Performance Appraisal and Other Practices Used by Organisations to Recruit and Select Employees - Essay Example

Introduction The people working in an organisation are deemed as the most precious asset of the organisation. Individually and collectively they contribute to the achievement of the objectives of the business. Thus the management of the people has become one of the most important aspects of the management. Traditionally, this mien was believed to be just a part of the workplace management and consequently was called "personnel management". Gradually, the processes evolved out of this restricted sense and are now called "human resource management" and "human resources" (HR). Human Resource management is evolving rapidly. Primarily, it is the ‘performance’ and ‘productivity’ of the working people which affected the business, but soon, it matured into several new dimensions. It has become essential that staffs is motivated, developed and managed in a way that they can give of their best to support departments missions. It too is stressed that the Human Resource systems and organisational structures should be managed in a way that was congruent with the organisational strategy (Fombrun). Human Resource Management (HRM ) is also seen by many to have a key role in risk reduction within organisations. The managers of an enterprise are required to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. This is part of the Human Resource Management. What is Human Resource Management? William R. Tracey, defines Human Resources as: "The people that staff and operate an organisation"; as contrasted with the financial and material resources of an organisation. Human Resources is also the organisational function that deals with the people and issues related to people such as compensation, hiring, performance management, and training. A Human Resource is a single person or employee within your organisation.’’1 From here, the definition of the human resource Management flows as “ the function within an organisation that focuses on recruitment of, management of, and providing direction for the people who work in the organisation.” Human Resource Management can also be performed by line managers. Further, it is defined as the organisational function that deals with issues related to people such as compensation, hiring, performance management, organisation development, health and safety, wellness, benefits, employee motivation, communication, administration, and training. One of the more recent evolution of the Human Resource Management is the in the field of ‘value’ formation for the enterprise. The creation of "value" has long been at the heart of corporate mission statements. The successful maximisation of the stockholder value, is often found involving attempts to maximise satisfaction among stakeholders i.e. employees, customers, and the public. Thus the ‘employee’ becomes important even to the shareholder and to the stakeholders. Stakeholders can be listed and categorised in various ways. One starting point is to divide a list into primary and secondary stakeholders. Besides the ‘owners’, the customers, employees, communities, and the environment are deemed as the primary stakeholders. The firms operate on a routine basis with and through their primary stakeholders to effect their strategies. Stakeholders are defined as persons, groups or institutions with interests in a project or programme. Primary stakeholders are those ultimately affected, either positively (beneficiaries) or negatively (for example, those involuntarily resettled). Secondary stakeholders are the intermediaries in the aid delivery process. Secondary stakeholders can be divided into funding, implementing, monitoring and advocacy organisations, or simply governmental, NGO and private sector organisations. This definition of stakeholders includes both winners and losers, and those involved or excluded from decision-making processes. Similarly, key stakeholders are those who can significantly influence, or are important to the success of the project. Interests of certain stakeholders may include "hidden interests", and it may be difficult to define interests of all types of stakeholders. Sometimes these "hidden interests" can be in contradiction with the openly stated aims of the organisations or groups involved, making the definition even more difficult. Thus, as a rule of thumb, each stakeholder is associated either with problems or with the objectives of the project. A tentative list of the stakeholders’ interest may be drawn on the basis of their expectations of the project, likely benefits for them , the kind and quantum of resources, the stakeholder wish to commit (or avoids committing) to the project. Normally, the stakeholders have ‘other interests’ as well, which may conflict with the project. Still, this remains a fluent situation and even the interpersonal relations among the stakeholders can re-align the interests. The stakeholder-agency concept of the firm states that the multi-purpose corporation seeks to balance the interests of its various stakeholders so that everyone receives some degree of satisfaction (Abrams, 1951). 2 The agency concept identifies not only the contracts but also the costs the resource holders must incur in order to insure proper action on their behalf.3 Among all the stakeholders, the Employees are a major one in most firms. The employee exert costs to the agency in two major manners: 1. The costs of direct and indirect compensation. 2. The costs of inefficiency which may be inversely related to compensation costs. Here, the HRM plays a major part. They work on the compensation part, as well as try to minimise the costs of inefficiency. Both of these aspects have a direct bearing on the interests of the stakeholders and the shareholders. The HRM have to have a well-defined recruitment policy in place. Selection of the wrong candidate or rejection of the right candidate could turn out to be costly for the organisation. Besides hiring the people, the HRM also executes internal promotions and the training, as and when required. An elaborate exercise of hiring the persons is taken to minimise the possibility of error. The first stage is recruitment. It is the process of identifying and pulling in potential candidates from within and outside organisation for future employment. After identification of the candidates, organisation can start the selection process. The selection process includes collecting, measuring, and evaluating information, mostly in data shape to reduce influences, about candidates’ qualifications, skills, experience and abilities for specified positions. Finally, those individuals are selected, who posses the right skills and abilities to be successful at their jobs. In real terms, selection amounts to 'purchasing' an employee (the price being the compensation multiplied by probable years of service). This cost, in case of a poor judgement, can be too much. For that reason some firms (and some firms for particular jobs) use external expert consultants for recruitment and selection. In real world, right from the head hunt to outsourcing has become very important, at times needed to be very swift and elaborate. Selection of outside consultant/vendor too may require special skills. In fact better and innovative recruitment and selection strategies are the key to the success of the organisation. The more effectively organisations recruit and select candidates, the more likely they are to hire and retain satisfied employees. The general practices used by organisations to recruit and select employees include: 1. Internal candidates. Normally they typically stay in positions and are more successful than external candidates, yet they offer a comparatively smaller constituency and less boost to innovations. 