Importance of Employee Performance Management in Retail Industry - Essay Example

?INTRODUCTION In the era of global competition, organizations are more inclined towards the creation of high performance work culture which would significantly help in the attainment of organizational goals and objectives. To effectively support the performance work culture, it has been incorporated by retail organizations in business and strategic strategies (Armstrong, 2007; Boxal and Purcell, 2008; Fletcher and Williams, 1996). Employees of the organization play an essential role within the process of work i.e. performance management (Boxal and Purcell, 2008). Performance management has become an important aspect for organizations today. By evaluating the performances organizations are able to better understand and identify the areas of improvements. Moreover, by evaluating and analyzing the performances of the organizations as well as the performance of the individuals working in the organizations, the management is able to formulate strategies that could further help in improving the productivity of the organization. Therefore it can be said that the performance management tools and performance management of employees help in improving productivity as well as in helping firms to gain competitive advantage. According to Armstrong (2006), employee performance management is the process in which employees are provided with significant opportunities to develop and nurture their skills and knowledge for the achievement of organizational goals and objectives. Having mutual understanding between the manager and the employees is quite essential in the employee performance management as the employees tend to maximize their efforts for the accomplishment of organizational goals (Leopold et al, 2005). Therefore, establishing employee performance management is quite essential for the organization to increase its overall productivity along with the level of performance in the market. Performance management is a process that ensures improvement in both quantity and quality of work and activities taken into consideration by the organization. In addition, the process helps the organization in aligning all the activities with the organizational goals and objectives (Leopold et al, 2005). By identifying the areas of improvements and areas where the organization has its strengths, the organization is in a better position to make important strategic decisions and help in achieving competitive advantage particularly when the organization is operating in a highly competitive industry such as retail industry. The level of competition in the retail environment has significantly risen and the organization has to deal with variety of employees, due to which the implementation of performance management has become a necessity to achieve the organizational goals while sustaining the business for long-run in the market (Jones et al, 2005). The purpose of this study is to evaluate the process of employee performance management. In order to do so, the importance and benefits associated with the employee performance management have been taken into consideration. Moreover, the retail industry within UK’s competitive environment has also been taken into consideration. For the effective evaluation of employee performance management, a case study of the UK retail industry has been presented in the study. Lastly, recommendations have been provided with an aim to help the organizations operating in retail industry to enhance the level of performance along with the overall productivity within the competitive retail landscape. EMPLOYEE PERFORMANCE MANAGEMENT Employee performance management, in simpler words is the process that allows the establishment of shared workforce understanding by motivating the managers and employees to have mutual understanding regarding the attainment of organizational goals and objectives. Employee performance management ensures that the employees would work towards the attainment of desired organizational goals rather than just the personal goals. With the help of this process, the objectives of the organization are aligned with the employee’s skills and competencies to ensure positive delivery of results. For the creation of performance work culture, this process focuses highly on the improvement, learning and development of the workforce so that the overall business strategy could be effectively achieved (People Streme, 2012). Fletcher and Williams (1996) revealed that organizations are continually working towards the creation of performance culture. In order to effectively do so, several strategies are incorporated in the organization to enhance the performance of individual towards the attainment of overall goals and objectives. In addition, Miner, & Crane, (1995) defined employee performance management as a process where the individuals working within the organization are provided with an opportunity to develop the right set of skills and knowledge so that the employees could work towards the achievement of meaningful and desired goals and objectives. In return, the individuals are provided with encouragement and support from the management of the organization. In addition, Armstrong (2009) asserted that the aim of such performance management process is to provide the employees with an opportunity to continually improve and enhance their skills under the supervision of effective leadership. The employee performance management is defined in output term which is required for the achievement of pre-decided goals and objectives. Employee performance management takes every single factor regarding what job is done, how it is done and what has been achieved into consideration. This signifies that employee performance management aims towards the increase in productivity