Employee Engagement and Performance Appraisal

Review of Management, Vol. 1, No. 2, April-June 2011

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Case Study on Employee Engagement and Performance

Appraisal: ITC Maurya

Priyanka Anand

*

Abstract

The hotel industry in India has experienced considerable and consistent growth over the

last decade. The influx of tourists for the common wealth games has caused a further rise

in the five star and deluxe hotels. In sync with the emerging trend, the study focuses on the

two important HR practices of performance appraisal and employee engagement in the

hotel industry. The research was conducted in ITC Maurya evaluates their practices

relating to HR processes. The basic methods and systems are described keeping in mind

the general trend in the Industry. ITC Maurya conducts the Q12 Gallup survey on its

employees, this method is used to access the existing levels of satisfaction amongst

employees. The employees were involved and highly satisfied with the work environment.

The performance appraisal standards are updated and different methods of appraisal are

used across the organization. The employees were aware of the criteria for appraisals and

also related a sense of importance to them. The incentives and initiatives taken by the

Hotel for various levels in the organization were communicated to all the employees.

Keywords: Employee Engagement, Performance Appraisal, Hospitality Sector

Introduction

The growing trends and rising competition in each category of hotels from five star deluxe

to five star and even the new age budget hotels has caused the best in the business to

evaluate their practices and check for areas of improvement. As the economy is

developing and becoming more fluid the sustenance and growth of all organizations have

assumed new dimensions all together.

Company Background ITC is one of India's best private sector companies with a market capitalization of nearly

US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's

Best Big Companies, Asia's 'Fob 50' and the World's Most Reputable Companies by

Forbes magazine, among India's Most Respected Companies by Business World and

among India's Most Valuable Companies by Business Today. ITC also ranks among

India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance

and published by the Economic Times. ITC has a diversified presence in Cigarettes,

Hotels, Paperboards & Specialty Papers, Packaging, Agricultural-Business, Packaged

Foods & Confectionery, Information Technology, Branded Apparel, Personal Care,

Stationery, Safety Matches and other FMCG products. ITC is an outstanding market

leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-

Exports. Over the last decade and half the mad rush to India for business opportunities has

* Lecturer, IILM College, Gurgaon (India) E-mail: [email protected]

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intensified and elevated room rates and occupancy levels in India. Gaining market share

even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel,

Personal Care and Stationery. ITC's Agricultural-Business is India's second largest

exporter of agricultural products. ITC is one of the India's biggest foreign exchange

earners (US $ 2 billion in the last decade). The Company's 'e-Chou pal' initiative is

enabling Indian agriculture significantly enhance its competitiveness by empowering

Indian farmers through the power of the Internet. As one of India's most valuable and

respected corporations, ITC is widely perceived to be dedicatedly nation-oriented.

Chairman Y C Deshwar calls this source of inspiration "a commitment beyond the

market". In his own words: "ITC believes that its aspiration to create enduring value for

the nation provides the motive force to sustain growing shareholder value‖. It was the first

to launch the powerful idea of a 'Hotel within a Hotel' by segmenting and branding the

hotel services. It created the exclusive 'ITC One', 'The Towers' and the 'Executive Club'

each catering to the needs of the global business traveler with unmatched quality and a

range of services.

Employee Engagement at ITC Maurya

Employee engagement is the measure of how involved and committed the workers are

towards their organisation and values. A well engaged employee is well aware of the day

to day happenings of the organisation and work with his or her fellow colleagues to

improve the performance of the individual and work s towards the betterment of the

organisation. It is an optimistic attitude that the employees hold towards their organisation.

Employee engagement is how the employee feels about his workplace employee feels

about his workplace and whether he or she is satisfied with the work or not. It is also

concerned with the emotions of an individual employee. The unique emotional balance of

employees and their experience. The employers and their talent of creating conditions that

give rise to employee engagement. Communication among employees at all levels in the

organisation.

Levels of engagement: Gallup defines the various types of levels of engagement

engaged-these employees are also known as builders. They are impatient and willing to do

the best of their ability. They are ready to know the expectations of their role so that they

are able to face and exceed them. They are curious to know about their work place. They

are highly talented and hardworking and like to give their 100 % at all times. They are

passionate about their work and never take their work as a burden.

Not engaged- this category of employees are more concerned about the short-term task,

they are quite away from the goal of the organisations. They work for the sake of doing it

and want to get over with every task they perform as soon as possible. They never perform

their work whole heartedly. Such people often feel that their work is not given enough

importance or appreciation; they feel this way because they do not have healthy

relationships with their fellow worker or managers.

Actively disengaged- this category of workers is also known as cave dwellers. They are

highly negative regarding their work. They are highly unsatisfied with their work and they

often show their unhappiness. They are pessimist and often create tensed atmosphere in

the workplace. They transfer their negativity all around. Engagement is an important

aspect of any organisation. It cultivates the feeling of commitment and satisfaction within

the employees. When employee is engaged in their work, they give their 100% and work

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for the benefit of the organisation. Engaged employees have a sense of responsibility and

they work towards the required goals. Engaged employees provide the organisation with

best results and high performance. An engaged employee will always deliver beyond

expectations. ―The Watson Wyatt‖ consulting companies have proved that there is an

intrinsic link between employee engagement, customer loyalty, and profitability. As

organizations are become more dependent on technology in a virtual working

environment, there is a greater need to connect and engage with employees to provide

them with an organizational identity.

