The Effectiveness of Performance Appraisal - Dissertation Example

? Literature Review Literature Review- The Effectiveness of Performance Appraisal Background and Introduction A human holds a nature- a tendency to judge people by any means and at any level of life situation. In organizations people judge people, and this is the basic human tendency they exercise at the work place. To avoid this instinctive, natural and informal judgment of people at the workplace, organizations bring performance appraisal systems, which are formal systems of judging people. Performance appraisal refers to assess and analyze a worker’s performance and results at the work place. It refers to a system of retaining employees, by providing them the guidance, fair treatment and a sense of motivation towards work. These are built-in outcomes of a formally set performance appraisal system. Organizations need performance appraisal system due to multiple numbers of reasons. Out of all one major reason is employee performance and other is employee retention through employee rights. This chapter will signify the importance of performance appraisal system in the organization, by uncovering the effectiveness of the system and the positive outcomes it brings for the organization, managers and staff. To truly grasp the concept of performance appraisal and its effectiveness, a critical evaluation of the literature will be made. Research Aims and Objectives To determine the role of human resource management in achieving organizational goals. To determine how human resource management benefits employees to achieve organizational goals in Chinese business market. To analyze and assess the impact of performance appraisal on organizational performance. The aim is to focus on performance appraisal as one effective method of HRM to bring organizational performance. To understand the relationship between effective performance appraisal and organizational performance. To determine the relationship between effective performance appraisal and employee performance. The aim is to test and measure the effectiveness of performance appraisal of a selected food company in Hohhot China. Literature Review The Markets of Buying and Selling Labor When markets start flourishing with the capitalist regime, they have to bear challenges in the labor section. Markets which undertake industrialists’ basing and hold a major share of foreign direct investment, there is a chance that labor gets sidelined in such markets. India being an emerging industrialist economy upholds this situation where there is an excess of labor conflicts and strikes all over. Similarly, China where there is a trend of buying and selling labor in replacement of commodities, monetary and nonmonetary benefits precisely holds the same trend of labors’ strike and protesting. According to Chan (2010), in the last decade capitalism has been encircling around the communist state of China. A major investment has been brought into the Chinese private sector business which has invited the Stake holder’s interest and influence into the business function. Due to more power in hands of stake holders, the rights of labor are being avoided and ignored, which have created the revolt situation in most of the private sector firms. The protestation of labor is a situation where manpower has lost its focus, its direction and its willingness to work and perform respectively. The political segment of the country is dealing with this challenge as it is more on the nationalist trail and wants to resolve the labor conflicts. This is because the country’s bureaucracy realizes the importance of labor power (manpower) - a source which it feels to be the primary base of industrialization and urbanization in the country (The Economist, 2010). From organizational point of view, employee constraining affects employee’s performance. Likewise, when employees are constrained by any means i.e by the market trend where labor is intensively sold and bought, they simply keep their directions straight- continuing to the job without any purpose or exceptional motivation. The interest towards work is lost when employees are in such destabilizing state of compromise. Keeping in view the fact that employee performance is the most significant for organizational performance organizations have started redefining their employment visions. They have started redefining their policies and their systems (HRM system) to completely manage the performance of the employees and their work motives. System of Performance management In order to resolve labor conflicts there are different propositions that have come around in the modern literature. Most of the authors and researchers have suggested that to ensure labor rights and their adequate treatment, a performance evaluation system is required. This system is to take care of labor rights, their timely promotions, job design and their fair treatment for performance at the work place. An optimum system of labor management would be the one that incorporates three basic features. These three basic features are ideology, job regulation and job satisfaction respectively. Integrating all these three basic features in one system will form a system of fair labor treatment and a system to agree labor on performance. Ideology Ideology is the base of any system. It is the foundation of a system to get piled up for a regulation. A system of fair labor treatment and performance management should have a well grounded ideology. The ideology of such a system should be practical, deliverable and well adjusted to the labor norms. When ties of ideology and system are there, there are more chances of a better system delivery and performance (Brown, 1992). The Ideology of Unitarism Unitary refers to a system where entire