The Performance Appraisal Process Management Essay

The essence of the concept of the HRM is that people working in the organization are viewed as a valuable resource. If these people are managed properly, they can boost productivity through commitment and capability. HRM lays emphasis on the importance of integrating personnel functions (recruitment, selection, appraisal, reward, development, industrial relations, grievance and discipline, retirement, redundancy, dismissal) into the overall strategic management of the organization. All organizations evaluate the performance of their employees to find out their relative worth for the job they are doing. Performance is being related to the productivity, it is crucial for the organization to achieve its goals and objectives. Effective performance for the organization means that output can be maintained with fewer numbers of employees. Performing effectively is also of crucial importance to the employee because organizations can no longer tolerate poor performance, they (employees) are more likely to be dismissed. The effective management performance, therefore, is not only vital for the long-term survival of the organizations but is also a moral obligation on the employees.

Performance appraisal is considered as the systematic evaluation of individuals to their performance on the job and their potentials for development (Dale S. Beach, 1980: 290). Wendell French has defined performance appraisal as a systematic and periodic assessment of how employees are doing their jobs in relation to established norms and the communication of that kind of assessment to employees. It is a process of evaluation an employee’s job performance with respect to its requirements.

A systematic performance appraisal provides information for making decisions about various issues such as promotions, pay increases, layoffs, training and development and transfers. It is management’s powerful tool in controlling human resource and productivity. Managers can improve an employee’s job performance through clarifying expectations and evaluating performance. Employees also, in general, prefer having some kind of appraisal to develop an appropriate vision of their own effectiveness and opportunities (Wood, 1988). Formal performance appraisal can meet the three needs, one of the organization and the other two of the individuals within the organization:

It provides systematic judgments to back up salary increase, transfer, demotion or termination.

It is the means of communicating to subordinates the behavior, attitudes, skills or job knowledge and let him know where he stands.

It is used as a base for coaching and counseling the individual by his superior.

The effective management of performance is not only vital for the survival of the organization but is also in the best interest of the employees. The underlying assumption of performance management is that the individual employees can satisfy their needs and objectives by contributing to the attainment of the organization’s objectives. This may result in employee’s motivation and greater job-satisfaction which is at the core of HRM (Foot and Hook 2008).

The performance appraisal process generally consists of the following six steps as depicted in Figure 1 (Decenzo and Robbins, 1998).

Figure 1. The Performance Appraisal Process

Establishment of performance standards

Communicate the performance expectations to employees

Measure actual amount of performance

Compare the actual performance with standards

Discuss appraisal with the employee

If necessary, take corrective action

Performance appraisal begins with the establishment of clear and objective standards of performance evolved out of job analysis and job description. These standards need to be communicated to the employees. Subordinates have to receive and understand the information properly. The third step is the measurement of the actual performance. For this, four measures can be utilized by managers, namely, personal observation, satisfied reports, oval reports and written reports. The fourth step is the comparing of the actual performance with standards. If any deviations are found between standards and actual performance, the manager may proceed to the fifth step to discuss the appraisal with the employees. Final step of appraisal is taking corrective action when it requires

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The objectives of performance appraisal can be classified by different ways but according to (Harrison, 1995) to the objectives of performance appraisal are i. administrative: which determine orderly way of promotion, transfers and increase of payment. ii. Informative: supplying the relevant data to management team according to performance of subordinates and weakness and strengths of individual. iii. Motivational: create good environment to employee which motivate staff to develop themselves and to improve their performance

According to (Randell, et al. 1972) the main purpose of staff appraisal is to evaluate, auditing, constructing succession plans, motivating staff, developing individuals and checking.

Similarly according to (Lefton, 1997 ) performance appraisal can be defined by mainly four characteristics a. its formal b. it tries to find out why and how a subordinates is doing the job c. it tries to explore how subordinate can do better way in a job d.it always tries to produce benefits for subordinate, the organization and the superior.

Performance evaluation systems in Nepalese organizations are mandatory. The results of performance appraisal are not used in terms of career development, reward management and employee training and development. The results are mostly used to decide whether to promote employees or not (Adhikari, 2006).

The main purpose of performance evaluation in government and public enterprises is the promotion of employees. It is not used for performance feedback to employees, reward management and identifying the needs of training and development. In civil service, 40 percent of performance appraisal is confidential and thus non transparent to employee (Agrawal, 2001).

