Class Project Presentation Essay

In narrow perspective, PA is a documentation, filling form, checking boxes, once-a-year drill, annual fiasco, meeting held between lower and higher worker, and they will meet again next year (Grote, 2002; DelPo, 2007; Tourish, 2004). It s a common misconception that performance appraisal entails simply filling out an evaluation form answering prefabricated questions and checking boxes. If this were the case, you wouldn t need an entire book to help you do it right, and your evaluation wouldn t be worth the paper you wrote it on. When done correctly, performance appraisal is a process, not a document it is a way of structuring your relationship with your employees. A good appraisal system includes observation, documentation, and communication. It envisions a workplace in which supervisors know what is happening in their departments (who is doing what and how well) and document employee performance as it occurs. Supervisors and their employees should have open lines of communication. Employees should know how they are doing so they can make adjustments when they veer off track. Supervisors should know what obstacles get in the way of their employees performance so they can remove those obstacles as they arise (DelPo, 2007). PURPOSE Study shows that PA is commonly used by companies now, from every level or industrial background (Nakervis and Leece, 1997; Bach, 2003). Of course the phenomenon is not without cause, consider that sometimes PA is a hectic and hated job, time and cost consuming. Grote (2002) case in No. 14 is cited from DelPo (2007)- list the purpose of PA as follow: 1. Providing feedback to employees about their performance 2. Determining who gets promoted 3. Facilitating layoff or downsizing decisions 4. Encouraging performance improvement 5. Motivating superior performance 6. Setting and measuring goals 7. Counseling poor performers 8. Determining compensation changes Encouraging coaching and mentoring Supporting manpower planning or succession planning Determining individual training and development needs Determining organizational training and development needs Confirming that good hiring decisions are being made Providing legal defensibility for personnel decisions Case : A hospital fires an African-American doctor. She does not have an employment contract, so the hospital does not need just cause to ire her. Nonetheless, the doctor files a wrongful termination lawsuit, claiming that she was fired because of her race. When she files her lawsuit, she has no real evidence of racial discrimination; her case is based on her belief that she was always treated more harshly than her coworkers, most of whom were white men. The hospital responds by asserting that she was fired because of her poor diagnostic skills and her inability to get along with her coworkers. Her attorney requests her performance evaluations. Well managed PA system can prevent this kind of situation. Further reading about the issue of legal practice and PA, read The Performance Appraisal Handbook; Legal & Practical Rules for Managers by Amy DelPo. 15. Improving overall organizational performance Performance Appraisal is an integrated part of company s Performance Management Strategy (PMS). Performance Management is a set of regular, ongoing human resource activities carried out by managers and supervisors relative to their subordinates to enhance and maintain employee performance toward the achievement of desired performance objectives (Vance and Paik, 2006). Why company need to create such job, what are the job requirement, job description, the most important thing to do in this job, issue surround the job, etc. 2. The Jobholder Who is suitable for the job? What are the requirements? 3. The Person Now, you have to know the person deeper. How is his performance compare to the previous year. Remember, know the person based on the job, not based on individual prejudices 4. The Self-Appraisal or Accomplishment List If you asked the individual to prepare a list of accomplishments or complete a self-appraisal (and return it to you in advance), this will be a worthwhile source of performance data. This information then can be gathered by assigned appraiser (supervisor, specialist, peers, appraisee, or all). There are two types of information: 1. Qualitative: Information of behavioral remarks, comments, symptom, process, expectation, etc. 2. Quantitative : Numerical information. Information about sales number, revenue, productivity (number of product per hour or per day), and area covered, etc. Quantitative is easier to be measured and less subjective. There are two types of quantitative information; pure numerical information, and scaled information. Scaled information is subjective and non-numerical information, but converted into number by scaling method. For example, 5 for Excellent, until 1 for very poor. Or 1 for Approved, 0 for Rejected (see additional exhibit, example of performance appraisal form of University of California). The appraiser can use combination of questionnaires, observation and interview to gather the information (an example of the standard PA form can be seen in the exhibit 1). The job can be very useful, yet sensitive because: 1. Common agreement among HR specialist that subjectivity cannot be avoided. . Legal consideration (sexual harassment, racism or libel issue) 3. No standard question or appraisal method available. Most of the organizations have to adjust the method for their organizational style. Performance Appraisal by only one appraiser sometimes might trigger subjectivity and bias. To prevent this, the method known as 360-degree Performance Appraisal is implemented. This form deviates from the vertical, hierarchical arrangement in that every