along with performance of the employees. According to Walters (1995), the employee performance management provides the employees with information regarding what is to be achieved through enhanced skills and competencies to significantly increase the possibility of achieving success. Employee performance management is regarding the everyday actions and behaviors used by the employees for the improvement of performance. It is an essential component for the organization as through it, the organization is continually provided with opportunities to enhance its productivity and performance. The process encourages the employees to perform to the best of their abilities in an optimum fashion for the achievement of organizational goals and objectives desired by the organization. The focus on employee’s performance management significantly affects the overall organizational performance as well due to which the concept of employee performance management has been provided with utmost attention in the corporate world of business. The underlying goals of an effective employee performance management are as follows; To improve the performance of the employees working for the organization so that the goals and objectives of the organization could be effectively and efficiently achieved (Taylor, 2007) To provide the employees with an opportunity to acquire new sets of skills through development and continuous learning To motivate the employees to work towards the attainment of organizational goals and objectives through lucrative compensation and rewards (Perkins, and White, 2008) IMPORTANCE OF EMPLOYEE PERFORMANCE MANAGEMENT IN RETAIL INDUSTRY The retail industry is one of the most lucrative and advanced industries across the globe. According to Grimshaw, & Miozzo, (2009) the retail industry is advanced in terms of segmentation and integration. In UK, almost 11 percent of the total workforce is employed in the retail industry. This significantly indicates that the UK retail industry accounts for 8 percent of the total GDP. The number of employees working in the retail industry is 3 million which includes 1.4 million full timers while the rest 1.6 million are part timers. With variety of organizations operating in the retail industry, it has become quite essential to encourage and promote the workforce regarding the increase in productivity and performance through employee performance management. With the passage of time, the concept of employee performance management has gained popularity due to the rising competitive landscape that has significantly impacted the way organizations used to work (Swarnalatha, and Prasanna, 2013). The most prominent importance and benefits of employee’s performance management in the retail industry are as follows; Employee’s Engagement Employee engagement could be defined as an approach that ensures that the employees are dedicated and committed to the organizational goals and values, motivated to play an essential role in the success of the organization while enhancing their own sense of well-being within the organization. Through employee engagement, the management is provided with an opportunity to create conditions where the employees are provided with an ability to offer more than their capacity and potential for the betterment and success of the organizational goals and objectives (Swarnalatha, and Prasanna, 2013). Improved performance and productivity is the heart of engagement which cannot be achieved without employee performance management. Employee performance management allows the organization to have strong and authentic values which motivates the workforce to have clear understanding of organizational goals. In addition, engagement helps the employees to fulfill the organizational goals as a discretionary effort rather than an ‘add-on’ effort (Swarnalatha, and Prasanna, 2013). In earlier years, the engagement level of employees in the retail industry has significantly declined. For instance, the employee engagement index score declined to 51 percent in comparison to other industries in UK. This significantly reveals that the employee’s performance for the achievement of organizational goals has declined which eventually leads to weak performance along with productivity of the organization (Swarnalatha, and Prasanna, 2013). (Swarnalatha, and Prasanna, 2013) Positive Organizational Outcomes The foremost objective of an organization is to enhance the level of sales and profit within the industry while enhancing the performance and productivity for the achievement of desired goals and objectives effectively. To effectively do so, the organization relies heavily on employee performance management as it provides the organization with an opportunity to track the performance and productivity of the employees. As a result, the flaws and bottlenecks within the employee’s performance are evaluated and eliminated through continuous feedback from the management. In addition, the motivation level of the employees significantly increases while the frustration level diminishes and helps in the achievement of organizational goals and objectives through increased productivity and performance (Swarnalatha, and Prasanna, 2013). In the retail industry, employee performance management has become a necessity as it provides the organization with variety of benefits within and outside the organization. Gaining competitive edge is the essence in the retail industry and is possible only through effective employee performance management. Performance management helps the management to enhance the motivation level of the employees by providing them several opportunities to increase their competencies and skills. As a result, the organization is provided valuable human resource that is dedicated towards the achievement of organizational