"Strategy, performance management andperformance appraisal Organisations need ever-improving performance to survive and prosper in today’s competitiveworld: individual and organisational performance improvements are the keys to competitiveadvantage. Rapid change, tighter budgets, downsizing and restructuring, and pressures forPerformance managementgreater employee accountability are placing greater emphasis on performance management byAims to improvetranslating the organisation’s objectives and strategies into individual job objectives and per­ organisational, functional, unitformance standards. A US study shows that top global organisations use performance measuresand individual performance‘that focus on all the drivers of their business — fnancial performance, shareholder value,by linking the objectives2 employees and customers’. Research by Nankervis and Leece indicates that Australian organ­ of each. Incorporatesisations are trying to relate individual outcomes more directly to their strategic business objec­ job design, recruitment3 and selection, training tives. In addition, performance-related rewards that target those who meet the performanceand development, careerrequirements signal the types of employee behaviour and organisational culture demanded4 planning, and remunerationby the organisation’s strategic business objectives. Critics argue that this produces a market- and benefts, in addition tooriented, entrepreneurial, individualistic culture that weakens the infuence of trade unions,performance appraisal. undermines collective bargaining, strengthens the role of the line manager and enhances5 employee commitment to the organisation rather than the union. The evaluation of organisational and employee performance permits managers to checkthat strategic business objectives are valid, are being communicated successfully throughoutthe organisation and are being achieved. In short, performance management ensures that jobsare properly designed and that qualifed personnel are hired, trained, rewarded and motiv­ ated to achieve the organisation’s strategic business objectives. Performance managementpromotes the organisational and employee behaviour and performance required to improve6 bottom-line results. Research demonstrates that companies that manage performance outper­ form companies that do not, with higher profts, better cash fows, stronger share market per­ formance, productivity gains, higher sales growth per employee and overall better fnancial7 performance. Performance appraisalPerformance appraisal, by providing a dynamic link to employee recruitment, selection,Concerned with determiningtraining and development, career planning, remuneration and benefts, safety and health,how well employees are doingand industrial relations, is a vital tool for strategy execution. It signals to managers andtheir job, communicating thatemployees what is really important; it provides ways to measure what is important; it fxesinformation to employees,8 accountability for behaviour and results; and it helps to improve performance. Research,agreeing on new objectivesfor example, shows that development-oriented appraisals are signifcantly linked to organ­ and establishing a plan for9 performance improvement. isational commitment. Finally, performance appraisal is necessary to defend the organisationagainst individuals who legally challenge the validity of management decisions relating10 to promotions, transfers, pay changes and termination. According to Lieber, performanceappraisals ‘are one of the most powerful weapons HR can use to demonstrate that the organ ­ isation had legitimate, non-discriminatory reasons for termination or other adverse action11 against an employee’. Appraising and managing performance are critical management responsibilities and avital part of the organisation’s strategic management process. In practice, however, perfor ­ mance appraisal systems are often ad hoc and divorced from the organisation’s strategic12 business objectives. One survey, for example, found that many companies do not link their13 strategic objectives with individual employee performance criteria. Other studies similarlyshow that the use of (and satisfaction with) performance management systems remains prob ­ lematic, and a large gap can exist between employee expectations and their actual experi­ 14 ence. In addition, highly unionised, university and public sector organisations often havecultures that promote strong opposition to any form of performance evaluation (despiteineffective control and performance monitoring systems being an important factor in the15 poor performance of the public sector). Australian research, for example, indicates thatincreased union membership is associated with a reduced likelihood of performance appraisal16 being used. Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. 