Performance Appraisal System of KFSCHR - Case Study Example

 Performance Appraisal System of KFSCHR Executive Summary This study reviews whether there is a need to change or update the existing performance appraisal being used by the King Faisal Specialist Hospital and Research Center. Under the present environment of technological and communication advances, there are many changes noted in the use of the traditional system. The study also shows that the PAS of the KFSHRC is not consistent with the social and cultural idioms of the hospital as it is patterned after the American environment which is totally different from that of Saudi Arabia. Data gathering from published literatures, studies and opinions of noted authors is done to amplify the recommendation and conclusion that an update is needed under the circumstances. Findings of the study can also be used as references by the Organization and Management in their future undertaking of performance management of the hospital. A REVIEW OF THE PERFORMANCE APPRAISAL SYSTEM AT KFSH&RC Introduction. The KFSHCH appraisal system has been developed by the hospital in 1988. It is a system based on the American Appraisal system that has been adopted by the hospital in 1975. The pros and cons of the present appraisal system of the hospital are reviewed to determine if there is a need to update or replace or the PAS totally. First part of the study presents the overview of the KFSCHR, the present performance system and its benefits. Second part of the study presents a review of literature that includes the criticisms, studies and researches that argue about instituting new measures of performance evaluation of employees and gauging employee job satisfaction. Purpose of the Study: The purpose of the study is to review the application of the Performance Evaluation System in the KFSCHR and to find out the need for replacement of the system or an updating of the present one. Research Methodology Research Design, data collection strategy and research instrument. This will be a descriptive research that will make use of published researches, studies and opinions of respected authorities on the discipline. It intends to answer why or why not an employee performance appraisal system is needed in KFSCHR. Data collection and research instruments will be gathered from books, reviews, articles and internet sources. The research will include review of studies done along the line and to incorporate a view to justify the need for further implementation, review of the present system and to align information gathered to the PAS of the hospital. Findings from this research will provide information for further use of the system in the KSFCHR management. The study will address the following research questions: Does the PAS of KFSCHR effectively meet the reasons why it was created? Are the objectives of the company for the program fully satisfied by the implementation of the PAS? Is the morale of the employees improved by the PAS? Findings of the research will also have an impact to current method being used by the hospital and will show if there is a need for updating or change. The PAS manual in use by the hospital will be the basis of evaluation and will be analyzed as to its propriety based on the existing literatures and concluded studies. Limitation: The study will be limited by the existing researches and studies done for KFSCHR which means findings may not be used to generalize other conditions in other hospitals. In addition, study will provide descriptive findings only. Part 1. An overview of the KFSCHR The King Faisal Specialist Hospital and Research Center is an 894-bed tertiary hospital and is considered as one of the leading healthcare institutions in the Kingdom of Saudi Arabia. KFSCHR has a mission to provide highly specialized nature of medical services and to promote medical research and education programs that includes postgraduate education training. It also seeks to contribute to the prevention of disease. It has a vision of becoming a world leading institution of excellence and innovation in health care. (“Mission Statement” 2008) A separate mission and vision has been adopted for the Human Resources of the hospital, which is stated as: “HR is committed to have the ultimate accountability by providing effective and appropriate resources to both management and employees.” It envisions in “becoming a recognized leader in human resources and organizational development.” (Mission Statement) Among the medical services provided by KFSHRC are Anesthesiology Dentistry Emergency Services Family Medicine Medicine Nutrition Obstetrics and Gynecology Pediatrics Radiology Pathology and Lab Medicine Surgery Physical Therapy Source: “Assessing Kingdom of Saudi Arabia’s….” The Performance Appraisal System in KFSHRC and PAS manual The performance appraisal system and manual has been developed by the HR Department of the KFSHRC in November 1988, for the purpose of assessing staff development and progress. The process also makes it possible for managers to identify employees who need further training and improvement. By initiating a scientific method of evaluation, avoiding generalizations and haphazardness, the employees are assured of fair treatment in the PAS. PAS also encourages and motivates employees to do their best by reviewing performance over the past year. (Jabbar, 198 8) The management believes that PAS is a continuing process, and as such, has issued an instruction to all the supervisors about its implementation, requiring their active participation in the program. Supervisors are required to make comments during the implementation, so that proper updating