Research for Managers ANALYSING THE EFFECT OF PERFORMANCE APPRAISAL SYSTEM OF SAINSBURYS ON MOTIVATION OF THE EMPLOYEES A CASE STUDY OF SAINSBURYS

LEVEL 7

Submitted by: HASAN BABERSubmitted to:Student Registration no.:Student e-mail address: Relicpassion@yahoo.com

Table of ContentsA case study of sainsburys1Introduction:3Past Oriented Methods4Sainsburys Attributions5Sainsburys Values:5Study Rationale:6Aims:6Objectives:7Literature review7Performance appraisal8Purpose of performance appraisal:8Employeeappraisalaversionfactors10How Rewards & Reinforcements Sustain Motivation over Time (Behaviour Modification)11Motivational Theories:11Motivation Theory of Maslow:12Alderfer theory of Motivational12Methodology12Findings and Analysis13Employees perception about organizational attitudes14Discussion and Conclusion15REFERENCES:16

INTRODUCTION:For many years, the attention of HRM researchers and organisational behaviour has been centred on the performance appraisal (PA). Over the past years, a number of research papers and articles have been published, that emphasized on the main aspects and highlights of performance appraisal for getting the employees to be motivated and giving high level of performance, although the performance appraisal also has some inaccuracies, that some have also highlighted, when it is applied.Definition:Edwin Flippo describes performance Appraisal as Performance Appraisal is the systematic, periodic and impartial rating of an employee's excellence, in matters pertaining to his present job and his potential for a better jobThe main aims of performance appraisal can be enlisted as:1. Selecting workers, who are eligible to have an increase in their salary.2. Data generation to undertake personnel decisions including transfer, promotion or decisions of termination.3. Identifying the developmental and training requirements of its employees.4. Validation of the selection process5. Measurement of the standards that had been established, are weather fulfilled by the workers or not.6. Estimation of the need of work force in future7. It also aids in motivation of its employees, by giving them feedback about their performance level.Relationship between Performance appraisal and Job analysisJob analysis usually describes the personnel requirement and work for job. Performance standards categorizes the need of the jobs, into levels of acceptable and unacceptable performance. Performance appraisal describes each employees weaknesses and strengths, in their job.

Performance appraisal method/technique:Many methods have been proposed that determine the quality and quantity of performance appraisal. Although every one method is beneficial for some purposes, for selected organizations only.Overall all the appraisals method, consist of two types of categories:(Future) oriented methods(Past) Oriented methodsPast Oriented Methods1. Measuring Scales: 2. Checklist3. Forced choice method4. Forced Distribution Method5. Confidential records6. Essay method7 Cost accounting method8 Comparative evaluation method(paired and ranking comparisons)

Future oriented methods:Management by objectives: In it management by performance and objectives is rated against the achievements of these objective, which are stated by the management. Psychological Appraisals: In this the appraisals are mostly focused to evaluate the employees potential for further performance, instead of old once. Assessment Centres: It consist of a centralized location, in which manages may gather together, having their participation in various job related activities, which are directly observed by trained observers. 360-Degree Feedback : It is a more popular technique, it consist of systemic gathering of performance data on every single group, derived from many stakeholders, including immediate supervisors, customers peers, team members and self.

Figure 1 Circle of Performance appraisal (image adapted from http://www.appraisal-smart.com/Appraisal-Smart-Product-Suite.jpg)

Sainsburys AttributionsSainsburys are striving hard to achieve better, experience of shopping to its customers, offering new valued products at competitive and economical prices in the market. Its goal is to, surpass their customer satisfaction for fresh, safe and healthy foods.Sainsburys Values:The importance of Sainsburys brand, urge for fresh, healthy and safe food, focussing on giving quality products at competitive and fair prices in the market, with history of leadership and innovation and having a strong regard for environmental, ethical and social values . The five main principles for business of Sainsburys are following;a) Being best in healthy and safety foodb) Integrated sourcingc) Environment friendlyd) Having a positive impact on the local communitye) Providing a friendly environment for work.These factors give Sainsburys an edge over its competitors, and aids in defining its main business goals. To improve the overall success of the company, a system of reward culture is being incorporated for promoting performance and satisfaction in job.Study Rationale:We now have a clear understanding of performance appraisal. We also came to a conclusion that performance appraisal also has certain inaccuracies, and as a result researchers have come to a conclusion that, failure in employees motivation is a result due to some of these weaknesses in performance appraisal. A research project is proposed, that under the highlight of performance appraisal, will evaluate the effect of employees motivation, in one of the giants of retails in England Sainsburys.The retail industry of UK is one of the most modern in terms of segmentation, integration and concentration (Sparks, 2000). Over 3 million people are employed by the retail industry, that is equal to around eleven percent of the total force of work and also 8% of UK GDP generation is via the sector of retail. At present there are around 1.6 million part timers and 1.1 per cent full timers employees in the retail industry of UK, (Lynch S. 2005). Sainsburys is responsible for over 14.7% of market share in UK, with over 785 stores (2009, Sainsburys). According to (Brignall, et. al l996), Sainsbury adopted centralized business strategy. In order to improve the effectiveness at all levels, they are trying to reshape its management cultures and strategies. System of rewards is one of the most pivotal tools of management and HR control .Sainsbury are striving hard to improve its performance from the floor of the shop to the overall success of the business.Aims:The focus of this paper was, the motivation of employee, under the reward based system at Englands industry of retail, with SAINSBURYS being the main focus of this study. By collection of Random samples, in form of questionnaire, from Sainsburys Whitechapel Branch.

