Performance Appraisal Techniques - Essay Example

HR Management Ans Jobs in any organization are relatively static and often it is possible to identify and predict critical job-related behaviors which in turn lead to effective and efficient performance. Job analysis therefore takes into account the dynamic behavior of job holders. One of the major purposes of carrying out job analysis exercise is to develop an appropriate design of job for improved efficiency and productivity. Job analysis therefore provides details of the tasks and activities to be carried out on a particular job together with required human skills and motivations to the human resource. Adequate working ambience and other motivators then act towards maximizing the productivity and satisfaction. Job design and work organization work towards complementing each other’s roles. This set of analysis is the specification of the contents, method and relationships of jobs to satisfy technological and organizational requirements as well as the personal needs of job holders1. A systematic body of knowledge on the design of jobs is a result of the Industrial revolution and the rise of large-scale economic enterprises. Principles of scientific management developed by Frederick W Taylor2 around 1900 form the basis for designing jobs in most organizations. The primary emphasis of scientific management was on planning, standardizing and improving human efforts at the operating level in order to maximize output with least amount of input. But now behavioral part is also included into managing the human resources. Now profit maximization is not the only motive, but establishing a relationship with the customers and employees have become equally important parts of the managerial tasks. Traditional views on job design and work organization The early thinking on scientific management of job design was dominated basically by two assumptions. Management Driven Approach: According to this school of thought management will be most effective if it devises rules and procedures to govern the staff for the task to be undertaken. In this approach management is assumed to be a class apart and more effective than labor at devising methods for executing the work and then at planning and organizing. In this case the work is broken down into simple elements The training of workers is planned out in advance Workers are more easily substituted, just like any component, one for another Supervision is considered more crucial to make the workers perform their duties as defined with the specified task. Workers as Economic entities: According to this school of thought, human beings are considered as rational economic beings. And maximum output is thought to be the direct consequence of the policy of relating pay levels to the output. This theory assumes that primary goal of human beings is the monetary compensation and the reward systems. As such, humans will examine a situation and identify a course of action likely to maximize their self interest and act accordingly. All that is required to maximize output, from the organizations perspective, is to hire the right people, train them properly and construct an appropriate reward system. If the work can be paced, say be a machine, a worker can develop a natural rhythm and momentum. Over time the approach of looking at the people/ workers has changed a lot, now the workers are considered very much as an integral part of a business enterprise. Jobs are therefore designed accordingly. The principles on which job design is generally based are; Task fragmentation: A task is supposed to be broken down into smaller operations for achieving technical efficiency. Technology Optimization: The task is analyzed scientifically and then a best method of doing it, is developed. This method is supposed to be the most efficient one. Of course, over time reviews are also held to see the scope for improvements. Standardization of the method: The method once finalized is standardized through time and motion studies. Specialization: Workers are accordingly selected or recruited to perform the specific tasks and specialization expected of them. Training: Once selected/ recruited, the workers are accordingly trained for the most efficient method for performing the task. Cost and time for training are considerably reduced due to fragmentation of the tasks into simple operation requiring low skilled jobs. Individual responsibility: Each worker is made responsible for a single operation forming part of the total task. This forms the building block of the organization. Economic incentive: Once the responsibilities are assigned for each specialized and standardized operation, a system of economic incentive as reward for performance is developed. Industrial relations: At times in order to buy industrial peace, an organization prefers to do the work allotment on the basis of management-union agreements. At times some jobs are given to certain set of people depending upon tradition or customs prevalent from time to time. In the 1970s most of the industrial units used to be state controlled with little competition and employment legislations were in full force. At times such legislations appeared to make the task of controlling the workforce little difficult and emphasis used to be towards compensating the productive efforts lost due to industrial action and absenteeism. Therefore the management too was least interested in the concepts like Job design. In the 1980s, changes started taking place in the workplace. Periods of