Evaluate The Influences Of Performance Management Commerce Essay

The principle objective of this dissertation is to analyse and evaluate the influences of performance management (PM) in a Hospitality Organisation as well as the impact on employees and the organisations overall growth. The analysis also aims on demonstrating how performance evaluation provide helpful guidelines in assessing, evaluating and appraising employees performance in a Hospitality industry and rewarding or providing them with training and development where needed. The paper also explains how goal setting theory helps motivate employees when applied in order to perform better in a Hospitality industry. Therefore, the study aims on the impact of Performance Management on the employees and Hospitality organisation overall growth.

In the past few years, the Hotel Industry has come across numerous changes. It suggests that no industry is resistant to resulting consequences of deregulation or the increasing growth of global competitors. One of the results of this progression in many hospitality organisations is the increase in reasonable obsession with quality and productivity. Hence, it is currently more essential to measure performance accurately in order to reward the employee and guide if any performance related problems through training and development. (Swan & Margulies, 1991:3)

Few decades ago, performance management was a primitive process and widely used to distinguish between good and bad performers. Whereas, now performance management is a vital factor in many job types and levels. Performance Management is not only used to distinguish but also to make various decisions about salaries, promotions and analyse the employee performance related problems in order to counsel and implement appropriate strategies to archive the Organisations objectives.

The conventional approach, unless handled with consummate skill and delicacy, constitutes something dangerously close to violation of the integrity of the personality.

Managers are uncomfortable when they are put in the position of “playing god” the respect we hold for the inherent value of the individual leaves us distressed when we must take responsibility for judging the personal worth of a fellow man. Yet the conventional approach to performance management forces managers, not to only to make such judgments and to see them acted upon, but also to communicate them to those who had been judged. (McGregor, 1957:37)

The “conventional” approach McGregor worried about is the practice of periodically determined whether and to what extent a given person has lived up to certain predetermined requirements. It is the “playing god” aspect that concerns managers the fear that what gets put on a piece of paper might spell the end of a man’s career, or the dashing of his hopes and aspirations (McGregor, 1957:38).

(McGregor, 1957:40) saw what so many managers have reported about performance management: that it is tricky, often subjective, and in many ways dangerous thing to do.

These managers feel that there is something inherently wrong with “judging” a man or woman. There are dreadfully afraid of making a once-and-for-all judgment which turns out to be wrong, and they are as much or more afraid of having to tell someone they are going to give him or her a “low rating” (McGregor, 1957:38).

The key purpose of PM in organizations is that it helps in; measuring the effectiveness of performance in the organization also, it helps in identifying training needs and largely promotes motivation towards work. But, how exactly does performance management help in running the organization? Every organization has a set of objectives and functions and the main task is to accomplish the desired objectives and functions. This can only be achieved, if the employees know their duties well. Employees form an important asset of the company, therefore they should be provided with a proper package, remuneration and good training and development. All these facilities will only help the employee to be highly motivated towards their work and would help in producing the right output i.e. performance.

Performance management is used all over the world. Many organizations use PM in order to develop a clearer picture of their organization. The process allows an organization to measure and evaluate an individual employee’s behaviour and accomplishments over a specific period of time (DeVries et al., 1981).In recent years the attention towards performance management has increased rapidly, due to its important potential implications ,relating to fair employment practices and the because of increasing concerns about employee productivity in the organization.(Pearce and Porter,1996 ) What ultimately lies is the end product which is performance which has to proper, therefore, in order to achieve that, the employees should be utilized to the full extent.

Organizations have to be organized and systematic in their approach, so that they can extract the exact performance from their employees which can help them, to create a balance between performance and organizational objectives.

Performance management : Overview

The primary function of performance management is inform employees about the job, the effort needed to satisfy the job title, work ethics and attitude expected from them.

Performance management not only strive to assist individuals and the organizational performance but also formulates a baseline for future planning and strategies. The following are the main purposes of PM:

Establish a common vision among the employees by communicating the Hospitality organisations objectives about customer service and satisfaction through a mission statement.

Allocating of individual performance target parallel to the overall organizational targets.

Generate a formal assessment of the progress with regards to the targets and where necessary provide training.

Periodic assessment to evaluate the PM effectiveness towards the organizations overall performance and development. (Coates,1994)

According to McEvoy and Cascio (1990), the employees of the organization should be informed about their duties i.e they should be made aware of what is expected from them and have effective orientation approaching effective performance. Hence, the purpose is to provide the employees with essential information about their job and motivate them to work towards organisational objectives and goals. Employees find it easier when objectives are set in order to achieve targets. Locke’s (1968) Goal setting theory suggests that employees’ performance can be determined by the conscious goal levels. The theory is summarized as follows:

High level of performance is produced when hard goals are set than easier ones.

Higher levels of output are achieved due to few hard goals.

Behaviour is highly regulated by intentions.

How widespread is performance management?

Performance management is commonly used in most of the Western countries. From 1970 to 1980, in US the percentage of Hospitality Organisations using performance management increased from 89 % to 94% (Locher and Teel, 1988). In UK, similar to US experience a rapid rise in the use of PM (Armstrong and Baron, 1998). Big sectors such as Financial Services and Hospitality Industry in the UK prominently use appraisal. Cully et al (1998) suggested that the development of PM was primarily towards middle managers and few professional industries but todays is widely applied to non-managerial works and professionals. Developing countries like China, India, Hong Kong and japan are readily accepting and using PM.

Objective of the study:

The aim of this study is to explore the operation and effects of performance management in Multinational Company. It will assess whether the appraisal process creates a positive response or negative response from employees and assess the subsequent impact on employee attitudes and behaviours. The appraisal process studied is that of a Multinational company in UK. The appraisal system of this company was designed to improve employee productivity. The findings, suggests that the performance management system is important in the Multinational company among employees and the organization. The study also explains how performance management systems have encouraged employee development in the organization considered. An over view of the existing literature relevant to this topic is considered in the following chapter.

