The Various Reasons Why Organisations Exist Business Essay

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Organisations exist for a variety of purposes. Some produce goods for local or overseas consumption while others provide necessary services for profit or community benefit. However, all organisations rely on the availability and effectiveness of several kinds of resources for the different objectives, which are financial, technological and human resources. Compared with financial or technological resources, human resources are the most unpredictable (because of their complex blend of rational and emotional characteristics) and often the largest ongoing cost factor in any organisation, and they may also be regarded as its most valuable assets (Nankervis et al. 2011, p3). Performance management program is an important part of the human resource management and it is a program must be developed if an organisation is to maintain and enhance its productivity. Claus and Briscoe (2009) point out that when discussing performance management, many think only in terms of performance review, whereas this is just one process under the performance management umbrella. In the following report, the performance management and its various components will be discussed. At last, we will discuss about the current performance management of Colbran Medical Institute case study. There are some particular performance appraisal issues in the Colbran Medical Institute, such as the potential for distortion of appraisals, will be reflected as well, and there are some proposals for the Colbran Medical Institute and a performance appraisal system that would suit it which can help the institute change the current system and develop the current performance.

Performance management is the process of identifying, evaluating and developing the work performance of employees so that the agency's goals and objectives are more effectively achieved. Effective performance management is designed to enhance performance, identify performance requirements, provide feedback relevant to those requirements and assist with career development. (Davidson et al. 2009) The primary objectives of performance management are to assist the company achieve the enhanced standards of work performance and employee to perform their job more efficiently, and for employees to work for the defined goals and receive regular feedback on performance (Hawkes, 1998). Kathy (2009) concluded some advantages and disadvantages of performance management. There are two main advantages of performance management. First of all, it targets staff development which is a good performance management system can be a positive way to identify developmental opportunities. Then, it rewards stuff for good job performance and encourage the staff to work hard. If pay increases or the bonuses linked to the PA, the process staff can see a direct link between performance and their reward. So their work performance becomes more efficiency. However, the main disadvantage is if the performance appraisal system provides some inaccurate feedback maybe caused by the rater errors like central tendency or leniency, it is a warning signal for the organisation.

Performance management has various components such as, performance review or appraisal, employee counselling, employee discipline, employees' training and development, termination and remuneration. The performance appraisal is the process of obtaining, analysing and recording information about the relative worth of an employee. (Nankervis et al. 2011) It focuses measuring and improving the actual performance of employee and also the future potential of the employee. The appraisals are normally performed twice in a year in an organisation in the form of mid reviews and annual reviews which is held in the end of the financial year. (NaukriHub, n.d) The performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees. There are many objectives of performance appraisal. First of all, it provides feedback to the employees on past performance. Then, it diagnose the strengths and weaknesses of the individuals for the identifying the training and development needs of the future. Thirdly, it provides clarity of the expectations and responsibilities of the functions to be performed by the employees. Last but not least, the performance appraisal provides information to assist the organisation establish the future goals and assess training needs. There are various methods to measure the performance review, such as rating scales, comparison methods, peer, self and upward review and 360-degree feedback (Nankervis et al. 2011). In the case of Colbran Institute, they use graphical scale to measure their performance appraisal.

While performance review is one importance process that under the performance management system, another is the process of employee counselling. Employee counselling can be explained as providing help and support to the employees when they face the difficult times in life. People have some problems either in their work or personal life at anytime in life or career, which can increase the stress level of themselves. As a result of that, the efficiency of their performance can be influenced. Counselling is guiding and helping them to resolve their problems whenever they need. Counselling of employees is becoming an essential function of the managers. (Bobinski, 2005) There are three various aspects that the managers need to address for their counselling of employees, which are performance counselling, personal and family wellbeing and other problems. Performance counselling is the need for employee counselling arises when the employee shows the signal which is the decreasing of their performance maybe caused by the work stress or bad decision-making. In addition, personal and family wellbeing counselling is employee carry the personal or family problems to their work which lead to a bad affect for their performance. These problems all can be deal with employee counselling and counselling at workplace is a way of the organisation to care about its employees. (NaukriHub, n.d)

Furthermore, Employee discipline is another necessary and important factor for any growing business. Indiscipline employees have poor ability to learn and inefficiency performance in work. Even worse poor disciplined employees can make an undisciplined workforce, can destroy the quality of service or product, can harm the reputation and the image of firm and increase the cost of the company. The purpose of the employee discipline is to avoid these bad things happened. The managers can use different ways to maintain the discipline in a company, such as set achievable goals and standards which can help the employees easy to abide the discipline, warn or even punish the employees whenever their performance is not up to the standards or targets and praise or reward every good performance from disciplined employees. (eSalesTrack, n.d,) These ways are all benefit for develop a good employee discipline and make a good affect for the long run of the business.

