A situational analysis of the effects of performance

management on the workplace

Prepared By
Hiba Hashem

A project Submitted in fulfillment of the requirements for the degree of

Master of Business Administration MBA to the school of Business under
Making a difference course at Arab Open University

SUPERVISED BY
DR. Saher Annan
Coordinator OF MBA
AOU

Beirut Lebanon
2014

Abstract

This thesis investigates the effects of performance management on

workplace, based on the observation of the reaction of managers and
employees for four years at Bahman Hospital. In fact performance
management proved to be in the priorities of human resources
management due to the effects on the overall performance. This study
aimed to find out the attitudes of employees toward the performance
management system available in the hospital. The proposed study is
based on an extensive literature review as a benchmark to
recommendations through a qualitative analysis. The thesis undergoes its
analysis adopting qualitative method research that focus on opinion,
analysis and observation. However some studies may intervene to
present and support some opinions.

The performance management system occurs after several years to

be insufficient to motivate and retain employees. Adjustment is needed;
the Hospital should review and implement a new system. This requires a
redesign for job description, processes, quality system, policies and
procedures.

Acknowledgment

The development of this thesis depended on the effort, support and

guidance of a number of people whom I should thank.

I am grateful to my supervisor Dr. Saher Annan for his guidance and

constructive criticisms.

Special thanks for my parents for their continuous support and more
importantly for the inspiration they gave to me in formulating this thesis
subject. It is always a source of motivation for me.

Thanks to my team in HR department at Bahman Hospital for their help

and support during the preparation period of my thesis.

Contents

Contents .................................................................................................................................................... 4
Chapter 1 Introduction .......................................................................................................................7
Statement of the problem .......................................................................................................................... 7
The purpose of the study ........................................................................................................................... 8
The Scope of the study .............................................................................................................................. 9
Limitation of the study .............................................................................................................................. 9
Definitions of terms .................................................................................................................................. 9
Chapter 2 Literature view ................................................................................................................. 12
Hospital background ............................................................................................................................... 12
Al Mabarrat Charity Association overveiw ............................................................................................ 12
Why Bahman? ..................................................................................................................................... 13
Bahman Hospital Mission and goals ....................................................................................................... 13
A word by Bahman Administrative Board ............................................................................................. 13
Bahman Hospital Divisions .................................................................................................................... 14
Chapter 3 Methodology ................................................................................................................... 15
Method .................................................................................................................................................... 15
Its effectiveness ....................................................................................................................................... 15
Limitations .............................................................................................................................................. 15
Chapter 4 Role of human resources department at Bahman Hospital ................................................ 16
Department overview .............................................................................................................................. 16
Objectives ............................................................................................................................................... 16
Services ................................................................................................................................................... 17
Chapter 5 Performance management ............................................................................................... 18
Description .............................................................................................................................................. 18
Performance management historical view .............................................................................................. 19
Chapter 6 Performance Appraisal (PA) .............................................................................................. 22
Definition of PA...................................................................................................................................... 22
Uses of Performance Appraisal............................................................................................................... 24
Performance Appraisal System ............................................................................................................... 26
Objectives of performance appraisal....................................................................................................... 27
Effects of performance appraisal ............................................................................................................ 29

Performance appraisal process ................................................................................................................ 30

Causes and effects of performance appraisal .......................................................................................... 32
Techniques of performance appraisal ..................................................................................................... 33
Chapter 7 Difference between performance management and performance appraisal ...................... 36
Chapter 8 Common performance appraisal errors ............................................................................. 38
Chapter 9 Con and pros of performance appraisal ............................................................................. 40
Pros of performance appraisal................................................................................................................. 40
Cons of performance appraisal ............................................................................................................... 41
Chapter 10 Performance appraisal at Bahman hospital ..................................................................... 42
Defining the problem .............................................................................................................................. 42
Performance appraisal under construction .............................................................................................. 42
Current Technique .................................................................................................................................. 43
Moving toward Changing ....................................................................................................................... 43
BARS in practice .................................................................................................................................... 44
BARS and stakeholders .......................................................................................................................... 46
Manager view.......................................................................................................................................... 46
Employee view........................................................................................................................................ 47
Objectives of new performance appraisal ............................................................................................... 47
Challenges of the performance appraisal ................................................................................................ 49
Chapter 11 Effectiveness of new performance management system.................................................. 52
Question 1: What are the employees attitudes from the performance result? ....................................... 53
Question 2: What impacts does the performance carry to the workplace? ............................................. 54
Chapter 12 Performance appraisal and training and development ..................................................... 56
Performance potential matrix .................................................................................................................. 58
Its purpose ............................................................................................................................................... 59
Performance potential matrix framework ............................................................................................... 59
Tips for dealing with each category ........................................................................................................ 63
Bibliography .................................................................................................................................... 69

List of Figures and tables

Figure 1: Effects of performance appraisal by Hiba Hashem ..................................................................... 29

Figure 2: 3Js by Hiba Hashem .................................................................................................................... 30
Figure 3: phases of performance appraisal process..................................................................................... 31
Figure 4: Causes and effects of performance appraisal by Hiba Hashem ................................................... 32
Figure 5: Performance appraisal process by Hiba Hashem ........................................................................ 46
Figure 6: Role of manager in the new appraisal system ............................................................................. 53
Figure 7: Performance potential matrix ...................................................................................................... 58
Figure 8: nine boxes of performance potential matrix ................................................................................ 62

Table 1: PM vurses PA (source: Armstrong and Baron, 2005) ................................................................. 37

Chapter 1 Introduction

Statement of the problem

This study explores the relation between performance management (PM) and its effects
on Bahman Hospital work place. Performance management encompass performance appraisal
(PA) that by turn is linked to motivation and rewards system that enhance employees moral. The
term performance management gained its importance and popularity in the1980s when the
competitive pressures in the market place started rising, with the arrival of strategic human
resource management (HRM) as an integrated approach to the management and development of
people. This is when organizations felt the need of introducing a comprehensive performance
management process into their systems for improving productivity and performance
effectiveness. PM can be regarded as a continuous process of managing the performance of
people to get desired results. It is beneficial to major stakeholders of an organization by clearly
describing what is supposed to be done for attaining certain desired goals. However focus on
performance management may be fruitless without the existence of effective implementation,
proper organizational design and management systems.

Over the last view years, organizations increased their interest in enhancing and
development the quality of their services. Though, they moved toward focusing on developing
the performance through several methods. Strategic planning rely high importance on
organization performance, whereas transforming these strategies into actionable matrix and
usage of analytics to expose the cause and effect relationships that could give insight into
decision making. Thereby managing performance depends spending time to audit, monitor,
adjust and react.

Business management performance may lead to several changes; whether this may touch
the structure, process or even employees. In this context, managers as well as employees may
experience the appraisal in different way. By which each one may carry different perspectives
toward performance management. The more effective the result carries to the employees the
more acceptable the performance appraisal is, on the other side the more effective the
7

performance appraisal toward the managers the more successful the process is. In other
sequence, what truly matters the organization having efficient design that reflects high quality in
productivity which by turn lead to increasing profit as well as gaining huge reputation. On the
next side employees interest summarized in obtaining perfect work condition, wealthy salaries,
in addition to insurance and some rewards. In this sequence, managing both views depend from
human recourses department applying and adjusting the performance management system in
order to balance between different stakeholders perspective , in order to achieve strategic
business plan. Many organizations spend a lot on adopting performance management system but
not all succeed. Many methods for PM may be practiced, but the most efficient is to adopt the
most suitable to the organization. Hence the type of the business and the structure of the
organization may play essential role in choosing the right method that matches the environment
of the organization. Since 1992, business performance management has been strongly influenced
by the rise of the balanced scorecard framework. It is common for managers to use the balanced
scorecard framework to clarify the goals of an organization, to identify how to track them and to
structure the mechanisms by which interventions will be triggered. In fact balanced scorecard is
often used as the basis for business performance management activity with organizations.

Key words: Performance management (PM), performance appraisal (PA), motivation and reward
system.

The purpose of the study

The MBA study is aimed to investigate the feedback and reaction of the performance
management system adopt at Bahman Hospital. Since the reason of demotivating employees set
behind the way of performance management especially the feedback from the performance
appraisal. The proposed study is structured to answer the following questions:
1) What are employees attitude from the result of performance appraisal?
2) What impact does the performance appraisal carry to the workplace?
The following study may result in providing the suitable recommendation, which result from
analyzing the situation, providing different perspective and comparing the methods.

The Scope of the study

The study will discuss the performance management handle in Bahman Hospital. It may include
an overview and background of the hospital. Perspective of different stakeholders intervene this
study.

Limitation of the study

In order to provide a professional thesis, time provided may shape a strong obstacle. Indeed,
some confidential information and opinion may provoke in reflecting the main subject. Besides,
some stakeholders may refuse to reflect the real situation due to their interest.

Definitions of terms
Performance management (PM)
It includes activities which ensure that goals are consistently being met in an effective and
efficient manner. Performance management can focus on the performance of an organization, a
department, employee, or even the processes to build a product of service, as well as many other
areas. It is a process by which organizations align their resources, systems and employees to
strategic objectives and priorities.
Employee performance management includes:

planning work and setting expectations,

continually monitoring performance,

developing the capacity to perform,

periodically rating performance in a summary fashion, and

Rewarding good performance.