Structure of the Dissertation:

Chapter 1: Introduction:

A brief introduction about the purpose of the research is given. A brief overview of performance management is presented. Then the research objective is mentioned. Then a brief description about the remaining chapters is given.

Chapter 2: Literature review:

Chapter 2 comprises of Literature review. It starts with the history of performance management system. It explains how performance management system was evolved in the industry and what its current importance in the industry is. The chapter then, explains 10 the various concepts relevant to the subject. The purpose and perception of appraisal system is explained. This is followed by the process of performance management. The literature review was designed to explain the main motive of the research, therefore accordingly the relevant literatures pertaining to the research was only considered.

Chapter 3: Research methods

Chapter 3 comprises of research method adopted in the research. This chapter gives an overview of the research and the research objective. It then explains the purpose of qualitative research adopted in the research. It then highlights the relationship between the study and the research method adopted. The majority of the chapter explains how the data was collected for the research and the process of data analysis.

Chapter 4: Analysis of Data

Chapter 4 comprises of the Analysis section. This section gives a brief introduction to the parameters on which the employees are tested in the organization and the scale on which they are judged are explained. This chapter then explains the findings of the research. This section broadly explains the reaction of the employees, of the appraisal system of their company.

Chapter 5: Conclusion

Chapter 5 concludes the research by stating briefly the findings of the research and sums up the whole research. The conclusion also suggests recommendations for future.

Chapter 2

LITERATURE REVIEW:

Performance management (PM) can be defined as the goal-oriented process that makes sure that the organisational processes work towards enhancing productivity of the employees and the organisation. It is an essential factor in achieving organisational objectives through measuring and improving the significance of the workforce. PM also consist of incentive goals and the corresponding incentive values which helps the relationship between performance and incentives.

The major focus in Business these days is performance management system. Even though the primary role of every HRM department is to contribute to performance, it is also important to provide training and performance appraisal. PM is a dynamic continuous cycle, unlike performance appraisal that arises at a specific time. In an organisation, every member or employee is a part of the on-going cycle. Every element of the PM system i.e training, appraisal and remuneration is associated and works towards the organisational effectiveness and each member works should be guided in accomplishing the set goals of the organisation. However, it is crucial to provide necessary training to improve the worker’s skills where needed as there is a direct co-relation between training and achieving organisational effectiveness. Additionally, there is a close relation between wage and performance in achieving organisational objectives.

As said by Robert J. Greene, CEO of Reward Systems Inc, “Performance management is the single largest contributor to organizational effectiveness. If you ignore performance management, you fail.” It is important that organisations to more strategic approach when dealing with performance appraisal. Therefore, the organisation should avoid “check the box, write a comment” ritual, and incorporate its mission statement and visions to the PM system.

Performance Appraisal

Performance Appraisal (PA) can be described as a formal process of assessment and evaluation of the employees on an individual as well as group level. The word “formal” is crucial, as it is important that the managers or supervisors review the worker or individual on a periodic basis. Even though, PA is only an element of performance management, it is very crucial for the success of performance management as it directly relates to the strategic plan set by the organisation. It is critical to evaluate team performance in many organisations where teams exist but PA in most companies concentrates on individuals. As emphasized, achievements, objectives and strategic plans set for development can be examined and evaluated by an effective PA system.

Although PA is somewhat considered as negative, unpopular and managers try to avoid the efficiency it provides. Not many Employers like conducting PA and workers dislike receiving them especially when it’s negative. Studies suggest that around 80% of workers are not satisfied with the PA system. Hence, if that is the case, why is it not yet eliminated? The sole reason why PA should not be eliminated is because it offers various opportunities to improve results and efficiency in an organisation which is important in today’s global marketplace which is highly competitive. Therefore, eliminating PA would be considered as a risky decision. Avoiding PA could also cause legal ramifications. Even after all the consideration, development of an effective PA system will always be an important function in management.

Uses of Performance Appraisal

In many organisations, an appraisal system assists in achieving numerous goals. However, in few firms PA is used in measuring and improving individual as well as organisational performance. The most common issue with PA is that a lot is expected from one form of PA system plan. For instance, a plan that is strategically designed to improve and develop employee skills may not be used in deciding wage increases. Although, if an appraisal plan is well designed it can be used in accomplishing the set objectives as well as performance.

Human Resource Planning

It is important to record data/information of employees in a firm so that it is easy to identify the potentials of who deserves to be promoted or have any area to improve. PA also helps in revealing if there is insufficient number of workers. An appraisal system should be designed and planned after considering the strengths and weaknesses of the HRM of the organisation.

Recruitment and Selection

Through the process of performance analysis, organisations can determine the performance potential on an applicant. Studies show that successful employees display specific behavioural traits while performing tasks. The data processed through performance evaluation help in setting standards for behavioural interviews. In the process of selection process, the employee rating can also be used as a variable against which test scores are compared.

Training and Development

Training and development is crucial for any employee as it acts as way to communicating what is expected and how. PA helps in drawing attention to these specific needs of training. For example, if an employee’s job involves the skill of creative writing and by the process of evaluation it reveals that he or she lacks in it or has poor knowledge about it, the employee will need appropriate training sessions. When managers of a firm lack the capability of administering disciplinary action, they need the necessary training to deal with this problem. Hence, identifying deficiencies and obstacles can be overcome by T&D sessions which develop and improve individual’s skills allowing them to perform better. An appraisal process does not train and develop individuals but determines the training needed by providing data.

Career Planning and Development

Career planning can be described as a never-ending cycle in which an individual sets profession goals and means to achieve them throughout his or her lifetime. However, career development is a more formal approach used by organisations. It involves recruiting suitable qualified and experienced people when required. PA can determine an employee’s potential through assessing its weaknesses and strengths. The data is also useful to counsel junior staff member and assisting in career plans.

