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Employee Performance Appraisal Best Practices Management EssayFor assignment help please contact
at [email protected] or [email protected]
Introduction
The Software development industry is a vital part of the economy
worldwide even during economic insecurities. As a result of the ever
increasing globalization of markets and the need for improved efficiency,
organizations are investing on software that allows them to do business
in competitive markets. This has lead to the growth in the software
development industry.
The growth in this industry has lead many companies to shift to countries
with a low cost of development. Today the development of new software
is outsourced while the management is situated in western countries.
This has lead to more efficient cost-control over the process.
hSenid Business Solutions is a software development company
specializing in Total Human Resource & Payroll Management Solutions,
Time & Attendance Solutions, Outsourcing, Gold Trading Solutions,
Community Development Management Solutions, Customized Software
Developments and ASP Solutions.
The Company was established in 1997 by Mr. Dinesh Saparamadu with
few engineers. Today hSenid is a software development company with
offices in United States, Singapore, India and R&D centers in Sri Lanka
& Malaysia. The Company has made a significant impact on the IT
industry both, locally and globally with its unique and innovative range of
products.
As mentioned above the Business Solutions division of hSenid is
specialized and globally recognized in building comprehensive HR
applications that assist HR professionals to effectively manage their
human resource and implement HR best practices. These solutions have
been specially designed to meet employee needs swiftly and consistently,
aligning manpower and skills with organizational goals and mission.
The capturing, maintaining and updating of employee related information
stands at the very core of any HR or personnel management work. It is
an elementary stepping stone to all other tasks. Hence a core HR module
is required to build and maintain a database which would serve as a
centralized location for other modules to access information.
The Employee Master Information module has been designed for this
purpose. It includes a comprehensive set of tools, capable of capturing a
wide variety of relevant employee data, maintaining them with a high
level of security, displaying the details in a very logical manner and
providing the necessary information to all other parts of the HRM
solution. In addition modules such as Time and Attendance, Leave
Management, Payroll, Benefits Administration have been designed to
manage various HR functions.
The success of hSenid however lies in their creativity and innovation.
Abiding by their mission to innovate hSenid has introduced the Software
As A service (SaaS) delivery model. As the world is gradually moving
towards the concept of cloud computing, SaaS has offered a platform
upon which Small and Medium Sized Businesses could reap the benefits
of low-cost software solutions. The new model bears minimum
investment unlike the alternative option of purchasing the software
upfront. Hence businesses adapting to the new model would benefit from
the cost savings in administration costs, standardization, increased speed
and quality of work.
hSenid aims to grab the attention of businesses towards the modern
trend of the industry by providing their software solutions across a
common platform. The SaaS model has paved the way in this regard.
However the Human Resource functions of each organization is not
standardized. One such HR function which varies based on the industry
is Performance Evaluation of Employees. Organizations adopt various
methodologies to measure the performance of its employees. Thus if the
HRM solution is to be deployed as a Service, Standardization is of
significant importance since it is intended to cater the requirements of all
potential clients.
It is evident that all organizations are on the look out to retain motivated
and skilled employees. Employee retention is considered as an integral
aspect of HRM. As mentioned above due to the diversity of requirements
among most organizations developing a Performance Appraisals module
is considered as a challenging task. Hence the development of an
appraisal model that could be implemented across a common platform
laid the foundation for the research.
The research was focused on proposing an evaluation model which could
be deployed across a common platform. It was understood that the
standard model should satisfy the requirements of most organizations
and possibly exceed majority of the requirements. Various employee
performance evaluation methodologies were evaluated to gather
information on the best possible solution. The drawbacks and the
advantages of each of these models were considered in developing the
suggested approach. Furthermore it was imperative that the proposed
approach could be implemented as a software solution. The research also
involved a thorough study on aspects which have an impact on
performance appraisals. A study was carried out to identify best
practices that should be followed in order to execute a sound appraisal.
The report highlights the approach and the methodology used to develop
a Standard Framework, which would address the above mentioned issue.
A survey was conducted to gather information on various Performance
Evaluation practices. Banking and Telecommunication industries were
considered for research purposes. It is recommended that hSenid
develops an Employee Compliance tracking module to further enhance
the process of performance evaluation. Furthermore the research team
recommends a list of best practices that could be adopted in the
appraisal process.
