Other than the above, employers can ride on the performance appraisal event to provide feedback to the employees regarding his or her past performance and to help them to improve their job performance. This exercise also provides opportunity for employees to express their feelings about the job and to increase interpersonal communication. From this it can stimulate interest in self-development for the purpose of greater personal development. Beside, performance appraisal will produce a databank of information can be used for financial and non-financial rewards.
Performance management approaches are generally described in the context of Managing by Objective (MBO) framework. MBO programs is an knowledge that evaluation must be secured to act like objective setting, communicate expected result, establish time frame and how to accomplish objective (Nankervis, Compton & McCarty, 1999, Pg. 399 – 400). Within the managing by objectives system the performance management process refers to the management of individuals, starting with the assignment of individual objectives through the final, formal assessment process. Employees today would like to climb the corporate hierarchy as quick they can. To stop employees from job-hopping, companies should provide views for individual and professional development. If people can achieve their development objectives with one employer over a long period of time, they will usually continue the same pace. Employees will certainly seek clearer fields if they distinguish the environment is restrictive. Especially when reviews are not fair, accurate and timely, they fail to compensate star workers, fail to provide support and guidance to average workers and fail to give proper feedback to whose work is imperfect.
It is in no doubt that there is convincing plane logic for steps in a performance management system. And, the benefits and purposes cited for such a system are intuitively compelling; there are very few managers who would disagree with any of the functions or results apparently associated with performance management. Keep in mind that while most agree with the concepts, few actually implement them. In today’s global economy, the advantage of growth from employees’ performance is cleared. It is referred as “intangible performance”. Stock returns are closely correlated with “intangible performance”. Take for example how Bill Gates built a multibillion-dollar software empire and how McDonald created its fast food kingdom. Many businesses are going through the same kind of internal dialog about their assets, particularly in the global economy, firms with relative little invested in factories and other tangible assets. To improve business performance, therefore, companies need tools that grow and manage their intangible assets. In this assignment we will discuss a few important issues when deciding and implementing an effective performance management system. As mentioned above, performance management is generally described within the context of MBO. As such the process shall be started with a thorough understanding of an organization’s business strategy. Here we refer to a strategy that is not “let’s make money”. Rather, it’s here “how to make money”.
In the context of strategic corporate planning, Balance Scorecard framework is widely used for goals and objectives setting for the entire organization or department. These goals and objectives are made as team goals. The Balance Scorecard provides a framework to describe and communicate strategy in a consistent and insightful way (Kaplan & Norton. 200, Pg. 10). This works best in departments or entire organization where the people are fairly independent and striving to achieve a singular purpose. A strategic scorecard is a process of establishing multi-faceted measures of an organization or unit they typically includes: (a) finance; (b) customer; (c) internal business process and (d) leaning and growth.
Having, balance scorecard organizational strategic direction is communicated well to the employees who must implement it. Once strategy is clear the process then moves to indemnifying cause-and-effect relationship driving business success.’ Nankervis, Compton & McCarty (1999, Pg 380) stress that performance review must never be taken isolation but, rather, tied directly to the organization’s strategic plan and the strategies that make up that plan. Organizational success is base on the result of adding together all the individual outputs. Using a mathematic equation as an example, if person X and person Y and person Z do their jobs correctly, the organization’s results are X + Y + Z. manage each individual’s result, and organization will succeed.
Key Factor in an Effective Performance Management System
As mentioned in the introduction, performance appraisal is the process of formal process in assessing someone’s performance. Performance appraisal is the end of process that goes on all the times. It is a process that is based on good communication between managers and employees (subordinates). In this exercise, not only the manager and employees is the key to success, the human resource department also play an important role because it can create a situation that virtually determine the value from the performance appraisal process.
Manager and supervisors traditionally have served as appraisers of their subordinates’ performance (Nankervis, Compton & McCarty, 1999, Pg. 385). Appraisers do appraisal to improve performance, not to find a donkey to pin a tail on or blame. Because blaming process is pointless and doesn’t help anyone. If there is to be a point to performance appraisal it should be getting manager and employee working together to have everyone get better. Formal appraisal is normally conducted every six months or one year, however, feedback is not just relevant to annual or semiannual appraisal. Feedback about performance needs to be immediate and continues since it is to influence future behavior. Appraisers should spend more time to prevent problems than evaluating at the end of performance cycle. When appraisers do good things during the performance evaluation period, the appraisal is easy to do and comfortable because there won’t be any surprises.