recession, retrenchment and introduction of newer technologies started to make the industrial environment somewhat turbulent. Workforce started to show the signs of worries over the implementation of computer technologies/ automation. Economic liberalization gave rise to increased competitive environment. This led to the development of the thought process of carrying out the tasks in the most economic and efficient manner. Over the years increasing emphasis on the quality management also affected the work environment. Organizations started following the general principles of job design. Simultaneously there were voices of dissent as well. One school of thought started pointing out the limitations of ‘Job Design’ approach. It said the design is based on the criterion of technical efficiency alone; human social and personal needs of human beings engaged in the designed task are often not taken into account, which reduces a worker to the status of an economic man, denying the existence of complex multiple needs. It also pointed out that such an approach leads to underutilization of the full potential of the worker and since the worker is supposed to do the same operation again and again, which leads to boredom and dissatisfaction. Adam Smith3 anticipated such consequences two centuries ago: “The man whose whole life is spent in performing a few simple operations….becomes as stupid and ignorant as it is possible for a human creature to become”. In fact as early as in 1950, the concepts of Job rotation and job enlargement were being advocated and tested as means of overcoming the boredom at work. Nonetheless all these apprehensions led to the evolution of more useful approaches towards job design and job re-design with the contributing factors like motivators leading to job enrichment. Frederick Herzberg4 developed his two factor theory of motivation. According to this theory, the hygiene factors like the organization, its policies, its administration, working conditions, interpersonal relations, status, job security etc. do not lead to motivation but their absence breeds dissatisfaction. The second component in Herzberg’s theory states that factors like sense of achievement, recognition, interest in the job arise from internal instincts in employees yielding motivation. Both these components applied simultaneously lead to job enrichment and motivation. Frederick Herzberg said, “If you want people to do a good job, give them a good job to do.” The contemporary job design theories outline a set of functions, components and tasks in any given organizational setting, based on a set of unique organizational and personnel qualities. For the organization, implementing job design will result in easier recruitment, greater output from the worker, better allocation of work, lower turnover rates and greater co-operation. For the worker, it improves the quality of the experience, offers greater freedom and flexibility, makes the work more challenging, and uses more of the worker’s skills (Dolan and Schuler, 1994). With competitive environment bringing in dramatic downsizing, the entry-level jobs are now increasingly being performed by mid-career workers, which in turn create problems of career blockage and stagnation for remaining workers. It is therefore more important to design the job in such a manner that it satisfies the worker for longer duration, while at the same time leading to successful business prospects on the part of the organization. Such a compatibility with the organization’s goals, culture, norms and strategies are important because belief in the value of the organization’s goals strengthens the worker’s commitment. The search for alternative ways of designing jobs to counter the dysfunctional consequences of designs based on traditional principles began with the developments in behavioral sciences and in the general systems theory. The Quality of Working Life (QWL) movement is one such example. It states that a high quality of work life (QWL) is essential for organizations to continue to attract and retain employees. The dominant approach to job design for individuals over the last decade has been the job characteristics theory of Hackman and Oldham (1976). This theory originally proposed the Job Characteristics Theory5 as a three-stage model, in which a set of core job characteristics impact a number critical psychological states, which, in turn, influence a set of affective and motivational outcomes (Figure 1). Figure 1: Hackman & Oldham’s (1976) Job Characteristics Model This model is based on the assumption that three key psychological states of a job holder affect motivation and satisfaction on the job. The three states are; 1. Experienced Meaningfulness: It is the degree to which the job holder experiences work as important, valuable, and worthwhile. 2. Experienced Responsibility: It is the extent to which the job holder feels personally responsible and accountable for the results of the work performed. 3. Knowledge of Results: The understanding that a job holder receives about how effectively he or she is performing the job. When an employee experiences these three states on the job, he or she feels internal work motivation. This also brings up the urge to perform well. This theory is considered to be the most well-known and widely discussed effort in explaining the relationship of job characteristics to job satisfaction. Original intention of the job characteristics theory was to diagnose jobs ‘to determine if and how they should be redesigned to improve employee motivation and productivity and then later to be used to evaluate the effects of job changes on employees.’ At the most basic level, five core job characteristics lead to a number of personal and work outcomes that are beneficial to the individual (Hackman & Oldham, 1975; 1976). These are; i. Variety of skill: This refers to the degree to which the job requires an individual to do different things and involves the use of a number of different skills, abilities and talents. ii. Identity of the task: This involves a complete module of work; the person can do the job from the beginning to end with visible outcomes. iii. Significance of the task: This is concerned with the importance of the job. It answers the question whether it has a significant impact on others. iv. Autonomy: This refers to the amount of freedom, independence and discretion the person has in areas like scheduling the work, making decisions etc. v. Feedback: This involves the degree to which the job provides the person with clear and direct information about job outcomes and performance. The strategy of job design therefore involves a wider dimension and has a big impact on the motivation levels of the employee, which proves detrimental in attracting and retaining good workers. A recent survey done by Hewitt Associates6, a global HR services company, found that big as well as small organizations in all industries throughout Canada are finding it challenging to attract and retain workers. Most of the 232 employers in the survey have started focusing on flexibility as a means of addressing the problem. While three-quarters of Canadian companies are finding difficulties in attracting or retaining employees, 44% have problems with both. Therefore during Job design this aspect needs to be well studied and analyzed in order to do justice to the organization as well as the individual. Ans 2 Performance Appraisal Systems as Performance Management Technique Performance management allows an organization to evaluate an employee for its suitability in the organization, in the department or for the particular task. Organizations constantly take stock of their workforce and assess their performance in existing jobs for three reasons: i. Improvement in the organizational performance is considered a direct result of the improvement in the performance of individual contributors. ii. For identifying the potential of the workforce. iii. To provide an equitable method of linking payment to performance where there are no numerical criteria. These basic reasons of performance management lead to the development of suitable methods to assess the worker’s ability and suitability. Such management helps in answering the questions like; What has been done to improve the performance of a person last year? What can be done to improve his or her performance in the year to come?). Performance management helps in recognizing existing talent within the organization and allows some room for maneuverability to use the in-house talent to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills. It is said that, Companies and organizations are made for people and by the people, and obviously their effectiveness depends on the behavior and performance of the people running these companies. As per the latest trend, the ‘individual’ acquires a central place in the HR policies being devised by the management. Great managers are therefore supposed to know abilities, positive and not so positive traits of their employees. For employees, monetary aspects and ease of work are no doubt triggers for better performance, but recognition of their work is equally important. Performance appraisal/ assessment have been in vogue since time immemorial. The techniques and linking such assessment with Job Design, promotions/ demotions, reviews etc have changed over the times. For example7, during early 19th century, Robert Owen used coloured wooden cubes at his New Lanark cotton mills in Scotland. These cubes were hung above the work stations, to indicate the performance of individual employees. Differing merit ratings were represented by different coloured cubes which were changed by HR managers to indicate improvement or decline in employee performance. Performance appraisal is therefore an important component of the information and control system. People are selected and recruited for effective job performance in the organization. It therefore becomes necessary for the organization to develop a set of performance management, analysis and review system, which can objectively and accurately measure the job performance, determine a reward system and develop programmes for enhancing the performance in the current job together with realizing the potential for future responsibilities. Michael Armstrong (2006), defined performance management as a ‘systematic process for improving organizational performance by developing the performance of individual and teams. It is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements.’ This approach believes in managing the people well and using their performance to provide adequate feedback and recognition towards helping the employees in realizing their full potential. Similarly Baron and Armstrong (1999) define performance management as a process which contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved. They go on to stress that it is a strategy which relates to every activity of the organisation set in the context of its human resource policies, culture, style and communications systems. The nature of the strategy depends on the organizational context and can vary from organisation to organisation. Performance appraisal is aimed at evaluating as well as developing the human resource. The main evaluation (i.e. judgemental) objectives of performance appraisal include; Providing feedback to the subordinates and telling them where they stand in the performance management mapping. Developing a data bank for the HR department to decide on matters like placement, pay, promotion, etc. Similarly the developmental objectives include; Diagnosing individual and organizational strengths and weaknesses Counseling, coaching, career planning and motivation of subordintates Developing congenial industrial relations. At times the objectives of evaluation and development appear in conflict. Particularly the appraisals and performance-related pay structure is criticized by the group of employees adversely affected by such techniques. Critics also point out the weaknesses in such a subjective method as sometimes when performance is expected to meet the evaluation objectives, managers may have to make difficult judgements while at other times the manager may prove to be liberal in his approach towards granting benefits. Similarly, in case of adverse appraisal, when such a communication is sent to employees, it may result in strained relations amongst the manager/s and workers. At time some managers too are reluctant to engage in such a process because of this type of confrontational nature. Such dilemma raises issues concerning the appraisal process, but on a realistic note it is widely agreed that good worker needs to be encouraged while less efficient workers need to be trained and developed for giving out their optimum performance to the organization. Any performance appraisal system should therefore seek to address the issues concerning an individual employee, like; Telling what is expected of the employee Providing him an opportunity to perform Letting him know how well is he doing the job Providing him guidance and direction wherever he requires it Rewarding him according to his contribution Maintaining worker friendly environment and entrusting responsibilities to the responsible one’s is very crucial from the point of view of management. The workforce if kept in good humor will not only help in efficient output but also work as a goodwill messenger for the organization. Performance appraisal system can therefore be put to several uses covering the entire spectrum of human resources functions in an organization. It can be used to promote a variety of management objectives like; Systematic efforts to tone up performance based on performance results Input for an array of HR decisions like placement, transfer, promotion and reward To identify individuals with high potential To analyze training and developmental needs Wider Human resources planning For diagnosing the problems of individuals and organization. For validating the selection and recruitment test and procedures Improving productivity Creating a positive work culture and envieronment Stimulating, recognizing and rewarding the achievements. Provide valuable information towards strategic and competitive planning. Performance appraisal system in any organization depends substantially on five factors; i. Concept: How the performance appraisal will be carried out, must be clear to the manager as well as the employee. All the dimensions like duties, responsibilities, behavior and traits should have standards or benchmarks based on past performance, industrial standards etc. Relative weightage has to be assigned to all the dimensions. Proper appreciation of the role and work by manager as well as the employee will help in the development of a sincere approach. ii. Criteria: Performance has to be measured against certain criteria like output, quality, punctuality, cost control, contribution, initiative, leadership, knowledge of work, honesty, discretion, team work, resourcefulness, sincerity etc are some of the criteria against which performance is assessed. There are no set standards or parameter for applying against these criteria, each organization has to develop its own set of criteria and standards for judging the performance. The perceived subjectivity will of course be there to influence the appraisal process, but the role of higher management in resolving such issues becomes very crucial. Top management needs to be very careful in assigning and communicating weights to different factors, identifying standards for comparison and fixing responsibility. iii. Context: The top management philosophy values and belief system in the organization influences the notions about people in the organization. Douglas McGregor explains the theory X and theory Y to describe the behavior of individuals in an organisation. According to theory X, the average human being has an inherent dislike for work and he’ll try to avoid the work whenever he can. This theory assumes that it is on the manager to make an individual work. The manager will have to control and punish the individual for him to work. Theory Y on the other hand believes that goals of perfection, self actualization and commitment to work drives and motivates the individual for performing better. This theory believes that control and punishment are not the only ways to make people work. An individual will perform better driven by his needs as well as by the needs of the organization. In practice though none of these two component theories can be implemented in isolation. That’s