Performance Management System of Colbran Medical Institute - Essay Example

?Introduction: In today’s competitive era successful businesses like Microsoft, Wall mart and many others have realized the importance of human resource management and thus, have shifted from traditional and old concept of personnel management to human resource management. Managing human resource is of vital importance not only for the well-being of the organization but for its profitability as well in the long run. Employees develop a sense of worth when they are considered as an important asset of the organization and are treated in a way that develops in them the sense of being most valued by their respective organizations. They tend to contribute towards their organization staunchly and scrupulously only when they are motivated, and their contributions are valued and appreciated by their organization. Valuing ones contribution and supporting their initiatives is possible only when an organization realizes its employees’ contribution in a way it should be realized. This is possible with proper implementation of an objective performance management system. Using objective measures of performance evaluation makes employees clear that organization follows procedural justice and rewards them according to their contribution. The end result of objective performance evaluation is motivation, commitment, encouragement, job satisfaction, and greater employee retention that contribute towards organization’s profitability in the long run. Moreover, with objective performance appraisal followed by good reward administration makes employees loyal and more committed towards their respective organizations. Thus, we can say that objective performance evaluation followed by performance appraisal accompanied with proper reward administration makes employees motivated and committed towards the organization. This paper focuses on the performance management system that will be suggested for Colbran medical institute in pursuit of removing its flaws in its current performance appraisal. Need for performance management system: Why organizations need performance management system is an important question. Most of the researchers argued that for unbiased performance evaluation, implementation of performance appraisal system is compulsory because it works by taking into account key performance indicators (KPI) and key performance results (KPR). When organizations communicate their employees the performance standards and key performance indicators clearly, that helps businesses in achieving competitive advantage because employees with a clear goal of what is expected of them, in terms of their performance, become more devoted and committed towards the organization. They tend to direct their behaviors in a direction that lead towards successful completion of their tasks. In addition to this, with management by objectives (MBO) and clear performance standards, employees get a clear track and set their individual goals in chase of achieving organizational objectives. According to Armstrong (2000), performance management is a shared process between employees and managers. In huge organizations, managers set clear objectives and performance standards, and communicate them to the employees so that they can direct their behaviors towards the accomplishment of organizational goals. However, the basic purpose of performance management as outlined by Armstrong (2000) is the establishment and identification of the means of getting better output or results at individual, team, and organizational level by communicating the performance standards and objectives clearly to each of the entity whose contribution towards the organization is considered as worthy and important. According to Philpott and Sheppard (1992), the fundamental goal of the implementation and establishment of performance management system is to develop an organizational culture that nurtures employees for continuous improvement of business processes and their own skills, knowledge, and abilities. Providence of a guideline and development of a working ladder is important. Organizations that pay special attention to their performance management system provide their employees with working ladders by developing smart goals and objectives. Keeping in view this, organizations should give ample time towards development of organizational goals. Performance management system: Before getting into the details of performance management, it is important to understand the literal meaning of performance. Performance is defined as execution or carrying out of certain activities. Performance management is defined as an ongoing process of communication between supervisor and employees that occurs throughout the year for the purpose of achieving strategic objectives of the organization. Communication involves clarifying expectations, setting objectives, clarifying goals, providing feedback and evaluating results. This shows that what is critical to the performance management system is actually communication between managers and employees. Until and unless the intended goals, objectives and performance expectations are not clear to the employees they cannot work in a way they are supposed to be. Through involvement in the process employees become more committed towards the organization. Keeping in view this, there are several components of performance management system that describes and communicate the process in detail to the employees but before getting into components we are concerned with the guiding principles that governs the system. Principles of performance management system: According to IRS (1992), following are the principles of performance management system: It translates the organizational long term objectives and strategies at divisional, individual and department objectives thereby clarifying the organizational goals at every level. It is a continuous process and is based on the shared understanding of goals and objectives and how well they can be achieved at every level. It fosters two-way and open communication between supervisors and their subordinates so that self-management of individual performance can be attained. Individual requires continuous feedback in well-established performance management system. It requires transparency so that the individuals can scrutinize the basis on which their performance is evaluated. These are the principles that are required to be put into practice if organizations want an efficient performance management system. Components of performance management system: Some of the important components without which the performance management system cannot be practiced in organizations are as under: 1. Strategize: According to Eckerson (2010) organizations before developing performance management system decide on vision, mission, long-term and short term objectives of the organization. They need to develop smart goals that are after their development communicated to the employees at individual, team and divisional level. It is important for the organization to decide upon these major aspects as they provide guideline and track to each and every member of the organization. However, this is done by translating organizational strategy into short term and long-term objectives and also by identifying key performance indicators (KPI) that act as drivers for business success. The key performance indicators for any business may be for example customer satisfaction that is measured with customer satisfaction score or no of units produced. These drivers provide objective measures for performance evaluation. In addition to KPIs organizations should identify key result areas so that they can measure the desired outcome against set standards. 