306PART 3 Developing and rewarding human resources Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.Unions see performance appraisal and pay for performance as focusing on the individual,thus creating a competitive culture, coercing higher output and promoting management by17 control. In the public sector, the cultural preference for collaboration rather than compe ­ tition means that peer competitiveness can be seen as a strong negative factor in employee18 job satisfaction. Indian research, for example, shows that private sector employees per­ ceive greater fairness and satisfaction with their performance appraisals than do public sector19 employees. Overall research suggests that the introduction of appraisal-based performance pay intothe public sector needs to be considered very carefully, as it requires major conceptual shifts20 in individual thinking and behaviour, and organisational culture. Figure 8.1 highlights themajor characteristics of performance management and performance appraisal. Performance management There is no universal agreement as to what constitutes performance management, but thefollowing characteristics are generally present: •\t Performance management is a much broader concept than performance appraisal. It aims toimprove organisational, functional, unit and individual employee performances. •\t Performance management has a focus on strategic planning and development. It aims tolink the organisation’s key objectives and strategies with organisational, functional, unit andindividual objectives and strategies. •\t Performance management measures the progress being made towards the achievement of anorganisation’s strategic business objectives. It does so by evaluating organisational, functional,unit and individual performance; identifying needed performance improvements; developingnew performance objectives; and activating mechanisms for converting improved performanceinto rewards. •\t Performance management, given the above, may incorporate job design, recruitment andselection, training and development, career planning, and remuneration and benefts, inaddition to performance appraisal. Production workers, for example, whose jobs have beenredesigned to include feedback concerning their own performance quality are more likely todemonstrate improvement than those who receive feedback from external sources such as21 quality control offcers. Performance appraisal Performance appraisal typically involves measuring how well an individual employee is doing theirjob against a set of criteria (for example, personal competencies, behavioural characteristics orachievements), providing feedback and creating a development plan. The performance appraisalprocess generates information that may be used for administrative purposes (such as rewards,promotions, transfers and terminations) and/or developmental purposes (such as training anddevelopment, coaching and career planning) and/or research purposes (such as validatingFIGURE 8.1 selection procedures and evaluating the effectiveness of training). Performance appraisal is a keyPerformance managementpart of an organisation’s performance management system. versus performance appraisal FASTFACT Performance management Under the Fair WorkOrganisational interest in performance management has increased as a result of competitiveAct 2011, all employees22 pressures, the infuence of HRM and the individualisation of the employment relationship.can bring an action forStorey and Sisson defne performance management as ‘an interlocking set of policies and prac ­ unfair dismissal. It isessential, therefore, thattices which have as their focus the enhanced achievement of organisational objectives through23 employers can showa concentration on individual performance’. Thus, performance management involves goaldocumented evidence ofestablishment, performance evaluation, employee development and rewards. It provides thepoor performance andlink between the organisation’s strategic business objectives, employee performance, develop­ communication of thatment and rewards, and organisational results (see fgures 8.2 and 8.3). poor performance. Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. CHAPTER 8 Appraising and managing performance307 Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.Organisational mission What is the purpose of the organisation? Why does it exist? Organisational objectives Performance improvements What must be achieved to ful\u001fl the Performance identi\u001fed Performance purpose of the organisation? objectives evaluated developed Action to achieve objectives Functional objectives Performance improvements Performance What speci\u001fc results must individual identi\u001fed Performance objectives functions (such as HRM and marketing) evaluated developed achieve to help the organisation to Action to achieve its objectives? achieve objectives Unit or group objectives Performance improvements What speci\u001fc results must individual Performance identi\u001fed Performance groups or units (such as remuneration objectives evaluated and bene\u001fts, and training and developed Action to development) achieve to help the HR achieve objectives function to achieve its objectives? Individual objectives Performance improvements What speci\u001fc results must the individual Performance identi\u001fed Performance achieve to help the group or unit to objectives evaluated FIGURE 8.2 achieve its objectives? developed Action to The link between performanceachieve objectives management and objectives The key elements of performance management are: • the creation of a shared vision of the organisation’s strategic objectives • the establishment of performance objectives (derived from the organisation’s strategicbusiness objectives) for each function, group and individual to ensure that their performanceis aligned with the needs of the business • the use of a formal review process to evaluate functional group and individual progresstowards goal achievement • the linking of performance evaluation and employee development and rewardsto motivate24 and reinforce desired behaviour. Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. 308PART 3 Developing and rewarding human resources Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.Organisation Mission Organisation Strategic objectives HRM Function objectives Renumeration and bene?ts Unit objectives Individual objectives Set speci\u001fc individual objectives which are mutually agreed and aligned with strategic objectives. Undertake activities to achieve individual objectives. Identify performance improvement and developmental needs. Measure performance using mutually agreed indicators. Evaluate performance (Superior, acceptable or needs improvement). FIGURE 8.3 The strategic link betweenorganisational, HRM andRewards individual objectives Performance management thus can have a signifcant impact on the success of an organ ­ isation through promoting cooperative effort towards common goals; encouraging teamworkand more open communications; increasing individual and group performance; and facilitatingchange. Firms with an effective performance management program should outperform thosewithout such a system. Performance appraisal Performance appraisal may be viewed as an overall measure of organisational effectivenessbecause organisational objectives are met through the efforts of individual employees. Ifemployee performance is improved, the organisation will lift its performance. It should be25 noted that some experts do not accept these assumptions. Deming, for example, argues that: • individual employees do not differ signifcantly in their work performance and that anyobserved differences are simply the result of sampling error Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. CHAPTER 8 Appraising and managing performance309 Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.• any variation in employee performance is predominantly a result of factors outside theindividual’s control • management appraisers are incapable of distinguishing between employee-caused and26 system-caused variations in performance. Deming’s position is in stark contrast with the generally accepted view that there are mean­ ingful differences in employee performance that should and can be measured. Carson, Cardyand Dobbins claim that both Deming’s and the conventional HRM assumptions regarding per­ formance appraisal remain largely untested. Their exploratory studies suggest, however, thatseparating person and system factors is diffcult. Other research, in contrast, indicates thatrather than being contradictory, both performance appraisal and total quality management27 (TQM) can add value if there is a clear strategic link between the two. Nevertheless, appraisal of employee performance remains a critical and ongoing manage ­ ment activity. This is because managers are continually observing and judging their employees.The evaluation process may be formal or informal. Either way, it has a direct impact on theemployees’ pay increases, promotions, demotions, terminations, training and development, andcareer progression. Motivation Satis?es needs for • personal growth Administration • recognition Provides a basis for decisions • \u001enancial reward • pay changes Development identi?es • discipline • training & development PERFORMANCE • promotionsneeds • terminations APPRAISAL • job experience • transfersrequirements • career opportunities Legal Provides data to validate • coaching initiatives • provide documented • recruitment and selectionevidence to justify • human resource developmentmanagement’s HR actions • remuneration programs • answer legal challenges regardingdiscriminatory treatment FIGURE 8.4 • promote legal and HR Purposes of performance policy compliance appraisal Despite the importance of performance management, many organisations do not haveany systematic method of appraisal or use a system that lacks congruence with the organ­ isation’s culture and strategic business objectives. In one survey, more than half the respondingcompanies reported that their performance appraisal system offered little or no value to the28 organisation. After a review of the literature, Newton and Findlay similarly concluded thatappraisal schemes rarely work as their formal procedures suggest because in practice they are29 predominantly concerned with surveillance, accountability and control. In contrast, otherresearch indicates that when employees perceive their performance appraisals as accurate and30 fair there is a positive effect on their motivation and development. FASTFACT There are other barriers that can restrict the effectiveness of performance appraisal schemes.Some large UK and USSome factors that can further undermine the value of such schemes include: organisations are making• reliance on subjective measures employee compliance with• disregard for individual performance objectives their green schemes and• supervision by untrained managers involvement in charity• inconsistency in reward allocation work part of the appraisal31 32 process. • lack of top management support. Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. 310PART 3 Developing and rewarding human resources Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.It is particularly important — if they are to be successful — that appraisal schemes have topmanagement support. HR managers thus have a critical and challenging role in educating their organisation’smanagement and employees on the importance and use of performance appraisal in employeedevelopment, performance improvement and achievement of the organisation’s strategic busi ­ 33 ness objectives. It should be noted that not all HR writers would accept this viewpoint. Barbara Townley,for example, expresses serious concerns about the real intent of performance appraisal. ForTownley, performance appraisal is little more than a pseudo-scientifc management techniquefor handling labour relations. The real purpose of performance appraisal, she argues, is tomonitor and control employees. This is done by emphasising the assessment of current perfor ­ mance (as opposed to future development) and using subjective traits rating rather than objec­ tive job-based criteria. Townley says that because of the increased discretion being given toemployees, it has become critical for organisations to ensure that they can continue to controlemployee behaviour. Internal controls (that is, within the individual) rather than externalcontrols (such as direct management supervision), she says, have now become of paramountimportance. Consequently, a key function of performance appraisal is to communicate organ ­ isational norms or culture so that employees internalise the organisation’s values. Townley thusperceives performance appraisal as nothing more than a personalised application of power in34 the workplace, with the ultimate aim being to control employee behaviour. A checklist for introducing a performance appraisal program is shown in fgure 8.5. Steps for introducing a performance appraisal program 1. Defne the purposes of the performance appraisal program (what it is you want it to achieve). 2. Ensure that the type of program you plan to introduce is consistent with the organisation’sobjectives and culture and is perceived by managers and employees as being fair in its designand application. 3. Ensure there is full understanding of and support for the program by top management,employees and the unions (if applicable). 4. Involve employees, managers and the unions (if applicable) in the development of the program. 5. Ensure that performance standards and the method of evaluation are clear, job-related, fairand as objective as possible. 6. Establish training sessions for managers and employees on the objectives of the program andthe skills and responsibilities required. 7. Provide a formal procedure to allow employees to challenge performance appraisal evaluationsthat they consider inaccurate or unfair. FIGURE 8.5 8. Monitor the program to check it is meeting its objectives (and it is perceived by managers andIntroducing a performanceemployers as having fair procedures and generating fair outcomes). appraisal program Performance appraisal objectives Discriminating on the basis of performance A manager must be able to objectively discriminate between those who are contributing tothe achievement of the organisation’s strategic business objectives and those who are not. Aperformance-oriented organisation has no room for egalitarianism: inadequate performancecannot be tolerated. Those who are underperforming should be given the opportunity and assis­ tance to improve (see fgure 8.6). If an employee still cannot make the grade, corrective actionsuch as transfer, demotion or termination should be taken. One senior executive says: ‘Youdon’t do anybody any favours by tolerating failure or incompetence. All you really do is put a35 lot of other people’s jobs at risk.’ Research shows that the best companies and the best CEOs36 never hesitate to fre when they must (and yet they are also more people-oriented). Micro­ soft annually weeds out about 5 per cent of its employees through its performance appraisalStone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. CHAPTER 8 Appraising and managing performance311 Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.37 system and Intel employs a tough ‘up or out’ program. The costs of keeping non-performers38 are signifcant and send the wrong signals to other employees who are performing well. Lostsales, high rejection rates, customer dissatisfaction and damaged public image are just someof the obvious costs. Hidden costs include loss of motivation among good performers and thediversion of management resources to deal with incompetent employees and the consequences39 of their poor performance. 