Performance Measurement Practices
Discuss about the Effect of Performance Appraisal System.
In the contemporary scenario of competitive business markets, employees and workers are considered as intangible assets of the organization. Overall development and functionality of the organizations rely upon the potential and work efficiency of the employees. The direct or indirect contribution of the employees in various operational practices facilitates the company in gaining a competitive edge from the market. Therefore, the organizations are obligated to emphasize over the implications of performance measurement practices(Brignall & Modell, 2010).The term “Performance Measurement” can be defined as collecting, analyzing, evaluating and reporting of performance information about an individual, group, team or system. Incorporation of such practices assists the organizations in investigating the efficiency and profitability of the ongoing organizational operations. Furthermore, it also helps the organization in evaluating, examining and implementing the development strategies to gain the maximum profitable outcome.
Considering the following context, this study is undertakento make comprehensive discussions over the performance measurement practices. The orientation of this study is to make enlightening discussions over the performance measurement actions by aligning it with the contemporary execution of CERA. Along with this, the projected report will also discuss the significance of performance measurement in the overall and sustainable development of an organization. Inclusive analysis of performance traits of CERA will further explore the limitations associated with the present managerial strategies. Furthermore, some recommendations are also drafted for CERA on the basis of limitations explored. Overall, this study is formulated in a potential manner to explore all the findings related to performance measurement in CERA.
Performance measurement is an old concept which has renewed its importance for the continued increment in efficiency and profit of an organization. Processes and structure of any organization need to be evaluated to ensure the success of that organization.Performance measurement is the procedure of analyzing and reporting the performance of any individual, group or system during a period of time (Kaplan& Norton, 2013). All the processes and strategies are studied to check if the output is meeting the required benchmark and the project success. Standards based on which the final report are compared to check if the project is meeting the standards or not are called project success criteria.The allocation of resources and further decision making is dependent upon the report of previous performance measurement of the individual or the group. An effective and efficient performance measurement system should be clearly defined, accurate and measurable for further processing. Instead of orienting the measurement in a single direction, it should be multidimensional so that all the parameters can be analyzed effectively.
Factors affecting the Selection of Suitable Measurement Practice
The selection of suitable measurement practice is dependent upon various factors which include their further use and the requirement. Three type of most common methods used to measure performance is management by objectives, graphic rating scales, and forced ranking. Graphic rating scale is the least time-consuming method which scales the employees based on the timeline and quality of their job duties. For employees at managerial positions, management by objectives is preferred and a set of goals along with a timeline is defined by the manager and the performance of the employee is measured based upon the goals completed within the defined timeline. Forced ranking is rarely used in companies as it creates a very competitive work environment and the performance of an employee is compared with another employee instead of comparing it with a benchmark.
The work environment has changed to more knowledge-based, as a result, the human resource of an organization is generating more innovative ideas and are bringing efficiency to the system. In this scenario, Israel Tobin has been appointed as new Human Resource Manager of Civil Engineering & Research Associates. Mark French is the Chief Executive Office of CERA. CERA was now also focusing on the human resource management apart from just recruitment and allocation of the resources. They have been remodeling the HR structure into more ordered, organized and planned to ease the work design and for diversity management. Similar to most of the companies, CERA is planning for the annual round of appraisal for their employees as the year-end is close. In respect to evaluation, management by objectives scheme called PPR (Performance Planning & Review) is used.In beginning of theyear each person set their goals and objectives along with a timeline for each goal and objective. Their performance towards achieving the set goals is reviewed at mid-year and once close to the appraisal which is the final review. Mr. Mark has introduced bonus type arrangement where a cash reward was given to the team depending upon the scale to which it exceeded the goals set at beginning of the project. Rachel, a team manager, was not satisfied with the system as the system was not clearly able to distinguish the extraordinary performers of their areas. It was also reported that people that employees were adjusting their efforts and eagerness to work accordingly and the misalignment was causing tension in their workplace. The management had realized the weakness of the measurement system and that their performance measurement needed to be altered for realigning the organization appraisal system and work culture. The company is now looking for alternate suitable measurement options which can be adapted without turning down the employees expectations.
