Improving Organisational Performance - Essay Example

?Improving Organisational Performance Table of Contents Introduction 3 Business Case for Performance Management at Barclays Bank 4 Business Case for Performance Management at Lloyds Bank 5 Difficulties, Challenges, and Implications Encountered By the Use of Performance Management at Lloyds Bank 6 Difficulties, Challenges, and Implications Encountered By the Use of Performance Management at Barclays Bank 8 Proposal For Mitigating the Challenges Faced By Lloyds Banking Group 10 Proposal For Mitigating the Challenges Faced By Barclays Bank 11 Limitations of the Proposals 13 Conclusion 14 References 15 Introduction Performance management can be defined as a systematic method through which the organisations tend to observe its employees as individuals as well as members of the group, in enhancing the competence of the organisation in the attainment of the group mission as well as objectives (US Office of Personnel Management, 2012). Performance management is considered to be one of the most regarded Human Resource (HR) functions in an organisation. In most of the organisations, the performances of the subordinates are measured either formally or informally. Effective communication regarding performance appraisal generally takes place once in a year or once in a quarter. Nevertheless, performance management is a continuous phenomenon (Armstrong, 2006). When the performance management is utilised in a proper way then the management gains numerous benefits. It has been noted that most of the United Kingdom based organisations operate periodic performance appraisal systems. However, it has been noted that most of the employees as well as managers are found to be discontent with the schemes utilised in the organisations (Keshav & Sharma, n.d.). Appraisals are incapable of motivating the employees in an organisation and it has been claimed by the respondents to an Industrial Society Survey that such appraisals do not have any positive impact upon the workforce. Therefore, it becomes significant for the organisations to monitor the way in which performance management is being practiced (Management Today, 1998). The main objective of the paper is to evaluate business cases for the use of performance management at Barclays Bank and Lloyds Bank. The study will also present the practical difficulties, challenges as well as implications identified by the use of the performance management in Barclays Bank and Lloyds Bank. The methods that the two banks can use in order to mitigate the difficulties related to the performance management will also be recognised in a detailed way in this paper. Finally, the study will attempt to find out the potential limitations or shortcomings related to the proposals provided to the banks. Business Case for Performance Management at Barclays Bank People tend to differ in terms of their abilities as well as aptitudes. There will be major disparities between the size and the value of the same work upon the same job done by two distinct people. Therefore, under such note, it can be assumed that the organisations need performance management so that they are capable of comprehending the abilities of the employees, proficiencies as well as their comparative worth for the organisation. Offering rating to the employees in terms of their performance can be done with the assistance of performance appraisal. Barclays Bank tends to extend its assistance in terms of financial services in approximately 50 countries all over the globe (Barclays, 2012). Barclays Bank is considered to be one of the famous companies in the banking sector and thus it states that the way in which the employees tend to perform their operations has a direct influence upon the business performance. The team members working for the bank are well aware of the goals that they are supposed to attain. In order to manage the performance, the bank has designed numerous actions in which the employees participate. Coaching is recognised to be one of the actions where a crucial objective is to make the employees aware of their job responsibilities and to assist them in attaining the goals that have been set. In addition to coaching, the bank also undertakes numerous other options such as counselling and mentoring. Barclays Bank also takes into account monitoring through which the bank tracks the performance of the employees. In such programs the main focus is to comprehend how well the employees perform and thus offer a feedback upon the performance. Numerous kinds of rewards are offered to the employees based upon their performance. At Barclays, the employees are offered with two main options such as cash reward and compensation, and the other reward which is offered to the employees in the organisation is known as opportunity where each employee is offered with the chance to enhance his/her performance. Barclays Bank also provides the employees with the chance to select their own skills in