Improving Organisational Performance - Essay Example

? Improving Organisational Performance Table of Contents Introduction 3 Evaluation of High Performance Work and Performance Management System in Tesco 4 Performance Management Framework 4 Evolving the Performance Framework 5 Performance Appraisal and Reward System 5 Evaluation of High Performance Work and Performance Management in Sainsbury 6 Objective Setting 7 Reviewing What and How 7 Overall Performance Rating and Rewarding basis on the appraisal 8 Challenges and Negative effects of Performance Management System 8 Balanced Proposals 10 Implications for Line Managers 11 Conclusion 12 References 14 Appendix 16 Introduction Performance management is a systematic progress that improves the performance of an organization by the improvement of individuals’ skills and effectiveness (Deb, 2009, p.36). Moreover, it increases the efficiency of team and helps to achieve the business and organizational objectives. Performance is explained apparently, which is the achievement of qualified objectives. The proper implementation and practices helps the employee of the organization to achieve the personal as well as organizational goal. The other important aspect of performance management of organizations is it helps to maintain the goal significantly (Caldwell, 2002, p.19). Performance management is one of the important elements of organization control system and Human Resource Management (Pravin, 2007, P.583). Performance management helps to provoke organizational and employee development by its methods. It also covers the strategic development by several modifications through its methods. Moreover, it facilitates indirect control of employees be setting up a clear target (Bhatia, 2003, p. 39). In order to achieve the objective of the study, Tesco and Sainsbury the two leading retail organizations of UK has been selected. They study will critically evaluate the Performance management in Tesco and Sainsbury. Moreover, the study will explore the challenges that have been encountered by the use of performance management in these two leading retail chains in UK. The study will develop a balanced proposal in order to overcome the challenges. The implications for line managers are also have examined by this study. Finally the study ends with a conclusion. Evaluation of High Performance Work and Performance Management System in Tesco Tesco organization structure is kind of a bureaucratic structure as authority and power flows from the top level to bottom level in the organization. This equilibrium has the similarity in the performance management system and reward structure. In Tesco, the top management employees earn more reward comparing to the employees who exists in low level of the organization. However, the overall reward and performance management system and the Performance Steering Wheel is the key reason of the organization success story of Tesco (Jolly, 2009, p. 397). Customer, Community, Employees, Operations and Finance are the major elements of the Tesco’s performance steering wheel (Figure 1). From this steering wheel the employee’s aspect has been discussed in this study in order to evaluate the performance management framework of Tesco (Barrow, 2011, p. 93). Performance Management Framework Sir Terry Leahy is the chief executive of Tesco, who is supremely responsible for the growth of organization. He had developed a clear map, direction and a compass in order to attain a strategic growth. The management team of Tesco has decided to develop and structure a performance management framework in order to develop a strategic goal of the organization. The performance management framework has created several key performance indicators in Tesco. The major purpose of this approach is to steer Tesco towards success. Performance steering wheel was developed by Tesco in the year 2009 in order to fulfil the organization as well as individual objectives (Taylor and Nichols, 2010, p.11). It has created the groth opportunities for the employees. The adoption of this framework has made the jobs interesting for the employees. Moreover, according to the managers of Tesco, the performance steering wheel has helped to provide the self-respect to the employees. Tesco has able to maintain the sheer organizational and business performance through the time period across the globe with the help of its performance steering wheel. Evolving the Performance Framework The chief executive of Tesco has not only pushed the performance management framework implementation but also made several changes that may create few controversies. The controversy began when he closed down the strategy department as he did not want only one leader or department would be responsible for the performances and strategies. According to him, there should be more leaders who can develop and understand the performance measurement strategy and High Performance Culture. Performance Appraisal and Reward System The performance appraisal and reward system of Tesco for the employees is very much similar to the system of Sainsbury. According to the store and department managers of Tesco, several categories have been designed in order to review