The Design and Implementation of Performance Management Systems and Job Satisfaction - Assignment Example

Critically analyze the relationship between the design and implementation of performance management systems and job satisfaction. As a manager of this process, what action steps would you recommend to maximize staff retention? Introduction Hospitality and related industries in the U.K. employ about 2.2 million employees comprising 7 percent of total workforce in the country thus emerging as the single largest sector.(Dickerson, Homenidou & Wilson 2006) The hospitality segment of this workforce are employed in hotels, restaurants, pubs, bars, nightclubs and contract food service. As success of this industry depends on its human face, employees’ force that is human capital is the most important source of competitive advantage for the industry but characterised by high employee turnover. (Kim et al, 2005) To consolidate its competitive strength, the industry needs to minimise the labour turnover for which organisations should have sound systems designed for achievement of high rate of employee retention. Purpose of this paper is to examine the relationship between performance management systems and job satisfaction and employee retention. Evaluating performance for employee retention It should be the goal of human resource management to recruit and retain employees for which evaluation of their performance is highly essential. Performance evaluation is a powerful tool which if implemented, can assist the hospitality organisation and help its employees excel in their jobs. It serves as a feedback system for the management on the successful implementation of the organisation’s manpower plan. It gives the management an idea as to how effectively each of its employee is improving individually and how the development of the individual is contributing to the realisation of the goals of the business plan of the hospitality organisation. Some of the benefits of the performance evaluation or appraisal are, it becomes a two way communication between the management and every employee individually, laying down job criteria so as to measure job performance, improvement in job performance, correcting faulty work habits, suggestions from employees for enhancing job performance, methods and morale, becoming aware of problems earlier, feeling of commitment to the organisation, improved job satisfaction, an effective tool for motivation, a means of communication to the employees, documentary proof in case of future dispute, basis for giving promotions and giving increase in salaries, a method of seeking alternatives to job termination, future guidance for improvement and development by the employee, continuous improvement, creation of high performance work force and enhanced productivity.(Tanke, 2000 p 222) Things to avoid in appraisal of performance Both negative and positive biases must be avoided since they can lead to a non objective or unfair performance evaluation. They are apt to mislead even the employer with good intentions to make a wrong appraisal. Some of the possible situations are ‘halo effect’, ‘horn effect or horn error’, recent behaviour bias’, ‘primary bias’ and equating of self by the appraiser or employer with the employee. The ‘halo effect’ results by interpreting subsequent events guided by the limited information of an earlier event. Positive halo effect results when an employee who had scored high on pre-employment skills test is weighed by manager with high expectations from him. If such an employee happens to perform poorly, the manager thinks that the employee is not performing well due to some bad luck on him that day without actually ascertaining from him reasons for poor performance. On the other hand, the employee tends to assume that his performance has been approved or appreciated .This positive halo effect leads to the expectation of the employer for still higher performance by the employee in future. The opposite of this positive halo effect takes place when the employee earns negative impression from the employer. This effect is known as ‘horn effect’ or ‘horn error’. Hence, however high a performance level the employee achieves, it will be viewed by the appraiser in bad light. ‘Recent behaviour bias’ occurs depending on the time gap that precedes the appraisal. Since it is the tendency of humans to think of only the recent behaviour, employees would take advantage of this tendency and would take care to show a high level of performance just before the appraisal if the periodicity of appraisal is known in advance. This is also known as ‘primary bias’ or ‘recency bias’. Yet another bias is ‘expectancy’ by the employer to think of his employee in his own place and expecting a higher performance what he would otherwise have himself performed in the job. Some more problems in appraisal are, not having sufficient time to review the data available and tendency of the appraiser to rate employees as average due to his inability to rate as outstanding or poor. This is called non-differentiation. Besides, performance goals are found to be vague or contradicting one another. Some organisations would use performance appraisal just for exercising control and not as an additional developmental tool. There are also organisations which do not recognise and reward managers for developing employees through appraisals. (Tanke, 2000 p 239-40) Employee Turnover Employee turnover is both good and bad for organisations. Good because, the bad ones automatically get weeded out and bad because, it entails recurring cost of recruitment, training and instability especially when human side is important to a hospitality organisation. Efficient employees are an asset to the hospitality organisation as they produce returning customers. Some times turnover becomes unavoidable due to retirement, resettlement, moving away by the employees for reasons that are not related to job adverse outcomes. Employers in the hospitality industry tend to hire students and freshers as part-timers at low wages without social security costs but these employees do not stay long enough to justify even the cost of their orientation. Labour turnover can be effectively managed positively as the new comers come with fresh blood and ideas. Employee turnover is bound to be high especially when there are low unemployment levels. There was a twenty four year low at the advent of the millennium unlike in 1980s when the turnover rates were 60 percent as against 100 percent and even higher as of now. National Restaurant Association had reported in 1996 that by 2005, 1.3 million new jobs would be created. With the retiring employees, the job creations would be 3.9 million between 1996 and 2005. This is exclusive of managed turnover. It is stated that the unmanaged turnover is what deprives the hospitality industry of talent and knowledge base, returning customers or positive customer relationships, profitability and competitive edge. An important reason for the high employee turnover is because of the unattractive nature of the job in that that work is manual or physical, long hours of work, inherent poor working conditions, having