Effectiveness of Performance Appraisal Strategies - Case Study Example

Data Analysis 4.0 Introduction The research was conducted using questionnaire, consisting of both structured and unstructured questions on a sample set of 60 respondents taken from both companies, Wal-Mart and Tesco. Out of these respondents, 50 people responded giving a ratio of 83.33 percent success rate. The findings are discussed below and are also illustrated using graphs. 4.1 Respondents and Departments Wal-Mart It was observed that 12 percent of the total 25 respondents belonged to the technical and the finance and audit departments. From merchandising department only 8 percent constituted the respondents while it was 16 percent from the corporate communications. Logistics and assets departments represented around 16 and 8 percent of the respondent population while 16 percent of them hailed from the human resources unit. Around 8 and 4 percent of the people hailed from Store Planning and Legal departments. Figure 2: Percentage of respondents interviewed from various Departments of Wal-Mart Tesco Relating to Tesco the departments like Property, Supply Chain and Merchandising reflected around 16 percent, 12 and 8 percent each respondents of the total 25 people taken for interview. Departments like Information Technology, Store Sales and Human Resources reflected 16, 15 and 12 percent of respondents. Finally units like Recycling and Business Support hailed 20 and 8 percent of respondents. Figure 4: Percentage of respondents interviewed from various departments of Tesco 4.2 Duration of Work Wal-Mart In Wal-Mart 28 percent of the respondents stated that they worked for 1-5 years while 24 percent of the people are working from 6-10 years. 32 percent of the respondents stated of working for 11 to 15 years, and remaining16 percent working from 16 to 20 years. Figure 5: Percentage of Respondents working duration in Wal-Mart Tesco Relating to Tesco around 28 percent of the respondents stated of working for 1 to 5 years in the company. 20 and 24 percent of the respondents responded that they had worked in Tesco for around 6 to 10 and 11 to 15 years and the remaining 28 percent of the respondents stated of working for 16 to 20 years in the concern. Figure 5: Percentage of Respondents duration of working in Tesco 4.3 Familiarity with Performance Appraisal Strategy Wal-Mart Out of the total 25 respondents, 11 responded affirmatively relating to their familiarity to the performance appraisal process in Wal-Mart, whereas 14 stated that they are not familiar. This reflects that the human resources system is partially transparent in Wal-Mart. Figure 7: Response rate to the Familiarity with the performance appraisal strategy in Wal-Mart Tesco Relating to Tesco it is noted that around 60 percent of the total 25 respondents reflected in an affirmative to the query of familiarity with the performance appraisal strategy while around 40 percent stated that they are not familiar. Thus herein also it is observed that the performance appraisal strategies and polices are not transparent enough in Tesco. Figure 8: Rate of responses to the familiarity with the performance appraisal strategy in Tesco 4.4 Performance Appraisal and Company Strategy Wal-Mart In response to Question 5, the opinion emerged is that Wal-Mart management appears to be quite stringent in its performance appraisal practices such that the management tends to conduct the appraisal of the individual employees depending on contributions rendered to store productivity and growth. A raise or decline in the pays are decided upon depending on the parameter of individual performance. Thus the performance appraisal is closely linked to the company strategies for growth and performance in meeting consumer expectations (Armstrong, 2006). Tesco In response to Question 5, the observation is that the performance appraisal system of Tesco is largely based on evaluation of the performance and productivity of the employees in terms of identifying key indicators for company and store performance. It rates the individual’s contribution in accomplishing such end goals relating to store productivity and consumer satisfaction. However effective feedback is rendered to the people and also training rendered to help develop their productivity in the concern and develop their capacity to full potential (Armstrong, 2006). 