Identification of Effective and Ineffective Performance - Network Solution - Assignment Example

Running head: PERFORMANCE MANAGEMENT Performance Management [Writer’s name] [Institution’s name] Table Of Contents Executive Summary Performance systems have always been an asset for organization show value quality human resource. Many organizations develop a prefect performance management system which satisfies their employees. A network solution is one such organization. The paper is based on a case study of Network solutions. It uses an forced distribution system to evaluate the performance of it’s employees. The paper answers a series of questions which helps in analyzing the entire case study. The advantages and disadvantages of the system are also highlighted. Each answer helps in understating the performance system which Network solution has used. Thus, through this case study the forced distribution system of performance can be clearly analyzed. The recommendation of the paper also gives ample understanding of a behaviour based performance system which may be helpful for Network solution’s performance evaluation. Performance Management Introduction Performance management systems are an important part of any organization, without such systems the organization may never know which employees are an asset for them. Identifying good performers helps the organizations to retain quality human resource. Companies that manage with performance appraisal programs for their people have outperformed companies without such programs. (Mcdonald & Smith, 1995)Companies who have trailed in their industries show significant improvements in their business results after implementing a program. Failure by organizations to implement performance appraisal programs are costly, in terms of lost opportunities, unfocused activity, loss motivation and morale. Performance appraisals can be good way for organizations to boost employee's motivation and hone their competitive edge. To abandon or abuse the performance appraisal process is a breach of business ethics. The practice of managing turnover is directly linked to the implementation of a complete performance management system. Valuing high performers, supporting workforce development, and encouraging the separation of low performers is in the best interest of an organization to ensure growth, profits, competitiveness and consistency of standards (Noe etal., 2007) This paper shall analyze a case study based on Network Solutions performance management system. It shall answer a few questions given at the end of the case. Discussion Answer1 Network Solutions performance management system fulfils most of the characteristics of an ideal performance system highlighted by Aguinis (2009). Since Network Solutions has planned to implement a forced distribution performance management system thus this kind of system has the following characteristics of an ideal performance system: Identification of effective and ineffective performance Network Solution’s performance system identifies effective and ineffective performance. As mentioned in the case study set percentage of employees was classified in each of several categories (for example, a rating of 1 to the top 20% of performers; a rating of 2 to the middle 70% of performers; and a rating of 3 to the bottom 10% of performers). This categorization of employees helps the management in differentiate between the effective and ineffective performance of employees. Acceptability and fairness Network Solution’s performance system is highly acceptable and fair in it’s rating. It’s fairness lies in the fact that the incentives are given according to the rating of performance only. No favours can be given to any employee. This is clearly exhibited in the case study as in Network Solution’s performance system Employees receiving a 3, the lowest rating, have a specified time period to improve their performance. If their performance does improve, then they are released from the plan, but they are not eligible for stock options or salary increases. If performance does not improve, they can take a severance package and leave the company or they can start on a performance improvement plan, which has more rigorous expectations and time lines than did the original action plan. If performance does not improve after the second period, they are terminated without a severance package. Individuals with a rating of 2 receive average to high salary increases, stock options, and bonuses. Individuals receiving the highest rating of 1 receive the highest salary increases, stock options, and bonuses. These individuals are also treated as ‘high potential’ employees and given extra development opportunities by their managers. The company also makes significant efforts to retain all individuals who receive a rating of 1. Standardization Network Solution’s performance system also has the characteristic of being standardized. Like an ideal system their system tends to follow particular standard. Like mentioned above incentives and rewards are given according to a certain ranking. This system promotes standardization as employees know that the system by which they are being rated has a potential standard which is fixed by means of a certain measurement (Wells, 2001). This characteristic is an important one in any performance system Practicality Practicality is a characteristic which is extremely important for any performance management system. Without this characteristic the system would not be a standardized one (Bowen, 1991). Network Solution’s performance system is an extremely practical system. Due this system they can easily design strategic human resource plan for their employees according to their performance. They can also motivate the low performers by certain incentives which the top rankers receive. . Strategic congruence A forced distribution performance management system has one of the most important characteristics of and ideal system i.e. “Strategic congruence”. Since the Network Solution’s performance system is implanting the above mentioned performance system is too has the characteristic of being “Strategically congruence”. It has the quality of being Strategic congruence as it provides employees with complete guidance as to how to achieve the top rank in the organization. Network Solution’s performance system gives the employees complete information about the top rank and how to achieve it. Their training programmes and conference calls gave the employee a lot of information regarding the ranks in the system. Reliability Network Solution’s performance system has high reliability. The kind of performance system they are using is a forced distribution system; this kind of system is extremely reliable as it constantly and impartially measures the employee performance. The very same task and out comes of the performance employee is measured and valued precisely the same (Bowman, 1999). As mentioned before it implemented forced distribution performance management system in which a set percentage of employees was classified in each of several categories (for example, a rating of 1 to the top 20% of performers; a rating