Performance management originated as a broad term coined by Dr. Aubrey Daniels in the
late 1970s to describe a technology for managing both behavior and results, two critical
9

elements of what is known as performance. A formal definition of performance management,

according to (Daniels, 1970) is "a scientifically based, data-oriented management system. It
consists of three primary elements-measurement, feedback and positive reinforcement."
In effective organizations, managers and employees have been practicing good performance
management naturally all their lives, executing each key component process well. Goals are set
and work is planned routinely. Progress toward those goals is measured and employees get
feedback. High standards are set, but care is also taken to develop the skills needed to reach
them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and supporting each
other achieve natural, effective performance management.

Performance appraisal (PA)

Performance appraisal is a very important aspect of human resource management. PA is used for
validating the recruitment sources and selection methods used, for reward allocation, for
providing promotions and for identifying training and developmental needs. In short
performance appraisal is a process of managing and developing people. Furthermore PA refers to
a comprehensive process that encompasses planning for future performance, tracking
performance as it occurs, and rating performance at the end of a review period. In the same
context, it is linked with each and every other aspect of human resource management. Hence
knowing the performance appraisal practices, employee opinions about different aspects of
performance appraisal system would help in improving the system as a whole. As mentioned
above, performance appraisal is the process of assessing employee performance by way of
comparing present performance with the tasks declared in the job description which have been
already communicated with employees, subsequently providing feedback to employees about
their performance level would results in enhancing organization performance. Beach Dale S.
(1985) define performance appraisal as systematic evaluation of individuals with respect to their
performance on the job and their potential development.

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Motivation and reward system

In a competitive climate, most health care organizations are looking at improvements in quality
while reducing costs. Indeed the huge emphasis is on retaining the employees, especially nursing
staff. Employees reward programs are one method of motivating employees which affects their
performance, habits and key behaviors by which it returns benefit to the hospital. Employees
reward systems refer to programs set up in an aim to reward performance and motivate employees
at different levels. They are normally separated from salary but may be monetary in nature or
otherwise have a cost to the firm. Dessler (2007) defined employee compensation as all forms of
pay or rewards going to employees and arising from their employment. Equally, Baron (1983)
defined motivation in his own right. He argues that motivation is collection or arrangements of
procedures involved in the push and pulls forces that strengthen the actions towards reaching
specific goals.

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Chapter 2 Literature view

Hospital background
Bahman Hospital, of Al Mabarrat Charity Association, was founded in 1999 to provide excellent
health care for patients. Since then, it has been developing year after year towards new
milestones in the field of health. Bahman Hospital has been equipped with the top of the line
technologies and the most experienced and qualified physicians to serve Lebanon and the region.
Bahman Hospital has started receiving outpatients since first of March, 1999 with departments
that depend on outpatients, such as clinics, medical imaging, and laboratory departments.
Bahaman Hospital continued its progress till September of the same year; it opened the inpatient
floors for treatments. Accordingly, wards in Bahman Hospital have been opened gradually over
the past five years until the hospital had enough room for the 200 beds. Bahman Hospital has
been ranked among the best five hospitals according to the categorization of O.P.C.V. Indeed,
Bahman Hospital always follows up any new technical, technological, and scientific
developments to keep its leading place among the best hospitals that provide good health service
for all kinds of patients; it circumspect to hire the most qualified and talent employees in order to
secure patient safety standards.

Al Mabarrat Charity Association overveiw

Al Mabarrat Charity Association established by the Religious Authority, Sayyed Mohammad
Hussein Fadlallah since1978, and was the first orphanage institutions Imam Al-Khoei. It aims to
spread to cover large areas of the country from Beirut to the Bekaa Valley to the north and the
south. From its high priority to provide care for orphans and embrace them and lift them out of
the reality of homelessness, and with time, care developed to cover not only educational, cultural
but also holistic humanitarian to produce a human being balanced integrated in the mind and the
soul and the body, in order to enhance the social community with excellence in education,
thoughts and message.

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Why Bahman?
Sayyed Mohammad Hussein Fadlallahs concerns with grieves of people and their social
welfare, were met with the noble motivations of the great charitable and benevolent man, Al-Hajj
Abed Al-Hussein Bahman, who is known for his philanthropy and good deeds. From Kuwait,
Bahman's donations, channeled through his charitable association, have spread in several
countries of the world to serve the orphans and needy. With the donation of Abed Al Hussein
Bahman this great building has been constructed and also equipped with the best up to date
technical and technological means adopted in the field of health.

Bahman Hospital Mission and goals

The Hospital's mission is to provide quality medical care that values the human life and dignity,
and through offering medical services for every patient regardless of race, sex, and beliefs with
the help of highly specialized medical and nursing teams; while it aims at presenting a bright
picture about the practice and implementation of quality health programs. Bahman Hospital
strive continuously develop its human resources who will strive to spread and plant the seeds of
good under the slogan ''Goodness for the sake of health''
The main goal behind the establishment of this great hospital is to contribute in developing and
promoting health services for our patients. By relying on our faith in God to achieve what we
hope for, and after we constructed and equipped the building, we worked on preparing the
nursing staff whose proficiency must be based on qualifications and experience, in addition , we
were also concerned to acquire talent employees in various technical and administrative
departments.

A word by Bahman Administrative Board

As bright as the sun that shines with goodness for man and life, and as promising as hope that
flies the banner of a better future, Bahman Hospital alleviated our deep pains that were
aggravated by social exhaustion and economic problems.
13

Form the heart of pain and by joining hands to contribute in charity and benevolence, this great
institution, whose foundation were laid by the Religious Authority, Sayyed Mohammad Hussein
Fadlallah, was established.

Bahman Hospital Divisions

Bahman Hospital consists of eleven floors: Three lower floors and eleven upper floors including
the ground floor. The 200 beds which are currently available in the hospital are distributed
among the 3 under floors and the eleven upper floors. However, work is still going on to expand
and enlarge the number of beds in an aim to reach 250 beds. Bahman Hospital management
includes all functions of management, starting from human resources department, till finance
department, reaching information technology department, including the nursing and medical
department. Notably, some of these departments are segmented and branched to several sections,
such as finance department and human resources department, through which each one is divided
to three or four sections. Important to mention, the high level of collaboration between the
departments that reflects efficacy in processing tasks to deliver effective medical services to the
patient. Taking in consideration that the medical service does not include the nursing services, it
is a combination of interrelated services distributed on the administrative staff as well as on the
nursing staff reaching the doctors team. The efficient progress of this chain is monitored and
adjusted by the quality department that play crucial role in filling up the gaps and rely on high
importance on the patient satisfaction through following up patient satisfaction surveys, taking in
consideration, employees satisfaction that is the concern of human resources department.

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Chapter 3 Methodology

Method
The thesis explores analytical perspectives based on qualitative method research. Qualitative
method focuses on opinions, analysis and observation. However some studies may intervene to
present and support some opinions.

Its effectiveness

Qualitative method provides a deep analysis of human behaviour. For this main reason it is the
most appropriate method to discuss a topic such as performance management, since it touches
the employees behaviour. Indeed, it may provide wider perspectives by discussing numerous
authors opinions.

Limitations

Obstacles may intervene to shape strong barrier in introducing this study. Some obstacles are
related with information and data collection in other meaning secrecy. Others like time in which
closed deadlines may restrict the thesis from being illustrated professional and providing the
suitable and needed information.

15

Chapter 4 Role of human resources department at Bahman Hospital

Department overview

As Bahman Hospital reorganize to gain competitive edge, human resources department plays an
essential key role in helping the hospital deal with a fast changing competitive environment and
the greater demand for quality and talent employees. Human Resources Department promotes
hospital efficacy by providing programs and services that facilitate the effective and efficient
management, thus enabling to meet its operational goals and objectives to the mutual benefit of
the public and employees. Human resources department at Bahman Hospital aims to achieve its
mission that characterized by providing counseling and guidance to management in planning for,
acquiring, maintaining and developing the hospitals best capital; And fully using their expertise
to the development of our patients health service. It consists from three sections that collaborate
together in order to serve approximately 670 employees, these sections are as follows:

Recruitment and training section

Personal affair section

Nursing staff development section

Objectives
The main purpose of human resources department is to accomplish Bahman hospital
goals. Therefore, the resources are mobilized to achieve such goals. Some importance and
objectives of human resources management are as follows:

Setting up HR plans and implementing them

Retain qualified professionals in all fields.

Refine HR practices.

Provide excellent services for fellow employees.

16

Services
Activities that human resources department achieves to add values to the hospital are many in the
areas of:

Effectively managing and utilizing people.

Adopting performance appraisal and compensation to competencies.

Developing competencies that enhance individual and organizational performance.

Increasing the innovation, creativity and flexibility necessary to enhance competitiveness.

Applying new approaches to work process design, succession planning, career

development and inter organizational mobility.

Managing the implementation and integration of technology through improved staffing,

training and communication with employees.

