Promoting employees through complete performance appraisals are quite in practice these days, companies use this techniques for succession planning of their work-force as well as the management. Most of the companies in Pakistan are practicing the same method as a tool of promotion for their employees. In addition to the private companies, (including MNCs) that strictly follow the periodic appraisal system, there are public sector companies also using the similar grounds for their strategic work-force planning in terms of their succession in management.
The organisation chosen for this project is the 'Income Tax Department' of Pakistan which falls under the federal government's Ministry of Finance & Taxation, also know as 'Federal Board of Revenue' (FBR), which includes Customs, Sales Tax, Income Tax departments etc.
The induction criteria in these departments is totally on examination basis, after having a degree or a certain qualification a candidate has to take a competitive examination in order to get the job in these departments. There are two streams of inductions, one is for higher grades start with Assistant Commissioners or Assistant Collectors, through which, at the end of the career one can probably make it to the Additional Secretary or the Secretary in the federal department(s). Which is entirely on the basis of seniority and Annual Confidential Reports (ACRs), a prevailing appraisal system, which rarely gets an average rating due to the system which pushes juniors to have good relations with their immediate bosses, therefore there is no trouble in getting a good ACR.
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Also in junior level, where an officer is inducted through examinations are only given further opportunities through more examinations, regardless of their performance or abilities.
In addition to that, the senior employees who were appointed on a certain scale used to have a similar salary like a young lecturer or a post-office assistant manager. Then the tax reforms were introduced in year 2000, to improve the tax machinery in order to widen the tax base and increase revenues. Therefore the salary, perks and benefits of tax officials were increased due to the highly demanding job. Since then the morale of the management remained quite high, which resulted the surplus recovery every year, than the initial targets set by the government.
But one thing is still remains the same, is the promotion criteria, which still being carried out on the same old version of ACRs, and on the basis seniority, with no consideration to the modern appraisals. So there is a need emerges of introducing the new performance appraisals in order to select the right candidate for the higher positions. The organisation needs to follow the new system to select the best candidates for higher position on merit and capabilities, and not only the basis of seniority alone.
The scope of this research was limited to Income Tax Department, which covers only post Tax Reforms era. The research studied that how 'appraisal systems for career progression' of middle level management employees working at the zonal offices is being managed at the Federal Board of Revenue and the Ministry of Finance, in post-reforms environment so that they are performing their jobs in more effective manner.
To explore the basics of promotion criteria in this organisation.
To find the major tools of appraisals for promotion.
To evaluate the employee opinion regarding the prevailing system.
To identify the employees satisfaction and grievances regarding the procedures of promotion.
Assumptions behind the promotional criteria and appraisals.
To assess the difference between the promotion criteria of a private organisation and the organisation we are conducting this research for, which is a public one.
To discover all possibilities and expectations of employees regarding promotion techniques.
To assess the morale of the employees regarding the system.
Limitations of the Study:
It was a new area of research which was not yet completely tapped in Pakistan so it was not particularly easy to get the required information (especially from secondary data).
As the researcher had difficulty in gathering data on a country-wide basis from Income Tax Department's Zonal Offices, the data was gathered from only the city of Karachi.
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Limited availability of time on part of the respondents and researcher
Organisation of Study:
The second section of the thesis includes an in-depth understanding of the concepts of performance appraisal and management, its impact on the organization and the individuals, why individuals need appraisal and how the employees need to be involved in the appraisal and performance management system process in order to implement a successful performance management program in any organization. Various cases most matching the requirements and objectives of the researcher's subject matter were analyzed by the researcher in order to gain an insight into the concept of change management and resistance. The common factors among the various cases were highlighted so as to provide support to the data gathered by the researcher.
The third section is based on the information that the researcher gathered through the interviews of the senior executives of Federal Board of Revenue. This section gives an insight into the details of the implementation of the process of appraisal/ performance systems and its outcomes. The researcher's objective was to clearly convey the reasons and the causes of the decision expected by the management of FBR. The fourth section includes the findings and analysis of the employee questionnaire. Each question was analyzed by the researcher so as to clearly explain the researcher's objective in asking that question and to what extent did the results support the literature the researcher had reviewed.
The fifth section comprises of the conclusion and recommendations provided by the researcher based on information acquired through the top level management interviews and through the analysis of the employee questionnaire. The researcher's aim was to provide objective and unbiased recommendations which in turn could be used both by the management of 'Income Tax Department' (FBR) and for the purposes of further research.