of 2 to the middle 70% of performers; and a rating of 3 to the bottom 10% of performers). Validity Network Solution’s performance system can be anticipated as being extremely valid. As per case study the desired outcomes of the new system included raising the performance level of all employees, identifying and retaining top talent, and identifying how performers and improving their performance expectations for all employees to be clear. Since it’s system is a forced distribution performance management system it will mostly probably fulfil its’ objectives as such a system usually does do so. It’s rating makes employees perform the best they can and this healthy competition leads to the fulfilment of the objectives of such a test (Costello, 1994). Openness Network Solution’s performance system is very open to change. It can be implemented in a number of different circumstances. The fact that Network Solutions plans to continue reinforcing the needed cultural change to support forced distribution ratings. They are even planning to measure it in a different way than in the past. Further strengthens the fact that it is a system which accepts change. Clarity The characteristic of clarity is quite obvious in Network Solution’s performance system. The fact that the system rates it’s employees according to performance and plus their rewards and incentives are given accordingly. A forced distribution performance system is an extremely understandable one. Employees are quite clear about how and what they will get if they reach a certain rank. The fact that Network Solution’s is providing training and conference calls as well as meetings further makes the system more transparent and clear for the employees. Thoroughness Network Solution’s performance system has the characteristic of being thorough. It evaluates the employee’s performance in detail. The fact that it first evaluates in detail ranks the employees according to their performance then it gives the rewards or incentives further proves that it is a thorough system Meaningfulness This characteristic is associated with the characteristic of validity. The fact that Network Solution’s performance system is a valid system and gives suitable incentives as well as performance out comes also makes it a Meaningful system. Inclusiveness Network Solution’s performance system has the characteristic of being inclusive. It is a forced distribution performance system, such a system always has a detailed evaluation system. The fact that it is inclusive can further be proved by the fact that it evaluates the performance of employees in detail. Answer2 Before any performance evaluation takes place it is very important that the system has a few of the characteristics of an ideal system. This is important as without them the system would be useless for the management as well as the employees. The characteristics of an ideal system in Network Solution’s performance system are as follows: strategic congruence practicality Identification of effective and ineffective performance Clarity Openness Validity Reliability Standardization Thoroughness Meaningfulness Inclusiveness However, some of the 14 characteristic of an ideal system are not a part of Network Solution’s performance system. This is due to the fact that the system they are using is based a rating procedure and such a system cannot have all the characteristics of an ideal system. The characteristics of an ideal system which are not in Network Solution’s performance system are as follows: Correctability Forced distribution system is not very flexible when it comes to corrections. And Network Solution’s performance management system is a Forced distribution system. Once an employee is ranked and evaluated on basis of his/her performance, it can not be changed. The fact that it is not correctable also means that it is a rigid system. Ethicality At times favouritism can also play a role in Network Solution’s performance management system. Anyhow a performance system solely based on performance also reduces the sense of ethic in the employees. Infact the system it self only see the performance and not the hard work of those who are on the lower ranks. Specificity Network Solution’s performance management system is not a very specific one. It may be able to rank it’s employees but it cannot find out how and when that employee reached that specific rank. However some characteristics from the list of ideal characteristics also need in-depth evaluation before considering them as apart of Network Solution’s performance system. They as follows: Inclusiveness Employees usually require a performance system which is detailed as they want to know all the reasons as to why they are at a particular rank. Thus it is important that the Network Solution’s performance management system has to be researched first regarding it’s inclusiveness before implementing it. Answer3 Network Solutions’ performance management system has a lot of advantages, they are as follows: Improvement in performance The Performance of employees improves because of a detailed system of managing performance (David, 1994). This performance system measures every aspect of the employees’ performance and gives them a rank. Thus, they strive harder to gain the top rank. Positive Effect on Personal and Organizational Goals It has a positive effect on organizational goals as well as individual performance, setting targets to fulfil the set goal, and organizing development activities to make sure that all the goals are fulfilled. Helps In Searching For Talent It helps the management to track and monitor employees which they think have talent and then compare this to the performance of the organization. Improving Communication Skills It helps in improving communication and helps in development of the employees. The employee’s performance improves thus having a positive effect on the career development. Their communication skills also improve as they start discussing issues regarding the system and performance with the management. Employee Satisfaction Network Solutions’ performance management system also helps in Improving employee satisfaction, loyalty and dedication. They feel that the organization values their hard work as they are being evaluated by a system which is fair. They in turn become committed and loyal to the company. Innovation In order to be on the top employees are wiling to be innovative , creative and are also wiling to start thinking in the direction of coming up with ideas for break through in the field of technology. Manager –Employee Relationship A positive relationship between employee and manager is developed, the employees start trusting the management and the management start valuing it’s employees as they strive hard to improve their performance. Teamwork This kind of performance system may encourage teamwork amongst the employees. They will work together so that they can come up with innovative ideas and complete their assigned task on time. Answer4 Like any performance system Network Solutions’ performance management system also has a number of disadvantages. They are as follows: Limited Firing of