Practitioner Interview: Dr. Zuraidah Khwaja Kamaluddin
In 2017, the Performance Magazine editorial team interviewed Dr. Zuraidah Khwaja Kamaluddin, Director of the Strategic Management Office at Universiti Tun Abdul Razak – (UNIRAZAK), Malaysia. Her thoughts and views on Performance Management are presented in great detail below.
Continuous performance management has continued to shake up rigid, traditional Human Resource processes and flexibility is becoming crucial, particularly given the preferences and motivations of Generation Y.
- Which were the key trends in Performance Management, from your point of view, as seen in 2016, in the ASEAN region?
A key trend in Malaysia is the role of Performance Management in the Education sector.
As part of the Malaysia Education Blueprint 2015-2025 for Higher Education, the Malaysian Ministry of Education aims to catalyze the transformation among private and public Higher Learning Institutions (HLIs). Key performance-related initiatives will include greater consistency in performance standards and regulations across public and private HLIs, and defining outcome-based performance contracts between the Ministry of Education and public HLIs.
The Ministry of Higher Education intends to disburse funds for public universities in accordance with a Funding Formula. The Funding Formula will focus on outcomes, national priorities and innovations in moving Malaysian universities towards becoming regional and global champions. The structure of the Funding Formula encourages higher return-on-investment, whilst directly supporting the five-system aspirations outlined in the Malaysia Education Blueprint for Higher Education, i.e. to increase access, quality, equity, unity and efficiency.
All public universities will stand to benefit from the new Funding Formula regardless of university type, size, or date of foundation. Universities will also have a shared outcome-focused set of Headline Key Performance Indicators (KPIs) that are cascaded from the Ministry, underscoring a partnership between Universities and the Ministry of Higher Education.
- What are your thoughts on the integration of Performance Management at organizational, departmental and employee level?
The key here is alignment at all of the organization’s levels, to the overall strategic objectives – from the bottom-up, the individual employee objectives and KPIs should contribute to the departmental objectives, and the departmental performance should add to the overall performance of the organization.
It is crucial that the top-down cascading of the organization’s strategic objectives and setting of KPIs with targets is properly conducted at the departmental levels, and further cascaded down to every employee. A disconnect at any stage of the department and employee level will contribute to a misalignment, with serious consequences during the performance review.
When done correctly, the employee personal goals, incentives and competency development should be aligned in order to achieve and sustain the departmental and organizational strategic objectives.
- Which will be the major changes in managing performance, in the future?
Performance management at the employee level is changing rapidly. Several large well-known organizations have scrapped the traditional performance appraisals and restructured their performance management processes. Amongst the trail-blazer organizations were Microsoft, Adobe, Cigna and Accenture which dropped formal rankings and introduced on-going feedback facilities and informal check-in meetings.
All four of the companies reported positive outcomes, leading the way for other companies to embrace change. By 2016, General Electric finally put an end to their toughest form of formal annual performance review known as the “vitality curve”, “bell curve” or the “rank and yank” system, where the employees’ performance were based on a rating, then judged and ranked against peers, with the bottom 10% of underperformers fired from their jobs. General Electric has replaced the formal annual reviews with a system of frequent feedback via an app.
Studies have shown that employee performance ratings can lead to lower levels of motivation and are proven to negatively impact performance as a result. Instead, forward-thinking companies are favoring well-structured objectives and regular feedback for employees over outdated grading systems.
Continuous performance management has continued to shake up rigid, traditional Human Resource processes and flexibility is becoming crucial, particularly given the preferences and motivations of Generation Y. Millennials are changing the way business is done and companies that acknowledge this and embrace these new changes will be the ones to flourish and succeed in the future.
- What aspects of Performance Management should be explored more through research?
My particular research interest is to assess the success factors of the implementation of the Performance Management approach in the Education sector in Malaysia, in both the public and private Higher Learning Institutions.
According to the QS World University Rankings 2016/2017, the Top 10 Universities in Malaysia ranked with the best academic reputation are Universiti Malaya, Universiti Sains Malaysia, Universiti Kebangsaan Malaysia, Universiti Putra Malaysia, Universiti Teknologi Malaysia, International Islamic University Malaysia. All these public Universities have in place a rigorous Performance Management System (PMS) using the Balanced Scorecard (BSC) and KPIs as the key management tool, whereby all the strategic objectives formulated by the University’s management is transmitted throughout the organization.
