The topic promises to provide a detailed analysis of the different types of limitations based on the individual performance measurement that have been found within the organization CERA in Australia. Performance measurement is important for determining the areas of strengths and weaknesses of the individuals working within the organization and therefore ensures that the workers’ performances are improved, where they have been found to lack certain strengths (Bisbe & Malagueño, 2012).
The aim of the report is to provide a detailed analysis of the limitations during the individual performance measurement within CERA related to the organizational strategy and developments in the HRM practices.
Thus, the main purpose of using the performance management system is to align the performances of employees with the organizational goals and objectives and maintain a good culture to encourage simplified processes and documentation of employee activities. This would help in maintaining a good organizational behavior as well as maintain good performances of workers with ease and effectiveness. The balanced scorecard is used as a strategy performance management tool, which combines the financial performance measures to focus on the requirements of customers and business processes and achieve long-term sustainability (Duckworth & Yeager, 2015). The purpose of developing this report is to analyse the various findings and list the various limitations faced along with the probable approaches of addressing the limitations.
The performance measurement approaches can help in communicating the performances of workers and assume the predicted performance level that is expected. This would also provide the employees with necessary feedbacks, based on which, the performances could be improved for achieving the organizational sustainability. The performance measurement system including the both performance planning and evaluation systems can allow assuming the performance level that is needed to be achieved to bring out the best from workers of CERA, Australia. In spite of the benefits, there are certain limitations too like not involving all the stakeholders in the performance management measures (Franco-Santos, Lucianetti & Bourne, 2012). There are many people such as the suppliers, public authorities whose responses are decisive in nature and in many cases, their lack of engagement can lead to certain issues for the company. The linear chain consisting of skilled workers and better performances could result in satisfaction of customers, but it had been just a simplification of reality. There are certain limitations related to the cause and effect relationship, which would not only create invalid assumptions, but might also deteriorate the effectiveness of control system by using wrong data and information. This would further cause anticipation of performance indicator results and create complexities while managing the behaviors of organisations and furthermore led to below the par performances (Karim & Arif-Uz-Zaman, 2013). The performance management measures also could lead to other limitations such as not maintaining the efficiency of defined measures and lack of focus on managing the human resources. The Balanced scorecard, which is one of the most effective performance management measures used within CERA has mostly focused on the pre-defined indicators, so the other areas have remained unexplored. The performance management measures does not monitor the level of competition and advancement in technologies, which ignore certain risks and this further leads to inappropriate organisational behavior maintenance and lack of control over the organization to implement an effective strategy (McDavid et al., 2012). There are several situations when the organization fails to allocate enough time for generating the key indicators for measurement of performance. This creates complexities and the indicators remain unaligned with the strategic objectives. Due to lack of control of implementing a strategy, a proper balance between the financial and non-financial measures is not established. The narrow goals and objectives are established, which becomes difficult to gain the adequate level of organizational capability and higher performance of workers (Morrow et al., 2015).
The Centre for Eye Research Australia (CERA) follows various HRM practices for ensuring that the organizational standards are maintained and good productivity of the organization is achieved. The HRM practices include recruitment, selection, induction, training and development along with performance appraisal, compensation techniques, grievance addressable methods and welfare measures for ensuring satisfaction of customers within CERA. Various recruitment processes are used to gain the most suitable candidates to work for the company while proper skills, knowledge and expertise level are o other essential components needed to be recruited within the organization. Often the data and information provided by candidates during the process of recruitment and selection are not valid and appropriate, which the employers fail to check and this creates further complexities (Searcy, 2012). Another limitation could be the inability of the organization and its employers to communicate the roles and positions of the employees, which not only arises issues and makes the employees not understanding their responsibilities properly and fail to perform to their potential. There are limitations such as lower production level, lack of commitment of workers and deteriorated organizational performance, which can be due to the less training and development opportunities provided to the workers of the organization (Zairi, 2012). Monetary benefits are not provided to the employees art certain stages though their performances are quite good and noteworthy, which is another limitation too. Training and development measures lift up employee performance and improve the organizational effectiveness too and so not providing them with enough scopes and opportunities to grow and develop can also be a major limitation faced by the organization. Limitations are also faced when the employees’ health and wellbeing are not properly managed by the organization, then also their performances may deteriorate and lead to reduced organizational productivity (Bisbe & Malagueño, 2012).