2. Performance planning: Planning plays an important role in business world and almost every business function requires proper planning. According to Baron and Armstrong (2005) performance planning is about setting the direction, performance agreements and developing personal development plans. It incorporates what is to be done, how is to be done and what is to be achieved. It is concerned with developing people, supporting them for innovation and creativity and developing them in a way that they can use their skills at their best for achieving success now and in the future. 3. Defining expectations: As performance management is a two-way and open communication process between managers and employees, it requires defining performance expectations in terms of goals and objectives. It deals with issues like clarity of objectives to the employees at all levels, time horizon for carrying out activities, mutual agreement on performance expectations set and objectives identified and clarifying the employees about the standards on the basis of which their performance will be reviewed. 4. Measuring performance: After the performance expectations have been identified, the performance is measured against set standards and performance expectations. Performance assessment can be done quantitatively and qualitatively i.e. it can be on the basis of KPI or on the basis of desired behaviors and their outcomes. However, at times it happens in organizations that performance assessments are biased and unfair and for this reason theorists have laid great stress on using objective measures for assessing and measuring performance of the employees at all levels. For measuring performance, the criteria on which the performance is most likely to be assessed should be made clear to the employees during planning process. 5. Reviewing performance: According to Baron and Armstrong (2005) performance management is a continuous process and that is why there should be proper performance reviews at least twice in a year. Performance review is helpful because it signals about any modifications or changes required in objectives established and identified by mutual consensus of supervisor and subordinate. It basically answers the questions that where we need to get to and where we are currently standing. Performance review is done in performance review meetings that are held at least twice in a week. It provides information about areas that need development and more concentration or change in strategy of achieving them. Providing feedback: Feedback helps in the identification of development areas and recognizes achievements. It is always backed by some evidence. It is provided on the basis of events, results, achievements, critical incidents and important behaviors that have affected performance in a specific way. It is always based on facts and is not based on opinion that is why it tends to be objective rather than being biased. 6. Performance Rating: Powerful performance appraisal tools are used are rating the performance of an individual. Proper justification of using a particular tool for rating the performance is not given to the employees and it depends entirely on the human resource department. However, with flaws in few of the performance appraisal methods, sometimes it fails to give clear picture of one’s performance rating and in that case managers have to justify. Proper performance appraisal meetings are conducted in which employee’s performance rating is discussed in detail. After performance appraisal HR department makes decision regarding reward administration in the form of pay increments, bonuses and promotions. Retrieved from http://www.pdri.com/TMA/performance.htm Case Study Analysis: After understanding performance management system into detail our focus of discussion will be case study analysis of Colbran medical institute. Overview: From the case study of Colbran medical institute it is evident that there are certain issues with performance management system and performance appraisal of employees. In this particular institute all employees are rated as excellent and above average, while the outside HR consultant considers it as a flaw that has occurred because of the use of inefficient and unsuitable performance appraisal tool. Problems: Following are the problems identified in performance appraisal system of Colbran Medical institute: All the employees were rated as excellent or above average which shows that there are few errors at the appraisers end like leniency or central tendency. There are no set standards against which performance is measured and evaluated which signals that institute has no formal performance management system. The organization is using graphical scale method which is more appropriate if the performance standards are quantitative in nature. The organization fails to provide narrative arguments in support of the rating given to the employees as graphical rating scale does not allow narrations. Fails to identify flaws in employees’ performance. Importance of performance management system for institute: Organizations achieve high performance levels only when their employees are committed towards the organization. Commitment of employees is difficult to attain but however, there are three important factors highlighted by Beer and Foote (2009) that contribute a lot in making people committed towards their respective organizations. These factors are performance alignment, psychological alignment and capacity for learning and change. Three pillars: Performance alignment refers to the fact that whole of the organization’s system i.e. its people; culture, values, structure and systems are aligned with organizational goals and objectives. Once organizations align everything with their strategy they can easily direct the behaviors of the individuals towards desired performance. This is required by Colbran medical institute to strategize them in order to align individual performance with organizational goals. Once this alignment has been made organizations need to move towards psychological commitment which is about attaining emotional attachment of individuals towards at all levels towards organization’s mission, vision and values. Their emotional commitment will bring tremendous success not only to the organization but creates self-management of goals among individuals. This very institute lacks this aspect and needs to concentrate on it if it has to achieve high levels of performance and this can only be possible if it provides enough room for change and learning. Performance management: It is important to ascertain that what makes an organization success driven. Most of the theorists as suggested by Stiffler (2006), it is the performance management that drives an organization towards success. He argues that everyone in the organization starting from top level managers to the bottom line employees should realize the importance of performance management and strive hard towards implementing it in its true sense. This aspect was largely ignored by Colbran medical institute as they did not pay attention towards the establishment of performance