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Managing Human Capital, Appraisal Management, Performance Management, Human Resource

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    MANAGING

    HUMAN CAPITAL

    Student Name |Bao Quan Nguyen

    Student ID | B0103HOHO0813

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    CONTENTS

    ABSTRACT ............................................................................................................................................................... 3INTRODUCTION ..................................................................................................................................................... 4PERFORMANCE APPRAISAL ............................................................................................................................. 6

    1. Literature Review .................................................................................................................................... 6Definitions ...................................................................................................................................................... 6Process of Performance Appraisal ........................................................................................................ 7Purposes of Performance Appraisal ..................................................................................................... 8What makes an Effective Performance Appraisal?......................................................................... 9

    2. Methods of Performance Appraisal ............................................................................................... 10Types of Judgment ................................................................................................................................... 11Focus of the Measure .............................................................................................................................. 11

    3. Critique on the Performance Appraisal ........................................................................................ 14Authorianism ............................................................................................................................................. 14Fairness ........................................................................................................................................................ 15Raters errors .............................................................................................................................................. 15Bias and Personal Prejudice ................................................................................................................. 17Devolution ................................................................................................................................................... 17

    PERFORMANCE MANAGEMENT .................................................................................................................. 181. What is Performance Management? .............................................................................................. 182. Performance Management vs. Performance Appraisals ........................................................ 193. Activities for Performance Management ..................................................................................... 21

    Setting performance and development goals ................................................................................ 21Providing ongoing feedback and recognition ................................................................................ 21

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    Managing employees development ................................................................................................... 23Mid-year and year-end performance appraisals .......................................................................... 23Building a climate of trust and empowerment ............................................................................. 23

    4. 360-Degree Feedback.......................................................................................................................... 24CONCLUSION ....................................................................................................................................................... 26REFERENCES ....................................................................................................................................................... 28

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    ABSTRACT

    For many decades, the performance appraisals have been an indispensable

    component for organisations to evaluate the ability to perform of employees. However,

    although there are many methods of performance appraisals that organisations can use to

    rate the employees and big amount of investment for building a comprehensive appraisals

    process, there are still a variety of shortcomings that avoid companies to have optimum

    evaluation and for this reason, having an impact in employeesmotivation and development.

    Performance management system a process that has been evolved from performance

    appraisals appears to adapt with the managersrequirement. This paper will be based on

    the secondary research of existing literature to point out the critics regarding to the

    performance appraisals and evaluate the development of performance appraisals into

    performance management system. The main purpose of this paper is to help indicate the

    improvements of performance management system to eliminate performance appraisals

    disadvantages. Also, the employees should be taken part in designing and adopting the

    performance management to ensure their goals will be aligned with the organisational

    strategies.

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    INTRODUCTION

    The rapid development of international business has made the world becoming much

    more harsh for organizations to survive and develop. For this reason, companies and firms

    have to own strategic capability - resources and competences needed for organizations to be

    survived and flourish (Johnson, et al., 2007). Successful organization is the one which can

    make strategic capability become its sustainable competitive advantage which is better

    than other competitors at some aspects and can maintain the advantage in a length of time

    (Noe, et al., 2011). Obviously, human resource a part of strategic capability and has played

    an important role in organizations strategic management; in addition, human resource

    management considers people as assets that are essential for organizations compe titive

    advantage and bringing human resource into line with the corporate strategy (Armstrong,

    2009), forming a high-performance work system (Noe, et al., 2011). Below is the illustration

    of strategic human resource management (HRM):

    Figure 1. Strategic HRM (Noe, et al., 2011)

    People not only establish and drive the organization; through the people, the whole

    firms objectives are also set for staffs to target (Toppo & Prusty, 2012). For this reason, the

    employees get the jobs and are required the tasks to be done to contribute for the common

    objectives of the organization this can be called job performance (Stewart & Brown, 2011).

    The process which can be used to measure the contribution of staffs is performance appraisal

    (Stewart & Brown, 2011). The evaluation of employees performance helps to reveal the

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    contribution of the employees in the organisational objectives (Toppo & Prusty, 2012). The

    performance appraisals can also help the organisations to measure employees behaviours,

    traits and achievements. Hence, the performance appraisals not only be used in traditional

    human resources process such as salary, layoffs or retention but they are also applied for the

    employees development purposes. However, during the development of the modern

    international business, the performance appraisals have shown a lot of shortcomings. One of

    the most problem is the occurrence and increase of discrimination and bias due to the rapid

    growth of globalization which leads to the diversity in workplace.

