Critical Issues in Performance Appraisal - Research Paper Example

…………………………………………………………………………….xxxxxx …………………………………………………………………………..xxxxx ………………………………………………………………………………xxxxx ………………………………………………………………………………..xxxxx @2013 Changes to the appraisal system in Coca-Cola India Ltd Abstract Coca-Cola Company is the largest beverage company in the world. It made its re-entry into India through its 100% owned subsidiary known as HCCBPL. This paper will review on the changes to the appraisal system that has taken place in Coca-Cola India Ltd. This paper will discuss provide an introduction on the goals and objectives of the company’s appraisal system, the appraisal system, the advantages and disadvantages arising from the use of the appraisal system, improvements on the strengths and weaknesses, conclusions and will provide recommendations to the management on the best way forward. It is recommendable for the company to make use of a flexible benefit option that will allow employees to get compensation in accordance with their desires and needs. 1. Introduction Performance appraisal is defined as the structural formal interaction between supervisors and subordinates which usually take the form of a periodic interview through which the subordinates work performance is examined in order to identify the strengths and weaknesses, as well as opportunities for improvement and skill development. Performance appraisal system (PAS) is aimed at improving the performance of the overall organization by encouraging a high involvement level and motivation on the employees, as well as increases participation (Toppo & Prusty 2012). The system also establishes a process to use in the achievement of accountability and responsibility in the process of executing programmes in the organization. The human resource management of the Coca-Cola India Ltd believes that on the importance of employees as they are the main drivers of the company. The HR considers the employee as being its greatest assets and it requires their ultimate dedication to employments to make the best out of the company. The main objectives of using the appraisal system to the company are to: Recognize the top performers of the company- The company aims at recognizing and providing positive feedback on all top performers in order to ensure that they are motivated and challenged to enhance the growth of the company Improve planning- The Company aims at reviewing the status of all bottom performers in order to take all appropriate actions. The appraisal system helps the company to prepare performance improvement plan for all the bottom performers. Performance delivery and review of results- The Company aims at assessing the progress of the business results, assessing the progress on the competencies and development of the workers and to make clarifications on the necessary actions to take in maximizing performance. The system helps the company compliment and credit the good progress of the workers in order to maximize performance. Coaching of performance development- The appraisal system he 2. The appraisal system 2.1 Outline of the current appraisal system Performance appraisal in Coca-Cola is done on an annual basis. The company usually appraises its employees from their performance towards the achievement of the organization goals. These goals are usually set in the begging of the year and the employees, are informed about the goals and that they would be appraised at the end of the year if they achieve the set goals (Grote 2002). The company uses differentiated rewards that highly motivate the performers and drives high performers in the staff to achieve better results. Performance management and appraisal system in Coca-Cola Company The company uses different parameters as a base of its reward system which includes inflation rate factor, sales rewards, individual’s personal development, and market potential. The company used the named parameters to make its reward system well known in the market and to make all of its employees feel satisfied, comfortable and motivates into the achievement of organizational tasks (Grote 2002). The management believes loyal employees will perform better and will work to the achievement of the desired results. Coca-Cola Company also uses two rewarding systems which are function and performance (Toppo & Prusty 2012). The company has been rewarding its employees through the function reward system. The function reward system uses the length of services on the blue-collar workers to reward them. For the white-collar workers, the higher one rises in the hierarchy, the higher is the percentage of their reward. Employees are also rewarded in accordance to their performance with two reward systems which are either relational or financial. In the financial aspect of the reward system, the employees are paid in terms of benefits while the relational aspect deals with learning and development, as well as the work environment. The financial rewards provided by the company include fringe benefits like company car, disability plan, pension plan, share purchase plan, meal vouchers, well being initiatives, medical insurance, and flexible working time among many others (Grote 2002). Coca-Cola India has also recently replaced its five point rating system with a four point grading methodology which has forced the reviewing managers into making a tough call on the rating appraises. In many appraisal cases in the company, the appraiser would take the easy way and would assign a score of either 2.5 or 2.7 making it difficult to give a score of 3. The company also uses a 180 degree performance appraisal system which aims at increasing productivity, customer satisfaction, employee retention and compliance with the company rules and policies. 2.2 Advantages and disadvantages of the system Advantages The appraisal system, which includes performance management and reward system, has proved to be quite effective and strategic for the company. The system has overcome the thirst of the employees as they have been working harder in order get the reward Outstanding managerial expertise has been involved in equalizing the system to perform better (Banner & Graber 1985). The appraisal system used by the company has allowed the managers to compare and evaluate its employees in ways which are relevant to the goals of the organization. By implementing the appraisal system, the company is able to group the workers into developing performers, successful performers, exceptional performers, High end successful performer or workers who do not meet the expectations of performance depending on their competencies as well their personal development (Grote 2002). Disadvantages There have been injustices in the past when it comes to the distribution of rewards since there are more valuable for sales people in the organization