4.5 Clarification Wal-Mart For Wal-Mart the performance appraisal system is highly stringent and based on company’s strategy for growth and productivity contributes in the steering of individual performance. The performance appraisal system of the company being linked to the increase or decrease in compensation of the employees thus helps in the company in reducing cost. However the company management focus on reducing the workforce in terms of such strict evaluation processes in turn might cause tensions in the workplace and develops negative feeling towards the company (Dessler, 2000). Tesco The performance appraisal system of the company bears a close relationship with the strategic objectives of the concern. Top management of Tesco works in defining a set of key areas of performance such that the appraisal of the individual employees is conducted in accordance with the set standards for such key performance parameters. Effective feedback is given to the people depending on the evaluations such that the performance and productivity of the people are further developed for meeting the set objectives (Armstrong, 2006). 4.6 Knowledge of Employees Wal-Mart In response to Question 7, the findings are that nearly about 40 percent of the managerial respondents stated that the people in the company have knowledge of the activities required to be performed. However 32 and 28 percent of the respondents responded to the parameters of ‘May Be’ and ‘No’ respectively. Thus the above stature reflects the need for more enhanced communication between the management and people concerned. Figure 9: Rate of responses of managers relating to task knowledge of employees in Wal-Mart Tesco In Tesco it is observed that 48 percent of the total 25 respondents stated that the people are well acknowledged of their duties and responsibilities. However 32 and 20 percent of the respondents marked on ‘May be’ and ‘No’ respectively thereby suggesting the need for more transparent and clear communications. Figure 10: Rate of Responses of Managers relating to Task knowledge of Employees in Tesco 4.7 Knowledge of Roles and Responsibilities of Employees Wal-Mart In Wal-Mart around 40 percent of the respondents stated that the employees are well aware of their roles and responsibilities, while 32 percent were not sure and 28 percent are not aware. Figure 11: Percentage of responses relating to the knowledge of roles and responsibilities of staff in Wal-Mart Tesco In Tesco where around 48 percent of the managerial respondents stated that the employees are clear about their roles and responsibilities around 32 percent respondents they are not sure of it and 20 percent responded in negative. Figure 12: Percentage of Responses relating to the knowledge of r0les and responsibilities of staffs in Tesco 4.8 Providing Employees with Right Materials and Equipments Wal-Mart Around 52 percent of the respondents stated that the employees are equipped with the right materials and equipments to perform while around 28 and 20 percent responded on ‘May be’ and ‘No’ to the above query. Figure 13: Percentage of Responses gained relating to the resource availability to the employees for conducting the tasks in Wal-Mart Tesco In Tesco around 56 percent of respondents remarked positively to the fact that employees are equipped with the right amount of resources to achieve company objectives. However around 24 and 20 percent of the respondents responded on ‘May be’ and ‘No’. Figure 14: Percentage of Responses gained relating to the resource allocation to the employees for performing the tasks in Tesco 4.9 Employee Activities Fitting Company Mission and Objectives Wal-Mart In Wal-Mart 48 percent of the respondents stated ‘Yes’ while 32 and 20 percent responded to ‘May be’ and ‘No’ when asked about whether employee activities fit with company mission and objectives. Figure 15: Rate of responses stated whether the staffs operate based on the objectives and mission of the concern Tesco For the same query in Tesco, 52 percent reflected on ‘Yes’ meaning that their operations are based on the objectives and mission of the concern while 28 and 20 percent of the respondents reflected on the parameters of ‘May be’ and ‘No’ respectively. Figure 16: Rate of Responses in whether the staffs operate based on the objectives and mission of the concern 4.9.1Training and Opportunities Wal-Mart When asked about the training and other opportunities rendered to the employees, 40 percent of the respondents positively responded, whereas 28 percent said it is provided partly, 20 percent stated training is not rendered and 12 percent marked I Don’t Know meaning they were not sure what to answer and needed more clarification. Figure 17: Respondents response relating to the rendering of training and other opportunities Tesco 48 percent of the respondents said that full training and other opportunities are rendered for the employees to perform well, where as 32 and 12 percent responded that it is provided partly and not provided. 