Performance Appraisal at Starbrite Manufacturing Systems

By Gustavo Hernandez, June 1, 2011

Brenda Jackson, a newly hired human resources manager, has been on the job for approximately six months and is in the process of trying to create a new performance appraisal system for her employer, Starbrite Manufacturing Systems. Brenda has reviewed the company's current employee files and has noted that no performance appraisals exist in the files. This situation is of great concern to Brenda.

In response, Brenda schedules a meeting with the CEO to discuss her concerns and to gain his support to ultimately recommend the designing of a new performance appraisal system. After the meeting, Brenda is happy at gaining the CEO's approval but starts to feel overwhelmed at the large task she has in pulling the new performance management system together.

Directions

Complete critical thinking questions on chapter readings, websites, and cases and respond to readings/postings (minimum of two) within online community.

1. Complete and post answers to two case questions on Case Incident – A Performance Dilemma p. 296

a. Discuss and suggest the type of appraisal methods that Brenda should recommend the company utilize.

Brenda should start educating managers in the performance appraisal, or in creating some approach that the performance appraisal does not be impacted by the managers.

In this educational process to everyone in the company, it looks that Brenda should start developing performance appraisals without to impact the employee performance. Once the performance appraisal is instituted, it could be linked to formal measurements and actions according to potential outcomes.

Brenda will face different feelings from Starbrite Manufacturing Systems, but most of them negatives … except for the people on the top of the Organizational Chart pyramid; at the limit these people have they own performance appraisal based on the result of the company. So, wherever methodology Brenda could propose, the company will have a negative impact at the beginning of the process (without to consider the potential conflict with unions); then, over the time, the benefit could arrive if Starbrite Manufacturing Systems needs to increase its performance because the competitive market where it operates.

Assuming Starbrite Manufacturing Systems has a typical organizational chart characterized as bureaucratic structure it is not possible to suggest a simple method for performance appraisal to every employee at the company. The different positions have different outcomes, responsibilities, goals, possibilities, etc. If Brenda wants to develop a useful performance appraisal methodology for Starbrite Manufacturing System, she should differentiate the performance appraisal according to those and many other key issues. I’d suggest:

- Vice-president/s: something like Management by Objectives based on the company general performance (including financial, human resources, economics, legal, environmental, etc variables), and 360-Degree Performance Review.

- Director/s: Appraisal-coaching for those people with potential growth in the company. Paired comparison method and Alternation ranking method could help to develop the performance appraisal as well as to improve the internal competitiveness between sectors.

- Manager/s: Appraisal-coaching for those people with potential growth in the company (because not only provide performance appraisal, also helps to develop line people). Paired comparison method and Alternation ranking method could help to develop the performance appraisal as well as to improve the internal competitiveness between sectors.

- Supervisors: Appraisal-coaching for those people with potential growth in the company (because not only provide performance appraisal, also helps to develop line people). Narrative Forms could help for some specific supervision positions related more with very routine jobs. Finally, for those people with higher potential in the company, Management by Objectives will help to motivate and develop people.

- Staff: Graphic rating scale (provide a clear and simple performance appraisal for staff). For lower staff position, Behaviourally Anchored Rating Scale or simply Critical Incident Method could help in keeping a record on uncommon situations.

b. Discuss the rating errors that Brenda must be aware of and how these can be avoided.

Bouskila-Yim and Kluger (Bouskila-Yim and Kluger, 2011) have describe the experience in performance appraisal in SodaStream, the world's largest manufacturer, distributor and marketer of home water carbonation systems, operating in more than 30 countries worldwide. Brenda will probably find the same problems having similar structure both companies.

Six years prior to our involvement with SodaStream, the HR department implemented a performance appraisals process whose goals were a) to clarify company expectations b) to provide feedback to the employees on their performance and set expectations accordingly, and c) to identify employees' weaknesses and challenges as a basis for a development plan. The process flow comprised the following three stages: First, the managers filled out a performance appraisal questionnaire. Second, the subordinate filled out a self-evaluation questionnaire. Third, the manager held an evaluation meeting with the subordinate in which they discussed three strengths, three weaknesses, goals and an action plan for the next year. Results suggested that managers did not provide feedback to their employees at SodaStream(“we don't receive feedback from our managers”). The majority of the employees described unpleasant experiences in their previous workplace regarding feedback (“it is a stressful period”, “the feedback meeting is a conflict meeting”, “it was devastating”; “the process was a waste of time”; “feedback equals criticism and it is not nice”) and a minority described positive experiences (“managers dare to tell me things only during feedback meeting”; “I had a dialog with my manager and I understood his expectations”). Most of the participants in the two focus groups thought that it is crucial to have a performance appraisal process (“without feedback, it is as if you are navigating without a compass”). They suggested that the following conditions have to be met for the process to succeed: a) positively energize employees b) follow-up on the process c) raise employees' motivation d) make it short and simple. (Bouskila-Yim and Kluger, 2011).

