This chapter presents the definition of performance appraisal, who is the executive level employees, objectives of this study, statement of problem, important of study, contribution and limitation of the study. This study will be conducted to investigate the perception toward performance appraisal among executive level employees in Malaysia.
1.1 Performance appraisal
Performance can be defined as the record of outcomes produced on a specified job function or activity during a specified time period (Bernardin et al, 1995 as cited in n.d, n.a, pg1). Performance refers to how well reports are written, problems solved etc. The level of performance indicated or implied by workers' behavior or activities is determined by comparing them either to the behavior of others or to a standard (a performance expectation established by authority). In order to ensure that employees are performing at the required level to meet organizational (public and private) goals, an appropriate performance appraisal system must be in place.(n.d,n.a,pg1)
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Performance Appraisal (PA) also known as employee appraisal, is the process of assessing how well the employees are progressing on the job front. The process monitors, measures, and evaluates performance of the employees at their jobs (CBS interactive business network, 2003). The focus of the performance appraisal is measuring and improving the actual performance of an employee during a given period of time and also planning the future potential of the employee. It is aim to measure what an employee does. (appraisals.naukrihub, 2007). An efficient performance appraisal enable quick identification of process loopholes, if any, and helps in evolving precise benchmarks for employee evaluation.
Employee performance rating serve as inputs to performance based feedback and administrative decision relating to promotion, training and salary increase. (Pearcee and Porter 1986, Erdogan, Kraimer and Liden 2001 as cited in Sharon Narcisse and Mark Harcourt 2008). It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze employee achievements and evaluate his contribution toward the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personal management and reflects the management's interest in the progress of the employees. (Roshi,2009)
Performance Appraisal (PA) is one of the important components in rational and systematic process of human resource management. The information obtained through performance appraisal provides foundations for recruiting selecting new hires, training and development of existing staff, and motivating and maintaining quality work force by adequately and properly rewarding their performance. Without a reliable performance appraisal system, a human resource management system falls apart, resulting in the total waste of the valuable human assets a company has. (Encyclopedia of Business and Finance,2010).
The basic purpose of performance appraisal is evaluation and developmental. The main aim of the evaluative is intended to inform people of their performance standing and identify the performance gap between the actual and the desired performance. The collected performance data are frequently used to reward high performance and to punish poor performance. (Encyclopedia of Business and Finance,2010). The developmental purpose is intended to identify problems in employees performing the assigned task so a plan for improvement can be established. The collected performance data are used to provide necessary skill training of professional development.
The most important goal of the performance appraisal is to improve performance in future. The purpose of performance appraisal must be clearly communicated both to manager and subordinates, so they will have clear direction to their job. (Encyclopedia of Business and Finance,2010). The lack of specifically defined performance goals will undoubtedly undermine the effectiveness of the entire performance appraisal process. (Gregory D.Rankin and Brian H.Kkainer,2007,p.14). Failure to inform about the purpose or misleading information about the purpose may result in inaccurate and biased appraisal reports. (Encyclopedia of Business and Finance,2010).
1.2 Executive Level Employee
Executive level employee is any employee whose duties and responsibilities involve the management of the enterprise in which he or she is employed or of a customarily recognized department or subdivision thereof. Executive level employee customarily recognized and regularly directs to work of two or more other employees therein and has the authority to fire or hire others employees. As an executive level employee, he or she must customarily and regularly exercise discretion and independent judgment. It means that he has to make comparison and evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. The employee must have the authority or power to make an independent choice, free for immediate direction or supervision and with respect to matters of significance. According to employee law, an executive employee must also earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. Full-time employment means 40 hours per week as defined in Labor Code Section 515(C). (Deskin law firm, 2009)
The main variables or factors that will be discussed in details in this paper are the employee's perception toward performance appraisal. Hence, the objective of this research is to examine the perception of executive level employees in Malaysia on performance appraisal currently implemented in their organizations. The research focuses on satisfaction of employees on performance appraisal currently used and evaluates the effectiveness of performance appraisal whether employees' are receiving valid evaluations free from bias and assessment errors from their employer.
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The study was conducted with the executive level employees in Malaysia to determine whether the perception toward performance appraisal among executive level employees. Hence, the main purpose of this paper is to investigate level of effectiveness and whether employees are receiving fairness evaluations by using performance appraisal.
There are the relevant research questions which are being focused. At the end of this study, these questions will be answered based on the findings. The three research questions are as follow:
How effective is performance appraisal in measure the perception of executive level employee?
Has the employee receive fairness evaluations which free from bias and assessment errors?
How perceptions of performance appraisal influence the satisfaction of employees' toward commitment to the organization?
There are three objectives in this research:
To determine the level of effectiveness of using performance appraisal based on perception of executive level employees in Malaysia.
To determine the fairness and justice of the performance appraisal currently been used is free from bias and assessment errors.