management system. They rated the performance of the employees without communicating any standards and mark all of the employees as excellent which is a greatest flaw in itself. Performance measures: After the development of these three pillars organizations should move towards defining performance measures as pointed out by Cummings and Worley (2008). This was the major issue with the medical institute under study as it did not specify the performance measures and ranked everyone as equal without using any criteria. Performance measures set criteria against which performance is measured and in the absence of these measures an organization will obviously face issues of central tendency where everyone is marked neither too below nor too high resulting in average ranking without recognizing individual contribution. Performance appraisal: As highlighted by Jackson and Mathis (2007) performance appraisal provides detailed information regarding their future development. It is the process in which employee strength, weaknesses, training needs and development areas are identified and supervisors discuss each and everything related to employee performance, training needs and future development plans in detail. This aspect was largely ignored by medical instate as the appraisers appraise the performance of all employees as excellent and did not identify any flaws in their performance and rated all of them as excellent. They neither identified any training needs nor any development plans and did not rated their performance objectively which is the biggest flaw. Proposed solution: Keeping in view all the flaws highlighted above in the light of literature there is a need of a solution to solve these issues. In view of these issues I would like to change the performance appraisal system of the medical institute and want to replace it with behaviorally anchored rating scale (BARS). Reason for selecting BARS as performance appraisal tool: Selection of BARS is made on the basis of performance measures, type of jobs being evaluated and the nature of organization. As the performance measures in medical institute are most likely to be qualitative in nature like hospitality, attitude towards students, teaching methods employed, grading methods and time of returning assignments. If we analyze all these aspects we come to know that these are entirely qualitative dimensions and are more behavior oriented instead of results oriented. That is why I have chosen BARS as a new appraisal tool instead of Graphic Rating scale. BARS: BARS consist of vertical bars that explain performance dimensions identified through job analysis. Bohlander and Snell (2009) suggest that none of the appraisal methods reduces errors however; bars are considered as one of the most accurate appraisal methods. Advantages of BARS: Advantages associated with using BARS as highlighted by Hitt (2008) are as follows: Describes the behavior rather than abstract qualities Reduces the chance of manager’s biasness Scale is tied to the description of specific behaviors rather than description of ambiguous terms. Excess specificity does not ensure that the rating is comparable across different raters. Disadvantages of BARS: Following are the disadvantages that are highlighted by Stephen (2008): It is time consuming It is difficult to develop People might change their behaviors when they know that someone is observing them. BARS scale for cognitive abilities: For the purpose of providing an overview that how BARS scale is developed is as follows: Retrieved from www,Matheson.com Recommendations for Colbran Medical Institute: Following are the recommendations given to the Colbran medical institute: They can attain competitive advantage by strategizing themselves in a way that they should clear organizational long-term and short term goals clearly to the employees at all levels. They should carry out proper planning with the consent of employees and should clear all the criterions used for their evaluation. They should develop key performance indicators (KPI) and performance standards to make employees clear about the dimensions of their performance evaluation They should promote open communication between higher officials and lower level employees so that they can have a clear idea about what is expected of them in terms of their performance. They should appreciate employees for their initiatives and imaginations that they provide to the performance management system. They should conduct performance review meetings in order to review the performance of each and every employee against set standards. They should develop a rating scale that is behavior oriented and focus on key performance indicators (KPI). They should give special attention to their reward administration policy and should reward employees according to their performance. Conclusion: Huge and successful organizations have realized the importance of human resource management for managing their employees. Most of the organizations are increasingly incorporating an aspect of managing employees at their best in order to derive best results and tremendous benefits. This has gained importance because organizations have now developed a perspective that they cannot achieve competitive advantage until and unless their employees are motivated. Thus, concluding this paper we see with the help of case study that even small organizations need to develop objective and sound performance management system for removing flaws and for directing individuals’ behaviors towards organizational goals and strategy. Developing objective performance measures and standards help organizations to evaluate organization’s performance against set standards. Clarifying organizations strategic objectives, performance expectations, appraisal techniques and reward administration develops mutual understanding among employees and supervisor about organizational goals. Managing organizations by setting objectives and standards with the consent of employees develop in them a sense of belongingness towards the organization thereby increasing their commitment to the organization. Thus, organization for the sake of becoming market leader and grabbing market share should consider its employees an important asset and works for their satisfaction as they are the key contributors towards organizational profitability. Bibliography Armstrong, M. (2000) Performance management: key strategies and practical guidelines., 2ND ed., Kogan Page Publishers., London., UK. Armstrong, M. and Baron, A. (2005) Managing performance: performance management in action., 2nd ed., CIPD Publishing. Beer, M. and Foote, N. (2009) High commitment, high performance: how to build a resilient organization for sustained advantage., John Wiley and Sons., United Kingdom. Bohlander, G. & Snell, S. (2009) Managing Human Resources., 15TH ed., Cengage Learning., USA. Cummings, T.  Worley, C. (2008). Organization development & change., 9th ed., Cengage Learning., UK. Eckerson, W. (2010) Performance Dashboards: Measuring, Monitoring, and Managing Your Business., 2nd ed., John Wiley and Sons., Hoboken., New Jersey. Hitt. (2008). Management., Pearson Education India. Jackson. J, Mathis, R. (2007) Human Resource Management., Cengage Learning., USA. Stephen, R. (2008). Management., 9TH ed., Pearson Education India. Stiffler, M. (2006). Performance: creating the performance-driven organization., John Wiley and Sons., Hoboken., New Jersey. Read More