Discuss the critical issues in a performance management system.
An employee performance management system is a means to assure that every employee works in a way which is aligned with organizational goals and which assure that the employee achieve his maximum potential and productivity on the job (Aminuddin 2008). In business today, performance management system are one of the major focuses and it sales are expected to reach $2 billion on 2010 (Ariyachandra & Frolick 2008). A performance management system includes a number of elements including the training of the worker, appraisal and monitoring of the worker’s performance, setting of objectives for the individual worker, and the taking of appropriate follow-up action after the worker’s performance has been appraised (Lawler 2003). However, there still exist many critical issues in a performance management system.
The performance management system is a dynamic, ongoing, and continuous process, but the performance appraisal is a one-time event each year (Gooderham 2001). Performance appraisal is a technique of formally review and evaluate an employee’s work over a particular time period (Milliman et al. 2002). Performance appraisal data are potentially valuable for use in numerous human resource functional areas, which are involve the recruitment and selection, career planning and development, internal employee relations, assessment of employee potential, training and development, compensation programs, and human resource planning (Mondy 2010).
There are a lot of external and internal environmental factors can influence the appraisal process (Redman et al. 2000). The external environmental factors such as legislation which requires that appraisal systems be nondiscriminatory and the unions have traditionally stressed seniority as the basis for promotions and pay increase. Apart from that, the internal environment factor is a firm’s corporate culture can assist or hinder the process. The performance appraisal process starting point is identifying specific performance goals and the beginning of a continuous cycle (Mondy 2010). The next step in this process is establishing performance criteria or standard and communicating these performance expectations to those concerned. Then examining the actual work performed and the performance is been evaluated. And the final step is discussing the appraisal with the employee.
The people who are usually responsible for performance appraisal include immediate supervisors, peers, the employee, customers, groups, and subordinates (Mondy 2010). Some firms conclude that evaluation of managers by subordinates is both feasible and needed. They reason that subordinates are in an excellent position to view their superiors’ managerial effectiveness. Moreover, the major strength of peers and team members to appraise performance is that they work closely with the evaluated employee and maybe have an undistorted perspective on typical performance, especially in team assignments (Mondy 2010).
The performance appraisal methods which include rating scales, essay, ranking, forced distribution, result-oriented approaches, behaviorally anchored rating scales, forced ranking, work standards, critical incidents, and 360-degree feedback evaluation (Mondy 2010). The 360-degree feedback evaluation method is a popular performance appraisal method that involves evaluation input from multiple levels within the firm as well as external sources (Mondy 2010). In this method, people all around the rated employee which include subordinates, team members, peers, supervisors, the employee himself or herself, internal or external customers, and senior managers (Drakes 2008). There is 90 percent of Fortune 500 companies use some of 360-degree feedback for either employee evaluation or development and to provide evaluations for conventional uses (Maylette & Riboldi 2007). Many companies use results from 360-degree programs for conventional applications, and for succession planning, training, professional development (360Ëš Feedback 2008), and performance management (Survey Says 2004). However, according to some managers, the 360-degree feedback method has problems. Ilene Gochman (cited in Kiger 2006), director of Watson Wyatt’s organization effectiveness practice, says, “We’ve found that use of the 360 is actually negatively correlated with financial results.” GE’s former CEO, Jack Welch (2001), maintains that the 360-degree system in his firm had been “gamed” and that people were saying nice things about one another, resulting in all good ratings.
Additionally, the rating scales method is a performance appraisal method that rates employees according to defined factors (Mondy 2010). Evaluators are using this approach to record their judgments about performance on a scale. Although systems often provide an overall rating, the method generally allows for the use of more than one performance criterion. One reason for the popularity of the rating scales method is its simplicity, which permits quick evaluations of many employees. When you quantify the ratings, method facilitates comparison of employees’ performance.
Besides that, the problems associated with performance appraisals include appraisals include appraisal discomfort, halo/horn error, central tendency error, personal bias (stereotyping), employee anxiety, manipulating the evaluation, recent behavior bias, leniency/strictness, and lack of objectivity (Mondy 2010). Lack of objectivity is a potential weakness of traditional performance appraisal method (Mondy 2010). For example, in the rating scales method, which usually used factors such as attitude, personality, and appearance are difficult to measure. These factors probably have little to do with an employee’s job performance.
On the other hand, the central tendency error is an evaluation appraisal error that occurs when employees are incorrectly rated near the average or middle of a scale (Mondy 2010). This practice may be encouraged by some rating scale systems that require the evaluator to justify in writing extremely high or extremely low ratings. The rater with such a system may avoid possible controversy or criticism by giving only average ratings (Self-Evaluation Key 2007). This error still does exist and may influences the accuracy of evaluations, even these ratings tend to cluster in the fully satisfactory range and employees do not often complain about it.
However, in the evaluation process of performance appraisal cause the problems of employee anxiety (Mondy 2010). This may take the form of apathy, turnover, and discontent. A lawsuit is filed based on real or perceived unfairness while in a worst-case scenario (Clausen et al. 2008). The opportunities of promotion, better work assignment and increased compensation may hinge on the results. This will cause apprehension and also outright resistance. There has a opinion are suggested if those is surveyed typical employees, those will be telling the performance appraisal is management’s way of highlighting all the bad things from who are did all year (Colvin 2002).
In conclusion, performance management systems serve administrative, developmental purposes, and strategic, and thus, their importance cannot be underestimated (Witcher & Chau 2008). The organization has to getting the right performance management policies and processes because it was crucial to maintaining that organization’s competitive advantage. Manager should be conditioned to understand that managing performance is a continuous process that is built into their job every day (McCarty 2007). All the problems which have been associated with performance appraisal such as lack of objectivity, leniency, appraisal discomfort, halo/horn error, central tendency error, personal bias, and employee anxiety that the manager need to be wary of in an effective on performance management system.
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