Performance Appraisal as a Function of Human Resource Management - Essay Example

? Critically Assess the Importance of Performance Appraisal as an Integrative Function of Human Resource Management Table of Contents Introduction 3 Importance of Performance Appraisal as an Interpretive Function of HRM 4 Illustrating the Importance of Performance Appraisal in Rother Homes 5 Separating the Financial Bonus from Performances 5 The New Performance Appraisal Programme (Pilot Project) 6 The New Performance Appraisal Set Up 6 The Nature of Management Development Program 7 The Main Strands of the Management Development Program 8 Management Development and Performance Appraisal 9 Conclusion and Recommendations 10 References 12 14 Introduction Human Resource Management (HRM) is one of the important functions executed in an organisation that formulates and implements policies regarding recruitment and functioning of the employees ensuring that appropriate talents are selected for the job assigned (Clark & Colling, 2003). In the modern day perspective, there are various tools utilised for the execution of the prime functions of HRM. One of such tools is the performance appraisal system which elaborates on the evaluation of the individual employee performances and likewise suggests the determination of the reward system. However, being linked with employee performances in a direct way, the tool can be identified to impose various limitations and complexity issues for the modern day management. Based on this notion, it has often been argued that performance appraisal performs a vital function to determine the sustainability of an organisation by a large extent (Rees & Porter, 2004). Emphasising on this particular aspect, the discussion hereby deals with the role of performance appraisal system to support the success of an organisation by gaining sustainability in terms of enhanced employee loyalty and consistent augmentation in their productivity. The sole intention of the essay is thus to critically discuss about the importance of performance appraisal system taking into account the case example of Rother Homes, a major player in the market of UK housing association. Importance of Performance Appraisal as an Interpretive Function of HRM Performance appraisal can be identified as one of the most important tools considered in the modern day applications of HRM to evaluate the performance of the employees effectively in an organisation (The University of Texas- Pan America, 2008). It is in this context that an appropriately executed performance appraisal tends to make the organisation familiar with the employee’s performances and their capacity to work. The feedback obtained from the performance appraisal is often useful for the organisation to accurately decide upon the employees’ reward in terms of promotion or demotion. Hence, a properly executed performance appraisal program helps the organisation to identify the shortfalls of the employees and effectually work on the indentified issues. Moreover, it helps to conduct management development program efficiently and prepare quality workforce for the future operations (Dargham, n.d.). Although formulating standards is regarded as quite difficult in the application of HRM, it is also necessary to establish standards for measuring and evaluating the overall employee performances accurately and effectively. In order to ensure that the performance appraisal is effective in an organisation, it must include the features in terms of validity and reliability being free from biases and relevance (Khan, n.d.). Illustrating the Importance of Performance Appraisal in Rother Homes Separating the Financial Bonus from Performances In the case of Rother Homes, it has been witnessed that the management attempts to relate financial incentives with the performance appraisal system in order to motivate the employees to contribute their best in the organisational process. However, in executing the process, the organisation tends to lack analysing its impact on the employees which in turn indicates a major lacuna of the entire performance appraisal system (Analoui, 2007). Linking bonus with performance appraisal programme also possesses certain threats to the integration of the employees. For instance, the bonus system implemented within the organisation may create mistrust and friction among the employees which can further disturb the smooth flow of the organisation (Walsh & Fisher, 2005). From a generalised perspective, these limitations witnessed in the performance appraisal system of Rother Homes signify that the appropriate evaluation of the employees’ capabilities and likewise reward holds a crucial impact on the overall sustainability of the organisation. This in turn also embarks the importance of performance appraisal in today’s organisational system. The New Performance Appraisal Programme (Pilot Project) Owing to the lacuna in its performance appraisal system, Rother Homes decided to bring change in its two leading management tiers to get those reorganised in order to ensure better future and succession planning as well as developing effective workforce within the organisation. The organisation thereby made an attempt to undertake a pilot project which includes the 360 feedback and coaching in its performance appraisal system. With this concern, the senior managers were made responsible to obtain the feedback from their colleagues, board members, internal customers and staffs. The pilot project involved was majorly concentrated on the identification of competency areas such as communication, adequate knowledge of performance data along with the financial reward system. Commitment towards the customer needs and demands with due regards to the organisational objectives were also considered as the crucial aspects while developing the performance appraisal system (Analoui, 2007). The New Performance Appraisal Set Up In order to attain the objective of setting-up a new performance appraisal system, Rother Homes implemented 360 degree feedback system and frequent coaching sessions with the sole intention to enhance the performance of the staffs through a better performance appraisal framework. From a theoretical perspective, the 360 degree feedback is the systematic process where employees receive feedbacks from their peers, supervisors and managers, simultaneously rendering feedbacks on the performance of their immediate superiors. A series of questionnaires were prepared and the respondents were asked to complete the questionnaire and leave their comment on the space provided. The identity of the respondent was kept anonymous. In addition to this feedback question was rated on the scale of 10 and the respondent were liable to rate the performance of the other managers or the staff. At the end of the session the feedback report were given to the respective recipient to analyse their performance so that the recipient could improve his / her performance based on the report provided. Further the coaching session were conducted to focus on the performance development programme (Analoui, 2007). It was through this program that Rother Homes intended to overcome the limitations presented in the execution of its former performance appraisal system, thereby again signifying the importance of accuracy in evaluating the contribution of employees. The Nature of Management Development Program Concerning the development of ‘home