Employees The management may not be able to fire a lot of low rank performers so that they can fulfil the 10% quota. This in turn makes the high rank performers feel that some kind of favouritism is going on. They might even feel degraded and resign. Discrimination Law Suits A lot of organizations like Network solutions who implement a forced distribution performance management system many times have to face discrimination law suits. A lot of employees may feel that their management is favouring another employee and has been unjust to him. At times they may even have irrelevant proof to such actions carried out on the part of the management (Wayne etal, 2002). Hiring Average Performers By using such a performance management system Network solutions may have to hire human resource with average performance so that it can be successful in satisfying the bottom 10% quota. These average performers may turnout to be more of a burden then a blessing to the organization. Lack of Healthy Competition Such kind of performance management does not encourage healthy competition. Employees refuse to promote team work. Organizational politics start to develop in organizations which use this system. Unethical Behaviour Such a performance system also encourages unethical behaviour. Employees may They may go as far as degrading, humiliating each other and pulling the curtain from another employees minor mistakes. Undermining Abilities At times organizations start to give every employee a chance to be on the top, and thus at times this undermines the abilities of the true top performers by placing them at the bottom. Human Judgment Suffers From Reliability, Validity, and Bias To assess an employee there is already a pre determined set of standards and behaviours. In both of these elements human decision will arise in the process. Human judgment suffers from reliability, validity, and bias. Kinne and Lowe (1990) state, "Appraisers may find it difficult to identify and measure, the distinct contribution of each individual"; this can be because the appraiser doesn't really know the appraise or because, as suggested by Howell and Cameron (1996), employees are constantly moving from one project another. KSA for Performance Management The managers are responsibility for Goal cascading and team building. They have to have to be able to build a team in which they effectively fulfil the goals. Apart from this Performance and Development planning must also be carried out during the performance management. This has to be done by first researching the approved method so that the management ahs ample knowledge of the method. Apart from this the performance management system must promote ongoing discussions and updates between managers and employees as well as be able to give an Annual Performance Summary Today, part of the training associated with the performance management system revolves around the idea that the development planning phase of the system is the joint year-round responsibility of managers and employees. Managers are responsible for scheduling meetings, guiding employees on preparing for meetings, and finalising all development plans. Individual contributors are responsible for documenting the developmental plans. Both managers and employees are responsible for preparing for the meeting, filling out the developmental planning preparation forms, and attending the meeting. Conclusion An organizations performance system is it’s asset. It helps them to identify quality human resource. As per case study Network Solutions performance management system has also helped them greatly in proving their performance, however, like all performance management systems it too has a number of disadvantages. But it may be noted that it’s advantages over weigh it’s disadvantages. A complete and efficient system constitutes established objectives, effective training, constant communication and continuous feedback. The assertion of executing a complete performance management system is to essentially recognize high and low performers at different levels; and identify all areas of improvement Such distinction is relevant to an organization’s efforts in recognizing and retaining top performers for the overall growth and success of the company. Accordingly, a decisive management system is the source for putting into effect comprehensive annual performance appraisals. With wide-ranging intent, the performance management process guides constructive decision-making, while annual performance appraisals direct employee advancement (Pulakos, 2004). If Network Solutions think that the disadvantages are affecting them then they should consider changing their performance management system. But this would not be a wise move on the part of the organization. As they have developed a system which has been quite beneficial for them. Recommendations Network solutions present performance management system is a good one, however it should also try to use a Behaviorally anchored rating scale (BARS), and this will reduce any feeling of discrimination in the minds of employees. This is basically based on a behavioural approach to performance appraisal. The performance is measured by means of vertical scales; each job performance is measured on separate scale. A huge advantage Network solutions can have by implementing such a system is that not only the HR department is involved in it but staff from other departments is involved in the evaluation. Employee participation may result in greater acceptance of the performance evaluation system and it’s criteria of measuring the performance. References Aguinis Herman 2009, Performance Management, 2nd Edition, Prentice Hall. Bowen, R. B. 2000, Recognizing and rewarding employees, McGraw-Hill Trade. Bowman, J. S. 1999, Performance appraisal: verisimilitude trumps veracity, Alexandria, Virginia: Public Personnel Management, International Personnel Management Association. Costello, S. J. 1994, Effective performance management, McGraw-Hill Companies, Inc. David J. Woehr 1994, "Understanding Frame-of-Reference Training: The Impact of Training on the Recall of Performance Information," Journal of Applied Psychology 79, no.4. Howell K, Cameron E 1996, The benefits of an outsider's opinion (performance appraisal), People Management (UK) Vol: 2; Issue: 16. Kinnie, N. and Lowe, D 1990,'Performance-related pay on the shop floor', Personnel Management, Vol. 22, No.11. Mcdonald, D., and Smith, A 1995, "A proven connection: Performance management and Business results", Compensation and benefits review, 27, 1: 59-62. Noe, Raymond A., Hollenbeck, John R., Gerhart, Barry, and Wright, Patrick M. 2007, Fundamentals of Human Resource Management, Second Edition. Pulakos, Elaine D 2004, Performance Management: A Roadmap for Developing,Implementing and Evaluating Performance Management Systems, Society for Human Resource Management, United States of America. Wayne Mondy, Robert M. Noe, Shane R. Premeaux 2002, Human Resource management Pearson Education, Inc Wells, C 2001, Reward and Recognition Programs: Driving Employee Performance, Loyalty, and Enterprise Profitability. Boston: Aberdeen Group Inc. Read More