or assess the performance of employees (Dibb and Simkin, 2012, p.281). These are Top Performer, Strong Performer, Achieved Performer and Under-Achieved Performer. According to the management of Tesco, it is difficult to provide negative feedbacks to under achievers. Therefore, they have started reward of incentive system in order to boost or motivate the under performers towards better performance. Sainsbury has started to give rewards, such as incentives, promotions and many more to the star employees. By seeing these, underperformer should motivate enough to perform impressively in order to achieve rewards in next quarter or next year. Though it is an effective strategy to boost the inner will of the under achiever, but the reward system is not adequate enough. Few of the star performers can get distressed through this system. The difference in reward allocation between the managers and executives is like hell and heaven. This inadequate system may discourage the employees. Therefore, it is necessary for the HRM depert6ment of Tesco to monitor these issues carefully as it may affect the whole performance management strategy as well as the organization. Evaluation of High Performance Work and Performance Management in Sainsbury According to the Sainsbury’s Performance review guideline, the PMS has been restructured in the year 2008. The PMS was redesigned with a view to support their sub ordinates in order to achieve the objective of managing in the round to manage performance. The managers of Sainsbury, who have interviewed, pointed out that the key objective of the PMS is to develop the performance of sub ordinates along with monitoring their attitude and behaviour. The performance management system was introduced in Sainsbury in order to develop the business performance (Brooks, 2012, p.171). According to several managers of Sainsbury, the introduction of PMS drives the appropriate behaviour and coerce out the poor performances. It provides the opportunity to the employees who want to move forward in his career. It not only increases the sales scale but also develop the employees’ personality and positive attitude. Moreover, it helped to improve the overall performance of groups in Sainsbury. PMS was introduced in Sainsbury to improve the skills of employees in order to shift them toward achieving the organization business goal. The managers also believe that, if the behaviour and performance of their Sub ordinates are consistent with the strategy of the organization then it is impossible and very much difficult to attain the organization goals. The managers of Sainsbury have elaborated the implementation of performance management system in the organization in three steps (Figure 2). Objective Setting After the implementation of PMS, the managers used to sit down with their team and set their annual target. They used to set the targets which is measurable and achievable. It helped the managers to fulfil the individuals’ as well as stores’ targets and objectives. The department manager of Sainsbury has described the target characteristic of the large retail chain. According to them, they always set an achievable and measurable target, so that the executives and employees can easily achieve those targets. The implementation of PMS in organization has helped them to break both the organization’s business and individual target. Along with the business targets, the managers also have set the individual target for the employees as they think, until and unless, the employees are not provided the opportunity to move forward in their career, it would be difficult to progress the business (Scheer, 2006, p.186). Reviewing What and How Managers of Sainsbury used to monitor the performance of their colleagues after setting up the business and individual target. Basis on the performance, the managers used to provide feedbacks in a weekly or daily meeting. Moreover, they do formal performance review in every six months after implementation of performance management system. It helped the managers to follow up the performance of employees as it is necessary to know whether the employees are moving towards right direction or not. Moreover, this step helps the employees to understand their job responsibility and targets through the weekly or daily review. Overall Performance Rating and Rewarding basis on the appraisal After completion of six months, managers of Sainsbury conduct a performance review. This process is known as Colleague Performance Review (CPR). It is an important element in HRM for every organization that undertakes PMS. Sainsbury has effective implemented and practiced PMS. According to the store and department managers of Sainsbury, four categories have been structured in order to assess or review the performance of employees. These are Top Performer, Strong Performer, Achieved Performer and Under-Achieved Performer. The process called Mystery Customer Measure (MCM) has also been implemented to assess the performance of employees along with the critical review of the managers. The performance management strategy ends with this step. According to the managers, it is difficult to provide negative feedbacks to under performers (London, 2003, p.16). Therefore, they have started reward of incentive system in order to boost or motivate the under performers towards better performance. Sainsbury has started to give rewards, such as incentives, promotions and many more to the successful employees. By seeing these underperformer should motivate enough to perform impressively in order to achieve rewards in next quarter or next year (Aziza and Fitts, 2010, p.207). Challenges and Negative effects of Performance Management System Although there are positive impacts of performance management system on both of the organizations, but there are several negative effects too that has been identified. In terms of Tesco, the current salary structure does not recompense the performers frequently who have achieved the business target. The management used to provide increment on yearly basis. It is a biggest drawback for Tesco. Yearly or quarterly incentive schemes actually motivate the people to perform in impressive way. An incentive scheme is an important element of employee’s motivation factor (Brown, 2001, 41). Moreover, the incentive scheme is quite low in Tesco. The incentives or performance rewards are not distributed equally within the organization. Therefore, several successful employees look to switch the organization for the betterment of their career. The management of Tesco needs to monitor all these things carefully and needs to start distribute the performance rewards adequately. In terms of Sainsbury, the performance management framework is quite effective. Here the organization looks to motivate the successful employees as the department and store managers believe that better reward system can extract better performance from the employees which will be beneficial for the organization (Anderson, 2004, p.131). As it is discussed before in this study, a negative feedback for the underperformer may create a negative impact on the performance of whole group or team and organization. According to the employees of Sainsbury, the negative feedback may create a negative mindset for both the under performer and successful performer. The below motivation level of employees can reflect in the business output negatively. Therefore, it can be argued that managers need to motivate the underachievers too as according to proper Human Resource Management a team always cannot be comprised of successful employees (Herzberg, 2008, p.33). A mixture of success and failure can shoot up an effective performance together. The under performers of Sainsbury need to motivate adequately, as it is familiar to all that failure is the pillar of success. Balanced Proposals Tesco and Sainsbury need to implement customized balance scorecard in order to overcome the practical issues and achieve success. As Tesco has a problem regarding the reward distribution system and Sainsbury has the problem regarding negative feedback system for the under performers, both of the organizations need to identify that whether the scorecard model is designed according to the organization’s strategic vision and goals or not. The two organizations should introduce club card for employees for the effectiveness of the PMS. In terms of consumers they need to develop several loyalty programmes where the in house executives have to lead the major roles. It will help the organization to grow in terms of business, revenue and profit. Then the organizations should motivate the employees’ basis on their performance. It will make them feel proud to be an effective part of organizations. Several negative approaches by the management may reduce the motivation level of employees. Structuring models and framework according to the organization vision and setting up targets basis on the goals will ease the business performance of an organization. After designing the scorecard model, the objective of this scorecard model should be followed by the competitive threats that have been faced by both of the organizations. This will help the organizations to overcome the competitive threats. Designing customized balanced score card model would be effective for Tesco and Sainsbury. In order to achieve the business growth, organization need to carefully handle the customers, employees and business process (Hannabarger, Buchman and Economy, 2011, p.291). Therefore, adequate customer service, monitoring, evaluating and rewarding the performance of employees and an effective business process need to employ by Tesco and Sainsbury. Then it can be state that, both of the organizations has able to use the advantages of customized balance scorecard model. Implications for Line Managers Now the study will examine the implications for the line managers in order to assess how Tesco and Sainsbury will ensure the line managers are carrying out their responsibilities effectively. A manager, who is highly responsible for the achievement of organization’s major objective and leads the revenue generating department, is known as line manager (Williams, 2011, p.12). They used to achieve the objectives by several executing functions, such as decision making, policy making and target setting. In terms of Tesco’s and Sainsbury’s performance management