2. Review of Related Literature
From an organizational perspective performance is usually defined as the
extent to which an employee contributes to achieving the goals of the
organization. Performance appraisal is broadly defined as the process of
identifying, evaluating, and developing the work performance of the
employee in the organization. Appraisals are aligned with organizational
goals and objectives whilst benefiting employees in terms of recognition,
receiving feedback, and offering career guidance. (Lansburry, 1988).
Employee performance appraisal is an essential aspect in any
organization and is practiced since centuries. Longenker and Fink (1999)
cited several reasons that formal performance appraisals should be
practiced in organizations. According to them, formal appraisals are
required to justify HR decisions such as promotions, demotions, pay rises
etc. Appraisals are also required to determine employee training needs.
The authors have cited that a recent study on high performance
organizations indicate that performance appraisal is one of the top 10
vehicles for creating competitive advantage. On the other hand
ineffective appraisal systems could give rise to many problems including
low morale, decreased productivity and a lessening of the employee's
enthusiasm, support for the organization. (Somerick, 1993).
It is mainly the advocates of TQM (Total Quality Management) who
oppose the implementation of performance appraisal in organizations
(Deming, 1986; Glaser, 1993; Kane and Kane, 1992). Deming is of the
view that 85% of the factors that affect the employee's performance flow
from the system which are beyond the control of the employee, and only
15% of the factors are attributable to the employee. On the other hand,
human resource (HR) practitioners do not subscribe the view of TQM
proponents. HR practitioners often claim that performance appraisal is
an essential part of an organizational culture and it is required to assess
organizational progress towards goals (Daley, 1993; Landy and Farr,
1983). Aldakhilallah and Parente (2002) have developed a performance
appraisal process, known as TQMPE (Total Quality Management
Performance Evaluation) and is said to be a revised version of the
conventional methods of performance appraisal.
The following factors are considered as the benefits of an appraisal
system,
Enables employees to identify their strengths and weaknesses
Provides an opportunity to motivate employees and encourage for better
performance.
Lets determine the need for further training.
Helps to set goals for future superior performance.
Organizations at all levels are trying to ensure that their departments
and units are doing more with less. In this context employee performance
appraisal system can be considered as a tool that can measure and
suggest how to improve productivity (Vallance, 1999).
In the modern context the common approach used in employee
performance appraisal is the use of a numerical or scalar rating system
whereby managers are required to score an individual against a number
of objectives/attributes. In some companies, employees receive
assessments from their manager, peers, subordinates, and customers,
while also performing a self assessment.
The popular methods used for performance appraisal are,
Management by Objectives
360 degree appraisal
Behavioural Observation Scale
Behaviourally Anchored Scale
Trait based systems are also used in some organizations which rely on
factors such as integrity and conscientiousness. However since Trait
based systems are based on the personality traits, they make it difficult
for a manager to provide feedback that can initiate positive change in
employee performance. This is due to the fact that even though an
employee can change a specific behaviour they cannot change their
personality.
Further Trait-based systems, because they are vague, are more easily
influenced by office politics, causing them to be less reliable as a source
of information on an employee's true performance. The vagueness of
these instruments allows managers to fill them out based on who they
want to/feel should get a raise, rather than basing scores on specific
behaviors employees should/should not be engaging in. (Wikipepedia,
2009)
Management by Objectives (MBO) is a process where the management
sets the objectives and the employees agree on the objectives and
understand their role within the organization.
An Important aspect of MBO is the measurement of the employee's
actual performance against the standards that is set. Since employees
themselves have been involved with goal setting and choosing the course
of actions to be followed by them, they are more likely to accomplish
their responsibility. The advantage of the MBO model is that employees
gain a clear understanding of what is expected of them. i.e their roles
and responsibilities. Furthermore employees are motivated as they are
actively involved in the goal setting process. The MBO model also
facilitates better communication and coordination among superiors and
subordinates. This in turn helps employees to maintain good
relationships within the enterprise.
However the MBO model does not take into account the context in which
the goals are set. Furthermore it does not address the issue of
responding to obstacles and constraints that the employee may come
across when reaching the goal. Companies also tend to evaluate their
employee against the "Ideal" employee. In other words MBO focuses on
what employees should be not what they should do.
The 360 Degree Feedback performance appraisal model refers to
feedback that comes from all around an employee. In other words
feedback on individual performance is provided by subordinates, peers,
and supervisors. It also includes a self assessment and sometimes
feedback from clients and other sources such as the stakeholders.