Strategic management

Manpower planning and Recruitment

People management

Legal and labor law matters

Compensation and benefits

One of the most sensitive functions in this department is characterized by people management,
especially performance management. Over years it seems that managing peoples performance is
not an essay matter, many specified huge importance to this issues, since it is linked with the
success of the organization. And this, what is human resources department seeking to manage in
the hospital. Notably, performance management is related with all aspects of Bahman Hospital
performance. And in order to provide a suitable compensation and benefits system to motivate
the employees there should be an objective performance management system.
Performance management at Bahman Hospital proved over four years a problematic issue for
both manager and employee. For this subject, human resources department assign a priority plan
to adjust this system.

17

Chapter 5 Performance management

Description

Performance management is a systematic process by which all are involved in improving

organizational effectiveness in the accomplishment of mission and goals. It includes:

planning work and setting expectations

continually monitoring performance

developing the capacity to perform

periodically rating performance

Rewarding good performance

In Bahman hospital, managers and employees showed effective and efficient performance in
transforming services to achieve objectives. However human resources department aim does not
stop on this level. Human resources department broaden its view to include not only developing
but also creating talent. Consequently it seeks to provide continually adjustment to ensure high
quality of services, since the main priority is to secure patient safety, though high level of
monitoring and auditing is required. For this high importance, goals are set and planned to
achieve this target. Progress toward those goals is measured and employees get feedback yearly.
High standards are set up, but attention is also required to develop the skills needed to reach
them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five components processes working together and supporting each
other achieve natural, effective performance management. But still there is some matters are
unrecognized and more focus to be solved. Since the main performance management system is
resulting in some troubles at different managerial levels.

Performance management according to Armstrong (2009) is a systematic process for improving

organizational performance by developing the performance of individuals and teams. In other
words PM attaining better results through understanding and managing performance within an
agreed framework of planned goals, standards and competency requirements, aligned with the
18

mission, vision and strategic plans of the organization. Performance management is concerned
with aligning individual objectives to organizational objectives and encouraging individuals to
uphold corporate core values; enabling expectations to be defined and agreed in terms of role
responsibilities and accountabilities (expected to do), skills (expected to have) and behaviors
(expected to be); providing opportunities for individuals to identify their own goals and develop
their skills and competencies. (Armstrong, 2009)

Performance management historical view

Performance Management is a shared process between managers and individuals, based on the
principles of an agreed contract rather than top down task directives. PM involves agreement on
objectives, knowledge, skills and competency requirements to do the work and supported by
development plans to close agreed gaps. It involves a joint and continuing dialogue that
constantly reviews and improves the contract between the individual and the manager.
Performance management is an integrating process linking corporate, functional, team and
individual objectives in a partnership approach. It is not handed down or done to people by
superiors and neither is it an imposed HR chore. Some suggested that performance management
is a process and not a system which can be criticized and argued to prove that it is a system, by
which performance appraisal is the process. PM is characterized by including actions which
people handle to deliver day-to-day results and manage performance. Hence performance
management is about an understanding of what high performance and competence looks like and
what is required to be achieved through job description. Ultimately PM is concern to achieve
success of individuals in their jobs, making best use of their abilities, realizing their full potential
and ensuring their alignment to the corporate agenda, therefore maximizing their contribution to
the success of the organization.
Performance Management emerged in the late 1980's with the arrival of strategic human resource
management (HRM) as an integrated approach to the management and development of people
which saw the decentralization of this critical function to line management. HRM recognized
that the management of performance was something to be carried out on a continuous basis, not
a yearly event controlled centrally by HR, and could only be done by the line manager. It

19

paralleled the new thinking on corporate culture, driven by core values and the need for
processes that would help to change behaviour and align employees to corporate values and
goals. Recognition of the need for employee participation and engagement in any process
regarding their performance, brought about by the expansion on motivational theory beyond
Maslow (1943) and Herzberg (1959) to include more integrated accounts based on the work of
McGregor (1960) Vroom and Deci (1974), Nadler and Lawler (1983) and Steers and Porter
(1987), established a need for a process that would incorporate these ideas and move beyond the
now discredited precursors to performance management of the merit system, management by
objectives and performance appraisal.
The merit system or rating system originated in the 1940's and 1950's and required managers
to rate employees on both work and personality factors. A rating scale of 1 to 5 was the normal
ranging from 1 that stands for poor and to 5 that means outstanding. Work factors were typically
defined as knowledge of job, output, accuracy etc. however personality factors were typically
defined as confidence, attitude, judgment, behaviour and way of communication. Invariably the
merit system was used to set off pay reviews. As they were not tied to objectives they tended to
generalize, were essentially subjective and attempted to quantify the patently unquantifiable
judgments of personality. Although simple merit systems have been discredited and no hard
evidence exists to demonstrate they actually improve performance they still in practice exist
today.
Management by objectives was popular in the 1960's and 1970's, the term being coined by
Drucker in 1955. Management by Objectives was in essence the principle of the cascade from
corporate objectives to unit objectives to individual objectives to review of individual objectives,
review of unit objectives and back to review of corporate objectives. It was a feedback loop
characterized by extensive paperwork and adherence to rules and methods of the system as
opposed to a process of working. Furthermore it concerned itself primarily with the managers of
the organization with the employees invariably subjected to the pre-existing merit system. It was
a top down process which did not engage with employees and paid little attention to core values
or their communication.

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Performance appraisal emerged in the late 1970's and into the 1980's. They were a mix of the
merit system and management by objectives. They were more often than not the property of the
personnel department and were imposed bureaucratic systems. PA tended to operate top down
and were focused on the annual appraisal meeting which was display in its approach. They
quickly became perceived as the prompt for reward and hence the emergence of the concept of
pays related reward or performance pay. The word appraisal itself undermines the process as it
call up images of something that is done to individuals, with neither the manager nor subordinate
comfortable with the notion of one person telling another person what they think about them.

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Chapter 6 Performance Appraisal (PA)

Definition of PA
Performance Appraisal is defined by different scholars of human resource management at
different time. Therefore, some theories of those scholars have been discussed as follows.
According to Longenecker, (1997) performance appraisal is two rather simple words that often
arouse a raft of strong reactions, emotions, and opinions, when brought together in the
organizational context of a formal appraisal procedure. Most organizations throughout the world
regardless of whether they are large or small, public or private, service, healthcare or
manufacturing, use performance appraisal with varying degrees of success as a tool to achieve a
variety of human resources management objectives. Organizations especially healthcare use
different tools and have a number of goals for performance appraisals, often resulting in some
confusion as to the true purpose of performance appraisal systems. However, at its core, the
performance appraisal process allows an organization to measure and evaluate an individual
employees behavior and accomplishments over a specific period of time (Wiese and Buckley,
1998). Yong (1996) identifies performance appraisal as an evaluation and grading exercise
undertaken by an organization on all its employees either periodically or annually, on the
outcomes of performance based on the job content, job requirement and personal behavior in the
position.
Assessing how well employees are doing their jobs is the focus of performance appraisal (Mathis
and Jackson 1997). Furthermore, (Gomez-Mejia et.al, 2001), stated that performance appraisal
as the process of identification, measurement, and management of human performance in
organization. Hence to make these effective, organizations should develop a system that serve
as a tool to performance appraisal process. In which HR development begins with orienting new
employees, training and development teams and individuals, and also includes the necessary
information to accommodate technological changes. Encouraging development of all employees
including supervisors and managers is necessary to prepare organizations for future challenges.
Career planning identifies paths and activities for individual employees as they develop within
the organization.
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What is Performance?

The term performance refers to the employees behavior in their workplace, in other words ways
of being productive. Productivity is the concern of both effectiveness and efficiency, by which
effectiveness refers to goal accomplishment. However efficiency evaluates the ratio of inputs
consumed to outputs achieved. The greater the output for a given input is the greater the
efficiency will be. The term effectiveness is interrelated with the term efficiency. Through which
achieving one is does not guarantee lowering the cost. By a mean organization can achieve
effectiveness by the absence of efficiency and vice versa, but there will be something missed. It
is not desirable to have objective measures of productivity such as hard data on effectiveness,
number of units produced, or percent of crimes solved etc and hard data on efficiency (average
cost per unit or ratio of sales volume to number of calls made etc.).

In addition to productivity as measured in terms of effectiveness and efficiency, performance

also includes personnel data such as measures of accidents, turnover, absences, and tardiness.
That is a good employee is one who not only performs well in terms of productivity but also
minimizes problems for the organization by working on time and by minimizing the number of
work related accidents.

What is Appraisal?

Appraisals are considered the judgments of the characteristics, traits and performance of others.
On the basis of these judgments we assess the worth or value of others and identify what is
sufficient or insufficient. In industry performance appraisal is a systematic evaluation of
employees by supervisors. Appraisals are essential for making many administrative decisions
such as selection, training, promotion, transfer, wage and salary administration and others.
Besides they aid in personnel research.

Performance Appraisal thus is a systematic and objective way of judging the relative worth of
ability of an employee in performing his task. Performance appraisal helps to identify those who

23

are performing their assigned tasks well and those who are not and the reasons for such
performance.

