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Name : Yatin Mukeshbhai Bhandari

Student ID : 14719

Module Title : Recruitment selection Performance and Reward

Title of Assignment : Appraisal Reward & Performance Alignment Proposals

Due Date : 3rd March

Tutor : Nuala Osullivan

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Content:

Sr. No. Content Page No.

1 Executive Summary 3

2 E mail 4

3 Introduction 6

4 Literature Review 7

5 Specific Literature on case 14

6 Recruitment and Selection 15

7 Legal and Ethics 16

8 Dysfunctions 16

9 Methodology 17

10 Findings 17

11 Analysis 17

12 Evaluation 20

13 Conclusion 20

14 Recommendations 21

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Executive Summary:

This is a case study on three characters namely Ismail, the receptionist, Suneeta, the Accounts

Manager and Imelda the HR Director about their current problems and the way their

performances are appraised and rewarded examining the aspects of their job profile, their

designation, their experience, their skills and their abilities. The study also depicts the

Recruitment and selection aspects and the dysfunctions of the reward models on

organisational objectives. The report study is also concern with the legal and ethical issues in

appraisal and reward process of the employees. Lastly the report study gives conclusion and

the future recommendations to the firm on appraisal, reward and also the recruitment and

selection criteria’s.

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E-Mail

To

Imelda

The HR Director

Subject: Regarding Appraisal process of the employees considering their existing problems.

Respected Mam

This is in response to our last meeting where u assign me a task to prepare a report on the

current problems of the three characters of the firm namely: Imelda(HR director),

Ismail(Receptionist) and Suneeta ( Accounts Manager) which got accomplished so sending

you a report depicting the present problems and the appraisal system.

The present problems:

*) Dysfunctions of various reward models used like Myopia, Ossification, Interpretation,

Tunnel Visions for each of the characters.

*) Legal and Ethics related issues.

*) Giving inappropriate rewards to them.

*) Lack of appraisal related data etc.

The appraisal system designed in this study determines the following issues:

Objectives of PA, Job expectations, appraisal programs, performance interview, use of

appraisal data , archiving PA data for future use.

This report study indicates the appraisal and reward models for each one of them considering

legal and ethical issues and also shows the Dysfunctions of the methods chosen for reward

and appraisal in each of the case and draw necessary conclusion and recommendations with

respect to aspects of recruitment and selection that fosters the performance of the

organisation.

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I hope this report study will help you in determining the reward and appraisal models for each

of the character and also will help you in taking certain other decisions on HR at present and

so in future.

Yours faithfully

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INTRODUCTION:

Definition of Reward:

Milcivich , Newman and Milcovich (2001,p.9) State that “Employees may see compensation

as a return in exchange between their employers and themselves, as an entitlement for being

an employee of the company, or as a reward for a job well done”.

Definition of Appraisal:

Performance appraisal (PA) is a very critical management tool that measures employees’

efficiency at the workplace, and may be defined (Pearce & Porter 1986), as ” a structured

formal interaction between a subordinate and supervisor that usually takes the form of a

periodic interview (annual or semi annual) to evaluate the work performance.”

“Performance Appraisal is an objective assessment of an individual’s performance against

well defined bench marks.” By K. Aswathappa 2007.

“Performance appraisal is considered as one of the key elements of performance

management” (Suutari $ Tahvanainen 2002)

Presenting Problems:

Need to design an appraisal system linked to reward which will be able to motivate and

appropriately reward the following three members of staff of the Wall Mart PLC namely:

Ismail Hoq: The Receptionist with 8 x GCSE qualifications his task includes greeting and

taking mail deliveries, previously he didn’t get bonus of any of the other financial incentive ,

working from last two years, performing well, always conscious with the job.

Suneeta Begum: Account Manager : BA Media Art and design qualification and professional

responsibility for motivating and running an advertising team of 5 including delivering to

deadlines and within budget. Previously PRP incentives individual and team based.

