It's time to look back and evaluate the performance of your team, but things are not so easy this year. Post-recession, now that the rate of attrition is going up, one mistake can prove costly to the CIO and his team. "The costliest asset in an IT company is its people. More than 50% of the opex costs are incurred for human resources, and it is probably the only asset which appreciates with time," says Lata Menon, the head of HR at an IT organization. It's therefore important for a CIO to have the right strategy in place for performance appraisals of IT teams.
Appraisal of IT teams: Common methods
The mechanism for the appraisal of the IT team can vary from company to company. It depends on whether a company considers IT as a support function or a strategic function. If IT is a business, performance appraisal of IT teams can be quite straightforward. But if IT is a support or captive entity, the value definition and ROI calculation can be cumbersome.
"Performance appraisal of IT job roles is a meticulous and continuous process. It should not be taken as a year-end formality which one has to complete. Rather, it's an ongoing process. As leaders we are supposed to sense and visualize the qualities of an employee and see that the person is performing and delivering his best," says Sanjeev Kumar, the executive vice president and group CIO of the Adhunik Group.
According to Menon, a well-defined, self-enabled, transparent, online performance management system, takes care of a good performance appraisal process. One of the important mechanisms is key result areas (KRA). SMART (specific, measurable, achievable, relevant, time-frame), another oft-repeated acronym, has particular relevance when we talk about KRAs. IT KRAs are some of the most measurable ones, especially for programmers since they include lines of code produced in a day, their quality, the number of bugs, the quality of documentation, and the re-usability of components. As you move up the hierarchy value chain, financials, customer, process and people become an integral part of a well defined KRA system.
"The definition of KRAs varies from company to company. The criticality of IT in the company's annual global targets helps in defining KRAs for the IT team. The cash flow and information flow is interlinked. Cash flow can be maximized when you intelligently use your information systems," says Kumar.
For Ispat Industries, performance appraisal of IT is one of the most critical business processes. The company's performance management system is scientifically and objectively designed. "We have an annual business plan (decided by the functional heads) which further transforms to departmental annual plans," informs Atul Kumar, president and CTO of the Ispat Group. The company has in place a performance management system which runs on IBM Cognos and Lotus. In the IT department particularly, a daily time-sheet is managed which is directly related to the company's annual business plan. Without any subjectivity involved, this keeps a daily track of the employee and how much he has achieved. There is no scope for personal biases to affect the process. Apart from this, modern techniques such as Six Sigma are also part of the process. Parameters which are directly related to Six Sigma include zero breakdown for servers and 24/7 running of applications. Almost 95% of the processes are objective.
Major challenges in appraisal of IT teams
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Documenting the performance records is one of the important elements which are generally neglected by CIOs. "Stated and documented correctly, defined and articulated well, the process of review and assessment of agreed KRAs/KPIs can ease out the complexities of the appraisal of the IT team. People have preferences and bring in subjectivity, but human elements, individual biases and emotions can be controlled, if not eliminated. Multi-tier assessment processes, checks and balances, and periodic interventions weed them out to a large extent," says Menon.
Communication is also one of the big barriers during the process of performance appraisal for IT team members. Communicating expectations to the team during the process of appraisal is a crucial aspect. Adds Menon, "Linguists use a term, 'mitigated speech', which means 'tone down." This is one of the areas to be refined by managers providing feedback on performance. Communication should be specific, direct and focused—else it loses its essence as well as value. All the right things said the wrong way have either no impact or a negative impact."
Defining the compensation for an employee is a touchy subject for most managers, including CIOs. Here are some key points to be remembered during the process of appraisal.
- Always have an open mind.
- Never have an already-made decision in the mind during the process of appraisal.
- Communication should be sharp and to the point.
Apart from this, working closely with the HR department completes the performance appraisal lifecycle for your IT personnel and makes it 100% transparent. The right process will help you in identifying the right talent, and more importantly, retaining the same. Completing the process in time, maintaining the sanctity of the process, weeding out disagreements and biases, intervening to break pre-conceived notions, and clarifying HR's role as a neutral partner are part of the process of doing an appraisal of your IT team.