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Human Resource Management – Performance Appraisal

In this report, it has a particular Interest In performance appraisal methods regarding graphic rating scale, MOB, ranking and critical Incidents. Using the evidences of XX Construction Company and BBC clubhouse, it derives strong and weak points of these appraisal methods. Overview, both companies implement single-source of rater, fly. , supervisors to evaluate their employees. Therefore, both deal with hinders of personal biases, previous performance appraisal’s results or prejudices. In XX Company, graphic rating scale brings benefits of convenience, many aspects of its operation and management.

However, this method generates problems, especially the low level of reliability, ambiguous definition of evaluations and central tendency effect. Furthermore, XX Company has strengths in the ability to achieve strategic objectives via MOB technique. It helps the company ensure operative goals to align with overall organizational missions. On the other hand, the company probably finds it difficult and time-consuming in setting objectives and it is hard to change established objectives. In contrast, BBC clubhouse uses critical incidents that allow the company to examine employee’s performance and behaviors or long time.

Thus, the company does not face with recent performance effect. This appraisal tool also helps increase productivity via temporary instructions during supervisors usually spend time on

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the floors to observe their subordinates. Because of this, employees might feel uncomfortable at work as they are over-monitored. Sometimes supervisors might forget to record favorable or unfavorable employee’s behaviors. In addition, the appraisal method might also induce unethical competition or decreased morale at work due to ranking method.

However, ranking technique ores managers to recognize best performers for rewarding or promotion, and poorest performers for punishing or demotion. 1. INTRODUCTION As discussed on areas of human resource management (HARM), often there is the concentration on recruiting, selecting, staffing and paying policies. However, there is still another aspect that is not less important in HARM study. Performance appraisal that belongs in performance management system is fairly considerable when it is viewed “as an overall measure of organizational effectiveness: organizational objectives are met through the effort of individual employees” (Stone, 2010).

It is designed to evaluate employee’s performance, and to reward efficient employees, and to punish inefficient employees. As if employee’s performance is reviewed and improved, it will raise the overall organizational performance and efficiency. Because of the importance of performance appraisal, this report has a particular interest in studying 4 performance appraisal methods of 2 organizations. First, the XX construction company has used graphic rating scales and MOB approaches. Second, the BBC clubhouse has adopted critical incidents and ranking techniques.

Along with iterative review of these methods, this report will compare and contrast strengths and weaknesses of these 2 performance appraisal systems. Finally, there is a brief recommendation to improve its effectiveness. 2. THE LITERATURE REVIEW OF PERFORMANCE APPRAISAL METHODS 2. 1 Graphic rating scales The first technique discussed in this report is very popular and traditional performance appraisal approach in which each evaluated trait is rated and presented by a scale on which appraisers indicate the degree to which employees possesses that trait (Snell and Blander, 2012). It is illustrated in Appendix A.

Commonly, the scale includes four or more degrees that are numeric in an ascending or descend order. If there is a need to evaluate the level of customers’ satisfaction in terms of service, a scale of 1-4 that represents the degree of, for example, “needs be used in the appraisal form. According to Stone (2010) and Broody (2005) said that this method is to examine employee’s performances regarding quantity of work, quality of work, creativity, Job knowledge, cooperation, leadership, healthy and safety. Therefore, many companies prefer to use this technique rather than other methods cause of its convenience and diversification.

In fact, some scholars also agreed that graphic scale is simple as answers are numeric, and appraisers can quickly pick up a number expressing their opinions (Murphy and Cleveland, 1995; Jellybeans, 2005). Hence, it helps save time. However, this method does not avoid drawbacks. Due to its simplicity, it does not provide a high degree of reliability in performance appraisals. It can be explained as appraisers are in urgency or they tend to less pay attention on the importance of evaluation; they are inclined to circle the ‘average’ degree or the idle point of the scale.

This problem is called as ‘halo’ or central-tendency error (Growler and Warning, 2006; Stone, 2010). Moreover, because rating points are expressed by short clauses, it might not describe exactly all what appraisers say. In other words, appraisers do not distinguish totally the degree and standards of evaluation. Similarly, Snell and Blander (2012) affirmed that this method needs to improve the accuracy as it cannot ensure how clearly the points on the scale are defined. In addition, Murphy and Cleveland (1995) claimed that this technique lacks clarity and definition.

Different appraisers will have their own perceptions on evaluating a trait. Furthermore, the scale does not define clearly what is meant by ‘poor’ or ‘good’ degree. Hence, the great weakness of graphic rating scale is relatively low reliability. 2. 2 Management by objectives (MOB) MOB is defined as a philosophy of management that employees will establish objectives by consulting with their supervisors and then employee’s performance is evaluated based on the achievement of these objectives (Snell and Blander, 2012). To implement effectively this technique, the goal setting often follows the acronym of reminisces called SMART, biz. Specific, measurable, achievable, realistic, and time- bounded. For instance, the examined objective must be specific such as decreasing unnecessary expenses in the XX construction company. It depends on the production, its capability and resources. The company will decide to obtain a 5% or 10% saving of miscellaneous expenses. Importantly, the goal must be realistic, measurable and achievable. Namely, it considers time-bounded that when expenses will decline about 5%. It can be this month or this quarter. Each employee must attempt to achieve this goal and will be evaluated based on this. This example can be found in Appendix B.