In terms of lower performances of workers, the performance appraisal technique cannot present an actual picture of the employees while the employer who gives appraisal by giving central values can make the employees not getting promotions at the right time. The performance appraisal is often managed based on the past performances and thus the employees who will perform better in the present may not gain the same benefits. A strict performance appraisal can create limitations within the organization by affecting the goodwill between employers and employees, which further deteriorates the relationship between them and cerates negative impact on the organization too. Focusing on just the pre-defined indicators is another limitation, because the other areas remain unexplored and the human resources are not managed properly too (Duckworth & Yeager, 2015). It is important to determine the level of competition in the organization prior to the measurement of performances of theirs. If the level of competition is not understood along with the technological advancements, then also the performance measures will tend to remain ineffective and inappropriate. If the performance measures are not aligned with the strategic goals and objectives, then also certain limitations will be created which can create imbalance between the financial and non-financial measures. Other limitations include bureaucracy resulting due to job based pay and hierarchical nature that influences the top down approaches to decision making with ease and effectiveness (McDavid et al., 2012). Often the workers are not paid according to their performance, which is also considered as a major limitation experienced by the organization. Lack of motivation within the organization can also result in not bringing out the expected performances from the workers and this deteriorates the performances of the workers as well. There are many cases where CERA has failed to understand what actually the benefits can be obtained by using balanced scorecard as an effective performance management tool and also how can it be applied (Morrow et al., 2015). Therefore, these are the different kinds of limitations that are faced during the performance measurement considering the strategies within the organization and development in the practices of human resource management at CERA, Australia.
Various limitations are identified in the performance measurement approaches in CERA. The current strategy followed by CERA in human resource management shows incapability in managing and identifying the performance of its employees. The limitations such as invalid assumption, effectiveness of prioritizing the good performers are the major ones. The ineffective measurement of the performance is the cause of wrong data and information used in the process. Moreover, the biasness in the measurement system is also another issue that are found in the CERA’s performance management. This hampers the promotion process and fails to address the right candidate for the appraisal. A logical selection of performance management approach for the company can show potentiality to address the issues identified. Two of the alternative approaches re identified in the following discussion that can successfully address the issues found in the organization. They are comparative approach and attribute approach (Arzu & Erman, 2010). A detailed discussion of the mentioned approaches is shown in the following along with the process it obtains in resolving the issues.
The first approach that can be useful in addressing CERA’s limitation of performance management is comparative approach. Comparative approach utilizes some overall assessment of an individual performance or worth, and seeks to develop a kind of ranking of the individual within a particular group. It requires some standard rater to put the units in the same scale and compare the individual’s performance with the other members of the group. The top performer can be identified and rewarded with the help of this method. It distinguishes the top performers from the poor ones (McDavid et al., 2012). Later, it facilitates in taking necessary actions to increase the work potential of every segments of the groups. Three indicative methods are included in the comparative approach of performance measurement that are ranking, forced distribution and paired comparison.
The first indicator of comparative approach is the ranking. It is the process of identification of the employees on performance basis. It can again be divided into two. They are simple ranking and alternative ranking. The simple ranking involves the employer to rank everyone from the highest performer to the poorest performer. Both the best and the worst performer are identified in a single chain of ranking. On contrary, alternative ranking first identifies the best performer and the places him differently. The process then moves on to the left out names that would slowly taught about the worst performer and cross his name of the list and so on.
The forced distribution is the second indicative method used in comparative approach of performance management where the employee is put under some predetermined category. Every employee is given percentage on the basis of their performance. A scale is pre-prepared segmenting the percentages slabs and the employees are put under the slabs based on their percentage they obtained from their performance.
The last indicative model used in comparative model is the paired comparison. This process involves a more complex method of ranking. Every single employee is compared with every other employee in the group. Whenever an employee proves to perform greater than their competitors they are scored one. The score is then calculated at the end of the process and the employee with the highest score process to be the best performer in the group (Bratton & Gold, 2012).
Several advantages and disadvantages are identified in the comparative approaches. It is an effective tool in differentiating employee performance, eliminating problems of leniency, central tendency and strictness. It is also a good basis for pay raises and promotions. The compatibility of this approach shows greater results than the other approaches available in the market. However, personal biases are seen in the results if the number of evaluators is considerably low. It has greater impact on the rating of the employees. Moreover, it lacks specificity for feedback purposes as the employees aren’t aware of what they should improve on for their ranking individually (Armstrong & Taylor, 2014).
