Issues in Performance Appraisal - Assignment Example

Issues in Performance Appraisal Name Course Tutor’s Name Date: Question 1: Discuss problems with Countrywide’s performance appraisal process and the manner in which Kevin conducts the reviews The above question has two components. First, this paper will discuss the problems with Countrywide Credit Union’s performance appraisal process. To start with, it is important to note that performance appraisal is “the ongoing process of evaluating employee performance” (Foot & Hook, 2011, p. 285). Ideally, the performance appraisal process involves several steps. The first step is job analysis (i.e. the appraiser gets to understand what the job entails and the performance requirements of each job holder). Second is the development of standards and measurement methods (the standards and methods need to be communicated to employees). Third involves establishing an informal discipline and coaching in relation to performance appraisal (i.e. job holders need to know that performance appraisal is an ongoing process and should therefore learn to accept it as part of performance management). The final step is preparation by the personal appraiser to conduct the performance appraisal (i.e. the appraiser should understand why performance is assessed, what is assed, and how the assessment is done) (Lunenburg, 2012). Based on the foregoing, it would appear that several steps were missed in the performance appraisal process at Countrywide Credit Union. To start with, it appears that Kevin (the appraiser) did not fully understand (or did not care) about what the jobs entailed and the performance expectations placed on the job holders. Arguably therefore, he had not done a job analysis for the jobs he was appraising the job holders for. Secondly, it appears that Kevin either did not have standards and methods of appraising performances, or he completely ignored them. This explains why he (Kevin) conducted an informal appraisal with Wayne, his friend, and a somehow formal appraisal with Julia. It would also appear that Kevin had not adequately prepared to conduct the performance appraisal, and as such, may have failed to understand how to conduct the appraisal, why he was appraising the job holders and the reasons for conducting the appraisals. The latter is specifically evident when he tells Julia that regardless of the rating, everyone will receive a 20% bonus. The second part of the question relates to the manner in which Kevin conducted the appraisal. It would appear that he (Kevin) was a subject of rating errors, which compromised his accuracy and objectivity. For example, by appraising Wayne during a ‘boozy lunch at a local golf club’ as indicated in the case study, Kevin became a victim of the inter-relationship effect, which arguably affected his judgement of Wayne’s performance. The inter-relationship effect is defined as “a like-dislike relationship between a supervisor and his/her subordinate” (Varma & Shaun, 2007, p. 397). Traditionally, the interpersonal effect is considered as a potent source of biasness during performance appraisal, since it can lead to more favourable ratings even where the performance itself suggests otherwise. Gauging Wayne’s work by the performance of his branch for example may indicate that his performance might not be as high as he ranked himself. Another inadequacy in how Kevin conducted the appraisal is evident in the manner in which he handled Julia. It is evident that Julia wanted to think about her performance before rating it; yet, Kevin insisted that he was in a hurry and therefore asked her to pick a rating then. Although not directly implied, Kevin may have fallen prey to the leniency error, which according to Deb (2009), is adopted by managers who want to avoid confrontation with employees, and who would also want to uphold a ‘good manager’ image (p. 127). Finally, it is important to note that performance appraisal processes should effectively evaluate and motivate job holders (Foot & Hook, 2011). Arguably however, the appraisal at Countrywide neither evaluated (especially in the case of Julia) nor motivated any of the two candidates. Evaluation involves assessing past performance (clearly this was not done), while motivating involves encouraging employee to perform better in future (this too was not done because even problems facing the job holders and their branches were not identified). Question 2: a) Outline four types of appraisal methods and their advantages and disadvantages. Refer to conditions at Countrywide while discussing types. Graphic Rating scale Graphic rating scale is one of the most common performance appraisal methods (Foot & Hook, 2011). The rating scale is a checklist which managers use to rate individual employee performance on a defined continuum (Foot & Hook, 2011). The continuum usually has a numerical scale (e.g. 1 as an indicative numeral for low performance, and 3 as an indicative numeral for high performance). The continuum can be defined as excellent, average, or poor among other descriptions that the human resource department may find relevant to specific jobs. In addition to being used by managers, graphic