Performance Appraisal System in Qatar Petroleum - Case Study Example

Abstract

The paper will delve deeper into the dynamics and attributes of the topic problem, that is, performance appraisal with specific reference to Qatar Petroleum Company. The main arguments in the paper will include critical analyses of the performance appraisal system, its impacts on organisational processes including relevant theories and practical examples to support the claims made herein. While focusing the performance appraisal system in Qatar Petroleum, the study will encompass the company profile and describe the impact of the performance appraisal system in the company. Most imperatively, the paper will account for the facts that depict performance appraisal as a problem in the company including the negative and positive dynamics attributable to the system. To sum everything up, the paper will provide a series of recommendations that will foster improvements regarding the eminent problem.

Introduction

Performance appraisal systems constitute imperative factors that influence the effectiveness of a workforce in organisations. The workforce provides a significant input into the realisation of the organisation’s goals and objectives; thus, the evaluation or appraisal of this group is imperative. With that in consideration, the paper will encompass majority of the aspects related to performance appraisal including theoretical and practical attributes of the evaluations. It depicts a wide entity; its exploration requires critical and comprehensive research to ensure that the results or findings obtained are viable considering the problem in question. The paper will consider the specific example of Qatar Petroleum. The company, like many others, is a labour intensive organisation that relies significantly on the competency and efficiency of its workforce. Exploring the dynamics of the performance appraisal system in the company will give a wider view of the problem in its larger context, which includes other organisations.

In this case, the paper will cover the pertinent merits and demerits of performance appraisal systems in organizations. A consideration of the impacts of the system on the organisation depicts its imperativeness in determining the overall organisational performance. Presumably, a feasible performance appraisal system is likely to accrue significant benefits while a less feasible one may tend to cause more problems; this is the hypothesis that guides the research process. Prior to delving comprehensively into the issue, it is imperative to evaluate the different aspects of the problem, in this case, performance appraisal system. Performance appraisal depicts a procedure by which a consultant or a manager assesses and evaluates the workforce’s behaviour by comparing the same with set standards. After the assessment, it is imperative to document the results and use them to provide feedback. Feedback constitutes an effective part of an appraisal system.

Notably, this paper this paper adopts a systematic structure in its account of the problem. The literature review part will provide a comprehensive overview of performance appraisal systems including the theoretical views, advantages and disadvantages; these constitute the impact of the problem on organisational activities. Another imperative part that provides a practical view of performance appraisal is the case study on Qatar Petroleum. In this case, the paper considers the appraisal system in the company, its weaknesses, and strengths as well as the resultant effects on the company. After the evaluation of the aforementioned attributes, it is mandatory to make recommendations based on the research findings.

Literature Review

According to Deepa, Palaniswamy and Kuppusamy (2014), a performance appraisal system constitutes a tool for evaluating employee behaviour and actions in the course of their work. As already mentioned, a comparison of the actions to set standards reveals the competency and effectiveness of the workforce. Farndale, E, & Kelliher, (2013) introduces the different techniques or processes eminent in performance appraisal systems. The system also accounts for different processes including 360-degree feedback provisions, behavioural checklist appraisal process, psychological evaluations and management by objective. Behavioural checklist depicts a list of criteria that employees have to adhere to, and management by objective considers the ability of employees to meet set goals within specified deadlines. 360-degree feedback considers feedback from team members, managers, and supervisors while psychological appraisal assesses the employees’ emotional stability, psychological traits, analytical skills and intellect (Farndale & Kelliher 2013, p. 883). All these types of performance appraisal processes are imperative to consider when choosing an effective appraisal system.

Before considering the advantages, disadvantages and other impacts of the problem on organisations, it is imperative to discuss the performance appraisal cycle. A study of the cycle gives an essential breakdown of the different parts of the system and their importance in influencing organisational activities (Orlando & Bank 2016, p. 43). A performance management or appraisal system accounts for five key elements; formulating objectives, measuring performance, feedback regarding results, reward protocols based on performance finding and amendment to activities and objectives. The constituents of the cycle determine the overall effectiveness of the system.

