Performance Management of Employees - Research Paper Example

PERFORMANCE MANAGEMENT Submitted By 23rd Feb. Introduction 3 Identification of the Evaluation Method 4 Analysis of the Model 6 TheAdvantages of the Current Model 7 Disadvantages of the Model 8 Effects on Employees 9 Effects on departmental performance 10 Suggestions for improvement 11 Conclusion 11 Bibliography 13 Introduction In this paper we will try to identify the performance appraisal method used in the organization and will try to analyze the effectiveness of the method by taking into consideration the advantages and disadvantages of the method used. How effective it has been in analyzing and improving performance of the employees not only in the terms of their own career development but for the relevant department and organization as a whole. Performance management is one area of HR which is most difficult to implement that is why probably it is called Achilles’ heel of human resource management. This is one area which is least appreciated by employees and a major source of dissatisfaction. It is a key area through which organization not only gets the work done but communicating expectations and driving employee behavior towards goal achievement. It helps identifying under performers and developing them accordingly. Now the question arises if it is so important and beneficial for the employee and the organization then what makes it so difficult? There are genuine reasons for it. Managers avoid it in fear of damaging relationship with their subordinates. Employees avoid these activities especially development needs because they are afraid it will jeopardize their career growth. What we need to do is to change perception about it. Instead of treating as a necessary evil or a routine paperwork drill which has to be done once in a year, managers should be coached to conduct it properly. Both the managers and the employees should understand the benefits of effective performance management system. If done correctly Performance Management helps in implementing organization strategy by communicating what is important for organization and driving employees in achieving the defined goals. We can summarize the outcomes of effective performance management system in the following points (Pulakos, 2009) Clarity of performance expectations and standards Productivity improvement at all organizational levels Keeps employees motivated Ensures employees have the desired and required skills and capabilities for optimal performance. Alignment of performance with individual, departmental and organizational goals, values and strategy. Provides foundation for HR decisions e.g. salary, promotion etc. It helps in improving and building relationship between employees and managers. There are various performance appraisal methods and tools available and all of them apparently seem quite straight forward to implement. But the truth of the matter is that in order to gain maximum benefits organization must find the best fit in organizational context, especially the infrastructure and support for the implementation. Even the best designed performance management can fail if managers don’t understand the importance and benefits of it and implement the process in an effective way. Hence in short a critical analysis of the organizational situation, realistic goal setting and proper implementation of the performance management process is very necessary. Identification of the Evaluation Method There are various performance appraisal models available. The appraisal model applied by our organization Alere is a combination of management by objective (MBO) method and competency model. Company has actually utilized traditional MBO method with the modern behavioral model which is competency based. So the model used for evaluation of performance success is a combination of goal achievement as well as job behavior. Both of them should be in alignment with each other and company’s core values. The evaluation method used by Alere consists of the following steps. Identification and description of principal responsibilities Goal settings in alignment with organizational goals Setting SMART objectives Performance evaluation on the basis of results Competency identification and exhibition Identification of strengths and improvement areas in terms of personal development Employee’s performance rating at each step as well as overall rating Reviewer’s comment and signature Employee’s comment and signature Principal responsibilities are derived from job description and each responsibility depicts a specific end result that is to be achieved. It must include one or more measurements against which performance and degree of achievement can be measured. Each position has specific goals which are linked with the overall organizational objectives, values and strategy. SMART objectives are defined as a tool to achieve goals. Objectives should be specific, measurable, attainable, relevant and time bound. They contribute to the success of principal responsibilities and connect teams, department, division and broader company goals. Competencies define job behavior. What knowledge, capabilities, behaviors and actions are desirable for goal achievement? At Alere performance is only considered successful when the desired end results of a job are accomplished and the employee behavior is in consistency with the company’s core value. Employee performance is rated in four basic categories and they are exceeds expectation, meets expectation, needs development and unacceptable. An employee is supposed to exceeds expectations if he consistently demonstrates accomplishments in major areas and they go beyond reasonable standards. He is supposed to be meeting expectations if he manages to meet the requirements of quantity and quality of output with minor deviations. Development is required when he is unable to meet requirements but shows ability and potential of achieving them. When the demonstrated performance is below the minimum acceptable level then performance is rated as unacceptable. Analysis of the Model The model used by Alere is in alignment with the most recent trend in performance management which is result oriented. This new trend has gained popularity because increasingly organizations are becoming result oriented, focused on achieving results rather than just driving effective behavior. In this performance management system each employee is accountable for their particular goal achievement and overall organizational success. It is customary these days to assess employees on the basis of goal achievement as well as how they went about it in achieving those goals i.e. job behavior. MBO method was introduced by management guru Peter Ducker in 1954. MBO revolves around clear identification and communication of specific goals so that employees understand what is expected of them. MBO approach involves following steps ( (Peter J. Pecora, 2010) Identification of key result areas of the job and corresponding skills and actions. Setting objectives for key result areas and developing performance standards in measurable terms Development of action plan for goal achievement Modification of objectives in consultation with supervisors throughout the year. Performance monitoring and periodic feedback Annual performance review. Once an objective is agreed MBO method requires self audit to identify skills needed to achieve this objective. The traditional MBO technique is now refined