40 Leniency leading to inaccurate performance appraisals is a long-standing problem. Inter­ estingly, poor performers tend to have infated perceptions regarding their performance relative41 to good performers. According to one survey, more than 60 per cent of Australian employees42 FIGURE 8.6 felt their companies were too lenient with poorly performing employees. In some cases,43 Possible causes of incompetence may be tolerated because of excessive union power. underperformance Trade unions Job design • output restrictions Inadequate or no • work to rules • skill variety • demarcation issues • task identity • reduced fexibility • task signi\u001ecance • performance not rewarded • autonomy • promotion by seniority• feedback Rewards Training • unfair • inadequate Personal Know-how Substance abuse • not related to • inappropriate circumstances • skill de\u001eciencies • alcoholperformance• work–family • knowledge• drugs • insuf\u001ecientcon\u001fict inadequacy • uncompetitive• relationship • ability de\u001eciencybreakdown • language • child/elder care de\u001eciencydemands Health Discrimination • physical • racialillness/disability UNDERPERFORMANCE • religious Motivation • mental • sexual Political Inadequate or noillness/disability • other • toxic corporate politics • \u001enancial incentives • stress • destructive • recognitioncompetition • promotion prospects • job satisfaction Ethical Social Harassment • decision-making • corrupt practices • poor interpersonal • physicalfreedom • unethical relations • sexual Resources • responsibilitybehaviour • poor communication • verbal • substandard equipmentor employee hasskills • psychological• inadequate resources • low achievement need • poor leadership • outdated systems • low conscientiousnessskillsManagement Corporate culture • incompetent • low performance culture • discriminatory • ‘job for life’ mentality • fails to make performance • pressure to conform to lowexpectations knownperformance standards • no punishment for poor performance Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. 312PART 3 Developing and rewarding human resources Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.FASTFACT According to the National Commission of Audit, the extraordinary complexity of theThe federal governmentAustralian Public Service personnel system similarly protects ineffciency because the delays inin Australia has recentlyproceedings, the manipulation of rights of appeal and the frequent recourse to generous redun ­ introduced strictdancy payouts make it diffcult to dismiss ineffcient public servants. The rigidities and lackperformance standardsof accountability in dealing with underperforming employees are among the toughest issuesfor teachers. Teachers are45 facing public sector managers. judged on evidence suchAccording to one expert, ‘the only way to make a business live up to its potential is to getas classroom observation,46 parental and studenttough.’ Gail Kelly, CEO of Westpac, says one of management’s most important tasks is to get47 feedback and studentthe wrong people off the bus. Former legendary Port Adelaide Football Club coach, Foster44 results. Williams, illustrates this when he says: ‘Any club worth its salt will clear out its no hopersfrom the doorman to the head trainer to the captain. Keeping no hopers in these positions is amark of a non-successful club. You have to weed out the people who breed an atmosphere ofnon-professionalism. They are there for the bloody joke, the social life, the prestige. They are48 not there to win.’ Employees who achieve want to be recognised and rewarded for their efforts, while poor49 performers prefer egalitarian pay plans. To motivate performance, outstanding performerstherefore must be identifed and rewarded. Performance increases must be signifcantly dif ­ ferent in size to reward those who deserve it. The effectiveness of pay as a motivator, however,‘depends on the extent to which performance can be measured and the extent to which it is50 possible to discriminate between individual employees’. A study by the Australian Institute ofManagement in Western Australia found that a major disincentive to productivity was attribu­ 51 table to everyone getting the same pay rise regardless of how hard they work. Ninety per centof employees in a survey by the American Productivity and Quality Center said recognition forgood performance is a top priority in job satisfaction, yet only 55 per cent said they actually52 get such recognition. And while 85 per cent of respondents said fair performance reviews are53 critical, only 38 per cent said they receive fair ones. Unfortunately, research indicates that ingratiating subordinates are better liked and receivemore pay increases, more favourable performance appraisals and more promotions than do54 equally qualifed, non-ingratiating workers. Managers admit that political considerations55 are nearly always part of the evaluation process. Research, nevertheless, shows a positiverelationship between performance pay systems and organisational performance, and that the56 incentive effects of pay for performance can be very signifcant.Other research also indicatesthat task performance, helping behaviour and organisational loyalty all contribute to favour ­ able performance approval ratings. Challenging behaviour (from those perceived as performing57 and loyal) is also rated positively. Discrimination on the basis of performance is an organisational necessity. It is part of themanagerial role that cannot be avoided. If an organisation is to survive and grow, and retainand motivate its top performers, effective performance management is a must. RESEARCHPerformance