organization comes out as a whole to serve one common mission and objective. In this system, management and staff all work with mutual cooperation as they are expected to work for one common purpose (Brown, 1992). If the difference of opinion prevails, unitary system comes out as a weaker system. Definitely, if staff workers have different interest than stakeholders, friction of interest will be found in the unitary system. This will raise conflict between workers and managers, resulting in poor performance of all organization’s staff and workers (Brown, 1992). Apart from socialists’ critique on unitarism, the ideology comes out well suited to the modern organization and its work system. Likewise, unitarism states that when there is the intensity of business risk, there is a need that businesses realize the importance of labor source (the men power). The ideology explains that businesses should not play a part in arising labor conflicts. Indeed they should have a strong commitment for labor regulation, providing the value system to the employees to get them motivated at the work place (Wallace, 2008). If workers are neglected or avoided with their rights and interests they start losing their interest in the organization. Losing interest means losing willingness to perform. This leads the employee with an overall poor performance affecting the organization’s success and performance too at the same time (Krausert, 2009). The requirement as explained unitarism which further asserts that an organization needs to adjust a performance evaluation and gradation system- a system which can equally benefit the employees to motivate them on workplace (Krausert, 2009). This is the requirement of the modern organization (enterprise of the modern era) which is already in siege of competition and uncertainty. For this reason the post modernists and unitarists propose a system in which labor actions, decisions and results can be measured, assessed and weighted. This type of monitoring system is performance appraisal system- a system to rate people (workers) and their performances in order to design their grades, their positions (hierarchies) (Murrell & Meredith, 2000). Job Regulation and Job Satisfaction The most important features of a fair labor treatment system are job regulation and job satisfaction (Hickman, 2001). An employee is satisfied with the job, if it is satisfied with the regulations of the job. Therefore, an optimum labor treatment system is one which works out in true satisfaction of the work force. Such a system works for the improvement of the work environment in order to encourage and motivate the employees on work and performance. This system is a regulatory one and therefore operates in the care and satisfaction of employees and their interest (Katie, 2013). The job regulations include pay systems, awards, benefits, bonuses and interactive supervision of employees. An optimum labor treatment system is one which integrates all these basic elements. It includes these regulations to ensure job contentment at the work place. Definitely, satisfaction links with performance. If satisfaction is there performance of the workforce is automatically there (Hickman, 2001). What is Performance Appraisal? Definition to Appraisal Appraisal is a process of assessment. It is a process of judgment and evaluation. In employees’ context, appraisal is defined as the valuation of a human tendency to work and perform at the workplace (Hickman, 2001). Definition to Performance Appraisal The contemporary literature has brought different definitions on performance appraisal. According to Schwartz (2001), performance appraisal is a process of human resource evaluation (Schwartz, 2001, p.29). According to Krausert (2009), it’s a method of periodic scanning of employee performance and their role in organization (Krausert, 2009, p.9). In theoretical apprehensions the following definition comes out into place of performance appraisal: Performance appraisal is a formal system of interaction that takes place in between supervisor and the subordinate (Hickman, 2001). It is a system of viewing, discussing and interpreting an employee work performance. The purpose of performance appraisal is to compare the employee position with respect to timeframe and with respect to the objectives of the organization. This is to unfold the strengths and weaknesses of an employee period wise while performing a task or an operation at the workplace (Krausert, 2009). Description to Performance Appraisal In organizations performance appraisal refers to evaluation of performance activity of employees. It is a process of analyzing and comparing employees’ past from the present in order to decide their future wage promotions or hierarchy promotions (Krausert, 2009). In this way it can be said that performance appraisal is a basis to promote or not promote an employee in an organization (Krausert, 2009). In the context of the modern literature, there are two goals of a performance appraisal system. Goal one is to set a criterion-a measure of performance (Hickman, 2001). Goal two of the system is to create a formal environment of evaluation. In modern application, all organizations bringing performance appraisal system incorporates with these two fundamental goals (Subrahmaniyam, 2009). The organizations work on these objectives to achieve the basic purpose of performance appraisal system (Subrahmaniyam, 2009). In the recent application, performance appraisal comes out as a planning tool. It comes out as an administrative method for organizing the patterns of the work for the working men (Murrell & Meredith, 2000). By ensuring delegation of work, performance appraisal system plans out employees' daily work tasks (Hickman, 2001). This is definitely to keep an eye on employee