system, the organization has effectively monitored all the parameters. Now here are some recommendations for the line managers for the both companies in order to improve their business output. Line managers have a major role in the implementation of total reward policies (Armstrong, 2007, p.513). In terms of Tesco and Sainsbury, both of the organizations should give the freedom to these line managers in order to reward the contributions, potentials and performance. It will help the organizations to produce successful employees who can be the effective pillars of the organizations. Line managers have an important role in the total reward implementation as the closely observe and monitor the achievement and performances of the individuals. The top management should provide 100 percent autonomy to these line managers. It will help to increase the self-performance of employees (Adler and Cherniss, 2000, p.91). Therefore, directly and indirectly it will impact positively on the business performance of Tesco and Sainsbury. Involving the line managers in the total reward strategy development, providing training to the managers in the total reward scheme operation, providing the managers effective online support and implementing communicating schemes in order to create a healthy relationship with the employees will help both of the organization. Last but not the least, Tesco and Sainsbury should give 100 percent freedom to the line managers in order to develop policy, making decisions and setting up target strategies adequately. Conclusion Performance management is one of the important elements of organization control system and Human Resource Management. Performance management helps to provoke organizational and employee development by its methods. Tesco organization structure is kind of a bureaucratic construction as authority and power flows from the top level to bottom level in the organization. This equilibrium has the similarity in the performance management system and reward structure. The management team of Tesco has decided to develop and structure a performance management framework in order to develop a strategic goal of the organization. Performance steering wheel was developed by Tesco in the year 2009 in order to fulfil the organization as well as individual objectives (Woods, 2012, p.57). It has created the growth opportunities for the employees. The adoption of this framework has made the jobs interesting for the employees. Moreover, according to the managers of Tesco, the performance steering wheel has helped to provide the self-respect to the employees. According to the Sainsbury’s Performance review guideline, the PMS has been restructured in the year 2008. The PMS was redesigned with a view to support their sub ordinates in order to achieve the objective of managing in the round to manage performance. Sainsbury has effective implemented and practiced PMS. According to the store and department managers of Sainsbury, four categories have been structured in order to assess or review the performance of employees. These are Top Performer, Strong Performer, Achieved Performer and Under-Achieved Performer. Line managers have a major role in the implementation of total reward policies. Tesco and Sainsbury should give 100 percent freedom to the line managers in order to develop policy, making decisions and setting up target strategies adequately. References Anderson, V., 2004. Research Methods in Human Resource Management. London: CIPD Publishing. Armstrong, M., 2007. A Handbook of Employee Reward Management and Practice. London: Kogan Page. Aziza, B., and Fitts, J., 2010. Drive Business Performance. New Jersey: John Wiley & Sons. Barrow, C., 2011. Practical Financial Management. London: Kogan Page. Bhatia, S., 2003. Management of Change and Organization Development. New Delhi: Deep and Deep Publications. Brooke, C., 2012. Critical Management Perspective on Information System. Routledge: London. Brown, D., 2001. Reward Strategies. London: CIPD Publishing. Caldwell, C., 2002. Performance Management. New York: AMACOM. Cherniss, C., and Adler, M., 2000. Promoting Emotional Intelligence in Organizations. New York: American Society for Training and Development. Deb, T., 2009. Performance Appraisal and Management. New Delhi: Excel Books India. Dibb, S., and Simkin, S., 2012. Marketing Briefs. Routledge: London. Hannabarher, C., Buchman, F., and Economy, P., 2011. Balanced Scorecard Strategy for Dummies. New Jersey: John Wiley & Sons. Herzberg, F., 2008. One More Time: How Do You Motivate Employees. Boston: Harvard Business Review Press. Jolly, A., 2009. The Growing Business Handbook. London: Kogan Page. London, M., 2003. Job Feedback. London: Routledge. Pravin, D., 2007. Human Resource Management. New Delhi: Pearson Education India. Scheer, A., 2006. Agility by ARIS. New York: Springer. Taylor, D., and Nichols, D., 2010. The Brand Gym. New Jersey: John Wiley & Sons. Williams, C., 2011. Effective Management: A Multimedia Approach. Stamford: Cengage Learning. Woods, M., 2012. Risk Management in Organizations. Routledge: London. Appendix Figure 1: Tesco Performance Steering Wheel Figure 2: Sainsbury Performance Steering Wheel Read More