8 percent marked “I Don’t Know” as they wanted more clarification. Figure 18: Respondents response relating to the rendering of training and other opportunities 4.9.2Performance Appraisal Conducted Wal-Mart 52 percent of the respondents remarked that appraisal to be conducted yearly while 28 percent on half-yearly appraisal and 20 percent on others shown as follows. Figure 19: Respondents response to the frequency of conducting Performance Appraisal Tesco Where 56 percent of the respondents favoured yearly appraisals, 28 percent preferred appraisals to be conducted half-yearly and 16 percent selected on any ‘Other’ frequency. Figure 2: Respondents responses gained to the frequency of conducting performance appraisal 4.9.3 Key Success Factors Wal-Mart In response to Question 12, the opinion surfaced is that the most prominent key success factor for the company is taken as Cost Reduction. Other factors like profitability, increase in the level of earnings on individual shares and similarly increase in sales are also taken into count. As these factors are key indicators of company’s success that show its growth and financial performance (Bennett and Woehr, 2006). Tesco In response to Question 12, the opinion emerged is that the key success factors for Tesco are responsibility to the society and consumers, emphasis on the development of operational parameters and financial potential of the concern. Bennett and Woehr (2006) also stated that an organizational performance key indicators is not its financial performance but also its relationship with the community and customer satisfaction. It is based on these core areas that the performances of the individuals are rated as organizational success is connected with individual success and rewarded accordingly (Bennett and Woehr, 2006) 4.9.4 Person Responsible for Conducting Appraisals In response to Question 13, the finding is that in both Wal-Mart and Tesco the Performance appraisals comes under the purview of Human Resources Manager and only it conducts the appraisals of the employees in the company. . 4.9.5Training Offered Wal-Mart In response to Question 14, the opinion is that in Wal-Mart, effective training is rendered to the people involved in human resources department to enhance their skills pertaining to recruiting, selecting and sustaining employees in the concern and in conducting appraisals As it is crucial that people who are appraising are also properly trained for effective performance appraisal (Grote, 1996). Tesco In response to Question 14, the opinion is that in Tesco the management staffs pertaining to human resources department are continually trained to help develop their skills and effectiveness to evaluate the people in terms of performance conducted. Performance appraisal can be conducted properly and will give accurate results only when appraisers are trained thoroughly and continuously (Dessler, 2000). 4.9.6 Employee Involvement Wal-Mart In response to Question 15, the finding is that at Wal-Mart no such evidence is gained wherein the employees are involved in conducting performance appraisals of their own or others (Wal-Mart Stores, 2012). It is opined that without employees’ involvement in the appraisal process it becomes only performance management rather than performance appraisal (Grote, 1996). Tesco In response to Question 15, the opinion is that in Tesco 80% of the employees are involved in deciding the metrics of performance appraisal programs, mainly of the front line people employed and appraise themselves and other employees. Thus it can be said that the performance appraisal system carried out in Tesco is 360 degree Appraisal system. In 360 degrees appraisal feedback is collected from all around, that is from peers, supervisions, subordinates and internal and external customers. It is used mostly for development purposes rather than for increasing pay. However it is a complicated and extensive paperwork procedure (Dessler, 2000 and Grote, 1996). 4.9.7 Communication of Feedback Wal-Mart In response to Question 16, the finding is that the feedback of the performance appraisals conducted in Wal-Mart is communicated effectively to the employees to help them focus on growth and expertise and improve performance. It is imperative that feedback of the appraisal is effectively communicated to the employees as it not only improves their performance but also sustains it (Dessler, 2000). Tesco In response to Question 16, the opinion is that in Tesco also the feedback of the appraisal programs are communicated to the employees hinting on opportunities for growth and excellence in their functions. Effective communication of the feedback to the employees plays a critical role in appraisal system as employees perceive it to be fair, it improves the conduct of the process, give accurate results and improves the process performance and employees as they will know their shortcomings (Agola, Hemans and Abena, 2011). 