Challenges Of Human Resource Management And Performance Method

Performance Appraisal Challenges

Discuss about the Human Resource Management and Performance Method.

Performance appraisal and reward systems often work as the motivator. The human resource department is often flooded with the process and the managers are untrained in delivering excellent reviews that certainly influence the employee performance and develop the business. Likewise, the reward management is about the design, application, maintenance, assessment and communication of reward method that helps the organizations to enhance performance and achieve their goals and objectives. It is identified that “talent management” techniques is affected by the poor system or design of reward and performance appraisal.

A performance appraisal allows the business owner to provide constructive feedback to employees and even determine if there is an appropriate increase in compensation. With the help of standard rating criteria for each employee, the firm could ensure fairness in the process. Nonetheless, a number of challenges should be overcome to increase the effectiveness of the appraisal systems. As put forward by Liu and Dong (2012), most of performance appraisal are implemented so poorly that could actually harm the legal case. The challenge associated with the design, application and functional use of appraisal systems are well documented and they continue to be frustrating to both academic and practitioners. In the current essay, existing studies implying some of the issues or challenges with the performance appraisals have been presented. Thereafter, the issues related to it will be discussed further in the essay. The major purpose of the essay is to identify the challenges that organizations in the recent time face in implementing reward and performance appraisal systems.

According to Jääskeläinen and Laihonen, (2013)performance appraisals is considered as the “formal management system” by which the job performance of an employee is examined and evaluated, with the purpose of identifying their strength and weakness for improvement in future. The subsequent supervisor or the managers of the organizations conduct the method. Here, Renwick, Redman and Maguire (2013) commented that companies are interested in best practices, often look for the ways to enhance employee performance as well as motivate employees to gain the best they could. Thus, to be effective, the performance appraisal should fulfill certain criteria like the process of formalizing to assure fairness to the employees involved. As opined by Taticchi,  Balachandran and Tonelli (2012) a systemic appraisal of staff make it easy to gain several benefits such as encouraging quality performance by rewarding those who perform well.

Reward Management Challenges

As opined by Fugate, Prussia and Kinicki (2012), many employees dislike performance appraisal interviews for fear of criticism, fear of uncertainty, in dealing with the questions. They fear that their salaries, promotions and their relationship with the company hinge upon the consequence of these interviews as justification for decisions that are made in respect to the salary, promotion and job tenures. Songstad et al., (2012) mentioned that the identification of the evaluation criteria is the biggest challenge encountered by the top management. The performance data should be considered for the review needs to be carefully selected. Most importantly, the assessment criteria should be in a measurable term. The top management sometimes does not include the evaluators and they lack expertise as well as the knowledge to decide the criteria accurately. If the leaders or the managers of the firm lack the experience and the required training to implement the appraisal systems objectively, the firms will not conquer the possible challenges.

On the contrary, when it comes to reward management, the managers often lack the expertise of ensuring that the reward management strategies back the achievement of the organization’s business strategies as well as satisfy the needs and expectation of the employees for job security, stability and career enhancement. The managers those who do not have appropriate knowledge, find it difficult to achieve internal equity as well as external competitiveness. The HR department has to conduct market analysis to respond to fragmenting pay market and maintain a reasonably coherent pay structure. The managers have to concentrate on rewarding for output and maintain the quality standards. When the firms are not able to devise appropriate plans or strategies, the firms find it difficult to reward individual performance and contribution as well as promote work. The managers need to have the skills to have the best out of the employees.

In most of the assessment, the managers completely focus on the individual characteristics including “personal traits”, commitment, experience and behaviors. Certainly, these factors could contribute to the development of performance but they may not be the actual measures of the expected output. Gupta and Kumar (2012) commented that the employees of several organizations are least satisfied with the method used in the performance appraisal and reward systems.  The fortune 500 survey has revealed that nearly 243 managers of 25 organizations have responded that they are not satisfied with the performance appraisal and reward systems.  Nearly, 76% of the employees are less with the procedures (Royer, Stehr and Sydnor 2015).

Importance of Alignment with Organizational Goals

As commented by ALDamoe, Yazam and Ahmid (2012), incomplete, inaccurate, vague and the performance assessment are usual fare in many organizations. Conversely, Lepper and Greene (2015) commented that while no surprise or managers give in irrelevant employee feedback to avoid the possible lawsuit, the leaders should be aware of the legal formalities of their performance management practice. Adequate, quantifiable standards should be developed to measure the performance of the employees. This might help the employees to understand what is expected from them.

Having studied organizations closely and analyzed their employee reward systems over a period of time, what comes out persistently is that while reward continues to remain the core talent management activity, managing successfully the employee reward system remains as the significant challenge for many of those organizations. The employees do not have any idea about the process that goes behind the plan, design and delivery of the reward system. In fact, the same are also not communicated properly to the people and the involvement of the line managers are also not sought in the method either.