slightly which has made it more cost effective. This new approach is called MOR, management by objectives and results. MOR emphasizes on key result areas, performance indicators and standards. Throughout 1990’s and 2000’s organizations are moving towards competency based performance management model. Competencies are defined as a set of knowledge, skills and behavior that are essential and instrumental in achieving desired job outcomes and organizational goals in broader perspective. The Advantages of the Current Model Now we will discuss in detail the various advantages of the model used in Alere. (Gupta, 2009) This model provides ample opportunities to individuals to participate in designing tasks, identifying constraints and have an objective discussion with the superiors. Through job enrichment each manager participates as a whole in determining and achieving organizational goals rather than being just a part. It is extremely desirable in industries such as pharmaceuticals where it not only improves production but productivity as well. Competency model emphasizes on the skills essential for the deliverables expected. It provides a rational blend of planning and control. It is based on describing objectives which cannot be identified without proper and prior planning. It enforces a top to down hierarchy of objectives. Since goal setting is done at the top level hence all major and minor objectives needs to be intertwined. It is largely result oriented hence focuses on result rather than personalities and good intentions. Delegation of authority by managers is appreciated in order to achieve expected results. Each employee’s participation is ensured in goal setting which sets the organizational culture of self management and personal commitment. Employee empowerment gives them the opportunity to participate in planning and develop a clear understanding of their areas of discretion. With specific competencies identified it is easier for project managers to make efficient use of time and it is also cost effective. Disadvantages of the Model No model, method or technique is perfect. Each has their own set of shortcomings or disadvantages. An organization has to select the one that best suits their environment and should try to extract maximum benefit from it. Now we will discuss some of the disadvantages associated with model such as time inefficiency and ambiguities etc. (Bagad, 2005) It is time consuming and not very much time efficient. It is a tedious task to define goals and objectives for each and every job. It requires a lot of paper work because goals have to be defined for each job in collaboration with the manager and the employee himself, which may require many revisions. There can be many ambiguities and grey areas in goal setting. There is strong suspicion that rewards may not match the effort. Subordinates may fail because they are unable to gain support of top management Full understanding of the whole MBO cycle is necessary because it is based on self control and self management. Managers usually set short term goals mostly for quarters they rarely set yearly goals hence fail to realize the importance and coordination of short term goals in realization of long term goals. Objectives may change due to some unforeseen circumstances and employees’ show resistance and inflexibility in changing them. There is debate over which competencies should be included and how to effectively measure them. These are some of the inherent disadvantages associated with the model. Effects on Employees The effect of any performance appraisal method for that matter depends on its implementation. Generally the organizations have a very poor track record of properly implementing the appraisal process but research suggests strong link between feedback and performance. (thomas J Cummings, 2008) Objective feedback has a very strong and positive impact on the individual and group performance. According to a research conducted when feedback is based on behavior – specific information the median of improvement is over 47% whereas when feedback is not specific median of improvement is 33%. The same study suggests positive correlation between group performance and objective feedback. The same is true for our model of performance management. Since it is built very comprehensively and objectively covering not only all areas of responsibilities but the competencies as well, which are required to achieve those targets. It identifies all primary responsibilities based upon it are determined goals and SMART objectives. Competencies identified are not of the individual only but competencies for management are also evaluated. This model has positive effect on the employees and helps in improving performance and efficiency. It gives employees clarity of direction and goal and hence a sense of fairness and justice when their performance is adjudged on the basis of the yardsticks predefined for them with their own consent. Effects on departmental performance The model used by our organization is very helpful in improving performance of the department and organization as a whole. In this model targets for each employee are derived from the goals set by the organization. Hence each target, goal, and objective is in complete alignment with the organizations overall strategic goal and core company value. This model also helps in effective teamwork and building synergies because the role of each and every employee is clearly defined. There is no chance of overlapping of duties and clash of interest. Moreover each employee is adjudged on behaviors like teamwork, communication, innovation, adaptability and managerial competencies such as leadership skills and staff development. All this helps in generating a healthy, positive, supportive organizational culture. The managers not only evaluate your performance but behavior and competencies as well. They are responsible for identifying strengths and weak areas in each employee and suggest career development. All this helps in building and improving not only individual performance but group performance as well. Suggestions for improvement This model is quite comprehensively built with little room for improvement. I would suggest that it should include multiple rating system as well. Performance should not only be judged by line manager or immediate supervisor but it should be reviewed by the supervisor of the reviewer as well. It will help in eradicating any biasness and unfair practices by line managers. Conclusion The success of any performance management model depends on its implementation which includes complete understanding of the whole process not only by managers but by each employee as well. Its importance should be realized and reviewers should be trained properly to utilize the evaluation form. With little improvement as suggested above it can really be beneficial for any organization in achieving its overall strategic goals. Bibliography Bagad, V. (2005). Management and Finance. Pune: Technical Publications. Gupta, M. (2009). Principes of Management. New Delhi: PHI Learning Private limited. Peter J. Pecora, D. C. (2010). Strategic Supervision: A Brief Guide for managing Social Service Organizations. London: Sage publications. Pulakos, E. D. (2009). Performance Management: A New Approach for Driving Business Result. Oxford: Weiley Blackwell. thomas J Cummings, C. J. (2008). Organizational development and change. USA: South Western Cengage Learning. Read More