order to grow. It has been apparent that Barclays Bank makes use of 360 degree feedback system in its organisation in order to measure the performance of the general employees as well as to offer the senior executives with feedback regarding their management style (Pfau, 2002). Business Case for Performance Management at Lloyds Bank Lloyds TSB Bank Plc is considered to be one of the leading retail banks in the United Kingdom. The main motto of the company is to become one of the successful banks in those countries in which it operates. In order to attain this objective, it is significant for the company to gauge the performance of the employees so that they can serve the customers with utmost efficiency and effectiveness (Lloyds Banking Group Plc, 2009). At Lloyds Bank, the strategies of the business are converted into the Groups’ balanced scorecard which is aligned at various hierarchies in the organisation. With this method, the employees comprehend the relation of personal objective with the organisational strategy. The contributions made by the employees are evaluated against numerous factors along with long term growth of the business, risk management as well as personal development, customer service as well as financial success. The bank conducts performance appraisal of the employees twice in a year which assists the employees of the bank to comprehend how their performance would influence colleagues, suppliers, customers along with overall success of the organisation. Together, this proves to be a strong method for segregating high performance and thus monitoring underperforming employees in the organisation (Lloyds Banking Group Plc, 2009). The bank makes use of balanced scorecard so that it can evaluate and monitor the performance of the employees in the organisation. One of the most significant business strategies followed by the company is meeting the requirements of the clientele. It is through the balanced scorecard the company attempts to demonstrate its employees how their actions influence their colleagues as well as customers and how this is converted into performance (Lloyds TSB Group plc, 2012). Difficulties, Challenges, and Implications Encountered By the Use of Performance Management at Lloyds Bank The success and the failure of an organisation highly depend upon the performance of each single individual within the organisation. Poor performance of one member can hamper the overall objective that has been set by the management in an organisation. It has been noted that in the initial period of the year 2012, the Chief Executive at Lloyds Banking Group, Antonio Horta-Osorio decided to forego his bonus because of the poor performance of the bank and because of the tough conditions that its customers are facing (Sky News, 2012). Realising the poor performance of the bank, Lloyds Banking Group has minimised their bonus payouts by nearly 30% and thus making its bonus expenses to ?375m to the employees (Nasir, 2012). It can be stated that since the company makes use of the balanced scorecard in order to measure the performance of the employees in the organisation, it might face certain issues. It is often noted that the balanced scorecard method is subjective by its nature. Unlike quality levels, it becomes tricky to enumerate them except by means of surveys or management opinions (Hirschbichler, 2011). Furthermore, balanced scorecard method of performance appraisal does not comprise direct financial evaluation of economic value or risk management. Goal selection in case of balanced scorecard method does not consist of opportunity cost computation (Gomes & Liddle, 2009). Since balanced scorecard tends to inculcate a new sort of reporting without paying due attention towards the improvement of the quality or financial numbers, it is often perceived as an extra set of non-value-added reporting and may as well distract the bank from attainment of the actual goals (Biazzo & Garengo, 2012). Balanced scorecard might offer Lloyds Bank with extensive overview of the company and might as well offer the company with the facts related to its execution as well as performance. However, the balanced scorecard method might fail to offer suggestions on how the strategies can be modified in order to overcome the discrepancies. It can be stated that the balanced scorecard method will prove to be completely efficient if Lloyds Banking Group integrates it with an accounting system (Braam & Nijssen, 2004). One of the significant issues that Lloyds Banking Group faces in relation to the adoption of the balanced scorecard method is the difficulty in assigning weightage to numerous perspectives and in creating cause and effect association among these viewpoints (Zhang & Li, 2009). Difficulties, Challenges, and Implications Encountered By the Use of Performance Management at Barclays Bank Barclays Bank makes use of 360 degree appraisal system in order to monitor the performance of its employees. One of the most common