The Effectiveness of Performance Appraisal - Essay Example

?Critically evaluate the effectiveness of performance appraisal as a means of identifying and meeting employee development needs with reference to anorganisation with which you are familiar Introduction In some organisations, performance appraisal is a way to identify competency (Grote, 2002). However, one of the obvious reasons of performance appraisal is to determine pay levels (Zairi, 1994). It is in this reason that according to Zairi some employees are discouraged and to the extent performance appraisal creates division because senior managers may focus on results rather than on the process and development. Performance appraisal therefore is very evident especially in total quality management. Quality is of higher significance especially in industries where there is a need to come up with competitive advantage. In the case of car manufacturing industry for instance, quality assurance is of high interest because the output or product offerings should be enough to convey customer’s trust and loyalty. Thus, an organisation belonging to this industry must be able to come up with performance appraisal among its employee to constantly check quality and organisational performance. This evaluation is centered to an individual’s performance and potential development (Singh et al., 2008). It is clear that employee performance appraisal is one of the bases in which the company has corresponding idea on how to determine employees’ given compensation and other privileges. However, despite the presence of performance appraisal in almost every company or organisation, there still a need to evaluate if it actually helps identify and meet employee’s development needs. Performance appraisal defined Evaluation is very important especially in the corporate world because it is a way in which corporate performance is known at a specific significance. The case of evaluating employee performance is a complex task depending on the nature of business operation. Employee is naturally under evaluation and it may be monthly, quarterly or annually depending on the organisation. The evaluation is said to be formal because it determines an employee’s career in the organisation. This evaluation is known as the performance appraisal and it actually helps the company decides of one’s career opportunity (Randhawa, 2007). It is a form of assessment in which an employee’s strengths and weaknesses are identified and observed for the purpose of enhancing, improving or commending performance for potential development (Landy and Conte, 2009; Aswathappa, 2005). Performance appraisal is very complex because it involves specific standard that if not properly understood, it would result to a certain level of confusion and unnecessary feedbacks (Sandler and Keefe, 2003). Thus, it is important that employees must be able to understand what performance appraisal is all about and what it is for (Landy and Conte, 2009). The role of performance management Managers have important role to play when it comes to performance management process. One of the most and obvious role of performance management is to create a business environment that supports development and effective coaching for individual performance (London, 2003; Podger, 2009). With performance management, there is a considerable feedback that can become the basis of evaluation and control. The case of Investors in People is a good example because it is about business improvement and it tries to coach organisations to achieve their full potential. They target to help businesses improve their performance by knowing their priorities. There are many priorities that an organisation should focus. The Investors in People accredited organisations have significant priorities which include managing change, increasing efficiency, maximising profitability, increasing sales, improving productivity and strategic leadership. All of these priorities are eventually integrated with understanding the essential potential of company and its employees. Citing the case of AA Security Ltd, quality assurance was the key to its success why it significantly discovered its potential particularly on the significance of employee’s training management. The whole process covered in the development program involves internal and external understanding of the whole business process in general. The AA Security Ltd is good at understanding important key performance evaluation areas which include learning and growth, financial, customer and internal business process (Investors in People, 2008). Performance management and corporate strategy There are three known generic strategies in the corporate world and these include: focus, overall cost leadership and differentiation (Porter, 1990). According to Porter, an organisation using these strategies is trying to actually create competitive advantage in the midst of fierce competition. It is common practice today for businesses to create strategies for their expansion. The expansion of AA Security Ltd is related to maximising its operation and resources available including humans (Investors in People, 2008). However, this is just a stepping stone towards great opportunity to expand in new areas associated with its business process or even to grow into other areas in relation to its business practices. There is one important issue in here and the whole thing involves the idea of processes and practices. In the case of AA Security Ltd, the improvement of its performance lies on the detailed practices in its operation that eventually resulted to a working process that can be useful for its control and evaluation. The balanced scorecard for instance is a way to measure how a certain organisation translates its strategies into action (Kaplan and Norton, 1996). This involves the issue of control and evaluation. However, in the end the entire purpose is to use the basic priorities such financial, customer, learning and growth and internal business process as the basic measure how far the strategy is achieved or to know what are the necessary steps needed in