Red Square Industries - Case Study Example

Table of contents Preface ……………………………………………………………………………………. 2 Executive Summary ………………………………………………………………………. 2 Introduction ………………………………………………………………………………. 3 Red Square’s Performance Appraisal Systems Assessment .…………………….………. 4 Recommendations ……………………………………………………….….……………. 8 Conclusions ……………………………………………………………………………… 10 Preface This paper is based on a case study of Red Square Industries that works out its employee appraisal system using a five-level performance appraisal system. The paper also incorporates literature from other scholars who have written works related to performance appraisal applying them to the case of Red Square Industries case study. The paper is in response to Red Square Industries case study covering the usefulness of the appraisal system, its weaknesses and some of the recommendations that Red Square Industries would use to make its appraisal system more effective. It looks into: Coverage on contemporary issues related to performance appraisal Extensive use of scholarly materials from other professionals relevant to the case study Though provoking material for each section all tackling the performance appraisal topic and applying it to the case study Executive Summary Red Square Industries has a five-level performance appraisal system using a forced ranking distribution. Superior performers who are at least 10 percent are rated 1, for exceptional performers estimated to be 25 percent, they are rated 2, and acceptable performers taking a share of 45 percent rate 3, marginal performers being an estimated 15 percent are rated 4 while unsatisfactory performers within the industry holding 5 percent of the workers being rated at 5. From the company’s profile, employees rated 5 get 3 to 6 months in which they are mandate to improve their performance, and if not, their contract is terminated. The awarding of salary increases is only possible for people rated 1, 2 or 3 with bonus payments bring awarded only to 1 and 2 rankings. Any award for the industry is performance related with employees rated 4 or 5 only getting rewards through legal means. The rating system for the industry is terrific but has considerable weaknesses as it does not hold as confidential with employees’ easy learning their fellow workmate’s rankings. This paper looks into the performance appraisal as adopted by the industry with its usefulness and some of the weaknesses it holds. The paper structure also has recommendations for the industry in using the appraisal effectively and improving their performances and in overall, the industry’s productivity. Introduction A performance appraisal, performance review, or also known as an employee appraisal is a method through which am employee’s job performance is evaluated in terms of quantity, cost, quality and time characteristically by the corresponding supervisor or manager (Taylor 2003, p. 78 - 105). A performance appraisal is ideally a part of managing and guiding career development of an employee at any level of operation (Latham & Latham 2000, p. 199 - 249). It is referred generally as the process of analyzing, recording and obtaining information regarding the relative worth of a worker to the organization (Reilly & McGourty 1998, p. 244 - 277). The design of performance appraisal systems are intended to serve the organization’s and employee's interests and used to inventory the resources and abilities of employees and in letting an employee know exactly where he stands in that they become stimulated to better their performances (Sulsky & Keown 1998, p. 52 - 59). It is possible to enhance employee motivation and improve performance with the monitoring of the performance level of an employee while using the feedback to advise the same employees regarding their effectiveness (Fletcher 1994, p. 41 - 56). Performance feedback exchanges practically can be informal and ongoing, on a formal basis or a day-to-day coaching basis, biannually or annually (Reilly & McGourty 1998, p. 244 - 277). The ultimate--purpose of the evaluation is helping develop or create an atmosphere in the workplace that is characterized as renowned for operations (Taylor 2003, p. 78 - 105). It is in the belief of many scholars than performance appraisal motivates the employee to develop high standards of performance within the workplace (Latham & Latham 2000, p. 199 - 249). The Red Square Industries’ five-level performance appraisal system is an example of what many organizations apply in their daily operations. It has its strengths and weakness when being applied within the industry’s operations. A notable strength is that it motivates the hard-working employees, while poses a challenge for the lower ranked to improve their performance. However, since it is non-confidential, the system is weak as it reduces the team spirit therefore, improvements needs to be done on the system. Red Square’s Performance Appraisal Systems Assessment With Red Square Industries adopting a five-level performance appraisal system, it has a extraordinary importance in use to improve the performances of employees. The 5 rate rankings are a challenge posing as so to the lower rated employees who in positive mind and with zeal to improve their ratings work harder. In the event of working harder, they improve their input in terms of efforts thus making it better for the industry as productivity increases. Looking at Red Square Industries’ five-level performance appraisal system that uses a forced ranking distribution it is clear that the system is appropriate. It helps motive hard working employees and lay off the low ranked employees to the advantage of the organization since it improves its productivity. The rewarding of the high-ranked motivates them to work harder while the 3 to 6 weeks given to the lower ranked gives them a chance to redeem themselves and work even harder to improve their status. The system is excellent as it has accomplished usefulness in providing periodic formal interaction particularly between