rating scales can also be used for self-assessment by individual employees (Foot & Hook, 2011). The Self-Assessment and Skill Builder 8-1 is an example of one graphic rating scale that employees use to rate themselves. Among the advantages of the graphic rating scales as a tool for performance appraisal is that they require little training, are not costly, require little effort on both the manager and the employee, and do not require much time to fill them in and analyse them (Foot & Hook, 2011). However, they can be disadvantageous in that they are not very accurate since the rating is subjective. If applied at Countrywide, the graphic rating skill can be used by managers (e.g. Kevin) or could be used by individual job holders. Considering that employees at Countrywide are used to answering the two questions that equate to a performance appraisal interview as indicated in the case study, employees should be used with self-reported graphic rating scales. Arguably, and considering employees would be inclined to think about how they rate themselves based on their job descriptions and the expectations placed on them by managers. Ideally, a self-reported graphic rating scale would reduce the disagreement, which several authors (Foot & Hook, 2011; Lussier & Hendon, 2012) indicate are common when an employee feels that the manager was unfair in their appraisal. Graphic rating scales would also make it easier for Kevin to oversee performance appraisal in all the 27 branches he is responsible for. A one-on-one appraisal interview may be too overwhelming for him, considering that he may have other commitments. Ranking As a performance appraisal method, ranking is used in evaluating employees’ performance and indicating who the best performer was and who (but not always) performed the worst (Foot & Hook, 2011). During ranking, not all employees need to be ranked, and no standard forms are used (Lussier & Hendon, 2012). Ranking is mainly used when managers need to identify employees whose performance warrants a pay rise, or whose performance deserves getting laid off. Also, it is a common method of identifying an employee of the month (Lussier & Hendon, 2012). One of its main advantages is that ranking as a performance appraisal method can be used to motivate employees to perform better. When employees know how they compare to others, they are bound to put in more efforts in order to enhance their performances (Foot & Hook, 2011). At Countrywide, ranking would probably be a more proactive approach of performance appraisal as opposed to the method used at the moment. Ranking would require Kevin and other managers to be more observant of how employees perform. Grading Grading works with clearly defined categories of worth (e.g. poor, average, good, excellent) (Balachandran, 2009). The categories of worth are established and clearly defined in advance, and later user to compare each employee’s performance against the grade definition. Each employee is allocated a grade based on his/her performance. According to Datt (2011), grading is advantageous in that it can be used where a number of employees are candidates of performance appraisal. Additionally, it can be used to gauge employees’ analytical abilities, leadership abilities, judgement, job knowledge and comparative nature among other issues. One of the mainly cited disadvantages of grading is that “it leads to extreme level of job dissatisfaction among employees with high potential to perform” (Chattopadhayay & Ghosh, 2012, p. 882). This is especially the case in forced distribution systems where managers are forced to rank employees into high performing, average performing, and low performing categories (Chattopadhayay & Ghosh, 2012, p. 882). Just like ranking, grading would be a more proactive performance appraisal method compared to what is currently in use at Countrywide. Additionally, it would require Kevin and other managers to be more involved in gauging how well (or poorly) employees are performing. This method can also be applied where many employees’ performance need to be appraised as would be the case at Countrywide. Balanced scorecard Balanced scorecard draws attention to factors that affect the firm’s performance (Tatar, 2011). The four factors include: a firm’s financial performance, the satisfaction of its customers/stakeholders, its internal processes (and the efficiencies therein), and its learning and development capacities at an organisational and individual capacity (Tatar, 2011). An organisation can set goals in all the four aforementioned domains, and appraise whether the set goals have been achieved. Tillmann (2008) suggests that to be effective, organisations need to translate the components of the balanced scored into small and measurable tasks. For example, the organisation needs to ensure that every employee understands the purpose of the business, who its customers are, what customers need from the business, the products and services provided by the business, and how success in business is measured. Despite the balanced scorecard being touted as a good performance management tool, organisations have experienced difficulties trying to implement it