Development of Performance Appraisal System - Research Paper Example

PERFORMANCE APPRAISAL SYSTEMS Research project proposal Introduction: Appraisal is a transparent measurement of personnel performance and needs. It helps redefine the priorities and objectives of the company and reinforces motivation through analyses of achievements and their feedback, within he framework of the company philosophy and organisational set up. Formal and structured performance appraisal could be believed to have first started during the Second World War, but informal appraisal of personnel has existed throughout the history of mankind. It is considered to be the second oldest profession in the world, thanks to the basic human nature to judge and form opinions about self and others. (“Introduction: Performance appraisal”, from Archer North’s Performance Appraisal, The Complete Online Guide, retrieved on May 22, ’07 from http://www.performance-appraisal.com/intro.htm.) Significance Appraisal is a multi-pronged diagnostic tool that facilitates the creation of a platform for Organisational development and improvement Feedback of needs and performance of the employees/employer Reviewing personnel decisions of awards, promotion and merit schemes (“Performance Appraisal”, Wikipedia the free encyclopaedia, retrieved on May 22, ’07 from http://en.wikipedia.org/wiki/Performance_appraisal) Performance measurement and management in UK have a contingent approach, rather than following a set proforma. The three significant parameters that define the framework of the appraisal are: (1) the organisational set up and degree of decentralisation and delegation of responsibilities; (2) the company’s environment and competitive advantage/disadvantage in the market and (3) the technological profile of the organisation, as regards its manufacturing and production processes. (Source: “Latest trends in Corporate Performance Management”, CIMA briefing, July 2002, viewed on May 22, ’07 at http://www.cimaglobal.com/cps/rde/xbcr/SID-0AAAC564-BD006C0E/live/PerfMeasurementLatestTrends_techrpt_0702.pdf) Research becomes significant in an attempt to standardise and restructure a performance appraisal tool. Though there is significant research conducted on performance appraisal, this management practice continues to pose complex equations that need to be investigated, as an ongoing process. This research aims to study the aspects of the exercise to develop a performance appraisal system that is as efficient as it is reliable, to help an organisation make the right decisions. Literature review: “A performance appraisal assures a periodic opportunity for communication, between the person who assigns the work and the person who performs it, to discuss what they expect from each other and how well those expectations can be met. (Maddux, Robert B (2000), “Effective Performance Appraisal”, published by Thomas Crisp Learning, ISBN) Appraisals afford a crystal clear perspective of the company and its workforce, both supervisory and others. The 360 Performance Appraisal, for instance, solicits feedback from the managerial cadre, employees, peers, customers and every other who interacts with the company in the process of its business. (Source: Kent, Robert H (2001), “Why you should think twice about the 360 Performance Appraisal? “, the website of Mansis Development Corporation, retrieved on May 22, ’07, from http://www.mansis.com/page1237.htm). The objective of this exercise is to identify strengths and weaknesses of the person being reviewed and address them to further improve individual contributions. According to Robert Bascal (1999), “performance management and performance tools are the most misused tools anywhere”. He thus considers performance appraisal and the processes within it pose a challenge to the discerning manager. It requires just the right blend of management techniques to pull off a successful appraisal operation. He defines performance appraisal as – “ a structured formal interaction between a subordinate and a supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.” However others like Winston Oberg (1998) feel effective performance appraisals can be accomplished if the goals are set with “practice and purpose” complement each other. Bourne et all (2003) opine, after a research on executives of several European companies, “there is a growing trend towards managing performance improvement through focussing on the underlying drivers of performance.” Saltmarshe, et al (2003), with the help of a case study say that goals, performance assessment and performance management are the main parameters of a framework within which a “vibrant performance culture” can exist. This has to be supported by an ongoing process of effective learning for “continual improvement.” Performance Appraisal has been beneficial to the public sector in UK, according to Prabhu. et al (2002). This paper finds that while some companies have explored and improvised many facets of HR and leadership, there are others that still face challenges in implementing a strong evaluation and performance system. Townley et al (Townley et al (2003) argue that, all said and done, performance appraisal and similar tools of measurement are justified because, in the long run, they help