Various Factors Involved in Employee Performance - Essay Example

(HR 8 March 2007 Various Factors Involved in Employee Performance Although leadership can offer incentives for an increase in employee performance, without cooperation and understanding from the company's workers themselves, little will be accomplished. At the top levels of management, especially in a global economy, market share is apt to become more important than employee satisfaction, creating a "no-win" situation. Performance of employees goes beyond simple job competence and becomes highly instrumental in overall company output, establishing positive brand recognition, cooperative communication with upper management, and successful interaction with fellow workers. Also, in today's business community, there is far more focus on customer satisfaction. Performance appraisal (PA) is an important part of any organization, but according to human resources consultant John Drake, it seldom improves employee performance and sometimes even has a negative effect (1). Within any company, documentation is necessary for legal purposes, for feedback, corporate planning, employee development, and salary administration. Structure is needed in a PA plan, but it must be set up in a way that will help an employee understand and try to meet company goals and will best reflect the company's identity in the marketplace (Introduction). In the management process, it is necessary for a company to develop an initial plan for performance appraisal by meeting with a new employee and having a discussion that addresses key job responsibilities, a common understanding of company goals and objectives, the most important competencies needed, and an appropriate individual development plan (Grote 2.1). It is not enough just to pass out a manual, as has been the case in the past, and expect the employee to follow it. Without this initial discussion, further appraisal of the employee's attributes cannot be honestly determined. If an employee understands at the outset what is expected, his or her evaluation at different intervals will offer a more realistic appraisal of the employee's development. Once a performance appraisal method has been developed, the various factors that influence performance can be evaluated. With the current development of what might be called virtual organizations, it is employee relations, market relations and various hybrids of these two units that make up the overall performance factors for employees in today's global companies. Strict working hours and a single workplace have given way to a workforce that might be working from home or on the road as well as in the office itself. In the virtual marketplace, the physical employee becomes a combination of internal and external employees at different levels of training and expertise. In determining an appraisal method that takes all of this into consideration, it is necessary to recognize the factors that have not worked in the past and to replace them with positive factors based on a changing business arena. The boundary between organizations and the marketplace is changing as employees become more involved in organizational structure. Labor agreements and internal company rulebooks are giving way to service contracts in companies that are beginning to depend on information technology (Huiskamp & Kluytmans). With the Internet bringing customers into the mix, changing expectations call for a more fluid method of appraisal based on individual performance within a flexible time frame, and in a global economy, changes are inevitable and ongoing. Factors Influencing Employee Performance From Negative to Positive: 1) Monetary incentives - According to Drake (14), "you cannot expect a performance appraisal to improve performance when it is also linked directly to rewards (salary or promotion)." Drake sets forth a situation in which a plant manager is limited in his ability to get a salary increase for an employee unless he rates the employee at least at "5" on a scale of 1-7, which means a rating of "outstanding." If the manager sees his employee as above average but not outstanding, no salary increase will be forthcoming. It is the dependable, competent, loyal employee that keeps the company going, with the occasional innovative employee taking chances and helping the company grow. By offering competitive salaries at the beginning with promotional incentives as part of training, each employee can choose to advance or to stay at the same level of competence. Those employees who choose to stay at the same level can-as long as they continue to be competent-incorporate change into their schedules by implementing the ideas of the more imaginative employees. 2) Decision Making Process - By putting an employee in a position where he or she is expected to follow the rules and regulations of the job without being able to offer any input, enthusiasm will quickly wane, and boredom will set in. In the past, most companies were structured as hierarchies, with upper management at the top, department managers down a level, and all other employees expected to follow a prescribed plan, often without understanding the final goal or overall specifications. By offering employees at all levels the opportunity to become part of the decision-making process, change can be incorporated without creating resentment among workers, and this will increase overall understanding and improve employee relations. 