Performance appraisal defined:
Performance appraisal is vital component of performance management. In itself it is not performance management, but it is one of the range of tools that can be used to manage performance. Because it is carried out by line managers rather than HR professionals, it is important that they understandÂ their role in performance managementÂ and how performance appraisal contributes to the overall aims of performance management.
The performance appraisal or review is essentially an opportunity for the individual and those concerned with their performance, most usually their line managers, to get together to engage in a debate about the individual's performance, development and the support required from the manager. It should not be a top down process or an opportunity for one person to ask questions and the other to reply. It should be an informal conversation in which a range of views are exchanged.
Performance appraisals usually reflects the past behaviour and so provide an opportunity to highlight the past performance. But in order to succeed they should also be used as a basis for making development and improvement plans and reaching agreement about what ought to be done in the future.
The performance appraisal is considered the core of performance management. The performance management survey carried out in 2009 by CIPD, found that 81 per cent of organisations used individual appraisals.
However, it is a common mistake to assume that if organisations implement performance appraisals, they have performance management. This is not the case. Performance management is a holistic process bringing together many activities which collectively contribute to the effective management of individuals and teams in order to achieve high levels of organisational performance, as well as to reflect the chances of an individual's progress in future. Performance management is strategic in that it is about broader issues and long term goals and integrated in that it links various aspects of the business, people management, individual and teams.
Performance appraisal on the other hand is operational, short to medium term and concerned only with the individual and their performance and development. It is one of the tools of performance management and the data produced can feed into other elements of performance management but in itself can never be performance management.
CIPD research emphasizes the importance of a positive relationship between individuals and line managers. Carried out sensitively, the performance appraisal is an essential tool in developing and maintaining this relationship. (CIPD 2010).
Ways to conduct performance appraisal:
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The five key elements of the performance appraisal are:
Measurement: Assessing performance against agreed targets and goals.
Feedback: Providing information to the individual on their performance and progress.
Positive reinforcement: Emphasising what has been done well so far and making only constructive criticism about what might be improved.
Exchange of views: An informal exchange of views about what has happened, how appraisees can improve their productivity, the support they need from their managers to achieve this and their aspirations for their future career progression prospects.
Agreement: Collective conclusion by all parties about what needs to be done to improve performance generally and overcome any issues raised in the course of the discussion.
There is not a single way to conduct an appraisal. Some companies develop an appraisal form with space for appraisers to rate appraisees on aspects of their work such as their contribution to the team, role development, effectiveness, etc. The approach will depend on the nature of the business and the people involved. However as a minimum it is helpful to have a form to collect consistent information on the appraisal. This may be an informal dialogue from appraisers with the opportunity for appraisees to reply and comment.
It is also helpful to have some information on the following:
Objectives: Whether they were achieved and if not the reasons why.
Competence: Whether individuals are performing below, within or above the requirements of the role.
Training: What training the individual has received in the review period and what training or development they are likely to receive in near future.
Actions: A note of any actions that need to be carried out by the individual or the appraiser.
There is this widespread view that the content of appraisal discussions should be confidential to the individual and the appraiser. But increasing pressure to provide information to assess the contribution of people to organisational value makes it desirable that performance data be recorded and stored in such a way that it can be used to feed into indicators of human capital value.
Increasingly organisations are putting more emphasis on the kind of behaviour and traits they want their employees to exhibit.Â Behaviour, particularly management behaviour, has been identified as a significant source of value. They are therefore not entirely concerned with the achievement of goals, but how these were achieved. Some organisations are identifying a set of positive management behaviours for example, and then rating against them. Others are identifying the behaviours associated with excellent service and rating against these in the appraisal process. Again the design of the process will depend on what is important to the particular business and the achievement of their business objectives and will therefore be influenced by the broader performance management process. It is vital that people do not achieve their goals at the expense of their colleagues' morale. (CIPD 2010).
How a good appraisal looks like:
A good and constructive appraisal is one in which:
Appraisees do most of the talking
Appraisers listen actively to what they say
There is scope for reflection and analysis
Performance is analysed not personality
The whole period is reviewed and not just recent or isolated events
Achievement is recognised and reinforced
Ends positively with agreed action plans.
A bad appraisal:
Focuses on a catalogue of failures and omissions
Is controlled by the appraiser
Ends with disagreement between appraiser and appraisee.
All managers anticipated to carry out performance appraisal should have thorough training. Ideally this should not just be on the skills of performance appraisal, the 'how' to do it, but also on the reasons for performance appraisal the 'why' we do it. Managers should understand how it fits into the broader strategic process of performance management and how the information and data generated contributes to understanding of the capacity of the human capital of the organisation to contribution to business strategy and value.