difficulties that the bank might face in making use of 360 degree appraisal system is the wrongful assumption that making use of feedback from various sources will compensate for deliberate as well as inadvertent deformation. In fact, if the feedback is gathered from numerous sources in an incorrect way then it might increase the occurrence of errors instead of decreasing them and thus will destroy the credibility of results (Manatt & Benway, 1998). It is also viewed that the organisations make mistake of perceiving the method of 360 degree appraisal as a special event and thus uses it only once as a significant part of training and coaching session. It is because of this they do not think of taking the process outside the initial goal of offering feedback to individual employees. The trust as well as confidence upon the employees undergoing this feedback evaluation method is considered to be a determinant factor in its results (Alexander, 2006). Most of the employees consider this appraisal method to be a tool for downsizing. Most of the times, it is noted that the confidentiality of the assessment might not be ensured from the human resource department (McCarthy & Garavan, 2001). The appraisal method that the bank uses is considered to be quite time consuming and cost consuming evaluation process. If the organisation does not have proper resources in order to implement the process effectively then in such cases the appraisal system might end up leading to financial burden for the bank. Furthermore, such systems used by the bank tend to ignore the process in which the behavior takes place and a fear of vengeance might occur from the supervisor if the ratings are not favourable (Parker, 1998). The 360 degree appraisal method has also been criticised as giving rise to bias or prejudices. Most of the times, it is viewed that subordinates are not capable of assessing the task of the supervisors because it relates to the management objectives. With such loopholes in the performance management system at Barclays Bank, the employees will not be capable of recuperating their performance in the organisation. It is quite significant for the management of the bank to limit any such issues that might arise with the implementation of the performance appraisal system within the organisation (Censeo Corporation, 2008). Proposal For Mitigating the Challenges Faced By Lloyds Banking Group In light of the challenges that Lloyds Banking Group might face, it is significant to identify certain measures to mitigate them which will assist in improving the overall efficiency and thus lead to the attainment of the goals of the company. One of the significant aspects behind any performance measurement program is to identify what the company wants to measure and thus recognise how to measure it. It can be stated that for a balanced scorecard performance measure to work properly it is essential for the senior management at Lloyds Bank to create a climate for change. Communication must be quite comprehensive in nature and the management must ensure that goals and incentives that have been created to attain them are in alignment with the strategies of the organisation. The staff in the organisation must be motivated to make use of the balanced scorecard method in an effective way and the evaluation system must be devoid of any prejudices thereby encouraging fair judgement related to performance of the individuals in Lloyds Bank (Isoraite, 2008). Proper planning is the key to success for any process. Therefore, it is significant for the bank to have proper planning and discussion with the team members related to the feedback to be offered to the employees by making use of the balanced scorecard method (Niven, 2011). This will assist the company in identifying if the employees are satisfied with the performance appraisal method. For a balanced scorecard method to be effective, it is quite significant for Lloyds Banking Group to estimate the amount of time actually required in order to effectively implement balanced scorecard method. Balanced scorecard method is created as a dynamic tool which is quite adaptable and capable of change as required by the business conditions. However, with the pace of time, the bank may encounter significant alterations in terms of objectives, measures as well as targets (Niven, n.d.). With such alterations in the organisation, it would be prudent to critically evaluate the balanced scorecard method on a quarterly basis and thus determine if the core components are adequate and align with the objectives of the company or not. It can be stated that for a balanced scorecard to be effective, Lloyds Bank needs to be prepared for difficult times, changes in the culture substantially and a lot of hard work. The metrics required for the performance evaluation needs to be defined adequately at Lloyds Banking Group (Chavan, 2007). It has been noted that balanced scorecard might fail to operate if Lloyds Bank does not make