Uses of Performance Appraisal

The use of PA is illustrated by (Mullins, 1996) as a formalized and systematic appraisal scheme
can also form the basis of a review of financial rewards and planned career progression.
Performance appraisal is therefore, a crucial activity of the personnel function and the
management of human resources. Furthermore, (Henenman, 1996) discussed the usage of PA
and he mentioned that PA is used to identify the dimension of performance, and also to set
standards of contributions for each performance dimensions step. Stressing this issue by (Mondy,
Noe and Premeaux, 1999) stated as: virtually every American business firm is affected by
global competition. For survival and success, it is imperative that these organizations remain
competitive. Continued competences can only be maintained ceaseless development of human
resources. A potential mechanism for this growth is employee performance appraisal. The
important issues concerning PA role argued by (Mathis and Jackson, 1997) as follows PA has
two roles in organizations. One role is to measure performance for rewarding or otherwise
making administrative decisions about employees. Promotions or layoffs might hinge on these
ratings making them difficult at times. Another role is development of individual potential.
Performance appraisal is a crucial component of a broader set of human resource functions; it is
a tool for evaluating the extent to which each employees performance is aligned to the goals
established by the organization .According to Armstrong (2000), PA function is a continuous
and evolutionary process in which performance improves over time. It provides the basis for
regular and frequent dialogues between managers and individuals about performance and
development needs based on feedback and self assessment. It is mainly concerned with
individual performance but it can also be applied to teams.
According to Gomez-Mejia et.al (2001), Organizations usually conduct appraisals for
administrative and developmental purposes. Performance appraisals are used administratively
whenever they are the basis for a decision about the employees work conditions including
promotions, termination and rewards. Development uses of appraisal which are geared toward

24

improving employees performance strengthening their job skills, including counseling

employees on effective work behaviors and sending them for training. The major functions of
PA are to give employees feedback on performance, to identify the employees developmental
needs to make promotion and reward decisions, to make demotion and termination decisions and
to develop information about the organizations selection and placement decisions, as Mondy,
Noe and Premeaux (1999) discuss the PA purpose as performance appraisal data are potentially
valuable for use in virtually every human resource functional areas such as:

a) Human Resource Planning

b) Recruitment and selection
c) Training and development
d) Career planning and development
e) Compensation programs
f) Internal employee relation
g) Assessment of employee potential

The system involves several steps, which can be considered as continuous, however periodic.
Performance appraisal objectives can be classified in a number of ways. One of the best
classifications can be summarized by grouping the objectives as follows:

Administration: providing an orderly way of determining promotions, transfers and

salary increases.

Informative: supplying data to management on the performance of subordinates and to

the individual on his or her performance.

Motivational: creating a learning experience that motivates staff to develop themselves

and improve their performance.

25

Performance Appraisal System

Aguinis (2005) indicated that performance management system usually include measures both
behaviors (what an employee does) and results (the outcomes of an employees behavior). In
order to realize the purpose of performance appraisal, organizations should carefully design
appraisal system and implement accordingly. According to Gomez-Mejia (2001), the first step in
the performance appraisal process is identifying what is to be measured. This process may seem
to be very straightforward, whereas in practice, it can be quite complicated. Identification of
performance dimensions is the necessary at the first step in the appraisal process. If a significant
dimension is missed, employee morale is likely to suffer because employee who do well on that
dimension is missed, employee will not be recognized or rewarded. If an irrelevant or trivial
dimension is included, employees may perceive whole appraisal process as meaningless. The
Second step in performance appraisal process is measuring employees performance. Measuring
employee performance involves a number in order to reflect the performance on the identified
dimensions. Technically numbers are not mandatory. Label such as Excellent, Good,
average and Poor might be used instead. The third step in performance appraisal is managing
performance. The effective management of human performance in organizations requires more
than formal reporting and annual rating. A complete appraisal process includes informal day-today interaction between managers and workers as well as formal face to face interviews.
Although the ratings themselves are important, even more critical is what managers do with
them. Moreover the process of performance appraisal does not stop at the third step; it must
exceed to follow analyzing the needs of training and development in order to improve and
enhance the overall performance, by which can reflect efficiency and effectiveness.

26

Objectives of performance appraisal

Performance appraisal aims to evaluate the job performance of an employee. It is an ongoing
process of obtaining, researching, analyzing and recording information about the worth of an
employee. The main objective of performance appraisals is to measure and improve the
performance of employees and increase their future potential and value to the company. Other
objectives include providing feedback, improving communication, understanding training needs,
clarifying roles and responsibilities and determining how to allocate rewards.
-

Providing Feedback: Through performance appraisal process the individual learns

exactly how well he/she did during the previous twelve months and can then use that
information to improve his/her performance in the future. In this regard, performance
appraisal serves another important purpose by making sure that the expectations are
clearly communicated.

Facilitating Promotion Decisions: performance appraisal can be an opportunity for

uplifting. To make it easier for the organization to make strong decisions about making
sure that the important positions are occupied by the capable individuals.

Facilitating rewards decisions and encouraging performance improvement:

performance appraisal aids to insure that talented employees are retained and rewarded,
in which poor performance is being identified that affects the productivity of the
organization. That by turn highlights weakness that needs development and improvement.

Setting and measuring goals: goal setting has consistently been demonstrated as a
management process that generates superior performance. The performance appraisal
process is commonly used to make sure that every member of the organization sets and
achieves effective goals.

Encouraging effective communication: Managers are expected to be good coaches to

their team members and mentors their progress. Performance appraisal identifies the
areas where coaching is a necessity and encourages managers to take an active coaching

27

role through providing constructive feedback. In addition to leading their teams through
continuous follow ups.

Additional objectives Performance appraisal:

To review the performance of the employees over a given period of time

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control.

To strengthen the relationship and communication between superior, subordinates and

employees.

To diagnose the strengths and weaknesses of the individuals so as to identify the training
and development needs of the future.

To provide feedback to the employees regarding their past performance.

To provide clarity of the expectations and responsibilities of the functions to be

performed by the employees.

To judge the effectiveness of the other human resource functions of the organization such
training and development.

To reduce the grievances of the employees.

To insure adaptation of policies and procedures

To measure quality of the services

To monitor and reduce gaps and pitfalls

28

Effects of performance appraisal

Development

uplifts

Performance
appraisal

Communication

Involvement

Figure 1: Effects of performance appraisal by Hiba Hashem

Performance appraisal carries different effects on the whole organization performance. It may
either affect the organization positively or negatively. Hence these effects are strong related to
the way of adapting the performance in addition to the type of management found, however the
structure of the organization play essential role in this process. In this sequence, performance
appraisal is being considered the most crucial function in the human resource department, since
the first is linked to other function such as compensation system, benefits system, salary scale,
path career and others. Despite of the mentioned point, still there are effective missing subject
some does not consider them into consideration. These are related to development,
communication, involvement and uplifts. Rarely, who specify time to enhance communication
between their teams; where the enormous problems are raised from bad or insufficient
communication. PA provide opportunity in communicating through providing feedbacks, by
which it reflects development, which touches different tasks, in which this situation, by impress
the employees who by turn will be involved in enhancing the organization performance. Indeed
this success may reflect developing employee path career through uplifting. The effects of
performance appraisal touch more the organization then the employees. Hence organization
29

suggested strategies for motivating employees to perform better such as motivation system and
career path (uplifting and others). In order to empower the organization by increasing
productivity this will reflects enhancing the position of the organization. Therefore the impact of
PA is the priority of the top management. For this high importance managing the performance
appraisal effectively is essential subject, since it carries dramatic results for both organization
and employee.

Job analysis

job design

job
description

Figure 2: 3Js by Hiba Hashem

The 3Js are the required steps in constructing performance appraisal system. Adopting a strong
and efficient system, demands from human resources department to analyze the job, design it in
order to provide job description which mentions all the required responsibilities to the suitable
position. Hence, sometimes performance appraisal may result in reconstructing job description,
which demands job analysis.

Performance appraisal process

The process of performance differs from one organization to another due to the difference in type of
business. However, practically the process includes the following steps regarding the period of the
appraisal. Firstly, preparing the sample after insuring the right task mentioned to the right position;
secondly, distributing the form in the appropriate date; thirdly, specifying the due date of recollecting
all the forms in order to enter all the data to start in analyzing it to identify the development areas

30

required. In professional way, performance appraisal dictates a proactive approach to review process
that follows the multi-phase design:

Figure 3: phases of performance appraisal process

Planning Phase: is related to setting agreed goals and guidelines for employee
evaluation, determining the key objectives for measuring success in the position and
setting developmental goals to encourage greater productivity and results.

Performance Phase: The longest phase that allows the employee to meet goals and
objectives, develop new skills and track accomplishments. In other side, managers review
performance and make notes as well.

Assessment Phase: Employees are given an opportunity near the end of the performance
cycle to provide feedback on the preset goals, competencies and objectives to deliver to
their manager. This is when the manager will document feedback on the employee
performance as well. The system allows senior managers to review all submitted
documentation and sign off before the actual review is complete.

Review Phase: Manager and employee sit down together to communicate and discuss the
year in review. Reviews can be presented online or printed and e-signature that the
review took place can be captured in the system to protect the organization if legal review
should occur. In addition to planning for the following year, it is important to mention the
31

needs of training to each employee assigned for the next year, which aims to improve the
capabilities of the employees.

