Appraisal Systems as an Enhancer of Organizational Behavior - Coursework Example

Appraisal systems as an enhancer of organizational behavior Case Study Genworth, Inc is a multinational financial organization that has branches in five countries. The company has many diverse businesses in the financial domain and has invested a lot of money and manpower on developing new products that are targeted at corporate customers as well as high net worth customers. During the course of its fifteen years of operations, the company has consistently reported good returns and its ROI remained satisfactory. The company has recruited people to its branches in five countries and often post people to other countries as part of its international training schedule. However, for the past one year, analysts in the company have observed that the current growth of the company is not keeping pace with its growth history. There is increasing discontent in the company about pay and perks that are being offered to employees who work in the same level and professional capacities. The grapevine is that the top management is favoring some employees while deliberately ignoring others. As a result, employee productivity in the marketing department has fallen below optimal levels and this is hampering the overall performance of the firm. The company has posted an internal team to study the situation and suggest measures to improve it. David Mclean, who serves in the investment banking division of the firm, has been assigned the task of conducting an internal assessment of the situation and report to the management on how things can be improved in the company. David starts off his task with a questionnaire that has 50 questions and makes it mandatory for all employees to fill it. He takes special interest in the responses that have come from the marketing department. After studying the answers and the responses of the employees, David comes to the conclusion that many employees are unhappy with the appraisal system of the company. They feel that many of them have been sidelined when it came to plum overseas positions and feel that the unworthy is being rewarded in the company. David learns that the prime issue that the company faces is the lack of motivation. Employees are not motivated to perform well and in many cases their efforts are not being rewarded by the company. In addition, employees felt that they did not have a chance to vent their concerns in a confidential manner. They also felt that even if they had suggestions for the company, it was either not being followed up or the credit was given to someone else than the person who proposed the changes. It was evident that the situation is a very serious one, considering the fact that the issue was affecting the morale and productivity of all employees. Further, the lack of initiative in the marketing department was adversely affecting the productivity of other departments in the company. Already the HR department of the company had complained of a high attrition rate and if the situation was allowed to go unchecked, the company could lose key people, which would be detrimental to its operations. Hence, a program that would solve the situation and motivate employees was required. David came up with some suggestions and programs that could solve the situation in the company. In the modern business environments where every management activity depends on accurate and periodic feedbacks, it is not surprising that the issue of performance appraisal has generated much discussion on its efficacy and appropriateness. While many experts believe that an appraisal system is very important to assess the net worth of employees, others consider appraisal systems as too limiting and arbitrary and believe that it only serves to hijack the work initiative from an employee. However, there are many factors that make appraisal systems an integral part of modern human management systems and it cannot be easily replaced with other systems. Business analysts believe that an appraisal system that is well designed and suitably modified to solve many HR related issues, which were previously considered to sap the employee’s inherent potential, can work wonders in the work place as a motivational tool. One important factor that needs to be considered when linking motivation and performance appraisal is that motivation need not be always positive to elicit good performance from the employee. In this regard it may be said that various factors that act negatively on the employee, and which cause him/her to enhance her productivity can also be called as motivation. Although the second type of motivation is not healthy and conducive to a good work environment and organizational culture, it must be said that such possibilities also exist within the scope of the all inclusive term called motivation. Performance appraisal systems also use negative motivation to actualize the goals of the organization. The importance of an appraisal system Although much discussion has been conducted in the recent times against the usefulness of performance appraisal systems as an organizational tool (Coens, Jenkins and Block, 2000), it is considered to be one of the cheapest and most effective system to classify employee performance. Although the appraisal system can by itself generate much controversy and conflict in the work place, it is a system that prevents an employees performance from being assessed without a framework of guiding principles. Performance appraisal systems infuse a certain degree of formality and structured assessment of the past and present activities as well as the future potential of the employees and hence in this regard, it acts as a continuous monitoring system that transparently highlights the performance history of the employee. Motivation and Appraisal systems Performance appraisal systems would not have drawn much flak from management experts if it is were historically de-linked from the compensation programme in the organization. Many managers / Business managements almost always link performance appraisal