Yarra Bank Stakeholders' Views of the Performance Appraisal Program - Case Study Example

Name Class Unit Table of Contents Table of Contents 2 Introduction 3 1.0 Major stakeholders and explain their likely views of the existing performance appraisal program. 3 2.0 Strengths and weakness of the present program 5 2.1 Strengths 5 2.2 Weakness 5 3. Current organisational issues relevant to performance appraisal programme 6 4. Recommendations 7 Conclusion 8 References 9 Introduction Performance appraisal involves reviewing the employee’s performance on their duties and responsibilities. This is based on the results from the employees work and not the personality characteristics (Miller & Thornton, 2006). The employees’ appraisal programme is supposed to measure employees’ skills and accomplishments with high accuracy. This helps a lot in supporting profession growth and performance enhancement (Maddux, 2000). Yarra Bank performance appraisal is five levels based and uses a forced ranking distribution. The rating leads to superior performers (top 10%), good performers (next 25%), acceptable performers (next 45%) and marginal performers (15%) and lastly the unsatisfactory performers (5%). Despite being confidential, the employees are able to quickly learn on the ratings. This leads to wrong repercussions as workers starts ranking each other’s, envy and communication breakdown among workers (Miller & Thornton, 2006). The system also leads to demotivation and content. There is also favouritism for the employees belonging to unions despite the company denial. The system also leads to problems among the managers and is being regarded as a HR department exercise. This report identifies the major stakeholders and their views on the performance appraisal system in place. The report also identifies the weakness present in the performance appraisal program and comes up with recommendations. 1.0 Major stakeholders and explain their likely views of the existing performance appraisal program. Stakeholders can be viewed as those people who play a key role in supporting and influencing the organization and making it exist without which an organization would cease to operate (Miller & Thornton, 2006). The major stakeholders in the perfomance appraisal programme are managers, HR department, employees and trade union. In this case, employees view the performance appraisal programme as a source of division rather than motivation (Vasset, Marnburg & Furunes, 2010). Through the performance appraisal, employees separate themselves and how they view others. The employees rank each other into groups. The highly performing workers are regarded as stars and are regarded as belonging to a different ranking group. This leads to envy and deteriorating communication. The rating demotivated average employees. Another problem is the fact that the better employees in some cases leaves the company. Employees who underperform but belong to unions are perceived to be favoured as compared to those who are not union members (Miller & Thornton, 2006). The trade unions who are also stakeholders may feel that the existing performance appraisal favours them (Miller & Thornton, 2006). The current performance appraisal programme may lead to more employees joining trade unions especially United Union of Australia. The managers feel the current forced distribution programme is not fair. They feel that the appraisal system creates a lot of ill feeling. Some managers object their employees being ranked poorly making other departments disadvantaged. This leads to a feeling of tension and dissatisfaction. The HR department may feel that the programme has lost its objectivity. This is due to fact that it was a management programme which is being regarded as a HR department exercise. 2.0 Strengths and weakness of the present program 2.1 Strengths Performance appraisal is not witch hunting but should help in finding strengths and weakness (Nelson, 2000). When a performance appraisal loses this aspect, it becomes meaningless as in the case of Yarra Bank. The main strength on the Yarra Bank performance appraisal is the fact that it can identify and rank employees based on their performance. The appraisal system despite the fact that it has a lot of weakness is able to identify the employees’ contributions and rank them accordingly. The system is also able to communicate to the employees the results of the appraisal. This gives them a chance to give out their opinion. Without communication, performance appraisal becomes a one sided affair where employees do not participate. Communication aspect helps a lot in fostering development (Miller & Thornton, 2006). The bank has also been able to make the process on-going. For an organisation to benefit from performance appraisal, it must be an on-going process. 2.2 Weakness The current performance appraisal at Yaara bank does not cover the areas of venerability of the bank. The system does not correspond to the stakeholders’ views and expectations (Rudman, 2004). The performance objectives of the current performance management system are not clearly linked to Yarra bank objectives. Managers and employees are not properly engaged in the system. This is due to fact that employees do not see the benefits of the system. They look at performance appraisal as a way of ranking them into classes. In fact, the performance appraisal system in place demotivates the worker instead of motivating them. It leads to unnecessary divisions among the employees hence severing the lines of communication. The current program leads to stress on individual rather than performance. There are also issues with central tendency (Nelson, 2000). This is where some managers refuses their department to be ranked 4 or 5 and takes higher scores. The management in this case does not want low scores for their employees. This leads to bias and loss of credibility (Rudman, 2004). Some of the dismal performing employees are not punished due to their union membership. This favouritism leads to workers seeing the system as flawed. 