Compensation Programs

PA evaluations help in making decisions dealing with wage or salary regulations. It is believed that organisations should reward employees with increase in pay when excellent performance is achieved. In order to increase performance, an organisation should implement well planned and designed PA systems and award the efficient workers. This not only increases performance but also keeps employees motivated to achieve better in future..

Internal Employee Relations

PA evaluation can provide crucial information used in making decision about the internal employee relations i.e promotion, demotion, transfers and dismisses etc. For example,

Performance appraisal data are also used for decisions in several areas of internal employee relations, including promotion, demotion, termination, layoff, and transfer. For example, an employee’s performance in one job may be useful in determining his or her ability to perform another job on the same level, as is required in the consideration of transfers. When the performance level is unacceptable, demotion or even termination may be appropriate.

Assessment of Employee Potential

Some organizations attempt to assess an employee’s potential as they appraise his or her job performance. Although past behaviours may be a good predictor of future behaviours in some jobs, an employee’s past performance may not accurately indicate future performance in other jobs.

The best salesperson in the company may not have what it takes to become a successful district sales manager, where the tasks are distinctly different. Similarly, the best systems analyst may, if promoted, be a disaster as an information technology manager. Overemphasizing technical skills and ignoring other equally important skills is a common error in promoting employees into management jobs. Recognition of this problem has led some ¬rms to separate the appraisal of performance, which focuses on past behaviour, from the assessment of potential, which is future-oriented.

Performance Appraisal Process

As shown in Figure 8.1, the starting point for the PA process is identifying speci¬c performance goals. An appraisal system probably cannot effectively serve every desired purpose, so management should select the speci¬c goals it believes to be most important and realistically achievable. For example, some ¬rms may want to stress employee development, whereas other organizations may want to focus on pay adjustments. Too many PA systems fail because management expects too much from one method and does not determine speci¬cally what it wants the system to accomplish.

The next step in this ongoing cycle continues with establishing performance criteria (standards) and communicating these performance expectations to those concerned. Then the work is performed and the supervisor appraises the performance. At the end of the appraisal period, the appraiser and the employee together review work performance and evaluate it against established performance standards. This review helps determine how well employees have met these standards, determines reasons for de¬ciencies, and develops a plan to correct the problems. At this meeting, goals are set for the next evaluation period, and the cycle repeats.

Establish Performance Criteria (Standards)

There is an old adage that says “What gets watched gets done.” Therefore, management must carefully select performance criteria as it pertains to achieving corporate goals. The most common appraisal criteria are traits, behaviours, competencies, goal achievement, and improvement potential.

Traits

Certain employee traits such as attitude, appearance, and initiative are the basis for some evaluations. However, many of these commonly used qualities are subjective and may be either unrelated to job performance or dif¬cult to de¬ne. In such cases, inaccurate evaluations may occur and create legal problems for the organization as well. This was the case in Wade v Mississippi Cooperative Extension Service where the circuit court ruled: In a performance appraisal system, general characteristics such as leadership, public acceptance, attitude toward people, appearance and grooming, personal conduct, outlook on life, ethical habits, resourcefulness, capacity for growth, mental alertness, and loyalty to organization are susceptible to partiality and to the personal taste, whim, or fancy of the evaluator as well as patently subjective in form and obviously susceptible to completely subjective treatment by those conducting the appraisals.

At the same time, certain traits may relate to job performance and, if this connection is established, using them may be appropriate. Traits such as adaptability, judgment, appearance, and attitude may be used when shown to be job-related.

Behaviours

When an individual’s task outcome is dif¬cult to determine, organizations may evaluate the person’s task-related behaviour or competencies. For example, an appropriate behaviour to evaluate for a manager might be leadership style. For individuals working in teams, developing others, teamwork and cooperation, or customer service orientation might be appropriate. Desired behaviours may be appropriate as evaluation criteria because if they are recognized and rewarded, employees tend to repeat them. If certain behaviours result in desired outcomes, there is merit in using them in the evaluation process.

Competencies

Competencies include a broad range of knowledge, skills, traits, and behaviours that may be technical in nature, relate to interpersonal skills, or are business-oriented. Some managers recommend that cultural competencies such as ethics and integrity be used for all jobs. There are also competencies that are job-speci¬c. For example, analytical thinking and achievement orientation might be essential in professional jobs. In leadership jobs, relevant competencies might include developing talent, delegating authority, and people management skills. The competencies selected for evaluation purposes should be those that are closely associated with job success.

Research conducted by the University of Michigan Business School and sponsored by the Society for Human Resource Management (SHRM) and the Global Consulting Alliance determined that success in HR is dependent on competency and speci¬c skills in the following ¬ve key areas:

Strategic contribution: Connecting ¬rms to their markets and quickly aligning employee behaviours with organizational needs.

Business knowledge: Knowing how businesses are run and translating this into action.

Personal credibility: Demonstrating measurable value; being part of an executive team.

HR delivery: Providing efficient and effective service to customers in the areas of staffing, performance management, development, and evaluation.

HR technology: Using technology and Web-based means to deliver value to customers.

Goal Achievement

If organizations consider ends more important than means, goal achievement outcomes become an appropriate factor to evaluate. The outcomes established should be within the control of the individual or team and should be those results that lead to the ¬rm’s success. At upper levels, the goals might deal with ¬nancial aspects of the ¬rm such as pro¬t or cash ¬‚ow, and market considerations such as market share or position in the market. At lower organizational levels, the outcomes might be meeting the customer’s quality requirements and delivering according to the promised schedule.

