CASE 4

Summary of case:

·         A newly hired employee was assigned a new supervisor

·         The employee was given tasks, that he thought were not part of his job description, yet he completed them anyway

·         The employee thought he was meeting expectations

·         At the six-month performance appraisal, it turned out that employee and manager had a very different view of the situation, leading to the employee considering leaving the company

·         HR stepped in and together with the two set up a plan including performance goals

·         With clear goals to achieve, the employee knew what was needed of him, and even started exceeding employer expectations

Challenges:

·         Unclear job description leads to confusion

·         Appraisal should not take place on six-month intervals, but constant feedback is needed

·         Aligning employee performance with organizational goals is important for motivation

Key Concepts, Theory and Model

The case clearly shows an appraisal system gone wrong, but that got turned around by the Human Resources Department to benefit all. It is critical to have clear job descriptions to be able to have clear and mutually beneficial job appraisal. If the job description is clear, it is easier to identify performance dimensions to measure for the appraisal.

There are many ways to measure job performance, some better than others. In the book “Managing Human Resources” the following measurement models are presented: 1. Relative and absolute judgement, 2. Trait, behavioral and outcome data. These systems all have their benefits and downfalls.

Relative measurement, means measuring performance in relation to other employees, whereas absolute judgement is based on performance standards. Traits measure personal characteristics of an employee (energy, decisiveness for example). Behavioral measurements focus on behavior, as the name entails. Instead of characteristics, certain behaviors are measured (for example the ability to communicate in a team). Lastly, the outcome data tool, which mainly focuses on shared set goals, and to which extent they have been met. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.254-260).

Although performance appraisal meetings often are held annually, or on a six-month basis, it is important to not limit feedback to these situations. Continuous feedback, goal setting and development is crucial for keeping workers motivated, on target and performing well. In the case, the worker was not given any feedback during the evaluation period, and was surprised by the outcome. Once the feedback was given on a continuingly the relationship between manager and worker also improved. But giving feedback can be tricky. Once clear goals and expectations have been set, it is easy to give feedback during the appraisal. The Entrepreneur website gives five tips on how to give feedback continuously. 1. Establish a culture of trust. Make the employee feel safe, don’t give feedback to be mean. 2. Give at least as much positive feedback as negative. 3. Be specific. 4. Give feedback immediately 5. Be encouraging, even if someone has made a big mistake. Ask for their perspective, and explain what you expect in the future. ( S. Halford)

Every organization has (or should have) a mission, vision and strategy. For performance appraisal, the vision and strategy are great starting points. By relying on the vision and strategy, clear goals can be laid out for the departments, teams and even individual workers. Say for example that the vision of a company is to become the largest shoe store in Finland. To become the largest shoe story, the company’s strategy includes selling shoes worth 1 million euros. From there we can create a KPI (Key Performance Indicator). In this case, it could be the sale of 1 million worth of shoes. Let’s say that the company has 5 stores in Finland, for each store we can then divide the sales target into a sales target of 200 000 euros per store. In each store, there are ten employees. Each employee then has to annually sell shoes worth 20 000 euros. Divided quarterly each worker’s sales target is 5000 euros. Managing that goal is easy both for the employee and supervisor of the shoe store. The KPI needs to be clearly measurable and represent the vision or strategy of the company. Setting clear KPI’s will feed into the vision of the company. (Mindtools).

There are several different kinds of tools, that can be used for implementing the vision and strategy, such as the Balanced Scorecard and OKR. The Balanced scorecard includes strategic non-financial measures to give a view of the company’s performance (Balanced Scorecard Institute). 

The OKR (Objectives and Key Results), is a management methodology, that helps workers and managers set clear goals for the work. This helps in performance appraisal. Each goal should be clearly stated, measurable and have a deadline (Better Works).

Setting clear goals and evaluations, will according to studies, keep the workers more motivated an performing higher. According to Prof. Edwin Locke and Prof. Gary Latham, and their Goal Setting theory, people who have difficult but attainable goals perform better and lack of accomplishments leads to job dissatisfaction. (D. Art)

Setting clear goals and giving feedback is not only beneficial for the company and its strategy. It also helps the manager give appropriate feedback and appraisal. And as an added bonus, the employee is more motivated, performs better and feels accomplished.

Literature:

Balanced Scorecard Institute, “Balanced Scorecard Basics", https://www.balancedscorecard.org/Resources/About-the-Balanced-Scorecard (3.2.17)

Better Works, “What are OKRs?”, https://www.betterworks.com/okr/ (3.2.17)

D.Art, “A Theory of Goal Setting By Locke & Latham”, Chron, http://smallbusiness.chron.com/theory-goal-setting-locke-latham-1879.html, (3.2.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 7. Pearson Education Inc. New Jersey

Mindtools, “Performance Management and KPI’s”, MindTools, https://www.mindtools.com/pages/article/newTMM_87.htm (3.2.17)

S. Halford, “Five Steps For Giving Productive Feedback”, Entrepreneur, https://www.entrepreneur.com/article/219437 (3.2.17)