will be done in the process PAS covers the medical staff, scientists, specialists, paramedical, nursing administrative support, technical vocational and labor staff of KFSCHR. PAS shall be for a period of one year, beginning from the effective date of the employee’s hiring and continues up to the end of the contract year. The PAS should be submitted to management three months before the expiry date of employment contract. Under the system, an appraisal of employee performance is done on the following cases: At the end of a probationary period Upon transfer Upon promotion Upon suspension (usually in a long period of suspension) Before re-contracting KFSCHR manual indicates that the sources of the PAS report should come from the Department Personal File, notes recorded by the supervisor, and from any other sources that will help the evaluation to be more accurate. The last items in the PAS are the criteria for assessment which are the ratings and its definitions. Accordingly, it is arranged as to whether one has achieved outstanding, excellent, average, below average and unacceptable performances. It will be the responsibility of the personnel services as specified in the manual to keep the PAS and to provide assistance to the various departments of the hospital as to the completion of forms, job definition of duties, responsibilities and required traits. Benefits of the PAS The employee performance appraisal system is an accepted system being used by companies worldwide. In a survey conducted in 1989 by Cleveland and Associates, cited in Murphy et al. (1995) showed that 71% of the respondents used the PAS moderately to extensively for “between-person decision”, like pay and promotion; and for “within-person decision” e.g. feedback. It is said to be important not only to the employees but also to the companies as well as in fulfilling its goals and objectives. According to Lawrence (Nov. 2004), there are several benefits to be derived in having a PAS, such as providing an opportunity to “effectively address performance problems, and to improve employee morale” . PART 2 Review of literature The traditional performance appraisal has been the tool used by management in measuring employee performance for many years. It has been observed in many researches that this system is being used for personnel decisions to motivate personnel, to determine the need for further training, to give incentives for increases of pay, promotion, and other personnel needs such as transfer, hiring or firing. Recent observations, however, bring out controversy of just how effective has been the use of the performance evaluation system. Researchers agree that there is a need for an employee evaluation, but they have drawn quite different conclusions in addressing the following questions: Is organizational commitment and job satisfaction related to employee performance? What are the implications of these questions to the performance appraisal system? This review of literature on PAS focuses on the above questions. Is organizational commitment related to employee performance? By definition, this is a commitment of the organization as shown in its goals and objectives and is demonstrated by its actions and allocation of its resources, while on the part of the employee, it is the degree of its commitment within the organization. (Business definition, n.d.). The degree of employee commitment has been described by Meyer and Allen (1991) as cited by Brown (2003) as being affective, continuance and normative commitments. Affective commitment is a kind of concern wherein an employee has an emotional attachment, identification and involvement with the organization. Continuance commitment, according to source, is when an employee considers the cost of leaving the organization, and has to stay because he has to do so. And finally, the normative commitment is a feeling of obligation that an employee has to continue working in the organization. In retrospect, the conclusion of several studies proved that the above commitments in organization are related to employee performances. For instance, Bryant et al (2007) found that affective commitment is positively connected with peer mentoring, while normative and continuance commitment is negatively associated with professional commitment. Affective commitment was also found to be more significant than other commitments in the study of 238 nurses conducted by Cohen (cited by Brown, p. 31). This means that these nurses remained with the organization because they wanted to and that they are more likely to show higher levels of commitment to their work, their job and their career. A similar study done by Sajid Bashir, et al (2008) showed that IT professionals’ organizational commitment is correlated with work opportunities while job characteristics do not. Is Job Satisfaction related to work performance? Job satisfaction is the contentment arising from the employee’s positive feeling about his/her work, while the reverse is experienced by someone who is dissatisfied with his /her work. Williams (2004) defines job satisfaction as “the extent to which people like (satisfaction) or dislike (dissatisfaction) their jobs. This definition of Williams is a generic sense of affective reaction that individuals have concerning their job. To him, job satisfaction is related with other job factors that include “co-workers, pay, job conditions, supervision, nature of works and benefits” From this definition, we gather from Murray’s work (1999) that job satisfaction is correlated with five factor model of personality in the workplace. These are motivation, deviation, job satisfaction and teamwork. Murray’s