    Therefore, performance management system was born as an evolution from

    performance appraisals. Performance management takes a role in strategic HRM and is

    considered as an important HRM process providing the basis for improving and developing

    performance. Moreover, the most important aspect of performance management system is

    that it encourages the continuous monitor toward employees, the engagement of employees

    in review performance and reduce the impact of bias through goals-directed element.

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    PERFORMANCEAPPRAISAL

    1.LITERATURE REVIEWDefinitions

    In the aspect of history, earliest usage of performance appraisal was in Industrial

    Revolution; back to 1800s, it was used as a way to help controlling and enhancing the cotton

    output of Scottish cotton mills worker that era was also the flourish time of bureaucratic

    organization (Rubin, 2011). At that time, the mechanism of performance appraisal is

    punishing employees who got the poor performance so they could be motivated to achieve

    better outcomes (Kondrasuk, 2011). Overtime, the performance appraisal can now be simply

    defined as an official interchange the details regarding to the performance in once or twice

    per annual (Rowley & Jackson, 2011). As a result, proper appraisals apprise staffs having

    good performance, their efforts in work are notified and acquaint employees who achieve

    poor performance so they can amend ways of working to improve (Camardella, 2003).

    At the modern business era, the performance appraisal system has evolved from the

    conventional carrot and stick mindset to become more comprehensive and try to capture

    all areas of employees contribution (Stewart & Brown, 2011); besides, performance

    appraisal has been developed with a system of setting employees job expectations and tend

    to engage employees more (Kondrasuk, 2011). As a result, Gomez-Mejia et al. (2012) stated

    a comprehensive model about Performance Appraisal; in which, performance appraisal is

    the inclusion of identification, measurement and management of human performance in

    organization:

    Identification: areas of contribution and work that the managers should look atwhen measuring performance.

    Measurement: making managerial judgments on employees performance. It isimportant that organizations must keep consistency in measurement.

    Management: not only a past-oriented activity to judge on employeesperformance, the appraisal must take the future-oriented view to utilize the

    potential of employees contribution toward organization.

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    Process of Performance Appraisal

    Regarding to Lussier and Hendon (2013), the process of performance appraisals

    include of four steps:

    1.Job analysis:firstly, the managers should know about what a job consists of inorder to evaluate employees performance.

    2. Develop standards and measurements methods:the job analysis leads to thejob description (Rowley & Jackson, 2011). With the job description, both the

    manager and employee would acknowledge about the job criteria. In this step, the

    job criteria standards or the standards of acceptable behaviours would be

    developed in order to make the assessment toward performance.

    3. Continuous feedback with informal performance appraisal-coaching anddisciplining:aligning the employees efforts with the jobs standards should be a

    continuous process (Dessler, 2012). Beside the formal performance appraisals

    that happen once or twice per year, the employees would need regular unofficial

    feedback so they can know how good or bad performance in their jobs at the

    current state so the managers or leaders can take action immediately (Dessler,

    2012).

    4.

    Prepare for and carry out the formal performance appraisal: this step wouldinclude the selection of appraiser (Boachie-Mensah & Seidu, 2012) and providing

    formal performance review with the appraiser. In this step, a variety of

    performance appraisals methods would be used to produce a comprehensive

    result regarding to employees contribution.

    During conducting the process, it is important to have a clear connection among the

    organization objectives and mission with the process.

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    Purposes of Performance Appraisal

    Employees performance appraisal is important and demands a significant amount of

    investment in business time, energy and money (Davis, 2012). Most of the authors agree that

    the two purposes of organizations to conduct the performance appraisal are administrativeand developmental uses (Gomez-Mejia, et al., 2012).

    Administrativeuses of appraisals are applied when they are basis for makingdecision regarding to the employeesdaily work condition which is inclusive of

    promotion, rewards, salary, benefits and even recognition programs; additionally,

    the performance appraisals provide systematic judgments to back up those

    information (McGregor, 1957). Moreover, managers also use the appraisal

    information in order to decide the retention, contract termination in case the

    employees show poor performance. Therefore, the administrative decisions can

    have significant influence toward employees future careers and make the

    managers feel itchy when receiving negative appraisal information which can lead

    to the employee layoffs (Noe, et al., 2011).

