Performance Appraisal System - Essay Example

Performance Appraisal System Executive Summary The success of any HR department lies on its Performance appraisal system. Without an adequate performance appraisal system, not only HR department will fail to monitor the progress of employees, but the overall financial results of the organization will be effected. This paper aims to conduct audit of performance appraisal system of ABC Consulting (a fictitious organization) located in Birmingham, U.K. An analysis of current appraisal system of ABC Consulting will be provided. It will then be followed by prospective advantages and disadvantages of current appraisal system to firm and its employees. Amendments for eradicating weaknesses of current performance appraisal system will be mentioned. The paper ends with a detailed conclusion that outlines all the major points discussed in the paper. Introduction ABC Consulting is a company that truly beliefs that the employees of the company are its most important assets. In order to develop a sense of commitment and teamwork as well as to create a more effective performance appraisal system, this analysis include the current performance appraisal that is being implemented at ABC Consulting nowadays. A brief description of current appraisal system will be mentioned and its strengths and weaknesses will be highlighted. Important points for brining improvement in current appraisal system will be mentioned. Prior to mentioning the appraisal system, an understanding of performance management must be developed. Performance management is the capability or capacity of an organization for developing human resources for the company to obtain their objectives not only to face competition but also to outperform rivals. According to Cascio and Aquinis (2005), performance appraisal is a continuous procedure for hiring, attracting, and assessing, and motivating the performance of employees within an organization for attaining their goals. Performance appraisal system is of hefty importance as it determines actual performance of employees. It allows employers and employees to provide positive/negative feedback to keep employees on the right track. A comprehensive and thorough performance appraisal system is the one that involves attracting talented employees from the pool of potential candidates, hiring them, retaining them, planning for their continuous performance, assessment of performance, creating situations for motivating employees, asking for feedback, reviewing employees’ performance and controlling any deviations. All these helps an employer to drive performance which has possibilities to develop higher levels of services, and increased profits (Miller, 2006). Current Appraisal System of ABC Consulting The current appraisal system of ABC Consulting includes several loopholes. Under the current performance appraisal system, employees are not encouraged to provide their suggestion and feedbacks. While analyzing the current appraisal system, it was found that questions asked by supervisor and feedback given by supervisor was not relevant to the job performed. Extensive flaws were found specifically in administrative department. The current appraisal system emphasizes extensively on past issues which certainly cannot be amended. The feedback that is provided by employees is too general in addition, it does not help employees in moving forward, therefore does not motivate them at all. Infrequent feedback is another problem of current appraisal system. The current appraisal system indicates that employees demand a review once in a six months. Current policies do not include a review in the first 30 days, 60 days, or 90 days after an employee has been hired. At ABC Consulting, there is also a concept of self-appraisal. Employees are given forms to evaluate their own self. Many employees fill this form in their favor in order to avoid any complication or confrontation with managers. In this way, a true and fair view of self-appraisal forms is not possible. In order to evaluate the current appraisal system, auditors sampled 25 reviews through random sampling. The purpose of collecting these samples was to determine if reviews have been given on time. It was found that 57% reviews were given on time whereas 43% were late. Due to lack of human resource education and human resource experience resulted in below than average appraisal system. Another problem that was found in the current appraisal system of ABC Consulting was non-data based evaluation. A large number of performance assessment forms rely on memory of respondents because pre-populating the evaluation forms with necessary data makes it too difficult. At ABC Consulting, performance evaluation does not measure the actual data. Managers evaluate a ‘person’ by emphasizing on his traits, behavior and knowledge. These factors might not contribute to actual output and might just evaluate the overall working behavior of a person. Advantages and Disadvantages of Current Appraisal System The current appraisal system of ABC Consulting holds some advantages whereas drawbacks supersede these advantages. Despite of its loopholes, this current appraisal system is designed to provide assessment of performance of employees for the specified period of time. This performance system provides a platform where managers and subordinates can meet and discuss the performance of employees. This performance system helps managers in identifying opportunity for subordinates to provide their feedback about their performance. It also helps in determining how well employees attain their goals. This appraisal system provides a planned process to an employee for expounding expectations and discuss their concerns with managers. This appraisal system allows for providing a structure for brainstorming for developing goals of employees in the upcoming year. If compensation system is improved and merit is good, then employees will be motivated with this system. A company has to pay hefty price for a broken appraisal system. The biggest drawback of current performance appraisal system is infrequent feedback. Along with that the feedback and suggestion that are provided by respondents are also not relevant. Performance appraisal system of ABC Consulting is ineffective as it is not helping to motivate employees. The review policy of employees is not frequent. Infrequency of review can cause employees to deviate from their objective and their performance can hamper. Along with that, the concept of self-appraisal is also deteriorating the foundation of current appraisal system of ABC Consulting. Moreover, for