Objectives:The basic objectives were the a. Evaluation and level of motivation at Sainsburys b. Assessment of the impact of current reward system on satisfaction of the employees. LITERATURE REVIEWThis part of the research proposal, demonstrates the literature review, which forms the backbone for this research.One of the problems faced by many organizations like Sainsburys is the employee reward system. It plays a pivotal role, in appreciating the goals of its business, in terms of able to lure the right talent to organization, retention of their services and further enhance these abilities, for further developing these essential assets for the organization.As a result the employee reward system is very essential for organization like Sainsburys Supermarket Ltd, for retaining their staff .The reason for this is, in any competitive industry, employees usually resign or progress to a better competitor for searching much improved packages or salary. Armstrong, M, (2006:624), gave suggestion that system of reward management should be incorporated in every organization. He suggested that the system of reward management consist of fairness, equity, belief in need to achieve fairness and be crystal clear in operation of the reward system. Reward management deals with implementing, formulating and maintaining reward practices, systems and procedures. The process is directed in meeting the requirements of both the organization and employee. (Wright, A, 2004)Brown (2001) is also in favour of the system of reward management. He comments that alignment of your reward practices with employee values and needs is very important as is alignment with business goals.The basis of the reward management system is the strategic value of the way employees should be treated, according to their achievements and contributions for the organization. This aids in organization addressing issues regarding benefit and reward system of employee in long term. According to Torrington et al., (2008) the system of reward management should be attractive to prospective applicants, staff motivation, fairness and retention of employee.PERFORMANCE APPRAISALWhen the employees have aims, their motivation in work increase, when they get feedback, regarding their work progress. Feedback can be given at any time, but majority of organizations also have a specific way of providing feedback to their employees. This is termed as performance appraisal.It is defined as a process in which the rater(s) do a complete evaluation of the employee. During the period of performance appraisal, the rater(s) do interaction, observation and evaluation of an individuals performance. When the time comes for the performance appraisal to be submitted, it is given on form.Although performance appraisal is being used today, in most of the organizations, but still very little number of organizations, make full use of it. On the other hand the negative impact of bad performance appraisal, can be so extreme, the Edward Demin (total quality movement founder), gave suggestion of completely abolishing it Carson, P.P, & Carson, K.D. (1993) .Making of an effective appraisal system usually results in a higher level of trust on Management. Mayer, R.c, & Davis, J.H (1999).Thus discovering ways of making an effective system of appraisal is essential. Usually appraisal system takes place once in a year, but some organizations have appraisal on quarterly basis throughout the year, which allows the raters to in revising their goals more quickly, as a result of changing environmental demands Odiorne,G.S (1990, July-August).Purpose of performance appraisal:Performance appraisal is an essential tool, for giving feedback to the employees, and helping them in their development. Although feedback is not the only reason, why performance appraisals are performed. It is seen in many companies that, the appraisal system is being used for distribution of rewards like, promotions, bonuses and yearly rise in salary. Not only this, this appraisal system can also be used to terminate the employees. Previous studies, on the appraisal process, have demonstrated, that effectiveness of the appraisal process increases, when organizations attach them to reward decisions and terminating employees with lower performance.Lawler,E,E.,111.(2003).This has been proved by motivation theories, like the theory of reinforcement, that suggest that the behaviour which has been rewarded, is mostly repeated.Performance appraisal leading towards employee motivation:In Todays Modern Job market, motivating employees through performance appraisal is an effective tool, for their retention in this unstable job environment. The performance appraisal process can be a valuable human resource tool ,not only it encourages the employees to perform better in their jobs, but it also tells the employers, the things needed to make improvements in their jobs. The following are the basic guidelines developed to aid in motivation of employees through performance appraisal process.1. The process of performance appraisal must be employee-centred2. The process of performance appraisal should be future-focused3. The process of performance appraisal should be dialogueReasonsEmployeesDislikePerformanceAppraisalsPerformance appraisal is an annual passage in an organization, which causes fear and anxiety for most hard working, experienced employers. Employees who receive the appraisals are not always ready for them. Research demonstrates that employees like performance appraisal, like visiting a doctor.The following are the employees appraisal aversion factors:Rating Bias: The main reason why employees dislike performance appraisal is because managers not most of the time rate it according to objective criteria. This has been called by problem ratters as a bias. When employers incorporate factors other than performance like including hair colour, gender, race etc. in an appraisal, the resulted appraisal rating becomes that of genuine unfairness in the rating outcomes and process. Other bias based aversion factors include bias of characteristics (age, race gender), negative affect of employee and rater impression management and mood of performance appraisal raters and the managers frame of mind, which is not in the control of the employee.Hypocrisy: This occurs, when managers fail to follow and practise the enlisted procedures and policies and what is taught in the organization. Employees will not work at their full potential, when they lack the trust in the integrity of the management.Poor informal feedback: Practice and research showed that constant disconnect between the manager and the employee, results in poor performance feedback. Established trust requires constant communication. Poor communication during formal feedback sessions: As a result of competing priorities, managers might be not sufficiently trained and prepared for the task of providing formal and informal feedback. This kind of behaviour of the rater reduces the employees satisfaction with the process of appraisal, which creates an opposite effect of diminishing the system of appraisals, intended benefits of motivation and productivity movement.Rate errors: To avoid conflicts, many managers, intend to give undeserved high ratings to their employees. They also tend to give average rating (central tendency).EMPLOYEEAPPRAISALAVERSIONFACTORS1. RatingBias2. AppraisalHypocrisy3. PoorInformalFeedback4. PoorCommunicationDuringFormal FeedbackSessions RaterErrors5. RaterAppraisalSelfAppraisal MismatchMotivation and its theories:Why is motivation important? :Under ideal situations, an effort can usually be increase and be sustained, delegation without constant monitoring is always essential .Employees do become self-motivated .Employees who are motivated, can give competitive advantage by giving suggestions and working for customer satisfaction.MAJOR THEORIES OF MOTIVATIONI. Need Approaches: Maslows Hierarchy of Needs Alderfers ERG TheoryHerzbergs Two Factor TheoryMcClellands learned Needs TheoryII. Cognitive Approaches:Expectancy TheoryEquity Theory/ Social ComparisonGoal Setting TheoryIII. Theory of reinforcement or operant conditioning: How Rewards & Reinforcements Sustain Motivation over Time (Behaviour Modification)