Trucker (1979) and Single (2010) proposed that the greatest advantage of MOB is self-control. MOB is the mix of planning and control into a rational system of management (Guppy, 2009). And objectives or goals cannot be formed without careful planning. Thus MOB forces management to have clear plans that imply self-control. Furthermore, this method is result-oriented. Hence, it forces managers to delegate authority according to results they expect (Guppy, 2009). Because of result-driven method, it encourages employees to have opportunities for reiterative and imagination in order to accomplish goals.

Managers and employees have similar goals, leading to improvement of commitment (Guppy, 2009). In certain, MOB helps enhance employee’s motivation and innovation. On the other hand, MOB problem. In particular, objectives must be examined carefully before setting that takes much time. Managers must choose objectives based on SMART principles. According to Single (2010), MOB is wastage of time as managers must spend much time in attending meetings and preparing reports in order to introduce objectives. Hence it also concludes that MOB increases paper-work activities.

In addition, MOB emphasizes on results rather than other factors. Consequently, employee might remain under pressure and struggle with each other as long as they can attain the objectives. It is the reason why Diners and Palmer (1998) claimed that MOB concentrates on goal congruence, but fails in human elements, I. E. Employee morale. 2. 3 Critical incidents This is a performance appraisal method that requires managers or supervisors to keep written records of particularly favorable and unfavorable work actions during the appraisal period (Jellybeans, 2005). It is illustrated in Appendix C.

It can be explained as when an employee often goes to work and finishes tasks late twice a week or when an employee satisfy an angry customer. Regardless of either negative or positive actions, managers will make a note of it. At the end of appraisal period, they will look back and base on their records. They will evaluate that employee’s performance. The great benefit of critical incident method provides entire evaluation of an employee’s performance over the time. Written records are even made before appraisal period begins. Supervisors can record employee’s behaviors during the period that they work in an organization.

Actually, Lloyd (2009) also agreed that this method is time-tested because it is less likely influenced by a last-minute scurry and undue impact of employee’s recent behaviors in a short observation period. Moreover, this method generates more face time (Lloyd, 2009). It means that managers will need to spend more time on the floors with their employees in order to observe and record their employee’s behaviors. As a result, it encourages managers to give frequently more guidance, coaching and feedback to their employees. It somewhat enables employees to improve their performance timely.

Despite having many above benefits, this technique also causes some pitfalls to users. Sometimes, managers view critical incidents as their chores, biz. , too busy or forget to record employee’s behaviors. Moreover, it is unequal between satisfactory and dissatisfactory behaviors (Lloyd, 2009). In details, an employee can deliver many satisfactory behaviors during a year, but only one dissatisfactory case that causes enormously negative impact on the organizational productivity. It will be unfair if the appraiser weight the performance via the number of behavioral cases.

In addition, cost supervisors are more noticeable to unfavorable behaviors than favorable ones. Likely to graphic rating scales, this technique has a problem of ambiguous definition as all evaluations are in numeric representation. 2. 4 Ranking Under this appraisal method, managers will compare their subordinates’ performance, and then rank each in order from ‘best’ to Worst’ (Stone, 2010). The details of the ranking method is illustrated in Appendix D . Ranking is the oldest and simplest tool, and most effective if there are fewer than 20 employees.

It is suitable to evaluate largely various criteria such as Job knowledge, quality of work, quantity of ark, attendance, punctuality and so on. Moreover, it is better to rank employees sense that it is a fast and easy appraisal tool. It is easy to realize this as managers just rank employee’s performances numerically. Furthermore, it provides a quick identification of top performers for rewards, training and development (Chronic. Com). Frankly, Growler and Warning (2006) also affirmed that ranking appraisal has direct implication to compensation strategies and staffing consideration.

Based on the appraisal results, managers can either promote top performers for higher positions or worse performers for demoting. Another benefit of this technique is an increase in productivity and profitability (Chore. Com). Namely, managers can easily replace poorest performers as well as retain efficient performers for developing a better workforce. Meanwhile, Geol. (2008) perceived that this method has a large number of flaws because inevitably there are differences in the behavior of people, their way of working, styles, and concepts of perfection.

Thus some managers find it difficult to compare between individuals. Furthermore, it does not work effectively if there are a large number of employees in the comparison list. Growler and Warning (2006) proposed that this approach is able to compare different employees across department within an organization, because employees are evaluated based on no common standards. On the other hand, ranking appraisal method does not encourage developmental and feedback about employee’s strengths and weaknesses (Growler and Warning, 2006).

Nevertheless, comparison and ranking are sound as a result of competition and discrimination (Chore. Com)[l]. It forces employees to struggle for high positions that creates obstacles for creativity and imagination, but might encourage unethical behaviors. Thus, if an organizational culture has incentives to teamwork, it will be not suitable to apply this appraisal method. 3. APPLICATIONS TO CONSTRUCTION COMPANY AND BBC CLUBHOUSE In general, it is prominent that both companies have benefits of convenience and simplicity as ranking and graphic scales are applied.