2. For recruiting managerial/professional candidates, the Internet is found to be the most popular advertising medium in a survey. 76 percent of the organisations surveyed preferred Internet over other means. 3. Employment agencies, colleges, and professional organisations are used to recruit managerial/professional candidates. 4. Careers officers (and careers masters at schools) 5. University appointment boards. 6. Organisations offer candidates a strong company reputation (69 percent) (b) high-quality benefits packages (65 percent) and learning opportunities (55 percent). 7. Offer of stock options or child care options are not found popular among the companies surveyed (37 and 36 percent respectively).4 Interview is normally supposed to be the last step into the firm enrolments. Thus interviewing is carried out by individuals , who are ultimately responsible for the job done by the perspective employee, e.g. supervisor or departmental manager. For vacancies of across the department significance, panels of interviewers or sequential interviews by different experts takes place, which can vary from a five minute conversation to a process stretching over several days. Ultimately personal skills in judgement are found to be the most important. Although certain techniques are there to aid judgement and to minimise error. They include: a. Aptitudes test (particularly useful for school leavers) b. Attainments c. General intelligence Techniques used for more senior posts are: 1. Leaderless groups 2. Command exercises 3. Group problem solving The art of selection has become a profession as well and specialists often use other techniques as well. All of these need skilled testing and assessment. Performance appraisal Performance appraisal is an integral part of the performance management system. A balanced and holistic approach of performance appraisal can greatly benefit an organisation. Any sound performance management system revolves around the process of ‘goal setting.’ The goal setting brings in the clarity required to deliver the required results. Any appraisal, barring some extra ordinary and accidental happenings, is basically a contrast to the expectations of the organisation. These expectations are set in the form of “key result areas” (KRAs). The required standards are strongly indicated there. This is also termed as “measures of performance”. Clear directions help increase productivity by enabling people to focus on the requirement. Simultaneously, it minimises frustration and enables employee satisfaction. The second most important component of performance management system is the regular reviews. Reviews provide timely feedback to the individual. A sound performance management system in place schedules formal reviews during the course of year. Such structured periodic reviews enable the organisation to take stock of the performance during the given period. At the same time these periodic reviews give the individual an opportunity to discuss his/her achievements during the given period and to look at areas of improvement. Reviews can also be utilised to make midcourse correction in the KRAs. The KRAs can not be deemed constant in swiftly changing macro economic environment. The organisation may feel the need to review some of the objectives. The regular reviews also ensure a predictability in the annual appraisal. Regular and structured reviews are an important component of the performance management system and are essential to ensure that the performance management system is not reduced into annual performance appraisal. This sub-system includes the following processes: Coaching Mentoring Performance improvement plans. Annual appraisal A typical appraisal system consists of : 1. Confidential report: The report is written by the immediate supervisor and is, normally, not shown to the individual. Decisions, such as promotions and changes in compensation are made, based on this report. 4. Report by supervisor. This is shown/given to the individual and discussed. 5. Self-appraisal by the individual. 6. Value-added comments by the supervisor following discussion In this system, the individual produces a self-appraisal report vis-à-vis KRAs. These KRAs are given to him at the start of the year. The manager normally adds his or her comments on the self-appraisal report of the individual. Ratings The methods of ratings adopted by the organisations are as follows a) rating given by the manager or b) the individual and the manager give ratings and the organisation has a mechanism to deal with differences between the two. In this system there is an opportunity for the individual and the manager to discuss the contents of the appraisal. In certain industries or project environments, the employee may raise a question about the suitability of the annual appraisal. There can also be such professionals, who work with different project teams during the course of the year. In such cases reviews can be signed-off at the end of each project. Development plan The entire exercise of appraisals becomes an intimidating tool in the hands of the HRM, unless it is not accompanied with a suitable development plan. This relates to the training and development sub-system. The development plan, in parts emanates out of the annual appraisal. This is the result of the areas of improvement drawn from the appraisal and competencies required. Vinculum to rewards system From the individual point of view, the performance management system and the culture of the organisation is judged by the message of the rewards system, which normally follows the performance appraisal system. Processes of compensation, rewards, progression and succession planning should flow from the performance appraisal.5 The rewards system needs to recognise contributions made to team objectives, else the culture of focusing on individual tasks starts in the organisation, at the cost of the team objectives. An elaborate system also relieves the management from many a pain. “Managers are uncomfortable when they