The results from the 360-degree feedback are generally used by the
person receiving the feedback to plan personal development. Results may
also be used by organizations in making administrative decisions such as
promotions.
However there is significant controversy as to whether the 360 feedback
model improves employee performance or whether it decreases employee
performance. Most organizations opt for an anonymously filled up 360
degree feedback document. The gathered data is then tabulated in a
confidential manner. The results are shared with the person whose skills
and performance were evaluated. This approach relies heavily on the
relationship, trust and satisfaction that the employees exhibit with their
supervisors and therefore is highly subjective.
The lack of accountability has been an issue with the 360 degree
evaluation model. Since the feedbacks are coming from anonymous
sources there is a significant question mark as to whether the feedback
could be used for something other than development purposes. "When
anonymous feedback from peers is improperly used, a department stand
to destroy whatever trust and credibility existed between manager and
employees." (Carey,1995, p.56)
Finally the information alone will not be useful in changing the behaviour
of the employees. It takes a considerable amount of time to digest and
form realistic action plans. If the feedback obtained from the 360 degree
feedback is not converted to a realistic plan it is bound to lose the value
of the entire evaluation process. (Waldman & Atwater, 1998, p.17)
Furthermore techniques such as essay appraisal, graphic rating scale,
forced choice rating scale, field review, work standards approach,
ranking methods, assessment centres are also used in the appraisal
process.
In Essay Appraisals the appraiser is required to write an essay on the
employee's strengths, weaknesses and the potential skills. This technique
is less complex and is more valid as compared to other appraisal
methods. The drawback however is the difficulty involved in combining
and comparing essays as it might include various aspects on an
employee's performance and qualifications. In other words the essays
might not follow a standard format; hence essays written to evaluate
employees might differ in terms of the aspects covered in the essay.
Graphic Rating Scale is a consistent and reliable method. A person's
quality and quantity of work is assessed in a graphical scale. Several
personality traits such as the employees' cooperation and reliability are
taken into consideration in this method. The advantage of this method is
that it is more economical to develop and is less complicated. Although
the Graphic Rating Scale method is widely used it is under frequent
debate among HR professionals.
Forced Choice Rating technique is unbiased compared to other rating
methods. This method does not involve a third party in the appraisal. The
raters are required are required to choose among groups statements
those that best fit the individual employee and those that least fit
him/her. The statements are then weighed and scored the same way
psychological tests are scored. This technique however is limited to lower
and middle management levels in organizations as the levels of jobs are
similar to make standard common appraisal forms for the group.
Field Review is a group judgement technique, which tends to be more
fairer and valid than individual ratings. In this method a member of the
personnel department meets with a small groups of raters from each
supervisory unit and goes over each employee's ratings with them. The
advantage of this method is that, each rater conceives uniform standards,
arrives at group consensus whilst identifying areas of disagreement. The
biggest drawback of this method is that it consumes a considerable
amount of time.
In Assessment Centers, the assessment for future performance or
potential of the employee is assessed in contrast to the past performance.
In this method individuals from various departments are brought
together and they spend two or three working days on group
assignments similar to ones they would be handling if they were
promoted. The pooled judgement of the observers leads to order of merit
ranking on the participants.
Ranking Methods are useful when two employees who work for different
supervisors need to be compared. In this method appraisal forms are not
particularly useful. This method is also used to compare people in
separate units of an organization.
Work Standards Approach is a technique where daily performance
standards are set for each employee. It is focused on improving
productivity and could be used to provide an accurate and objective
appraisal of work for each employee. This method revolves around
spending a considerable amount of time on observing the employees on
the job, simplifying and improving the job where possible and arriving at
realistic output standards. However the drawback is that employees are
rated differently and hence makes it difficult to draw comparisons among
employees especially in situations such as salary increase and
promotions.
In most performance appraisal programs/systems the superiority of the
supervisor is over-emphasized which might be damaging especially in an
organizational culture which is focused on employee participation. On the
other hand when negative feedback is communicated to employees, it
might fail to motivate employees and often result in worse performance.
In some organizations employees are unaware as to whether an appraisal
system exists. An appraisal system would not be successful if the
appraised does not know the criteria under which he/she is evaluated.
Hence the communication of evaluation criteria is of utmost importance.
The issue of tough and lenient raters/evaluators is also of concern. Some
departments might have highly competent employees as compared to
other departments. In such situations appraisals can be highly intensive.
Biasness in organizations is often the biggest drawback of appraisal
systems, which may result in non competent employees being rewarded.