4.9.8 Negative Opinions to Meetings Wal-Mart The frequency of rising of negative opinions of the employees in the review meetings can be reflected as under. It can be concluded that it happens only sometimes, that is 32 percent, 24 percent and 28 percent frequently and occasionally and 16 percent of the time no disagreement in review meetings. Figure 3: Rate of respondents to the frequency of disagreements in review meetings Tesco In Tesco the frequency of emergence of negative opinions of the employees pertaining to the review meetings is as follows. Occasionally it happens 28 percent of the time, sometimes it is 24 percent and 20 percent frequently and 28 percent of the time it never happens. Figure 22: Rate of Respondents’ response to the frequency of disagreements in review meetings 4.9.9 Rewards for Effective Performance Wal-Mart In Wal-Mart the management focuses on presenting financial incentives to the people in terms of rendering gift tokens for their effective performances (). Public recognition and gift tokens in proper organized functions are also a good way of rewarding employees’ good performance (Dessler, 2000). Tesco In Tesco the management focuses on rewarding employees by allocating shares on business profits on their effective performance feedbacks gained (). One of the primary objectives of performance appraisal is deciding on rewards, incentives and promotions based on the feedback and appraisal apart from initiating training and development. Rewards can be both financial and non financial (Bhattacharyya, 2011). It drives the employees towards achieving the specific set outcomes and performs better (Bhattacharyya, 2011). Allocation of shares reward mode is cost effective compensation, and motivates employees for good performance (Bhattacharyya, 2011). 4.9.1.1Actions for Weak Performance Wal-Mart Wal-Mart being a cost driven company focuses on reduction of employee strength in terms of weak performances of the people pertaining to specific departments. Both rewards and punishment are used to change the employees behaviour that is how he is performing the job, good performance is rewarded whereas poor performance is punished (Dessler, 2000) and dealt strongly by removing the employee (Grote, 1996). Tesco The management of Tesco focuses on involving the employees in discussion forums where their drawbacks are discussed relating to the standards of service decided on in relation to the specific performance or target areas. Thus their poor performance is analysed and facilities and opportunities are provided to improve the performance. It can be said that in Tesco they carry out soft appraisals where poor performance is not usually punished by firing them, but it is dealt with probing the reason for underperformance and given due time to improve his performance and removing an employee leads to consumption of time for hiring and training a new one, and negative feelings towards the company (Dessler, 2000). 4.9.1.2 Changes to Existing Performance Appraisal Programs The respondents belonging to both Wal-Mart and Tesco stated that the performance appraisal programs can be developed further through the incorporation of the 360 degree evaluation approach and also the use of other rating scales like BARS (Behaviourally-Anchored-Rating-Scales). It is claimed that BARS system’s appraisal is better, gives correct measures, standards are clear and equitable compared to other tools and 360 degrees appraisal system is good for employee development and provides all around feedback (Dessler, 2000). 4.9.1.2 Conclusion Responses gained from 50 potential respondents are reflected through the use of graphs and pie-charts to thereby gain needful inferences to the data sets. A mix set of responses are found to be gained from the people pertaining to the two retail companies Wal-Mart and Tesco relating to the inference of the effectiveness of the existing performance appraisal methods. It brings out certain significant differences between the two companies with regards to the conduct of performance appraisal process and its effectiveness. From the overall responses of the respondents it can be concluded that Tesco performance appraisal system is more evolved in terms of employees involvement in the process, rewards and punishment are conducive to the employees, when compared to Wal-Mart’s system however there is scope for further improvement. References Agbola, R, Hemans, S, & Abena, S (2011), The Effectiveness of Performance Appraisal as Tool for Enhancing Employee Performance in the Public Health Sector, Global Management Journal, 3, 1/2, pp. 81-96, Business Source Complete, EBSCOhost, viewed 26 June 2012. Armstrong, M. (2006), A hand book of HRM Practice, 10th ed. London, Press London Bhattacharyya, D.K. 2011. Performance Management Systems and Strategies. India: Dorling Kinderly. Bennett, W & Woehr, D, J, (2006), Performance Measurement: Current Perspectives And Future Challenges, Routledge Dessler, G (2000), Human Resource Management, 8th Edition, New York, NY, Prentice Hall Grote, R.C., (1996), The Complete Guide to Performance Apprais,. USA: AMACOM Wal-Mart Stores, (2012), Training and Development [Online]. Available at: http://careers.Wal-Mart.com/training-and-development/ [Accessed December 27, 2012]. Read More