research indicated that consciousness, agreeableness, and extraversion provides job satisfaction while “neuroticism is negatively correlated with job satisfaction” A satisfied employee, in general is seen as someone who remains in the position and avoids absences, Murray said. Job satisfaction or dissatisfaction is also related with other factors such as those specified by Murray, as when one’s job reconciles with one’s skills, training, and education. Calahan (2008) adds values and personality as factors of job satisfaction. For instance, Calahan cited instances when an employee accepts jobs because of dire need and that does not necessarily matches his skill, health and personality. Often enough, the because of mismatch of jobs, employee experiences stress and does not stay long on the job. Shree (2009) cited mismatch of jobs, among others, as reasons why employees quit their work. Job reconciliation is also related to career pathway and career path as a criteria for employee growth, career track advancement and ultimately to job satisfaction. What is a career pathway, and how does it helps in the employee growth and development? Career pathway is the unique pathway one chooses to reach one’s goal and one way of avoiding job mismatch. Usually, it involves completing non-formal or formal education, developing a skill, and having an experience of education of training, community and personal life. Career path is defined as a “planned, logical progression of jobs within one or more professions throughout working life.” (Business definition. *n.d.) As such, it can be planned in accordance with the stability of market conditions and little change. Job satisfaction also speaks about motivation, incentives and reward as a way of satisfying employees. Motivation has been defined by McFarland (1974) as a ‘way in which urges, drives, desires, aspirations, or needs direct, control or explain the behavior of human beings.” (p.540) There is considerable evidence that job satisfaction is tied up with compensation and reward. Katusak (2008) findings showed awards in the form of money or tangible awards increased employee performance by an average of 22 percent, while teamwork performance was up by 44 percent. His study also concluded that “payment by objectives” generated a more positive result, as in the quota based incentives. According to the research, the piece-rate program of doing more of something had positive results because everybody has a chance of success; while the tournament-based programs had negative impact on employees. What are the implications to the traditional PAS implementation? At this time where the use of the traditional performance appraisal system is being questioned, and job satisfaction is measured by management tools, it will help us understand factors that lead to an effective performance evaluation. Pointing out to factors that lead to changes in the traditional appraisal system being held in common suggest that there is a need for an update of the present appraisal system of the KFSCHR. The Performance Appraisal system is the subject of arguments saying that “Is it time to abolish the performance appraisal review?” Several studies and authors have questioned the applicability of the appraisal system today. Williams (2010) and Fandray (2001) both provided criticism on the use of appraisal system. Williams criticized the traditional performance appraisal system being practiced by many companies as being “flawed and incongruent with values-based, vision-driven and collaborative work environments. Fandray viewed the matter saying that annual employee performance is being replaced by new process of feedbacks and assessment Fandry agreed to this saying that the traditional system used to be the unquestioned way of appraisal wherein employees and supervisors sat down for an annual evaluation which is tied up to a ranking system. Fandray said that nobody liked the system, but it persisted under the “old command of style of organizational leadership” and this was used as a perfect appropriate “model of measuring performance.” But with the technological changes and improvement, the present set up of work place is towards teamwork, shared leadership, and an on-going struggle to retain qualified employees. Thus, critical authors believed that the PAS is falling out of place and that there is a need for a re-thinking of new approaches to employee evaluation. Discussions and analysis. The Pros cons of the appraisal system The early system placed emphasis on the role of supervisors over the subordinates. The weak points in the traditional system depict the trait of weaknesses of subordinates and strengths of superiors that exercised coercion and threat over him in ways that placed all the blames on him. (McFarland, 442)). Under this system, the hopes and frustrations of employees are crystallized when the supervisors are not properly trained to monitor, interview and grade the subordinates. . In many cases, as Lawrence (2004) points out performance evaluation results are used as evidence in wrongful termination cases. Furthermore, Lawrence insinuated incidences when a supervisor exercises personal bias into the employee evaluation wherein conflict starts. Conflicts in performance evaluation and bias values Biases become the cause of conflicts in performance evaluation. As normal human beings, biases cannot be avoided, but there are common biases identified in the study of Bacall, R. (2008). Study said, bias is created as a “halo effect” when raters give a high and low rating to employees in certain areas because it is inaccurate and too “general”. Result according to source does not