are put in the position of playing God”. They do not want to pass judgement on personal worth of their team members.6 These classic lines are still relevant. Appraisal of the system Ideally, the performance appraisal is not for the employees alone. The system variables also need be taken into account while dealing with performance.7 Some times even the organisation processes impede the actualisation of individuals. Thus the system too needs to continuously review the operational processes in the organisation, so that it may be ensured that they facilitate and enable performance. There has to be a judicious decision on the root causes of poor performance of the individual. May be, the cause of individual’s poor performance lies in the system and not with the individual’s competency or inclination. Coaching, mentoring and performance improvement plans All over the world, the best companies have realised that the secret of acquiring the core competencies, needed for competitive advantage and flexibility, lies in the continuous developing and training their employees. These organisations abet their employees to learn continuously. The immediate advantage thus accrued is that of self-development and an environment of learning and sharing. Employees are encouraged to have measurable goals to enable him to plan his/her career path and learning path. The features of an effective learning and development programs are: 1. Strategy driven: All training and development programs have to align with the strategic goals of the organisation and thus be mutually beneficial. 2. Return on Investment: The training program too should be measured as any other business activity. It too must show a return on the expenses either on short term or on long term basis. Methods of training and development programs The following methods are used for the training of the employees, depending on the type of business the organisation is engaged: eLearning Computer based training (CBTs) Class room training Knowledge sharing sessions Continuous educational program in reputed institutions Embedded learning (Learning at the work place) Sources for learning Employee ideas Research and development (R&D) Customer input Best practice sharing and benchmarking Advantages of organisational learning 1) Enhancing value to customers through new and improved products and services 2) developing new business opportunities 3) reducing errors, defects, waste, and related costs 4) improving responsiveness and cycle time performance 5) increasing productivity and effectiveness in the use of all resources throughout the organisation 6) enhancing the organisation’s performance in fulfilling its public responsibilities and service as a good citizen. 7) more satisfied and versatile employees 8) greater opportunity for organisational cross-functional learning 9) an improved environment for innovation, better products and services. 10) productivity increase 11) reduction in defect density 12) customer retention 13) employee retention 14) reduction in recruitment cost For effective learning and training, the organisation should create one training group. The training group interacts with the functional group heads and business leaders and understands the skill sets needed for the organisation to compete in the market and develop them.8 Both long term and short term training needs of the organisation are marked in this way. After identifying training needs, the training group head designs training plan for the employees. To assess the long term returns, benchmarking could be done with the competitors of similar businesses. The HRM Models However, the HRM and any of its deemed and desired functions can be different to the objectives and philosophy of the organisation. The employee may be a stakeholder, yet the owners are the shareholders. None of the functioning HRM model allows it any kind of independent philanthropy. The HR strategy has to fit ‘very tightly’ with the business strategy and out of the two, only the business strategy can have the liberty (tied to market and profits , in turn) to be an independent variable. The organisational effectiveness depends on this function only. “HRM cannot be conceptualised as a standalone corporate issue. Strategically speaking, it must flow from and be dependent upon the organisation’s (market orientated) corporate strategy”.9 The ‘matching’ model of strategic HRM (see Appendices), first discussed by Titchy et al (1982) and subsequently brought to the fore by Fombrun is of particular significance.10 Fombrun stressed that ‘HR systems’ and organisational structures had to be congruent with organisational strategy. In evaluating this ‘matching’ model, the most careful exposition of the theory (which on the whole has been sketchily done) and the most of the empirical testing has been undertaken by the Schuler group.11 Schuler and his colleagues concluded that while “HRM priorities are significantly associated with business strategy” 12, the picture is more complex than that. One of the problems identified by Boxall is the ‘matching models’ typical choice of the important context in HRM. Fombrun et al (1984) focuses entirely on the ‘four generic functions’ of selection, appraisal, rewards and development. Boxall (1992) describes the main difficulty with this is in its omission of two fundamentally (interrelated) policy domains: first, the attitude to such labour relations concerns as union recognition and collective bargaining13. The ‘Harvard framework’ found a greater favour in the UK. 14 ‘Harvard model’ had some important strength, it incorporated recognition of a range of different stakeholder interests. Simultaneously, it acknowledged a broad range of contextual influences on management’s choice of HR strategy. Business strategy is seen as being important,15 but the framework acknowledges a number of factors to play their part. Viz. Patterns of labour unions, workforce characteristics, labour market regulations, community values etc. Conclusion Several researches suggest that, in some cases, ESOPs, profit sharing plans, and progressive people management strategies have a positive effect on limited measures of financial performance.16 Despite of this and, that a good many ‘reputed’ large firms boast of involving a ‘stakeholders’ approach to employee management , HRM is fundamentally about ‘management’ decisions and behaviours used, consciously or unconsciously, to control, influence, and motivate those who provide work for the organisation-‘’the human resources’’ (Purcell in Storey 2001:64). This is a matter of fact. In fact all the ‘virtues’ of HRM models, whether British or American, tend to sharpen the ‘assets’ of the company, in their capacity of being a company property. Social obligations are neither attempted, nor addressed. The commercial worthwhile of HR philanthropy is paramount of them all. 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