Causes and effects of performance appraisal

Job analysis

Job design

Job description

Evaluation and
feedback

Compensation
system

Training and
development
Performance
appraisal

Career path
Salary raise

Figure 4: Causes and effects of performance appraisal by Hiba Hashem

In order to maintain continuous development, it is a necessity to configure a system which aid

in achieving effectiveness, this lead to manage performance for both organization and employee.
The performance appraisal is about assessing the adaptation of the required tasks aligned with
the objectives and goals of the organization. Thereby it is essential to have clear and concise job
description that may reflect clear goals for employees linked with clear annual objectives. To
demonstrate this issue, performance appraisal is the cause of several factors forces the
organization to obtain performance management in order to audit and monitor the work flow.
These causes are summarized by interrelated chain. First in order to construct a performance
appraisal from there should be a clear job description which is a result of job analysis and job
32

design. Hence PA by turn reflects feedback on employees performance that may carry both
negative and positive effects leading to either achieving compensation system and career path or
vice versa. Indeed training development may affect the performance of employee.

Techniques of performance appraisal

Numerous techniques for measuring performance have been developed over the years.
According to Gomez-Mejia, (2001), Techniques of measuring performance of employees involve
wide array of appraisal formats from which to choose. Here we discuss the formats that are most
common legally defensible. These formats can be classified in two ways:
1) The type of judgment that is required (relative or absolute)
2) The focus of the measure (trait, behavior, or outcome).
A performance appraisal or performance assessment is a formal interaction between an employee
and the manager. This is when the performance of the employee is assessed and discussed in
thorough detail, with the manager communicating the weaknesses and strengths observed in the
employee and also identifying opportunities for the employee to develop professionally. Here are
some different types of performance appraisals that can be performed depending upon the needs
of the organization or the employee.
General appraisal: In this method there is an ongoing communication between the manager and
employee throughout the entire year. At the end of the year they will determine whether the preset goals and objectives were met, provide feedback, and set new goals.
The 360-degree appraisal: In this process of appraisal involves allowing other employees to fill
out a questionnaire detailing their experiences with a specific employee. The feedback of peers
can be reviewed by the manager and considered during the appraisal.
Human resource accounting (HRA): is a method to measure the effectiveness of personnel
management activities and the use of employee in an organization. HRA stands for the process of
assigning, budgeting, evaluating and reporting the cost of human resources incurred in an
organization, including wages and salaries and training expenses. HRA method tries to find the
relative worth of assets in terms of money. In this method the performance appraisal is about
judging in terms of cost and contribution of the employees. Hence the cost of employees include
33

all the expenses incurred on them like their compensation, recruitment and selection costs,
induction and training costs, whereas their contribution includes the total value added. The
difference between the cost and the contribution will be the performance of the employees.
Ideally, the contribution of the employees should be greater than the cost incurred on them.
Management by objectives (MBO): as Peter Drucker argued in his book The Practice of
Management in 1954, MBO is a process by which the objectives of an organization are agreed,
met to and decided between the management and the employees, in this way the employees
understand what is expected from them and help set their own individual goals. Therefore they
attain both their personal goals and the organizations targets. He pointed the importance of
managers having clear objectives that support the purposes of those in higher positions in the
organization. MBO involves the setting out clearly defined goals of an employee in agreement
with his superior. Someone, in an extensive account of MBO, note the following characteristics:

The establishment of organizational goals.

The setting of individual objectives in relation to organizational goals.

A periodic review of performance as it relates to organizational goals. Effective goal

setting and planning by top management.

Organizational commitment.

Mutual goal setting.

Frequent individual performance reviews.

Some freedom in developing means of achieving objectives.

Thereby MBO is enables employee to measure progress toward a goal which the employee often
has helped to set. Furthermore the key features of management by objectives are as follows:

Superior and subordinate get together and jointly agree upon the principal duties and
areas of responsibility of the individuals job.

The subordinate sets short term performance goals in cooperation with the superior.

Both agree upon criteria for measuring and evaluating performance.

34

From time to time, the superior and subordinate met together to evaluate progress
towards the agreed goals. At the meeting, new or modified goals are set up for the
ensuing period.

The superior plays a supportive role. He tries, on a day-to-day basis, to help the
subordinate achieve the agreed upon goals. His major role characterizes with monitoring,
leading and coaches.

In the appraisal process, the superior plays less of the role of a judge and more of the role
of one who helps the subordinate attain the organization goals and objectives.

Behaviorally anchored rating scales (BARS): is a new technique combines graphic rating scale
and critical incidents method. It consists of predetermined critical areas of job performance or
sets of behavioral statements describing important job performance qualities as good or bad for
instance the qualities like inter-personal relationships, adaptability and reliability, job knowledge
and others. In this method, an employees actual job behavior is judged against the desired
behavior by recording and comparing the behavior with BARS. Developing and practicing
BARS requires expert knowledge. To illustrate BARS method, is an employee appraisal system
where raters distinguish between successful and unsuccessful job performance by collecting and
listing critical job factors. These critical behaviors are categorized and appointed a numerical
value which is used as the basis for rating performance.

35

Chapter 7 Difference between performance management and performance appraisal

The terms performance management (PM) and performance appraisal (PA) are sometimes
used synonymously, but in the core they are different. Performance management is a
comprehensive, continuous and flexible approach to the management of organizations, teams and
individuals which involves the maximum amount of dialogue between those concerned.
Performance appraisal is a more limited approach which involves managers making top-down
assessments and rating the performance of their subordinates at an annual performance appraisal
meeting. Performance management consists of all organizational process that determine how
well employees, teams and the organization perform. This process includes HR planning,
employee recruitment and selection, T&D, career planning and development and compensation.
Performance appraisal is especially critical to its success. An organization must have some
means of assessing the level of individual and team performance in order to make appropriate
development plans. Notably performance appraisal is considered one component of performance
management; which is vital component in the management operation which is linked to
organizations objectives and strategic plan. In the same context performance management has
wider scope than performance appraisal that came out to fulfill the short coming. As argued by
someone performance management is integrated process of performance planning, performance
appraisal, performance feedback performance counseling or consolidates goal setting,
performance appraisal, development in to a single, common system, the aim of which is to
ensure that employees performance is supporting the companies. As a matter of fact, the core
difference between performance appraisal and performance management lies in the scope. Both
performance appraisals and performance management entail setting performance targets,
reviewing the achievement of targets, and devising ways to enable employees to meet targets. In
addition both establish obvious expectations on what an employee is expected to do, set the
guidelines on what constitutes successful job performance, and strive to identify barriers to
effective performance.

36

Performance Appraisal (PA)

Performance Management (PM)

Top down assessment

Joint process through dialogue

Annual appraisal meeting

Continuous review with one or more formal reviews

Use of ratings

Ratings less common

Monolithic system

Flexible process

Focus on quantified objectives

Focus on values and behaviors as well as objectives

Often linked to pay

Less likely to be directly linked to pay

Owned by the HR department

Owned by line managers

Table 1: PM vurses PA (source: Armstrong and Baron, 2005)

37

Chapter 8 Common performance appraisal errors

Adopting an evaluation system is crucial but guarantee is objectivity is very sensitivity issue. Not
all organization succeeds in applying objectivity to their assessment system. Many errors
translate unfairness with the employees rises during the appraisal. Many who provide time to
discuss the errors rises during appraisal and they suggest many types of them. But what really
means is how to avoid these errors. Here are some common mistakes organization should be
aware of in order to avoid them.
Halo and horn Effect
In the context of a performance appraisal, the Halo Effect describes a situation in which the
supervisor allows a highly favorable characteristic of the subordinate to affect their judgments of
the person. For example, the supervisor gives Employee X a glowing appraisal because he is
overly focused on the individuals superb communication and presentation skills, while
overlooking the fact that the employee often fails to meet his KPIs. Conversely, the Horn
Effect occurs when the supervisor allows an extremely unfavorable characteristic of the
employee to affect the entire evaluation. Managers should thus have greater self awareness of the
biases they may potentially have so that they take the whole picture into consideration and make
a conscious effort to always be fair in their evaluations.
Central tendency Error
Another common mistake, central tendency tends to occur when a manager needs to evaluate a
large number of people. If the majority are assessed as average during the performance
appraisal, there is a tendency for the manager to generalize and rate ALL employees as
average, despite the fact that some employees may have put in greater effort and achieved
extraordinary results. Knowing that central tendency exists when managers should pay more
attention to ensuring that each employee is appraised on their individual merit and performance.

38

Favoritism bias
This cuts both ways the supervisor can either support a particular employee because he likes him,
or be extra cruel in the performance appraisal if he dislikes the employee. Again, this occurs
when the appraisers perception is marred by bias. So as the appraiser, make sure you have a
strong sense of fairness.
Stereotyping
There is a well-known saying that goes: Birds of a feather flock together. But guilt by
association is a cardinal sin made by managers. Many supervisors may have a tendency to
generalize members of a certain group and stereotype each individual based on the perceived
characteristics of the group. This is detrimental to the performance appraisal process, as it may
not provide an accurate assessment of those being appraised. Managers should thus make it a
point to evaluate each employee as an individual, and not base their judgments on who the
employee hangs around with.