    Developmental purposes tend to tune up and improve the employeesperformance and skills by providing the feedback, helping employees to conduct

    personal development plan, offering internal departmental or cross-departmentaland job rotation training (Salleh, et al., 2013). This helps boost employees

    confidence and morale level in daily routine and even the employees who

    achieved the performance expectations can become more treasured when they

    have chance to be heard and discussed about performance feedback (Noe, et al.,

    2011). Appraisals should be used as a helpful tool for the purpose of career

    planning and providing a chance to review employees career plans (Dessler,

    2012).

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    Regarding to Boachie-Mensah and Seidu (2012), two other purposes of performance

    appraisals would be system maintenance and documentation. Performance appraisal can

    help organisations to amend the common goals, referring to system maintenance uses.

    Besides, documentation purposes are to achieve the legal demands by authenticating the

    decisions regarding to HR aspect and leading to the corroboration of research on the

    performance appraisals tools (Boachie-Mensah & Seidu, 2012).

    Last but not least, Dessler (2012) also stated that performance appraisals also play a

    central role in the whole process of performance management.

    What makes an Effective Performance Appraisal?

    In order to achieve the goals as well as the objectives that managers indicate for

    organizations, the methods of measuring performance must be good (Noe, et al., 2011). An

    accurate measurement of performance can help the employees know where they can

    improve (Lussier & Hendon, 2013). There are criterion determine the effectiveness of the

    performance appraisal:

    Mission and objectives connection, fit with strategy:the managers always have to

    make sure that performance management systems lead to the accomplishment the missions

    and objectives of the organizations (Lussier & Hendon, 2013). In another hand, performance

    measurement should target at achieving employees behaviours and attitudes that cope with

    the organizations strategy, goals and culture (Noe, et al., 2011). The performance appraisals

    a central part of performance management system would play an important role in

    measuring whether employees are engaging in those behaviors.

    Validity and reliability:since there are would be many areas that the employees can

    contribute to the organizations, an effective performance appraisal should be valid which

    is an accurate measure that measures the process that the managers really want to measure

    (Lussier & Hendon, 2013). The measure also must be reliable, it means the measure must

    keep its consistency in delivering the result and be conducted in the same way everytime it

    is used.

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    Acceptability and feasibility: beside the validity and reliability, the performance

    appraisal should be also acceptable and feasible for the one who must use it. Both the

    appraisers and appraisees should feel that the measurement tools can evaluate

    comprehensive the performance and major aspects of the job, that tool would be acceptable

    and feasible.

    Specific feedback:the performance measurement feedback form should be as much

    detailed and specific as possible since it can help the employees acknowledge well the

    expectations and clear indication of working methods to achieve them. Moreover, a specific

    feedback also leads to the mutual benefit between organizations and employees: it can help

    the organizations satisfy the objectives of supporting organization strategy and the

    employees are developed (Noe, et al., 2011).

    2.METHODS OF PERFORMANCEAPPRAISALThere are many approaches for managers to conduct performance appraisals;

    organizations usually mix and combine different of approaches in order to design their own

    unique method (Grote & Grote, 1996). Regarding to Gomez-Mejia et al. (2012) the most

    common methods can be divided into two ways:

    a. Types of Judgmentb. Focus of the Measure

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    Types of Judgment

    Types of judgment are also mentioned as subjective performance measures which

    are the measures that signify judgments made by raters (Stewart & Brown, 2011). There are

    two types of judgment that the managers can make: relative judgment and absolutejudgment. Relative judgment requires the supervisors to make the comparison toward the

    performance of employees who are in charge of the same jobs or tasks (Gomez-Mejia, et al.,

    2012). The most simple approach of relative judgment is simple ranking which the

    supervisors rank the employees regarding to the aspects of highest performers and poorest

    performers (Noe, et al., 2011). A variation of this judgment can be called alternation ranking

    method. In this method, the supervisors will work from a list of employees. First, the

    supervisors will choose the best and the worst employees. After that, the remaining

    employees will be rated as the second best, second worst, etc. alternatively until all of them

    are rated.