systems with the financial worth of an employee and use appraisal systems to design the compensation package of the employee. As a result, performance appraisal and pay restructuring has come to be considered as synonyms. Actually systems that link Appraisal systems that are intimately linked with salary, perks or professional growth within the organization will almost always generate a lot of problems. On the other hand, if such issues are handled by secondary processes and if appraisal systems are used only to assess the professional and personal worth of the Negative motivation and Appraisal systems Often many experts complain that negative motivation is bad for an employee and destroys his/her enthusiasm to work productively. While it is accepted that negative feedback can hamper the performance of an employee, especially if it is clubbed with his pay, many experts feel that constructive criticism is a must to improve performance within the firm. In this aspect, appraisal systems act as good motivational tool and in conjunction with strategic HR policies, it can become a powerful motivational tool. Criticism can serve two purposes to the company If taken in the right perspective and if delivered in the right manner, appraisals can act as great correctional tools, which will help the employee to achieve his/her true potential. An appraisal report that speaks critically of an employee can be used by the firm as a guarantee against legal future problems (Hodowanes, 2000). Pitfalls in appraisal systems Appraisal systems can be a source of motivational problems because assessments can cause a lot of problems to the employee. For example, a negative assessment can make the employee cast aspersions on the manager’s motive. Similarly, assessment motivated by favoritism can cause other employees to revolt against the management decision. Hence, the appraisal season is the most dreaded period in many organizations when the relationship between the management and the employees is at the lowest levels. Appraisal systems also have the inherent drawback in that it often assesses the personal characteristics of the employee than his behavior in the workplace. There is also another problem with appraisal systems. Often the assessor of an employee keeps changing from time to time. This can cause a great deal of problems, when the company does not have a well laid out appraisal policy or the assessor shows complacency in his efforts. For example, an employees previous assessments may be completely ignored by a new assessor and in such a case, the employee’s past efforts at improving his performance comes to nothing and will de-motivate him (Hodowanes, 2000) Positive potential of appraisal systems as a motivational tool David proposed a well laid out appraisal plan has the following motivational qualities:- The employee expects tangible benefits for a work that is well done. In fact, the benefit of money and position and the fear of losing a job compels many employees to perform well in their jobs Appraisal systems ideally assess all employees with the same yardstick. This improves transparency and consistency in the organization Most of the existing appraisal systems and very responsive. Most companies link their perks and pay revision events to the appraisal processes and so as soon as an employee gets the feedback that he has been assessed well, he can expect benefits as cash or kind. Performance appraisals create extreme ends in the performance spectra of the total employees in the firm. This means that the process highlights the best valued employees, the worst, as well as those in the middle of the two. The best employees are positively motivated and they may be urged to maintain their value to the company in the future. Those in the worst category have to perform immediately if they are to be considered by the company for further employment, particularly in a crisis. Those in the middle are motivated to reach the higher spectrum or at least perform well in their group. Hence it may be seen that ideally appraisal systems have great motivational value. Employees can plan for both long terms plans as well as short term priorities that would enhance their performance levels in the next appraisal (Segal, 2000). Some plans to improve appraisal systems Enhance the organizational value of appraisals Appraisal systems must be considered as the means to appreciate the past work of the employee. It should not be a mere tool for deciding how much money the employee would be carrying home. On the other hand, it should provide positive feedback to the employee and apprise him about the possibilities of enhancing his skills in the future. When an honest assessment that is devoid of compensatory undertones is provided, employees will have the necessary inclination to enhance their current levels of performance. For example, if an employee is punished by denying a hike for his lack of soft skills, he may be reluctant to enhance his skills because the effort that needs to be taken to acquire the skill may not justify the hike. On the other hand, if the employee is informed that his acquiring the particular skill is important to the team, he may be motivated to learn and improve on it. Appraisal systems must not be restricted to pay systems. In fact, appraisal systems must be enforced in all possible departments in the organization Increase the frequency of the appraisal systems The annual or semi annual appraisal systems that are conducted in most companies immediately precede the pay revision events in that company. Hence employees feel that their performance for the whole year will be determined by a process that gets underway for one or two months. The gap in performance and its acknowledgement is a factor that de-motivates many employees and there is a genuine fear that the achievements of an employee in the early part of the year could be sidelined by lack of newer achievements or even some of his later failures. In a survey in the United States, it was found that only one third of the interviewed employees were assessed for