39

Chapter 9 Con and pros of performance appraisal

Despite the various techniques employed by different organizations for appraising employee
performance, and the advantages that an appraisal process has, both for the employee and the
organization, the concept of performance appraisal has earned a lot of criticism from various
corporate and social experts. The basic aim of all appraisals is to judge, whether the employee
has the skills and qualities, required to do his job in an effective manner. This evaluation is done
by the superiors, on the basis of some pre-decided criteria. If performance evaluation is done
correctly, it can help motivate an employee and increase his productivity. In this section the
discussion is centralized on the pros and cons of performance evaluation.

Pros of performance appraisal

Performance appraisal helps to evaluate the actual performance of employees against the
expected performance. It recognizes and rewards potential employees and motivates them to
excel further. PA provides a basis for determining the salary hikes, perks, promotions and
bonuses of various employees based on merit. Indeed appraisal process can provide a basis for
improving the performance of employees. It helps to identify the training and development needs
for employees who do not meet the set standards. This boosts the morale of employees and
increases the productivity of the organization. Furthermore, through performance evaluation the
supervisors can identify the strengths, weaknesses, job knowledge, skills and commitment of an
employee. An employee comes to know about his key work areas and also the areas he needs
improvement and has to work upon. He also gets a better understanding of the organization's
needs and expectations. Exceedingly, it helps to recognize the goals and objectives of an
employee. Sometimes, through the appraisal, the managers may tap the interests, skills and
proficiencies of an employee that may be suitable for some other job in the organization. This
helps to ensure that an employee is being utilized effectively. Identifying people with right skills
helps an organization achieve its mission and objectives and contributes to an employee's overall
growth as well. Besides this process is a viable tool for establishing and maintaining an open

40

communication between supervisors and employees, and enhances employee commitment and
productivity.

Cons of performance appraisal

On the downside, appraisals have been criticized on a lot of grounds. One of the arguments
against performance appraisals is that they get affected by office politics. Through which the
superior or the manager, may not assess his subordinates fairly. Instead of basing his evaluation
on the employee's actual behavior, the manager might give his feedback on the basis of his
personal likings and disliking. Even though another criticism that performance appraisals face is
that they are unable to fulfill the aim they are conducted for in the first place. Since, in an
appraisal, an employee is being evaluated and judged, and his pay rise and promotion is
dependent on it, there is no way he will bring out the problem areas in his work, when doing self
assessment. Although in some cases a superior too might find it uncomfortable to judge his
subordinates, since they are working together on a daily basis in the organization. Sometimes, it
can cause souring of relationships in the office, leading to an unproductive work environment.

Many management experts, who are against employee performance appraisals, argue that
appraisals and incentives should be kept separate. Appraisals should be only about the training
needs, performance and career development of an employee, and that there should be separate
salary reviews done periodically to decide the incentives for the employees. However, research
in this field has shown that if the reward review is a separate process from the appraisal system,
it may create dissatisfaction among the employees. Thus, looking at the strengths and
weaknesses of annual performance evaluation and the research findings, it can be concluded, that
though there are advantages and disadvantages of conducting an appraisal, it is a necessary
employee motivation tool without which organizations cannot function properly.

41

Chapter 10 Performance appraisal at Bahman hospital

Defining the problem

In the last three years, the need for adjusting the method of evaluation arises. Hence, realizing
withdraw of the performance especially the nursing team. For this high importance, analyzing
the situation is a crucial matter. The analysis results in defining a serious subject that addresses
the method of monitoring the performance. In fact the performance appraisal does not identify
the improvement area and the training needed. This point center the idea of mismatching
between the training and the performance. HR department find it necessity to adjust the method
and relate the appraisal with the training needed. In other words, HR department seeks to obtain
a method that starts with assessing the performance and end identifying with the area of
improvement.

Performance appraisal under construction

At Bahman Hospital, performance management is crucial subject, since the priority is for patient
safety. Thereby, continuous monitoring and auditing the performance shape essential interest in
human resources department; however still this issue is under development due to several
criteria. But the problem lies on not reflecting the accurate performance rating through the form
applied. For this issue, studies and analysis takes place. In this context, human resources
department divided the project to several stages. Continuously, stage one consists in defining the
real situation through raising question where are we now? Whereas stage two stands for
explaining the purpose from reconstructing the system under a question why it is important to
reconfigure it? However, stage three combines several steps to address a question what should
be done? Indeed, stage four identifies the due date for each stage.
This framework took Bahman hospital two years to address the new form. By which stage one
defines the weakness of the current form. This highlights several issues leads to job analysis and
job redesign which by turn leads to rewriting job description that by turn leads to redefine
responsibilities for each job. This steps result in reducing the number of job descriptions from
42

approximately 170 to 156. In this sequence, stage two moved the human resources department
to search for the suitable performance method. In fact this demands a logical and a practical
analysis. Through which in order to achieve efficacy and effectiveness the needed performance
system must provide validity and reliability.

Current Technique
In fact, there are many techniques adopted by several hospital that achieve huge success, but
what was taking in high concern is the one that matches with the standards mentioned by the
accreditation standards in addition to those mentioned by the health ministry. Since the Bahman
hospitals objectives and mission are aligned to the health ministry. This criteria demand from
HR department to test many methods in order to move toward suitable form. The current form is
about rating method which stands for rating the task from A till D, where A means strong
and D means weak. Besides the current form, is divided to parts where the first is concerned
with the tasks and the second with skills. Exceedingly, the process of this form is done by one
side. In other word the role of the managers/supervisor is to evaluate the employees
performance, where the employee role center on signing the performance without any rating or
either discussion. This defines the weakness of the current form that characterizes by weak
feedback to employee; in addition, to not identifying the suitable training to each employee in
order to progress development.

Moving toward Changing

The stages that HR department defined them in their framework requires from them to organize
several training sessions, in order to give the opportunity to develop the ideas with the
managerial level. As usual some may not cope easier with changes but with time all managerial
level collaborates in the process of reconstruction. Notably starting with job description till
reaching the standards, the process demands from all departments a high level of corporation. In
fact, changing the job description is not an easy issue since it touches the responsibilities of some
managerial levels. Changing the performance system at Bahaman Hospital requires redefining
the tasks and responsibilities. Therefore meetings begin with each department. The first criterion
43

was to redefine the responsibilities in order to achieve new performance appraisal. After this
stage, putting the standards for each task with the corporation of the managers was the priority.
Since, the idea illustrate that in order to obtain objective performance appraisal far from bias, it is
crucial to work on defining standards for each task. This step emphasizes the efforts spends on
defining rating scale linked with the tasks. To illustrate this matter, the changes that occurred in
the job description results in adding value to the tasks by adding weight to each task. The
weights of the task weigh between 1 till 5 where 1 stands for weak and 5 means strong. Indeed
the standards must define the conditions for each weight. In a mean, to categorize the remark of
the employee the performance must achieve the defined standard.
Based on BARS method Bahman Hospital based its performance appraisal. The BARS which is
behaviorally anchored rating scales used as a method of evaluating employees carries typical job
appraisals one step further, instead of relying on behaviors that can be appraised in any position
in the hospital.

BARS in practice
Development of BARS evaluations requires an in-depth understanding of each positions key
tasks, along with an understanding of the full range of behaviors displayed by employees in
carrying out such tasks. Rating these behaviors for each employee; then anchoring each behavior
to points on a rating scale, which indicates whether the behavior is exceptional, excellent, fully
competent, or unsatisfactory. The result is a rating scale for each task. Then after mathematical
formula a certain grade classifies the employee in a specific category. Illustrating this idea,
behaviorally anchored rating scale (BARS) technique is a rating scale whose scale points are
defined by statements of effective and ineffective behaviors. They are said to be behaviorally
anchored in that the scales represent a continuum of descriptive statements of behaviors ranging
from least to most effective. An evaluator must indicate which behavior on each scale best
describes an employee's performance. BARS differ from other rating scales in that scale points
are specifically defined behaviors. Also, BARS are constructed by the evaluators who will use
them. There are four steps in the BARS construction process:

44

1) Listing of all the important dimensions of performance for a job or jobs

2) Collecting critical incidents of effective and ineffective behavior
3) Classifying effective and ineffective behaviors to appropriate performance dimensions
4) Assigning numerical values to each behavior within each dimension
In practice to apply this method at Bahman Hospital was not an essay step to apply. It demand
two years of rewriting job descriptions. The only difference between the old job descriptions and
the new summarized with adding weigh to each task. But this is not the only adjustment done to
the form. Rereading the form was a priority in order to apply weighs. So this step take time in
readjusting and reordering tasks for approximate 670 employees. Indeed in order to record the
behavior of the employees HR department develop a log form for documenting effective and
ineffective behavior. This step provides managers with the information required at the end of the
year to assess the performance of the employee.
In a summary, the performance appraisal based on BARS method, divided to two categories. The
first category evaluates the behavior of the employee. This means how employees perform their
task annually. However the second category asses the skills required from the employees to
perform their jobs. The rating divided by a percentage 60% for the first category and 40% for the
second one. To emphasize the process of appraisal starts with job analysis process that enlarges
to job design, followed by adjusting and developing job description. The next step related to
identifying standards and measures matches job descriptions which should be mingled with the
mission and objectives of the hospital.