    The absolute judgments require the raters to make judgment based totally on the

    performance standards. This type of judgment is also calledforced distribution methodin

    which the raters place the preset portions of subordinates in performance categories

    (Dessler, 2012).

    Focus of the Measure

    In the opposite of subjective performance measures, the objective performance

    measuresor the focus of the measure are the performance measures based on counts of

    traits, behavioural and outcomes data (Stewart & Brown, 2011).

    Trait appraisal instrument requires the managers to conduct the evaluation

    regarding to the traits of the workers (Gomez-Mejia, et al., 2012). Traits help to identify the

    physical and psychological characteristics of a person (Lussier & Hendon, 2013); the traits

    can include of resourcefulness, enthusiasm, drive, application and even intelligence

    (Torrington, et al., 2005). One of the typical instruments to rate the traits is graphic rating

    scale. Graphic rating scale is a method for measuring performance by listing the traits of

    employees and adding the rating scales for each of the trait (Noe, et al., 2011). Below is an

    example of a graphic rating scale:

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    Figure 2. Graphic Rating Scale (Noe, et al., 2011)

    Behavioural appraisal instruments place more emphasis on the assessment of

    employeesbehaviours (Stewart & Brown, 2011). In this method, instead of listing the list of

    traits and rating employees regarding to the list, the supervisors need to measure the

    employees certain behaviours (Gomez-Mejia, et al., 2012). Two popular ways to appraise

    the exhibited behaviours of employees are critical-incidents method and behaviourally

    anchored rating scale (BARS). In the critical-incidents method, the supervisors will keep an

    circumstantial records of employees work-related behaviours (Dessler, 2012) and review

    those with employees in a periodic time. This method of performance measurement can help

    to clarify the good or bad aspects of employees in behaviours.

    The behaviourally anchored rating scale(BARS)is a rating technique that evaluates

    the workers performance concerning to the job-related incidents (Daft, 2010) and combines

    them with the quantitative ratings by anchoring a quantified scale with specific narrative

    examples of good and poor performance(Dessler, 2012). The BARS scale will show various

    levels of performance concerning to the employees behaviours.

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    Figure 3. A sample of BARS to rate the performance and behaviours of a Sales

    Manager

    (Gomez-Mejia, et al., 2012)

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    Outcome appraisal instrument is an approach in which the managers will assess the

    outcomes accomplished by the employees (Gomez-Mejia, et al., 2012). The typical method

    for this instrument is management by objectives (MBO) a system in which the organisations

    will set the goals, the process of these goals will flow from the top level to the bottom level

    so to ensure that everybody in each level of the organisation can contribute to the overall

    goals (Noe, et al., 2011). These goals will be used to rate employees performance.

    3.CRITIQUE ON THE PERFORMANCEAPPRAISALObviously, the performance appraisal is important to the development and

    performance measurement of the organizations; however, although there are many

    approaches as well as methods in appraising the performance, the performance appraisal

    still appears some limitations as well as challenges that can cause tremendous problems andavoid organization to build an effective performance management system.

    Authorianism

    Performance appraisals process are often conducted as manager-centric: the raters

    dominate the meeting when the employees must justify themselves and the raters play the

    role of judgment (Davis, 2012). The matter is that how an organisation can build up and

    maintain a supportive environment so that the employees can feel free to talk and give

    feedback information in the performance appraisal process.

    Moreover, most of methods in appraising the performance are past-oriented. Not only

    that the appraisals do not help to change the behaviours or outcomes that already happened,

    it also would require the raters to spend time and invest in collecting details to conduct a

    comprehensive review and rating regarding to the employees; therefore, if supervisors are

    not rewarded for the accurate ratings, they are not motivated to invest and carry out details

    gather (Grund & Przemeck, 2012).

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    Fairness

    The most important objective must be achieved for performance appraisal is fairness.

    In fact, managers and supervisors still disregard the accuracy and honesty during the process

    of appraising performance since they want to use this process for the political purpose (forinstance, the managers give good appraisal to employees so they dont get along with whom

    leaving the organisations) (Dessler, 2012). Therefore, regarding to Dessler (2012), the

    standards for employees performance evaluation must be clear and the employees should

    be known that in which aspects and basis they are appraised.

