Performance appraisal and training and development practices have been observed to be gaining increased attention within the research and business development context (Carlton and Sloman 1992; Armstrong and Baron 1998; Murphy and Swanson 1988;Keeping and Levy 2000). These two disciplines are practiced by the human resource function of any organisation, however the integration of these disciplines with other business functions such as finance, marketing, procurement, information technology (IT) etc. has been lately observed (Keeping and Levy 2000). This integration is a result of the demands and mandatory requirements of the modern businesses where stakeholders' satisfaction remains at the highest priority of the management of the organisation. Thus performance appraisal and training and development practices now form the part of strategic business development (Fletcher 2001). Both disciplines can be seen in a chronological manner that enables the management to use the output data of one practice as an input data for the other practice. Having said that, the performance appraisals provide the management with a clear assessment of employee performance levels. This output is then used by to design training and development programmes for the employees with an ambition of enhanced employee and subsequently business performance. Critical success factors and key performance indicators form the integral part of performance appraisal system, and facilitate the management to review and monitor employee performances at defined periodic intervals. Another frequently recommended and quoted framework within the system is balanced score card (Kaplan and Norton 1996) however it has been argued that balanced score card is more suited to provide an overall assessment of the business performance (measuring financial, internal business processes, organisational learning and growth and customer perspective). The aims of this study is to critically examine performance appraisal and training and development practices at International Business Machines Corporation (IBM) with a perspective of the rationale of these practices and their potential benefit outcomes.
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IBM is one of the largest information technology firm based in United States of America and provides business, technology and consulting services such as business transformation, software, hardware solutions / development, financing and component technologies. International Business Machines Corporation is a global company, operational in 170 countries and employs 398,460 people. The company is headquartered in New York (Datamonitor 2009). The strengths of the company have been assessed to be its a- leading market positioning in information technology (IT) services and b- comprehensive and well-equipped research and development competencies. The weaknesses of the company have been noted as its declining business profits that started in the 1990s until 2002 and still lays adverse impact on the company that have been realised in the form of slow business revenue growth. A research paper titled: 'Re-engineering HR delivery at IBM' published by Human resource management digest (2002) highlights the major reasons of the business losses faced by International Business Machines Corporation in the early 1990s. The organisation went through reviewing its products, services, infrastructure, operations and functions. The reformation of human resource function was a part of the re-engineering process and aimed to reinvent and revitalise the business strategy for consequential business growth. This study achieves its aims through making certain assumptions and then evaluating the practices in terms of their rationality and benefit outcomes. The assumptions have been made due to limited secondary research sources that don't explicitly identify the performance appraisal and training and development practices at the company. Therefore the once of the proposed context of the study i.e. international context of the business couldn't be achieved. The paper has been structured as follows:
Critical examination of performance appraisal and training and development practices at IBM.
Identifying the rationale and benefit outcomes of these practices
2- Critical examination of performance appraisal and training and development practices at IBM
2.1 Performance appraisal
Performance appraisal critically evaluates the performances of the people in an organisation. Staff performances are a combination of staffs' knowledge, skills, capabilities and behaviour that result in good / bad / poor performances. Different organisations have different scales and ways of evaluating the staff performances, however the ultimate objective of this human resource practice is to a- provide structured judgements / ratings so as to support salary increments, staff promotions, transfers / job rotation and in extreme cases staff demotions and termination of employment, b- inform and comment on employees' job performance and provide constructive feedback for making improvements and c- form the basis for identifying the coaching, mentoring and counselling needs for individual staff members to be provided by the senior and more experience staff member (Grote 1996). It is imperative to note that employees must experience positive performance appraisal response so that the performance appraisal practices can positively influence the employee behaviour (Kuvaas 2006). Performance appraisal is mostly deemed to be one of the most central human resource practices and has been evolving as a strategic approach towards integrating business policies and human resource activities (Boswell and Bourdeau 2002; Feltcher 2002; Ferris 1993). This suggestion indicates towards the extent of involvement of managerial levels in managing periodic performance appraisals in an organisation. A common trend that has been observed lately is the inclusion of critical success factors (CSFs) and key performance indicators (KPIs) while evaluating employee performances ( de Waal 2003; cited by Kuvaas 2006). Examining the similar practices at International Business Machines Corporation, it has been learnt that:
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2.1.1 The company re-defined its human resource practices to revitalise the business (Human Resource management international digest 2002).
2.1.2 Within the context of performance appraisal as a part of re-engineering human resource delivery project at IBM, the management's focus has been observed to initiate programmes to conduct a gap analysis between the current competences and skills level of the employees and required levels to meet the future business challenges.