Performance Measurement System
The skilled and talented workforce is the backbone of every organization. Due to the increasing competency in the market, organizations have realized the importance of having right people. One of the top challenges of HRM structure of any organization is retention, engagement and a healthy work culture. The efficiency of employees tends to increase when they are challenged and appreciated from time to time. An appraisal is the most sought-after solution to appreciate the performance of the employees by using a suitable measurement system. Annual or quarterly reviews ensure that employees need to work hard or the will face a poor evaluation.
Measurement of every process-efficiency provides a rational basis for selecting the areas which require business improvisation at priority. This also evaluates the strong points and weak links of the structure which can be further used for decision making. The best practices which are identified during the measurement can also be incorporated in other areas as and when required. Quantitative measurement makes it easier to justify incentives instead of incentives based upon subjective judgments. Every organization is required to be updated of the latest market trends so a comparison is done against various processes in other organizations. Performance measurement permits standardization against other organizations.
Every person needs a clear understanding of what is expected of them and how they are contributing towards the overall success of the organization. This process begins with individual goal setting which gives clear priorities and direction to attain their individual goals as well as goals of the organization. Depending on the goals they achieve within a defined timeline, their compensation can also be determined. It clearly distinguishes the underperforming employees from the extraordinary employees. The compensation creates the feeling of healthy competition among the employees which makes them more productive and therefore makes the organization more successful.
Close monitoring of the process and employees is required to measure the performance of employees more effectively at CERA. Analyzing and reporting the qualitative and quantitative performance of any individual or a process of any organization or group is called performance measurement. Usually an operative performance management system has five different parts such as outlining the expectation concerning the performances, assisting the performances, inspiring the employees to achieve the optimal level of performances and proving opinion to the employees concerning the performance in their output. Nevertheless, it is that CERA set some goals for their personnel and asks them to accomplish this. Hence, they measure the employee performance by analyzing how many goals they are accomplishing with excellence. As the participation of senior managing staff is very high towards accomplishing the objectives, the employees are being treated like school students(Yahya &Goh, 2012). They deliver a brief and adequate knowledge to their staffconcerning how they can accomplish those goals, but by following this approach, they do not get any adequateunderstanding regarding specific employee performance (Mayer& Davis, 2012). Nevertheless, this approachmakes their institute to accomplish more and effective result, but this approachsomehow is not able to produce very effective and skilled employee.The senior management has noticed that although their employees are showing good productivity as compared to similar consultancies but they do not have any effective motivation technique for employee retention and engagement. Bad mouthing and negative mood are the most common problems which arise with time due to such circumstances. Even after measuring the performance, a unfair strategy has been adopted for rewarding their employees and ultimately they end up compensating very high to the senior management and very low to the junior management. Moreover, it is also observed that the CERA does not have any responseapproach available so that their employees can improvise their performance and assist their organization in achieving its goals and pre-determined objectives. Any oral or written mode of feedback system can be beneficial for both, employees as well as the company in increasing their performance.
Measurement of Every Process-efficiency
Personal management has now changed into human resource management and now traditional human resource management is now shaping up into people asset management. This involves a transparent and trustful human resource developments system which treats all employees equally and is fair to managers and employees. At present, HR managers are not just expected to manage the paperwork and payroll of employees, instead, it has become imperative to evolve the HRM and make it a strategic part in operation and functions of the organization. HRM contribution in the formation of key policies and decisions has drastically increased as organizations have started perceiving HRM as a strategy and business driven function. CERA has realized that HR is an important asset which can lead the organization towards its determined goals. CERA has initiated a streamlined approach towards staffing, work design, diversity management and a tactical approach towards recruitment. CERA use management by objectives scheme for appraisal of its employees using PPR Scheme for which the review is done twice a year for each employee. This system motivates the employees to work harder towards a better appraisal review. CERA has realized that its employees are not satisfied with their performance management system and they require an effective motivation technique so the organization is considering the alternative options which have already been adopted by other companies. This is expected to manage the evident problems like motivation and conflict management (Metcalfe, 2012). The pay scale of employees has been designed above the market to motivate them but still, the employees feel that they are expected to work for more than what they are offered as they compare it to their peers in other consultancies or government.