order to achieve organisational goals. Thus, it is important to consider that a corporate strategy may it be vertical or horizontal needs to be evaluated through performance management process. It is in this way an organisation or individual receives feedbacks in order to know in which areas efforts are to be focused in detail (Cardy, 2003). The evaluation process usually involves four essential components and the mostly viewed measure of performance is financial. However, this is not the usual trend in the case of AA Security Ltd because there is a strong consideration of customers, learning and growth and internal business process in general. In the case of its employee management, performance is very essential in order to address higher level of customer satisfaction. Thus, it is therefore implied that performance appraisal is basically an integral part of its performance management process. The benefits and limitations of performance appraisal Certainly, there are benefits and limitations of performance appraisal. As pointed by Zairi, performance appraisal is commonly used by organisations in order to determine employees’ compensation and other privileges. This is agreed by Bose (2004). It is in this reason that an employee may be motivated further in order achieve the highest level of performance as possible and job motivation among employees is very important for an organisation to achieve (Lussier, 2008; McConnell, 2007). However, Zairi also argued that the management may be actually focused on the process of evaluation itself without taking into account the importance of training and other learning and growth programs. This is what AA Security Ltd tries to exercise. In general, the management tries to combine equal efforts on the evaluation process and how employees are equipped in order to reach what the management expects of them. One of the limitations therefore of performance appraisal is the ability of a certain organisation to enhance productive evaluation system that the employees are aware about. The other limitation lies on the ability of an organisation to motivate its human resource. If these limitations are to be clearly understood by the management, the entire performance appraisal process is going to be a success and will create further benefits in which the bottom line is more productive performance for the organisation just like in the case of AA Security Ltd. Development methods It is important to consider that in performance appraisal, to know when the development should be picked up and what methods or systems can be used is very critical. The case of AA Security Ltd is not about trial and error because the company knows exactly what its priorities are. Priority setting is an integral part in monitoring and the formulation of strategies that will lead to the achievement of corporate goals (National Research Council (U.S.) et al., 1999; Heath, 1997; Kransdorff, 2006). Priority setting is also another important point in order to formulate the required performance that needed to be achieved. This eventually leads to the achievement of clear and concise performance appraisal method or system. The development process starts from setting priorities and this is what Investors in People clearly states to its clients. Thus, the whole method or system used in appraisal is dependent exactly on what the organisation chooses to be its priority. Critical evaluation Measurement issues continue to become an integral part in performance appraisal and these include the following: how to measure performance, improving performance appraisal ratings, the meaning of performance, the definition of quality ratings (Kline and Sulsky, 2009). Thus, it is important to know the critical evaluation of measuring the performance criteria through appraisals. It is important to know specific criteria so that employees will be able to know what aspects they are expected to perform well (Sandler and Keefe, 2003). Conclusion Performance appraisal is an integral part of organisation’s control and evaluation system. It is also part of the achievement of its strategic goals in order to reach the required competitive advantage in the midst of fierce competition. Thus, performance appraisal is therefore clear and concise on the part of employees in order to make use of it as effective way to enhance and develop human resource’s performance for the achievement of organisation’s corporate goals. In this way, performance appraisal becomes and effective tool for organisations to bring out the best of their employees. References Aswathappa, K. (2005) Human Resource And Personnel Management. New Delhi: McGraw-Hill Education. Bose, D. C. (2004) Principles of Management and Administration. New Delhi: Learning Pvt. Ltd. Cardy, R. L. (2003) Performance Management: Concepts, Skills, and Exercises. New York: M. E. Sharpe. Grote, R. C. (2002) The performance appraisal question and answer book: a survival guide for managers. New York: AMACOM Div American Mgmt Assn. Heath, R. L. (1997) Strategic issues management: organizations and public policy challenges. 2nd ed. California: SAGE. Investors in People (2008) ‘AA Security Ltd: Case Study.’ [Online] Available at: http://www.investorsinpeople.co.uk/Documents/Case%20Studies/AA_Security_Ltd.pdf (Accessed: 4 April 2011). Kaplan, R.S., and Norton, D. P. (1996) The balanced scorecard: translating strategy into action. USA: Harvard Business Press. Kline, T. J. B., and Sulsky, L. M. (2009) ‘Measurement and Assesment Issues in Performance Appraisal.’ Canadian Psychology, Vol. 50 (3): 161 – 171. Kransdorff, A. (2006) Corporate DNA: using organizational memory to improve poor decision-making. England: Gower Publishing, Ltd. Landy, F. J., and Conte, J. M. (2009) Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. California: Wiley and Sons. 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Massachusetts: Adams Media. Singh, Y. K., Sharma, T. K., and Upadhya, B. (2008) Technology: Management and Planning. New Delhi: APH Publishing. Zairi, M. (1994) Measuring performance for business results. Oxford: Springer. Read More