in performance appraisal (Tatar, 2011). A main disadvantage of this tool is that organisations find it hard to gather accurate and/or relevant information (Tatar, 2011). Misunderstanding may also arise based on perceptions between what the management think they are appraising and what employees feel they are being appraised for (Tatar, 2011). If used at Countrywide, the balanced scorecard would probably draw attention to the reasons why the organisation’s branches are performing poorly, since the appraisal method would draw attention to the four domains as identified by Tatar (2011). They would include: the firm’s financial performance, the satisfaction of its customers/stakeholders, its internal processes, and its learning and development capacities at an organisational and individual capacity. What types of performance appraisal methods would be more appropriate for branch managers? Based on the analysis, the balanced scorecard would be the most appropriate appraisal method for use at Countrywide. With its use, branch managers would be efficiently and effectively appraised, meaning that their respective bonuses would be commensurate with the bonuses they receive. Additionally, and considering that the case study indicates that some branches registered poor customer satisfaction, rating the managers’ performance would be based on customers’ perspective as one of the four guiding perspectives. According to the US Office of Personnel Management (OPM) (2014), a well-performing manager under the balanced scorecard measure should know if indeed their organisation is meeting customer requirements and if the customers are satisfied with the services offered by the organisation. The manager aptly needs to answer the question “how do customers see us” (US OPM, 2014, n.pag.). The balanced scorecard would further be suitable for use at Countrywide because it appraises the managers’ understanding of what they need to focus on. Managers must know with precision what they need to excel in so as to improve their branches’ performance (US OPM, 2014). This is especially critical at Countrywide since the case study indicates that the value of sales was found to be declining in some branches. The innovation and learning perspective of the balanced scorecard would also be a good performance appraisal metric at Countrywide since the case study indicates that compliance levels were poor in some branches, and some staff lacked adequate training in relevant financial regulations. This perspective would appraise the managers’ performances based on their understanding of the improvements needed to create value in the organisation (e.g. by knowing that some staff members need training). Specifically, the managers responsible for different branches need to understand the innovations, improvements and learning needs in the branches they head (Kaplan & Norton, 2009), since such understanding (if communicated to top level managers) can help the organisation create value for its diverse stakeholders. The financial perspective in the balanced scorecard would also play an important role in appraising the performance of managers based on how well they understand what their branches need to do in order to enhance sales and thus profitability. According to US OPM (2014), managers need to know what needs to be done in order to meet the needs of different stakeholders (e.g. customers, employees, and shareholders), since they all contribute to profitability or lack thereof in an organisation. References Balachandran, V. (2009). Office Management. New Delhi: Tata McGraw-Hill Education. Chattopadhayay, R., & Ghosh, A. N. (2012). Performance appraisal based on forced distribution system: it drawbacks and remedies. International Journal of Productivity and Performance Management, 61(8), 881-896. Datt, R. (2011). Krishna’s organizational structure and personnel management. NY; New Delhi: Krishna Prakashan Media. Deb, T. (2009). Performance appraisal management. New Delhi: Excel Books. Foot, M. & Hook, C. (2011). Introducing human resource management (6th edition). Cambridge: Pearson. Kaplan, R. S., & Norton, D. P. (2009). The execution. Trans. Reza, M. A. 1st printing. Gainesville, FL: Nab Group. Lunenburg, F. C. (2012). Performance appraisal: methods and rating errors. International Journal of Scholarly Academic Intellectual Diversity, 14(1), 1-9. Lussier, R. N., & Hendon, J. R. (2012). Human resource management: Functions, applications, skill development. Los Angeles; London: Sage. Tatar, E. C. (2011). The importance of measuring individual performance to increase organizational performance. Journal of Defence Resources Management, 1(2), 113-118. Tillmann, G. (2008). The business oriented CIO: A guide to market-driven management. Hoboken, NJ: John Wiley. US Office of Personnel Management (OPM). (2014). Performance management. Retrieved April 30, 2014, from http://www.opm.gov/policy-data-oversight/performance-management/reference-materials/historical/using-a-balanced-scorecard-approach-to-measure-performance/ Varma, A. & Pichler, S. (2007). Interpersonal affect: does it really bias performance appraisals? Journal of Labour Research, 28(2), 397-405. Read More