Three different approaches exist for doing appraisals. Employees can be appraised against (i) absolute standards, (ii) relative standards, or (iii) objectives (MBO). However, no one approach is always best. Absolute standards are individual oriented whereas relative standards rank individuals. Management by objectives facilitates continuous improvement of performance results.

Most of the private sector enterprises in Nepal lack systematic performance appraisal system. Personal judgment and subjective assessment of owner-manager serves as the key criteria for performance appraisal (Agrawal, 1982). Formal and systematic performance appraisal system was non-existent in tea industry of Nepal.

Promotion is the vertical movement of an individual in an organization’s hierarchy, enhanced status, accompanied by increased responsibilities, and usually with increased income, though it is not always so (Monappa and Engineer, 1999). It is the advancement of an employee to a higher job-rank in the organizational hierarchy accompanied by a pay rise (Pigors and Myers, 1981: 303). Employees consider their ultimate success of their career and performance in terms of the number and frequency of promotion they get during their service. Yoder et al observed that promotion gives incentive to initiative, ambition and enterprise, unrest and minimizes discontent, attracts capable personalities, appropriate logical training of advancement, and forms and effective reward for cooperation and loyalty, long term service, etc. (Yoder,1979). It increases satisfaction in the employees that their talents and capabilities are being recognized. In turn, they trust the organization and devote for the accomplishment of organizational goals and objectives.

In Nepal, the Civil Service Act was promulgated in 1956 which stated that promotion should be given to civil service personnel on the basis of work efficiency (Civil Service rule, 1993). Many changes have been done in the promotion system of the employee in the government organization since that time. The Administrative Reform Commission formed under the chairmanship of Mr. Vedananda Jha suggested that the promotion criteria for civil service personnel should include (a) seniority, (b) experience, (c) academic qualification and training, and (d) departmental performance report including co-operative attitude. Another Administration Reform Commission formed under the chairmanship of Mr. B.B. Thapa noted as promotion occupied special importance in the career development of employees, so capability to hold higher promotion and the capacity to perform the work satisfactory in the present position were the main criteria of promotion (Government of Nepal, 1996, Report of Commission). Amendments were done in the Civil Service Rules in 1978 and 1983. Similarly the Administrative Reform Committee formed under the chairmanship of the then prime-minister Mr. G.P. Koirala in 1991 emphasized performance oriented promotion system. The new Civil Service Act, 1993 laid stress on performance ability with criteria such as past performance, seniority, work experience of remote area, and academic qualification. Similarly, the comparative weight-ages of promotion criteria of civil service employees were changed after 1992.

NASC’s study on promotion system of civil services stated that there was lack of clarity in its purpose and no consistency in the average promotion period between level and services. The risk of subjectivity in merit rating was a major apprehension in the minds of civil servants for giving more weight to merit rating. Even the performance evaluators’ views were in favor of ‘no link of the promotion with the performance’. Basic perquisites for sound performance appraisal practices, such as clear organizational and sectional objectives, individual job descriptions, adequate and reliable information system etc. were not properly provided in the civil service. Majorities were in favor of number allotting 50 percent of seats to the promotion by competitive examination as compared to the exiting 25 percent, in some cases even less.

Williams (1972) ascertained that managers lacked adequate means or determination to control the motivation and productivity of their workforce. Job description, performance appraisal and output indicators were non-existent; rewards and sanctions were irrationally applied; salaries were not genuinely related to knowledge and or effort requirements; offices had inadequate facilities; poor co-operation and limited delegation. The top of the decision making level was congested by trivialities while middle-level staff were in a soporific frenzy over the responsibilities for complex planning and fiscal matter.

The review presented above fairly indicates that the limited attempts have been made to study personnel / HR management practices in public and private enterprises of Nepal. Those studies have shed light on some aspects of personnel / HR management, however, the concluding remark indicates that personnel /HR management in the past remained neglected areas of management. This review also indicates that no systematic attempts have been made to study HRM practices in tea industry of Nepal. This knowledge gap has called for a systematic study which could bridge up such a gap. The present study is an attempt in that direction.

Tea industry which is leading position in the national economy is growing extensively mainly in the eastern region of Nepal. It is, being one of the most labor intensive, agro-based industries; it involves a great deal of workforce, which provides direct employment to about 41000 workforces. After the privatization of Nepal Tea Development Corporation in 2000, the change in ownership is also accompanied by deep changes in organizational procedures and culture that could have a profound effect on enterprise behavior and performance (Manandhar, 1998).