To assist the process, the manager needs to provide speci¬c examples of how the employee can further his or her development and achieve speci¬c goals. Both parties should reach an agreement as to the employee’s goals for the next evaluation period and the assistance and resources the manager needs to provide. This aspect of employee appraisal should be the most positive element in the entire process and help the employee focus on behaviour that will produce positive results for all concerned.

Improvement Potential

When organizations evaluate their employees’ performance, many of the criteria used focus on the past. From a performance management viewpoint, the problem is that you cannot change the past. Unless a ¬rm takes further steps, the evaluation data become merely historical documents. Therefore, ¬rms should emphasize the future, including the behaviours and outcomes needed to develop the employee, and, in the process, achieve the ¬rm’s goals. This involves an assessment of the employee’s potential. Including potential in the evaluation process helps to ensure more effective career planning and development. You should remember that the evaluation criteria presented here are not mutually exclusive. In fact, many appraisal systems are hybrids of these approaches.

PERFOMANCE MANAGEMENT OBJECTIVES

The most known purpose of performance management is to improve performance of individuals. Performance management has basically two important purposes, from an organizational point of view: The maintenance of organizational control and the measurement of the efficiency with which the organization’s human resources are utilized. (Cummings and Shwab.1973 pg. 55) but ,there are also a variety of other declared purposes and desired benefits for appraisal, including: Improving motivation and morale of the employees, clarifying the expectations and reducing the ambiguity about performance, determining rewards, identifying training and development opportunities, improving communication, selecting people for promotion, managing career growths, counselling, discipline, planning remedial actions and setting goals and targets.(Bratton and Gold,2003:284, Bowles and Coates,1993).

However, according to Armstrong and Baron, there is rise in more harder and judgmental forms of performance management than softer and developmental approaches. Therefore there has been a shift in performance management away from using it for career planning and identifying future potential and increased use of it for improving current performance and allocating rewards.(Redman and Wilkinson,2001: pg.60) Performance management can be used as an effective tool to improve employees’ job performance by identifying strengths and weaknesses of the employees and determining how their strengths can be best utilized within the organization and overcome weakness over the period of time. The next question that comes into mind is that who gets more out of the appraisal process the organization or the employees?

Who obtains more gain out of it? Either the organization or the employees or both of them. The following study gives us an explicit understanding of the different purposes of performance management in the organizational context and highlights the different key features of performance management. It also helps us to know who benefits from the appraisal system.

Mcgregor (1972) in his paper, “An uneasy look at performance management” said that formal performance management plans are designed to meet three needs, one of the organizations and one two for the individual: The following are his ideas about PA. Firstly, PA provides systematic verdict to back up salary increases, promotions, transfers, demotions or terminations. Secondly, PA forms a means of telling subordinate how he is doing, how his performance is towards the organization and suggesting the changes in his behaviour, attitudes, skills or job knowledge improvements ,they let him know “where he stands” with the boss. Thirdly, PA is increasingly being used as a basis for coaching and counselling of the individual by the superior.

Similarly, Murphy and Cleveland (1995) studied how performance management is used in organization. They compared ‘between individual’ and ‘within-individual’ performances. The ‘between individual’ performances was able to provide information to make decisions regarding promotion, retention and salary issues. The ‘within individual’ performances was useful in identifying the training and development needs which includes performance feedback, identifying the strengths and weaknesses of employees as well as determining transfers. Another use of performance management was found out through this study was that of ‘ system maintenance’ which was used to identify the organizational goals and objectives, to analyze the organizational training needs and to improve the personnel planning system of the organization. Finally, documentation purposes are to meet the legal requirements by documenting personnel decisions and conducting validation research on the performance management tools.

Bowles and Coates (1993) conducted a postal survey of 250 West Midland hospitality companies in June 1992, where the organizations were asked questions pertaining to the use of PM in the organization. These questions included the perceived function of PA in the management of work, its strengths and weaknesses, the role of commitment in the management of work. Through their survey they found out that PA was beneficial in the following ways:

PA was beneficial in developing the communication between employer and employee,

It was useful in defining performance expectations and

Identification of training needs.

An important study in the field of employee’s performance management program was conducted by Redman et al (2000) on National Health Service Trust hospital (UK). In this study, they explained the effectiveness of performance management in public sector. Their research was mainly to check in what context does performance management hold an upper hand in proving its worth in the public sector. The results however were pretty surprising. The results obtained showed that performance management was considered as ‘organizational virus’. Nelson (2000) adds that PA largely helps the employee to have a focused and fixed approach towards the target goal. He elaborates that appraisal system acts like a boosting factor for the employee to do his job well. It recognizes the employee’s capabilities in order to achieve the given objective and function. It also helps in knowing the shortcomings of the employees and acts like an important element, for career development and planning.

How is PA conducted? Shudnt b a question

Performance management system should not merely be a checklist of ‘do’s and don’ts ‘, it should provide a wider perspective to the employees. Performance management has to be designed in such a way that, both, the employee and the organization can obtain fruitful results from it. A performance management system should be made in such a way that the organization can ensure proper accomplishment of goals; at the same time the employee can expect clear and concise work expectations. Knowing what is expected from them is the first step in helping one cope better with the stress usually associated with lack of clear divisions. (Baker, 1984)

To make performance management effective, our criteria need to be present. These are-

Employees should be actively involved in the evaluation and development process

Bosses need to enter PM with the constructive and helpful attitude.

Realistic goals must be mutually set.

Bosses must be aware, and have knowledge of the employee’s job and performance. (Baker, 1984)

Cole (1988) presented the following appraisal process framework. This framework explains how the appraisal process is carried out. First, the appraisal form is completed by the manager and the employee then a formal interview is explained where a job improvement plan is established which gives three outcomes action agreed, promotion or transfer or salary review.