activity which further accomplishes work task on time. When work-tasks of employees are accomplished on real time basis, the organizational goals are effectively achieved (Krausert, 2009). This is how performance appraisal comes out as an effective planning and administration tool. It comes out as a method to engage employee motives with organizational motives and goals (Hickman, 2001). Performance Appraisal and Measurability According to the modern literature, performance appraisal is about measuring the performance. It is about judging an employee performance on the basis of a certain set criterion. Researchers and people associated to the HRM subject come up with the argument on this conception (Katie, 2013). They do not understand of how a job or work can be measured especially if it is of the complex nature or complex description. Jobs such as software engineers, R&D specialists, graphic designers or architects cannot be measured or accessed because they are of the complex nature and design. To settle this argument, the HRM specialists have given a brief description of measurability (Hickman, 2001). The specialists have suggested that measurability in performance appraisal is something that can be verified. It is verifiability through words and not through numbers or quantities. In this way, a good performance is one which can be verified, which can be measured through quality and not by quantity or numeric means (Katie, 2013). Performance Appraisal to achieve Employee Performance It is found in organizations’ application that performance appraisal systems are used to achieve one core objective and that is to increase or retain employee performance (Sahu, 2009). There are multiple opinions found in the literature on how performance appraisal system can increase employee performance. To answer it, authors and theorists have come to a collective opinion (Katie, 2013). The literature describes that performance appraisal system can increase employee performance if it strategically works in three areas; ideology, job regulation and job control by keeping the fear of job loss (Katie, 2013). Here the literature contradicts because at one side it is talking about employee motivation and job rights and at the other place it is suggesting the job controlling pattern of increasing job performance. However, in the prevailing organization trend, all possible methods are being adapted to increase employee performance at the work place. So organizations more specifically in cheap labor markets (China) agree to incorporate both motivational methods (job regulation and ideology) and controlling methods (keeping the fear of job loss) to increase the performance of employees (Saks & Haccoun, 2010). Performance through Ideology Potterfield (1999) brought assertions that democracy and participation are blocks of empowering labor (the Marxist thought) (Potterfield, 1999). These are ideologies that are truly responsible for labors’ synergies at the work place. Potterfield (1999) averred that societies which prevailed with the system of worker’s fragility have never been able to succeed or progress (Potterfield, 1999). Similarly Murrell (2000) revealed that democracy based organizational structures (unitary) which offer great employee autonomy, participation and motivation at the work place contributes in the deal of achieving ultimate employee performance (Murrell & Meredith, 2000). In this way an ideal performance appraisal system would be the one which encourages and empowers workers. It is the one which gives authority to workers with an opportunity to excel and progress (Murrell & Meredith, 2000). Giving workers the space to think, create and perform is what an idea performance appraisal system is all about. According to Besser (1996), Toyota Motors Corporation is one of the organizations that progressively work in Unitarism. It was the community of fate ideology that got worked out in Toyota Corporation (Besser, 1996). In Toyota teams understand the word of commitment as everybody comes out as a synergy to perform and deliver. This is the kind of system which eventually leads to labor empowerment- the system to authorize workers, their decisions and their methods to enroll performance (Besser, 1996). In modern theorists’ view, a deliverable performance appraisal system is one which is able to create a team environment and effort at one place (Brown, 1992). Ideology of Unitarism works in this manner as it offers mutual participation and coordination. Though it is a non-socialist concepts (anti Marxist) but still it is effective to bring individuals at one page. When individuals are at one page that means they have one direction. This makes the performance inevitable and achievable (Brown, 1992, p.169). However, there are beliefs in literature that Marxist theory is more powerful than other theories to encourage teams and their performance (Brown, 1992). Definitely, when workers are given their right and authority, they are more willing to work and perform for the organization. In this way, if a performance appraisal system adapts Marxist theorem, its approach will be to authorize workers to make them perform and to make them retain their motivation for the work (Katie, 2013). Performance through Job Regulation Job regulation is one activity in performance appraisal system. When managers deal in performance appraisal, they have a role assigned to regulate the jobs. In modern application, organizations show more concern to job regulation. This is because organizations realize that through well designed job regulations, employees’ rights are protected which get them to perform and deliver. According to Saks & Haccoun (2010), during regulation of jobs, managers have a lead to take on. Saks (2010) states that managers while assigning