There have been only a few research studies in the field of human resource management in private enterprises of Nepal. And there has not yet been any specific research conducted in HRM in tea industry of Nepal. So, in view of the poor research-based on HRM and the lack of knowledge existing in this field, the research work is virtually called for the streamlining of HRM practices. Research can lead to an increased understanding of an improvement in HRM practices. It can provide insights for managers as they attempt to increase employee productivity and satisfaction while reducing absences and turnover. Research can also identify potential problem areas related to HRM.

Industry background

The golden beginning of tea plantation in Nepal dates back to the year 1863, with the first tea processing factory was established in the year 1878, in Ilam Tea Estate. In 1959 Budhkaran Tea Estate was established at Jhapa which was the first tea estate in private sector. Soon after this venture, Satighatta, Nakkalbanda, Mittal, Giribandhu Tea Estates and Himalaya Tea Garden were established. The establishment of Nepal Tea Development Corporation (NTDC) in 1966 is considered to be a landmark to augment the tea cultivation.

Generally, two types of tea orthodox and CTC (Crush, tear and curl) are produced in Nepal. At present, there are 128 tea estates and 45 tea processing factories as registered in NTCDB. Basing on the previous statistical figure of total tea plantation area of 16420 hectares, and multiplying by 2.47 persons per hectare, it is estimated that about 41000 people are employed in tea industry of Nepal

Tea industry which is considered as the backbone of national economy of Nepal but there has not yet been any specific research conducted in HRM in tea industry of Nepal. So, in view of the poor research-based on HRM and the lack of knowledge existing in this field, the research work is virtually called for the streamlining of HRM practices. Research can lead to an increased understanding of an improvement in HRM practices. It will provide insights for managers as they attempt to increase employee productivity and satisfaction while reducing absences and turnover.

Research aim, research questions or hypothesis and objectives

Research aim:

The research aims is to investigate the employee performance appraisal system in an organization.

Research question

Is the performance appraisal practice key to pay rise, training and development, promotion or termination of the employee in the tea industry of Nepal?

Research objectives

The specific objectives of this study are:

1. To examine how employee performance is appraised in an organization.

2. To evaluate the effectiveness of performance appraisal system in the organization.

3. To analyze the relationship between performance appraisal and the factors like pay rise, training and development, promotion or termination of employee in an organization.

Research Methodology

The research philosophy applied for this research project will be phenomenological instead of positivist philosophy and the researcher will analyse and explain the purpose of research through the qualitative methods.

4.1. Research Philosophies: Positivism and Phenomenology

Phenomenology as a philosophy, propounded by Edmund Husserl in the 20th century which is concerned with the systematic analyses and reflection of consciousness, structures and phenomena as it approaches in the act of consciousness. The reflection in the phenomenological philosophy is to be done through the first person viewpoint which is highly modified first person. According to Saunders et al. (2000) explained the significant differences between these two approaches of research which is very useful for this study to make concise choice. Regarding the worldview Saunders et al say that phenomenology describes world is subjective which is socially constructed whereas Positivism philosophy says that the world is objective and external. In terms of their basic beliefs they further say that positivism define that the observer is independent in his or her observation, converse to this, phenomenological view says that the observer can’t be isolated from what is being observed rather than the observer is a part of what is being observed. In positivism Science is taken as free of value contrary phenomenological philosophy takes the human interest in science. Phenomenology view says that human interest is to colour the science.

Taking into consideration of research nature the research the researcher finds phenomenological philosophy opt for this study. Collis and Hussey (2003) says that phenomenological research provides qualitative data which is well matched with this research, as the qualitative data by its nature is subjective and rich because there is a significant level of participation of the researcher. Besides these facts, the research setting is the commercial organization which is natural setting rather than laboratory setting of the positivistic philosophy.

4.2. Qualitative and Quantitative Research

Mainly there are mainly two kinds of research where researcher can apply any one of them or mix both qualitative and quantitative as per their demand of the research topic. In this study, researcher will use qualitative approach with the definition of Collis and Hussey (2003) who says, qualitative research as an approach of study which is subjective and tries to explore and understand the social and human activities which includes reflection and examination on perceptions. Performance appraisal as such is a subjective in nature which is related to the study of human behaviour with a fixed organizational setting.

Inductive and Deductive Research

The choice between two methods of research as inductive and deductive is also depends on the nature of the study. The deductive research which begins with theory and later tested through empirical observation. In this study, inductive approach will be used where researcher moves from the particular to general.

