Quality Management Programs

Performance Management System

When it comes to the management of the workforce, a performance management system is a very significant component that can be used to attain organizational goals and objectives. Apart from only overseeing employees, performance management is a key component in managing employee and labor relations, development and talent management, staffing, equal employment opportunity, worker protection, and risk management (DeNisi & Smith, 2014). Unlike the situation in the company, the HR department must acknowledge that performance management is not only done when necessary, but it must have the long-term perception that will able to absorb ‘shocks’ from unprecedented challenges and changes in the future. For instance, through the ongoing globalization effect, HR departments have been forced to re-strategize various approaches to managing diversity and multicultural workforce (Sanyal & Biswas, 2014).

Overall, this paper will focus on the assessment of performance management in a manufacturing company particularly on the aspect of competency, which is a really important issue in this organization. The best system that looks fit for this organization is the “Performance Appraisal System” whose benefits can be considered generic in allowing organizations to SMART goals as well as improving motivation (Aggarwal & Thakur, 2013). Firstly, the main focus of this system should aim at establishing its impact on the company innovation aspect which is a factor that must be considered in developing an effective performance management system. Therefore, the proposed performance appraisal system must align with the company's values and its nature of operation in electronic manufacturing.

Analysis of Performance Appraisal System Performance Appraisal is characterized as a ‘formal’ type of system that allows continuous assessment and review of employee task performance. Although performance appraisal is largely unpopular to most managers and workers, when it's properly handled it can provide a wide scale of benefits to the company’s management strategy. Despite its previous history of managers using the system to evaluate subordinates, the recent 360-degree feedback has improved the process to have a better understanding of an individual’s competence, encourage performance improvement, and eliminating biases (DeNisi & Smith, 2014). With this fact, performance appraisal is largely based upon the evaluation of individual accomplishments and the development of objectives, goals, and the general plan.

Also, performance appraisal becomes significantly essential during the assessment of various organization levels and dimensions. During the entire process, the main objective of using this system is to enhance an individual’s performance and the general organizational output. In essence, for the system to operate at its most efficient state, it must have adequate data resources required to make strategic planning and reasonable management decisions (Dusterhoff, et al., 2014). This success must also be highly correlated with the workforce's willingness to coordinate and see through the appraisal objective and goals. Out of its many advantages, performance appraisal will start by at least solving the current issue of performance management continuity. By its implementation, the HR department will have a strong system that will allow effective distribution of performance review, analysis and evaluation, planning, and development of future improvements (Sanyal & Biswas, 2014).

Following the above discussion, the performance appraisal system's main functions are highly based on evaluation and ratings. The system focuses on identifying indicators, reviewing employee’s performance, strategizing, and lastly discussing with individuals on their records. During the evaluation of employee performance, there are mainly two evaluation strategies which are based on criteria and rating. The criteria approach focuses on an employee’s performance through his or her job description in an organization (Dusterhoff, et al., 2014). An example of criteria method it can be used to analyze the efficiency of employee’s interaction with customers and general relation in regards to each respective individual’s job description. On the other hand, the rating approach utilizes the use of scale rating methods that usually begins from best to worse or vice versa (Dusterhoff, et al., 2014). For example, the majority of employee’s performance can be rated from Excellent, Good, average, and bad or using the scale of five-star ratings ranging from 1 to 5 stars.

After recognizing an employee’s performance, the reward system plays a central role in achieving the success of almost the entire system process. Through the reward systems, the HR department and the company’s management will have a fluent understanding of the company’s goals and needs. This aspect will improve the overall company’s performance by channeling resources in the most efficient ways and most importantly retaining employee talent (DeNisi & Smith, 2014). For instance, if the HR department can establish a clear understanding of each employee’s contribution to the overall performance, the organization will also have an enhanced monetary approach in various aspects such as recruitment and selection, talent retention, training and development, and general employee relations.

Impact of Environmental Factors on Performance Appraisal

When considering the development of a performance appraisal system, it is essential to consider the internal and external environmental factors of a particular organization. For instance, the legal aspect of appraisal systems requires a fair and just process for all workers within an organization. This aspect has been seen to raise a lot of concerns from different types of industries which evidence is witnessed on the increasing amount of such case proceedings. According to the Mistretta v Sandia Corporation case, which is an electric company, the court sided against the company’s appraisal process, concluding that, there was more than enough evidence showing that the company performance rating discriminated the old age groups through imposing age biased policies (Sanyal & Biswas, 2014). This case is one of the many that affirms that organizations must avoid appraisal policies that may be negative towards the vulnerable and diverse population.

The organizational culture is another component that has a significant impact on the system’s success. One reason behind understanding the organization's culture is due to the growing dynamics in management structures that continue to pose various challenges in performance management systems (Dusterhoff, et al., 2014). However, the company’s management needs to note that the performance appraisal system remains a bit rejected by the majority of the various industry workforce. Therefore, to effectively attain the desired results, the company has to conduct specialized training to help employees efficiently understand and easily embrace the proposed appraisal process. Through this system, the management will have an enhanced feedback system that allows the identification of challenges and gaps in its operations (Aggarwal & Thakur, 2013). This approach will help the individual employees to know what the management expects from them as well as what could follow in the reward system.

As stated earlier, the continuous management trends and changes are significantly important factors that must be accounted for in the performance appraisal system. For instance, the company’s industry of operation can tend to be innovative, thus changes will be considered to continue occurring with time (DeNisi & Smith, 2014). So, when strategizing on the company’s performance appraisal system, the management should consider some of these “shocks” and thereby implement a system that has an enhanced adaptability function. With this in mind, being in the technological industry, the company should also consider implementing integrated learning and performance to effectively apprehend the continuous changes in labor and the overall market (Aggarwal & Thakur, 2013).

Problems with Performance Appraisal System

During the analysis of the majority of performance appraisal systems, several challenges tend to occur mostly in the relation to low reliability and validity. The most common types of errors likely to be witnessed in the system include “(1) central tendency error, (2) strictness or leniency error, (3) halo effect, (4) recency error, and (5) personal biases” (Shields et al., 2015). The central tendency is normally observed in situations where managers choose to employee’s performance and progress and continue to categorize them to an ‘average’ group or category. Strictness and leniency error can be described as a form “tough grading system”, where managers fail to differentiate between bad and good performers and continues to categorize almost every person in the same group (Shields et al., 2015).

In the case of a halo effect, it occurs in situations where the manager’s perception plays a role during the assessment. For instance, a supervisor may tend to see a positive attribute of his or her favorite employee’s performance and lack to even notice improvement of another employee. The recency error happens by choosing to focus on an individual most recent performance record and chooses to ignore other past attributes and achievements. Lastly, personal biases are characterized as almost similar to the halo effect but in most situations, they may be viewed as illogical or morally unethical (Shields et al., 2015). To minimize the occurrence of most of these errors and effects, the management must identify the various sources of the problem and strategize the appraisal process on different dimensions (DeNisi & Smith, 2014).

In summary, one fact which should adequately be understood is that in order to make an effective performance management system, the main priority of the system should be based on improving performance through the reward method. Other factors that must be put into consideration include measurement indications, strategies, and methods, i.e., the use of results and rewards in this case. The system in use should also offer and provide reliable information that can be used to enable personal growth, training, and development approach, and allow a fair rewarding system throughout the organization (Sanyal & Biswas, 2014). Therefore, it is important essential that an organization has an effective performance management system for it to have consistent growth and development in various fields.