Engagement assessment: This HR practice plays a crucial role in every organization.

Employees who are engaged perform to their full potential, they are motivated and can

also improve their skills as they progress. Employee engagement plays a vital role in the

hotel because it effects everything from retention and productivity to profitability and

safety. In today‘s world organizations have found out various methods of creating

competitive advantage. They have created competitive advantage through innovation,

quality products, technology and pricing technology. Organizations view ―customer

service that exceeds expectations‖ as their key to success. Engaged employees provide

quality service. Now there are a numbers of jobs in every industry but organizations need

to focus on the right people for the right job. They should also make sure that these right

people are satisfied with their work.

In the hospitality industry many employees see their jobs as stepping-stones to more

permanent positions, and employee turnover rate ranges between 78.3 percent to 95.4

percent. These numbers are staggering; more staggering is the cost of this employee churn.

The Incentive Research Foundation estimates roughly 100 to 200 percent of an

employee‘s base salary is spent to recruit and train a replacement. In an arena where

customer service is paramount and the labor pool is shrinking, keeping employees satisfied

and engaged is critical. ITC MAURYA measures the level of employee engagement in the

hotel. It conducts the GALLUP Q12 survey on a yearly basis. An exhaustive study is

conducted in different departments of the hotel on the basis of 12 questions. The Gallup

conducts a survey and they give a small presentation in the hotel and they tell about the

strongest and weakest departments in the hotel.

Initiatives: The management comes to know about the loop holes in various departments

and they try to overcome them in order to increase employee engagement. Maurya

undertakes various activities through employees can feel engaged in the work place. They

have Maurya gazette, this is an internal newsletter which is made on monthly basis...This

newsletter entails about the day to day happenings of the hotel. It also showcases

department of the month. The employees those who are awarded as the employees of the

month also narrate their experience that is also shown in this gazette.

They also have Good Morning Maurya which is a daily bulletin and it high lights the

birthdays and lunch menu of the day. Some of the other activities are:Instant recognition,

GM‘s tea, Retirement ceremony, Yoga and meditation camps, Health camps , Diwali

tambola, Annual day, New year celebration, Open forums and Long service awards.

Gallup‘s plays a vital role in the hotel. Employee engagement is of great importance in the

hotel. The hotel has more than 100 employees in each department which is a huge number.

The duty of the HR department is to take care of all the employees and the department

ensures that the employees are well engaged in their job because only when the employees

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are satisfied can they perform their 100%. The issue of a shortage of skills throughout the

workforce is very important to the hospitality industry and the need to create a talent mix

is recognized. Planning for future recruitment helps to accommodate the lack of essential

skills in the modern HR environment. People are multi-talented and they expect a lot out

of their job owing to this the employee engagement techniques are contemporary.

The Employee Side of the Human Sigma Equation: Human Sigma combines the power of

two Gallup Consulting concepts: employee and customer engagement. The Human Sigma

approach provides leaders with the means to reduce the variance in performance across

organizational units. Research published by Gallup and others has shown that engaged

employees are more productive employees. The research also proves that engaged

employees are more profitable, more customer-focused, safer, and more likely to

withstand temptations to leave. Many have long suspected the connection between an

employee's level of engagement and the level and quality of his or her performance.

Performance Appraisal

Performance appraisal is a very important tool in any workplace. It helps in evaluating the

behaviour of the employees in the workplace. It includes both the qualitative aspects of the

job performance. It evaluates a person systematically including his on the job performance

and his potential for development. It is a continuous process and its responsibility is totally

on the supervisor. The supervisor makes sure that the work is in its place, he or she keeps

a check on employees as to how the task assigned to them is performed. The supervisor

tries to find out the weak points and try to cope up with the challenging situations. This

process in an organization faces certain limitations like Halo effect, Error of comparison,

Personal Bias, Leniency and incompetence of Appraiser. To make the process most

effective the organizations should set clear defined standards, mutual understanding,

selection of the right appraisal tool and constant review and feedback.

Process of Appraisal: The performance appraisal systems were formally communicated to

the employees. Employees were well aware of the parameters of performance and also

were satisfied with the systems. The performance appraisal system is based on the

assessment sheet. The parameters of the sheet include: knowledge of work, planning

organizations, delegating work, initiative & drive, personal efficiency, dependability,

leadership, co-operation, honesty integrity, quality of work, punctuality, six sigma

contribution. The parameters were assessed on a scale of outstanding, above average,

average, below average. The performance is appraised by both appraiser and appraisees,

Head of department, personnel manager and general manager. The sheet would contain

information from all of the above. Appraisals are conducted yearly, in the month of

February and March.