3. Current organisational issues relevant to performance appraisal programme While utilising performance appraisal, it is important to note its limitations. Performance appraisal includes personal bias due to human element. There are always chances of one’s own opinion interfering with the appraisal (Pettijohn et al., 2001). There is also tendency of an employee being rated consistently based on earlier good performance ignoring the current performance. This is known as halo effect. Another limitation is the horn effect where an employee is rated lower than their current performance. This is due to earlier failures which affect current judgement (Coens & Jenkins, 2002). Appraisals are developed to help in improving individual’s workers performance but this is not the case at Yarra Bank (Miller & Thornton, 2006). The perceptions by different stakeholders make the programme to lose its objective. The decisions made through the programme may be disregarded by majority of the stakeholders. Managing the expectations of the stakeholders is one of the biggest challenges in performance appraisals (Maddux, 2000). By looking at how various stakeholders’ looks at program, it is easy to determine whether it is a success or failure. For the employees, it is a chance to get a pay rise. Employees are able to gain the clarity of their roles and what is expected of them. They are able to know what the management values. For the managers, the appraisal is a chance of dealing with poor performers. Managers are able to identify the performance problems and issues with work process. The managers are expected to use the performance appraisal to develop their team capacities and meet their objectives. The human resource manager is supposed to see the performance appraisal as a chance to identify employees who have high potential. It also helps in determining the future workforce needs. The HR department is supposed to see this as an opportunity to determine the training and development programmes to have in place (Miller & Thornton, 2006). 4. Recommendations It is recommendable for Yaara Bank to restructure their performance appraisal system. This is through making it more confidential and ensuring that there is no bias. The performance appraisal system should be able to meet the expectations of all stakeholders involved. The performance appraisal system should be able to address the employees’ needs and enhance their motivation. This is in contrast with the current system which demotivates employees. The restructured employee appraisal system should be able to eliminate any bias and treat all employees fairly. The program must be designed as a management program as opposed to a HR exercise. Furthermore, there is a need to involve all stakeholders in designing the new appraisal system to ensure they feel part of the system. This is to ensure their expectations and issues are adequately addressed within the performance appraisal system making it even more familiar to them. Conclusion The current performance appraisal system at Yarra Bank is flawed. The performance appraisal is not capable to meet the expectations of the major stakeholders. The major stakeholders in this case are managers, HR department, employees and unions. The performance appraisal is supposed to help in improving the employees’ weakness and enhancing their strengths. This is not the case since it leads to demotivation, communication breakdown, bias, ill feeling and frustration (Rudman, 2004). The main strength is the ability to rank employees based on their performance. The appraisal is also communicated well and carried out as an on-going process. There is need to restructure the performance appraisal system at the bank as explained in the report. This will play a great role in enhancing motivation, streamlining communication channels and processes, alleviate biasness and make the employees feel more comfortable. This will result to overall improvement of the Yarra bank productivity. References Coens, T., & Jenkins, M. 2002. Abolishing performance appraisals: Why they backfire and what to do instead. Berrett-Koehler Publishers. Maddux, R. 2000. Effective performance appraisals. Crisp Learning. Miller, C. E., & Thornton, C. L. 2006. “How accurate are your performance appraisals?.” Public Personnel Management, Vol.35, no.2, p.153-162. Nelson, B. 2000. “Are performance appraisals obsolete?.” Compensation & Benefits Review, Vol.32, no.3, p.39-42. Pettijohn, L. S., Stephen Parker, R., Pettijohn, C. E., & Kent, O. L. 2001. “Performance appraisals: usage, criteria and observations.” Journal of Management Development, Vol.20, no.9, p.754-771. Rudman, R. 2004. Performance planning and review: Making employee appraisals work. Allen & Unwin Academic. Vasset, F., Marnburg, E., & Furunes, T. 2010. “Employees' perceptions of justice in performance appraisals.” Nursing management (Harrow, London, England: 1994),Vol. 17, no.2, p.30- 34. Read More