As an example, prior to the implementation of the PMS, one of the aforementioned universities highlighted several issues: the difficulties of obtaining data for measuring performance, the lack of understanding of the outlined strategies and plans by lower level personnel, poor monitoring of the execution of action plans by the respective division, unclear responsibility in executing the strategies and initiatives which were put forward by the university’s management.
After the implementation of the systematic PMS, the university noted some advantages of adopting the BSC framework: it provided an initial alert system known as performance dashboard for easy monitoring, it offered a structural mechanism for analyzing performance, it also integrated all of the related sources for performance data entry, with each entity of the university now having a clear responsibility in contributing to the success of the Strategic Plan, alongside the ability to communicate the execution progress of the strategic initiatives.
Further research will be useful to set the benchmarks for implementing the Performance Management approach in the Education sector throughout the ASEAN region.
- Which organizations would you recommend be looked at, due to their particular approach to managing performance, and their subsequent results?
The Ministry of Higher Education (MOHE) aims to transform the private and public Higher Learning Institutions (HLIs) via Performance Management, with all public universities being given a shared outcome-focused set of Headline Key Performance Indicators (KPIs) cascaded from the Minister of Education.
MOHE has instituted seven Headline KPIs for public universities as follows: KPI 1.0 Graduates Employability, KPI 2.0 Number of Publications, KPI 3.0 Number of Citations, KPI 4.0 Income Generations, KPI 5.1 Students Attrition Rate, KPI 5.2 Intake Graduate-On-Time Rate, KPI 6.0 QS-World University Ranking by Subjects, KPI 7.0 Number of International Students.
As rated by the Quacquarelli Symonds’s (QS) 2016/2017 World University Ranking, the nation’s oldest university, Universiti Malaya (UM), went from its previous 146th position to 133rd, within reach of breaking into the top 100 universities in the world.
According to a statement by QS, “Universiti Malaya is one of three Malaysian universities to improve its research impact. It rises 30 ranks for citations per faculty. It is now close to becoming one of the world’s top 500 research institutions”. Universiti Teknologi Malaysia (UTM) and Universiti Putra Malaysia (UPM) are now among the top 300 universities in the world. In 2015, UPM was ranked 331st and in 2016 is now 270th, while UTM rose 15 places to 273rd.
My research interest would be to consider the impact of Public Universities that use Performance Management to achieve the transformational objectives outlined in Malaysia Education Blueprint for Higher Education. The lessons learnt can then be applied to the many other Private-sector led Universities in Malaysia, where the usage of Performance Management and KPIs has not been fully established.
- Which of the existing trends, topics or particular aspects within Performance Managementhave lost their relevance and/or importance, from your point of view?
In my opinion, the usage of the Bell Curve as a forced ranking system of performance appraisal will be made obsolete. Some Human Resource professionals believe that a Bell Curve is the best way to identify the top performers and under-performers, whereas others believe it compels the appraiser to use a forced rating instead of a fair one.
Forced rating assumes that all the employees in a company can be ranked as follows: Top performers – 10%; Average performers – 80%; Low performers – 10%. The so-called normal distribution of this systematic bell-shaped graph places the majority of people in the average performance area while keeping the exceptions on both sides of the dropping slope.
For organizations that use the pay-for-performance concept, this rewards top performing employees, boosting their confidence and motivating them to achieve the set business goals, whilst encouraging mediocre performers to work harder and get into the square of highest performance, identifying low performers to guide and get them back on the track to better performance (or in the case of General Electric, to sack them from their jobs).
Studies however have shown the disadvantages of using the Bell Curve, which is nowadays considered a rigid approach to rating employees. Sometimes managers need to put employees in specific gradients just for the sake of the Bell Curve requirements. This happens more often when the manager’s teams are small.
The Bell Curve performance appraisal creates doubts in the mind of both managers and employees, who may worry about the possibility of an exit during tough job market conditions. This may lead to a loss of morale and further deterioration of job performance. The Bell Curve is not suitable for small companies where the number of employees is less than 300. With fewer employees, the categorization cannot be done properly, and the results are mostly erroneous.