    Raters errors

    These are the errors in performance appraisals that reveal consistent biases

    regarding to the point of view of the raters (Gomez-Mejia, et al., 2012). Below are the the

    typical errors that appear in the process of performance appraisals:

    Halo error

    The halo error here means that the general congeniality in rating process that

    managers give to an employee can influence the assessment of the other aspects or fields

    that the raters are conducting (Torrington, et al., 2005). Therefore, the raters may give a bad

    review in all fields of traits toward an employee who shows an unfriendly attitude during

    work (Dessler, 2012).

    Distributional error

    Raters may make distributional error when they have tendency to use a limited part

    of rating scale (Noe, et al., 2011). The distributional error can be divided into three aspects:

    leniency, strictness and central tendency (Lussier & Hendon, 2013). The leniency rating

    occurs when raters tend to give easy or restricting ratings to the high result; the strictness

    results when raters use the low portion of the rating scale and the central tendency arises

    when raters make the average or middle point ratings (Gomez-Mejia, et al., 2012).

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    Recency error

    This type of error occurs when raters emphasize too much on recent employees

    behaviour and outcomes (it can happen when conducting the critical incidents method)

    (Lussier & Hendon, 2013). In this case, an employee may show a good range of performanceduring the whole period of performance review may have possibility of being appraised with

    lower rating if the performance was not such high right before the ratings were conducted;

    as a result, the raters may place emphasis on recent data because it is easier for them to recall

    recent outcomes (Stewart & Brown, 2011).

    Moreover, regarding to Lussier and Hendon (2013), there are some other types of

    errors that can happen as well:

    Similarity error

    The similarity error happens when the raters consider that the employees who have

    or share the similar traits or characteristics with them are the good employees; otherwise,

    the employees who have the opposite or different traits can be evaluated as poor performers

    Proximity error

    This error occurs when raters tend to give similar marks to items that are near (or

    proximate to) each other in the form of performance appraisal although that, in fact, theyshow differences in measuring performance.

    Contrast error

    This error happens when the raters tend to compare and contrast the performance

    between two employees instead of giving comprehensive performance measurement to

    evaluate each of them (Becker & Miller, 2002). For example, a good performer can be rated

    as below average employee when comparing him/here with an outstanding one.

    Attribution error

    The attribution error might occur when the supervisors observe a behaviour or

    action of an employee and then make the subjective conclusion toward the performer. For

    instance, when the rater observes the employee arguing with another one, the rater can

    assume that employee is a poor performer with bad attitude.

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    Bias and Personal Prejudice

    The bias happens when the ratees characteristics (age, sex, race) might have an

    impact in the evaluation process although these characteristics do not have any concern to

    the performance (Dessler, 2012). Raters tend to give lower rating points to employees whobelong to the minority group and high portion of points to employees who share the same

    race with them such as white raters give higher evaluation to white employees and real

    reasons behind the discrimination and bias regarding to the racial diversification still remain

    unknown (Stewart & Brown, 2011). Additionally, the performance ratings can also be varied

    between male and female raters tend to demean womens performance concerning to the

    male-typical jobs (Dessler, 2012). Moreover, there still exist something so-called glass-

    ceiling an invisible barrier that prevents minority and women develop themselves into top

    management positions (Daft, 2010). Regarding to the sex, another sensitive issue should be

    mentioned is about the homosexual employees in the workplace. The homosexual

    employees can be discriminated and lose jobs; hence, gays and lesbians tend to fabricate

    heterosexual identities to secure their careers and overcome the glass-ceiling (Daft, 2010).

    The issue of bias can be developed into the prejudiceand stereotyping. Theprejudice

    is the tendency to view the people who are heterogenous or different as being deficient (Daft,

    2010) while stereotyping is classifying person into an affinity group and making anassumption that the person also has the same characteristics with the others in that group.

    In this case, the people who are homogenous or in a homogenous team can have a prejudice

    or blame the different people and take advantage of the cultural difference to suggest that

    the others cannot be better than us(Fish, 1999).

    Devolution

    In some organisations, the performance appraisals process is designed by Human

    Resource department and the process will be used by the line managers for implementation

    (Davis, 2012). Therefore, some line managers say that they do not have any support from HR

    when they want to implement the process as well as they cannot give out their idea on

    developing the form of performance appraisal to HR.