A core requirement is that appraisers have the skills to carry out an effective appraisal as described above. This means they ask the right questions, listen actively and provide feedback.
Asking the right questions:
The two main issues are to ensure that appraisers ask open and probing questions.
Open questions are general rather than specific; they enable people to decide how they should be answered and encourage them to talk freely. Examples include:
How do you feel things have been going?
How do you see the job developing?
How do you feel about that?
Tell me, why do you think that happened?
Probing questions explore more specific information on what happened or why. TheyÂ should be supporting the individual's answer and encourage them to provide more information about their feelings and attitudes and they can also be used to reflect back to the individual and check information. Examples would be:
That's very interesting. Tell me more about â€¦.?
To what extent do you think that â€¦?
Have I got the right impression? Do you mean that â€¦.?
Main features of modern succession planning:
Succession planning can be widely defined as identifying future potential leaders to fill key positions. Wendy Hirsh defines succession planning as 'a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short-term successors) or seen as having longer-term potential (long-term successors).'
In the same survey referred to above, 58% of UK organizations reported having a process for identifying high-potential leaders.
According to Hirsh, succession planning sits inside a very much wider set of resourcing and development processes called 'succession management', encompassing management resourcing strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills analysis, the job filling process, and management development (including graduate and high-flyer programmes).
Organizations differ in size, scope and type, so it is difficult to point to any single model of succession planning. However, it is most common for succession planning to cover only the most senior jobs in the organization, plus short-term and longer-term successors for these posts. The latter group are in effect on a fast-track, and are developed through job moves within various parts of the business. This focus on the most senior posts, perhaps the top two or three levels of management, means that even in large organizations, only a few hundred people at any given time will be subject to the succession planning process. It also makes the process more manageable, because it is much easier to concentrate on a few hundred individuals rather than (say) several thousand. That said, however, many large organizations attempt to operate devolved models in divisions, sites or countries where the same or similar processes are applied to a wider population. (CIPD, 2009).
Therefore we can infer with this point that there is a very high correlation between the succession planning and appraisal, because, without a fair and substantial appraisal system it is difficult to assess a potential candidate for the greater responsibilities within the same organisation. Without having a proper appraisal one cannot figure out what qualities a candidate already has and what else he/she needs more, in order to develop in future and fulfill the role in a desired manner. Appraisal gives an opportunity to the manager to audit the entire skills and capabilities of a candidate for the next level, and if there is something needs to be catered to, in terms of training and development programmes, that also need to provided accordingly so they can keep abreast with the responsibilities of their position.
Balance between individuals and organizations:
The old succession planning was purely about organizational needs. The modern version takes account of the growing recognition that people, men as well as women increasingly need to make their own career decisions and to balance career and family responsibilities. So the emphasis is about balancing the aspirations of individuals with those of their employing organizations, as far as possible customizing moves to meet the needs of employees, their families and the changing skill requirements of the organization. (CIPD, 2009).
Broadening experience by lateral moves:
Traditionally, people would have gained experience by upward moves, with accompanying increases in status and salary. Nowadays that may not be possible, because organizations are less hierarchical, with fewer management layers. A sideways move into a different job may be all that is available, without any extra cash. Traditional fast-tracking created expectations of upward progression, and if status and money are thought to be motivators, different methods of generating commitment may have to be found. Similarly, some organizations are taking advantage of secondment opportunities as a way of providing wider development opportunities to potential leaders. But some of the above mentioned factors are not motivators, because these are the basic needs of a role therefore considered hygiene factors (Herzberg, F. 1959).
Individuals prefer to look a role in upwards position rather than in the same horizontal positions, which are more associated with the hygiene factors than the motivation, which can possibly be acquired through more responsibilities in an enriched role.
Roles, not jobs:
In the past, people would move up to specific, often specialist, jobs. Now (although some jobs will always require specialists) the main focus is on identifying and developing groups of jobs to enable potential successors to be identified for a variety of roles. So jobs might be clustered by role, function and level so that the generic skills responsible for particular roles can be developed. The aim is to develop pools of talented people, each of whom is adaptable and capable of filling a number of roles. Because succession planning is concerned with developing longer-term successors as well as short-term replacements, each pool will be considerably larger than the range of posts it covers. (CIPD, 2009)
The reason for having a larger pool is that not all employees will remain in the same organisation for a longer period of time these days, they are always looking for more opportunities even in the other organisation in addition to their own. Appraisal plays a vital role here, which tends to play as motivator in this case, where highly graded candidates feel more motivated and expect future growth within the same organisation, whereas others who may not be given the same credit may move somewhere else for more challenging opportunities.