- Which are main challenges of Performance Management in practice, today?
The usage of ‘traditional’ performance ratings will decline further. During 2016, more and more organizations eliminated annual performance ratings. Today, companies who choose not to use ratings should have a reliable system in place to ensure employees are receiving valuable, constructive feedback, from both their manager and peers, on a regular basis.
General Electric are a great example of an organization who have successfully achieved this, and their employee satisfaction has increased since dropping ratings and most of their managers say they are able to differentiate performance for pay purposes without ratings.
A point worth noting is that some organizations who have eliminated ratings are still measuring performance for reward or talent management purposes. Microsoft famously got rid of annual appraisals and performance ratings, but managers still assess each team member’s ‘impact’ on the team, business and customer on an annual basis to help determine reward. This process is however completely separate from their performance management discussions which take place 3-4 times a year.
- What should be improved in the use of Performance Management tools and processes?
Some experts have predicted that a shift to the cloud and increased use of online Performance Management software and apps software will be a big part of the future of performance management. Cloud-based HR could improve employee engagement as well as cut down on admin time for HR teams. Many companies are already introducing performance management software that uses the cloud. General Electric is currently using a performance feedback app for managers and employees so that they can request feedback and provide comments from their devices.
Social media has played a part when it comes to recruiting and it looks like it will also impact performance management. I believe that in the future, social media interfaces will be part of software design to make it as user-friendly as possible. Software will be designed to function in real-time, to allow for constant feedback and regular updates between managers and co-workers.
When an organization eliminates appraisals or ratings and does not establish a structured framework for ongoing performance management to replace them, it is left with a vacuum where little communication takes place between managers and their team members. For this reason, organizations are looking for software tools to help ensure that employees receive on-going performance feedback.
Yet, as Josh Bersin points out in his “Predictions for 2017”, the trend towards a more agile, continuous, feedback-based approach to performance management has “left the incumbent HR software providers flat-footed” and “the big software vendors…do not have the software yet”.
As a result, Bersin predicts that organizations will rapidly adopt a new generation of performance management tools which enable employees to receive and request feedback in real-time, send automated email reminders to ensure employees and their managers check-in with each other regularly, provide online agendas for effective one-to-one conversations and give HR and senior management visibility over the recurrence of regular performance discussions.
These tools also enable agile objectives and shorter-term priorities to be agreed and monitored, as opposed to traditional performance management software which typically ties organizations into an annual goal setting cycle.
- What would you consider as a best practice in Performance Management?
Frequently, when Performance Management is mentioned, people think of the employee performance appraisal or review. Performance management, however, involves so much more. Properly constructed appraisals should represent a summary of an ongoing, year-round dialogue. Focusing only on an annual appraisal form leads to misunderstanding and underappreciation of the benefits of performance management.
An effective performance management process enables managers to evaluate and measure individual performance and optimize productivity by aligning individual employees’ day-to-day actions with strategic business objectives, providing visibility and clarifying accountability related to performance expectations, documenting individual performance to support compensation and career planning decisions, establishing focus for skill development and learning activity choices, creating documentation for legal purposes, to support decisions and reduce disputes.
Many of the practices that support performance also positively impact job satisfaction, employee retention and loyalty. Recommended best practices include delivering regular relevant job feedback, setting and communicating clear performance expectations, linking performance to compensation clearly, identifying organizational career paths for employees, evaluating performance and delivering incentives in a fair and consistent manner, providing appropriate learning and development opportunities, recognizing and rewarding top performers.
The primary reason to ensure that performance management processes are functioning properly is to tighten the link between strategic business objectives and day-to-day actions. Effective goal setting (including timelines), combined with a method to track progress and identify obstacles, will contribute to success and bottom-line results. Regularly tracking progress against performance goals and objectives also provides the opportunity to recognize and reward employees for performance and exceptional effort, contributing to job satisfaction and productivity.
Employees want to feel successful, do well at their job and feel they are making a valuable contribution. In order to ensure this happens, employees need a clear understanding of individual goals and how they fit into the overall organization. New technology-based solutions can provide goal visibility across entire organizations, offer extensive reporting options and can reduce paperwork.