Imelda Byrne: HR Director: BA Business Management & MA Personnel & Development

with responsible for HR strategy organisation wide. Previously she had bonus.

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Hypothesis:

Hypothesis(h0): All the methods of appraisal and rewards depicted in the literature section is

linked with each other and impact the performance of the employees..

Hypothesis(h1): All the methods of Performance appraisal and rewards depicted in the

literature section is not linked with each other and it does not have any impact with the

performance of the employees.

Scope of the report:

Performance Appraisal systems and models that are applicable to the three members of the

study and also the Reward for them so as to motivate them in future and to satisfy them in

order to enforce the organisations strength , also suggesting Recruitment and Selection

elements to the firm and require to draw recommendations on the character examined .

A Literature review:

What exactly Performance appraisal is?

Appraisal helps poor performer to improve and helps employer in judging the weakness of

the employees.journal of summer (2002)

In simple language appraisal means the assessment of an individual’s performance in a

systematic way, the performance that is measured in front of factors like job knowledge,

quality and quantity of output, initiative , leadership qualities, co-operation, supervision ,

dependability and health. Assessment should not only be confined to past performance alone

but it should also assess the future potentials of the employees.

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Appraisal Process:

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“Objectives of Performance Appraisal”

“Establish Job Expectations”

“Design an Appraisal Programme”

“Archive Appraisal Data”

“Performance Interview”

“Use of Appraisal data for Appropriate Purposes”

“Appraise Performance”

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Objectives of the performance Appraisal ,wright( 2004):

1) To make a positive impacts on promotions based on individual’s capability and

performance.

2) To give a job confirmation to the employees who are on probation .

3) To find out the training and development requirements of the employees.

4) To improve communication.

5) It is used to determine whether HR programs such as selection, training , and transfers

are effective or not.

6) To decide the pay raise and where regular pay scales have not fixed.

7) To take the future decisions on promotions, incentives , bonuses and other non

monetary benefits to the employees.

The questions in designing an appraisal Programme, Journal of management

research(2010):

*)Whose performance needs to be rated? Individual group or an organisations.

*) Who are raters? Immediate supervisor, Sub-ordinates, rating committees or self appraisal.

*)What can be the problems of rating?” Leniency or , Central tendency, spill over effect ,

status effect”.

*)What should be rated? Quality, Quantity, Timeliness, Cost effectiveness, Need for

supervision , interpersonal impact, community service.

*) Timing of evaluation? As Arthur Anderson(1997) suggested that 70 percent of the

organisation conducts appraisal once a year but it depends it can be twice a year or even

thrice

Methods of Appraisal:

Many methods have been devised to measure the quality and quantity of the employees

job performance. Most of the methods are classified into past oriented methods and future

oriented methods. The various methods of appraisal are listed below:

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1) Balance Score Card, Kaplan & Norton,1994;2001 in Porter et al(2008;57):

Under this method the performance of the employee is assessed under four factors

like how is their reputation in the mind of customer, factor to excel at, improvement

and value creation, and shareholders aspects.

2) Confidential records, k aswathapa (2007): This is the method in which the

evaluation is done on the bases on certain performance judgemental factors such as

Attendance, Self expression, Ability to work with others, reasoning power, handling

responsibility, initiative, concerns that suits the employees best, integrity etc.

3) 360 Degree appraisal (Harvard Business Review,june 2001): Under this method

the feedbacks are taken from stakeholders, superiors, team members, customers and

self.

As from the variety of performance appraisal methods so now taking those into consideration

and the applicability of them according to case given can be done but beyond that we need to

take the other activities in order to complete the process that is performance interview,

storing & Appraisal data use.

Performance Interview: Once the appraisal is made herein the raters need to discuss the

review with the ratee in order to know where the rate stands in the eyes of the superiors

Purpose of PI: Taylor and wherry (1951)

*) To change the behaviour of employees not achieved their goals

*) To maintain the behaviour of the employees who are performing well.