Attribute is the suggested approach that can be useful in solving the identified issues in CERA. This approach identifies a set of skills of the employees which are considered as the parameters of rating. They can be like, problem solving skills, teamwork, communication, judgment, creativity and innovation. There are two indicative methods incorporated in the attribute approach of measuring performance. They are graphic rating scale and mixed rating scale. The graphic rating scale evaluates the employees on a scale of 1 to 5 for each of the predetermined skills set for the evaluation. The employee’s performances are market on the basis of this rating. Whereas, multiple layers are involve in the mixed rating scale. The employees are primarily categorized between high, medium and low on a given parameter. Later, each parameter is broken down to above, equal or below (Alwaer & Clements-Croome, 2010).
The major disadvantage of this approach is the subjectivity of measurement. It heavily depends of the nature of the evaluator. Moreover, only the best and worst performance is identified with this method, while neglecting the rest of the employees who come in between. Advantage of the approach on the other hand is the simplicity. This is the reason for its acceptance in various industries (Micheli & Neely, 2010). This is the primary reason for suggesting it for the case of CERA.
The above mentioned approaches are capable of providing effective scorecard for the employees and remove the errors that are present in the organization. The both the simple and alternative ranking can provide authentic ranking of the employees based on their performance. However, the paired comparison is the most effective process of evaluating the performance as it includes multiple level of performance checker. A single employee undergoes several stages of verification before producing the end result. Moreover, no biasness can occur in this process which makes it the best among all the comparative methods of performance measurement. Tool under attribute approach also shows potential of removing the biasness, and false information issue that is faced by the CERA. This approach addresses specific set of parameters as mentioned above. The mixed rating scale in this approach is useful for the organization as it has a minimum of two level of verification. However, it might fail to address the biasness that the organization faces as it is a subjective approach. Moreover, as it identifies the best and the worst among the group members, it can show lack of compatibility in the organization.
Conclusion:
The above discussion suggests that the comparative and attribute approach are the best measuring tool for performance management that CERA can utilize at this moment for eradicating the issues they face in the measurement. Both the tools and its indicators have some limitations, but their capabilities serve the function to address the limitations of the organization. As mentioned in the discussion, the comparative approach can address the biasness involved in CERA’s performance indication. On the other hand, the attribute approach can prove to be useful in the case for its multiple level verification process. However, the biasness cannot be addressed with the help of attribute approach. To meet the necessity to address the biasness, the comparative approach of performance measurement is the best tool to address the issue.
References:
Alwaer, H., & Clements-Croome, D. J. (2010). Key performance indicators (KPIs) and priority setting in using the multi-attribute approach for assessing sustainable intelligent buildings. Building and Environment, 45(4), 799-807.
Armstrong, M., & Taylor, S. (2014). Armstrong’s handbook of human resource management practice. Kogan Page Publishers.
Arzu Akyuz, G., & Erman Erkan, T. (2010). Supply chain performance measurement: a literature review. International Journal of Production Research, 48(17), 5137-5155.
Bisbe, J., & Malagueño, R. (2012). Using strategic performance measurement systems for strategy formulation: Does it work in dynamic environments?. Management Accounting Research, 23(4), 296-311.
Bratton, J., & Gold, J. (2012). Human resource management: theory and practice. Palgrave Macmillan.
Duckworth, A. L., & Yeager, D. S. (2015). Measurement matters: Assessing personal qualities other than cognitive ability for educational purposes. Educational Researcher, 44(4), 237-251.
Franco-Santos, M., Lucianetti, L., & Bourne, M. (2012). Contemporary performance measurement systems: A review of their consequences and a framework for research. Management accounting research, 23(2), 79-119.
Karim, A., & Arif-Uz-Zaman, K. (2013). A methodology for effective implementation of lean strategies and its performance evaluation in manufacturing organizations. Business Process Management Journal, 19(1), 169-196.
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Morrow Jr, J. R., Mood, D., Disch, J., & Kang, M. (2015). Measurement and Evaluation in Human Performance, 5E. Human Kinetics.
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