To determine how perception of performance appraisal influence the executive level employees' satisfaction and commitment to the organization.
Performance appraisal in Malaysia remains a widespread and common practice
by organizations in evaluating employees' performance; subsequently, determine employees' rewards, both monetary and non-monetary. Many organizations have implemented systems which are based on accepted practices and procedures only. However, lack of efficient ways to evaluate the effectiveness and fairness of performance appraisal within organization cause de-motivation of employees and might affect efficiency of manpower. Clearly, it is essential to have an effective performance appraisal than a technically sound rating format and well defined policies and procedures.
This research is conducted to evaluate the attitudes and perceptions of performance appraisal by executive level employees in organization. There are two main problem statements as below:
No commonly accepted method or efficient approach to evaluating the effectiveness or success of a performance appraisal. Identifying and organizing the most important variables in performance appraisal has proved to be a challenging task to an organization.
Perception on effectiveness and fairness of performance appraisal of employees has not been emphasized by organization. Fairness is one of the key components in the ultimate success of performance appraisal system. Perception of unfairness might pull down employees' motivation and efficiency; it may affect the ultimate success of such organizational systems.
H1: There is a positive relationship between employee's perception and the level of
effectiveness of performance appraisal.
H2: There is a positive relationship between justice and fairness and satisfaction with
performance appraisal rating
H3: There is a relationship between perception of performance appraisal and the
satisfaction of employee and their commitment toward the organization
H4: There is a relationship between employee personalities and the perception on
H5: There is a relationship between performance appraisal and existence of motivation
Importance of study
Performance appraisal will continue to be an issue of great concern for large number of companies to evaluate employees' performance. Thus, it is crucial for managers and researches to better understand this construct. A lack of effectiveness to evaluated performance appraisal among employees is a serious and potential to negative consequences for organization such as high economic costs of obtaining and retaining a committed workforce and cost of court fines and settlements due to legal action taken by the workers who felt that they were treated unfairly.
This study is important to indentify the level of job satisfaction which influences employees' commitment to organization and help organization make planning efforts to increase employees' job satisfaction and commitment. In Jawahar (2006) study (as cited in Jawahar, 2007) reported that satisfaction with appraisal feedback was positively related to job satisfaction and organizational commitment and negatively related to turnover intentions.
In short words, determining an organization's appraisal effectiveness or ineffective are essential to assist organization achieves success as well as maintain the ways of evaluation or planning for improvement in future. In the organization, effective performance appraisal is the fundamental tool to increase employees' job performance and reduce turnover among employees.
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Finally, this research intend to contribute to the study of employee's perception toward performance appraisal in Malaysian context since appraisal reactions likely play a important role in the development of favorable job and organization attitudes and enhance motivation to increase performance.
Contribution of study
This study will examine the perception of performance appraisal applied among executive level employees in Malaysia. It also investigated the effectiveness of performance appraisal and satisfaction of employees on performance appraisal. The result of the study provides a mirror to Malaysian organization to uses the most effective ways to evaluate performance appraisal and to create awareness of importance of performance appraisal toward job performance. Organization has to utilize performance appraisal as a tool by management in motivating employees, and subsequently increase better job performance and productivity.
Beside facilitate discussions concerning employee growth and development, appraisal result provide useful data for human resource decision and provide managers with a useful communication tool for employee goal setting and performance planning. It also revealed the performance appraisal are useful for organization in assessing and evaluating performance as well as planning for improvement can be establish in future. From the result, organization and employees can grasp the knowledge about the important of performance appraisal system that can aid them in managing their company.
1.8 Scope of study
In this research, the scope focused on executive level employees in Malaysia. The study is based on 200 respondents which from different organization. These respondents are all Malaysian which their organization have implemented performance appraisal to appraisal their performance. In the study, employee's perceptions of performance appraisal will be investigated.
Limitation of study
There are many organization implemented performance appraisal in Malaysia. However, it was difficult and time consuming to access to all employees. Hence the scope was focused on executive level of employees rather than all level of employee. Hence, the gap might exist between the result carry on executive level employee and the result carry on the all level of employee.
The survey was conducted by distributed questionnaire to selected employees. In the process of data collection, several problems had been met. Some of the respondents were unwilling to respond while some of them were inaccessible on the first and second attempted to access. Some of the respondents that had been successful accessed and participated in the survey were refused to provide their information or documentation evidences when requires were made. In addition, few of employees were unwilling to give the respond themselves; instead, they ask their secretary to respond. This may cause the result is not fully accurate. Besides that, one of the respondents did not complete the questionnaire and gave the excuse that he was busy. This led to abolishment of that incomplete questionnaire from data analysis.
The social desirability bias might occur either consciously when the survey was carried on. This caused by the respondents that tent to gain prestige, or to create a favorable impression. The responded that they do the performance appraisal measures and analysis in accessing their performance although in reality maybe some aspects have not been covered by them.