On the other hand, all methods of 2 companies are a single rater that the supervisors will evaluate their subordinates. Both the systems have a common weakness of subjectivity of the supervisors, namely if there is a personality conflict or the supervisors perceive the employee as a threat. Dependence on a single person might generate personal bias if the supervisors are hostile to their employees. In addition, the accuracy of evaluation might be influenced by previous performance prejudice. In other words, supervisors can be affected by their employee’s performance in previous rating results.

Or new supervisors who have not had enough either knowledge about their employees or time to understand their employees might rely on previous appraisal results even or judgments from other colleagues in order to rate their employees. Furthermore, by using graphic scales and MOB methods, XX Company has the strengths with aspects to self-control, improved creativity and imagination, and attainment of objectives that are discussed on aforementioned parts. Meanwhile, BBC Clubhouse adopted 2 other methods including ranking and critical incidents and by using these methods it will be able to evaluate its employee’s performance.

It might also be a problem for XX Company as its appraisals might depend heavily on recent events. BBC Clubhouse cannot make sure that its strategic objectives are obtained fully as their appraisal methods are not result-orientated. MOB helps XX Company establish operative goals aligning with strategic organizational missions. However, once the objectives are set, it is difficult to change, and employees often prefer easy goals. Due to result-oriented evaluation, employees pursue the quantity of tasks while the quality of tasks might be neglected.

Therefore, tasks might possibly be completed shoddily. Besides, XX Company might have some central tendency issue. Sometimes, raters tend to choose an average degree for most employees in the 5-point scale. It may be because appraisers do not take appraisal process seriously, and perceive it as burden. Consequently, they might rate their employees either higher or lower Han they actually are. In contrast, the problem of central tendency is eliminated in BBC Clubhouse by forcing appraisers to rate employees over a predetermined range in critical incidents.

In spite of that benefit of critical incidents, BBC Clubhouse’s employees might feel stressed at work due to the continual performance observation by superiors. During work, employees might be constantly keeping track of their activities, be self-conscious about their presences, and create hesitation at work. Although critical incidents provide detailed observation, it does not fulfill requirements. During peak period, it will be difficult for managers to take notes about their employee’s behaviors as time is preciously limited. Managers might not be able to manage the clubhouse as well as record at same time.

As a result, significant incidents might be missed out. Furthermore, during recording process there might be too many different types of papers or forms that managers have to use to take notes of incidents that occur during appraisal period. Consequently, it might slow down or complicate the whole appraising process. Conversely, the ranking method of BBC Clubhouse might create unhealthy or even vengeful competition at work. Because of comparison between each other, employees might be induced to fight for the highest position for increased merit or promotion, resulting in negative outcomes.

To make things worse, employees might even behave unethically in order to eliminate competitors. Nonetheless, there is one strong point in Abs’s appraisal form that the company gives extra explanation for each ranking criteria (See Appendix D). Thus, it can diminish the problem of unclear definition that critical incidents theoretically encounter. 4. RECOMMENDATION First of all, to implement effective performance management system, management of tooth companies must appreciate their appraisal methods.

If their employees perceive and see that the importance of appraisal is valuable to management, they will take the appraisal process seriously. Consequently, feedbacks from the appraisal process can help improve employee’s performance, and leading to overall organizational efficiency. Second, the appraisal procedures must be agreed between management and employees. It must be necessary to diminish any case of supervisor’s discrimination. If there is any bias in appraisal process that creates adverse unhappiness among employees, it could lead to rapid declination in employees’ morale and performance.

At that time, appraisal methods are not useful in performance management system at all, but originate organizational conflicts and inefficiency. Third, it is the central tendency effect of graphic rating scales. The problem of such tendency can be resolved by changing the scale from 5 points to 4 points. Although appraisal process is guaranteed to be taken seriously, managers appraisal process as a useful assistance in managing their human resources instead of a burdensome responsibility. Forth, multi-sources of raters can remove the pitfalls of supervisor’s errors in appraisal process.

Both companies can consider 360-degree appraisal that allow many raters, such as colleagues, supervisors, customers, and subordinates to involve in performance appraisal process. It can avoid discrimination and bias by providing a more comprehensive view of employee’s performance. Furthermore, customer’s involvement can increase employee’s accountability to their customers. Employees are also permitted to give reviews to them, creating self- evaluation and self-development. 5. CONCLUSION In brief, performance management process is absolutely important to organizational efficiency.

And it is not easy to deploy an effective performance appraisal system at all. The four discussed approaches all have their benefits and shortcomings. Though XX Company and BBC Clubhouse adopted a mix of 2 approaches each, they do not avoid problems in their appraisal processes. Overall, both companies face with supervisor’s errors, including personal bias and previous appraisal prejudges. Though XX Company has the convenience and coherent commitment to attain strategic objectives, its appraisal methods are comparatively low in level of reliability, central tendency effect and difficulty in setting objectives.

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