For instance, the first step is the setting up of objectives. The objectives determine the standards for the evaluation of employee performance; determining whether they are working accordingly towards the achievement of the set objectives. Measuring performance denotes the actual comparison of employee input against organisational standards; this ensures that employees maintain a clear vision of their duties and the importance of being competent while at work. Feedback from the regarding the results are essential in informing the employees and managers on the areas that require improvement and those that portray favourable performance (Storey 2014, p. 19). Feedback fosters the correction of existing or potential problems within the workforce. Rewards serve as motivating factors that encourage good performance. The amendment to objectives involves tailoring organisational activities and goals to ensure effective performance. The activity might involve the formulation of more effective standards of performance, reshuffling the staff members and revaluating set objectives among other measures. A complete performance management cycle fosters proper performance appraisal processes.

Another imperative factor to consider in the context of this problem is the aspect of the pertinent advantages and disadvantages. Ojala (2016) presents a clear account of the pros and cons associated with performance appraisal systems. First, performance appraisal systems provide proper documentations on employee performance within a given period. Suh documentation ensures that the organisation can keep track of employee activities to check on consistency in their performance and competency levels. Documented trends enable organisations to restructure their activities to suit emanating issues regarding performance. The systems also provide a protocol with which managers can discuss performance issues with employees (Ojala 2016, p. 66). Such discussions enable employees and managers to evaluate the requirements and adopt specific directions that will enhance performance. Performance appraisals also provide imperative feedback to an organisation’s workforce. The feedback dispatches vital information based on the results of performance evaluation processes; this enables employees to identify faulty areas and relevant directions from managers on viable measures for improvement of efficiency and effectiveness. Additionally, performance appraisal systems constitute a basis for seasonal planning and instituting employee goals. For instance, for performance to be effective, it is imperative for workers to be working towards a predetermined set of goals that endeavour to guide their activities (Poocharoen & Wong 2016, p. 612). Lastly, regarding the advantages, performance appraisals in organisations tend to motivate employees in the presence of a feasible compensation system and merit increase. In this case, employees receive compensation and merits according to their efficiency and ability to align their work with the pertinent expectations and professional standards.

Ojala (2016) also denotes some of the disadvantages posed by performance appraisal system. Foremost, poorly formulated appraisal processes may create a negative experience. A credible example, in this case, is the presence of bias and unfair treatment in the activity. In this context, most employees will experience demotivation; it is imperative to ensure that the process adheres to the requirements of equality and other legal regulations attributable to workplace environments. Second, the formulation of an appraisal system and the actual evaluation is time-consuming and burdens most of the managers and employees. Performance appraisal processes are complex, and managers have to consider various facts before the constitution of the findings; a lot of time is necessary, and the input of significant effort is mandatory. Third, performance appraisal systems are subject to rating errors; this leads to ineffectiveness in evaluating employee performance (MAŇÁK 2015, p. 36). In sum, performance appraisal processes and the pertinent systems constitute a considerable method of ensuring that employees maintain professional standards in their practice owing to the accruable advantages. However, organisations must consider the existence of flaws in the systems; these depict negative impacts that require viable rectifications.

Harden & Upton (2016) and Sholihin (2013) introduce the considerable impacts of performance appraisal systems on organisations. Some of these impacts are attributable to the advantages and disadvantages of the same. The effectiveness or effectiveness of these systems is determinable from their subsequent impacts on organisational processes. A notable impact, in this case, is the effect of appraisals on employee performance. According to research, the consequent workforce performance is dependent on the nature of the system (Sholihin 2013, p. 234). For instance, a system that is free of bias and accounts for the appropriate compensation of good performers is likely to enhance employee performance. On the contrary, a performance appraisal protocol with significant biases and evaluation errors poses a threat to the organisation in question. In this case, the demoralisation of employees will impede proper performance and subsequently derail professional development in the pertinent organisation. Managerial efficiency is an imperative aspect of performance appraisal; this determines the viability and reliability of the process.

Notably, performance appraisal systems depict costly counterproductive processes in their entirety. The primary aim, in this case, is to foster the development of workforce performance that resulting in the enhancement of organisational productivity and competence. The system applies for both individual and group performance (Ding & Beaulieu 2011, p. 1231). Another impact is evident when considering employee and organisational goals. Goals set for employees determine the performance standards that guide their practice. Alternatively, the organisational goals reflect the long-term objectives of the whole organisation. Markedly, such goals should be precise, quantifiable, time-conscious and feasible such that they are admissible in the performance appraisal system. In the context of the achievement of organisational goals, the appraisal process outcomes indicate the components of employee input that adds up to the success in the achievement of objectives including the prevalence of utmost profitability.