Clear visibility, regular individual analysis and company-wide employee appraisals help identify corporate competencies and skill gaps. With this valuable data in hand, companies can identify training and development plans. When effectively implemented, performance management best practices result in a wide range of benefits for employees, managers and companies.
- Which aspects of Performance Management should be emphasized during educational programs?
On a personal note, although I was already a Palladium Kaplan-Norton Balanced Scorecard Certified Graduate, I still pursued a program to become a Certified KPI professional from The KPI Institute, which gave me a thorough understanding of KPIs to complement my practical, on-the-job work experience in corporate Strategic Performance Management.
Hence I would always emphasize the importance of setting correct KPIs for any Performance Management or Balanced Scorecard training/educational programs.
At an organizational level, a Key Performance Indicator (KPI) is a quantifiable metric that reflects how well an organization is achieving its stated goals and objectives. If the KPI is inappropriate, the resulting behaviors may be counterproductive. Furthermore, while it is important for organizations to choose the correct KPIs for business performance, it is equally useful if managers and employees define correct KPIs for their team members.
The ideal situation is where KPIs cascade from level to level in the organization, which will help employees work in such a way that their activities are aligned with the corporate strategy.
- What are the limits that prevent practitioners from achieving higher levels of proficiency in Performance Management?
The limitations that a practitioner may encounter are:
- Lack of leadership commitment and willpower to lead in the overall implementation of Performance Management, which could typically start as part of a Transformation or Change Management project.
- Resistance by employees who perceive Performance Management as additional workload to monitor and report on the results of their KPIs.
- Misalignment of KPIs and targets which are not set and cascaded correctly at the organizational, department and employee levels.
- Inadequate communication about the Performance Management process, which could lead to poor buy-in and lack of co-operation from stakeholders.
- Gap in the integration between Strategic Planning systems (for Organizational Performance Management) and Human Resource Management systems (for Employee Performance Management).
- What is your opinion on the emerging trend of measuring performance outside working hours, during our private time?
I would fully support measuring personal performance outside working hours. Setting personal Wellness KPIs will help improve the health of the person and indirectly have a positive impact on one’s productivity as an employee.
Some examples of such Wellness KPIs are: Body Mass Index, no. of steps taken per day (target of 10,000 steps, as suggested by experts), no. of hours of exercise per week (target minimum of 30 minutes of brisk daily walking).
- What personal performance measurement tools do you use (i.e. gadgets that track blood pressure, steps taken, heart rate, burnt calories or tools that help with one’s finances or personal skills)?
The gadget called “Fitbit” helps track my daily activities including exercise, food, weight etc., and assists with measuring the results of my Wellness KPIs targets.
Previously, at the start of a year, I would set myself some idealistic New Year resolutions, kept them in my drawer and wonder why some of them were not achieved by the end of the year. But since the moment I have found out & learnt about the Balanced Scorecard (BSC), I have modified the four perspectives of the BSC, to suit my personalized KPIs at the start of every New Year.
This has actually helped me have clear personal life objectives, set targets for various aspects of my life, monitor the results of my personal KPIs and track my progress towards achieving my life objectives on a more regular basis.
Specialization Specific Question
- Practitioner Point of View: Which were the recent achievements in generating value from performance management in your organization?
Although UNIRAZAK is a private-sector owned University, it has aligned with the aspirations of the Ministry of Education Malaysia as stated in the Malaysia Education Blueprint 2015-2025 for Higher Education. In my role as the Director of the Strategic Management Office, we had obtained Board approval to implement the UNIRAZAK Strategic Transformation Excellence Plan 2012-20 (STEP2020), which outlines the Strategy Map, key strategic objectives, key results areas and strategic initiatives to drive strategy execution and implementation, by using the Balanced Scorecard methodology and KPIs.
As a result of this, we have even developed a Master’s Degree, Masters in Strategic Human Resource Management, in which the core courses are around the subject of Performance Management.
The value generated at UNIRAZAK was focused around having KPIs set at the organizational, departmental and employee levels, to cascade the strategic organizational objectives of the University to every employee, with their own scorecard performance objectives, KPIs and targets. The regular quarterly monitoring and reporting of organizational KPIs to the Board has been the basis for discussion on continuous performance improvements, to ensure we always achieve the organizational objectives and targets.