Because the company has not experience in performance appraisal, Brenda should be aware of all rating errors.

Validity and Reliability: because Brenda is new at the job, it is not clear that she has the correct and complete information to elaborate the performance appraisals with accuracy and positive impact in the company. In addition, the lack of experience from line people at Starbrite Manufacturing Systems evaluating subordinates, peers and supervisors create some dispersion in the validity and reliability of the performance appraisals that Brenda will develop.

Unclear performance standards: Brenda needs to develop an important work training employees. The lack of experience evaluating people will generate many unclear situations to everyone as well as the potential lack of experience from Brenda defining the task, duties and responsibilities from each position.

Halo effect: this bias it is very common also when people have experience developing performances appraisals. In the current situation at Starbrite Manufacturing Systems this problem will still deteriorate the validity and reliability of the performance appraisals.

Central tendency: Brenda should work in training people looking for a homologation in the evaluation of employee. The lack of experience at Starbrite Manufacturing Systems evaluating employees gives to this bias a high degree of incidence in the evaluation of the personnel. In addition, the supervisor apprehension face on a very sensitive tool in the performance and feeling of the employee could do that some supervisors tend to rate all employees in the middle of the scale.

Strictness/leniency: the lack of training and experience will potentially produce a different offset in the evaluation from each supervisor. This will create a tendency rating employees either low or high.

Appraisal bias: some positions at Starbrite Manufacturing Systems could favour the tendency of appraisal bias in the rating of employees. This could generate many concerns and at the limit legal problems for Starbrite Manufacturing Systems. Brenda must instruct very well to evaluators in trying to avoid this bias.

Recency effect: instruction and experience in the evaluation process will reduce this bias for the performance appraisal. Again, lack of experience and the initialization of the process will help to decrease the validity and reliability of the evaluations putting more emphasis in the most recent events more than in the appraisal period.

Similar-to-me-bias: this bias in the performance evaluation is easy of being committed due to the belief that if the person has a common procedure, understanding, vision, behaviour, etc, than the evaluator. This not only represents a bias in the performance appraisal, but also could have some legal implication related with discrimination. Brenda should work instructing personnel before to proceed with the performance appraisal.

As conclusion, Brenda should expend many time and effort understanding the different groups or cluster of positions, then instructing the personnel before to implement the performance appraisal, get some feedback and improve the process. In addition, a training period should be considered before the performance appraisal has a formal implication for any employee.

2. Given the numerous problems with performance appraisal, and the negative consequences that often ensue, should performance appraisals be abolished?

Appraisals are tools to keep under control a certain process. In this case the efficiency of workers. Without the feedback that appraisals offer the evolution of employees could follow a direction that decreases the efficiency of the workers, the company, etc, hurting its productivity and putting in risk the business development in a competitive market segment. Those companies that operate in a monopoly could avoid certain degree of appraisals due to the non-necessity of a high efficiency. Governments are a clear example of that. But those companies that operate in a competitive market, appraisal looks to be an essential tool to contain and promote efficiency.

The problem of appraisal looks not to be the appraisal itself, but the methodology that HR people have developed to implement it. When appraisals are subject to language influence, perception, emotions, tool for pressure, etc, it becomes the numerous problems associated with it. This incorrect way and set of measurable objectives translate the problem to the appraisal concept, when really this problem emerges for the incapacity of defining a solution or other way to evaluate and improve the employee performance.

Bouskila-Yim and Kluger (Bouskila-Yim, O., and Kluger, A., 2011) have showed that performance appraisals could even be destructive, and to overcome the potential destructive elements of performance appraisal they developed and implemented, in collaboration with HR managers, a Strength-Based Performance Appraisal (SBPA) by capitalizing on Positive Psychology. The research is not finished but it shows how this mix of theories could help abolishing the destructive elements of the classical performance appraisals.