Many times, we found appraisers did all sorts of “funny and dump” things to destroy the process of performance appraisal that is important to everyone. But another important factor in the appraisal process is the employees they themselves herein referred as appraise. Appraisers take their cues from management and human resources. However, when appraise perceive the process in negative ways, they can create or damage even the best appraisal processes. Appraiser tend to take their jobs personally and making it more difficult to hear others’ comments about their works, particularly when they are critical. Even constructive criticism is often hard to hear. When appraise enter into the discussion with an attitude of “defending” then it’s almost impossible to create the dialog necessary for performance improvement. Appraisers are advised or should present their own opinions and perceptions in a calm, factual manner rather than a defensive, emotional way. Of course, if appraisers are inept in the appraisal process, it makes it very difficult to avoid this defensiveness.
Similar to the appraisers, appraisees need to know how they are doing all year found, not just at appraisal time. Generally it is primarily appraiser’s responsibility to ensure that there are no surprises at appraisal time. Often, appraiser discusses both positives and negatives of appraiser performance throughout the performance period, but this is unfortunately not a universal practice. It’s in the appraiser interests to open up discussion about performance during the period, even if the appraiser does not initiate it. The sooner appraisees know where they are at and what they need to change and keep doing, the sooner the problems can be fixed. In fact many problems can be prevented if they are caught early enough. Even if appraisers aren’t creating that communication, appraiser can and should. It is a shared responsibility. The success and failure of performance appraisal system doesn’t just fall on appraisers and appraise only. Human resource department is one of the major contributors to the final results. F then, human resource department tends to focus on and stress the paperwork and forms. We can understand why human resource personnel want some sort of paper trail related to performance appraisal in concerning the formality and the possible legal implications. But when the emphasis on the forms and paperwork overshadows the real purpose of doing appraisal, the huge amounts of resources are wasted. When human resource department focus on getting the forms done, that’s exactly what they get i.e. forms done.
Documentation in performance appraisal is seen as the central of performance appraisal. The issue is that the “one size fits all requirements” doesn’t really work. In many organizations, human resource department uses a standardization approach; this means one form use across the organization. A weakness of many performance programs is that manager and supervisors are not trained adequately for the appraisal task and provide little meaningful feedback to subordinates (Nankervis, Compton & McCarty, 1999, Pg. 389). Training for not only the appraisers but also the appraisees in their role in the appraisal process is one the important tasks of human resource department. Both appraiser and appraiser need to hold the same understanding about why they are doing appraisal, how it will be done and what is expected. In this discussion, top management is being seen as on the key factors in performance appraisal system. Recognition and commitment from top management towards the performance appraisal system will eventually affect the entire implementation of such system. People who involve in the appraisal process will conduct appraisal so long as they have to do so to justify or withhold certain objectives. Management can influence personnel in a holistic manner to ensure the ultimate goal of performance management system i.e. for improving individuals, teams and organization as a sole base on measures that tie directly to the success drivers of the organization. Performance appraisal isn’t about the forms although, often management, appraiser and human resource department treat it as such. The ultimate objective of performance appraisal s to allow employees and managers to improve continuously and to remove barriers to job success and not to get the organizational success as well.
The major responsibilities for setting performance assessment tone and climate rest with appraisers and the human resource department. However, even when managers and human resource department do their job well, workers who come at the process with unenthusiastic or suspicious approach are not likely to aim from the process or to do well over the long term. The constant key for successful performance management is active and self-confident sharing among the key personnel, but keeping a problem-solving mindset, and keeping focus on how things can be improve in the future. No matter how instigates it, performance appraisal is about positive open communication between appraises and appraisers.
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Implementation of Performance Management System: Problems and Recommendations:
Performance appraisals are always sticky for everyone. While organizations make an effort to be as objective as possible, there are always concern about specific performance appraisals and their accuracy. Performance appraisal instruments are considered as test and must be validated against actual job-related requirements. Job requirements or standards should be based on job analysis or competency profiling and resulting job description and job specifications. When performance standards are properly established, they will translate job requirements into levels of acceptable or unacceptable employee performance (Nankervis, Compton & McCarty, 1999, P. 390).