develop the employees. Further still, rating someone low creates “a devil effect”. Often enough, standards ratings used in PAS are categories such as fair, good, excellent, etc., whose interpretations differ from person to person. Bacall suggested in the study that these categories should no longer be used as they do not provide sufficient information for development of an employee. Other imperfections here as noted from the study is the tendency to rate everyone as an average performer and avoiding to rate someone high or low; to rate someone based on most recent performance, neglecting old performances; the tendency to rationalize why someone must be rated higher; ignoring the fact that non-performance was caused by opportunity beyond control; and lastly, when someone fails, it is his own error, and does not consider the system that caused it. Conflicts in the appraisal system also exist in the purpose of its usage. For example, according to Cleveland, et. Al, (p. l07) conflicts arise between the rate, rater and the organization when it is used for multiple purposes in the organization such as promotion decisions and feedbacks. Conflicts in Appraisals towards poor performance (disciplinary action) and management of problematic employees. Conflicts arise when disciplinary action is needed to control problematic employees. On this view, McFarland, (p.410) feels that most executives favor positive means of control, but somehow, when employee’s faults reach a point where positive measures are not possible, the negative measures of control are tried with problematic employees. For example, a laboratory technician in the hospital is a habitual absentee and does not feel restrained even there is a report on his behavior. His supervisor at this point may invoke censure thru an oral or written reprimand. The employee’s lack of improvement may cause his dismissal or termination from the job. The new thinking of management appraisal The new thinking of appraisal is by veering away from judgmental or reward system and personality oriented approach and doing appraisals through the Management by objective approach. The philosophy behind this, as McFarland contends (p.443) is that it applies sound psychological principles of man-boss relations and that it eliminates the subjectivity and emotion to an objective analysis. Under this set up, a mutually selected target is used as a standard for evaluation. Individual performance and system performance What is a selected target? As differentiated from the traditional rating system, an MBO is a performance system that specifies clearly targeted goals that is communicated to the subordinate. Throcknorton (2000) said people become more productive when they have clear goals, expectations and feedback. As noted in this study, when the reason is fully understood by the employee, they will use it as a link to grow and add value to the company. Throcknorton said that employees give value to growth opportunities and meaningful work, and thus become motivational factors in staying on their job. Recommendation and Conclusion Based on points raised by different authors from concluded studies, there is a need to evaluate the present system of employee appraisal of the KFSCHR. The system being used is found to be inconsistent with the social and multicultural aspects of the hospital because of cultural differences of America and Saudi Arabia. The traditional process of performance evaluation has been seen to contain many flaws as it creates biases, false hopes and generates frustrations, thus, the PAS fails to improve the morale of the employees. The process of employee appraisal in many organizations as shown in several studies have already adopted a different framework that uses strategic management and planning in their process. It was also proven that although monetary incentives motivates employees to work harder, there are also other ways that becomes motivating factors for employees to stay on their job, perform well and do their work in accordance to the goals set by the company. The rating factors that describes employee performances as either high, average, or low, and excellent, satisfactory, etc. have been found in the study to be non-descriptive of the actual behavior of the employees and are recommended for phase out. In this sense, generalizations through pre-set ratings of employee performance is not consistent with the objectives of the KFSCHR of becoming a leader in organizational development because of the flaws in the system. At the point where job dissatisfaction prevails, Murray’s observation of consciousness and agreeableness should be used and job reconciliation should be done in a manner of an audit of performances. On this, what follows is the need to identify key accountabilities for a particular position that could be the basis for hiring, transfer, training or retraining of an employee. Findings of the study are further strengthened by the key recommendation of the Organization and Management Department of the KFSCHR (2001) to review the performance appraisal system being used by the hospital. Findings could serve as reference in the updating procedures of performance appraisal, and as a recommendation, no company should be exempted from having one. In this context, based on the reviews gathered the PAS of the hospital is recommended for evaluation, taking into consideration views expressed herein that is needed to update the content of its appraisal program. List of References “Assessing Kingdom of Arabia’s hospital performance using a balanced scorecard”. 2008. SaslehAlthuanian Paper 57. 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