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Theory of Performance Every organization is and rightly so focused on its performance. More so in an age of globalization where companies want to produce where it is cheapest to produce and sell where one can get the best price. This leads to a huge number of challenges as the way companies did business earlier is completely different from the way in which it is being done today. The strategies are different, environmental issues different, cultures are different and so are the consumers and people who are the employees. However, one aspect remains unchanged despite a myriad of different things that may happen, and there is a clear emphasis on performance. Today companies are not only being judged on the financials but also on other issues such as corporate social responsibility, sensitivity demonstrated for the environment, employer brand, whether the corporation is doing something for the larger good of the population in terms of creating social awareness and so on. In the midst of this entire milieu companies are also grappling with challenges on talent specifically how to attract, develop, grow and retain talent. Talent is again something which is believed to be scarce and more often than not very mobile especially in the context of the current business scenario. So the critical aspect is how one assesses talent at the very early stage either as a first time employee or even in the mid career stage at the time of hiring. What does an organization need to do to really create performance? It is not that all companies across all sectors of the economy would be getting their share of outstanding talent in terms of intellect and competence. Hence, it becomes all the more necessary for the business to appreciate as to what creates performance in an organization given the talent that exists. This is where the Theory on Performance has its relevance. Because if we were to understand what creates performance then we will be in a position to design systems and provide inputs for ensuring that the individual and at the aggregate level the company performs. Hypothesis on “Theory of Performance” Performance of an individual or an organization is a function of:
All of the above are necessary to enable performance. Professional skill is ‘what’ of a job, is the subject matter of any profession. Be it technical, finance, human resources, quality, supply chain or what have you. Professional skills can broadly be characterized as single domain, multiple domain or specialist / unique. Everyone in the company has to have professional skills without which he / she is just not capable of doing even rudimentary tasks. These professional skills come out of a body of knowledge which may be primary, secondary, advanced or tertiary. The professional skills will be unique to every organization and may significantly vary even between the needs of two companies in the same business domain. Behavioral competencies are ‘how’ of a job. They are very much ingrained in a person from early childhood. However, there are many which can also be nurtured over time either through life experiences, self development initiatives or coaching. Again the framework for behavioral competencies will vary according to the nature of the organization and the kind of business and customers it serves. A FMCG company may require competencies which may be significantly different than a Project Engineering say an (EPC) i.e. Engineering, Procurement and Construction company. It is well known that competency frameworks can be identified which will deliver the ultimate goal of an organization. Resource is something which is a lesser talked of subject when we talk of performance. Performance is not only determined by the extent of professional skills or behavioral competencies one possesses, but also in today’s world by the resources that are made available. Right from a decent work place to IT connectivity and various other assets depending upon the nature of work and outcomes expected by the company. It is only a combination of all above mentioned factors that performance is created. The basic premise of this theory is that performance can be made a reality if the company were to correctly identify the professional skills, behavioral competencies and the resource needs for every position in the company. It is possible to characterize each of these three components of performance at the individual level as well as at the organization level. Such characterization would lead to providing an empirical value which can then be termed as Human Capital for that company. Scope of the Theory The scope of this theory is vast and applications many. First there is a need to characterize the three components of performance. Second, would be to create a framework within which these components interplay, third would be to develop a model which will be able to provide linkages by level and complexity of domain knowhow to the probability of success of the enterprise and lastly develop a method to predict future performance. That is to say, it will be possible to provide an empirical value to a hitherto aspect considered as intangible. Benefits of this theory
Way forward a) Conduct a Pilot Survey to prima facie test the hypothesis and understand the variability’s to be considered in the design of instruments for data collection. b) Collection of data on all three components which drive performance from a large cross section of companies across sectors and industries within India. c) Analysis of the data collected and development of a framework within which the three components drive performance. To conclude we will first move with the Pilot Study and understand the complexities involved. The target date for completing the Pilot Study is end July 2010. 17th March 2010
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