management — an alternative view FLASH Forcing employees to deliver against set measures may tunnel their vision, and reduce their urge toexperiment, and cause them to underperform. If the organisation provides good working conditions,generally does not impose sanctions on unsatisfactory results and promotes trust, employees willreciprocate. An organisation with a culture that fosters identifcation with the company, has inspiringleaders and gives its employees a high degree of responsibility and freedom to develop their ownideas is likely to see extrinsic motivation replaced by intrinsic motivation which springs from a sense ofa job well done. Such organisations do not require formalised individual performance measurement systems inorder to achieve high performance. Source: Adapted by the author from Platts, K.W. and Sobótka (2010) ‘When the uncountable counts: An alternativeto monitoring employee performance’, Business Horizons, 53, pp. 349–57. Stone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. CHAPTER 8 Appraising and managing performance313 Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.DOCTOR Dear Dr HR HR I have a non-performing subordinate who is very high maintenance. Because of the time taken, I amforced to neglect my other subordinates. What do you suggest I do? Rewarding performance To encourage performance, it is obvious that it must be rewarded. Consequently, most organ­ isations claim that they do just that. Employees who have contributed the most to the achieve­ ment of the organisation’s strategic business objectives should receive the greatest rewards. Ifnot, how are employees to be motivated? Head of Australian equities for BT Financial Group,Crispin Murray, claims that the company’s improved performance can be attributed to the intro­ duction of stringent pay for performance standards. ‘In the past’, says Murray, ‘there have beensituations where people have not delivered performance and still got well paid. In that circum­ stance you create a culture where people are not hungry enough to deliver performance, whereastoday people very much know that there is a measured way of assessing their performance. If58 you deliver, you will get paid but if you don’t deliver, you will suffer the impact of that.’ The big question is: if no objective measure of performance exists within the organisation,how does management know what is being rewarded? Embarrassingly, organisations oftenreward seniority, a servile demeanour or some other factor that has little or nothing to do withthe achievement of strategic objectives. Research shows that employees who fatter and fawn ontheir supervisors receive higher ratings, better pay increases and more promotions than do their59 counterparts. The result ‘is the over-rewarding of incompetence and the under-rewarding of60 superior performance’. This also helps to explain why merit pay is often perceived to be inef ­ 61 fective in improving motivation and productivity. Private sector management is not averse to rewarding non-performance. Raw CapitalPartners,a Brisbane-based information technology and advisory frm, paid its managing director DouglasWong $317444 — a staggering 74 per cent of the company’s market capitalisation — even62 though the company made a net loss of $2.3 million. Investment banks, similarly, incentivised63 the sale of toxic loans (and encouraged corrupt behaviour) by linking rewards to volume sold. However, there is now evidence to suggest that organisations are increasingly rewardingperformance, even though the key factor in determining rewards in the past has been mem ­ 64 bership. Membershipbased rewards include ‘across-the-board’ pay increases, cost-of-living ­increases, seniority payments and so on. Performance-based rewards include piecework pay­ ments, commissions, incentives, bonuses and merit pay plans. Performance-based rewards are‘at risk’ rewards. They are based on the continual achievement of job performance goals. An objective performance appraisal system in which top performers receive higher rewardsand lesser performers receive lower rewards is essential for encouraging performance-orientedbehaviour and a performance-oriented culture. Linking employee contributions and rewardsalso ensures that the organisation gets maximum value for its remuneration dollar. FormerGeneral Electric CEO Jack Welch states: ‘If your company is managing people well, it tightlyaligns good performance with rewards. The better you do, the more you get — and you get it65 both in the soul and in the wallet.’ DOCTOR Dear Dr HR HR My boss plays favourites when it comes to performance review ratings (and this affects our payincreases). Most of us are very upset about this but don’t know what to do. What do you suggest? Developing employees Employee development is the third aim of performance appraisal (and one that is often over ­ looked). Performance improvement comes about by building on strengths and overcomingweaknesses. It is the manager’s job to remove blocks to employee performance and to helpeach employee to grow and develop. Performance appraisal must be a positive and dynamicStone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. 