CERA follows the management by objective strategy only. So it is veryvital for them to follow a more competent performance management scheme by which they can categorize their strong and weak relations and so that the performance of staff can be adjudged more effectually. Oral or written feedback should be provided to the employees at every short interval so that they can analyze their performance and they can focus on their weak areas(Brutus, 2016). As it can be observed that senior management is able to effectively and closely analyze the employees, so they can implement 360-degree performance appraisal process.As stated by Levy & Williams (2014), 360-degree performance assessment feedback is one of the developments that aredeveloped by any corporation to gather information concerning their workforces from diverse sources to evaluate the work-related behavior of the personnel. In order to implement the 360-degree feedback in the organization, CERA can gather the opinion from their team leaders & colleagues. As the feedback system improvises the communication gap between employee and employer, it becomes easier for senior management to identify the business goals. However, the feedback is very useful, but feedback of an individual from the colleagues may lead to a risk of conflict between the employees(Bernardin, 2011). Hence, the system should be modified as per the company’s requirement before adaption. Such implications will further facilitate the organization in presenting efficient development programs for the business ventures. Moreover, it will assist the government in making critical understanding of the overall and sustainable development policies. Along with 360-degree system, the behaviorally anchored rating scale is also recommended for adaption at CERA. The rating scale quantifies the performance so that it can be compared to a benchmark or even with other employees.
CERA: A Case Study
Conclusion
It can be concluded from the above-stated facts that for achieving adequate performance, an effective performance management system is inevitable. Efficient performance management system always leads to increased productivity and motivated employees. It can also be concluded that the financial compensation given to employees should also be based on their actual performance and an effective feedback system is required for accurate measurement of their performance. This will generate the feeling of ownership and will create a fair system for all employees. The feedback system is also inevitable for employees to identify and focus on the weak areas of their performance. It has also become clear that the present performance management system has failed at CERA and the organization is required to amend the system at the earliest to avoid any conflict between the employees. 360-degree method system seems to be a suitable system for CERA but before the implementation, the employees must be informed about how they are supposed to provide feedback for their colleagues and how this system can be beneficial for the organization as well as the individual. Overall, the orientation of the research is potentially aligned to validate the purpose of this study. In addition to this, the comprehensive discussion of the significance of performance measurement practices in the development process of CERA and contemporary development in the HRM practices of the organization made significant contributions in justifying the proposed objectives of the study.
References
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Bernardin, H. J., & Smith, P. C. (2011). A clarification of some issues regarding the development and use of behaviorally anchored ratings scales (BARS). Journal of Applied Psychology, 66(4), 458.
Borman, W. C., Hough, L. M., &Dunnette, M. D. (2012). Performance ratings: An investigation of reliability, accuracy, and relationships between individual differences and rater error. Personnel Decisions Research Inst Minneapolis Mn.
Brignall, S., & Modell, S. (2010).An institutional perspective on performance measurement and management in the ‘new public sector’. Management accounting research, 11(3), 281-306.
Brutus, S., Fleenor, J. W., & London, M. (2016). Does 360-degree feedback work in different industries? A between-industry comparison of the reliability and validity of multi-source performance ratings. Journal of Management Development, 17(3), 177-190.
Kaplan, R. S., & Norton, D. P. (2013).Transforming the balanced scorecard from performance measurement to strategic management: Part II. Accounting Horizons, 15(2), 147-160.
Levy, P. E., & Williams, J. R. (2014). The social context of performance appraisal: A review and framework for the future. Journal of management, 30(6), 881-905.
Mayer, R. C., & Davis, J. H. (2012). The effect of the performance appraisal system on trust for management: A field quasi-experiment. Journal of applied psychology, 84(1), 123.
Otley, D. (1999). Performance management: a framework for management control systems research. Management accounting research, 10(4), 363-382.
Yahya, S.,&Goh, W. K. (2012).Managing human resources toward achieving knowledge management. Journal of knowledge management, 6(5), 457-468.
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