FIG. 3 PA PROCESS

Performance Appraisal Methods

Managers may choose from among a number of appraisal methods. The type of performance appraisal system used depends on its purpose. If the major emphasis is on selecting people for promotion, training, and merit pay increases, a traditional method, such as rating scales, may be appropriate. Collaborative methods, including input from the employees themselves, may prove to be more suitable for developing employees.

360-Degree Feedback Evaluation Method

The 360-degree feedback evaluation method is a popular performance appraisal method that involves evaluation input from multiple levels within the ¬rm as well as external sources.

The 360-degree method is unlike traditional performance reviews, which provide employees with feedback only from supervisors. In this method, people all around the rated employee may provide ratings, including senior managers, the employee himself or herself, supervisors, subordinates, peers, team members, and internal or external customers.

As many as 90 percent of Fortune 500 companies use some form of 360-degree feedback for either employee evaluation or development. Many companies use results from 360-degree programs not only for conventional applications but also for succession planning, training, and professional development. Unlike traditional approaches, 360-degree feedback focuses on skills needed across organizational boundaries. Also, by shifting the responsibility for evaluation to more than one person, many of the common appraisal errors can be reduced or eliminated. Software is available to permit managers to give the ratings quickly and conveniently. The 360-degree feedback method may provide a more objective measure of a person’s performance. Including the perspective of multiple sources results in a broader view of the employee’s performance and may minimize biases that result from limited views of behaviour.

Having multiple raters also makes the process more legally defensible. However, it is important for all parties to know the evaluation criteria, the methods for gathering and summarizing the feedback, and the use to which the feedback will be put. An appraisal system involving numerous evaluators will naturally take more time and, therefore, be more costly. Nevertheless, the way ¬rms are being organized and managed may require innovative alternatives to traditional top-down appraisals.

According to some managers, the 360-degree feedback method has problems. Ilene Gochman, director of Watson Wyatt’s organization effectiveness practice, says, “We’ve found that use of the 360 is actually negatively correlated with ¬nancial results.” GE’s former CEO Jack Welch maintains that the 360-degree system in his ¬rm had been “gamed” and that people were saying nice things about one another, resulting in all good ratings. Another critical view with an opposite twist is that input from peers, who may be competitors for raises and promotions, might intentionally distort the data and sabotage the colleague. Yet, since so many ¬rms use 360-degree feedback evaluation, it seems that many ¬rms have found ways to avoid the pitfalls. The biggest risk with 360-degree feedback is con¬dentiality. Many ¬rms outsource the process to make participants feel comfortable that the information they share and receive is completely anonymous, but the information is very sensitive and, in the wrong hands, could impact careers.

Critical Incident Method

The critical incident method is a performance appraisal method that requires keeping written records of highly favourable and unfavourable employee work actions. When such an action, a “critical incident,” affects the department’s effectiveness signi¬cantly, either positively or negatively, the manager writes it down. At the end of the appraisal period, the rater uses these records along with other data to evaluate employee performance. With this method, the appraisal is more likely to cover the entire evaluation period and not focus on the past few weeks or months.

Essay Method

The essay method is a performance appraisal method in which the rater writes a brief narrative describing the employee’s performance. This method tends to focus on extreme behaviour in the employee’s work rather than on routine day-to-day performance. Ratings of this type depend heavily on the evaluator’s writing ability. Supervisors with excellent writing skills, if so inclined, can make a marginal worker sound like a top performer. Comparing essay evaluations might be dif¬cult because no common criteria exist. However, some managers believe that the essay method is not only the most simple but also an acceptable approach to employee evaluation.

Work Standards Method

The work standards method is a performance appraisal method that compares each employee’s performance to a predetermined standard or expected level of output.

Standards re¬‚ect the normal output of an average worker operating at a normal pace. Firms may apply work standards to virtually all types of jobs, but production jobs generally receive the most attention. An obvious advantage of using standards as appraisal criteria is objectivity. However, in order for employees to perceive that the standards are objective, they should understand clearly how the standards were set. Management must also explain the rationale for any changes to the standards.

Ranking Method

The ranking method is a performance appraisal method in which the rater ranks all employees from a group in order of overall performance. For example, the best employee in the group is ranked highest, and the poorest is ranked lowest. You follow this procedure until you rank all employees. A difficulty occurs when all individuals have performed at comparable levels (as perceived by the evaluator). Paired comparison is a variation of the ranking method in which the performance of each employee is compared with that of every other employee in the group. A single criterion, such as overall performance, is often the basis for this comparison. The employee who receives the greatest number of favourable comparisons receives the highest ranking.

Forced Distribution Method (Bell Curve analysis)

The forced distribution method of performance appraisal requires the rater to assign individuals in a work group to a limited number of categories, similar to a normal frequency distribution. The purpose of forced distribution is to keep managers from being excessively lenient and having a disproportionate number of employees in the “superior” category. Forced distribution systems have been around for decades and ¬rms such as General Electric, Cisco Systems, EDS, Hewlett-Packard, Microsoft, Pepsi, Caterpillar, Sun Microsystems, Goodyear, Ford Motor, and Capital One use them today. Proponents of forced distribution believe they facilitate budgeting and guard against weak managers who are too timid to get rid of poor performers. They think that forced rankings require managers to be honest with workers about how they are doing.

The forced distribution systems tend to be based on three levels. In GE’s system, the best performers are placed in the top 20 percent, the next group in the middle 70 percent, and the poorest performing group winds up in the bottom 10 percent. The underperformers are, after being given a time to improve their performance, generally let go. If any of the underperformers are able to improve their performance, you might wonder if any in the 70 percent group would get nervous!