314PART 3 Developing and rewarding human resources Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved.process for this to occur. ‘Developmental schemes enhance the appraisal process byencouraging66 communication and employee participation’, says Lansbury. For example, performance67 measures framed in a positive way promote creativity, problem solving and communication.Performance ratings are of signifcantly better quality when made for developmental pur ­ 68 poses than for administrative purposes. Development-oriented appraisals and comprehensivetraining also show a signifcant positive relationship with organisational commitment and job69 satisfaction. The research evidence is clear: the higher the level of employee participation andthe greater the emphasis on skill development, the greater the employee’s satisfaction (and sense70 of fairness) with the appraiser and the appraisal process. If it is perceived as having unfairprocedures or outcomes, however, performance appraisal will generate emotional stress among71 employees. One major US company calls its performance appraisal program ‘the employee72 development system’, to emphasise the importance of coaching and development. Unfortunately, performance appraisals are negative and static in too many organisations.73 They are concerned with past performance rather than with improving future performance.The emphasis is on looking back and judging where an employee has been. No attempt is madeto explore how the individual can grow and develop, even though research indicates that most74 employees want performance appraisal to be used primarily for employee development. Simi­ larly, any organisation seeking to pursue quality over an extended period of time must make75 development a primary concern. Without this emphasis, performance appraisal becomes aFASTFACT negative experience, leading employees to see it as an unfair ‘report card’ to be given on theThe presence of informalannual day of judgement. Employees who constantly receive negative feedback also risk emo ­ performance appraisals is76 tional burnout. Research by Connell and Nolan suggests that informal feedback given on amore likely to be found inregular basis in a positive and constructive way overcomes employee fear of formal perfor ­ smaller frms not employing77 78 mance appraisals and promotes employee and work group wellbeing. a HR professional. Negative experiences also explain why there is often considerable management, employeeand union opposition to performance appraisal. Particularly for top executives (whose behav ­ iour is a primary contributor to an organisation’s culture and whose strategic leadership fostersa common vision and sense of organisational direction), feedback that leads to increasedawareness, insight and development is critical. Unfortunately, top executives often do not per ­ 79 ceive the need for feedback and change. But if appraisals are not done at the top, the messagesent to the rest of the organisation is that appraisals are unimportant and should not be takenseriously. Moreover, research suggests that such attitudes result in other managers deliberately80 distorting and manipulating appraisals for political purposes. Giving feedback to employees Managers are responsible for evaluating the performance of their employees and for accuratelycommunicating that assessment. This requires managers to identify an employee’s defcienciesand determine how they can be overcome, to know what specialised training and developmentare needed, and to ensure that opportunities are created for any new job experiences required. Communicating clear, specifc expectations and giving both positive and negative feedback are81 essential parts of the performance appraisal process. Employees, for example, react with higher82 commitment and improved job performance when they report high levels of regular feedback.Unfortunately, discussing such matters with a subordinate can be stressful. Managers may alsoprefer to avoid the unsettling experience of making decisions that affect the lives of employees. A survey of US managers found that ‘evaluating staff members’ performance’ and ‘havingto make decisions that affect the lives of individual people that I know’ were major man ­ 83 agerial stressors. Stress is aggravated when the organisation’s performance appraisal schemeis subjective, is unfair in its procedures and outcomes, has managers who are untrained orwho are inadequately prepared, causes employees to lose face or results in constant negative84 feedback. Many Chinese managers in Hong Kong and mainland China, for example, feel it is85 impolite to even say something negative about another person. Mainland Chinese employees,furthermore, may take even objective feedback personally and regard it as a message about the86 relationship their have with their superior than about their actual performance. Singaporeanmanagers similarly dislike performance appraisals because the cultural infuence of face is87 so powerful. As a result, managers are reluctant to give open and honest feedback to theirStone, Raymond J.. Managing Human Resources, John Wiley & Sons, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ballarat/detail.action?docID=3059017. CHAPTER 8 Appraising and managing performance315 Created from ballarat on 2017-11-09 20:14:31. Copyright © 2013. John Wiley & Sons. All rights reserved."