4.4 Source of Data

In the initial phase of investigation, a comprehensive study of various relevant materials – books, reports, research works etc. will be done. Both the primary sources and secondary sources of data collection tools will be applied. While collecting data from primary sources, multi-data collecting method i.e. triangulation method will be applied. The researcher will prepare the questionnaires that elicit the facts regarding the personal appraisal system in the organization. In the second phase, the researcher will visit the different tea states with semi structure interview schedules, design to get information on what was being done and how was it being done relating to various aspects of employee performance and appraisal process. Then after first field study, he will construct some research questions regarding to structure interview for pilot study. So, at last with the help of pilot study he will fully prepare research question for structure interview for different employee as workers, managers and assistant. The researcher thinks that collecting data from different methods helps the researcher understand the phenomenon more deeply and increases the reliability and validity of the data.

The secondary data will be collected from various published and unpublished reports, records and documents of Central Bureau of Statistics, Labor Department / Office, Center for Economic Development and Administration of TU, Nepal Tea and Coffee Development Board, Agro Enterprise Center under Federation of Nepal Chamber of Commerce and Industry. Data will also be collected from publications of different national and international institutions, research works, books and relevant articles published in different journals, magazines and newspapers etc. and will review for obtaining necessary information.

4.5. Sampling Procedure:

The sampling method for selecting the tea estates will be judgmental sampling. The tea estates for this study will select mainly on the basis of their size of plantation, number of employees, and production performance of the companies representing both corporate and private sector, and hilly as well as Terai region. For this study, five leading tea estates having their own processing factories will be selected comprising two tea estates from corporate sector, namely Kanyam tea state from hilly area of Ilam and Tokala from Jhapa district. On the other hand three tea estates from the private sector, namely, Budhkaran, Satighatta and Giribhandhu will be chosen from Jhapa district. Five employees from different level of each estate will be considered as a sample. So sample of this study will be 30.

Analysis of Data:

After the collection of data from both primary and secondary sources most of the processing work, tabulation and calculations will be conducted manually in the beginning. Data will classify into different groups and finally they will be presented in tabular forms. Similarly, the respondents’ views and opinions will be analyzed in terms of different levels of employees such as managers / officers, assistants and laborers. The analyses of data will be made with the help of relevant statistical tools such as simple average, percentage and chi-square tests. For computation and statistical analysis electronic scientific calculator and computer will be used.

Research ethics

While conducting the research we requires certain disciplines .It embodies certain goals and norms which the researcher need to maintain coordination between the actions or activities they applied and maintain which establish the public trust of the discipline. Ethical standard helps the researcher to maintain knowledge and truth to minimise the error. It is essential to avoid misrepresentation, fabrication, and falsification of data. Some ethical issues as honesty, integrity, objectivity, carefulness, openness will be carefully considered while conducting the research.

. This study will reveal a clear picture about the existing state of HRM practices in tea industry. The outcome of the study may serve as a research infrastructure on which further researches can be built. And the information and conclusions derived from this study may be useful and helpful for practicing managers, as well as planners, policy makers and other agencies concerned, through better understanding of HRM practices relating to tea industry. Thus, it is a modest attempt towards examining and understanding HRM practices in tea industry of Nepal. Also, researcher has a good taste of knowledge and highly interested about tea industry of Nepal from the very beginning. So the research topic will be significance for researcher.

Human resource is the most important resource in an underdeveloped country like Nepal which can be mobilized or managed for the overall development of the country. But in practice, very little attention has been given to the management of human resources in any organizational setting. Consequently Nepalese industries have been facing various HR problems such as low employee-morale, low productivity and greater tension between labor and management.

Timescale

After the proposal has been accepted by the University of Wales the following time line will be followed to complete the research work:

Figure 2. Gantt chart:

Months and weeks→

Activities

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Read literature

Conform objectives

Draft literature review

Field survey with semi structure interview schedule

Research question for structure interview for pilot study

Pilot study of interview

Prepare research question for final interview

Conduct final interview with employee and fill up questionnaire

Tabulation of raw data

Analysis

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Writing thesis

Deadline

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Resources

Both primary and secondary sources will be used in the study. In the initial phase of investigation, a comprehensive study of various relevant materials – books, reports, research works etc. will be done. The secondary data for this study will be used from previous research works, books and relevant articles published in different journals, magazines and newspapers etc.

In the first stage of primary data , the tea estates were visited with the semi-structured interview schedules design to get information on what was being done and how was it being done. With that information from first visit, more reliable semi structure interview will be designed and piloted with 7 non-sampled employees of different levels such as managers, assistants and workers. Finally, revise structure interview schedules will be construct and administer to the 25 sample employees with different level.