use of non-financial measures in order to drive the performance. Therefore, it can be concluded that Lloyds Bank must make use of the non-financial measures as well so that it can drive the financial performance in an organisation (CIMA, 2005). Proposal For Mitigating the Challenges Faced By Barclays Bank In light of the difficulties faced by Barclays Bank in making use of the 360 degree appraisal system, it is crucial to determine certain measures through which the company will be capable of mitigating the risks of such performance system and thus improve the performance of the employees in the organisation. It is often found that the employees might not have adequate faith with regard to the judgement offered in an organisation which is implementing 360 degree appraisal method. When such circumstances take place it is significant for the top management of Barclays Bank to communicate the good faith of the organisation to the employees and thus focus upon continuous learning, open communication, safety as well as confidentiality. Responders for the 360 degree survey might be elected in terms of subject, supervisors, and project organisers. It is quite significant that whoever takes the work be fully described regarding how to elect adequate responders. It is also vital for the bank to adequately communicate the main purpose of the 360 degree feedback system in the organisation (DeNisi & Kluger, 2005). The rater might have adequately explained the process, however the respondent might have not paid due attention in understanding to which might create a great confusion in the mind of the respondent. It would be better for the leader to talk to the respondents individually and thus identify what they think regarding the 360 degree appraisal method. The answers obtained from the respondents will assist in comprehending the areas where the leader has been successful in communicating the respondents well and also in identifying the areas that need to be paid due attention. The prejudices need to be prevented so that the respondents can have faith upon the performance evaluation system and thus they might work hard towards the improvement of their performance substantially. The 360 degree appraisal system is likely to fail at any point of time if the participants or the raters do not possess adequate knowledge regarding the proper implementation of the system in the bank. Thus, training must be offered by the top management to the participants as well as raters prior to the implementation of the system and after execution of the process as well so that they can understand how to deal with the appraisal method and thus enhance their performance and help in the attainment of the goals of the organisation (Horwitz, 2012). Limitations of the Proposals The proposals tend to identify the challenges that the Lloyds Banking Group and Barclays Bank confront when implementing the balanced scorecard method and 360 degree appraisal method respectively. Furthermore, certain recommendations have been proposed for the improvement of the two performance management systems in two banks. However, proposals fail to suggest any new performance management system other than 360 degree appraisal system and balanced scorecard system that can be applied by the banking sector which tends to be the major limitation. In the modern day context, the banking institutions need to keep themselves updated with the modern methods in order to sustain in both the short run and the long run. There are numerous other performance management systems like Behaviourally Anchored Rating Scales (BARS) as well as Human Resource Accounting Method, which if applied in Lloyds Banking Group and Barclays Bank can assist in improving the performance of the employees and thus maintain competitive advantage. Conclusion Performance management system assists in assessing the performance of the employees in an organisation. It is often conducted weekly, monthly or yearly in an organisation. The main objective of the performance management system is to gauge how the employees are performing in the organisation, offer them feedback and thus take measures to improve their performance. There are numerous performance evaluation tools used by the organisations such as traditional and modern methods. Choice of the performance management tool highly depends upon the size and strategy of that particular organisation. It is quite significant to make choice of optimum performance management tools so that the objective of the organisation is attained and performance of the employees can be improved. It has been observed that there are certain loopholes in the performance management systems of Lloyds Bank and Barclays Bank that tend to hamper the overall effectiveness of both the banks. Adequate attention needs to be paid on improving the performance management systems in both the organisations to attain the objectives in an efficient way. References Armstrong, M., 2006. “Performance