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    PERFORMANCEMANAGEMENT

    1. WHAT IS PERFORMANCE MANAGEMENT?The ultimate objective of any performance appraisals system is heading to the

    performance management (Gomez-Mejia, et al., 2012). Actually, the fact in some

    organisations or corporates is that the employees always have to wait until the official

    appraisal time which happens usually once or twice a year to be indicated if they are

    performing good or bad (Dessler, 2012). Moreover, during the performance appraisals

    process, there are high possibility of occurence of errors and problems as being stated above

    and beside, both employees and raters might not be able to remember everything happening

    throughout the year due to their selective memory (Mustapha & Daud, 2013). Therefore,

    more and more employees as well as employers take part in more continuous approach to

    the performance appraisal (Dessler, 2012). Additionally, there has been a shift away from

    subjective evaluation on desirable traits towards a multi-characteristics or multi-traits

    review of process behaviour and outcomes; furthermore, a collaborative approach to

    establishing objectives and analysing requirement of development and training (Rowland &

    Hall, 2012). As a result, performance management is a continuous, evolutionary and flexible

    process that involves both managers and employees within a framework that sets out how

    they can best work together and improve the performance overtime (Armstrong, 2009). In

    another way, when Gomez-Mejia et al. (2012) mentioned a model of performance appraisal

    in which includes of identification, measurement and management of human performance

    in organization; Dessler (2012) emphasized that performance management is the continuous

    process of identifying, measuring and developing the performance of employees and aligning

    their performance with the organisations objectives. The performance management focuses

    on future performance planning and improvement as well as personal development instead

    of past-oriented performance appraisals (Armstrong, 2009).

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    2. PERFORMANCE MANAGEMENT VS.PERFORMANCEAPPRAISALSSometime it can be assumed that performance management is the same thing with

    performance appraisal (Armstrong, 2009). However, there are still significant differences

    between them. In actual workplace practice, Armstrong (2009) stated that the performanceappraisal is usually operated as a formal performance assessment or ratings after the review

    and it is discredited since it has been conducted as a top-down and bureaucratic system

    owned by HR department instead of line managers. Therefore, modern business

    environment requires much more than that from performance appraisals. The performance

    appraisals has been evolved into performance management. Regarding to Dessler (2012),

    there are three main points that distinguish between performance management and

    performance appraisal:

    1. Instead of meeting employees in an official review sessions one or twice a year,the performance management means there must be continuous, daily or weekly

    interactions between the supervisors and performers to ensure the continuous

    improvements.

    2. The performance management is mainly the goals-directed.3. Performance management means the continuously re-evaluating and if necessary,

    modifying the ways of employees or teams use to get things done.

    Additionally, apart from the conventional paper and pen (or even electronic) forms

    in performance appraisals process, with the breakthrough advances in technology, the

    application of high-technology devices or software in managing performance is necessary

    and recommended since they would help managers or supervisors in direct and continuous

    tracking of employeesperformance. One example for performance management software

    system would be Cadena HRM Series (applied by large corporates such as InterContinental

    Hotels Group Plc., Starwood Hotels & Resorts, etc.): a comprehensive and flexible system

    which is mainly used for managing human resources within organisations. For instance, it

    not only helps the managers to manage the daily routine, time attendance, payroll or

    promotion of employees but also records the training process of each department to develop

    the staffs.

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    Figure 4. Cadena HRM Series interface

    (Source:http://cadena-hrmseries.com/Resources/Images/img_pr_2.jpg)

    As a results, building up a comprehensive total performance management would help

    the organisations to evolve the performance appraisals from a process in which the raters

    dominate and are affected by the bias to become an interactive system the raters and the

    employees can interact with each other so they can track the performance measurement

    continuously.

    http://cadena-hrmseries.com/Resources/Images/img_pr_2.jpghttp://cadena-hrmseries.com/Resources/Images/img_pr_2.jpghttp://cadena-hrmseries.com/Resources/Images/img_pr_2.jpghttp://cadena-hrmseries.com/Resources/Images/img_pr_2.jpg
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    3. ACTIVITIES FOR PERFORMANCE MANAGEMENTThere are many approaches that would be used for performance management to

    engage the employees in the process of performance management. Mone et al (2011)

    summarized and suggested that there are five performance management activities. Theyinclude:

    Setting performance and development goals

    Firstly, setting performance and development goals plays an essential role in the

    process of performance management (Mone, et al., 2011). Additionally, this step means that

    with the collaborative engagement of both supervisors and employees, the interaction

    between them would be better. In this step, regarding to Dessler (2012), there are two

    elements within setting the performance and development goals:

    (1) Direction sharing which means the organisation communicates the goals and

    objectives throughout the whole organisation and interpreting those goals into the doable

    departmental, teams and individual goals.

