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Performance Appraisal is one of the human resource management tools used to evaluate the job performance of employees. Performance appraisal system highlights the individual and group performance over the period of time and reviews for the promotion and raise in monetary funds. It is a process of summarizing, assessing and developing the work performance of an employee. The ultimate goal of PA is to maintain better performance by fostering employees' motivation, which would depend upon the situations in the workplace, such as reward system, rules and regulations. In order to be effective and constructive, the performance manager should make every effort to obtain as much objective information about the employee's performance as possible.
In the past few decades, organizations were very concerned about the development and orientation of their employees and also pondering on performance management (Murphy & Cleveland, 1991). Now, Organizations are following the new patterns of working and doing jobs to adhere the aims and mission of it. To fulfill this new modernized concept of fast and technological revolution, they are realizing the importance and implementation of new methods of performance management (Cardy & Dobbins, 1994).
In the Performance management, the appraisal system is the most significant part where it defines a structural and formal system that helps the manager and subordinate to interact with each other to evaluate performance. This interaction usually comes into process annually or semi-annually in shape of some structured interview or questionnaire. In this process, supervisor examines the performance of subordinate where supervisor identifies strengths and weaknesses and also highlights the area of improvements (Connock, 1991).
In today's competitive business environment, employees represent one of the organisation's most valuable assets. This means that the company's productivity and ultimately, its profitability, depend on making sure every person in the organisation is working up to his or her full potential and is being remunerated according to the efforts he or she is putting up. Employees frequently do not have a clear idea of what is expected of them, and may not be working toward the goals that contribute most to the long-term success of the business. Very often also those carrying out the appraisal are criticized for the lack of necessary competencies to recognize and reward top performers. Thus performance appraisal plays a pivotal role in any organization.
1.1 Purpose of Research
The aim of this research is to conduct an evaluation of the Performance Appraisal System at CEB so that recommendations can be made so as to improve the overall performance of the organization.
1.2 Overview of performance appraisal system at CEB
The Central Electricity Board (CEB) is a parastatal body wholly owned by the Government of Mauritius and reporting to the Ministry of Energy and Public Utilities. Established in 1952 and empowered by the Central Electricity Board Act of 25 January 1964, the CEB's business is to "prepare and carry out development schemes with the general object of promoting, coordinating and improving the generation, transmission, distribution and sale of electricity" in Mauritius (CEB Annual Report 2009, p.3). To be able to achieve its mission, CEB relies largely on employees.
The CEB produces around 40% of the country's total power requirements from its 4 thermal power stations and 8 hydroelectric plants; the remaining 60% being purchased from Independent Power Producers. Currently, it is the sole organization responsible for the transmission, distribution and supply of electricity to the population.
The CEB is managed by a board of Directors consisting of a Chairman and ten members. The function and duties of the Board consist of preparing and carrying out development schemes. CEB aspires to become a modern utility, operating on sound business principles, delivering value and quality service to the customers. Thus the CEB has prepared a Corporate Plan in 2003, which sets out business strategy for the utility, establishes priorities and objectives to provide direction throughout the organization (CEB Corporate Plan 2003/2004).
The overall mission of CEB is "To provide our customers with a continuous and reliable supply of electricity at the lowest possible cost and with optimum safety and courtesy" (CEB Annual Report 2009, p.3).
Its vision is "To become world-class commercial electricity utility enabling the social and economic development of the country" (CEB Annual Report 2009, p.3).
In order to achieve the above, CEB relies on a workforce of over 1900 employees and supplies electricity to more than 390,000 customers.
The primary purpose of PAS at Central Electricity Board (CEB) is to ensure that there is an appraisal document into the employee file once each calendar year. Any benefit to the employee or to improve the productivity of the organization is secondary. PAS are left to the last minute and then done in a hurried manner. According to Maddux (1987), when this occurs, the supervisor feels guilty and the employee unimportant and let down.
Currently the only performance appraisal system (PAS) that exists for CEB is a one year/six months probationary period for new hires, and those newly promoted. There is a simple evaluation form which is in place to determine if an employee should be retained at their current position or not and to whether any incremental increase in salary should be applied. The current form has been in place for more than a quarter of a century without any significant changes. However, according to Luthy (1998) outdated PAS are insufficient to motivate, encourage, or recognize employees. Employees are often left contemplating their performance without feedback from supervisors and seldom do not know about the goals and objectives of their department/organization.