tasks to subordinates have to take care of their tasks submissions, objectives and results. This is to bring better results from employees through intact managerial participation and decisive coordination (Saks & Haccoun, 2010). In the literature’s assertions, job regulations are designed and conducted by managers. It is the managers’ responsibility that they formulize and implicate the job regulations during performance appraisal (Murrell & Meredith, 2000). Actually, job regulations are meant to increase employee performance. They are set to organize and evolve employees with their conductive attitude and this is to achieve and increase performance on the frequent basis. In the literature reflections, there are different regulations through which managers raise employee performances. According to Hickman (2001), performance appraisal is the heart of human resource management and therefore the activity incorporates all the sub activities which are to regulate employees’ jobs with respective to their performances (Hickman, 2001). Performance is associated to employee’s need and satisfaction. It is associated to employee’s individual behavior which is affected by rewards or punishments’ system (Sahu, 2009). The modern literature reflects that organization’s performance appraisal systems are deployed with rewards and incentive systems. Rewards which are part of job regulation are made according to employee need and satisfaction and employee’s condition to perform (Wallace, 2008). The conditioning theory applies in this perspective which states that rewards or punishments are external factors to affect an employee’s approach on performance. In order to improve employee’s performance approach, it is essential that performance appraisal is based on encouraging reward and incentive system. Adding a bonus to employee’s account for each achievement is compulsory to motivate the employee. This is how an employee achievement enables organizational achievement and employee performance enables organizational performance respectively (Wallace, 2008). Wayland and Robinson (2009) assert that the first regulation is to measure employee performance (Robinson & Wayland, 2009). Through measuring performance, the employee can be rated and then sent to the HRM function for promotion decision. In the modern apprehension, it has also been seen that managers measure subordinates’ performance to identify their weak areas which are further to be covered with training programs and sessions (Robinson & Wayland, 2009). To increase employee strength, managers organize training sessions. These are to cover up employees’ weaknesses and to prepare them for meeting their regular tasks. Wayland (2009) describes that all these activities come in performance appraisal and are part of job regulation to stimulate employees and to make them encourage for delivery and better results. Managers also measure performance to rate training programs (Robinson & Wayland, 2009). By measuring performance, managers are able to understand the conduciveness of programs. If results are there, the changes are made lesser but if the programs are weaker to conduct employees, improvements are brought immediately and accordingly (Robinson & Wayland, 2009). On further, managers’ next goal is to merge organizational objectives with employees’ goals and ambitions (Krausert, 2009). When employees are at the same page as the organizational management, they are in a better position to perform and to deliver. This is another important activity which managers are concerned off during performance appraisal. After assessing employees’ performance, the next big thing is to integrate employees' objectives with the organizational goals. This is how performance is achievable and closer to employee’s effort (Krausert, 2009). Performance Appraisal and Fear of Job Loss The contemporary literature uncovers the controlling trend of performance appraisal system, where employees are forced to work and produce outcome. There are organizations like SMEs, restaurants or hospitality cafes where managers use such controlling performance appraisal systems. They use forced ranking to restrict employees on work and delivery (Busse, 2005). Setting strict rules by enforcing the regulations, employees have no other choice left than to work and wait for the reward. This type of performance appraisal system is successful only when employees have constraints involved (Hickman, 2001). When employees know that despite continuing their jobs they have no other option to secure, they are ready to work in these hard and fast working environment. Fear of job loss is one of the constraints that restrict employees to their jobs (Sahu, 2009). When management uses this controlling and governing method, they are much aware of employees’ weaknesses. This is how understanding employees’ weaknesses, make them work for bringing their performance (Busse, 2005). Empirical Evidence A study conducted by Law & Yun-Li (2007) in Chinese hospitality sector revealed that there is a significant relationship between formal HRM practices and workers’ performance (Law & Yun-Li, 2007). Well designed job regulations and performance appraisal include in HRM practices which do pose positive effect on workers’ working and their respective outcomes. By multilevel analysis of the data collected from differently located Chinese hotels, the study found that organizational performance is dependent upon workers’ performance (Law & Yun-Li, 2007). The study revealed that performance appraisal system is one effective system that organizes employee performance in most of the Chinese hospitality organizations. When employees’ perform definitely it influences organizational performance in the positive way. This is what the study concluded after explorative