Although used by some prestigious ¬rms, the forced distribution system appears to be unpopular with many managers. In a survey of HR professionals, 44 percent of respondents thought their ¬rm’s forced ranking system damages morale and generates mistrust of leadership. Some believe it fosters cutthroat competition, paranoia, and general ill will, and destroys employee loyalty. A Midwestern banker states that his company “began a rank-and-yank system that ¬‚ies directly in the face of the ‘teamwork’ that senior management says it wants to encourage. Don’t tell me I’m supposed to put the good of the team ¬rst and then tell me the bottom 10 percent of us are going to lose our jobs because, team be damned, I’m going to make sure I’m not in that bottom 10 percent.”

Critics of forced distribution contend that they compel managers to penalize a good, although not a great, employee who is part of a superstar team. One reason employees are opposed to forced ranking is that they suspect that the rankings are a way for companies to rationalize ¬rings more easily.

Behaviourally Anchored Rating Scale Method

The behaviourally anchored rating scale (BARS) method is a performance appraisal method that combines elements of the traditional rating scales and critical incident methods; various performance levels are shown along a scale with each described in terms of an employee’s speci¬c job behaviour.

Table 8.1 illustrates a portion of a BARS system that was developed to evaluate college recruiters. Suppose the factor chosen for evaluation is the Ability to Present Positive Company Image. On the very positive end of this factor would be “Makes excellent impression on college recruits. Carefully explains positive aspects of the company. Listens to applicant and answers questions in a very positive manner.” On the very negative end of this factor would be “Even with repeated instructions continues to make a poor impression. This interviewer could be expected to turn off college applicants from wanting to join the ¬rm.” As may be noted, there are several levels in between the very negative and the very positive. The rater is able to determine more objectively how frequently the employee performs in each de¬ned level.

A BARS system differs from rating scales because, instead of using terms such as high, medium, and low at each scale point, it uses behavioural anchors related to the criterion being measured. This modi¬cation clari¬es the meaning of each point on the scale and reduces rater bias and error by anchoring the rating with speci¬c behavioural examples based on job analysis information. Instead of providing a space for entering a rating ¬gure for a category such as Above Expectations, the BARS method provides examples of such behaviour. This approach forced facilitates discussion of the rating because it addresses speci¬c behaviours, thus overcoming weaknesses in other evaluation methods. Regardless of apparent advantages of the BARS method, reports on its effectiveness are mixed. A speci¬c de¬ciency is that the behaviours used are activity oriented rather than results oriented. Also, the method may not be economically feasible since each job category requires its own BARS. Yet, among the various appraisal techniques, the BARS method is perhaps the most highly defensible in court because it is based on actual observable job behaviours.

Results-Based System

The manager and subordinate jointly agree on objectives for the next appraisal period in a results-based system, in the past a form of management by objectives. In such a system, one objective might be, for example, to cut waste by 10 percent. At the end of the appraisal period, an evaluation focuses on how well the employee achieved this objective.

Management benefits

While PM cannot solve every problem, it has the potential to address many common management concerns. If it is properly used, with invested time on it, and a cooperative relationship, PM can:

Reduce the need to be involved in everything that goes on.

Save time by helping employees make decisions on their own by ensuring they have the necessary knowledge and understanding to make decisions properly.

Reduce time-consuming misunderstanding among staff about who is responsible for what.

Reduce the frequency of situations where you do not have the information you need when you need it.

Reduce mistakes and errors (and their repetition) by helping you and your staff identify the causes of errors or inefficiencies.

Identify individual training and development needs.

Build closer working relationships based on mutual trust and respect.

Provide better feedback to individuals about their performance and progress based on mutual understanding of needs.

(Armstrong, 1994:237)

PM is an investment up front so that managers can just let employees do their jobs. They will know what they are expected to do, what decisions they can make on their own and how well they have to do their jobs.

Employee benefits

It can provide scheduled forums for discussion of work progress, so employees receive the feedback they need to help assess their accomplishments and to know where they stand. That regular communication ensures there are no surprises at the end of the year. Since performance helps employees understand what they should be doing and why, it gives them a degree of empowerment-ability to make day-to-day decisions.

It helps in figuring out how to improve performance, even if there are no current performance problems. This provides an opportunity to help employees develop new skills and is more likely to identify barriers to better performance, such as inadequate resources.

Employees benefit from better understanding their jobs and their job responsibilities. If they know their limits, they can act more freely within those parameters.

Organizational benefits

When people in the organization understand how their work contributes to the success of the company, morale and productivity usually improve. A company can have all of its parts aimed at the same bulls-eye. PM is the key to making these links clear to everyone.

Summary of literature review

Performance management was evolved in the third century in China in the Wei dynasty. (Weise and Buckley, 1998) PA was seen in industry in the early 1800.In UK; Randell (1994) observed it in Robert Owens ‘silent monitors’. In US, an Army General introduced it in for evaluation of his army men. Earlier, PA was used only for administrative purposes like retention, discharges, promotion and salary administration.

The linkage of human resource management and performance management is shown in the research. Huber (1980) rightly puts it that in the context of human resource management, formal appraisal serves three main purposes: 1. Evaluation, 2. development and 3. Employee protection. Richard & Johnson (2004) also suggest in this context that organizations need to match up with the HR framework, objectives and practices up to holistically corporate strategy in order to achieve superior performance in the organization. The research explained why a formal performance management was necessary in the organization. PA gives an employee a proper understanding of his duties and tasks towards his organization. It helps the organization to evaluate employees on a common ground and gives scope for retention, salary decisions, promotions, training and development programs etc. (Jacobs, Kafry & Zedeck, 1980) Studies by McGregor, Murphy et al, Bowles and Coates etc explained the various purposes of performance management.