Another considerable impact according to Sholihin (2013) is effect of performance management systems on decision-making processes. Decision-making is an imperative constituent of organisational activities. In the course of giving directives and planning, managers have to make specific decisions to that effect. Performance appraisals onset a practical basis for formulating feasible decisions; these encompass various sectors in organisations. A considerable example of these decision-making areas is employee retention. Managers decide to retain or dismiss employees based on the results of their appraisal. Decisions regarding the promotion of the employees are also dependent on the existence of practicable performance management system (Saxena 2015, p. 29). From this perspective, performance appraisal influences the protocols used for the promotion of workers; those whose performance meets the set standards are eligible for promotion while poor performers should receive directives that will foster improvement.

Finally, about the impacts of performance appraisal systems, Davis, Girth & Stazyk (2016) denotes that the system affects other employee development areas. The results of the appraisals reveal weak area and provide a basis for professional development through adequate training among other methods. The pertinent developmental tools are transferable from the managers to the supervisors before it reaches the junior employees. The evaluation program should be effective to ensure that it results in positive impacts. On the contrary, the inability of the system to facilitate effective professional development limits the organisation’s productivity, making it less competitive when compared to other institutions.

The primary purpose of the paper is to analyse the impact or effect of performance appraisal systems on employee performance regarding productivity, efficiency, and competence; this denotes the specific area of the problem. The purpose of an appraisal system is to increase employee productivity, facilitate the accomplishment of significant objectives across departments and to create synergy. However, this research recognises the fact that some barriers and problems are eminent in the application of performance appraisal systems (Ammons 2015, p. 9). Therefore, another significant focal point, in this context, is the recommendation of techniques that are likely to offset these problems. An imperative consideration is the recognition that performance evaluation constitutes a critical indicator of productivity within the workforce with specific reference to the Qatar Petroleum Company including an evaluation of the influence of performance appraisal systems on the productivity of the company’s employees. The significance of this case study is evident in the fact that it portrays the imperativeness of performance appraisal systems in workplaces; this accounts for both employees and the managerial or leadership systems.

Performance Appraisal System in Qatar Petroleum

Company Profile

The company is state owned and deals with the survey, production, manufacturing, storage, and transportation of oil and gas products. The country’s Minister in charge of Energy and Industry is the Company’s Chairperson. Qatar Petroleum (QP) collaborates with state authorities and uses state machinery in the course of its activities. Some of the notable state players in QP include policymakers, regulatory authorities, and agencies responsible for planning. Qatar’s GDP is significantly dependent on revenues from the oil industry; this makes QP a critical determinant of the country’s economy (Qatar Petroleum 2016, p. 1). Regarding transportation, QP controls Qatar’s oil pipeline network that facilitates transport of oil and natural gas products from the fields to the export and refinery units or terminals.

Qatar Petroleum Performance Appraisal System

Being one of the largest global oil companies, QP accounts for a significant number of employees. The exploration, production, refinery, storage and transportation processes are labour intensive. It is mandatory for organisations dealing with labour intensive activities to formulate feasible performance appraisal systems. Such systems foster the effective management of the workforce. Productivity is dependent on the company leadership’s ability to manage and appraise the performance of the employees to ensure that utmost professionalism and productivity. QP has a viable performance appraisal system. However, considering the complexity of the pertinent activities and the large workforce, the system still depicts some flaws that tend to pose problems to proper workforce management.

QP’s performance appraisal system contributes significantly to organisational effectiveness in spite of the existence of a few drawbacks, as it is the case in performance management units in other companies. The current system has been contributing significantly to the maintenance of its position in the global oil and natural gas market. The employees constitute an imperative organisational input; their productivity and efficiency determine the sustainable development of the company. Most of the system’s provisions bridge the gap between the managerial bodies and the junior employees; this link integrates the protocols for the determination of the current performance status as well as the activities that require rectification.

In this case, the analysis of QP’s appraisal activities will focus on the attributes of the various components of their evaluation system. The components include regular feedback, improvement and strength areas, support and fair compensation of employees. The components are essential for the effective evaluation and motivation of the employees. Foremost, the existence of an avenue for feedback and communication within the system denotes effective methods of ensuring employees receive regular updates regarding their tasks. In this case, the managers and top officials in the company maintain a culture in which every participant is aware of their distinct responsibilities. In this case, employees endeavour to perform their tasks while adhering to directives from their superiors. Adherence to managerial and leadership directives at QP ensures that employees do not breach the conduct that guides proper practice as well as the quality or professional standards.