Motivational Theories:NeedHomeJob

Self-actualizationReligion,hobbies,education,and personal growthCreativity, growth, training and advancement

EsteemFamily approval and from friends and communityResponsibility, high status and recognition

BelongingnessFriends, families and clubsTeam, departments, co-workers, clients, supervisor, subordinate

SafetyWar freedom, violence and poisonWork safety, job security and health insurance

PhysiologicalWater, food and sexAir, heat and base salary

Motivation Theory of Maslow:In this theory, priority takes lower needs. Fulfilling of these needs is necessary before, other needs at hiachearcial level are activated.Alderfers theory of Motivational: This theory classifies needs into three parts: Growth needs (competence development & potential realization) Needs of relatedness (satisfaction in relationship with others ) Needs of existence (physical well-being)Alderfers classifies needs into three categories, also ordered hierarchically: Need of Growth (Competency development and potential realization) Relating needs (Satisfaction in relationship with others) Needs of existence (Physically well-being) The aspects of this theory are almost same as that of Maslow, just contract into three parts. It is although more rational.Methodology For this particular research, Whitechapel Branch of Sainsburys was chosen. 20-25 employees in the branch were selected randomly for the research. Subordinates and managers also took part in data collection. Collection of data was done through structured questionnaire. Overall 30 questionnaires were distributed, among those, 25 were returned.For this research type, we chose Sainsbury supermarket (Whitechapel branch). Around twenty to twenty five employees in Sainsbury (Chartical and Whitechapel geopsie outlets) were chosen randomly for conducting the research. The process of data gathering was done by Subordinates and Managers of Sainsburys. Collection of data was done through the process of a structures questionnaire overall thirty questionnaire were distributed, among which we received twenty five.Findings and Analysis Our initial data demonstrated that, among the total respondents of 25, 7 were female while 18 were male respondents. When defining by, age 20% were belonging to 18-22 age group, 40% were 23 to 27 age groups and a small amount of only 2% were at the age of above 33 years. The questionnaires were given to various different departments of Sainsburys.24% were distributed to the checkout staffs, 36% to counter staffs and 28% to customer service employees. Among these 36% were full time working employees, 56% were part time working employees and a small number of 8% were contract staffs. Most of the respondents had around 3 to 4 years of experience and 28% had around 1-2 years of job experience.42% of the respondents were qualified diploma holders.The Major conclusions of the results are given below:Our analysis demonstrated that, most of the responders of around 76% agreed that responsibilities of their job are much challenging having a positive impact on their level of motivation. The employees had to become involved with the customers in the process of shopping and becoming part of their shopping experience.Out of these only 28% of the employees agreed that their job, gave them an opportunity of experiencing a true sense of personal accomplishment, while 48% had different opinion. It suggested that most of the responders, does not consider that their current job, had any positive impact on their lives. Other than this, 40% of the respondents agreed that they have enough opportunity, in learning new skills and developing new talents at the work, while 40% had different opinion and 20% gave no opinion. The results have considerable value for the company cause they signals that the employees, does not consider the company as a success factor, for their bondage and development, but is very weak and have a negative impact on the retention of the employee.Sainsbury requires a review of its skills and training development process or policy for creating opportunity for its work in acquiring new skills .Oracle, Microsoft and IBM spends around 60% (Technology and resource Improvements Times Magazine: 2007) of its Human resource development and management budget on development and training, which is basically for equipping the employees in contributing to new innovations, and maintain better practices and for overall development in the organization.The survey also discovered that 56% of responders felt that their organization has concerns for employees welfare, while only 16% disagreed and 28% were silent .It suggested that Sainsburys has been successful in making a positive impact among most of its employees but still improvement is needed in employee-employee relationship, in finding out the factors that can be improved .This suggests that Sainsburys still has to go long way, to come at the level of its competitors.The survey demonstrated that 72% of the respondent felt that the system of reward is based on performance .It suggested that better their performance is better reward they could get. Definitely it is a positive attitude of the employees for the organization and is an important contributing factor for retention of the employees. For ensuring an optimum level of satisfaction of customers and gaining an edge, this is one of the most crucial issues to consider for Sainsburys. Here the theory of equity pays a crucial role and management successfully balanced the rewards and efforts for employees .More than half of the respondents felt that the system of reward is fair, with 24% disagreeing and 20% giving no opinion. When we consider these findings, we can conclude that Sainsburys are quite happy with their compensation system.Although it is essential, for Sainsburys in considering the interest of those respondents who disagreed with the reward system, as this may aid in bringing the attitude of the workers towards the organizations objectives and goals. Most of the responders (80%) felt they have an edge in payment over others in the industry; a continuous review of the reward management of the company is needed, in matching with the standards of the industry on continuous basis. The survey also concluded that 77% of the employees knew of the market standards, thus majority of the deviation from the market can result in dissatisfaction of employees.EMPLOYEES PERCEPTION ABOUT ORGANIZATIONAL ATTITUDES68% respondents felt they receive the desired dignity and respect from organization and 76% agreed that organization is also concerned about its employees; personal circumstances i.e. those employees having children or with disability. It is clear that for long term retention of its staff, Sainsburys should focus on developing a more effective policy for accommodating its employees .From these results it is clear, that elements of Adams motivation theory are incorporated in human resource policy of Sainsburys. Another crucial discovery that came from the survey was that majority of the employees 80% agreed that their performance and attitude can be affected by various different motivational strategies reward system of organization. This gives the company a chance in influencing the standards of productivity of the employees by adjustments of its reward system.Discussion and ConclusionFerrell and Hartling (1999), Spreitzer (1995), gave the opinion that performance related reward encourages employees motivation and competencies in participation of decision making process. It encourages them in exercising responsibilities and initiative, with rewards for their positive behaviour. This survey also confirms our results that Sainsburys employees link their performance with rewards they get from the organization.Armstrong ,2006:748) demonstrated the value of communication in the reward practices and policies of organization, to its employee also becomes crucial, as the survey demonstrated that their employees have a good knowledge of the current market standards. Thus Sainsburys must keep their employees well informed, of the future developments and pay packages, so as to avoid development of confusion in the employees minds.Human resource people at Sainsburys must be given relevant training in the reward system. This will aid the organization, ensuring that the implemented system of benefits and rewards in organization is efficient and fair.The Reward system discussed here is designed and developed, in alignment with the corporate objectives of the organizations. Reward system aids in boosting the performance of the organization. (Wright, a, 2004). The system of rewards aids in designing and keeping the kind of people, which the organization needs and encouraging behaviour, which will directly contribute to the goal of the organization. Wright 2004 et al also suggested that the effect the reward system has on its performance, occurs not also as a result of increased value in motivation, but also due to strong symbol, that communicates the intent, philosophy and attitudes of the management. Thus as final words, the research concluded that the workers in Sainsburys are quite satisfied with the companies human resource policy.

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