to work hard on week ends and holidays and low pay scales. According to the U.S Department of Labour, cost of replacement is as much as 33 percent of the new hire’s annual remuneration, incurred by way of advertisement for recruitment, managerial and clerical time incurred for the recruitment process, orientation and training and overtime for the existing employees and supply of uniforms. While these are direct costs, reduced productivity, low employee morale, loss of customers and good will are indirect costs. Since employee turnover is not unique to hospitality industry, lessons can be drawn from other industries also for effective employee retention. (Tanke, 2000 p 242) In spite of measures to achieve employee retention, it is the “turnover culture” prevailing in the hospitality industry is the major determinant for employee leaving. And this turnover culture is reinforced by the job search behaviour, job opportunity, commitment to the organisation, loyalty to the union, job satisfaction, carer development and similar factors. Hence HR strategies need to be formulated to suitably tackle the employee turnover. (Iverson and Deery, 2007) Measures for higher rates of employee retention Always employ only the best candidates and avoid the temptation just to fill a vacancy. Recruit only those who fit in with the company’s philosophy. Must ensure that job given is according to job description and specifications for which the employee has been recruited. Help create loyalty in new employees by a realistic orientation. Make the new employees spend some time with General Manager, President or the CEO. Give employees effective training besides evaluating effectiveness of training programmes periodically. The training should result in both horizontal and vertical growth. The company must be portrayed as a people oriented company and must have set of clear expectations on employees. Praise them when they excel and correct them when they fail. Treat the employees with dignity and respect as per the Golden rule to treat others as you would expect to be treated especially when the employees are meant for treating the guests coming to hotels and restaurants. Compensation and benefits packages must be periodically reviewed since there have been always changes in the cost of living and people leave only when they feel they are underpaid. Quality of work life should be improved constantly especially because the employees have to work while the guests enjoy. The management must at times accommodate employees when ever they are in need of leave under special circumstances. High quality work force is the key for high employee retention. (Tanke, 2000 p 244) Job description At the time of recruitment, a job pre-views procedure should be followed so that the prospective employees are apprised of nature of jobs including their adverse sides. (Tanke, 2000 p 244) A clear job description is necessary so that employees are informed of the job requirements. Some times an assistant manager not eligible for overtime but who works beyond working hours cannot not grumble for not being paid with overtime if there is a proper documentation of job description at the time of recruitment. And this will be helpful as evidence in case of disputes by proving that the job involves supervision not eligible for overtime under law. Besides, poor job description can lead to low productivity and high turnover since employee would not know what they are expected to do and how to carry out what they are expected to perform. (Miller J.E et al 2006 p 147-148) An example for a server’s position is shown below. Tasks in one unit Job classification: Server Unit of Work: Takes food and beverage orders Tasks performed: 1. On guest check, numbers seats at tables. 2. Asks each guest in turn what he or she wants and records it following the appropriate seat number. 3. Uses correct abbreviations. 4. Asks for all ‘choice of ‘selections and records on check. 5. Suggests additional items such as appetizer, soup, salad, beverage, wine, specials. 6. Turns in order to kitchen. 7. Completes guest check with prices. (Source: Miller, J.E et al p149) Job Satisfaction Job satisfaction results in job retention which can be achieved through having standard systems of performance appraisal. Before evaluation of performance, some of the pre-requisites that must be present are job analysis or job description which the respective employee must know when he is recruited or when he is transferred from one department to another. Each job in the hospitality industry is unique coming under different segments or units of work and each such unit has a number of tasks to be performed. The job description should consist of performance standards thus making up the heart of job description. The development of performance standards as a system which occurs overtime, involves worker’s participation, active leadership from the supervisor, and reward systems. Thus the worker’s participation helps job analysis in respective categories so that standards for each job can be determined through his practical experience. In the process, standard procedures will be developed for each job. This will ensure mutually agreed standards and expectations between the workers, supervisors and the management. The leadership expected of the supervisor is also part of the development standards of performance in that the supervisor recognises the workers performance individually and making them feel needed and thus develop a sense of belonging in their minds. As a leader, the supervisor continues to give training to the workers and continues to give his feed back to them about their performance. Lastly, having a reward system for giving rewards to the deserving employees. The system helps identify the eligible employees and also motivate others who have not been rewarded to show better performance next time. (Miller J E et al, 2006) Conclusion It has been seen that job retention will be outcome of job satisfaction. And for job satisfaction, jobs must be well defined along with systems in place for performance appraisals. Each step should be taken in such a way that it helps motivate employees to discharge their functions efficiently. Motivation in hospitality industry gains significance since it helps employees motivate their customers in turn with a view to earn their enduring loyalty. References Dickerson, A., Homenidou, K and Wilson, R.A. (2006), Working Futures 2004-2014: Social Report, Sector Skills Development Agency, January Iverson D Roderick and Deery Margaret, 2007, Turnover culture in the hospitality industry, Human Resource Management Journal, vol 7, Issue 4 , p 71-82 Kim Gon Woo, Leong K Jerrold, Lee Yong-Ki, 2005, Effect of service orientation on job satisfaction, organizational commitment, and intention of leaving in a casual dining chain restaurant, International Journal of Hospitality Management, vol 24, Issue 2 , p171-193 Miller E Jack, Walker R John, and Drummond Eich Karen, 2006, Supervision in the Hospitality Industry: Applied Human Resources, John Wiley and Sons Tanke L Mary, 2000, Human Resource Management for the Hospitality Industry, 2nd Edn, Cengage Learning. Read More