The process takes two weeks to complete. The appraisal depends on mainly the strength

and weakness of employee and means to enhance quality of work of employee. The award

system for appraisal is also in place. The head of department will decide the most

deserving candidate for award. Performance Appraisal was found to be a two way process

in the hotel, with the employer and the employee being equally involved in assessment.

The process was designed to facilitate discussion and mapping of future goals and growth

plans. The implementation of the performance appraisal process determined promotions,

increments, training and development needs and best employee awards. The process

differed across different levels; a combination of methods was used. It was clearly an

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annual process. In case of severe deviations from the expected standard, the employee was

given a warning letter, terminated, increments were withheld, promotion withheld and in

some situations employee is referred for further training and development.

Balanced Score Card: ITC Maurya successfully uses Balanced score card method for its

appraisal. Balanced scorecard was prepared on FIVE parameters, which are as follows:

1. Customer perspective

2. Financial perspective

3. Internal perspective

4. Employees perspective

5. Social perspective.

The innovative aspect was the fifth parameter of the social perspective, which was added

to the Scorecard at ITC Maurya. The Balanced Scorecard was strategically oriented, and

all the functional heads had a series of meetings with the HR department and the top

management team. The BSC is supported by the career review form to further assess the

employees.

Career Review Form: This form assesses the subjective aspect of measuring a person's

performance which is fixed at 30%. The objective of the career review form is to

encapsulate the Big Five (The five Perspectives). The key competencies and the feedback

which needs to be given to the senior managers. secondly, to allow inputs taken on key

parameters and assessing the potential for future growth. It is done in cohesion with the

Balanced Scorecard. It comprises of five sections.

Section A-The big Five/Self-Assessment

* Revisiting the Big Five

* Providing background against which the employee performed

* Providing a framework to prepare for appraisal discussions

Filled by: Assessee

A1: Specify Departmental Objectives

A2: State Big five at the beginning of the year and achievements: Example: ?

A3: Factors which aided/hindered performance

Future Outlook: The Company has adopted various positive engagement and performance

oriented objectives, however the future growth of the company will be determined by the

enhancement of additional strategies. The drivers of engagement are the key focus of the

company, the workforce has to reflect uniform positive levels of engagement. The focus

on the drivers of engagement namely Career, Community, Congruence, Compensation,

Content, Coping will further involve each employee. The process of appraisal will be

blended with the requirement of the work. The appraisal process may align with the

following aspects: process being Trait based, Behavior based, Knowledge or skill based,

Result based. The Hotel aims at ideally using a combination of all these aspects for

appraisal.

Focus of the organization is on increasing job understanding, remedial performance

improvement, career development, employees efforts focused on specific tasks, increasing

output, HRP, linking pay and performance, improving team work. Peer rating being an

important part of the process, building a system of peer assessment to add value to the

feedback collected by reviewers. Rating by customers, suppliers, outside experts and

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clients provides an important insight into the study of appraisals. The measurement of the

results to strengthen the existing processes and further additional three elements:

dimension, measures and standards to the appraisal. Usage of forms which are more

qualitative than quantitative, as using qualitative forms can cloud judgment and impact

decision making.

The focus is on taking care of its people and developing them at every stage. Maurya is a

27 year old hotel and majority of the employees are working here since many years.

Moreover, the trade union of this hotel is very strong and thus the employees have an

emphatic backing from the union. The top management at times faces problems with the

union and has to ensure that all its policies are people centric. It organizes various

activities for its staff and provides welfare amenities. Daily meetings take place for every

department and Saturday training sessions for all the head of departments. Various

informal activities are organized to facilitate an open and friendly environment in terms of

organizational work arrangements.

Every department designs its own feedback forms, which the employee has to fill from

time to time. Despite these efforts at times the people working in the organization since

many years tend to command most of the decisions. Except for one respondent, every

employee interviewed supported the open culture facilitated at Maurya Sheraton.

Authenticity is close to openness, the employees don't feel hesitant to come out with their

views and own up their mistakes, as Maurya's culture doesn't believe in firing people for

every small mistake unless and until it is really drastic. Various cross-functional training

sessions and other informal sessions are organized to facilitate better employee relations.

Running the gauntlet to more effective, purpose based performance management is a high

risk, high reward endeavour. Many myths may be dispelled and may traps avoided. A

successful run requires significant investment, sustained commitment and the underlying

belief that performance management is a core business process that can create competitive

advantage when done well.

References

Berger & Berger. (2004). Talent management handbook. New Delhi: Tata McGrawhill.

Bhatnagar, Jyotika, Puri Radhika, Jha, H.M. (2004). Managing innovation strategic HRM:

The balanced scorecard performance management system at ITC Hotels. South Asian

Journal of Management, Oct-Dec. 2004.

Cheese, Thomas & Craig. (2008). Engagement: The talent powered organization. London:

Kongan Page.

Murphy, Emmet. (2009). Coach for achievement: Talent IQ. Platinum Press U. S. A.

Web Resources http://retention.naukrihub.com/increase-employee-engagement.htm

http://appraisals.naukrihub.com/succession-planning.html

www.itc.com/maurya

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