For example, Waite and Stites-Doe (Waite, M., Stites-Doe, S., 2011) state in their research that formal performance evaluations are destructives, and they encourage managers to coach their employees and provide performance feedback that is constructive and developmental, rather that evaluative, in nature. Thus, it is not the act of giving performance feedback that is destructive; it is the act of evaluating performance. Other authors recommend modifying performance review processes to support Total Quality Management initiatives. Among the criteria scholars should research are users’ satisfaction with feedback, perceived procedural justice, and feedback effectiveness. Researchers must learn more about employees’ perceptions of and satisfaction with the feedback they receive under alternative performance feedback programs. Given the importance of employees’ perceptions of the differences between performance evaluation and performance management, a longitudinal study of an organization undergoing changes in its evaluation and management of employee performance would be insightful. The findings of their study resulted from deliberate changes in organizational culture and systems, including the development of goals for all employees based on company-wide strategy, training, development, and coaching to achieve these goals, and changes in compensation structure. This study furthers our understanding of both organizational justice issues and the ramifications of HR policy changes that have been adopted by perhaps thousands of organizations. Their attempted an initial explanation of the consequences of employees’ reactions to the removal of formal performance evaluation and merit pay systems. Results indicate that the policy changes were positively received by employees. Replacing a traditional performance appraisal with a concerted performance feedback and coaching effort, and merit pay with a blanket pay increase enhanced employees’ perceptions of pay fairness, pay satisfaction, and job satisfaction.

So, I think performance appraisal should not be abolished; it should be developed in a better way. The current HR theories are not able to produce a good product for performance appraisal. More research and new and broader HR concept should be developed.

3. Select two companies and research their salaries and benefits as follows:

Company	Capital Power Corporation			Government of Alberta
	Assistant	Consultant	Manager	Assistant	Consultant	Manager
Salary (by-weekly)	~$1378 to $1682	~$2023 to $2613	~$2790 to $3661	$1191.73 to $2209.2	$1,729.66 to $3,352.65	$2,367.82 to $3,799.55
Vacations, holidays, and other leaves	Starts with a minimum three-week allowance in the first year (depending on years of experience), as well as an innovative personal days-off program that allows employees to take time off for their personal or family needs (for all permanent non-unionized and some unionized employees) Scheduled Days-Off Program - one Friday per month for non-unionized employees working outside of Operations.			Casual Illness 72.5 hpy. (i) General Illness: 181.5 h@100% of the salary plus 398.75 h@75% of the salary. (i) Special Leave: 72.5 hpy (i) Vacations: 15 work days up to 8 years of service. 20 between 8 and 16 years. 25 between 16 and 25. Then 30 work days.
Short-term & long-term disabilities	Benefits Plan – it is a flex benefits package that allows choosing the benefits and coverage that are right for the employee, in combination with company-paid Long Term Disability premiums. Employee and Family Assistance Program - available to all employees, providing tools that they can use to bring balance to their lives.			MyChoice (*). The employee could choice different covering where the cost is shared between the employee and the GoA. This includes life insurance, disabilities, and health/medical insurance.		1^st Choice (*). The employee could choice different covering where the cost is shared between the employee and the GoA. This includes life insurance, disabilities, and health/medical insurance.
Life insurance
Health/medical insurance
Retirement (Pension Plans)	Capital Power Savings Plan – a retirement-savings plan administered by Scotia McLeod allows permanent non-union employees to contribute up to 10% of their annual salary, with a company match of the first 3%			Public Service Pension Plan (PSPP)		Management Employees Pension Plan (MEPP)
Personal Services (Credit Unions, Counselling, Employee Assistance Plans)	NA			Finance a leave of absence for any purpose by deferring part of their salary for a minimum of 12 months to a maximum of 6 years. Programs and services to support learning and development plans.
Other Plans – daycare, fitness transportation, food, education.	Wellness Account - encourages employees to become physically active Incentive Program - all permanent non-unionized and some unionized employees participate in an annual incentive (bonus) pay program.			The Special Accidental Death and Dismemberment beneficiary. Current and future retirees from the Alberta Public Service enrolment group benefits program. It includes Extended Health Care with an Out-of-Province/Canada Emergency Travel Option, Dental Care, Long Term Care, and Life Insurance plans for retirees, their spouses/partners, and dependent children. Learning and Wellness program (frozen). The employee was able to claim up to $500 per year for any activity related with learning and wellness. Expenses and allowances for travel on government business. Alberta Public Service Career Development Resources. Career Management support.

(i) It could change based on the years of service