goals and objectives rather than personal goals and objectives (Swarnalatha, and Prasanna, 2013). Higher Employee Retention Rate To maintain a profitable organization, it is essential to retain and preserve the talent pool within the organization. Dissatisfied employees significantly reduce the possibility of organizations to enhance its performance and productivity within the industry. As a result, the organizations are constantly lacking behind in terms of achievement of organizational goals and objectives (Torraco, & Swanson, 1995). In addition, the reduction in performance and productivity of the employees negatively impacts the overall competitiveness level of the organization. Moreover, the increase in dissatisfaction level of employees increases the chances of high turnover rate. As a result, the organizations are forced to hire and train the potential employees from the scratch (Swarnalatha, and Prasanna, 2013). To reduce this significantly, the organizations have relied on employee’s performance management for decades. With employee’s performance management at work, the issues and concerns of the employees are taken into consideration. The aim of this approach is to reduce the dissatisfaction of the employees and to do so effectively, employees are frequently provided with feedbacks in which the concerns of the employees are highlighted. As a result, the organization is provided with an ability to retain the key employees by significantly reducing the level of dissatisfaction by collaborating to the highest form with the employees. This helps in reducing the turnover rate while increasing the employee retention rate within the organization (Swarnalatha, and Prasanna, 2013). Greater Customer Satisfaction An employee that is dissatisfied with the organization can never provide the customers of the company with happy experience. To enhance the satisfaction level of the customers, it is essential to deal with the satisfaction level of the employees (Secord, 2003). Employees are the front-end of the organization and the way they behave with the customers reveal the seriousness of the organization towards the customers. In retail industry, providing the customers with un-rivaled experience is a prominent factor to enhance the customer base along with the sales and profit level (Swarnalatha, and Prasanna, 2013). To significantly do so, the employees must be satisfied with their job as well as other aspects of the organization. This can be significantly done through employee performance management where the employees are provided with information regarding every aspect of the business. In addition, the goals and values of the organization are clearly communicated to reduce any errors and mistakes in the achievement of excellence. This approach significantly helps in the reduction of negative behavior of the employees. As a result, the organization is provided with variety of satisfied customers that are loyal and satisfied with the organization. This reveals that employee performance management significantly helps in the reduction and elimination of employee’s dissatisfaction level which eventually helps in the increase of customer satisfaction level (Swarnalatha, and Prasanna, 2013). Employee’s Job Satisfaction The level of employee’s engagement reveals the position of the organization within the industry. A retail organization competes in the retail industry through customer satisfaction which is quite impossible to achieve with low employee’s engagement. Low engagement level of the employees is bad for business. This clearly indicates that lower employee engagement levels significantly increase the risks of voluntary turnover rates along with lower organizational performance. Moreover, it reduces the competitiveness level of the organization through which the organization attracts and retains the customers in the market. To enhance the satisfaction level of the employees, the use of employee performance management has become a necessity in the retail industry. Employee performance management provides the employees with an opportunity to communicate their issues with the management. With such insights regarding the issues of the employees, the management tends to resolve the issues by taking corrective measures. Moreover, the organization also provides the employees with an opportunity to enhance their skills and knowledge through proper training and learning. This significantly helps the organization in gaining the employee’s trust and loyalty which results in increased job satisfaction. In addition, the productivity along with the performance of the employees significantly increases to show their dedication and commitment towards the organization and its desired goals and objectives (Swarnalatha, and Prasanna, 2013). Reduced Risks of Poaching Poaching is one of the essential practices taken into consideration by different retail organizations to recruit key employees from other competitors in the market by offering lucrative incentives. The risk of poaching has become a prominent issue in the retail industry that costs the retail organizations with good employees, increases the employment costs along with disputes between the rival retail organizations (Kramar, Mcgrew, & Schuler. 