growing’ managers, a management development program was introduced by Rother Homes. With this concern, monthly seminars were conducted engaging both the managers and the employees. A group of 23 managers had to attend the seminar which included 18 managers from Rother Homes and 5 managers from its parent company, the Horizon Housing Group (Analoui, 2007). It was in this context that the organisation had to witness major human resource related issues fundamentally due to the inefficiency of the managers to execute the former performance appraisal system effectively (Rowe, 1995). Thereby, with due regards to the significance of performance appraisal system, the organisation attempted to train its managers which in turn would yield for better efficiency in the performance evaluation for process. The Main Strands of the Management Development Program The three strands of the management development program identified by Rother Homes were cost and process effectiveness, business development, leadership and communication. The coaching session was offered on the issues related with lean thinking, managing difficult conversations and risk management in order improve the efficiency and communication between the employees and the managers (Analoui, 2007). It is worth mentioning in this regard that the major limitations witnessed in the former performance appraisal system of the organisation was identified in terms of inefficient execution of the process, lack of appropriate leadership skills and miscommunication resulting from faulty business development planning. Thereby, the strands of the management development plan were planned in a manner that would in turn facilitate the mechanism of the newly framed performance appraisal system (Langridge, n.d.). It is in this context that the program was identified to benefit the staffs in several ways. One of the benefits rewarded by the program was its assistance to the managers towards applying and expanding their knowledge and understanding in three strands. Furthermore, the program was intended towards the development of a better communication channel, engaging the various dimensions of the business operations in Rother Homes bringing in transparency within the evaluation process of employees’ performance. This in turn was expected to generate cooperation and team spirit within the workforce (Analoui, 2007). Management Development and Performance Appraisal The program was further observed to have a positive impact on the staffs and on the organisation as a whole. The participants were greatly pleased with the new system of performance appraisal owing to the fact that they could now give their best possible effort to the organization. The sense of team effort was developed and the recipients of the 360 degree feedback report were able to develop their skills and improve their performance at the work place (Analoui, 2007). The new performance appraisal implemented within the organisation substantially help the management to improve the performance of the employees and build a highly productive future workforce within the organisation. From an in-depth perspective to the case scenario presented in the above sections, it becomes quite apparent that performance appraisal beholds a significant position in facilitating productivity and cooperation amid the various organisational channels (Ahmad & Ali, 2004). It was owing to this particular aspect that the organisation focused on considering the 360 degree appraisal system and an advanced management development program to mitigate the limitations witnessed in the former performance evaluation process and thereby gain the complete advantage of the strategy. Conclusion and Recommendations With reference to the above discussion, it can be apparently witnessed that performance appraisal indeed is quite significant to create a deep impression on the overall sustainability of an organisation, as can be learnt from the case scenario of Rother Homes. Creating a direct impact on the employees’ perceptions, values and commitment, the performance appraisal system also intends to cause both positive and negative impacts on the organisational efficiency subjected to the degree of accuracy and competency in its execution (Analoui, 2007). Therefore, while formulating performance appraisal program, it is essential to select the most appropriate objectives and the goals of the organisation related with the job performances of the employees. Concerning the fact that performance appraisal is actually intended to motivate employees, the length and the period of appraisal should be determined before setting performance appraisal program which in turn would facilitate the identification of the lacunas and strengths possessed by the individual employees from an unbiased perspective (Fisher, 1994). It is also necessary that the employees should be given opportunity to express their views regarding the job and their performance to add transparency and justness. In addition to this, the program should attempt to create cordial relationship between the superiors and the subordinates along with assisting employees to improve their performances. The employees must also be provided with written statements of their performance development and growth to preserve transparency and thereby maintain coordination amid the workforce (Mooney, 2009). References Ahmad, R. & Ali, N.A., 2004.Performance Appraisal Decision in Malaysian Public Service. International Journal of Public Sector Management. Vol. 17, pp. 48–64. Analoui, F., 2007. Strategic Human Resource Management, Thompson Learning, pp. 217-218. Clark, I. & Colling, T., 2003.The Management of Human Resources in Project Management-Led Organizations. Personnel Review. Vol.34. pp. 178–191. Dargham, N.A.S., No Date. Effective Management of the Performance Appraisal Process in Lebanon: An Exploratory Study. Performance Appraisal System: The Specific Case Of the 360-Degree, pp. 3-6. Fisher, C.M., 1994. The Differences between Appraisal Schemes: Variation and Acceptability - Part I. Personnel Review, Vol. 23, pp.33– 48. Khan, A., No Date. Performance Appraisal’s Relation with Productivity and Job Satisfaction. Journal of Managerial Sciences, Vol. 1, pp.104-108. Langridge, D., No Date. Cross Currents. Designing Dynamic, Lean Organisations - Breaking Down Boundaries – or putting them in the right Places. [Online] Available at: http://www.rubiconassociates.com/articles/A4%20Aut-03.pdf [Accessed August 04, 2012]. Mooney, J., 2009. A Case Study of Performance Appraisal in a Small Public Sector Organisation: The Gaps between Expectations and Experience. Chester Business School, pp: 21-32. Rees, W.D. & Porter, C., 2004. Appraisal Pitfalls And The Training Implications - Part 2. Industrial and Commercial Training, Vol. 36, pp. 29–34. Rowe, C., 1995. Introducing 360-Degree Feedback: The Benefits and Pitfalls. Executive Development, Vol.8, pp.14–20. The University of Texas- Pan America., 2008. Staff Employee Performance Appraisal Program. Uses of the Performance Appraisal. [Online] Available at: https://portal.utpa.edu/portal/page/portal/utpa_main/dba_home/DBA_FORMS_DROP/business_affairs/human_resources/pdf/SEPAP%20GUIDELINES.pdf [Accessed July 4, 2012]. Walsh, K. & Fisher, D., 2005. Action Inquiry and Performance Appraisals: Tools for Organizational Learning and Development. The Learning Organization: An International Journal, Vol.12, pp.26–41. Read More