A credible example of the involvement of QP’s top leadership in the performance appraisal process is the meeting convened by the company’s President Saad Sherida Al-Kaabi on April 4, 2016. Such a meeting is a considerable indicator of the company’s leadership commitment to ensuring that employees perform accordingly (Qatar Petroleum 2016, p. 1). In the meeting, the President assured the employees of his leadership’s cooperation with those that work towards the success of the company; this is an indication of the HRM theory’s provision on the imperativeness of performance appraisal systems in the success of a business entity. He also extended his appreciation to the employees who made significant contributions to the development of the company in the past twenty-three years. In sum, QP’s top leadership, specifically the President, is conscious of the imperative role the employees play to facilitate the successful achievement of set objectives; this is an essential part of their performance appraisal system.

HRM theories denote explanations on how behavioural management and structures can pose positive or negative impacts on employees. QP has been investing in a human resource and performance evaluation system; this accounts for most of the employees’ interests to precede proper performance and desirable productivity. In this context, QP’s employee compensation procedure as a component of performance management or appraisal is a notable factor. According to most HRM theories, proper compensation constitutes an effective way of motivating the workforce to onset quality-oriented performance (Park, Lee & Kim 2016, p. 321). In this case, the compensation procedures are considerate of the different efforts levelled by various employees and departments while on duty. Best performers deserve relevant rewards; monetary compensation works effectively to this effect. For instance, at QP, salaries and other benefits undergo regular reviews to ensure that they remain competitive. A positive review of these benefits is reliant on the productivity of the workforce.

QP offers various benefits and compensations for its workers in their performance appraisal processes including what they call Qatarization. Quality Qatarization, according to the company, refers to the necessity of recruiting and developing Qatari workers and developing them to a standard or level that is comparable to their global counterparts; the aim here is to enhance quality performance, complexity and diversity in the energy sector (Qatar Petroleum 2016, p. 1). The effectiveness of this approach is notable in Qatar’s economy. Other sub-provisions of the QP performance appraisal framework include personal career plans that enable employees to align their goals with that of the company and higher education services that accord employees the opportunity to advance their professional knowledge in the field. Higher education enlightens employees on current trends in the industry enabling them to update their performance to meet the dynamic requirements of the global market; this enhances productivity.

However, it is imperative to note that in spite of the significant efforts to develop a feasible performance appraisal system at QP, some discrepancies are still evident. Such problems require adequate and practical solutions to improve productivity and competitiveness beyond the current level. For instance, QP does not have a pronounced 360-degree feedback system. The system constitutes a vital component of effective performance appraisal systems. In this system, employees receive anonymous and confidential feedback from colleagues and other officials. The sources of feedback, in this case, include direct reports, peers, and managers. As aforementioned, feedback is an essential component of the appraisal system because after the evaluation of performance employees need to information on how to enhance their efforts to ensure maximum productivity.

Additionally, QP lacks efficient rating scales. According to HRM theories regarding the performance of employees, rating scales can effectively give a visible impression of efficiency in organisational activities. The absence of significant rating scales at QP limits the enactment of a high degree framework for appraisals. In the current system, it is difficult for the company’s leadership to get a clear view of employee’s cooperation, initiative, technical competence and communication capabilities among others. Other appraisal methods or components of the performance evaluation system can portray this attributes, but they are not as effective as rating scales. QP has a viable performance appraisal system, but it lacks a proper and equitable evaluation protocol. In this case, there is need to incorporate appraisal provisions that ensure utmost equality; one not limited to a selected minority. The problem is primarily attributable to the absence of noticeable rating scales within QP’s performance management system (Harden & Upton 2016, p. 85).

The presence of the discrepancies reveals the imperativeness of the incorporation of HRM theory to avert the challenges. The knowledge of the pertinent theories will provide feasible solutions to the pending problems. For instance, the theoretical perspectives present the changing role of HRM and the subsequent impact on the process of adding value or promotion productivity and competence within the workforce. The HRM theoretical perspectives provide for effective research on employee interests, productivity, and performance (Wendt 2014, p. 7). Such indicators will enable QP to recognise the importance of considering the interests of the employees during and after the evaluation of their performance. In this case, the analysis of poor performance is not subject to limitation to the results of the appraisal that may lead to the dismissal of victim employees. Alternatively, the consideration of the theory will include the consideration of the causes of poor performance before the victimisation of the employees.