instead of other departments like accounting and Human Resource. It is bad for the long terms perspective of the company since the reward criteria requires equal distribution for all employees for as long as there is a long term focus The company is not focusing on different alternatives of reward management, which may lead to long term upsets on the company (Banner & Graber 1985). The financial and non-financial compensation and rewards for the company differ greatly from the top staff to the subordinates which have been demoralizing the employees. Alignment of the business performance with employee pay in the company has only been restricted to senior levels 2.3 Improvements from the analysis of the identified strengths and weaknesses It is very important for the company to define the criteria for rewarding the employees as this will lead to mutual benefits for both the organization and employees. To avoid injustices resulting from the reward system, Coca-Cola India has come with different techniques, which it used in defining the reward criteria to work in accordance to the defined organizational standards (Banner & Graber 1985). The developed system has worked so well in the market and has enabled the company to compete with its competitors. These techniques are grade jump, financial aspects, designation change, career grooming, training and development, special assignments (interdepartmental transfers), grade jump and designation change and personal development of an individual. The company has also made a close collaboration with all employees in order to fetch information of their problems in order to ensure their satisfaction and increase their effectiveness and efficiency. The performance management system (PMS) in the company follows all the basic steps of PMS right from planning to coaching and feedback (Toppo & Prusty 2012). However, it is important for the company to introduce proper check and balance system is enhanced between the performance goals. To prevent further demoralization of its workers, the company has enhanced the consultations between the management and employees as this helps the management to understand better and analyze the needs of the employees hence awarding the accordingly. To enhance the motivation level of its workers, the company has reviewed its appraisal system into quarterly bases from the annual bases. 3. Conclusion Coca-Cola India Ltd follows and believes the grow approach. The grow model helps the employees to understand where they want to be and what to in order to accomplish the goals. From the above analysis, it is evident that the appraisal system used by Coca-Cola India Ltd has helped it in the achievement of the set goals and objectives. The performance management system is not a continuous process as the review in the company is not done quarterly but on an annual basis. The performance management system should be a continuous process of measuring performance and should be done daily or monthly by managerial reviews (Grote 2002). Management of bottom performers and other performers is one of the objectives behind the use of the appraisal system in the company. The company usually prepares a robust of 30-90 day of performance improvement plan that includes all specific and measurable actions with clear timelines. The company provides guiding principles on how the performance will be measured after which a review is done followed by the necessary actions. It is also evident that the company employs different strategies to accelerate the performance of its solid performers (Toppo & Prusty 2012). This includes building on their strengths in order to help them leverage on what they are best at, identification of the critical tasks that require enhancement of performance, creation of a development plan that will enhance their performance in critical tasks, assigning them those projects that will help in building their skills and confidence, encouraging recognition and progress contribution, ensuring a fair compensation, facilitating problem solving to remove all barriers to performance and challenging them with appropriate stretch objectives that will help them to reach peak performance. 4. Suggestions Appraisal system is a very effective technique as it supports and changes culture of the organization in an optimistic way. However, this system would only be possible if the system is mad equal to all employees of the organization. It is important for the management of Coca-Cola to utilize this system to all its employees in order to increase productivity and effectiveness. It is recommendable for Coca-Cola India Ltd to introduce an alternative appraisal system like goal sharing, pay for the knowledge of a program and profit sharing in order to increase the productivity of its employees. It is also important to implement a link of business performance with the employees pay from top to bottom. Small recognitions and rewards should be implemented, and each supervisor should have a good degree of autonomy in the recognition and rewarding of the performance of the employees. Financial and non-financial rewards by the company should be re-designed in a way that gives a fair importance to both low and top level staff. The management should ensure that the reward management of the company is fully functional in order to make its employees committed to the values and standards, organizational goals and push the employees to boost the work understanding and competencies (Toppo & Prusty 2012). Organizations are having more curiosity towards group tasks that require great communication and interaction between different departments and this can only work if all departments are rewarded in an equal manner. It is therefore important for the company to address to group tasks since its rewards are specifically designed for an individual which sometimes leads to a reduction in productivity. Intrinsic rewards are usually driven by the extrinsic ones, and this includes incentives benefits, formal recognition, pay promotion work environment and social relationship. It is therefore recommendable for the company to devise a more innovative appraisal system that will include the best practices from others that will fit well into the organizations environment. References Banner D.K, & Graber J.M, 1985. Critical issues in performance appraisal. Journal of Management Development, Vol. 4 Iss: 1, pp.26 – 35 Coca-Cola India, http://www.coca-colaindia.com Grote R.C, 1996. The Complete Guide to Performance Appraisal. AMACOM Div American Mgmt Assn, Grote R.C, 2002. The Performance Appraisal Question and Answer Book: A Survival Guide for Managers. AMACOM Div American Mgmt Assn Toppo M & Prusty T, 2012. From performance appraisal to performance management. Journal of Business and management, Vol. 3, Issues 5, pp 01-06 Read More