*) To find the superiors behaviour so that they can continue the same.

*) Promotion, transfer and layoffs decisions.

*) Feedbacks and disciplinary actions.

Reward:

Rewards or remuneration comprises of wages, salaries, incentives , Fringe benefits,

perquisites and other non monetary benefits. Reward policy or strategy needs to be same as it

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follows with respect to the business strategy by (Michael Armstrong). Appraisal system in

public and private both is especially designed for the issues of payments, bonuses and other

payments related to merit ,Journal of Public Administration Maldivis (oct 2001)

Examining various reward models:

Reinforcement Theory (K Aswathapa 2007): This theory emphasised on person actually

experiencing the reward.

Equity Theory: This theory mainly emphasis on fair dealings with the employees with

respect to pay that they receive for what they deserve to be.

(Image taken from Employee reward by Michael Armstrong,1996 figure : 1,p.7)

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Reward process:

By: (K aswathapa,2007)

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“Job Description”

“Job Evaluation”

“Job Hierarchy”

“Pay Survey”

“Pricing Jobs”

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Specific Literature on Case( Appraisal Methods):

1) Checklist, by Decenzo(2002): Under this the rates behaviours are examined and

checklist forces the appraise to judge the pair of behaviour that can be favourably

“yes” or unfavourably “no” decides the Appraiser.

2) Behaviourally Anchored Rating Scales(Tzinger etl, Canadian journal of

administrative sciences,dec97):

Behaviourally Anchored Rating Scales, sometimes called behavioural expectation

scales, are rating scales whose scales points are determined by statement of effective

and non effective behaviours . it represents a range of descriptive statements of

behaviour varying from least effective to the most effective.

Example:

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Highly good performance

Good performance

Slightly good performance

Slightly Poor performance

No good no poor performance

Poor performance

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Source: C. Hulin Fogh and M.R. Blood, “ Development of first – level Behavioural

Job Criteria.” (Journal of applied Psychology,1971,55(1),pp.3-8.)

3) 360 Degree appraisal by pieperal,etl, Harvard business review(2001): Under this

method the feedbacks are taken from stakeholders, superiors, team members,

customers and self.

4) Management by Objectives Journal of Occupational Psychology,(sep87): Under this

method the goals are set by superiors and subordinates then it is accessed by

comparing it with the standards and then again new goals are formulated.

Subordinates who achieved the task are allowed again in goal setting. Here both

superior and sub ordinates work for some specific goals and then percentage are given

for each of the goals, the employees are given scores on each of the goals and that is

how the overall scores are obtained which decides the ratings and ratings are used for

the reward.

Specific Literature on Case (Reward Models):

Principal Agency Theory (Jensen & Mecklins,1986): It deals with the achievement of the

organisational goals by keeping the interest of the employees and also the organisations

interest. It ca be on behaviour oriented (performance pay) or result oriented(commissions and

profit sharing).

Tournament Theory Rosenbaum,(1989): In this theory series of task is given to the

employees and the employee performing the series of challenging task are rewarded.

Human Capital Theory, Forth & Millward, (2000): Here the pay of the employee is based

on the skills that are being upgrade by the employees, if there is a significant rise in the skills

pay too will rise at the same time by same number.

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Highly poor performance

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Power dependency Theory Pfeffer & Salancik,(2003): Here the skills that employee is

possessing reflects the reward of the employee.

Risk reward Theory, Pepper (2006): This refers to reward on risk criteria and the risk

associated skills.

Recruitment and Selection: Recruitment and selection are the main issues that are to be

considered by human resource specialist. HRM and the rest of the management studies

mainly concentrates on the process of selection and induction of the newly hired employees.

These aspects have taken a great attention of experts of the field. But as Murphy(1994)

Observes ” Substantial volume of research in the areas of selection and appraisal is both

blessing and curse”.