    (2) Goal alignmentthis means that the organisation should develop method that can

    help the supervisors and employees to see and understand the relationship between

    employee individual goals with the departmental and companys goals.

    This activity is also a critical part in the outcome appraisal method management by

    objective (MBO).

    Providing ongoing feedback and recognitionProviding ongoing and effective feedback is another important component in

    performance management, an ongoing feedback would help the employees to improve

    performance and engage more in the performance management process (Mone, et al., 2011).

    This activity also has two steps need to be done (Dessler, 2012):

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    (1) Ongoing performance monitoringthis step includes of using the computerised

    and electronic systems that measure the progress and performance measurement of

    employees. Then, the managers will use the email or the system report forms to inform the

    employees about their progress in performance. The computerised system supports the

    managers in continuous observation and monitor so that they can immediately make the

    implementation.

    (2) Ongoing feedbackthe managers can make feedback and implementation face-

    to-face with the employees or giving out the feedback comment through email. The feedback

    here can be either positive or negative (Stewart & Brown, 2011). Also, regarding to Stewart

    and Brown (2011), the positive feedback can bring the positive motivation toward the

    employees while the negative feedback can have different impacts toward the employees:

    either decrease the motivation of employees who perceive the negative feedback as criticism

    or increase the motivation of employees who are confident in their abilities.

    Figure 5. The effects of positive and negative feedback (Stewart & Brown, 2011)

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    Managing employees development

    Through the ongoing and continuous monitor and feedback, the managers will have

    an overview of how well or bad performance of the employees are. Then, the managers can

    make the decision which training and coaching should be conducted to encourage the goodperformance or to enhance the employees who have bad progress. A good performers can

    be trained to broaden the types of tasks (job enlargement) or they can be authorized more

    decision-making right (job enrichment) (Noe, et al., 2011). For both good and bad

    performers, the job rotation or cross-departmental training which is a method to help

    enlarging the job knowledge by moving employees through different jobs or departments

    (Noe, et al., 2011) would be a useful way.

    Mid-year and year-end performance appraisals

    After that, the official mid-year and year-end performance appraisal would be

    conducted with the methods mentioned in previous parts. One of the most important point

    that Mone et al (2011) mentioned in conducting performance appraisal is that it can help

    employees to perceive the fairness within the organization so fostering the engagement of

    employees in performance management process.

    Building a climate of trust and empowerment

    Once the employees perceive the fairness in the organisation and trust their

    managers, the can be empowered to do their job and being encouraged more in engaging the

    performance management process (Mone, et al., 2011).

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    4. 360-DEGREE FEEDBACKThrough the activities of performance management, the ongoing feedback plays an

    important role because through that, the raters can help to design the training and coaching

    programs for employees. Therefore, it is very important for the supervisors and managersto collect and analyze the information and working details of the employees (Noe, et al.,

    2011) because the issue of them is that managers and supervisors cannot have the complete

    picture of their employees and they suffer from both contamination and deficiency (Stewart

    & Brown, 2011). Contamination occurs when information that should not be included in

    performance measurement is included while the deficiency is vice versa: information that

    should be included in measuring performance is not included (Stewart & Brown, 2011).

    Below is the graph shows the contamination and deficiency of a job performance measure:

    Figure 6. Contamination and Deficiency in Performance Measurement

    (Stewart & Brown, 2011)

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    Therefore, in order to get comprehensive and detailed information of employees,

    organisations combine the information from all of possible sources include employees

    manager, peers, subordinates, self and customers (Noe, et al., 2011). This method is called

    360-degree feedback.

    Regarding to Noe et al (2011), the use of managers as a source of information can

    motivate them to produce the accurate feedback since their success depends much on their

    subordinates. However, the shortcoming is that the manager may do not have all chance to

    observe the employees during the job duties. In this case, a feedback from the employees co-

    workers would be an excellent source of information since the colleagues would have the

    chance to observe the employees whenever the managers cannot. The potential

    disadvantage for the peer feedback is that the friendship and rivalries can affect the bias in

    giving the evaluation.