3) Need for Encouragement - One process utilized in performance evaluation is to list an employee's weaknesses and use them as a basis for evaluation. However, failure begets failure, and if the employee disagrees with the evaluation, the ensuing conflict between manager and employee will just make matters worse. Encouragement is a far more useful method, and will give the employee incentive to improve. Even more important in a company that relies greatly on information technology is to allow for innovative suggestions on the part of employees. Their successes will result in further successes in the organization. 4) Unrealistic Goals - By setting specific time frames for employee development rather than discussing goals for an employee and allowing the employee to determine how much time might be required to meet those goals, upper management automatically sets itself up for failure. If the employee feels he or she cannot meet goals in the time frame required, incentive to improve performance gives way to resentment. The deadline might be met, but the result might not meet expectations. In order to fulfill expectations at the outset, it is important to allow an employee to set his or her own goals to be accomplished within a time frame that is acceptable to both the employee and management. 5) Product Reliability - If company goals require an employee to follow performance protocols that lack any personal incentive, it is the customer base that will suffer with an inferior product. The company is looking for profitability and increase in market share, while the employees are more concerned with quality of the product and their part in customer satisfaction. Canada's Business Development Bank (BDC) offers suggestions on their Web site on harmonizing corporate and employee goals in an electronic marketplace (HR Rewarding). The balanced scorecard approach (Kaplan & Norton) is growing in popularity. This approach utilizes different factors that might impact the business as a whole. The customer service aspect of organizations has become very much a part of employee performance appraisal. In "participative management," company leaders and managers involve employees in goal setting and tracking. The goal is to meet customer demands. This requires interaction between upper management, employees, and customers in order to create products that will meet individual need (HR Rewarding). Performance Appraisal in the Twenty-First Century People are at the core of any successful organization (Njeru, par. 2). This sounds like such a simple statement, but recognition of the personal aspects of the business world did not become foremost until the twenty-first century. Prior to that, upper management made the rules and expected the staff to follow them. In keeping with a 2005 survey by PriceWaterhouseCoopers, hybrid performance systems that combine set performance standards and personal qualities have been found to be a popular appraisal method (Njeru). In this method, not only individuals in the organization but the customers become part of the decision process. Monthly or even weekly meetings with representatives in all facets of the organization are necessary, from the CEO to the managerial staff to the common workforce. With the rapidly growing marketplace and information technology expanding into every area of the marketing arena, appraisal needs to be a continuing process that includes overall company representation (Njeru). When company goals do not take employee input into consideration, employees are apt to become demoralized. However, in a system called "participative management," employees feel empowered when: they feel they are a part of the process of setting goals and identifying desired results; their input is listened to and valued; they are praised and rewarded for making progress towards or achieving company goals. (HR Rewarding, section 3, par. 3)). The Balanced Scorecard In utilizing a system called the "balanced scorecard," all facets of the business world become part of the performance appraisal system. The balanced scorecard is a management system that provides feedback around both the internal and external outcomes. Drs. Robert Kaplan and David Norton developed this approach in the 1990s as a way to "balance" the financial perspective in a company. A successful plan for a balanced scorecard transforms "strategic planning from an academic exercise into the nerve center of an enterprise" (Arveson, par. 2). Data should be collected and analyzed in terms of objectives, measures, targets, and initiatives as to learning and growth, business process, customer perspective and financial perspective. In this process, since variations in products will be created at every step of production, a system with feedback loops allows significant problems to be corrected even as they occur. Pictured below is a chart for the balanced scorecard as developed by Kaplan and Norton (Arveson, par. 2): Although customer management reflects what is new in modern business strategy, one problem with this recent concern for customer satisfaction as a factor in employee performance is that a company is apt to become "customer-obsessed" instead of "customer-focused" (Kaplan). According to Kaplan, companies often capture additional business by offering more services, but increases in cost offset the benefits. Only