It was seen that performance management can be used as a motivational tool. The Behaviour Maintenance Model presented by Cummings and Swab in 1973, which explained how people become motivated to perform effectively in the organization. Similarly, Evans (1986) also presented a model which explained how individual and manager decide a goal and how this goal largely influences the individual’s persistence, attention and the strategy he/she adopts to complete the goal. These factors determine his actual performance. When the individual’s tasks are achieved then this actual performance is compared with the original goal. Locke (1968) introduced the Goal setting theory which emphasizes the importance of conscious goal levels as determinants of actual performance. Goal setting theory is summarized as follows- a. hard goals produce a higher level of performance than easy goals, b. some specific hard goals produce higher level of output; c. behavioural intentions regulate choice behaviour.

Feedback is another important element in the field of performance management. the feedback which an individual receives is the report of the performance achieved by him/her. 360 degree feedback was introduced which refers to feedback received by an individual through everyone in the organization.360 degree feedback includes feedback from peers, sub-ordinates and customers. It is also known as ‘multi-source feedback’.

Chapter 3

RESEARCH METHODOLOGY

This section would help understand and explain the reasons behind the choice of the methodology I have adapted for this research. The choice of research methodology depends on the nature of study topic (Creswell, 1994).

Research objective

The research objective was to understand the effectiveness of Performance management process on the employees. The main purpose of this dissertation was, to study the employee’s ability to perform well in the industry and to check the impact of performance feedback over their job.

Research Philosophy

According to Bryman (2004, p. 453), a paradigm is a set of beliefs that prescribes how research in a specific discipline should be implemented and how the results should be interpreted. ‘Paradigm Wars’ (Tashakkori & Teddlie, 2010) describes how the mono‐method approach to scientific study was challenged in the 1960s, with the resulting approach being a mixture of qualitative and quantitative research and thus a hybrid of post‐positive and constructivist beliefs. In the 1990s, mixed‐method approaches that encompassed both qualitative and quantitative studies became highly popular (Creswell, 2003). In response to this, a third set of beliefs eventually emerged: the pragmatic paradigm. 

Pragmatists associate the paradigm to the nature of the research questions developed (Creswell, 2003). As it is not possible to conduct research in a single‐dimensional approach, a ‘what works’ tactic allows researchers to focus on questions that cannot be handled via a purely quantitative or purely qualitative approach. Darlington and Scott (2002) add to this argument, asserting that many decisions that are made while designing a research study are not based on decisions that are philosophical in nature, but on practical concerns related to the type of methodology that will be best suited to the study. Essentially, therefore, the pragmatic paradigm rejects a strict choice between post positivism and constructivism (Creswell, 2003).  

Tashakkori and Teddlie (1998)) and Creswell (2003) view the pragmatic paradigm as a philosophy that supports an intuitive approach to research and scientific study. Adopting this approach allows scientists to make informed decisions about which methods to apply, based on their individual value systems (Creswell, 2003). As such, it may be claimed that the pragmatic paradigm is suitable for social and management research as well as for scientific research, as it offers a harmonious combination of quantitative and qualitative approaches suitable for ‘practitioner‐based’ research.

This research was guided by the philosophy of pragmatism. Pragmatic research reflects the researcher’s innate disposition toward systematic enquiry. It also allows a flexible approach to the investigation, accommodating an outcome‐and adaptive‐oriented enquiry method (Johnson & Onwuegbuzie, 2004) and allowing for the use of mixed methods (Calori, 2000; Cherryholmes, 1992; Creswell, 2003). This kind of developmental and iterative approach helps the researcher to engage with issues as they emerge. In addition, it allows for both qualitative and quantitative data and analysis to be used.

Research methods

Quantitative Vs Qualitative

Denzin and Lincoln (2000) say that, Qualitative research generates the socially constructed nature of reality, the intimate relationship between the researcher and what is studied, and the situational constraints that shape inquiry. They seek answers to questions that stress how social experience is created and given meaning. In constraint, quantitative studies emphasize the measurement and analysis of casual relationships between variables, and not processes. Qualitative research thus has a humanistic element to it, whereas Quantitative research is grounded in mathematical and statistical knowledge. (Gephart,2004) Qualitative research is a representation of peoples mind and, it is interpretative and highly inductive. (Van Maanen, 1998)

Another interesting difference between the two methods is, that quantitative techniques require the researcher to produce and verify hypothesis and reduce entities into simple variables for the benefit of understanding and generalizing. Also, it assumes that all occurrences are independent events that have no connection to the surrounding environment. On the other hand, qualitative research attempts to prove and understand phenomena rather than explaining the cause and effect relationship. Further, it believes that all occurrences are linked in some way to the surrounding environment. (Easterby smith et al, 2002)

Why qualitative?

The goal of qualitative research is to understand the research topic more explicitly, from the perspective of the interviewee, and to understand how and why they have arrived at this perspective. (Gephart, 2004) adds that, qualitative research methodology largely depends on recounting, understanding and explaining complex or interrelated phenomena, namely, the methodology is to understand multi-dimensional, dynamic picture of a subject of study. Qualitative research method was ideal for this project, because it gave a deeper understanding of the, given theories and helped in obtaining an edge in knowing the concepts well. As the data obtained through qualitative is the interviewees own responses, it helps in gaining a broader perspective about the topic. The exact responses pertaining to the literature review helps in linking the data well.

Research Approach:

The approaches used for data collection for the research are classified as follows:

Primary data:

The research deals with the reaction of the employees after being appraised. Hence, it was necessary to conduct the research through Likert Scale questionnaire. Cooper and Schindler (2001) suggest in this context, that if the research is an exploratory study, use of questionnaire is more appropriated for the researcher to understand and get an in depth view of the topic being explored.

Questionnaire:

According to Zikmund (2003), questionnaires are a simple yet effective research tool. They are cost effective and reduce distortions in data resulting from any ‘interviewer biases’ introduced during the process. Since the research aimed to discover deeply held personal attitudes and beliefs, some of which may be sensitive in nature, the anonymous nature of the questionnaire allows respondents to express their inner beliefs, attitudes, and perceptions freely.  