    In case the person being rated is a supervisor or manager, the information from their

    subordinates can be obtained (Stewart & Brown, 2011). Moreover, another approach is self-

    review from employees which is really effecting when being used to discuss with other

    evaluation (Noe, et al., 2011).

    Last but not least, the customer feedback (from survey when using the service, or

    satisfaction rating through emails) would help the organisation in evaluating fairly the

    employees performance (since the employees directly serve the customers) and improve

    the customer service through human resources activities (Noe, et al., 2011).

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    CONCLUSION

    For many years, the performance appraisals has evolved from the traditional punish

    and reward method in traditional work and labour into the ongoing process of evaluating

    employee performance (Lussier & Hendon, 2013). The globalization, diversity and high

    knowledge workers require the organisation to invest more in building up the performance

    appraisals process which is nowadays not as simple as just looking into the amount of

    outcome or number of products made by the employees. The process of performance

    appraisals include of four steps: (1) job analysis, (2) develop standards and measurements

    methods, (3) continuous feedback with informal performance appraisal-coaching and

    disciplining, and (4) prepare for and carry out the formal performance appraisal. The

    managers now use the performance appraisals not only to make the decision about salary,

    promotion, retention or layoff; through performance appraisals, they also help the

    employees to develop themselves or improve their performance. Thus, an effective

    performance appraisal process must satisfy four aspects:

    Fit with the strategy Validity and reliability Acceptability and feasibility Specific feedback

    There are also a variety of methods regarding to performance appraisals. They are

    classified into two main groups: types of judgment and focus of the measure. The types of

    judgment consist of relative and absolute judgment while the focus of the measure include

    traits (graphic rating scale), behavioural (critical incidents, BARS), and outcome (MBO)

    appraisals instrument. However, although there are many approaches of performance

    appraisals, the performance appraisals still have the limitations which can create huge

    impact in evaluating the employees. The raters can dominate the employees during the

    performance review session; hence, the employees do not have chance to talk or express

    their own thought; it can lead to the issue that the raters may not show the fairness in rating

    the employees. Moreover, during the performance review, there are some errors may occur:

    the supervisors can be so strict or lenient or even central tendency which lead to the

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    inaccurate rating. More seriously, the raters may show their bias and prejudice toward the

    employees. Finally, the performance appraisals happen once or twice per year and most of

    them are past-oriented sessions; hence, it can be a little bit late and outdated for supervisors

    and managers to implement and improve the performance.

    As a result, the performance appraisals has evolved into a next level of performance

    management system which is a continuous process of identifying, measuring and

    developing the performance of employees and aligning their performance with the

    organisations objectives (Dessler, 2012) and become a part of it. The performance

    management system has the three main improvements in comparison with the performance

    appraisals:

    (1) Performance management does mean that the interaction between employees

    and raters will be continuously maybe daily or weekly instead of once or twice per year;

    hence, the performance will be continuously improved.

    (2) Performance management will be goals-directed, the top purpose would be

    aligning the employees goals with organisations goals; thus, it can reduce the impact of

    rating the unrelated traits or characteristics of employees which cause the bias and

    prejudice.

    (3) Encouraging the engagement of employees through the five interactive activities

    of performance management: setting performance and development goals, providing

    ongoing feedback and recognition, managing employees development, conducting mid-year

    and year-end performance appraisals, building an environment of trust and empowerment.

    However, in the ongoing feedback and recognition activity, the issue occurs when the

    managers and supervisors have to collect and analyze the information to give out

    comprehensive and accurate feedback as well as avoiding the contamination and deficiency

    problems. Therefore, the 360-degree feedback a performance measurement which

    combine the information from many sources consisting of managers, peers, subordinates,

    self and customers can be a solution.

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    In conclusion, performance management system can help the organisations to

    improve their employeesperformance continuously to help them achieve their goals and

    through that the organisations can achieve the business target. Another mutual benefit is

    that the engagement of the employees can help them enlarging the knowledge in jobs;

    therefore, the organisations can make a retention of talent and develop employees with

    leadership competencies.

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