the managers or supervisors and the subordinates in interview forms therefore, making it easy to examine the performance of the subordinate and discussing the same, with the aim to identify, monitor and improve on weaknesses of the lower performers (Latham & Latham 2000, p. 199 - 249). It is therefore, an excellent approach that the industry has taken that helps in building on strengths of performances and improving employees’ skills. However, the Red Square Industries five-level performance appraisal system using a forced ranking distribution has significant weaknesses. These are the challenges it poses in maintaining a smooth operation of the industry and harmony at the work place. The challenges are a distraction to the productiveness of given employees and therefore, hails as a negative attribute to the industry (Sulsky & Keown 1998, p. 52 - 59). The five-level performance appraisal system is supposed to be confidential, but this concept does not stand. It is possible for the employee’s to know their peer’s ranking. An employee learning the ratings of other people is disastrous as it brings down intimate relations between them and lowers the morale of work (Taylor 2003, p. 78 - 105). It is the sole reason why employees tend to have sore relations especially a lower ranked, and a high ranked because of the jealous, which is so natural for a human being (Scott and Einstein 2001, p. 107 - 116). In any situation, such a ranking system should be highly confidential (Reilly & McGourty 1998, p. 244 - 277). Organizations, with confidential ranking systems are able to maintain satisfactory relations with employees, and this reduces tensions within the work place therefore, laying a neutral ground for all employees from which the environment is perfect for productivity (Sulsky & Keown 1998, p. 52 - 59). The nicknaming of the ratings for instance 1 (stars), 2 (starlets), 3 (work horses) and 4 or 5 (dogs) are disadvantageous in the organization’s work as there is reduced morale in those rated lower. They few dehumanized, and abused in such a working environment and this are a negative attribute within any given work place. Latham and Latham (2000, p. 199 - 249) ascertain that respect is a virtue in any given work places, and it dwindles due to such elements as abuses and pretence. In reality therefore, such a ranking system allowing the nicknaming and open to everyone might be humorous, but in reality, it brings down the productivity of the organization, which becomes difficult to build in the long run. Fletcher (1994, p. 41 - 56) reflects that employee rankings are great, but when applied wrongly, they bring down the team work spirit that could be of great advantage to the organizations’ performance. His argument was that this causes divisions and lack of vision for the lower rated and yet they are part of the organizations depended upon to complete some major tasks, in the productivity process Due to a poor appraisal system, envy and reluctance to communicate prevails within the work place and is a danger to the operations of the organization as it reduces the moral and productivity of respective individuals (Taylor 2003, p. 78 - 105). The lower rated tend to relax, and they leave the problem solving issues to the high, which creates negative attitudes that are disastrous for the organization. The industry therefore, needs to fight the vice and redeem the effective appraisal system that would not divide employees but unite them and motivate them to productivity (Sulsky & Keown 1998, p. 52 - 59). Reilly and McGourty (1998, p. 244 - 277) were of the view that ratings in an organization work well but they are also hazardous as they cause high rates of workers’ turn over especially those who feel they are better than they are rated. This is the same case with Red Square Industries’ five-level performance appraisal system. It was designed to keep track of employees and motivate them to higher ranks, but the employees rated lower feel down yet they deem themselves as hard workers and the tension created is negative to the organization as it increases turnover rates. Sulsky and Keown (1998, p. 52 - 59) were also quick to note that poorly monitored ratings in appraisal systems for an organization lead to discriminations and favoritism, which are an enemy to the future development in the specified organization. For instance, in the case of Red Square industries, favors and discrimination is created with the establishment of the rankings, for instance members belonging to unions are not laid off even when rated lowest. The industry therefore, needs a proper system, one that would do away with discrimination and treat everyone equally and provide a neutral ground for the organization (Losyk 2002, p. 8 - 11). There is also an element of logger heads among departments within the organization that should not be the case in maintaining productivity. Reilly and McGourty (1998, p. 244 - 277) were of the argument that departments are self composed but they depend on each other for success in producing for the overall organization. This is why a dividing system must be done away with such as the case with Red Square where the ratings create divisions among departments as some departments do not rank their people below three because of biased perceptions, and this is a disadvantage to the honest departments that follow the rankings. It ends up creating tension and dissatisfaction within the organization. Recommendations The industry needs to incorporate a coaching appraisal in collaboration with the ratings adopted. The main goal of incorporating a coaching appraisal is encouraging constructive thinking, and developing commitment toward improvement of performance and developing an efficient effort (Fletcher 1994, p. 41 - 56). The manager in this case will be able to find ways of motivating the employee in committing himself to the objectives and goals (Smither 1998, p. 537 - 548). The manager is also able to provide the employee with the information he must have