1997). In order to deal with this issue, the organizations in retail industry focus highly on employee performance management. This means that the use of employee performance management provide the organizations with opportunities to develop employees- development plans, introduction of performance incentives along with improvements in the workplace culture to enhance the motivation and satisfaction level of the employees. As a result, the retail organizations have made them invulnerable to the risks of poaching. Moreover, the introduction of employee performance management allows the management to initiate training programs regarding anti-poaching and anti-headhunting techniques. The management of employee’s performance is beneficial for the organization as well as the employees. If done properly, it provides the organization with an opportunity for effective two-way communication. As a result, the information and insight gained could be used to remove barriers to increase employee’s productivity and performance. Some of the most prominent benefits that the organizations are provided with the implementation of employee performance management are as follows; Employee Motivation Employees have the tendency to be motivated knowing their contribution in the achievement of organizational goals and objectives. This significantly motivates the employees knowing that they are an integral part of the organization. Employee performance management helps the organization in communicating the importance of employees and their contribution towards the achievement of goals and objectives. As a result, the employees tend to be motivated and satisfied with the organization. In addition, they tend to increase their performance and productivity to allow the organization to achieve the goals and objectives effectively and efficiently (Jackson, Schuler, & Werner, 2009). Concerns Tackling the situations before they become serious problems for the organization is quite essential in the survival and growth of the organization. Employee performance management provides the organization with an ability to address the performance or behavior concerns of the employees. This significantly helps the organization in showing the employees that the management cares about its workforce. New Skills Through effective employee performance management, the employees are encouraged to acquire new skills and knowledge. Acquiring new skills provide both the employees and the organization with additional benefits. As a result, the organization is provided with variety of benefits through employee’s new skills (i.e. shared responsibilities in team tasks etc). Career Direction Employee performance management provides the employees with opportunities to develop existing skills along with the learning of new skills. This significantly helps the employee to plan for his/her next move in the career. In addition, the use of employee performance management allows the organization to bridge the gaps between the current skills of the employees and the future needs of the employees in terms of new skills and knowledge. Communication With employee performance management at work, the organization is provided with an opportunity to create two-way communication that makes the organization aware of the employee’s satisfaction level along with the needs of the employees. Common Goals Working towards the achievement of common goals within an organization is quite essential for the organization and its success. The individual performance of the employees drives the organizational performance due to which employee performance management ensures that the employees have clear understanding of the goals and objectives of the organization. This significantly helps in increasing the engagement level of employees and improves the performance of the employees along with the overall performance of the organization. CASE STUDY OF UK RETAIL INDUSTRY Tesco, being the third largest grocery store in the world and the largest retailer in Britain, it has become quite essential for the retail leader to focus highly on its performance and productivity as it drives the growth of the company. Tesco operates 2,200 stores in UK with workforce of 280,000 in UK and 460,000 worldwide (The Times 100, n.d.). To meet the constantly changing needs of the customers, the company requires well-trained employees due to which higher attention is given to employee performance management over the years. Tesco has acknowledged the importance of better staff knowledge, skills and job satisfaction to ensure enhanced future growth due to which the company focuses on improving the performance of the employees through effective training of the employees (Advance Performance Institute, 2009). To ensure relevant growth in the current and forthcoming years, Tesco focuses highly on meeting the needs of the right people, at the right time and at the right place. Having the right skills at Tesco is quite essential for the organization to pursue the desired goals and objectives due to which the organization consistently measures the abilities of its employees. Moreover, enhancing the skills and knowledge of the employees from time to time is quite essential for the organization due to which the employees are provided with an opportunity to apply for training after performance reviews and career discussions (The Times 100, n.d.). The three themes that have remained the focus of Tesco are customer focus, working with others and own behavior. This implies that employees at Tesco are encouraged at every step to become the leaders of the future by identifying the gaps in their skills and knowledge through the planning tools. These gaps are filled through employee performance management (i.e. training and development) to ensure that Tesco’s employees are at the right track to achieve the organizational goals and objectives (Advance Performance Institute, 2009). Tesco focuses highly on training and development to enhance the productivity and performance of the employees for effective and efficient achievement of desired goals and objectives. Some of the prominent aspects in Tesco’s training and development are as follows; Training Tesco focuses highly on the training of employees to enhance the skills and knowledge of the employees. In order to do so, the retail organization considers flexible approach