performance at least in last 12 months. A majority of them felt that they would not be awarded for a good job because of the gap in appraisal events. (Bates, 2003). Hence appraisals needs to be structured so that they happen more than once or twice in a year. As far as possible de-link direct financial benefits from appraisal systems Although appraisal systems that decide the pay package of an employee cannot be wished away, managers may enhance the productivity of their employees by linking productivity with other tangible gifts, than money and position. Care must be taken to ensure that these gifts are flouted by the employee, which will serve as motivation to other employees. In this regard, it must be said that incentives in the form of money may not be visible for other employees to serve as motivation. Similarly an elevation in ones position in the firm can give rise to peer problems particularly if they think that the employee in question does not deserve the promotion Avoid appraisal systems as the only criteria for a pay revision. Performance appraisal methods must set goals for the employee so that he/she has goals other than financial benefits to work for. This will enhance his/her commitment to the firm (Locke, et al., 1981). Promote Appraisal systems as a tool for educating the employee about their weaknesses and drawbacks Often appraisal systems are one sided or pre determined. Most employees complain that the appraisal systems often look like a conviction statement where the weaknesses of the employee are projected by the management (Baron, 1988). Actual processes must allow the employee to explain his weaknesses and their possible causes, which the management could have overlooked. The benchmarking of the employee must happen only after this discussion is over and issues settled amicably (Nemoroff, W. F. & Wexley, K. N. 1979). Employees must also be educated to understand that the process that details their weaknesses are carried out to identify professional challenges and not as a yardstick to curtail their perks. Appraisal systems must be a continuous evaluation process that is independent of the assessor. Care must be taken to insure that the assessed employee has a written record of past performance issues and corrective actions taken in response to it. Such reports must be meticulously studied by the assessor and any further decision must be based on that study. The role of the assessor Appraisal systems depend on the performance and maturity of the manager/assessor to succeed or even make some improvements in the productivity of the employee. Since appraisal systems are personnel dependent processes, a thorough expert must be assigned the job of assessing the skills of the employee. For example, a survey conducted on employees who had undergone the appraisal assessments showed that most of the misconceptions regarding appraisal systems arose primarily because of the non-performance of the manager. For example 71% of the people interviewed showed that their efforts to explain their lack of performance were stymied by the managers refusal to discuss issues with them. 68% felt that managers do not clearly spell out their drawbacks and often use the appraisal system as an excuse to control the cost to the company in terms of higher salaries. Many employees also feel that the manager may use the appraisal system to score credits at cost control (by eliminating the need to pay higher salaries to deserving employees). 55% percent felt that ratings were not consistent with their performance. (This may be ignored because very few people accept their mistakes and fewer still are ready to forego their pay for their mistakes) (Hodowanes, 2000). The gist of this survey reveals the potential for breakdown of interpersonal relations while an appraisal is underway. Hence an expert manager is required to carry out the appraisal process properly. Conclusion Performance appraisal is actually conducted to ensure that the employee is encouraged to fall in line with the objectives of the company. Even though appraisal systems are indispensable to the company, companies must develop an entirely different approach to performance appraisal and only then will employees be satisfied that the company is prepared to do justice to their cause. Similarly, employees must not be encouraged to work solely for good grades in the appraisal systems, because that would make them less efficient and more self-centered. The need of the hour is to develop a system that can effectively do away with bad appraisal systems and to enhance the job satisfaction of the employees in an atmosphere of trust. Similarly, the employers also must be given a system that does not grade employees, but helps them to perform better in a professional atmosphere. Works Cited Nemoroff, W. F., & Wexley, K. N. (1979). Journal of Occupational Psychology. An exploration of the relationships between the performance feedback interview characteristics and interview outcomes as perceived by managers and subordinates. Vol 52, pp.25-34. Fedor, D.B., Eder, R.W., & Buckley, M. R. (1989). Organizational Behavior and Human Decision Processes. The contributory effects of supervisor intentions on subordinate feedback responses. Vol 44, p.396-414. Baron, R. A. (1988). Journal of Applied Psychology. Negative effects of destructive criticism: impact on conflict, self-efficacy, and task performance. Vol 73, p.199-207. Locke, E. A., Shaw, K. N., Saari, L. M. & Latham, G. P. (1981). Psychological Bulletin. Goal setting and task performance: 1969-1980. Vol 90, p.125-152. Tom, Coens., Mary, Jenkins., &, Peter, Block. (2000). Abolishing Performance Appraisals: Why They Backfire and What to Do Instead. Berrett-Koehler Pub; 1st edition. Hodowanes, Joe. (2000). Job Articles - Its Performance Review Time Again - A Managers Perspective. Retrieved May 29, 2007, from http://www.ocjobsite.com/job-articles/performance-reviews.asp Steve, Bates. (2003). HR Magazine. Performance appraisals: some improvement needed. Segal, A. Jonathan. (2000). HR Magazine. 86 Your Appraisal Process? Read More