a company to achieve its goals in a realistic and well planned manner. In this scenario of conflicting opinions regarding the implementation of performance appraisals, the single consensus is that an effective and relevant performance appraisal can appreciably increase the overall efficiency of both the company and its personnel. Research Objective All successful organisations have a healthy staff-manager relationship. Company objectives are jointly achieved with a high morale and appreciable degree of motivation. The objectives are remodeled into day-to-day target that is achieved with the manager and the employees maintaining a vigilant communication system. This system encourages and at the same time evaluates employees to define a employee profile of the company. When explicit targets are set for measuring employees’ performance, accountability and transparency in the organisation increases considerably. Important features of effective performance are The employee knows how “Good work” can be translated into measurable action The employer knows that the organisation emphasizes on higher morale among staff than their evaluation Employees are evaluated on the basis of what they do, rather than what the manager thinks of them There is a well defined link from the employee’s individual objective to the staff who work with him/her, which in turn is linked collectively to the organisation’s objectives The link is considered significantly effective when it is two-way, that is, the organisation’s objective can be comprehensively translated into a department’s and then an individual’s goals in his work setting. Development, knowledge creation, teamwork, ethics and work appreciation ((by bonus or awards) receive a higher priority than security, and evaluation The object of this research is to find ways of establishing an appraisal system that can raise an organisation to the above level of effectiveness and efficiency. The research question How can we develop a proper performance appraisal system to be more reliable and efficient to help an organisation to make right decisions at all managerial fields? Explanation of terms: How? The method of developing: The research proposes to investigate the methodology for developing a reliable and efficient system of appraisal.  Reliable: An appraisal system may be flawed within itself that it does not accurately project the actual state of affairs. For instance, an employee with mediocre job satisfaction may not mention the same for fear of losing an increment. The need therefore, is of a system that can remove ambiguity in answers to the largest extent possible. Efficient: An efficient system is one that stands the test of time, has dynamic variables and can elicit an accurate appraisal, no matter what changes may take place in the structure and functioning of the company. Right decisions: Right decisions are made by defining the problem and its components, understanding it in the right perspective in consultation with peers, prioritising the actions evoked by the problem with optimum consensus (maybe a brainstorming session), selecting the best decision to solve the problem, and identifying the resources to make this decision. (McNamara, Carter) Managerial Field: This is a position that recommends and implements initiatives for day to day functioning of the department/organisation, and develops and cultivates relationships with the client, employees and the target audience. (Burson Marsteller) Research methodology The methodology in the following pages is modelled akin to the UN Low Level Planning Division (a network of 70 planners from different fields of life who network to work to enhance UN as a powerful force of good) that conducted a study “Practical Steps to a More Effective and Efficient United Nations. The methodology will basically test theapproaches to decision making in managers that affect performance appraisal systems. The methodology consists of a survey based on a questionnaire, pilot studies interviews for qualitative analysis, and analysis made using software like SPSS or NOVA. The Organisation Profile: The organisation in question here is named Company XYZ. . The Performance Appraisal System, though appearing efficient has not helped improve Company performance For the past two years XYZ has been incurring losses Everyone had good reports in appraisal, in spite of a distinct lack of communication between the staff and the managers There is evidence of a drop in employee morale. This research project will Consult a peer group/ members of professional management concern about issues in management and discuss research methodology Identify the target group for the questionnaire. Here it would be (1) the personnel in supervisory cadres as they are involved in making current employee decisions and (2) Employees as they shoulder the major responsibility for the company’s successful performance Review the existing Performance Appraisal System Select an appropriate research assistant if there is a provision in the budget for one Prepare a questionnaire for the survey based on (1) inputs from discussion with professionals and (2) the concepts of performance appraisal as described in the (a) Literature Review and in (b) Research objectives Conduct a