when customer-focused relationships contribute to higher, not lower, profits will such a focus lead to satisfaction, retention, and growth within the customer base. Kaplan suggests various methods for insuring profit, for instance, if a customer is unprofitable because it is purchasing a single service, the company can encourage the customer to purchase a wider range of services. This might transform the customer into a profitable relationship. Customer focus must be aligned with financial objectives-on managing customers for profits, not just for sales. The all-in-one method being used in employee performance appraisals is new enough to incur weaknesses that must be addressed. New techniques such as balanced scorecards for appraising performance include customer satisfaction and input from employees at all levels of the organization and have been shown to be useful in many ways. But, as with any new concepts in business, weaknesses do occur. The balanced scorecard is successful as a financial barometer but not very useful for prioritizing or choosing projects (Merkhofer). By labeling it as a system, it becomes limited in its success. It would appear that successful performance appraisals should depend on the philosophy of the balanced scorecard rather than as a system or a program. The concept should set up a way to best determine a human solution in order to measure performance (Integrated Measurement). Influencing Employee Performance Successful interaction between manager and employee is the link that determines balance throughout an organization. Unfortunately, surveys have found that although managers agree that helping employees develop is crucial to company success, most employees do not find managers to be effective in this endeavor. In addition, most employees, as a rule, look for learning opportunities, but many managers do not believe this is what they want (Trinka). With so much disparity between manager and staff, positive influence on employee performance becomes doubtful. The need for better understanding and honest communication between them would seem to be the first step in any plan to improve employee performance. Jim Trinka offers the following methods to improve relations between manager and employee: "1) create an environment and strategy to support continuous on-the-job learning, and 2) strategically use communication to produce enthusiasm and foster an atmosphere of open exchange and support." (par. 11). The conclusion to be reached in this paper is that in order to create a successful evaluation plan in an atmosphere that has expanded to include both upper management and customer satisfaction, a simple but effective method of measuring employee performance must begin within middle management and move out from there to all levels of the organization. Works Cited Arveson, Paul. "What is the Balanced Scorecard" Balanced Scorecard Institute, 1998. 25 February 2007. http://www.balancedscorecard.org/basics/bsc1.html Drake, John D. Performance Appraisal: One More Time. Thomson Crisp Learning, 1998, 95 pp. 23 February 2007. http://books.google.com/booksvid=ISBN1560524421&id=rPgO-i-0gzIC&pg=RA1-PA93&lpg=RA1-PA93&dq=performance+appraisal&sig=XzJLcUkUZ1jQ-rGJmAKoJ2hg-NQ#PRA1-PA14,M1 Grote, Richard C. The Performance Appraisal Question and Answer Book: A Survival Guide for Managers. AMACOM Division American Management Association, 2002, 238 pp. 23 February 2007. http://books.google.com/booksid=rLPEs4wveyUC&dq=performance+appraisal&pg=PP1&ots=xzI9XKkFLD&sig=OX-2iaI0G7BDhHOeNW7C7tVDiVw&prev=http://www.google.com/search%3Fsourceid%3Dnavclient%26aq%3Dt%26ie%3DUTF-8%26rlz%3D1T4GFRC_enMX203MX203%26q%3Dperformance%2Bappraisal&sa=X&oi=print&ct=result&cd=2#PRA1-PA23,M1 "HR Rewarding Performance." Business Development Bank of Canada. n. date, n. pag. 25 February 2007. http://www.bdc.ca/en/business_tools/ask_professionnal/archives/hr_rewarding_performance.htmiNoC=1 Huiskamp, R., and Kluytans, F. "Between Employment Relationships and Market Relationships: Dilemmas for HR Management." Management Review, Vol. 15, issue 3, 2004, pp. 381-398. 24 February 2007. http://www.management-revue.org/papers/mrev_3_04_Huiskamp_Kluytmans.pdf "Integrated Measurement Systems: Balanced Scorecards and Organizational Development." Toolpack Consulting. Last updated 15 September 2006. 28 February 2007. http://www.toolpack.com/scorecard.html. "Introduction: Performance Appraisal." 2006. Wikipedia Online Encyclopedia. 23 February 2007. http://www.performance-appraisal.com/intro.htm. Kaplan, Robert S. "A Balanced Scorecard Approach to Measure Customer Profitability." Reprinted in Harvard Working Knowledge Newsletter with permission from "Add a Customer Profitability Metric to Your Balanced Scorecard," Balanced Scorecard Report, vol]. 7, no. 4, July-August 2005. 26 February 2007. http://hbswk.hbs.edu/item/4938.html. Merkhofer, Lee. "Priority Systems: Glossary of Technical Terms Used In Project Portfolio Management," 2002-2007. 27 February 2007. http://www.prioritysystem.com/glossary1.html Njeru, Alphan. "Organizational Success Depends on Effective Staff Performance Management." PriceWaterhouseCoopers, 2005. 25 February 2007. http://www.pwc.com/Extweb/pwcpublications.nsf/docid/879F856F32FDDF1C80257060002EC22F Trinka, Jim. "What's a Manager to Do" GovLeaders.org, October 2005. 28 February 2007. http://www.govleaders.org/whats_a_manager_to_do.htm Read More