Business Ethics and Solutions Related to Performance Management - Essay Example

? Business Ethics Introduction This paper is an attempt to look briefly at performance management and many ethical concerns regarding the same. The paper will start with brief introduction of performance management, which would be followed by various ethical problems, and their possible solutions related to performance management. Discussion Over the past few decades, due to globalization and other related factors, the market place has become an extremely competitive arena. It appears to be following the same rule, which human societies were following thousands of years ago and that is of “survival of the fittest”. Throat cutting competition and desire for growth is pushing companies to make every possible effort to improve their performance. It was during the 1950s when experts used the term “performance management” to refer to the systematic and controlled process with which organizations would monitor their performance in order to achieve their goals effectively and efficiently. Today, performance management is a crucial part of every big organization. Despite the fact that the Human Resource Departments are usually responsible for conducting the performance management functions and activities, entire organizations contribute to the process to make it successful (Dresner, pp. 214-219). There are five major pillars of performance management. First, planning the goals and objectives and deciding on the expectations. Second, performance management, as mentioned earlier is also about having a check and balance on the performance of the organization and its employees. Third, performance management also binds managers to ensure that there are enough resources available at the disposal of the company, departments, and employees to achieve those goals. Fourth, with the help of balance scorecards and performance appraisals forms, performance management also requires managers to rate and evaluate the performance of individuals and groups. Fifth, lastly, with different pay systems of contribution-based pay, performance based pay, skill based pay and others, and it rewards and appreciates employees for their performance (Cardy, Leonard & Newman, pp. 85-89). Managers all over the world are realizing that many decisions and processes required for performance management necessitate upholding of high ethical and moral standards. These ethical dilemmas are everywhere in the system of performance management. It becomes even more important to answer and address because many decisions concerning the future of the company and the future of its employees, remains depended on these performance management decisions. Companies use this data for recruitment, selection, layoffs, terminations, promotions, bonuses, pay increases, rewards, demotions, and others (Cardy, Leonard, & Newman, pp. 85-89). One ethical question, which comes up during the performance management of companies, is the fact that whenever companies manage performance of their employees, they are well aware of the fact that the element of “bias” is embedded deeply in the system. Experts have pointed out many forms of bias, which are present in the system when employees are being rated. First, leniency error when the rater or the manager has the tendency to be lenient, nice, and kind to all the employees because he knows that these ratings would probably decide their future. Furthermore, in order to keep harmony within the group or the department, to gain support, to avoid any tensions or confrontations, managers also try to give above average ratings to all the employees. Second, central tendency error occurs when managers do not want to give very high or very low ratings to anyone. Many managers know that their high and low ratings would force employees to ask them a series of questions, explanations and proofs and the best way to avoid that conversation is by giving them all average rating (Luecke, Hall & Harvard Business School, pp. 321-324). Third, halo effect occurs when managers fail to evaluate the employees objectively and wholly and rate them on the basis on identifiable, prominent, and obvious good or bad quality. For example, a manager may rate a well-dressed, courteous, well-mannered, and polite employee with a B plus even when his performance deserves not more than a B minus (Dresner, pp. 214-219). Another example could be of an employee who is an expert in his field, always achieves his target but is always late due to family issues and misses out the starting sessions of many meetings, which seem to irritate the manager very much. Despite the fact that employee was able to keep up for all the time lost, he still gets a B; however, he deserves a straight A. Fourth, spillover effect is also a common phenomenon at workplace where managers rate their employees based on their past performances and lose sight of their current performances. Employees who have not performed well during a current period receive better ratings because they were the stars of the past. Fifth, the other side of the spillover effect is latest behavior effect (Halligan & Bouckaert, pp. 52-58). Many employees tend to underperform or stay just at the bar during the initial days of any performance appraisal period. However, all these employees would suddenly try to become the center of attraction during the last days of those reporting periods with their presentations, goals, achievements, and others (Armstrong, pp. 135-139). This is because most managers tend to forget or underrate the events that have happened in the past and would tend to remember and focus more on the events, which take place towards the end of that period since the memory about them is fresh and they still echo in the head. Sixth and last, cross-cultural biases are also becoming more and more common at the workplace because of globalization and diversity at the workplace (Bacal, pp. 