This would demotivate highly competent employees, thus resulting in an
organizational culture which is less active and dynamic.
3. Research Approach
3.1. Methods
This research was primarily conducted based on the information
gathered through the World Wide Web. In addition an interview session
was held with Mr. Sampath Jayasundara to obtain an insight into various
performance evaluation methodologies. Questionnaires were also used to
gather information on employee opinions. The questionnaires were
designed to investigate the various approaches used by organizations to
measure the performance of its employees. A total of 200 questionnaires
were distributed amongst employees from the Banking and
Telecommunication sectors. The questionnaire used a combination of
both open ended and close ended questions with the intention of
obtaining additional information from the recipients. Each team member
focused on collecting information from 40 employees, which required
personal visits to selected organizations.
3.2. Results
Majority of the employees are of the view that the appraisal system
prevalent in their organizations does not take into account the external
aspects relevant to their occupation. Most employees complain that even
though they perform a dual role, the evaluation considers only the
activities related to their respective designations. Employees state that
the evaluation systems are obsolete and have not been reviewed
frequently. The lack of employee involvement in the goal setting process
has also been raised as a concern. Furthermore in most organizations
annual appraisals are conducted in a very short time period. Hence
certain aspects are often ignored.
Results indicate that approximately 67% of the employees suggest that
the existing appraisal system is not satisfactory. They are of the view that
supervisors and managers tend to forget the achievements made by an
employee as time passes by. Elaborating further some employees went
on to say that all the hard work done at the beginning of the year is often
forgotten at the time of appraisal. This in turn results in employees being
evaluated on their current performance as opposed the overall
performance within the year. Around 9% of employees shared an
interesting opinion. These employees were of the view that existing
appraisal system was satisfactory and that it required minor alterations.
They were also of the view that the employees tend to complain about
appraisal systems when they do not receive the expected benefits.
Around 60% of the employees believe that the appraisal process should
be conducted in a methodical manner and that supervisors should
maintain clearly documented achievements and failures of each
employee. This will in turn serve as a guideline in the appraisal process
and will obviate the need for an informal assessment. This will also
eliminate the focus on relationships in a corporate environment.
Employees suggest that they should have the opportunity to view their
achievements and failures (areas of improvements) over a time period.
The following section provides a detailed analysis on the data gathered
through questionnaires.
The following section provides a detailed analysis on the data gathered.
It was interesting to note that the opinions of employees in both sectors
followed a similar pattern. Questionnaires were formulated to gain a
precise understanding of individual perspectives. The use of both open
and close ended questions enabled the research team to gather a vast
amount of information relevant to the research.
Do you believe that the existing Appraisal System is satisfactory?
Answers
Industry
Strongly Agree
Agree
Disagree
Strongly Disagree
Neutral
Banking
7
15
33
39
6
Telecommunications
11
19
24
38
8
18
34
57
77
14
Table 3.1. Employee opinions on existing appraisal systems
As mentioned above a large percentage of employees are not satisfied
with the prevalent appraisal system. As Table 3.1. indicates 26% of
employees agree that the existing system is satisfactory. These
employees argue that "employees who perform well are always
recognized". Furthermore the use of diverse assessment criteria was also
highlighted as a justification to the successfulness of existing appraisal
systems.
What measure would you think is most suitable to solve issues in existing
appraisal systems?
Answers
Industry
Change Existing System
Alter the existing system and continue
Introduce a novel concept
Merge Existing Appraisal Models
Shouldn't be changed
Banking
25
16
19
24
16
Telecommunications
28
14
23
22
13
53
30
32
46
29
Table 3.2. Employee opinions on measures to solve the issue
As Table 3.2. indicates when questioned as to what measures could be
taken to solve the issues, a considerable amount of employees stated that
either the existing system should change or an alteration should be done
to the existing system. However it was important to note that 41% of
employees from both sectors believed that the existing system should
either be altered or organization should adopt a combination of appraisal
models.
If the existing appraisal system is to be improved what
additions/alterations do you think are required?
Answers
Industry
Involve employees in the goal setting process
Eliminate the relationship based culture
Track employee actions throughout the year
Train the evaluators
No Improvements are needed
Banking
27
19
22
18
11
Telecommunications
23
20
16
26
14
50
39
38
44
25
Table 3.3. Employee opinions on improvement factors
The involvement of employees in the goal setting process was highlighted
as one of the key aspects that should be incorporated to the appraisal
system. The results in Table 3.3. provides evidence that elimination of
the relationship based culture and the involvement of employees in the
goal setting process could improve the appraisal systems.