Training and development is another factor that can influence the performance management. Most employees need additional training if they want to know how to perform better in the job which they were hired. Development usually refers to teaching the skills needed for both present and future jobs. (Davidson et al. 2009) Training of the reviewers is as important as the management appraisal, because the managers and supervisors need to develop themselves. Performance review training should focus on eliminating the subjective errors made by managers in the rating process. Taking the Colbran Institute case study for example, there are rater errors in the process of its performance appraisal. That influences the result of the appraisal generalities.

Last but not least, termination of employment is the end of an employee's duration with the employer. It can be initiated by either the employee or the employer. There are various types of termination, which are voluntary termination, retirement, involuntary termination and termination by mutual agreement. Firstly, voluntary termination occurs when absence from work for three or more consecutive work days without notifying the company. Secondly, retirement occurs maybe as a result of the employee's age which is vary depending on various job, or else an injury or other medical condition forcing early retirement, such as athletes or builders. Then, involuntary termination is initiated by the company. It occurs when employee's unsatisfactory job performance or reduction in staff. At last, termination by mutual agreement is some occupations have the contract of the certain age to retire, such as airline pilots. ( HumanResources, n.d,)

Colbran Medical Institution Case Study

According to the case study, some of the particular issues are identified in the current performance appraisal system used by Colbran Institute, which is the potential for distortion of appraisals. The potential for distortion of appraisals include unclear performance criteria and ineffective rating instrument, and lack of focus on management development and improvement. The unclear performance criteria and ineffective rating instrument can lead to rating inaccuracy, central tendency, leniency and does not indicate that whether the employee's performance effective or not. The lack of focus on management development and improvement can lead to ineffective link to reward systems. Obviously, the current performance appraisal system in Colbran Institute shows that it has the defective rating system and the lacking motivation skills. In the case, Isabel showed the performance appraisal forms which are either marked 'good' or 'excellent' to Allan. As highlighted by Allan, he thought that is the rater errors which like central tendency or leniency and it showed unclearly the real performance appraisal.

The unclear performance criteria and ineffective rating instrument, which is the biggest potential distortion of appraisal, can lead to inaccurate rating, leniency errors and does not estimate whether the employee's performance effective or not. In developing a rating system, a clear reflection of each level of performance must be provided and disseminated to all employees. One of the key steps in developing effective performance appraisal system is to determine the organisation's objectives. When performance appraisals are well done, there are an effective tool for guiding, enhancing and rewarding employees' performance. An effective appraisal system is important for an organisation in the long run.

Recommendation of a Performance Appraisal System

In order to achieve the full potential of performance appraisals, the Colbran Medical Institute need to form part of an integrated evaluation system. Firstly, they need to do the job analysis which the job is divided into its components and determines skills, abilities and behaviour which can distinguish between good and poor employees' performance. The Colbran institute can use job analysis to decide the different level of requirement of good or bad performer. Then, a through analysis is the most important step in designing such a system. It establishes the relationship between the job and the performance appraisal. Based on this analysis, performance standards of related particular job can be developed and communicated in writing to the employee as part of the job description. Next, actual performance is then measured and compared to standard by using rating scales. It uses the enough details to do the rating scales rather than the generalities of that. The result is communicated formally by each review period, and the result of performance appraisal should be linked with pay, that is important to ensure the system can reflect accurately what the employee is producing. So, an integrated evaluation system should be designed and performed carefully, and an excellent performance appraisal system can provide actual feedback of the employees' performance on past, improve the employees' performance more efficiently and thus enable to increase the productivity and make a long term broom of the organization.


In conclusion, the performance management plays an important role of human resource management. Effective performance management leads to enhance employees' performance, identify performance requirements clearly, provide accurate feedback relevant to those requirements and assist with career development. Performance management has various components, such as performance appraisal, training and development, remuneration, employee counselling, employee discipline and termination. Performance appraisal is on of the most important processes under the performance management. It is focus on providing feedback to the employees on past performance, discussing their strengths and weaknesses, clarifying future performance expectations, establishing future goals and assessing training needs. According to the case study, the Colbran Medical Institute has a potential for distortion of appraisal which is unclear performance criteria and ineffective rating instrument can lead to rating inaccuracy, central tendency, leniency and does not indicate that whether the employee's performance effective or not. In order to achieve the full potential of performance appraisals, the Colbran Medical Institute need to form part of an integrated evaluation system.