26-28). The ethical concern here is that many managers may fail to understand the culture and background of the employee and may rate him negatively or even positively due to his cultural background and traditional constraints. For example, in Japanese and Chinese cultures elders are seen with great deal of respect and appreciation. If a junior employee is asked to rate a senior employee, the same may lead to distorted results. A Saudi executive is more likely to give lower ratings to woman who is dresses in western clothes and style because women in Saudi Arabia always take a passive and silent role in the activities of home and workplace (Armstrong, pp. 135-139). Ethical and morality standards dictate that a fair and just performance management has to be the one, which could decrease and avoid these biases to the highest possible levels. One way of doing the same is to decrease the elements of perceptions and subjectivity in the process by creating a highly mechanized method of performance management with lesser room for raters to be subjective. Second, rather than allowing a single person to rate, two to three raters must complete the process. Third, it is extremely important to train the raters for the completion of the appraisal forms so that they become capable of handling these situations (Halligan & Bouckaert, pp. 52-58). Another ethical concern has its roots in the fact that despite the fact that performance management is supposed to be a year round activity, many managers fail to keep proper and reliable records about the performance of the employees. A research conducted in 500 midsized companies revealed that more than 63 percent of the managers do think about the appraisals and other performance management activities before a week of submission. Most performance appraisals take place on semiannual basis and it is understandable enough to conclude that those managers are most likely to do injustice while summing up the performance of six months in less than six days (Halligan & Bouckaert, pp. 52-58). Very crucial to the entire process of performance management is the need for performance and development review meetings. Employees and teams have all the right to know about their ratings and the rationale behind it. However, often these meetings, which should serve the purpose of discussing performance, identifying gaps, providing suggestions, feedback and ideas, ends up with confrontation, stress and tension. Important here to understand is that taking criticism is against human psychology (Cardy, Leonard & Newman, pp. 85-89). People would usually defend themselves to all possible limits whenever any criticism is presented. Therefore, for conducting this entire process, training is mandatory. Training should not only be for the people who are giving them feedback but also the individuals, which are taking the feedback. Employees should learn listening skills, reflection skills, and analytical skills and must know how to show focus and understanding (Luecke, Hall & Harvard Business School, pp. 321-324). Ethical performance management will also dictate that it is the responsibility of managers and the organization to create a supportive environment for the same. First, the roots of performance management is never successful until and unless the goal setting process is not in order. When employees set their goals with mutual consensus with their bosses, they are clear about their goals, resources, methods, approaches and others and that is when employees give it their best shot. However, if the goals are not CSMART (challenging, specific, measureable, attainable, realistic, and time bound) then employees lack a clear vision. Furthermore, it is ironic that towards the end of the day, employees are the ones, which are held accountable for problems in their performance, which were caused by improper goal setting process. Therefore, managers and the supervisors should spend ample amount of time for goal setting as well (Dresner, pp. 214-219). One of the biggest problems with performance management systems is that while managing and rewarding the performances of others, it often fails to take into account the effect of many external factors. For example, the current recession and financial crunch has affected the performance of many individuals and employees in various companies failed to achieve their goals. However, important here to note is that this event was beyond their domain of control and most of these employees had put in a lot effort. Furthermore, it becomes troublesome to separate the effect of individual efforts on results and number achieved and the effect of factors such as financial boom, new CEO, product innovation, new groups, seasonal demand, and others (Luecke, Hall & Harvard Business School, pp. 321-324). Towards the end, organizations also face the ethical question that if this system has so many flaws, loopholes, and gaps then is it fair and just enough to use these ratings and processes for making important decisions concerning the future of employees. Therefore, organizations must not rely heavily on performance management tools or at least must not rely on only one tool for making important decisions (Armstrong, pp. 135-139). Works Cited Armstrong, Michael. Performance management: key strategies and practical guidelines. Kogan Page Publishers, 2000. Bacal, Robert. Performance management. McGraw-Hill Professional, 1999. Cardy, Robert L., Leonard, Brian, & Newman, Bruce I. Performance Management: Concepts, Skills, and Exercises. M.E. Sharpe, 2011. Dresner, Howard. The performance management revolution: business results through insight and action. John Wiley and Sons, 2007. Halligan, John, & Bouckaert, Geert. Performance Management. Taylor & Francis, 2010. Luecke, Richard, Hall, Brian J., & Harvard Business School. Performance management: measure and improve the effectiveness of your employees. Harvard Business Press, 2006. Read More