Furthermore 22% of employees from both sectors suggest that the
evaluators should be trained before they perform appraisal. A small
percentage of employees (12.5%) believe that the existing appraisal
systems do not require changes. These employees questioned the
sustainability of a new or a modified appraisal system and suggested that
if a new appraisal system is to be introduced it should satisfy the
requirements of all employees, which is not practically possible.
Do you think employees should retain a copy of their assessment?
Answers
Industry
Strongly Agree
Agree
Disagree
Strongly Disagree
Neutral
Banking
46
21
13
16
4
Telecommunications
37
25
17
14
7
83
46
30
30
11
Employees of both sectors displayed a common attitude towards the
retention of personal assessment copies. A significant 64.5% of
employees shared critical views on retaining a copy of personal
assessments. Most of these employees argued that copies of assessments
could be used to correct their mistakes and further enhance their skills.
This would in turn be beneficial to employees in terms of personal and
professional growth. However the assessment should provide acceptable
justifications for each comment/remark.
On the other hand some employees believe that copies of assessments
shouldn't be handed over to employees. These employees stated that
certain comments made by supervisors cannot be directly justified and
could only be associated with the behaviour of each employee. Hence
making a comment/remark on the behaviour of an employee might create
a environment of doubt which is not healthy in a corporate environment.
Do you think that the time period for appraisals is too lengthy?
Answers
Industry
Strongly Agree
Agree
Disagree
Strongly Disagree
Neutral
Banking
31
19
26
18
8
Telecommunications
27
13
30
24
4
58
32
56
42
12
Table 3.4. Employee opinions on the length of appraisals
It was noted that 45% of the employees believe that the prevalent
appraisal systems are time consuming and effects the productivity of the
organization. However these employees agreed that an appraisal system
is critical for any organization and that it should be conducted in a
methodical manner which consumes less time.
A Further 73% of employees are of the view that the time frame in which
the performance evaluation is conducted is insufficient. They argue that
this has in turn lead to incomplete appraisals which might not take into
account the essential aspects of the evaluation process. Organizations
that conduct appraisals bi-annually tend to limit the time consumed for
the evaluation process. Furthermore since the appraisal process does not
have a direct impact on the revenue, most managers consider the
appraisals as wastage of human hours. Some employees stated that "It is
the employees that drive a business and if proper recognition is not given
to the work they do employee retention will turn out to be an issue."
Almost all the employees suggested that the appraisals should be aligned
with the designation/role of each employee. For an example the
evaluation criteria used to evaluate the performance of a receptionist
should be different from the criteria used to evaluate an engineer. The
performance criteria should ideally take into consideration the various
aspects related to each designation/role. In most organizations there is a
lack of distinction between performance evaluation criteria used for
various designations/roles.
A negative attitude was visible among most employees when asked as to
whether they were satisfied with the existing process. Some employees
state that if the appraisal is to be successful all employees should actively
participate in the process. However most employees are reluctant to
adhere to processes as they believe that processes consume a
considerable amount of time and results in decreased productivity.
Hence an overall change in the employee attitude towards appraisals was
considered as an important resolution.
4. Employee Performance Appraisal Best Practices
A list of best practices was derived by the research team following the
analysis of the gathered data. It was identified that the following aspects
play a vital role in improving the effectiveness of appraisal systems.
Employee participation: based on the research outcome it was evident
that most employees believe that the appraisal systems are biased. In
such a situation it is highly unlikely that they would accept the outcome
of a performance evaluation. Participation gives an opportunity for the
employees to discuss their concerns. Performance methodology, criteria
for evaluation and the evaluation form itself could be developed with the
involvement of employees. Higher employee participation is bound to
generate an atmosphere of cooperation and support. This in turn would
facilitate in the development of a healthy coaching or counseling
relationship. Appraisal related tension and rater-ratee conflicts could also
be reduced by initiating a relationship based culture. Somerick (1993)
suggested that having a dialogue session between the manager and the
employees would initiate problems to be solved immediately.
Goal setting: Goal setting consists of performance goals that are specific,
challenging and accepted. Goal setting within performance appraisal has
resulted in greater appraisal satisfaction and increased performance
(Dobbins et al., 1990). Stevens (1990) states that: "…assign employees a
series of goals to be accomplished in the course of a year. When annual
reviews are held, rate the employees' progress in achieving these goals."
