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Performance management refers to a process by which employees work alongside managers in planning, monitoring and reviewing employees’ work targets and general contributions at the organization (Aguinis 2013). It is also the continuous activity of setting objectives, assessment of progress and provision of progressive coaching and reply in order to ensure that all employees meet objectives, as well as career goals. On the other hand, performance appraisal refers to the systematic evaluation of the employees with regard to their performance in the workplace alongside their potential for development (Greenhaus, Callanan & Godshalk 2000). Performance appraisal is focused towards realizing reasons of performance and the way to work correctly in the future in order to ensure that employees, organization and community benefit.
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Many scholars have come up with different arguments concerning performance appraisal and one of the most critical arguments is one presented by Deming in 1982. The statement mentioned that, “Performance appraisal nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, and nourishes rivalry and politics” (Deming 1993). Current paper will focus on a critical evaluation of Deming’s statement by providing the arguments for and against it. Arguments in support of the statement will be provided first and followed by arguments against the statement.
In Support of Deming’s Statement
In support of Deming’s statement, performance appraisal has been associated with the concept of merit rating that has been regarded as alluring. However, arguments have been presented that the word merit rating presents opposite promises at the organization. Performance appraisal forces individuals to work for their own interest by pushing forward their life preservers and, as a result, the whole organization loses a the end of it all. In most cases, merit rating tends to reward employees who do well at the organization and fails to reward those that try to improve a system (Deming 1993). It has also been mentioned that fair rating is a difficult activity due to the fact that performance of individuals is the result of combinations of several forces. Such factors include the employee, colleagues, task, equipment management and supervision among other forces that produce huge differences among people. In that case, an individual who is not promoted fails to understand the reason why his or her performance is lower than that of another individual (Aguinis 2013). Therefore, performance can be regarded as an unfair process that ascribes to individuals diversities caused by the whole system that they work in.
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Moreover, a survey on performance appraisal programs was conducted on 200 human resource individuals by professors at the Stanford University. The surveys revealed forced ranking to be a common element of the programs that results in decreased productivity, skepticism, inequality, reduced cooperation, reduced employee engagement and reduction of morale and leadership mistrust. A good example that helps argue against performance appraisal is that of Toyota Company. In the company, systems thinking, as well as lean production, inform the management that increase in productivity emerges from inspections and adaptation of the system and not from the focus on personal performance. Therefore, it is the improvement of mindset, thoughts about long-term outcome, elimination of wastes and removal of impediments that result in improved performance.
It can also be argued that some people tend to be outstanding performers meaning that they will automatically outperform system’s limits. Therefore, increasing their payments based on their performances will be a single way of accomplishing the objective of outstanding individuals’ recognition (Ainsworth, Smith & Millership 2002). A good example of a company that has totally abandoned performance appraisal is Adobe that has lately moved fromm the annual performance ratings to regular check-ins. It enables managers to provide their employees with coaching and advices on how to grow and develop plans within the organization. In Adobe, managers are involved in making adjustments in employees’ compensation, hence abolishing forced rankings and including compensation of employees dependent on how well they are able to meet their goals (Deming 1993). Therefore, it is wise for Deming having mentioned that performance appraisal only nourishes short-term performance and distracts long-term planning.
Arguing against Deming’s Statement
Arguing against Deming’s statement, performance appraisal has undergone several changes especially due to technological advancement and management upgrades. The process of performance appraisal is no longer conducted under the bases of traditional performance management such as merit rankings. Performance appraisal has emerged as a vital part of every organization and is conducted against several factors including job knowledge, quantity, as well as quality of initiative, supervision, judgment, dependability, leadership capabilities and versatility among other relevant factors.
Most importantly, performance appraisal has lately been applicable in most organizations in order to enhance promotions, confirmations, compensation reviews, improved communication, training and development, competency improvement and feedbacks. The performance appraisal system in current times seems to outdo that in the traditional era means that Deming’s statement is least applicable in today’s business world. The process of performance appraisal can be regarded as effective beginning with definition of objectives, establishment of job expectations, designing of the appraisal program, appraising performance, performing interviews, application of data for relevant purposes, identification of chance variables and application of social, physical and technological processes for change (Nankervis, Compton & Baird 2008).
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