member of an organization is placed at the centre point of a circle embracing all related employees, superiors and colleagues. Manager hates to measure their employee for some reason, while in the same time, employee hate to be scrutinized. Time consuming, high cost, and focused on past result rather than future development, are among the arguments, also additional findings show that performance appraisal can actually lead to poorer rather than better performance, tend to create prompt argument between appraiser and employee (Rothwell and Kazanas, 2003, cited from Martin and Bartol, 1998; Kikoski, 1999). Gloomy predictions about the end of performance appraisal even have been prophesied by some writer. As Bach (2003) noted, some have predict that appraisal would fall apart at the seams (cited from Margerison, 1976), due to employee ambivalence and union opposition, and added that the days of standardized appraisals were number (Bach, 2003, cited from Fletcher, 1993). (Cited from my journal study). Tourish (2004) revealed even more shaking information. As he cited from various research, that Appraisal should be avoided if it linked to numeration and payment, because sometimes may lead to moral hazard and even bankruptcy. As he wrote it: An illuminating example of what happens when this research is ignored may be in order. Enron was an organisation that combined both a ranking system and the linking of performance to pay. Its bankruptcy in 2001 stands (at the time of writing) as the biggest in US corporate history. As with many other aspects of its internal culture, its approach to appraisal is a valuable case study in what not to do. An internal performance review committee rated employees twice a year (Gladwell, 2002). They were graded on a scale of 1 to 5, on ten separate criteria, and then divided into one of three groups A s, who were to be challenged and given large rewards; B s, who were to be encouraged and affirmed, and C s, who were told to shape up or ship out. Those in the A category were referred to internally as water walkers. The process was known as rank and yank. The company s propensity to disproportionately reward those who were high achievers and risk-takers was widely acclaimed by business gurus (e. g. Hamel, 2000). Faculty from the prestigious Harvard Business School produced 11 case studies, uniformly praising its successes. However, problems multiplied. People chased high rankings because the potential rewards were enormous, while low rankings imperilled both their salaries and eventually their jobs. The appearance of success mattered more than its substance. In addition, internal promotions due to the appraisal system reached 20% a year. This made further evaluation more difficult, and inevitably more subjective how could you honestly rank someone s performance when they did not hold a position long enough to render sound judgement possible? Paradoxically, Enron had a punitive internal regime ( rank and yank ) but loose control (those adjudged to be top performers moved on too fast to be pinned down). In this case, ratings and performance pay formed a lethal mix. Internal staff churn, and a relentless emphasis on achieving high performance ratings in the interests of obtaining ever-greater personal rewards, contributed to the lax ethical atmosphere that precipitated the company s downfall. Versions of rank and yank have been used by many organisations, including General Electric and IBM. IBM, in the early 1990s, actually required that one out of every ten employees be allocated a poor rating, and given three months to improve or be fired (Gabor, 1992). The research evidence overwhelmingly suggests that such practices produce only defiance, defensiveness and rage (Kohn, 1999). However, despite all the criticisms, number of companies utilize this system is still growing. I think this is understandable because some findings correlate the implementation of effective and well created performance management system and performance appraisal, with employee s or organizational success. Waal (2008) in his research titled The effects of performance management on the operational sales results of a bank , showed that the PM related key events had a significant and lasting positive impact on the quantitative result of the division (Waal, 2008). Table 1: Disadvantage of PA, as identified from literature Source : Kourkit and Waal (2008) Other study conducted by Kourkit and Waal (2008), strengthen the previous findings. In this research, writers try to find out the correlation between advantageous and disadvantageous of Performance management, with companies success. The research showed that in general the advantages were experienced to a much greater degree than the disadvantages, and that specific reasons for use achieved specific advantages. With the research results, management can convince organizational members that SPM (strategic performance management), indeed beneficial for the organization (Kourkit and Waal, 2008. Italic added). Kourkit and Waal try to find the answer for dissatisfaction of PA process and they found out that there is no correlation between advantages created by Performance Management with dissatisfaction. In other word, companies where PA system works well will create the advantages it has promised. Future studies are needed to identify about what is going on with PA system in bankrupt companies (like Enron). Is it poor performance management might result their bankruptcy? Figure 2 : Relation Model developed by Kourkit and Wall (2008). Source : Kourkit and Wall (2008) TQM (Total Quality Management) by some also seen as the opposite of PA. Adoption of TQM, which emphasize more in team effort (Wikipedia, accessed 2010), didn t seems to lessen the spreading