Furthermore goal setting should take into consideration the context in
which the goals are set. It should also take into consideration the
obstacles that the employees may face during the course of the time
period concerned.
Developing performance standards: Standards should be developed in
order to measure the essential job duties and responsibilities.
Performance appraisal interview: In a performance evaluation interview,
the interviewer must be aware of the employee needs to protect
confidentiality and privacy. Roberts (1994) is of the view that it is of
utmost importance to provide undivided attention during the interview
and reserve sufficient time for a full discussion of the issues.
Krug (1998) suggested asking open-ended questions would encourage
employee participation in the appraisal interview. He suggests that
question such as "Do you enjoy your job?" should be avoided and
replaced by questions which would bring about answers which are more
thoughtful and informative. As an example the question "How do you feel
about working in this company?" requires a certain degree of thought.
Self evaluation: Self evaluation is also of significant importance as it
enables employees to systematically assess their performance. Studies
provide evidence that self evaluation increases employees' perceived
fairness on the appraisal process. Employees can perform a self
evaluation by completing their own appraisal form and presenting the
draft for discussion with the evaluator. McCarthy (2000) comments that
employees who have an opportunity to asses their own performance often
come up with creative solutions that would not have been considered in
the one-sided managerial evaluation. Pam Perry, vice president of human
resources for CB Richard Ellis says (cited in McCarthy, 2000, p. 25)
I have my staff write their own reviews; they do the rating and include
their comments, then we sit down together and go over them. It
eliminates the debate over who is right and who is wrong and allows us
to focus on what's important. It's valuable for employees to express their
thoughts about their performance in writing.
Management feedback: Management feedback is of essential importance
for two reasons. Firstly employees' work should be appreciated when
they exceed expectations or when they perform the assigned task in an
acceptable manner. Secondly employees should also be given
constructive feedback on aspects that he/she would require
improvements. If constructive feedback is not given on areas which
employees need improvement, there is a possibility that employees may
believe that their current level of performance is satisfactory. Camardella
(2003, p. 105) states: Evaluating each employee as average, without
specifically mentioning strengths and weaknesses, diminishes the value
of the appraisal process. When an employee's strengths and weaknesses
are explained, the employee can build on his or her strengths and correct
his or her weaknesses. Employees cannot improve their job performance
unless they are told where their performance is inadequate. To have an
effective performance appraisal system, there must be formal and
informal performance feedback.
Roberts (2003, p. 93) states that: Feedback is essential in gaining the
maximum benefits from goal setting. Without feedback, employees are
unable to make adjustments in job performance or receive positive
reinforcement for effective job behavior. Effective performance feedback
is timely, specific, behavioral in nature, and presented by a credible
source. Performance feedback is effective in changing employee work
behavior and enhances employee job satisfaction and performance.
Furthermore Feedback should provide a short list of areas where the
employee needs improvement, highlight the most important ones to be
improved first.
Need of a user-friendly procedure: The Performance evaluation criteria
and rating procedure should be simple enough so that they could be
understood by the raters and ratees. Essentially the performance criteria
should focus on the employee's job. It should also take into account other
intangible aspects such as attitude, personality traits, etc.
Design of specific and relevant appraisals: Employees often complain that
"Our company uses the same appraisal for all positions. Appraisal
systems should be reviewed and updated periodically to address the
present situation. Some employees state that the organizations do not
change the appraisal system sufficiently, and therefore the appraisals are
not relevant at times.
Evaluator training: The results of the research suggests that most
employees are of the view that the person responsible for assessing the
performance is not properly trained and therefore is incapable of
providing feedback on employees' performance. The research conducted
by the American Management Association provides evidence that the
main reason for employee and supervisor's dissatisfaction with the
performance appraisal process is that a large number of managers are
poorly trained on providing feedback to employees (cited in Krug, 1998).
Mot employees are of the view that the person who conducts the
appraisal exercise should receive extensive training in goal setting,
setting performance standards, conducting interviews, providing
feedback, avoiding rating biases, etc.
In particular, top management must be aware about the competency
level of the raters as mentioned by Martin and Bartol(1998, p. 226):…a
review may suggest that a rater who consistently gives all high ratings
would be committing a leniency error. On the other hand, a rater who
rated most employees low may have fallen prey to the stringency error,
and one who entered most employees in the middle of the scale may be
demonstrating the error of central tendency.