in making improvements or changes, provide opportunities for using the information as well as providing efficient feedback (Cawley, Keeping & Levy 1998, p. 615 - 633). This appraisal approach therefore, would be ideal for the industry as it calls for a manager to practically discuss the employee’s appraisal with him, provide a model, use personal examples, and work with the respective employee in making a plan and reviewing his progress over time, and possibly teaming the employee with another more knowledgeable for effective appraisal. The HR of the industry also needs to work out a solution to provide a fair ranking and action oriented process (Cardy 1998, p. 132 - 162). Looking at challenges that managers have a behavior of not following protocol and protecting the union employees even if rated lowest, it is obvious that the organization needs a change and implementation of a better strategy. A Performance Management module would be an ideal solution in this matter (Chandra & Frank 2004, p. 25 - 30). The module provides an efficient and flexible performance management system that would allow the manager and employee a self service enabled evaluation system of performance while reducing the mountains paperwork burden from the shoulders of industry’s HR (Sulsky & Keown 1998, p. 52 - 59). Appraisal reviews and forms can be obtained and filed online but made confidential through specific logins for different employees (Smither 1998, p. 537 - 548). It also manages all aggregations and computations therefore, saving the organization of the time that is involved in compiling company-wide data on performances (Fletcher 1994, p. 41 - 56). The performance appraisal software would be an excellent idea for confidentiality and enabling the managers and employees to communicate performances effectively through an established and structured process (Roberts 2002, p. 333 - 342). This makes it easy to conduct evaluations on employee performance against all expectations of the industry with frequent and instantaneous updates. On the same module is an intuitive on-line module for learning that would help the employees, understand how the appraisal process for fairness to prevail (Cawley, Keeping & Levy 1998, p. 615 - 633). All managers and employees of the organization can surely be ensured of confidentiality completely throughout the process. Training is mandatory for all managers of all departments within the organization (Gilliland & Langdon 1998, p. 209 - 243). This is because even with a five-level performance appraisal system, Red Square Industries has a lot more to handle in making sure that the system works. The managers of respective departments need ample training to handle the rewarding and lay off processes with regard to the ranking system (Cardy 1998, p. 132 - 162). This will prevent personal bias and promote an effective system that holds as a solution to the industry’s operations (Taylor 2003, p. 78 - 105). Cawley, Keeping and Levy (1998, p. 615 - 633) argue that interpersonal relationships are a great influence to the evaluation as well as the decisions in the appraisal process and thus notes that the evaluators must always be trained to effectively carry out the appraisal processes without personal bias. Conclusion It is outright that Red Square Industries has one of the best five-level performance appraisal systems for its employees. The system work well in that it helps motive hard working employees and lay off the low ranked employees to the advantage of the organization since it improves its productivity. The rewarding of the high-ranked motivates them to work harder while the 3 to 6 weeks given to the lower ranked gives them a chance to redeem themselves and work even harder. The system is also great and useful as it helps examine the performance of the subordinate and discussing the same, with the aim to identify, monitor and improve on weaknesses of the lower performers. However, the performance appraisal system using a forced ranking distribution has significant weaknesses. The system is not confidential therefore, creating room for nicknaming, which plays as negative in lowering the moral of the lower-ranked employees. An employee learning the ratings of other people is disastrous as it brings down right relations between them and lowers the morale of work. To make it efficient, the company will need better approaches to re invent the appraisal system and make it better and workable for the industry. Incorporating a coaching appraisal is a excellent idea, which will help encourage commitment with the managers equipping themselves with ways of motivating employees and avoiding layoffs within the industry. Working out a solution to provide a fair ranking and action oriented process is also what the industry must do. On the same note, it is recommendable that the industry trains all managers of all departments within the organization. With a proper work out of a better system of appraisal, it is particularly evident that the five-level performance appraisal system as applied by Red Square Industries will be excellent and work to the advantage of the industry. References Cardy, R 1998, Performance appraisal in quality content: A new look at an old problem, In J. W. Smither (Ed.), Performance appraisal: State of art in practice (pp. 132-162), San Francisco, CA: Jossey-Bass. Cawley, B., Keeping, L. M., & Levy, P 1998, Participation in the performance appraisal process and employee reactions: A meta-analytic review of field investigations, Journal of Applied Psychology, 83, 615-633. 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M., and Keown, J 1998, Performance appraisal in the changing world of work: Implications for the meaning and measurement of work performance, Canadian Psychology, 39, 52-59. Taylor, P 2003, Performance management and appraisal, In M. O’Driscoll, P. Taylor, & T. Kalliath (Eds.), Organizational psychology in Australia and New Zealand (pp. 78-105), Melbourne, Victoria: Oxford University Press. Read More