Mode of Questionnaire Development

Closed questions were included in the questionnaire to determine the context of the research by asking general questions like age, gender, and occupation. Multiple choice questions were employed with Likert scales so respondents could indicate the ‘intensity’ of their attitude towards each aspect of their job. The Likert scale had a range of options from ‘Strongly Agree’ to ‘Strongly Disagree’. This gave respondents the ability to make fine distinctions between attitudes (Dundas, 2004). The questionnaire was structured so that general information was sought first before moving to questions that probed deeper aspects of job contentment and loyalty (Arab, 2007).  

Structure of the Questionnaire

The questionnaire was divided into four sections. A detailed explanation, and a copy of the questionnaire, is available in Appendix.

Part (A) Demographic Information

This part sought respondent’s demographic details: age, gender, the state they work for, their experience and qualifications.  

Part (B) HR Practices

This section encompasses nine questions assessing HR functionality and its effectiveness adapted from (Edgar & Geare, 2005). The Likert covered four areas of HRM practice: good and safe working conditions, training and development, equal employment opportunities, and recruitment and selection. These have been identified as likely to have the greatest impact on employee behaviour and attitudes (Guest, 2001).  

Part (C) Job Satisfaction

This section draws on the Minnesota Satisfaction Questionnaire (Weiss, Davis, & England, 1967). The participants evaluate their level of satisfaction in their current position within their organisation.  

Part (D) Leadership

The questionnaire created by Pattern (1995) is utilised for this section, but also incorporates features of other studies such as those of Clabaugh, Monroe, and Soutar (2000) and Hiltebeitel, Leauby, and Larkin (2000). A Likert scale was used by participants to grade their responses from A (strongly agree) to C (not sure).

Data analysis:

For the data collected in this research through interviews, a framework given by Bryman and Bell (2003) was used. The framework is known as Theoretical sampling which is explained as follows.

Theoretical Sampling:

It is a process of data collection for generating theory where the researcher collects and analyzes data and decides what data to collect next and where to find it, in order to develop his theory as it emerges (Bryman and Bell, 2003). Thus, data was collected from various sources until there was a theoretical saturation. The same content leads to descriptive content analysis which is discussed in detail in the next section (Bryman and Bell, 2003, p.330).

Figure – Theoretical sampling

Secondary research

This has been provided through the available research and various reports. This was done by accessing the library and books, journals, market reports and internet extensively.

Limitations of qualitative research:

The big problem with qualitative data is how to condense highly complex and context-bound information into a format which tells a story in a way that is fully convinced to the reader.” (Cassell and Symon, 2004) Qualitative research methods are descriptive. Also, they are subjective in nature which always leads to a kind of research bias. Sometimes, the interviewees were not willing to open up much, towards some question. This would either lead to incomplete information or incorrect information.

Summary of Research methods:

The research method was done keeping the research objective in mind. The research method adopted for this research was Qualitative research method. Qualitative research method helps to understand multi-dimensional, dynamic picture of a subject of study. The research tactics adopted for the research were done in the form of primary data source and secondary data source. Primary data was obtained in the form of structured interviews. The questions designed for these interviews were open ended. The secondary data was obtained in the form of reports, books, journals etc. A theoretical sampling method of Bryman and Bell (2003) was adopted for data analysis method.

Participating Company

As a part of this dissertation, the best option suited is Indian Hotel Company Limited (IHC) and its subsidiaries which are collectively known as Taj Hotels Resorts and Palaces and is recognised as one of Asia’s largest and finest hotel company. Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East. The group is headquartered in Mumbai, India and employs more than 20,000 employees. The company recorded revenues of US$ 317.34 Million in FY2011-2012. Spanning across the countries, gracing important industrial towns and cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, Taj operates in the luxury, premium, mid market and value segments of the market. Each Taj hotel offers luxury and superior service, the apogee of Indian hospitality, vantage locations, modern amenities and business facilities. IHCL operates in the luxury, upper upscale, upscale and value segments of the market through the following: Taj (luxury full-service hotels, resorts and palaces), Taj Exotica (luxury leisure resort and spas), Taj Safari (wildlife resorts), Vivanta by Taj (Upper upscale hotel), The Gateway Hotel (upscale/mid-market full service hotels and resorts), Ginger (smart basics), Jiva Spas and Taj Sats (Air Catering).

Sample size, Audience and Limitations

As part of this dissertation I have been given permission to do a questionnaire survey with the current employees (include Sample size) of the company who can give a better insight to the topic, Effectiveness of performance management at Taj Hotels and resorts. The audiences who preferred to be unnamed are the various level employees of Taj ranging from Managers/supervisors to team leaders. All the participants have been a part of various performance management trainings and have a better know-how about the performance management measures taken by the company. Choosing an Indian company as a part of this dissertation resulted in many limitations in the research process. The limited number of respondents that were exposed to the survey questionnaire extends only limited statistical power to the study. The questionnaire participants were contacted through emails and all the conversation that took place was through emails only. The scope of interviewing the managers and supervisors in the dissertation proposal was de-scoped, purely on the basis that a formal interview was not possible because of the company location; instead questionnaire survey was carried out. This also become valid limitation for this dissertation as you have limited time to interact with the employees through webcams and the output is extremely critical and time-bounded. Also keeping in mind the dissertation submission has limited time for completion, it is vital I am able to fulfil the objectives.

Reliability and validity

According to (Bryman, 2008) there are four elements of ethical principles that are needed to be respected at all times. a) Harm to participants contributing to the research: this will be eliminated by keeping the names anonymous at all times to avoid any stress to the representatives, harm to participants development and loss of self-esteem, b) Lack of informed consent: this is a primary issue, and author has to ensure that all relevant information with regards to questionnaire is clearly mentioned and no information is hidden with the outcome of questionnaire or research material. Therefo