where the subjectivity part comes into play in performance appraisal. iv. Culture: Culture of the people in general affects the appraisal system. Culture also varies from nation to nation. For example workers in Japan are known to be very workaholic in nature while those in some South Asian countries and countries like USA an UK are more assertive towards their rights and they have strong union influence on their work cultures. In fact Religion and culture never tell a person to ‘not to work’, yet people of some socio-cultural background are found to be less workaholic than others. The effect of family systems like ‘Joint family system’ or ‘Nuclear family system’ become crucial factors in forming the habits of individuals and thus formulating of HR policies. Employees sometimes prefer flexibility in their work schedule depending upon the local festive season, local climatic conditions etc. Therefore the performance appraisal system for an MNC cannot have same set of rules for its head-office in London as well as its subsidiaries in Tokyo, New Delhi or Rome. v. Contingency: The most important aspect of any information and control mechanism in any organisation is the use it is put to and in what manner. The top management needs to come out with a systematic effort to link performance appraisal to other sub-systems of human resource management so that all HR decisions use the performance appraisal data as a critical input. This will help in creating faith and seriousness in the approach of both the appraiser and the employee towards the performance appraisal system. Otherwise the appraisal would reduce to just a ritual. Performance appraisal techniques: In general, some of the more widely used techniques for performance appraisal include; i. Appraisal by Objectives: This approach takes a leaf out of the book of Management by Objectives (MBO). In this approach the organisation introduces goal-setting as part the appraisal process. The objectives for evaluation period (annual) are determined through joint discussion and negotiation between the manager and workers. Key Performance Areas (KPA) or Key Result Areas (KRAs) are spelt out as benchmarks for appraising the performances. The appraisal is done in terms of the degree of achievement and non-achievement of these objectives. ii. Confidential Reports: This is a traditional form of performance appraisal, generally found in defence and governmental organization. A confidential report is prepared by the manager/ boss about the employee as per his/ her own judgement about the employee, enlisting the strengths, weaknesses, achievements, failures, behavior, attitude towards work and co-workers etc. iii. Trait Appraisal: In this approach individual traits like honesty, integrity, creativity, punctuality, discipline dependability, co-operation, judgement, adaptability, efficiency, industriousness, loyalty, motivation etc. are enlisted for individual employees and the effect of these traits on work is measured. iv. Rating Scales: In this technique performance is measured through assigning numbers (e.g. from 0 to 10 or alphabets from A to G etc) to items or events to describe differences in performances of individual employees. v. Ranking Techniques: This technique encourages the managers to rank/ order their subordinates or peers as by comparing the qualities of each individual depending upon their performances within the organization. vi. Behaviorally Anchored Rating Scales (BARS): In this approach description of various degrees of behavior relating to an aspect of performance dimension are documented by deriving them from an analysis of job content and work behavior. The behaviors are described for a set of intervals ranging from the most negative to most positive. References: 1. Job Design - Traditional views on job design and work organization, available online at http://www.accel-team.com/work_design/index.html (Jan 7, 2007) 2. Scientific Management and Fredrick W Taylor, available online at http://www.accel-team.com/scientific/scientific_02.html (Jan 7, 2007) 3. Dolan, Shimon L. and Randall S. Schuler. (1994). Human Resource Management: the Canadian Dynamic. Nelson Canada. 4. Coverdill, J.E. and Finlay, W. (1998). “Fit and Skill in Employee Selection: Insights from a Study of Headhunters.” Qualitative Sociology 21 (2), pp. 105–127. 5. The Importance of the Critical Psychological States in the Job Characteristics Model, available online at http://www.chrms.org/library/critic/critic1a.htm (Jan 8, 2007). 6. G Nasl Saraji, * H Dargahi (2006), Study of Quality of Work Life (QWL), Iranian J Publ Health, Vol. 35, No. 4, pp.8-14 7. Meagan Scott, Kirk A. Swortzel, and Walter N. Taylor (2005), Extension Agents’ Perceptions of Fundamental Job Characteristics and Their Level of Job satisfaction, Journal of Southern Agricultural Education Research 88 Volume 55, Number 1. 8. Hackman, J. R., & Oldham, G. R. (1975). Development of the Job Diagnostic Survey. Journal of Applied Psychology, 60(2), 159-170. 9. Hackman, J. R., & Oldham, G. R. (1976). Motivation through the design of work: Test of a theory. Organizational Behavior and Human Performance, 16(2), 250-279. 10. HRM Guide (June 20, 2006) ‘Employers Struggling To Find And Keep Employees, available online at http://www.hrmguide.net/canada/jobmarket/labour_shortage.htm 11. Michael Armstrong, (2000), 2nd ed, ‘Performance Measurement’, Kogan, UK. 12. Brown, Duncan & Armstrong, Michael (1999). Paying for contribution: real performance-related pay strategies. London, Kogan Page. Read More