Management: Key Strategies And Practical Guidelines”, Kogan. Iss: 3, pp: 1. Alexander, D. M., 2006. How Do 360 Degree Performance Reviews Affect Employee Attitudes, Effectiveness And Performance. Research. [Online] Available at: http://www.uri.edu/research/lrc/research/papers/Alexander_360.pdf [Accessed April 25, 2012]. Barclays, 2012. Barclays at a Glance. About Us. [Online] Available at: http://group.barclays.com/About-us/Barclays-at-a-glance [Accessed April 25, 2012]. Braam, G. J. M. & Nijssen, E. J., 2004. Performance Effects Of Using the Balanced Scorecard: A Note On The Dutch Experience. Long Range Planning. Vol: 37, pp: 335–349. Biazzo, S. & Garengo, P., 2012. Performance Measurement With the Balanced Scorecard: A Practical Approach to Implementation Within Smes. Springer. Chavan, M., 2007. “The Balanced Scorecard: A New Challenge”, Journal of Management Development. Vol: 28, Iss: 5, pp: 393-406. Censeo Corporation, 2008. The Value of 360 Degree Feedback. White Paper. [Online] Available at: http://www.censeocorp.com/downloads/whitepapers/the-value-of-360-degree-feedback.asp [Accessed April 25, 2012]. CIMA, 2005. Effective Performance Management with the Balanced Scorecard Technical Report. Introduction. [Online] Available at: http://esgp.istanbulsmmmodasi.org.tr/files/sources/17_20111215032009630.pdf [Accessed April 25, 2012]. DeNisi, A. S. & Kluger, A. N., 2005. “Feedback Effectiveness: Can 360-Degree Appraisals Be Improved”, The Academy of Management Executive. Vol: 14, Iss: 1, pp: 129-139. Gomes, R. C. & Liddle, J., 2009. “The Balanced Scorecard as a Performance Management Tool for Third Sector Organizations: the Case of the Arthur Bernardes Foundation, Brazil”, Brazilian Administrative Review. Vol: 6, Iss: 4, pp: 354-366. Hirschbichler, P., 2011. Implementation of an IT Balanced Scorecard: Theory and Application. GRIN Verlag. Horwitz, R., 2012. 360-degree Feedback. Introduction. [Online] Available at: http://www.leadership-vancouver.ca/documents/360BestPractices-Kwela.pdf [Accessed April 25, 2012]. Isoraite, M., 2008. “The Balanced Scorecard Method: From Theory To Practice”, Intellectual Economics. Vol: 1, Iss: 3, pp: 18–28. Keshav, S. & Sharma, R., No Date. Achieving Quality of Service through Network Performance Management. Abstract. [Online] Available at: http://www.cs.cornell.edu/skeshav/papers/nossdav98.pdf [Accessed April 25, 2012]. Lloyds Banking Group Plc, 2009. Our People. Performance Management. [Online] Available at: http://www.lloydsbankinggroup-annualreport.com/2008/businessreview/ourpeople/performance-management/ [Accessed April 25, 2012]. Lloyds TSB Group plc, 2012. Performance Management. Our People. [Online] Available at: http://www.lloydstsb-annualreport.com/businessreview/our_people/performance_management/ [Accessed April 25, 2012]. Manatt, R. P. & Benway, M., 1998. Teacher and Administrator Performance Evaluation: Benefits of 360 Degree Feedback. ERS Spectrum. [Online] Available at: http://www.georgefox.edu/education/resources/mentoring/Resources%20for%20Mentors/Teacher_Admin_Performance_Eval.pdf [Accessed April 25, 2012]. Management Today, 1998. UK: Performance Appraisal Systems Could Do Better. News. [Online] Available at: http://www.managementtoday.co.uk/news/411404/UK-Performance-appraisal-systems-better/?DCMP=ILC-SEARCH [Accessed April 25, 2012]. McCarthy, A.M. & Garavan, T. N., 2001. “360° Feedback Process: Performance, Improvement And Employee Career Development", Journal Of European Industrial Training, Vol: 25, Iss: 1, pp: 5 – 32. Nasir, M., 2012. Tradition Vs. Innovation- Who to Trust to Manage Your Wealth. Wealth Management. [Online] Available at: http://digest.deltaquestgroup.com/2012/02/tradition-vs-innovation-who-to-trust-to-manage-your-wealth/ [Accessed April 26, 2012]. Niven, P. R., No Date. Maintaining the Balanced Scorecard An Excerpt from Balanced Scorecard Step-by-Step. The Balanced Scorecard is Never Complete. [Online] Available at: http://www.exinfm.com/pdffiles/maintainBsc.pdf [Accessed April 26, 2012]. Niven, P. R., 2011. Balanced Scorecard: Step-By-Step for Government and Nonprofit Agencies. John Wiley & Sons. Pfau, B., 2002. “Does 360-Degree Feedback Negatively Affect Company Performance”, HR Magazine. Vol: 47, Iss: 6, pp: 1-6. Parker, T, R., 1998. Exploring 360-Degree Feedback Performance Appraisal. Abstract. [Online] Available at: http://www.usfa.fema.gov/pdf/efop/efo29061.pdf [Accessed April 25, 2012]. Sky News, 2012. Lloyds Banking Chief Gives Up Bonus For 2011. News. [Online] Available at: http://news.sky.com/home/business/article/16148470 [Accessed April 26, 2012]. US Office of Personnel Management, 2012. Overview. Performance Management. [Online] Available at: http://www.opm.gov/perform/overview.asp [Accessed April 25, 2012]. Zhang, Y. & Li, L., 2009. “Study on Balanced Scorecard of Commercial Bank in Performance Management System”, Proceedings of the 2009 International Symposium on Web Information Systems and Applications. pp: 206-209. Read More