2.1.3 The human resource functional objective of IBM is the key transformation of the IBM's business.
2.1.4 Furthermore, in order to establish effective, efficient and formal communication channels with in the organistaion, the human resource management had layered itself into three tiers i.e. customer service representative, HR subject matter specialist and the HR programme experts.
2.1.5 As identified earlier, modern organisations exercise performance appraisal practices as an integrated part of business management, which requires effective communication as an integral part of the performance appraisals. A three tiered managerial level thus facilitate point of contacts between the management and the staff.
2.1.6 The identified goals of the performance appraisal practices at IBM are: a- improve performance level of the employees through provision of a structured constructive feedback, b- performance enhancement and development of career potential and c- and identifying and optimising the management talent to revitalise the business.
Although the efforts made by IBM can be validated through the reviewed literature, however the critique in this regard is that the company is taking a risk (Grossman 2007; Deci and Ryan 1985). The critiques of performance appraisal systems is based on an assumption of forged degree of measurement correctness. It is further suggested that the appraisal systems provokes employee conflict and competition among the employees which is dysfunctional and gives a sense of insecurity to employees whose performances have been evaluated as incompetent. Thirdly and most importantly there is a lack of sufficient research over the subject area to validate the benefit outcomes of performance appraisal (Gore 1996). Within the similar context i.e. whether or not performance appraisal delivers what it promises, a research study based on 328 respondents form US based firms conducted by Cook and Crossman (2004) concludes that there exist no significant dissatisfaction from performance appraisal practices.
2.2. Training and development
Training and development refers to work- related set of skills, knowledge and capabilities that need to be required and developed by the employee to perform according to the defined levels of performance by the management (Adamson and Caple 1996). Training and development can be viewed as a next step to performance appraisals. Elaborating this point further, performance appraisal identifies the levels or ratings of employee performances. The data (performance ratings) is further used to carry out training need assessment. Training need assessment is a gap analysis to identify the gaps between the employee's current level of skill, knowledge and attributes / capabilities and required level of skill, knowledge and attributes so that the employee(s) can develop their competencies and meet the future business challenges. Within the created scenario, training and development programmes provide employees with appropriate professional training such as short professional and or technical courses, managerial courses etc. The objective of training and development programmes and practices is to develop the employee skill, knowledge and attributes level as needed by the organisation. It should however be noted that training and development practices are not always a result of performance appraisals. Any developments in business systems such as up- gradation, re-engineering, new implementations etc. also demands for developed workforce that will be ultimately using the new of developed system.
Garavan et al. (1995) defines training as a planned and controlled efforts of management to transform or develop knowledge, skills and attitudes of employee(s) so that effective performance can be achieved to perform the business activities. Development has been further defined by these authors as a general improvement and growth of individual's skill, knowledge and attributes through deliberate and in- deliberate learning. In so doing, the management's ambition is to enable the employees to take up more suitable and advance job role in the future in the organisation. In a contextual belief of people being the most valuable organisational asset, it has been assessed that the management's intent behind training and development of its workforce is to meet the business challenges that are a result of dynamic internal and external business environment.
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Every organistaion has its individual training and development needs. The training and development needs at International Business Management Corporation have been observed and assumed as follows:
2.2.1 These needs arise due to the re-engineering of human resource practices so that business can be re-invented after the declining business profits.
2.2.2 Training and development programmes follows a strategic responsiveness towards intercession in support of organisation's mission and vision to revitalise its business.
2.2.3 Training and development practices has been re-formed as a semi-formal function where management gains the stakeholders and specifically employees' commitment through leadership progression of training and development management.
2.2.4 This leadership progression also entails the development of training and development policies, learning needs, training and development planning and employee career progression.
2.2.5 The outcome of the training and development programmes is that the business can lay its focus on training and development needs that should be addressed in a cyclic process.
3. Rationale of using performance appraisal and training and development at International Business Machines Corporation
This study will now treat performance appraisals and training and development needs as a progressive cycle towards attaining shared human resource and business goals. Examining the human resource environment at IBM, the expected benefit outcomes of these practices are:
Enhanced job satisfaction and improved morale of the workforce. This is achieved through the deployment of a formal and well-structured system that evaluates the employee performances and provides then with rewards, recognition and appropriate feedback for improvements. Further on the work force is also motivated and develop itself according to the current and future needs and challenges of the organisation.
3.2 Performance appraisal system and subsequent training and development programmes direct the valuable organisational resources to be invested in the right directions. Translating the right directions into benefits outcomes, the company can anticipate increased capacity and inclination of the workforce towards adapting innovation and new technologies that will subsequently result in financial gains; increased revenues, increased profit margin.