Revision of the performance appraisal process: Appraisal system should
be revised periodically so that it reflects the present situation of the
organization. Longenecken and Fink (1999, p. 22) state: It is important to
systematically and regularly review system operations to make sure that
process and practices are being followed and effective. Examples of
measures that can be used to assess the health of your appraisal system
include employee acceptance and trust of the appraisal systems.
Employees are subject to both conscious and unwitting assessment by
their supervisors on a daily basis. Much of this assessment is subjective
and may be affected by factors such as the ability of the employee to get
on with his or her supervisor, his or her reactions under pressure, his or
her appearance, degree of organization, levels of attentiveness and
interest. While these sort of assessments are difficult to avoid, a standard
appraisal model that would take into account the above mentioned
factors would to a certain extent reduce the reliance on such informal
assessment. The following section describes the proposed appraisal
model.
5. The Solution
Firstly the performance evaluation criteria should be properly structured.
Each criteria should have a clearly defined meaning along with a set of
subcriteria. The subcriteria should have their respective weights and
priorities. The criteria used to evaluate the performance of a particular
employee should be specific to the designation/role concerned. It should
essentially entail the job responsibilities as well as the expected
improvements. Improvements have to be set based on a study of each
employee.
Initially the supervisor sets goals and objectives for a particular
employee with his/her participation in the goal setting process. This will
ensure that the employees have a proper understanding of what is
expected of them. The supervisor then has the responsibility of tracking
'incidents' related to the employee. In other words the supervisor should
document the activites of the employees. For an example if the employee
delights the client that can be considered as achievement. On the other
hand if the employee misses a deadline due unacceptable reasons that
can be considered as a fallout. However this process of recording actions
of an employee over a time period ensure that there is clear evidence of
the actions performed by each individual. This in turn would facilitate in
an effective appraisal process and would prevent the possibility of
employees being evaluated on based on the relationship that he/she has
with the managers/supervisor. In annual appraisals the supervisor and
the employee would meet up after the specified time period. The
supervisor would then complete the appraisal based on the recorded
objectives and goals that were set initially. The recorded 'incidents' could
be used to justify each evaluation. If the employee agrees with the
appraisal he/she could comment and sign the appraisal. The process
would be completed once the reviewing manager signs and retains a
copy. The supervisor and employee would receive a copy of the appraisal.
This would enable the employee to have a focus on the aspects that
he/she needs to improve and thereby will form a strong base for
'Personal Development'.
However if the employee disagrees with the appraisal he/she would be a
given a time frame to prepare the comments. The supervisors would then
forward both the appraisal and the comments from the employee to the
reviewing manager. Reviewing manager could then uphold/recommend
changes to the appraisal within a specified time period. The appraisal is
sent back to the supervisor and results in a meeting with the employee
concerned.
Figure 5.1. The Proposed Appraisal Process (Main Flow)
Figure 5.2. The Proposed Approach (Sub Flow)
6. Recommendations
As described above factors such as employee participation in the goal
setting process, self evaluation, evaluator training, design of specific and
relevant appraisals, management feedback etc should be taken into
consideration in developing a 'Performance Appraisal' module. Managers
should be able to carry out the appraisal processes tailored to their needs
and access information in a variety of different forms and reports.
Employees on the other hand should be able to benchmark themselves
with other employees, divisions etc. The ability to define own appraisal
forms, adjust grading criteria, set goals and targets, track entire
sections/divisions, generate inputs for training are some of the essential
aspects that should be considered in developing the appraisal module.
In the knowledge based economy, it is of critical importance to deliver
the right knowledge and skills to the right people at the right time within
the given financial resources. Hence the research team recommends that
a comprehensive training and development module should be
incorporated to the existing HRM solution. The training module should
provide functionalities to record training needs, track attendance,
evaluation programs, etc. The training module should be interlinked with
other HRD modules (Performance Appraisal/Management) to provide a
platform for human capital management. This in turn would enable the
organizations using the HRM product to gain a competitive advantage
based on the workforce.
Furthermore existing modules such as Competence Management &
Employee Self Service should be further enhanced to optimize the
process of human capital management. As an example defining the
competency levels required for specific job roles is an integral aspect
which has to be given due consideration. Methods to assess monitor and
manage competencies of each employee should be clearly structured.
These modules should have strong relationships with modules such as
Training & Development, Performance Appraisal/Management, etc.
