How Mahindra & Mahindra moved away from the rating system

The farm and auto sectors of Mahindra and Mahindra have scrapped the rating part from their performance-review system

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The biggest business sectors of Mahindra and Mahindra, farm and auto, have moved away from the rating part of the performance-management system. Starting this year, the Company has embraced a feedback-based performance management system (PMS), shares Manish Sinha, SVP & CHRO, Mahindra & Mahindra Automotive Business, with HRKatha.

Earlier, Mahindra & Mahindra followed the traditional performance-management system for many years. This included following the bell curve and point rating scale for evaluating performance.

To bring about more objectivity and remove any bias and subjectivity in the process of evaluating the employees, Mahindra & Mahindra decided to do away with the rating and bell curve system.

“Now managers cannot hide behind the bell curve and rating assessment and have to own talent decisions related to employees in their team,” tells Sinha.

Apart from the performance-management system, the Company has also stopped using psychometric tests. “We had various assessment centres to evaluate people while promoting them, but now, we have discontinued the same,” reveals Sinha.

What does the new performance-management system at Mahindra and Mahindra look like?

As per Sinha, the Company decided to move away from the old PMS system a year ago.

Sharing exclusively with HRKatha, Sinha says that a new feedback-based system has replaced the old one.

Leadership framework: Mahindra has a new leadership behaviour framework called CAB, which stands for collaboration, agility and boldness. Sinha explains that every employee in the farm and auto sectors is evaluated on these three leadership behaviours. The managers evaluate the employees on what Mahindra calls the ROFA scale — short for Rarely, Occasionally, Frequently and Always.

In 2021, the CAB evaluation happened during the month of November and December, with the employees sharing instances and examples of how they demonstrated the CAB behaviours throughout the year in their role. They were then evaluated by their respective managers basis the ROFA scale.

“Now managers cannot hide behind the bell curve and rating assessment and have to own talent decisions related to employees in their team”

Manish Sinha, SVP & CHRO, Mahindra & Mahindra Automotive Business

Self-evaluation: Another set of inputs is recorded through the self-evaluation process. In this, after discussing with their respective managers, the employees prepare a ‘goal sheet’, which documents all the goals they will have to achieve throughout the year. This activity, known as ‘goal setting’, happens at the start of the year. During appraisal time, around April and May, the employees fill the self-evaluation sheet, where they first evaluate themselves on these goals. This involves mentioning the goals they have achieved and how they have achieved them. All the inputs are digitally recorded in the Company’s PMS system.

These inputs are then sent to the respective managers, who give their remarks, comments or feedback on the same. In this feedback process, the managers top up the evaluation process with the CAB feedback, which has already taken place in the previous year and which has been reviewed by the managers’ bosses. The reviewers then feed in their remarks if required and the appraisal form report is shared back with the employee.

Talent panel: Another input on performance comes from the ‘talent panel’, which is primarily not part of the PMS review process, but is an additional tool that helps the company evaluate the employees. The Talent Panel was introduced at Mahindra to primarily identify high-potential employees in the organisation who can become future leaders for Mahindra.

Every function at Mahindra’s farm and auto sectors has a talent panel, which constitutes the functional head, two very senior employees in the respective functions and one external senior resource. For instance, in case of the sales and customer care function at Mahindra Auto, the talent panel will comprise the functional head, two senior employees from the same function and one senior resource from the sales and customer-care function of Mahindra’s farm vertical. “The external reviewer works as a challenger in the panel, helping keep the process fair and objective,” asserts Sinha.

“The primary objective of the talent panel is to ensure that talent gets discussed in the organisation, and high-potential employees are duly identified and recommended for leadership-development plans,” enunciates Sinha.

However, there is a catch! “Only employees above a certain mid managerial band or level at Mahindra are covered by the talent panel process,” Sinha shares.

Though the talent panel inputs fall outside the PMS review system, for certain employee levels, the feedback from the talent-panel discussions are also integrated in the PMS review system.

Performance dialogue: After all these inputs are recorded and documented, a performance-dialogue session takes place at the end during the appraisal time, where the managers share their feedback on the performance of the employees. In some of these sessions, the HR is an observer and if the manager requires any assistance, the HR is there to lend support.

Since the new feedback-based system for performance review is fairly new for all managers, Mahindra prepared an I-BOLD framework. On the basis of this framework, the managers were trained on how to give feedback to their employees.

I-BOLD stands for:

I – Intent

B- Behaviour

O – Observe

L – Listening to employee’s feedback

D- Documenting the conclusion

“These training interventions are not led by the HR but by the business leaders themselves. The HR function just partners and enables all the processes,” explains Sinha.

This whole transformation at Mahindra has been a big journey for all. “We believe that managers are responsible for conducting fair and objective reviews. They are the ones who take ownership of all talent decisions in their team and drive the process. Therefore, to enable them, they had to be trained in conducting feedback sessions for the employees, as they were doing it for the first time this year, without any ratings,” shares Sinha.

Sinha discloses that over 150 mock sessions took place last year with all the managers so that they were thoroughly trained for the performance-dialogue sessions with the employees. Role playing was used to train them, which also involved switching roles — managers became employees and employees became managers.

The whole transition has happened very smoothly at Mahindra’s auto and farm businesses. “Through the initial reactions, we can see that now employees are not anxious about what their rating will be. The new evaluation process also frees the managers of stress,” observes Sinha.

The performance-dialogue sessions of the new feedback system allows for the discussion of the employees’ career goals, talent objectives and future roadmap in the organisation. “Employees and managers will now move away from the insecurities attached to a number on a rating scale. There will be more richness in feedbacks and less pressure on employees,” says Sinha proudly.

The feedback-based system also has its own challenges. For instance, while evaluating a leadership behaviour, the understanding of ‘collaboration’ may differ from manager to manager. So it may be a challenge to achieve uniformity in terms of feedback. Moreover, Sinha observes that few employees working at lower bands and salaries seem to be unsatisfied with the appraisal this year, but the company will keep improving the process as they move on. For instance, Sinha says that from next year, Mahindra may plan to cover lower-band employees as part of the talent panel session.

Presently, the new PMS system reviews only the white-collared employees at Mahindra & Mahindra’s farm and auto sectors.

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