and metaphysical survey (Law & Yun-Li, 2007). Ye & Liang (2010) by investigating the cases of Haibin Hotel and Westin Hotel in China found that employee performance is resultant in organizational performance. Analyzing the views of hotels’ respondents (managers and staff), the study claimed that HRM practices are pivotal in bringing employees’ performance (Ye & Liang, 2010). Best HRM practices may include employee incentive programs, training sessions, development programs and performance appraisals. Additionally, the study emphasized on management’s concern for employee motivation as this is what stimulates employee’s willingness to perform and participate (Ye & Liang, 2010). Cheng & Chien (2011) made a case study of Hilton Hotel Corporation China. The study revealed that service organizations like Hotels need well cooperated work force (Cheng & Chien, 2011). This work force having a stubborn direction is well prepared to bring organization of what it needs “success” (Cheng & Chien, 2011). On exploring the case of Hilton Hotel, the study found that a result oriented work force requires democratic style of leadership and a democratic style of work environment. When workers are in this set of culture, they are autonomous and they come out more participative in their roles and in their delivery (Cheng & Chien, 2011). This is all possible if management is democratic and with a team based approach for the workers. The study also found that if management brings non-discriminative- unbiased appraisals regularly, there is a more chance of employee retention at the work place. This is all what a service organization needs- a successful and truly accomplishing work environment (Cheng & Chien, 2011). Conceptual Framework Analyzing the modern literature, it can be stated that human resource management is about managing employee performance, where the central core objective is to manage the organizational performance. HRM manages all those factors which are associated to employee performance i.e. employee motivation and satisfaction and this is to achieve the primary goal- bringing organizational performance. Therefore there are two primary goals of a human resource management system; increasing employee performance and increasing organizational performance. This is the focus of the current study as it investigates how HRM function in the selected company is contributing to achieving these objectives. Also, a discussion is made to compare the findings from the present study with case studies in this chapter. This would allow concluding whether the HRM function of the selected company is successful and comparable. To achieve these primary goals, performance appraisal is one system of HRM that comes out sufficient and deliberate. The system is to achieve its primary goals by its effective features of rewards and incentives, training and development of employees and valuable promotions. These are all features to make a performance appraisal system complete and well adjusted to the employee’s needs. The problem for organization is poor performance of employees which leads to the poor performance of the whole organization. To overcome this challenge, organizations have laid down the performance appraisal systems which work in the area of the workforce’s performance. In order to reach conclusions from the research, data through primary research is collected to obtain sufficient and relevant information to predict the relationship between HRM practices, employees’ performance, and organization performance. Conclusion and Summary Performance appraisal refers to a system of retaining employees, by providing them the guidance, fair treatment and a sense of motivation at the work place. These are built in outcomes of a formally set performance appraisal system. Organizations deploy performance appraisal system due to several reasons. Out of all one reason is to increase employee performance because employee performs, an organization performs too. In modern theorists’ view, a deliverable performance appraisal system is one which is able to create and encourage team environment at the work place. Ideologies of Unitarism and Pluralism fit in this manner as they offer mutual participation and coordination at the work place. In modern application, organizations show more concern to job regulation. This is because organizations realize that through well designed job regulations, employees’ rights are protected which get them to perform and deliver. Job regulations are designed and conducted by managers. It is the managers’ responsibility that they implicate job regulations during performance appraisal activity. Employee training and development, declaration of incentives, and setting employee objectives, all comes in job regulation activity. There are three basic features of a performance appraisal system; ideology, job regulation and fear of job loss. Some organizations work on the ideology to make their employees work and others on job design and regulations to make employees motivated and perform. It depends on the culture of the organization that how it brings its employees to performance and delivery. List of References Besser, T., 1996. Team Toyota: Transplanting the Toyota Culture to the Camry Plant in Kentucky. Albany: SUNY Press. Brown, R.K., 1992. Understanding Industrial Organisations: Theoretical Perspectives in Industrial Sociology. London: Routledge. Busse, R.C., 2005. Fired, Laid Off Or Forced Out: A Complete Guide to Severance, Benefits, and Your Rights when You're Starting Over. Chicago: Sourcebooks, Inc. Cheng, W. & Chien, C., 2011. A Case Study of the Business Performance Management of Hilton Hotels Corp. International Business Research, 4(2), pp.213-17. Hickman, S., 2001. 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