Enterprise performance management—From an unpopular exercise into a new age productivity tool
Companies have been experimenting with tracking performance of employees for a long time now. We have had the traditional management year reviews, peer-based reviews, 360 reviews and so on. At Infolob, we feel that this HR modernization tactic can be done better with blockchain and crypto-currency technologies that are available today, leading to sustained excellence across teams working for a common goal.
Modern businesses are geographically dispersed with work involved in multiple time zones. As such, they require dynamically allocating appropriate resources to execute different activities and business processes. Effective allocation and optimization of resources is key for the organization’s success. With multiple divisions and business processes involved, it becomes complex to create an optimized path even with the advanced BPM and EBM tools.
Hikechain takes a different approach by implementing the push vs. pull supply chain methodology into HCM, using blockchain technology for rewarding the resource with appropriate cryptocurrency. The currency is then validated by the respective supervisors/managers who act as “brokers/miners.” Their team/division then collects their share of the currency based on respective involvement.
The current push strategy of HCM
The current EBM/HCM is based on push strategy where the projected demand/budget allocation for improving financial decision-making is purely data-driven. It combines time consuming what-if analyses to make impactful decisions, and often, these tools do not account for individual productivity when performing a particular task. Due to various social and technical reasons, an employee could perform a set task in half the time as compared to his coworker. A typical push-based, data-driven approach necessitates that all resources are equal, which often causes operational bottlenecks. Some departments overproduce, while others lack the ability to pull in a timely way, thus adding inefficiencies into the operations.
Employees passively operate on the task they are given and often grow apathetic towards the task they are assigned.
The quarterly and biyearly reviews that are required to assess the task’s efficiency don’t assess the actual performance; they provide infrequent feedback and lack accountability.
The processes are totally disconnected from rewards with no comprehensive team assessment, and sole focus on a squeaky wheel does not address diversity.
This causes inconsistent ratings, recency issues, employee dissatisfaction, and staff iteration. Modernization of HR systems can help stave off these problems.
The department that takes most of the toll from the push strategy is the Human Resources department. Constantly juggling to find the right strategies to retain talent and staff allocation is difficult, especially when they are often based on data from already flawed performance appraisal and task-based metrics.
Hikechain: Human capital supply chain methodology (the pull strategy)
In today’s fast-paced and increasingly competitive global business climate, it’s essential that your organization focuses resources and cash in on the right things. This means investing in generating more winners and/or reducing investment in losers. Either can improve overall profitability but, as we often say, the devil is in the detail. Executives realize that accurate cost information is essential—but for many organizations, that’s the information they just don’t have.
In the methodology graphic, the project task is broken down into smaller parts with committed due dates. Once the task is performed by the respective resource, the resource surrenders the task to his/her supervisor for validation. When the supervisor validates it, the appropriate currency is automatically allocated based on hikechain’s internal logic. According to this logic, crypto-coins are dispersed based on the due date and complexity/relationships of the task. This gives the stakeholder buy-in (as they clearly see how amounts were allocated).
The valuation of the crypto-coin/virtual currency is calculated based on by seamlessly combining data from the general ledger and other financial systems with data from operational systems. The solution provides the transparency necessary to support analyses within today’s complex enterprises down to the employee level.
Should the resource require additional help to complete the task, he/she could enter into a smart contract with a fellow coworker and trade the currency allocation. The smart contract is automatically executed after the task is validated by the supervisor. Thus, it eliminates the squeaky wheel that captures the best practices by converting them to tradable coin.
Since the resource is vested with the crypto-coin in real time, which is pegged against the company’s revenue/real time scenario, they will have the drive to get the push the company currency upwards.
At the end of the fiscal year, the organization can give the employee an option to convert coins into the real bonus/reward.
Studies show that only 60% of employees have converted their rewards into cash; the deferred compensation to the employee will give the corporation access to the much needed capital at a near zero borrowing cost, and the employee is also vested into it.
The cascading effect that is caused due to the increased employee feedback/returns into the organization in which they are vested in, would in-turn increase the productivity.
Hikechain is designed to eliminate all the traditional problems that arise due to gaming the system, inconsistent ratings, and processes that do flex with the business and to promote HR modernization within the organization.
Being based on blockchain technology, the system is foolproof, with completely auditable real-time performance metrics, accurate forecasts, and an accountable enterprise.
This blog post was written by Infolob Innovation and Blockchain Lead Hari Ambati. You can reach Hari at [email protected]