In some instances, the victimisation of employees might be inconsiderate of the fact that the fault might not lie with them. In some cases, lack of motivation, proper compensation, and inefficiency in HRM practices may lead to poor performance. Therefore, by considering the theory, QP will recognise the fact that the performance appraisal system should not implicate employees but rather recognise the faulty areas and facilitate the formulation of solutions. Other HRM theories focus on the development of knowledge and skills. Knowledge and skills constitute some of the most imperative characteristics of a competent workforce (Baldenius, Nezlobin & Vaysman 2016, p. 745). In this regard, QP will focus on an appraisal system that endeavours to promote the enhancement of the workforce’s knowledge and skills. Deductively, QP has to deliberate over these problems and consider incorporating remedy measures for the quality development of the employees, managerial units, and other organisational leadership positions.

Recommendations

Considering the discrepancies and faulty attributes eminent in QP’s performance appraisal system, this paper proposes the following recommendations:

QP should incorporate 360-degree feedback in their performance appraisal system. The enactment of this provision will ensure that employees get credible feedback from a variety of sources. For instance, in some cases, peers understand their colleagues better than managers do. In this case, they can offer more credible information and feedback regarding performance appraisal. Deductively, 360-degree feedback provides comprehensive information that is imperative for the improvement of organisational practices as well as the orientation of employees’ efforts towards the achievement of the organisational goals and objectives (Chang-Lin et al., 2016, p. 301). Another critical aspect that QP should consider is the implementation of proper follow-up procedures regarding the enactment of the information in the feedback to ensure that performance evaluations yield the desired results.

The company should develop feasible rating scales within the current performance evaluation system. The rating scales will provide a bipolar scale that accounts for the categorisation of performance either as poor or excellent. In this case, the company will have distinct units of evaluating performance. The primary advantage of the application of rating scales is the fact that they introduce structured and standardised appraisal protocols that are more reliable; this enables the comparison of ratings to check on consistency regarding performance and productivity thus simplifying the identification of problematic areas (Wilson 2014, p. 496). Notably, rating scales will account for an equitable treatment of employees across the company’s departments. The implementation of rating scales should be considerate of the fact that unwise or uninformed ratings may increase the discrepancies. QP should consider the enactment of these provisions in the process of revaluating their current performance appraisal system and implementing the relevant practices that depict considerable potential for improvement.

QP should also develop an organisational culture that depicts performance appraisal as an entire system. The system will account for all the relevant parties including both the senior and junior staff members. Such a system will incorporate training, counselling, orientation, motivation and the recognition of peak performance with which the workforce can identify.

Unlike the current system that focuses on performance appraisal as an occasional event, QP should develop a system that establishes performance appraisal as a continuous process. Such an action will guarantee consistency in monitoring performance, and a subsequent enhancement of productivity is likely to result. Occasional appraisals only emanate when problems are prevalent; this culture is not effective in enhancing competency (Davis, Girth & Stazyk, E 2016, p. 742). The continuity of the process fosters significant professional development within the workforce.

Finally, the company should consider aligning its goals with those of the employees. If individual employee goals are conflicting those of the company, productivity is likely to be lower. The performance of employees will be better if QP’s management provides an avenue on which employees can incorporate their goals into those of the company. For instance, innovative employees should be able to exert their innovative skills into the production process and compensated appropriately for their efforts.

Conclusion

Effective and feasible performance appraisal systems are critical for the efficient functioning of HRM practices. The focal point, in this case, is on enhancing performance, competency and productivity within the workforce. The workforce's development is imperative because employees constitute the primary production input especially in labour intensive organisations. Organisations must account for several factors in the process of ensuring the feasibility of appraisal systems. The paper covers most of these aspects including the strengths and flaws evident in various performance appraisal systems. HRM theories constitute a significant factor to consider when formulating viable performance appraisal frameworks.

The focal point of this paper is a case study of the performance appraisal system at QP and the pertinent characteristics. QP’s performance appraisal structure depicts various factors that are contributing to quality performance especially the focus on adequate compensation of the workers. However, some flaws are evident in the system. Examples include the lack of a feasible 360-degree feedback framework and the absence of rating systems. In light of this problem, the paper comes up with recommendations for QP; these are critical for the enhancement of performance evaluation practices in the company. Some of the recommendations include the incorporation of rating systems, revision if the current performance evaluation culture and the enactment of 360-degree feedback. The improvement of QP’s performance appraisal framework is dependent on the company’s willingness to adhere to the provisions of the HRM theory and the pertinent recommendations.