45

set standards
and measures

job design

identifying
tasks,
activities
and
requiremnet
s of the job

outline and
organize the
tasks, duites
and

define tasks,
work
conditions
and
heirachies

responsibilities

job analysis

valid and
reliable,
acceptable and
feasible, specific,
and based on the
mission and
objectives.

performance
appraisal

performance
appraisal form

job description

Figure 5: Performance appraisal process by Hiba Hashem

BARS and stakeholders

While talking about employees performance means it is important to consider quality issues. For
this matter evaluation is crucial issue for the main target that is customer satisfaction. Designing
performance appraisal system demands bearing in mind Bahman hospital main goals as well as
customer expectations; in order to set up standards for different jobs. In this sequence, each
stakeholder involved in the chain of performance management may carry different view of
appraisals. Even though same stakeholders may reflects several perspective. To demonstrate this
subject clearly, it is better to discuss each stakeholder aside.

Manager view
From managerial level, the main purpose stands for achieving the target effectively with low
cost. The target is not about only achieving high profit margin, it centralized in meeting customer
expectation that stands for providing the suitable health care to the patient. For this importance,
they work on providing high standards to match the criteria. But this is not even. Measuring the
performance of the employees is not an easy job. It demands a daily base follow up. Exceeding,
in some areas recording and documenting the measurement is important. For this matter some

46

manager are distinguished from others. However some consider appraisals a wasting time
moments, whereas others see it the most efficient way to provide feedbacks and measure their
team in relation with the annual plans.
BARS method has high popularity at Bahman Hospital at managerial level in comparison with
other methods. Where other methods over the years proves to be insufficient,

Employee view
Employees over three years experienced some how bad method of appraisal that result in
unsatisfying their needs. This experience let the employees to have various views toward the
evaluation of their performance. Especially that in the last three years the employees did not
receive any benefit results from high performance. Though a bad picture begin to figure up that
reflects bad effects. Some of the employees offer high importance on the result of the appraisal
while others do not give it any importance.
HR department take in consideration the employees views. HR department from its main
function is to satisfy employees need. And from this corner, motivation and reward system is
essential to obtain. However it is beneficial to relate the reward system with the performance of
the employee. Though having evaluation system that combines the reward system with the
evaluation system and the training needed to improve.

Many studies undergo its path in

analyzing the employees performance in relation with motivation. The most important study
was Maslow theory and Herzberg theories both discuss the idea of what motivate employees.

Objectives of new performance appraisal

According to Malcolm and Jackson (2002) there are three main groups of purposes:
-

Performance reviews: managers discuss with employees the progress in their current
positions, their strengths and areas requiring further development.

47

Potential reviews: the discussion is about employees opportunities for progression, and
the type of work they will be fitted for in the future and how this can be achieved.

Reward reviews: usually separate discussion but linked to the appraisal system. The
manager communicates decisions on rewards such as pay, benefits or promotion and
provides feedback.

Performance Appraisal could be an effective source of management information, given to

employees. Performance reviews are focused on contributions to the organizational goals. Some
forms of these reviews include the question What organizational goals were contributed to and
how? Outcomes of performance appraisal can lead to improvements in work performance and
therefore overall business performance via, for example increased productivity or customer
service. Malcolm and Jackson (2002) outline four different benefits for the organization. These
are targeted training approach based on identified needs, future employee promotion decisions,
effective bases for reward decisions and improved retention of employees. The importance of
performance appraisal for training and promotion needs is also discussed by Mullins (1999).
Besides, he identifies an additional benefit: performance appraisal can help to identify inefficient
work practices or reveal potential problems, which are restricting the progress of the company.
Derven (1990) and Mullins (1999) suggest that performance appraisal can help the organization
to identify the talented employees and future leaders in the company. Derven (1990) believes
that there is a straight connection between the job of an individual and the strategic goals of the
organization and this can directly increase the profitability of the company. He gives an example
that advantage can be achieved when a company builds its appraisal systems on measuring
customer satisfaction. The annual meeting gives an opportunity to the manager to formally
recognize good performance and this would lead to more motivation from the workers (Derven
1990). Modern systems for performance appraisal depersonalize issues. Supervisors focus on
behaviors and results, rather than on personalities. Such systems support ongoing
communication, feedback and dialogue about organizational goals. Also they support
communication between an employee and a supervisor. Performance appraisal provides a clear
target of job standards and priorities and ensures more trust on the relation managerworker
(Derven 1990). Performance appraisal takes into account the past performance of the employees
48

and focuses on the improvement of the future performance of the employees. It gives the staff
the opportunity to express their ideas and expectations for the strategic goals of the company
(Mullins 1999). Employees can find what is expected from them and what the consequences of
their performance are. Ideally they receive a fair and analytical feedback for their performance
(Derven 1990). Performance appraisal helps to rate the performance of the employees and
evaluate their contribution towards the organizational goals. It helps to align the individual
performances with the organizational goals and also review employees performances. Besides,
enhancing motivation appraisal is about involvement in the big picture responsibility,
encouragement, recognition for effective delivery and effort (Malcolm and Jackson, 2002).
Performance Appraisal is a motivation for the employee, who performs well in the present to go
on doing so and in the future (Derven 1990).

Challenges of the performance appraisal

Performance appraisal is being widely practiced in sectors despite of the type of business.
Regarding this fact there are large numbers of managers, human resource professionals, human
resource consultants and researchers that recommend companies to get rid of the performance
appraisal systems. The first and maybe be strongest argument is the existing discrepancy
between the theory and the practical implementation. Authors like Bernardin & Klatt (1985) and
Maroney & Buckley (1992), report there is a considerable gap between theory and practice
concerning human resources specialists who do not make full use of the psychometric tools
available. Counter argument maintained by line managers is that the process needs to be simple
and easy to use; otherwise it becomes time consuming and cost ineffective. Another portion of
criticism comes with the fact that performance appraisal increases the dependency of the
employees on their superiors. Where the process is conducted by managers who are often not
trained to be appraisers, the actual feedback is obstructed because it includes subjectivity and
bias of the raters, which leads to incorrect and unreliable data regarding the performance of the
employee.

49

Performance appraisal process can also be a bitter process that can create emotional pressures,
stress and sometimes can adversely affect the morale and lead to demotivating. PAs are often
time consuming and use incorrect methods to measure performances. They are generating false
results and the decisions taken can be politically influenced. An example to support the points
mentioned above is the case of managers and employees of Bahman hospital. To some extent
managers begin to think that the appraisal is almost time consuming on the other side employees
were demotivating. Reaching this level an attempt to manage this situation, the reconstruction for
new appraisal system take place at Bahman Hospital in order to rescue the situation, in an
attempt to decrease the turnover, this was high in the last three years. In this direction, the
disadvantage of the appraisal undergo annually at the hospital summarized by two main points.
First one is that both managers and employees reach a level to consider the evaluation as a
wasting time contradictory to that of considering it an opportunity to provide constructive
feedback. Second one is that employees were demotivating due to the missing link between the
assessment and the reward system. So these two main points in addition to other factors are
strong enough to let the HR department move toward designing a new performance management
system.

Walters (1995) outline the main performance appraisal challenges in the performance appraisal
process:
-

Determining the evaluation criteria: Identification of the appraisal criteria is one of the
biggest problems faced by the top management. For the purpose of evaluation, the criteria
selected should be in quantifiable or measurable terms.

Lack of competence: Evaluators should have the required expertise and the knowledge
to decide the criteria accurately. They should have the experience and the training
necessary to carry out the appraisal process objectively.

Errors in rating and evaluation: Many errors based on the personal bias like
stereotyping, halo effect (i.e. one trait influencing the evaluators rating for all other
traits) etc. may creep in the appraisal process. Therefore the rater should exercise
objectivity and fairness in evaluating and rating the performance of the employees.
50

Resistance: The appraisal process may face resistance from the employees because of the
fear of negative ratings. Therefore, the employees should be communicated and clearly
explained the purpose as well the process of appraisal. The standards should be clearly
communicated and every employee should be made aware of what exactly is expected
from them.

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Chapter 11 Effectiveness of new performance management system

Changing in fact is essential for any organization especially in this dynamic world, in order to
sustain progress. But it demands from any organization to be flexible to accept the changing in
its environment. However resistance to change is a natural feedback from internal and external
stakeholders. But what if it touches the behaviour of the employees? Hence the effectiveness of
any new system in the first degree depends on the acceptance of the stakeholders. That by turn
relies heavily on the way of creating culture for it. That highlights the importance of training and
learning.
The first step was training the managers on the new appraisal form; where it sounds strange for
some managers who strongly disagree on the form. Important to mention, that changing the
performance appraisal demand readjusting the whole performance management. In brief this
includes rewriting objectives, strategic plan, job description and others. For this issue, some
disagreed on moving toward change. Despite of some views that belief in considering the
evaluation wasting time based on an idea that performance management, that concern in day-today follow up more accurate than annually appraisal. But change takes place for the aim to
decrease turn over and to enhance employees situations and work conditions. The new
technique of evaluating the staff proves its success with the rise of some weakness in some parts.
Since first it proves to assess the employees more effectively than the old one, because it shows
logic far from bias. For more details in this idea, it is necessary to discuss the importance of
diminishing the bias while evaluating employees. Decreasing bias was the first consideration to
the general administration which is not an easy mission in order to try to be fair with all types
of employees. For this criteria, developing a log to document the effective and ineffective
behavior of employees performance, in an aim to apply benefits to the efficient performance
even if he/she specialized in performing even one task. In the second image, they insist to apply
penalty for ineffective performance in order to remove duplicate bad performance. The log is
linked to a chain of standards for each task that shows the standard for each rate. For clarifying,
the rate adopted are from 1 to 5 in the performance, so the standards explains to get a rate of 5
the required task from the employee should matches the one find in the standards. So the

52

manager compares the log with these standards and scale the performance based on what was
mentioned.