Although many of the costs drivers are beyond the control of CEB, the company has only two ways to be cost effective, that is, either to reduce the costs of operation or to increase the profit generated. But given that CEB is a non-profit organization and that the pricing mechanism for its product is of a political undertaking, the company can only maintain a competitive advantage by capitalizing on its most important asset, its human capital.
The government has placed an increasing accent in recent times on the requirements for strong management processes to improve productivity. This has been in response to the Pay Research Bureau (PRB) report 2003, wherein it is said that the public sector must use performance management as one of the ways to satisfy their customers through prompt service delivery.
Performance appraisal in CEB concerns all employees. It influences employee motivation and work performance. The present performance appraisal system (PAS) requires nothing more than checking boxes and writing a few brief notes on the employee performance and expectations. Actually there is no formal training, either in the proper completion of the document or appropriate interview techniques provided to those conducting the interview that have the primary responsibility for the PAS function. There are no goals setting. During the performance appraisal (PA) interview, there is no in depth or comprehensive review of past performance or any formal support or feedback mechanisms in place to assist the employees who are subject to PAS.
According to Wright and Cheung (2005:206) "if employees are not happy with the existing appraisal system, they would be unwilling to take a full part in it, which in turn would lead to lower productivity."An effective performance appraisal system is an important tool for measuring and improving productivity. Cederblom and Permal (2002:131) suggested that many employees can become frustrated about the limited value, in actual practice, of performance appraisals in their organisations.
Although performance appraisals exist to benefit employees, various aspects of the appraisals are not present at CEB. Accurate performance appraisals are critical to both the organisation and the employee. Without an accurate evaluation, merit raises may be given with bad performance or worse, be withheld with good performance. Employee may also be denied the opportunity to promote when their performance has actually been acceptable, or individuals that have not performed to expectations in their current positions may get promoted. Furthermore the lack of an accurate performance appraisal may allow an employee to continue working with unsatisfactory performance. Any of the above situations can be detrimental to the employee and the organization.
For the past 25 years the organization's Performance Appraisal System (PAS) has remained unchanged. However, according to Luthy (1998:4), outdated PAS are insufficient to motivate, encourage, or recognize employees. This study will assist CEB in improving its current PAS that will eventually meet the needs of the departments, employees and stakeholders.
Employee's performance and the way they are appraised, requires greater attention. Thus, the current study seeks to evaluate the Performance Appraisal in CEB, thereby identifying the merits and flaws of the actual appraisal system. The conclusions will lead to recommendations that CEB can contemplate to eventually use, to improve the actual system and also be more competitive.
1.3 Objective of the study
The objectives of this study are:
To examine the existing performance appraisal system at CEB;
To explore employees' views on the performance appraisal system at CEB;
To assess the effectiveness of the performance appraisal system within CEB;
To determine whether the performance appraisal exercise at CEB is meeting its objectives; and
To make recommendations to CEB so that management can improve the current performance appraisal system.
1.4 .1 Scope of the study
The scope of the project is fully dependent upon the objectives of the project.
This study can be helpful to the company for conducting any further research.
It is helpful in finding out the reach and effectiveness of the performance appraisal system.
This study also serves as a base for understanding the perception about the employees regarding their performance appraisal being conducted.
To provide an opportunity for self-reflection and individual goal-setting.
To assist in a variety of personnel decisions by periodically generating data regarding each employee.
With the results of the study the company can improve their standards of their appraisal system.
1.4.2 Limitations of the study
Lack of reliability and accuracy
1.5 Structure of Thesis
The structure of the thesis is as follows:
Chapter 1 introduces the topic of the study and lays down its objective. It provides an Introduction and Background analysis of the organization chosen for the purpose of the survey. It also sheds light on the Aims, Objectives and Format of the study.
Chapter 2 focuses on the literature review and gives an insight and ideas about performance appraisal. It builds a theoretical foundation upon which the research is based.
Chapter 3 introduces the research methodology which is concerned with the way data are collected. It explains the methodologies and procedures that have been used to answer the research objectives. Moreover it highlights the methods and techniques adopted to collect data and carry out the survey.
Chapter 4 is about Statement of results and discussions concerned with discussion of findings. It also analyses the findings which give an introduction of the main issues emerging with the performance appraisal system in the organization.
Chapter 5 is an outline of clear and practical recommendations and conclusion following an evaluation of the current performance appraisal system at CEB.