Consequently, HR is not able either articulate or increase the value of such reward systems to its internal consumers. While planning and developing the reward programs, it is repeatedly found that HR works at best with a least number of chosen stakeholders who they are comfortable with, as well as not in overall alignment with company’s goals. This could come out as the lack of broad alignment between the employee needs and organizational objective. Heidrich and Tiwary (2013) commented that there is a perception that the absence of a proper Job evaluation system or well designed job description often fail to distinguish between the real job at hand and its worth, as against heavily crafted position. It is identified that pitfall of the same is inappropriate job mapping exercise with the equivalent market job.

The organizations that do not track their competition or compare their salary levels with the industry always experience the disadvantage of not paying their workers. It is wise for the organizations to get industry salary level periodically, as real time data is the best alternative. As commented by Lepper and Greene (2015), the rewards are not linked with the individual needs. This means most of the time the Employee reward Programs end up being flat and linear in the name of consistency and equality. Thus, the spectrum of rewards should be flexible since the motivational factors are different for different group of employees. Likewise, their respective needs and purpose should be met. The organizations should choose the way of providing “different strokes for different folks” while ensuring fairness and equity in the method. The organizations should focus on building their internal capabilities, techniques, tools and data to identify their “Employee Reward System” in scientific and robust manner. The firms need to ensure that there is a fine balance between employee expectation as well as the business needs for retaining their competitive edge in the current market.

The execution of reward system is established using the concept that a businessperson should give up all responsibilities of dealing and running the firms to some skilled individuals who are accustomed to deal with personal agenda and behave opportunistically. The business owners got into an ongoing debate that reward systems is built of different perspectives or it is built on the situation available. Shields et al. (2015) believes in the idea that “carrot and sticks” encourage workers, as they are core resource of organizational productivity, which brings out the idea of reward system. The academics and the critiques insist on the similarity between individual and organizational performance. Thus, it can added that rewards certainly increase the risks that lead to lower levels of motivation among the employees, which means the organizations are not able to come to a certain point to justify their current reward system. In spite of the growing criticism, the reward systems followed by the organizations plays a significant role of management. It should be considered significantly. The effective reward systems are often seen to be gaining significance as the new, the organizations in the global platform act on one single market. The major issues of developing an effective reward system could be versatile since there are many ways of formulating a reward system. Moreover, some considerable aspects are there to discuss and consider in terms of reward system. Some of the aspects talk about how the staff should be rewarded and how the reward system can be developed to support the long-term goals. On the other side, some small organizations are increasingly dependent on single worker and by understanding the potential of each employee, these small size of organizations take the initiative of attract, retain and motivating each employee. However, the techniques used by the small firms could be less expensive but stand as the motivational factor such as monthly appreciation and internal promotion. As stated by Daley (2012), HRM practice, where employee reward method is a considerable part in the operation are usually not considered as the formulization and financial stronger aspect in the large organization. This often takes place because of the accountability of the smallness but the studies within such field are very scarce

As put forward by Jiang et al. (2012) if the performance appraisal is not related to the specific career goals, top management might not see the point; thereby, they might consider them as the negative experience. This issue indicates that there are rare act of having a performance review process that could actually result in large turnover particularly for top management. Here, Buller, and McEvoy (2012) mentioned that having an official performance review process could actually prevent timely feedback throughout the year. This happens as the managers often consider the performance review process as the “catch-all time” to cover anything that has been going with the employees.

The scholars and the academics that functions of reward system usually becomes cumbersome and insightful aspects encountered by the organization. As put forward by Alfes et al. (2013), the formulation, use and the inherent challenge of reward system is a continual and the intense debate. More specifically, it can be mentioned that poorly developed system that has many flaws attract the public attention as there are many incidents like scams in the organizations. In some places, the protesters barged in the organization claiming inadequate reward system. Therefore, the labor union in some organizations fights against the tangible and intangible benefits developed by the large firms. For example, though Sport Direct in UK provides the internal employee growth opportunities, it cuts down the wages of employees following the “Zero hour” contract policy.

For several organizations, the major goals of an appraisal system are to enhance individual and organizational performance. However, a potential issue with the performance appraisal is higher expectation from appraisal plan. For instance, it can be added that a plan that is effective for enhancing employees may not be the best for determining pay hike. Hoque (2013) stated that a well designed system could help the firms to achieve company’s objectives and boost the performance of the employees. Therefore, while assessing a firm’s human resource capability, the data must recognize the people who have the competencies to be treated well or promoted for the senior positions at the organization. It is difficult for the small and medium size organizations to develop well-designed appraisal procedures due to lack of funds, which remains as the key concern. Due to the lack of proper planning, the organizations cannot determine how they could devolve power to the line managers to deal with their own reward process and retain sufficient control. The organization does not have a powerful pay-for-performance scheme, which could have helped to ensure values.