pilot survey with this questionnaire to test the efficacy of the questions set Make the required alterations for the questionnaire to be given to the target audience Conduct the test Analyse the findings Prepare a report that suggests major changes in the company’s existing performance appraisal system and devise a new system based on these changes. The questionnaire design Questions will include (1)Yes/no answers (2) Multiple choice questions like “ Which of the following help in motivation a) Appreciation b) Pay hike c) Awards d) Philosophy of the organisation e Working environment (3) Rating from “unsatisfactory to “excellent” (4) rating from 1 to 5 (5) Ranking of priorities (6) Open-ended questions The questionnaire will address the following Have all functions performed in the office been included for setting goals and evaluating performance Is performance management considered an extra responsibility by managers Do managers set targets for the department/office/unit Does motivation cascade from manager to employees at all levels Do employess work in relation to the goals set How relevant are the rules to linking performance to rewards/appreciation and bonus Do loyalty and seniority count in disbursement of the above, rather than performance Is the annual pay rise linked to performance of employee Are under performers identified effectively What is the status of contractual employees in the office, if they exist? Do career development programmes exist in the office and if they do, are they relevant for employees Relative time spent in the exercise of performance appraisal and actual motivating and goal-setting procedures Is filling out appraisal form a formality, or is it considered an important tool for performance measurement Self assessment tests on employee and managerial performance Frequency of consulting peers/bosses for guidance Frequency of staff meetings to involve employees in the target identifying process Frequency of awareness meets among managers/employees Evaluation of peer review practice Existence of peer pressure in recruitment and promotions The questionnaire is formulated based on these points and a pilot study is conducted. If it is found that certain issues were not addressed, for instance “how managers and employees rate the level of mutual communication” or “is a “good” rating more important than a genuine rating based on performance” then they are included in the questionnaire. The corrected copy is sent to the company head or by email to individual employees . Once the responses come in they are analyzed. The SPSS/NOVA analyses and qualitative assessment will indicate the following findings. Findings How systematically managers measure performance and level of efficiency in confronting challenges like under performing staff Level of awareness among staff about goals of the company and challenges faced by the company Level of motivation – (1) as the manager interprets (2) as the staff interpret Does the need for consistent excellency in evaluation (awarded as a formality) impede the actual quality in performance Identify the lacunae in communication among personnel How effective is knowledge gain and management within the company Benefits of the research The research findings will pave the way for a concerted effort to identify and implement in the revised performance appraisal system, the following A concerted effort by the organisation personnel in improving their performance Both behavioural and monitoring responsibilities of the manager clearly laid down for an efficient appraisal Help managers make current employment decisions Minimise job dissatisfaction Encourage better manager-employee relations A systematic effort to inculcate greater employee motivation Lead to performance appraisals that highlight job satisfaction, Training and knowledge based procedures for the staff Define more accurate criteria for recruitment Problems that may be encountered in the research If, due to some reason, emails of questionnaire cannot be reached to employees, the conducting of the survey on paper becomes a cumbersome process, leading to wastage of paper and delayed analysis, because of non-automation. Employees may not update their contact information leading to inordinate delays in case a particular employee has to be contacted again. Employees may fill automated forms routinely, but these information may not have been automated yet, or they may be swallowed up in a sea of data , in a base that cannot be easily retrieved. There may not be a common data base for all employees of the organisation, especially the overseas personnel. Employees or the manager himself could be particularly hostile and reluctant to set up the machinations for change. . Moreover, there may be discrepancies in the data because of misinterpretation of the questions by non-English speaking personnel Some Ethical Issues Managers sometimes exercise “creative discretion” Longnecker and Ludwig (1990) , while assessing employees. Mediocre performance goes unreported and sets in for an inaccuracy. This is all the more an existing reality. They do so, to avoid a written disapproval of an employee, which may adversely affect careers permanently. Though this tips appraisals more towards inaccuracy, it also