Managing Human Capital

Topics: Management, Goal, Human resource management Pages: 15 (4141 words) Published: April 4, 2014
1

Abstract

Performance appraisals have been practiced by organizations all around the world to measure employees’ performance, garner feed back and set goals. However, there are many studies that prove performance appraisals bring more harm than good. This essay critiques the performance appraisal as a whole, indicating its purpose, benefits, and types of appraisals. Negative effects of appraisals are also discussed in detail. The essay also discusses the activities in which organizations need to invest in to design, develop and improve the performance appraisal process to include employees in the mix. The final part of the essay discusses the challenges that organizations would face when implementing those activities. It is found that traditional performance appraisals are time consuming, demotivates staff, and creates distrusts among teams and managers. The system has too many loopholes and therefore needs to be improved. Overall, delivering little benefits at high costs. Performance management is evolving to include employees in its design and is moving towards individualized performance management, as it is more effective than the traditional methods. The activities that organizations would need to invest effort, time and resources are to simplify performance appraisal documents, determine ratings, goals, implement self assessment, training of managers and develop a feedback rich culture. The challenges that organizations would face in implementing these activities are eliminating performance related pay; adopting a more collaborative and creative culture, promote fairness, setting of achievable goals, personality factors, subjectivity and politics.

2

Introduction

The intent of this essay is to discuss the performance management appraisal process, which is part of Human Resource Management. Referring to Devanna et al. (1984) model (Figure 2a), the performance management process which is under Human Resource Management, interlinks with other elements within the organization; Organization structure, mission and strategy which are subject to external influences such as economic, political and cultural forces (Bratton, 2012). This integrated system is known as Strategic Human Resource Management.

Figure 2a : Devanna et al.’s strategic human resource management ‘matching model (Source : Bratton, 2012)
This essay establishes the purpose and objectives of traditional performance appraisals and then critiques the more common types traditional types of performance appraisals that have been used in organizations across the world such as MBO, 360degree feedback, rating scales and essays. It will not cover other methods such as critical incident methods, work-standards approach, assessment centers and forced ranking methods. It then addresses common issues that are found in the traditional methods of appraisals such as MBO, 360-degree feedback, rating scales and essays.

In the next part, the essay proceeds to discuss the activities in which organizations need to look into to improve performance appraisals in their companies. The main activities in designing the appraisal system are to design simpler and efficient performance appraisal documents to enable easier execution, agreeing to individuals and company objectives and ratings, and allowing employee self evaluation. To improve adoption of the enhanced performance management processes, management need to adopt a more democratic approach to encourage development and communication, provide training to managers and employees alike to improve performance towards objectives and cultivate a feedback rich culture. In the final part of the main body, the essay discusses challenges that organizations might face when involving employees in the performance appraisal process. Challenges include setting of achievable goals, enforcing management concerns, curbing biasness and fairness in evaluations, managing subjectivity and internal politics and promoting an open...
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