The management should also expect reduced employee turnover, improved business reputation, improved and innovative products, increased stakeholders' motivation levels.
4. What are the potential benefit outcomes of adapting performance appraisal and training and development practices at IBM?
Prior to identifying the benefit outcomes of the performance appraisal system, it has been strongly suggested that the following outcomes can only be possible if the performance appraisal system is effective and continuously monitored for its developmental needs. As a brief guideline for developing an effective performance appraisal system, the identified critical success factors are: a- strategic approach towards management of people and their performances, b- effective communication of human resource values and objectives across the organisation, c- deployment of training and development programmes / initiatives as an integral part of performance appraisal system, d- continued investments made in the review and monitoring of human resource management practices and their reformation as appropriate (Zairi and Sinclair 1995), e- clearly defined performance levels and their interpretive explanation of these levels to the employees and most importantly f- central placement of competency based performance evaluation within a performance appraisal system. The potential benefit outcomes of an effective and effectively implemented performance appraisal as suggested by Ahmed (1999) are:
4.1 Employees are able to gain a better understanding of their job role and performance expectations
4.2 Understand the job role within the wider context of the organisation.
4.3 Employees can understand how their performances are perceived by the management and finding ways of improving their performance levels.
4.4 Employees can develop an understanding of how performances are appraised, reviewed and monitored by the management.
4.5 Employees can also identify their weakness and strengths and self- evaluate that what further needs to be developed. In so doing employees also find an opportunity to formally discuss their role, opportunities for further progression.
4.6 Through performance appraisals the management can gain agreement of the employees about their understanding of their job roles and objectives for the following year.
4.7 From a business / organisational perspective, the current level of employee and his potential can be assessed. This further forms the basis of succession planning of each employee.
4.8 The management can update the employee information such as his achievements, new skill, knowledge, ability and competencies.
The benefit outcomes of training and development practices are:
4.9 Training and development practices provide the employees with challenges that need to be addressed for meeting performance standards as defined by the management. Challenging job role is one of the many motivational factors for employees.
4.10 Training and development practices can further ensure the employees that they are being valued by the company that is the reason the company is making investments in their development.
4.11 Successful training and development provides the employees with sense of ownership of their job role while taking pride in their performance. The results are higher productivity, efficiency and satisfaction rates.
Critically evaluate these practices at the examined company, it has been assessed that these practices can only be effective if they follow a continued process where performance of the system i.e. performance appraisal is also reviewed, monitored and evaluated for its performance outcomes. The recommendation is important because unless that management can't review the performance, it can't be evaluated whether or not the system is meeting its objectives. Furthermore, user training of the performance appraisal system is equally important so that full benefits of the business system can be experienced. It is further suggested that any further developments of the performance appraisal system should involve the end user opinions and comments so that the objectives are completely and satisfactorily met. These recommendations gain their importance from the fact that any investments made into the development of the systems should be done so that valuable organisational resources are optimised and stakeholders' interest remains intact.
The prime purpose of human resource management function is to manage employees at any organisation. Management of employees is a complex task and requires extensive and perspective strategic approach to be adapted so that the employees that come from different social, educational etc. backgrounds are effectively productive and managed in the organisation. It is therefore management's responsibility to make best use of employee skills, knowledge and abilities so that they are competent enough to perform the designated tasks. Performance appraisal is a human resource practice that is concerned with management of employee performances. Management of employee performance is also crucial because people are the source of competitive advantage for an organisation (Cook and Crossman 2004). Thus one of many benefit outcomes of effective performance appraisal is being a business enabler for earning the competitive advantage. Other benefits of performance appraisal are enhanced employee performances, enhanced employee behaviour and identification of future prospects for individual employees etc. The critiques of performance appraisal system question the validity of the practices because these practices are believed to lay negative or destructive affects rather than laying constructive affects on the employees' performances. Different studies however suggested different implications. Another human resource practice that finds its foundations in the performance appraisal system is training and development. Training and development needs of employee are learnt through periodic performance appraisal of an employee. These needs further signify towards the gap between the current and future levels of employee performance levels that should be filled by appropriate training and development programmes to attain the desired levels of skills, knowledge and attributes. The examination of performance appraisal and training and development practices at IBM has also been critically evaluated in this study in context of their rationality and benefit outcomes. As a result of these practices the organisation can expect enhanced job satisfaction and improved morale of the workforce in addition to reduced employee turnover, improved business reputation and improved satisfaction levels of stakeholders (Adamson and Caple 1996). Out of effective training and development practices the organisation can expect employees' better understanding about the organisation, its objectives and functionality. The employees will be more competent and accountable while performing their job through keeping a better understanding of their job role. Employees feel more valued and show their commitment towards showing high performances at work.