speaks of positive manager-employee relations and may even be a causative factor for motivating the employee into better performance. However deliberately manipulating records for the betterment of favoured employees is a totally different ethical issue. This, besides leading to dissent and hostility may also cause a fall in motivation levels. Maintaining a strict ethical code for an organisation eventually leads it to greater strengths. Consistent adherence to ethical and moral standards helps managers become sensitive to the complex as well as simplistic issues where decision-making can be tricky.. (McNamara, Carter) Budgeting: An outline Salary for Principal Investigator Consultancy charges for hired professionals Salary for research assistants EDP costs Telephone billing Contingency expenditure Travel Expenditure Cost of paper and other stationery Miscellaneous Expenditure Implications Management system appraisal goes hand in hand with knowledge management and a common goal setting. There is a need to accord priority status to management research and its findings for improved all round economy. Any modification within the company should trickle from the managerial level, so as to reiterate that “following the leader” is safe and beneficial for the company. This exercise would include the efficient construction of a sizable knowledge base. Other positive outcomes of such a research would be Increased accountability and comprehensive transparency in the dealings of the company Move to improve automation of data both of the personnel and of the company’s dealings Set aside a unit for information management and data base of employees Managers need to maintain a cordial and professional rapport with employees to be genuinely aware of their performance and attitudinal preferences Documenting project experience, challenges and highpoints in negotiations for strengthening the knowledge base of the company and making it easily accessible for personnel Conclusion: The performance review of Albert Einstein, when he worked as a Third Class Patent Clerk in Bern, found him unfit for promotion, lacking in dress sense, but highly capable of “analysing facts and reaching logical conclusions”, according to his manager, Dr. Friedrich Haller. (Web page: http://norvig.com/performance-review.html). That was an accurate enough appraisal than any other, almost a century ago. Performance appraisal has come a long way since then, but continues to elude management practitioners from reaching a consensus about an optimum appraisal tool. Research in this area will always remain relevant and significant as each study will continue to display yet another facet of effective performance appraisal procedures. References: Books Maddux, Robert B (2000), “Effective Performance Appraisal”, published by Thomas Crisp Learning, ISBN Bascal, Robert (1999),”Performance Management”, A Briefcase publication. Berg, B (1989), ”Qualitative research Methods for Social Sciences”, Allyn and Bacon publication Articles Oberg, Winston (1998), “Making Performance Appraisal Relevant”, Performance management review, Bourne et al (2003), “Corporate Performance Management”, Measuring Business Excellence, Vol. 7, No.3 Saltmarshe et al (2003), “The performance framework: a systems approach to understanding performance management”, Public Administration and Development, Vol. 23, No.5 Prabhu et al (2002), “Business excellence in the public sector”, The TOM Magazine, 14(1) Townley et al (2002) “Performance Measures and the rationalization of Organisation”, Organisation Studies, 24(7) Bretz Jr., Robert et al (1992), “The Current State of Performance Appraisal research and Practice: Concerns, Directions and Implications”, Journal of Management Vol. 18, No.2, Longnecker and Ludwig (1990), “Ethical dilemma in performance appraisal revisited”, journal of Business Ethics, Vol. 9, No.12, December 1990 Websites 1 “Performance Appraisal”, Wikipedia the free encyclopaedia, retrieved on May 22, ’07 from http://en.wikipedia.org/wiki/Performance_appraisal 2. “Introduction: Performance appraisal”, from Archer North’s Performance Appraisal, The Complete Online Guide, retrieved on May 22, ’07 from http://www.performance-appraisal.com/intro.htm 3. “Latest trends in Corporate Performance Management”, CIMA briefing, July 2002, viewed on May 22, ’07 at http://www.cimaglobal.com/cps/rde/xbcr/SID-0AAAC564-BD006C0E/live/PerfMeasurementLatestTrends_techrpt_0702.pd 4. Kent, Robert H (2001), “Why you should think twice about the 360 Performance Appraisal? “, the website of Mansis Development Corporation, retrieved on May 22, ’07, from http://www.mansis.com/page1237.htm. McNamara, Carter, “Basic guidelines to problem solving and decision making”, Free management Library, retrieved on may 22, ’07 from http://www.managementhelp.org/prsn_prd/prb_bsc.htm “Manager”, Web page of Burston Marseller, Public Relations Firm, retrieved on may 22, ’07, from http://www.burson-marsteller.com/pages/hr/careerdev/jobdesc/mgr “Practical Steps to a More Effective and Efficient United Nations”, Low Level Planning, Web Page of the United Nations, retrieved on May 22, ’07, from http://www.lowlevelpanel.org/uploads/report_internal_UN_reform.pdf Web page: http://norvig.com/performance-review.html Read More