and growing importance of PA. Some have tried to reconcile the difference by creating a PA system that actually works so well in TQM (Marr and Kussy, 1993). This criticism is closely related with argument of team (emphasized by TQM) Vs. individual appraisal (PA). However, Kessler (2003) find out that, There is some evidence to suggest that use of team pay to support job design may have positive outcomes in terms of individual and organizational performance (Wageman 1995; Burgess et al. 2003). However, the take-up of team pay remains low with well under 20 per cent of organizations using it (CIPD 2003). Salary progressions based on team performance is even less in evidence; these findings are confirmed by other surveys (Thompson and Milsome 2001: 13). This low takeup suggests that despite some evidence of effectiveness, administrative difficulties remain in introducing team pay. It is not always easy to find a standard of team performance that can be linked to pay because teams often break up quickly and do not therefore represent a stable base for a pay. Moreover, it remains questionable whether team working in the strictest sense is as widespread as assumed (see Cully et al. 999: 43). Team-based pay may well be rare simply because genuine forms of team working are scarce. AVOIDING THE PERIL Performance Appraisal process, as we have seen, proven to be a dangerous game. However, it is necessary for company s success. Failure of PA process can sometimes attributed to human shortcomings. Tourish (2004) list 8 of that phenomenon that must be carefully avoided: 1. Appraisers frequently fall victim to the halo effect. There is a tendency to assume that a positive attribute or a job related success in one area automatically implies success in others. 2. Personal liking bias means that when supervisors like a subordinate, for whatever reason, they generally give them higher performance ratings, their judgment of the subordinate s work performance becomes less accurate and they show a disinclination to punish or deal with poor performance. 3. The horn effect arises when a problem in one area is assumed to be representative of defects elsewhere 4. The consistency error suggests that we have an exaggerated need to feel consistent in our opinions and judgments, and to assume that people and circumstances are more stable than they actually are (Millar et al. 1992). 5. The fundamental attribution error, discussed above, means that an appraiser tends to attribute poor performance to the personality of the interviewee, rather than to the situation. 6. The similarity bias means that we are attracted to people who look like us, sound like us and form a convenient echo chamber for our own ideas. 7. The what is evaluated problem arises when the behaviors being evaluated differ from those required to obtain organizational goals. 8. Each of these problems is exacerbated by ingratiation effects. People with lower status habitually seeking to influence those of greater status by exaggerating how much they agree with their opinions, policies and practices, and so ingratiate themselves with the powerful, and sometimes might create bias to these so called powerful. DelPo (2007) also found that unwise selection of words can lead to poor PA system. Not only create false hope and false impression, it also might lead to legal problem. Brief, based on the fact, rather than personal conclusion is better than a long, trying to be funny or conclusive word. The latter, might bring not only false facts, but also future problem. Organization is comprised of human, which is all unique, so also the organization. Standardized PA schemes from industry to industry, from size to another size will be better if was avoided. The common mistake that also always lead to rejection to PA is, the believe that PA is just an annual ordered ritual. Useless but a must. In fact, PA is a never stop process. The shift in paradigm regarding PA is needed now days. Formal, written and companies scale PA can be held annually, monthly, quarterly or half-a-year, but everyday informal PA through Management By Walking Around, Management By Objectives, through constant communications and immediate daily basis feedback, might lessen the hectic work of annual PA and might reduce the frighten about PA. If I can extent the scope of Performance Management Process, PMS actually started since the recruitment. If the recruitment ran well, it will reduce the burden of PA, since all employees are ready, or willing to improve. Future study also needed in this part to know whether good recruitment system is correlated with successful PA scheme, and vice versa. Communication is also the most important. Employee must have the willingness to hear the feedback, while management also must be willing to receipt critics regarding the PA schemes and procedure. At very last, but one of the most important, Company s value, philosophy, vision and mission is also are fundamental in PA system. CONCLUSION y PA is an integral part of human life. We have experienced it since the moment we can remember and understand word. We live by it, cope with it, and shaped by it. Strengthened and weakened by it. In school we received report card, in university we get grades, those all are part of life s Performance Appraisal. Even as Christian, I believe that PA will continue in the afterlife. Appraisal is needed, it is necessary for company s or employee s development. Some study reported that PA is correlated with performance, and the growing number of user of this method, strengthen its position of importance. y PA is needed to measure performance, personally. PA is irrelevant under assumption that all member of organization has done and will do a fine job with, or without evaluation.