Legal and Ethics:

Fairness notions of legality is directly concerned with the processes in a way the reward is

given to the employees. It is very essential for the employers to reward the employee as per

the agreement signed at the same time of contract. Procedure way of justice impacts the

employees commitment, behaviours, intent Cohen – Charash & Spector, (2001). EEOC

guidelines and the court decisions with respect to the settlement of the claimed especially on

hiring discrimination process. As per law the organisation needs to have formalised appraisal

& Reward system and even the reward needs to be minimum as per the law of minimum

wage, and also need to consider of child labour acts for recruitment and the discrimination in

selection with respect to ethnicity (Journal of summer,80,vol19 Issue2,p14-18) EU

Employment laws, the employment equality& diversity (2010), claim on sex discrimination

etc.

Dysfunctions: These are the factors that negatively impact appraisal and the reward models

of the human resource system; it hinders the corporate objectives and the HR objectives of

the firm. Smith P(1995) Journal of public Administrator. The some of the dysfunctional

behaviour are Tunnel vision that is focussing only towards the main target, Sub- optimisation

is narrow objectives at expense of co-ordination, , Myopia that is short termised, Ossification

is when employee feels risk of innovation and gets rigid, Gaming is the manipulation of

performance indicator to achieve the target, Misinterpretation is fraudulent of account and the

other task.

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Appraisal Outline:

Personnel Rewards Given

Ismail Hoq -

Suneeta Begum PRP Incentive

Imelda Byrne Bonus

Appraisal align to the reward methods chosen:

Personnel Appraisal Method Rewards Method

Ismail Hoq 1) Checklist

2) BARS

Expectancy Theory,

tournament theory.

Suneeta Begum 1) 360

2) BARS

3) MBO

Equity Theory, Principal

Agency Theory,

Imelda 1) 360 degree Risk reward, Bonus( group

bonus scheme)

Results / Findings:

Reward Management

Character Rewards Given Reward Method Fits With

Literature

Ismail Hoq(Receptionist) Salary no other rewards “Expectency theory,

Tournament theory”

Suneeta Begum(Accounts

Manager)

Salary with PRP Incentive “Principal Agency Theory”

Imelda (HR Director) Salary with Bonus “Risk Reward, Bonus

Scheme”

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Discussion /Analysis:

Ismail Hoq’s Appraisal methods and the factors affecting appraisal:

Bases of pay or appraisal factor Appraisal method

Job performance, customer response Checklist

Value of work performed , work quality BARS

Behavioural Anchored Rating Scales can be applicable to decide the reward for the Ismail as

it depicts the performance of the employees that is evaluated with the standard ratings set as

shown in the literature and even the checklist method is applicable as it focus on various

aspects of the job like behaviour, customer response, responsibility handling, order handling

etc.

Reward Method link with Appraisal system for Ismail:

The reward method chosen in the case of Ismail is Tournament theory as under this the task is

given to the employees and on addition to it the other new task is given and reward is given

on the bases of achievements Rosenbaum,(1989) it is applicable in the case of Ismail as he is

receptionist and needs to deals with the customers and also having a team of four members so

competitive atmosphere can be created by setting this reward system hence tournament

theory is very precise for the case of Ismail.

Dysfunctions:

The tournament theory deals with setting of task and reward on task achieved so there may be

chance of concentration towards only those task and leads to go away from the other task and

the corporate objectives(Tunnel Vission), and as the tasks are short term so it may also leads

to Myopia.

Suneeta Begum’s Appraisal methods and the factors affecting appraisal :

Bases of pay or appraisal factor Appraisal method

Potential Personnel ,team leading, group

decision making

360 feedback’

Managerial Skills MBO

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The appraisal system applicable in the case of Suneeta begum is BARS as it deals with the

Ratings of different aspects of the job profile and the Suneeta Begum is the Accounts

Manager and she is having the team so different aspects like leadership qualities, Co-

ordination, Customer response, Objective setting etc can be rated to judge her performance

therefore BARS technique is applicable . Balance score card is also applicable as they work

in a team an responsible for the sake of accounts so Customer thinking, innovation and

learning and the serving to shareholders etc can be scored to assess the performance of

Suneeta.