getting the appraisal forms filled, managers do not take the help of extensive data and information. The weakening situation of appraisal system of this company can harm the influx of attracting talented candidates. Moreover, there can be financial risk in not improving the performance appraisal system because if performance of employee is not good, then how can overall organization succeed? Poor performance appraisal can incur cost in the forms of loss of productivity that occurs if the problem is not fixed immediately. Moreover, if employees are not performing well, then it will directly influence their morale. They will feel upset often times, and tend to get angry, demotivated, and demoralized. In fact, poor appraisal system is even worse than no appraisal system. The next section outlines the changes that needs to be brought into the appraisal system of this company. Improvement in Current Appraisal System The current appraisal system demands for the need of reviewing procedures and reviewing documents. There are some ways through which performance appraisal system can be improved. First, the frequency of conducting reviews should be increased. Instead of semi-annually, managers must review the performance quarterly. A report will need to be prepared in which the records of quarterly performance is noted. At the end of the year, this report will be reviewed and the yearly performance will be in front of manager. This information will be more precise and actual and loss of information due to ample time will be minimized. Instead of annual performance appraisal, managers must provide feedback on weekly basis. Employees like frequent feedback. It also helps managers in keeping employees on track. Moreover, by doing so managers become so expert that they nip the problems in the bud. When it comes to self-appraisal, managers must complete a form along with employee in order to provide transparency in results. In this recommendation, manager jot down their concerns, employees arrive with their filled self-appraisal form and the discussion begins. Without discussion, self-appraisal form is of no use. The problem of late reviews also need to be solved. Managers must be very attentive towards receiving feedback from subordinates. Any late review will be accompanied with a penalty. In this way, the punctuality of reviews will also improve. Ambiguity or irrelevance in appraisal forms can wipe out all the efforts. An HR expert or professional must be asked to design the questionnaire/ appraisal forms. The questions must be highly related to job position, quality of outcome, productivity, responsiveness, and dollar value. Open ended questions must be included in order to provide respondent ample space to provide actual answer. Accurate questions will certainly lead to accurate answers. In addition, HR personnel need to review the policies and procedures from the scratch that are being implemented currently within the organization. A single loophole must not be left. An outside expert advice can also be taken in order to improve prevalent policies and procedures. Effective HR policies are those that link directly with goals of organization. Conclusion This paper extensively analyzed the current practices being followed in performance appraisal system of ABC Consulting. Advantages and pitfalls of the existing system have also been mentioned. It was found that pitfalls of the current system were greater than its advantages which means that the current system is weak. The major reason that performance appraisal systems do not work properly is because the management leave out too many important steps. Sometimes, it happens because of lack of knowledge and expertise of manager in this field. If the company is lacking an expert HR professional or the current one is not experienced or qualified enough, then then the HR manager must be replaced on immediate basis. More professional HR manager needs to be hired who possesses the basic understanding of how to reflect organizational goals in policies and practices of HR department. As mentioned earlier, management also needs to ensure that review is conducted on quarterly basis. It will help in keeping employees on track. Any deviation will be grasped and thereby removed immediately. Goal setting meeting must be held with HR so that the department is aligned with organizational culture, values, objectives, and goals. Manager must ensure that objectives and priorities are set for each distinctive responsibility. A standard of performance must be established and the performance of employees must be matched with it. Feedback must be solicited as much as possible. Feedback must not be limited to a specific issue but it may also include what employees feel that needs to be improved, what new assignments, trainings, professional development must be provided etc. Before terminating the meeting, employers must ask employees if they want to discuss something. In doing so, a conversational tone instead of confrontational tone must be maintained. Employees must also be ensured that the performance review is not tied to compensation review. Though the two has strong relationship between them, for instance employees scoring better in performance appraisal will be the only one to get compensated with increment or bonuses. Regardless of the negativities of the performance appraisal of an employee, a reward can be granted on some positive aspect that one might has. Recommendation/Suggestion The biggest solution for any problem is to believe that a problem exist. Solutions come through varying modes. Management must acknowledge the loopholes that are present in the current appraisal system and should take steps mentioned in this paper. The scope of this paper is limited to performance appraisal system but there are also other modes of evaluation which determine the productivity of employees. Those techniques can also be utilized. It is recommended to include as much information as possible in the performance appraisal system. It is suggested that management utilizes as much types of performance appraisal as possible. Some of them include peer review, 360 degree appraisal, top down evaluation, probationary review, and self-assessment. The more thorough an appraisal is, the more accurate will be the information. Detailed appraisal system will be fruitful for employer, employee, and overall organization. Reference List Brown, M. & Benson, J. (2005). Managing to Overload? Work Overload and Performance Appraisal Processes. Group & Organization Management. 30, (1), 99-113. 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