It is a facto life that the easiest things to measure or evaluate are the least important things with respect to doing a job. Take for example; managers can simply define customer service as “answering phone call within three rings or reply e-mails within 24 hours or some such thing. That is easy to measure if it is wanted. What is not easy to measure is the overall quality of service that will get and keep customers. By adding in the clause regarding legitimate customer complaints it becomes event serious. One-sided judgment must be trained and there is room for understanding, and the manager is required to evaluator whether a complaint is “legitimate” or not. So, the standard is no longer objective.
Measuring overall customer service is hard, we could carry the above example to the point where standard resembles “war & peace’, but the point here is that the more quantifiable a standard is, the less relevant it becomes. It is easy to measure a trivial but it is hard to measure what is important in an objective way. Many instruments have been developed to improve employees’ performance. Written procedures are a better contact between the employees and manager, incentives or punishment and so on. However, even well written standards have an appearance of objectivity but require subjective judgments. Expectation about work output in terms of quality, quantity, errors, waste, etc should be discussed as often as necessary until the employee is self-monitoring and self-correcting. When the subordinate is consulted in setting up standards of performance and he / she is given an opportunity to express his opinions during the post-appraisal interview will give him / her sense of participation and probably increase job satisfaction. Moreover, having helped to set the goals himself / herself, he / she will be less disposed to argue later about what is expected of him / her (Heyel, 1958, Pg. 33). Nankervis, Compton & McCarty (999, Pg 391) suggested that jobs which involve tasks where qualitative measurement is difficult, this job it may well be that success must be measured in how the work is performed rather than by end numerical result. One cannot ignore in the appraisal system is the role of personal trait because it bear significant when performing current job and considering the potential of an individual for higher position in an organization. Any shortfall, training and development have to come in place to “rescue” and improve the situation for success. The performance management system conveys to people in an organization how work is to be performed and communicated, often unintentionally the values and organizational culture too. More specifically performance management system can foster a lack of collective responsibility for achievement of organizational goals, encourage competition rather than cooperation and can impede the development of effective teamwork. It is not surprising that we eagerly embrace the idea that each person should be both responsible and accountable for this or her work. I am sure you agree. Performance management is designed to enhance this personal responsibility. It implies that you are not responsible for the work of others that is important to the organization. It focusing on individual responsibility reduces an employee’s responsibility to the organization and the activities that are not his or her job.
To overcome this problem, management should create an environment in which all members of the organization are continuously buzzing about and striving to improve the organization’s performance relative to its purpose. Promote team spirit, interest and induce feeling towards the responsibility for almost everything that goes on. When employees want to be involved, they contribute ideas, they function in a team context because they see achievement of overall organizational objectives as more important than the achievement of their own objectives. Perhaps the mathematics equation illustrated earlier can be used as an example for explanation to all employees. Due to the limitation of, we shall look at the final problem for this assignment i.e. the relationship between performance and rewards system. Many organizations tie employee pay appraisal results, which puts employee and manager on opposite sides. Employees in such system tend to focus too much on the money component, although that focus is certainly understandable. It is also understandable when employees in such systems become hesitant to reveal shortcomings or mistakes. If employees’ main intention is to gain as much of pay raise out of the company, and the management tries to keep increasing as little as possible, it becomes completely impossible to focus on what eventually matters over the long term which is continuous performance improvement and success for the company overall.
It may be very important, where possible, to tie remuneration and benefits to performance or at least to ensure that benefits package supports that organizational objectives (Lockett, 1992, Pg 199). Pay is important but it is on the only issue that related to the appraisal focus. Furthermore, pay is just one elements of reward. Promoting people on the basis of performance can divert the focus; however the factors appraised must be highly correlated to the requirements of the new job. Frequent reviews of the relationship between performance and reward system are important to retain high performance. How do we do that? We should start looking at how fairly are rewards distributed base on performance and does every employees understand this or in other words is how transparent is the system to all parties in an organization.
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Kaplan, R. S. & Norton, D. P., (2001), Harvard Business Scholl Publishing Corporation, Boston.
Lockett, J., (1992), Effective Performance Management: A Strategic Guide to Getting the Best from People, Kongan Page Limited, London.
Nankervis, A., Compton, R. & McCarty, T., (1999), Strategic Human Resource Management, 3rd Edition, Nelson, South Melbourne.
Schermerhorn, J. R., (1999), Management, 6th Edition, John Wiley & Son Inc, New York.
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Thompson, A. & Strickland III, A., (2001), Strategic Management Concept and Cases, 12th Edition. McGraw-Hill Irwin, New York.
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