Reward Method link with Appraisal system for Suneeta Begum:

Principal Agency theory is applicable in the case of Suneeta Begum as goals are aligned and

the expectation is high as she deals with sales and she needs employer for the compliance of

the firm so on the bases of performance of the agents that is Suneeta and her team the reward

is set by the principal.

Dysfunctions:

In this case there is a chance of manipulation in the objectives by the agents as the

expectation is high so called as Gaming, as goals relating to sales are aligned with the

performance so even there is a chance of Misinterpretation .

Imelda’s Appraisal methods and the factors affecting appraisal :

Bases of pay or appraisal factor Appraisal method

Skill transferability, Leadership Concern 360 degree feedback

Forward planning, decision making and

objective settings, subjective judgement.

The appraisal method applicable in the case of Imelda is 360 feedback method as Imelda is

the HR director who is at the superior position responsible for the every aspect of the firm the

sub-ordinates, customers, the corporate objectives, and for the self development and

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contribution in accomplishing the corporate goals and so as the departmental goals. Under

this Imelda do self appraisal then the sub-ordinates appraises the performance and the

superior also appraise the performance the Board of directors and Customer feedback is also

taken as an appraisal and that is how the performance data is used as a reward, considering all

these factors bonus of the Imelda is declared.

Reward Method link with Appraisal system for Imelda :

Risk reward is applicable as at the top level it is risk that is rewarded like framing some

innovative strategies to increase the productivity of the department it may prove costly for the

firm, in the case of Imelda she is rewarded on her skills that is associated with the risk related

strategies that results to increase the productivity of the firm.

Dysfunctions:

Sub optimisation can be a dysfunction in the case of Imelda as she may narrow down he

objectives at expenses of co-ordination, and equally misinterpretation and gaming is possible

as she is the HR director and even more risk can leads to failure if reward is given on risk

rewarded method.

Evaluation:

Hence it is very important for the firm to have effective performance appraisal system and the

reward policy at individual and at the organisational level as it is responsible for factors like

motivation, developing capabilities of the team and the individual, training and development

needs can be assessed, sustaining success of the organisation, employees satisfaction, goal

achievement etc. hence it is very important for the firm to carry appraisal and reward

functions effectively non biased and legally so as to motivate the employee and the

organisation as a whole.

Conclusion:

The various appraisal methods depicted in the case shows the relative applicability with the

character examines and also determines the importance of appraisal and reward system in the

organisation and also shows the importance of recruitment and selection of the employees on

those factors hence it is concluded form the study that appraisal and reward play a significant

role in determining the employees performance namely Ismail, Suneeta and Imelda and so as

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their expectations which relates the performance of the organisation as a whole and their

individual performance.

Hypothesis Conclusion:

Hence it is proved that every most of the appraisal methods have linked with the reward

models and affects the performance of the employee significantly.

Recommendations:

Academic and practical:

The characters examined in the case can be rewarded by considering many other aspects

which the study does not consider, even firm can make use of other reward methods like

Power dependency in the case of Ismail, Expectancy Model in the case of Suneeta, Human

Capital Theory Creative Destruction Theory and Bonus mode in the case of Imelda and also

the other appraisal systems like Observation method for Suneeta, Rating Scales for Ismail,

Field review method (where the expert judge the performance) for Imelda. It is also

recommended to the firm to emphasis more on recruitment and selection criteria so as to

foster the higher level of performance and commitment, firm could also try to avoid

dysfunctions.

Limitations:

The study does not consist of motivational aspects of the reward system and also it does not

cover the technical grounds of the performance indicators that helps in assessing the

quantitative performance of the employees and it also doesn’t cover the empirical study over

the characters, various statistical tools can be used to support the reward models to draw

precise conclusion over the characters examined.

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