Employee Performance Appraisal & Mitivation and Incentives - Essay Example

PERFORMANCE APPRAISAL & MOTIVATION AND INCENTIVES Contents Introduction 3 The Process of Performance Appraisal System 3 The Objectives of Performance Appraisal 4 Methods and Tools Used by OIC 5 Reference 1 5 Reinforcement Theory 6 Reinforcement of Undesired Behavior 6 Importance of Reinforcement Theory 7 Arguments for Reinforcement Theory 7 References 2 8 Introduction Performance management is one area of HR which is most difficult to implement that is why probably it is called Achilles’ heel of human resource management. This is one area which is least appreciated by employees and a major source of dissatisfaction. It is a key area through which organization not only gets the work done but communicating expectations and driving employee behavior towards goal achievement. It helps identifying under performers and developing them accordingly. The general perception about performance appraisal is that it is a necessary evil, on the contrary if done correctly it helps in implementing organization strategy by communicating that is important for organization and driving employees in achieving the defined goals. The company I have chosen for studying performance appraisal system is UAE is Oman Insurance Company (OIC). It is a leading insurance company established in 1975 in Dubai. It is a huge company whose total assets are in excess of DH 3.2 Billion and paid up capital of DH 243.75 Million. It provides its customer with a variety and type of insurances and the security they need. The Process of Performance Appraisal System The process of performance appraisal system in OIC consists of the following steps. Predesigned performance appraisal forms are distributed to respective line managers before the end of the year. The performance appraisal form contains various key success factors that have been identified for the performance of a certain position. These key success factors include both capabilities and competencies personal and work related. Managers fill these form by ranking the employees on a scale of 6-10 based upon performance throughout the year, where 6 being lowest and 10 highest. The line manger has discussion with the employee about the ranking identifying his strengths and weakness areas. Employee can give his own opinion as well and ask to change his rankings. If line manager disagrees he can contact HR manger. Based upon the performance appraisal the development plan of employee is formulated by the employee and the line manager in the form of SMART objectives for the next year. After developing the career path for the employee the action plan to achieve those goals e.g. training etc. are decided. In the end these filled forms are sent to the HR manager, who updates the file of each employee for appropriate action such as compensation and benefit etc. The Objectives of Performance Appraisal The objective of the performance appraisal system at OIC is to align various HR activities and company strategy. SMART objectives are defined as a tool to achieve goals. Objectives should be specific, measurable, attainable, relevant and time bound. They contribute to the success of principal responsibilities and connect teams; department, division and broader company goals. Competencies define job behavior. What knowledge, capabilities, behaviors and actions are desirable for goal achievement? At OIC performance is only considered successful when the desired end results of a job are accomplished and the employee behavior is in consistency with the company’s core value. Employee performance is rated in four basic categories and they are exceeds expectation, meets expectation, needs development and unacceptable. It helps in aligning the reward policy of OIC with performance appraisal and hence reinforces desired behavior in employees. The performance related incentives motivate employees to maximize their performance and hence achieve their goals and company objectives. Methods and Tools Used by OIC The method used by OIC for performance appraisal of its employees is Management by objectives (MBO). MBO revolves around clear identification and communication of specific goals so that employees understand what is expected of them. It includes identification of key result areas of the job and corresponding skills and actions. Once an objective is agreed MBO method requires self audit to identify skills needed to achieve this objective. Development of action plan for goal achievement and modification of objectives in consultation with supervisors throughout the year helps manager supporting the employee in improving performance. It ensures performance monitoring and periodic feedback and annual performance review. In the MBO method not only the goals of an employee are aligned with the company objective as part of strategic human resource management but it also helps in ranking the core competencies requires in each employee so that the strengths of each employee can be identified and the development plan for each employee can be developed based upon the strengths and weaknesses of the employee and the future and present requirements of the OIC (Ahmed et al 2007). Reference 1 Ahmed, M. B., Dablan, Duaa I. (2007) The role of the appraisal system in developing employees' performance: the case of Oman Insurance, eTQM Working Paper Series. Pg 16-21 Reinforcement Theory A theory for improving employee motivation is reinforcement approach. This theory establishes the link between employee behavior and its consequences by modifying followers’ on the job behavior through the appropriate use of reward and punishment. According to this theory there are two types of reinforcements. Positive reinforcement is used to reward the desired behavior whereas negative reinforcement is used to punish the undesirable behavior. According to this theory through this reward and punishment system an organization can motivate employees to indulge in the desired behavior that is beneficial not only for them but for the organization as well and ultimately extinction of undesirable behavior (Daft et al 2008). Reinforcement of Undesired Behavior Sometimes organizations mistakenly reinforce the undesirable behavior at workplace. The classic example of such negative reinforcements is in project management when sometimes individual performance is positively reinforced that has a negative impact on teamwork. For the success of any project, ability to collaborate and work in team with cooperation is the most essential requirement. It brings synergy of work that is beneficial for the organizations. In an attempt to reinforce positive behavior some organizations reinforce individual performance instead of team performance that leads to reinforcement of undesirable behavior of individualism. That is undesirable behavior for the success of a team and the organization as well (Robbins, 2009). Importance of Reinforcement Theory The reinforcement theory is very important in behavior modification. It is argued that when a desirable behavior is reinforced it is most likely to recur and the chance of recurrence of undesirable behavior is reduced when it is negatively enforced. The example of such behavior is coming late for work. One form of negative reinforcement is withholding the negative consequence when a desirable behavior happens. If an employee is saved from punishment for coming on time for work it positively reinforce the desirable behavior of coming on time for work. In the same manner if the employee is punished in monetary terms e.g. for arriving late it is negative reinforcement of undesirable behavior. It helps in maintain punctuality at work place (Nelson, 2008). Arguments for Reinforcement Theory I am in favor of reinforcement theory. It is a very effective tool for behavior modification in the organization. An appropriate use of positive and negative reinforcement can help in encouraging the desired behavior and the reduction of undesirable behavior for organizational success. Positive reinforcement of desirable behavior through incentives keep the employee motivated and improves job satisfaction that results not only in the increased performance of the individual employee but also enhances organizational performance and chances of growth and success. In the similar manner negative reinforcement helps in elimination of the undesirable behavior and promotes healthy organizational culture. References 2 Daft, Richard L., Lane, Patricia G. (2008) The leadership experience, USA: Thompson South Western Robbins, Stephen P. (2009) Organizational behavior: Global and southern African Perspective, Cape town: Pearson Education Nelson, Debra L., Quick, James C., (2008) Understanding Organizational Behavior, USA: Thompson South Wstern Read More