to training. The training approach focuses on meeting the employee’s needs along with the business’ needs to ensure that the employee is provided with right set of skills for the achievement of desired goals along with positive performance results. The on-the-job training has always remained the spotlight at Tesco as it encourages the employees to quickly feel part of the team. The on-the-job training provided at Tesco includes; Shadowing a person to learn the new skills and knowledge Coaching the trainees effectively in handling problems Mentoring Job rotation or secondment (i.e. taking up a job in different department of the business to acquire new set of skills) The benefits provided to the employees through such employee performance management are as follows; Motivation and satisfaction level of the employees significantly increases due to which they feel more connected to the business and its operations The employees become better at their job which provides the organization with an opportunity to meet the customer’s needs effectively The employees become more effective with the newly acquired skills Customers are provided with un-rivaled experience which eventually motivates the customers to frequently visit the Tesco’s retail stores (The Times 100, n.d.). Development Development at Tesco is about helping the employees to grow. In order to do so, the organization has developed an Options Programme which provides the employees with an opportunity to plan long-term route for development. Moreover, the employees are also provided with an opportunity to assess their own skills so that they could effectively decide regarding the focus for their development. Employee performance management has always remained the central focus of the organization due to which Tesco consistently provides its employees with training and development opportunities. As a result, Tesco is continually provided with employees with new set of skills to work towards the achievement of organizational goals and objectives through enhanced performance and productivity. Moreover, the process of employee performance management comes under the supervision of the line managers due to which the process remains effective from the start till the very end. The existing staff along with the new staff at Tesco is provided with training and development from time to time so that the skills and knowledge of the employees could be enhanced significantly. Lastly, Tesco ensures that its employees have the right skills and knowledge to support the future growth of the organization along with reduced skills of poaching (The Times 100, n.d.). The performance framework at Tesco has provided the organization with an opportunity to establish a culture where the employees feel responsible for performance to achieve the organizational desired goals and objectives. In order to do so, the employees are provided with significant opportunities to come up with new ideas while improving their performance. This has significantly helped in increasing the motivation level of the employees along with the job satisfaction level. Moreover, the continuous feedback from the management has encouraged the workforce to enhance their capabilities and potentials for the achievement of overall organizational goals and objectives to help Tesco maintain its leadership in UK’s retail market. RECOMMENDATIONS Some of the recommendations regarding employee performance management in the retail industry in UK are as follows; Retail organizations should tend to focus highly on the personnel development rather than sales and profit level. After the economic and financial crisis, retail organizations have focused all their attention to increase the level of sales. The motivation level of employees depends highly on the opportunities to grow in terms of career. This reveals that the organizations should not just help the employees in acquiring new skills and talents but should also help the employees in remaining on the right track. To enhance the performance and productivity of the organization, it is essential that the employees should be provided with regular feedback. This significantly helps the employees to gain relevant insights regarding their mistakes and how can the mistakes be eliminated in the forthcoming years. As a result, the employees would tend to remain loyal and committed towards the organization and would work towards the achievement of organizational goals and objectives. To achieve un-rivaled customer satisfaction, the retail organization should focus highly on providing the employees with challenging tasks and responsibilities. Employees in retail organizations are the frontline and providing the customers with happy experience requires job satisfaction of employees. Poaching is a rising issue in retail industry. To tackle such issue, the retail organizations should provide its employees with consistent lucrative opportunities to enhance their skills, talents and knowledge through effective training and development programmes. CONCLUSION Employee performance management has played a crucial role in the success of retail organizations in UK. The process of enhancing employee’s performance through enhancement in skills and knowledge is quite expensive but it has provided the retail organizations with variety of benefits in the retail industry. Tesco is one of the most prominent examples of retail organization that focuses highly on the training and development of employees to enhance the contribution of employees in terms of performance and productivity for the accomplishment of desired goals and objectives. Tesco has gained significant level of customers in the earlier years due to the exceptionally outstanding satisfaction level of the employees. 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