Personal benchmarking and the tracking of employees with highest
potential are essential aspects which need to be incorporated to the
Competence Management module. Employee Self service on the other
hand should enable employees to view their personal files, update
information and perform HR functions relevant to them.
This would give employees more confidence and a better overview, which
in turn would be beneficial to the organization in retaining employees.
It is also recommended that hSenid develops an Employee Compliance
tracking module to further enhance the process of performance
evaluation. Employee Compliance should initiate an employees'
commitment towards the organization's defined rules, regulations,
policies, processes and, procedures. The initiation of aspects such as
daily task updates, team meetings, action items, etc would enable the
organization to obtain feedback on each employees' actions. The
feedback could then be used in the performance appraisal process. The
implementation of this module could be elaborated as follows. Employees
are assigned tasks by their respective Managers, Supervisors etc. These
tasks would be entered into a system which is accessible by all
employees. Each employee would then be able to view the assigned
tasks. Each task would have an estimated time duration and an
associated effort. On a daily basis the employee is required to lodge time
for the tasks performed. However if the employee fails to do so it can be
considered as non-compliance. The feedback obtained over a period of
time would serve as a source of evaluation for each employee. Constant
maintenance of team meetings, action items, action plans to resolve
issues etc. can also be considered as a form compliance. These factors
could be used to track the progress of each employee. Employee
performance in challenging circumstances could be observed by
maintaining team meetings and action plans.
The development of an incident capturing module is also recommended
as it would serve as a form of justification in the appraisal process. In this
method the supervisor would identify and prepare a list of critical
incidents, giving details of very effective and ineffective, also positive and
negative behaviour of an employee. The negative or ineffective critical
incidents represent the poor behaviour of employees on the job. There is
a separate log for each employee in the organization, which is
maintained by their supervisor or manager. These critical incidents of
worker behavior is recorded periodically by supervisors and is used to
evaluate the employees' performance at the end of a period. For this
purpose there should be a methodology to note down the critical
incidents.
7. Conclusion
It is a known fact that employee appraisal systems play a vital role in
retaining valuable employees. Such appraisal systems enable employees
to understand their job responsibilities. Furthermore properly structured
appraisal systems help employees achieve personal growth. On the other
hand unfair appraisal systems can result in employee dissatisfaction
which in turn would have a negative impact on the employees'
productivity. Hence it is of utmost importance to identify the various
factors that are needed to develop an effective appraisal system. The
research was carried out with the intention of developing an acceptable
performance appraisal approach that could be deployed as a software
solution. hSenid Business Solutions, the market leader in HRM products
provided the platform to conduct the research.
The software-as-a-service (SaaS) delivery model is extensively used to
cater small and medium scaled enterprises (SMEs). hSenid with its vision
to innovate has initiated the deployment of HRM products as a web
service. However certain HR functionalities such as employee
performance appraisals are not conducted in a standardized manner
across organizations. Hence it's imperative to construct a standard
approach/model that most organizations could utilize. In evaluating
existing methodologies it was evident that companies are concerned
about problems of equality in evaluation and effectiveness, they are also
concerned about other issues such as evaluation accuracy, mistakes in
ratings, or a consideration of the cognitive processes applied in the
evaluation process.
The research focuses on the drawbacks of various appraisal approaches
and aims to provide a sustainable solution. Employee opinions and
feedback from various managers were taken into consideration in
deriving a best possible approach that could be utilized by majority of the
organizations. It was concluded that effective employee evaluation
results could be achieved by considering aspects such as informing the
employees of the objectives that they need to achieve, employee
involvement in the designing of the appraisal process etc. The proposed
model/approach could be utilized by most organizations as it includes the
key aspects that any organization would be looking for. As mentioned
above it includes aspects such as the constant maintenance of an
'incident journal' which would eliminate the drawbacks associated with
the traditional relationship based approach. Major issues such as
relevance of objectives, experience gained and significance of objectives
were given due consideration in developing the proposed approach.
Proper research techniques were selected to test the effects of various
appraisal models used in the Sri Lankan banking and telecommunication
industry. Feedback of employees from these sectors was used to derive
the proposed approach. From the team's perspective the experience
gained by all team members was invaluable as it helped the team to
understand, analyse and thereby provide a feasible solution for the
problem concerned. The exposure gained by interacting with industry
experts, employees of different organizations was invaluable as it
provided an insight into how the corporate world handles an important
aspect as employee performance evaluation.