As mentioned by Sparrow,  Brewster and Chung (2016) an appraisal is often considered as the evaluation of employee performance, which in general includes employee present and future performance. In addition, it is used as the motivational factor for desired performance in the coming future. Two major grounds for the appraisal systems include the conceptual purpose, which is referred as the action of making decisions regarding pay and career growth. Similarly, another ground is about recognizing the improvement needs of employees. Recently, the organizations have faced a significant force of liking appraisal system to the strategic long-term objective of the firm. This means, the organization should develop its own goals and measures of evaluating the performance. The method includes certain criteria that helps to compare the targeted performance and the performance delivered by the employees. Thus, Renwick, Redman and Maguire (2013) commented that performance evaluation is considered as the significant part of management’s responsibility. With the final evaluation of employee performance, the management proactively acts on the employees’ dues, remunerations and promotion.

Not surprisingly, the survey conducted by Jääskeläinen and Laihonen (2013) reveals that almost 70-80% of the employees denied that their performance evaluation method does not prove to be effective, as it did not enhance their performance. Conversely, Liu and Dong (2012) commented that the performance appraisal systems tend to have many issues as critique’s assessments are often found to be biased by some aspects like motivational state of being and cognitive. The managers have the tendency of applying different standards with the different employees with the outcome in consistent and unreliable. Thus, to formulate better systems, the scholars have conventionally focused on the validity and reliability by developing newer “forms” of PA. In spite of the current advances in the assessment design, critiques persistently give a push on the performance appraisal systems that are not effective or well designed. As commented by Taticchi, Balachandran and Tonelli (2012 the performance review is often deemed by the senior management such as senior employees and manager’s supervision with the “anxiety and reluctance”. There is a significant explanation for fear, poor ownership and the absence of reward for effectively finalizing the technique.

In order to oppose the above-mentioned statement, Royer, Stehr and Sydnor (2015) commented that evaluation could be a receptive matter, which could elicit the negative psychological impact including the confrontation, discouragement, refutation and aggression, particularly when the assessment becomes negative. The employee reaction to appraisals could be significant conditions to enhance the employee performance. Gupta and Kumar (2012) put forward that emotions of employees as well as the awareness could be significant in enhancing the efficiency of PA systems.

Shields et al., (2015) commented that the use of rating and other methods in PA system help to consider that viewers or evaluators are rationally objective as well as precise but the memories of raters could be imperfect and raters could prefer their own sets of expectation about individuals, expectation, which may or may not appropriate. In spite of the fact that a completely error-free performance appraisal is the only idea, people could focus on, with all actual appraisals failing short of this deal. Hence, Daley (2012) commented that “Hello Effect” is considered as the tendency to measure the performance as high or low on each factors due to the thought of low or high performance rating on few significant factors. If an employee is considered careful as and reliable, the raters could prefer him/her or biased towards that person to a certain degree

Moreover, if an institution is considered, the students rate a faculty member as excellent on all criteria when they are genuinely appreciative of some areas he/she does in the classroom as compared to some bad habits that might result in student evaluating the instructor as “awful” across the board. Conversely, Hoque (2013) commented that “halo error” is probably the most pervasive effect in performance appraisal systems as raters who commit this errors assign their rating on based on global impression of rates. So, according this view an employee is rated high or low depending on several aspects as their raters are aware that employee is high or low on some particular aspects.

In this context, Renwick, Redman and Maguire (2013) commented though performance appraisal provides effective opportunities for the managers and general staff, in some firms, it is often seen to be biased.  This means the organizations the senior authority or the leader having the good relationship with the employees could favor their preferred employee while rating them. However, Hoque (2013) argued that such biasness are the typical practice that organizations would follow decades ago. The present scenario is changed with the increasing force of work. The senior authorities promote their employees based on the performance come out from employees’ end. Conversely, Boella and Goss-Turner (2013) commented that what organizations finds it difficult to understand is the skills gaps that is required to be managed swiftly, it could affect the bottom line. This fact indicates that problems that organizations have been considering for months would be an insignificant issue if the firms understand the importance of hiring or retaining the skilled people. Another tendency followed in the PA system is the weakness, which replaces the strengths and creates the base for negative work. It also creates the conflicts between the supervisor between the managers and employees.

Conclusion

On the completion of the essay, it can be added that instead of using a “cookie-cutter approach”, an effective performance appraisal system should fit the organization. The external and internal factors could influence the appraisal systems. More specifically, the labor union is one such significant factor that could affect organizational appraisal process. It is identified that Unions have conventionally insisted on seniority as the basis for promotions and pay increase. They could dynamically go up against the implementation of management-decision performance appraisal system used for these purposes. Alternatively, organizational culture could also affect the performance appraisal process.

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