Log

document both effective and ineffective performance

follow through meetings in order to provide constructive feedback

up
annual assess the performance annually based the log.
appraisal

training

plan

assess the training needs to improve the weakness area.

develop annual plans

Figure 6: Role of manager in the new appraisal system

Question 1: What are the employees attitudes from the performance result?
Usually employees dislike the idea of being evaluated by someone else however some accept it.
Some are interested by the rewards and motivation more than the training and developing
sessions. Though for most employees if the appraisal is not related with a reward system for
them its a just a paper that does not translate any meaning for them. However other types of
employees just a constructive feedback means a lot for them. In their view, they see the follow
up and the feedback is crucial that reflects the interest of their managers by their outputs. But
these types of employees are rare across 670 employees. The huge percentage prefers the idea of
relating the performance with benefit system. In fact this idea proves to be more accurate in
obtaining effective and efficient outputs. But what is an attitude? An attitude could be defined as
a learned predisposition to respond in consistently favorable or unfavorable manner with respect

53

to a given object (Kreitner and Kinicki, 1992). Moorhead and Griffin (1992) propose two views
of attitudes:
-

Dispositional view holds that attitudes are stable dispositions toward an object.
According to this, attitudes have three basic components: affect (emotional feeling
toward the object), cognition (perceived knowledge about the object) and intention
(intended behavior toward the object).

Situational view contends that attitudes evolve from socially constructed realities.

Attitudes are formed throughout the time, can be changed and may be influenced by a manager.
One of tools for initiation of attitude change is performance appraisal. Benefits motivate the
employees to perform harder this reflects efficacy that increase the profit as well as the market
share of the hospital. For this matter the hospital strongly agrees with the idea of providing
motivation and reward system based on the performance of the employees that is categorized
based on the BARS technique. This new system aims to change the attitude of the employees.
Since the old experience of the employees was demotivating. Hence it lacks this issue.
Markedly, the new appraisal system is facing a strong resistance from the employees. Because of
their past experience they are not expecting to have benefits from the new system. And their
perspective toward the performance as mentioned previously is only a paper archived in their
files. For this importance, HR department work harder to prove the contradictory idea through
training sessions done while launching the new system. This is coupled by the idea of building a
culture to accept the new system.

Question 2: What impacts does the performance carry to the workplace?

Studies show a strong relation between performance management and the workplace. Since the
workplace seems to be sensitive toward the effects of the whole process of performance
management. Workplace can be either influenced directly or indirectly as well as negatively or
positively. The performance appraisal that is a part of performance management is enough to
reflect catastrophic impacts to the organization if it is managed badly. To enumerate this idea, it
54

is important to mention that performance appraisal have an effect on the organization from
several area. PA influences directly the productivity of the organization. This by turn is linked
with the behaviour of the employee. Exceedingly if the employees are not satisfied, bad
performance may arise this by turn lead to insufficient productivity. Which reflects bad quality
on both levels whether on management level or on services level. This may lead to a decline in
the market share that is a result of unsatisfying customer needs, through which the competitors
may catch up the opportunity to challenge the company. In addition, low quality in production
and services does not only reflect minimizing profit it also leads to affecting negatively the
supply chain of the production. In other meaning, losing customers may lead to withdraw strong
supplier that can be a result of a large decline in the market. On the contrary, performance
appraisal can carry positive impacts on the work place translated firstly by increasing revenues
that result from increasing productivity which is a result of superior behaviour. This leads to
gaining competitive advantage over rivals resulting in lead the market that by turn reflects in
empowering the supply chain. Performance appraisal affects the hospital workplace as follows:

Improve performance throughout the organization due to:

- Increase sense of cohesiveness and loyalty.
- Managers are better equipped to use their leadership skills and to develop their
staff.
- Effective communication of organizations objectives and values.

Improve overview of tasks performed by each member of a group.

Identify areas for improvement.

Create and maintain culture for continuous improvement.

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Chapter 12 Performance appraisal and training and development

Training and development (T&D) is essential factor in developing human capabilities. T&D is a
function of human resource management concerned with organizational activity aimed to
enhance the performance of employees and organization. It can be ongoing educational activities
within an organization designed to enhance the fulfillment and performance of employees.
Training and development programs include a variety of educational techniques. The main
purpose from training and development in any human resources department is to adopt change
by developing skills. T&D is the upgrading of an employees skill and capabilities, which in turn
can bring about the desired change an agency is seeking. Kozlowski, et al. (2000) suggests an
approach to organization improvement and development based on enhancing the knowledge,
skills and attitudes or abilities of the workforce. It is important to understand that training in and
of itself cannot motivate a work force. However, it is an integral part of what is needed to
accomplish the long-term goals of the agency. In the light of T&D importance, there are many
reasons to provide training to employees:

To foster growth and development

To provide opportunities for employees to accept greater challenges

To aid employees in contributing to the achievement of department goals and the

agencys mission and vision

To build employee self-confidence and commitment

To produce a measurable change in performance

To bring about the desired changes that can solve a variety of problems

Indeed providing training to an employee benefits both the employer and employee by:

improving an employees performance

developing the group and team skills needed to achieve organizational goals

giving employees the needed skills and knowledge to complete assigned jobs, duties and
tasks

motivating employees to achieve higher standards

increasing overall efficiency

56

improving customer service, which leads to customer satisfaction

preparing employees for promotional opportunities

decreasing employee turnover, which reduces down time

enhancing employee morale, motivation, and creativity

enabling managers to reach unit goals and objectives

giving employees the tools needed to analyze interpersonal and situational factors that
create obstacles to achieving high performance

However there are a numerous of methods to determine the type of training an employee need.
First, training can be identifying by a request from manager or employee. Employees usually are
the first who can recognize the need for further training they need. This need can result from the
assignment of a new task, technological changes, or just a realization that additional training
would result in a more efficient work product. Managers can assess the training needs for their
team while evaluating their performance through considering areas of weakness and how they
may overcome these weaknesses. An excellent time to determine training needs is when a
performance review is completed on employees. What additional training would be needed to
assist employees to meet or exceed job expectations? Based on the employees self-assessment
of identified strengths and improvement opportunities, an analysis should follow to determine
training that may be needed to improve overall work performance. Second, adoption for new
technology or even changing in processes and procedures or even changing or launching new
forms demands training. Thus employees may be assigned new duties or positions may be
restructured. Besides assigning new duties and responsibilities to employees, requires additional
training. Remember, the reason for providing training is to produce a change or provide support
so employees can reach their goals and objectives that should be aligned to organization goals
and objectives.
There is a strong link between performance appraisal and training and development. Hence the
performance appraisal may specify the training needs for each employee aforementioned.
Employee training and development activities are intended to improve performance.
Unfortunately, most training and development activities fail in this respect because they are
thrown at problems that are ill-defined are improperly identified. Since the point of both training
and development is to improve performance, it makes sense to use them together, so that the
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performance management process ends up telling you what kinds of training and development
will be most effective in any given situation. Correspondingly, performance appraisals can also
be used to develop training programs. So, if there is a pattern of employees underperforming in
certain areas, it could be that training in those areas is lacking. Further development of the
training program is needed. Areas where employees do well do not need to be re-evaluated or
adjusted, and can be models for programs in the future. As noticed performance appraisal rely
heavily on training and development. And many how discuss and analyze this issue. One of the
most efficient and familiar study is the performance potential matrix.

Performance potential matrix

Performance Potential Matrix (P.P.M.) consist of nine box model, is one of the most widely used
tools in succession planning and development. It can be a valuable tool for anyone who works in
talent management. This tool used to assess talent in organization along two parameters past
performance and future potential by categorizing talent employees into each of the nine boxes in
the matrix. This matrix enables to link the performance with the training system and reward
system. In addition the matrix aids in delivering training plans for developments.

Figure 7: Performance potential matrix

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Its purpose
The goal of this tool is to move employees from wherever they currently are in the 9-Box grid to
the upper right box. These movements are concern with developing skills and capabilities. That
results in improving performance. That by turn reflects enhancing organizational performance.
Taking in consideration, this can be linked with reward system which may add value to the
system. As you move to the upper right of the Nine-Box, actions become more strategic and farreaching as your succession plan begins to have a more direct impact on the goals and success of
your organization. Furthermore, the term performance in the matrix refers to sustained business
results demonstrated over time. Through which the organization's performance management
process is used to classify the talent pool into three categories: outstanding performance, good
performance, and poor performance. However potential means readiness, willingness, and the
ability to grow into a future job as determined by functional expertise, aspiration, required
competencies and learning agility. In other meaning, potential may include ability that stands for
the ability to involve capabilities of the employees in the workplace, besides engagement which
refers to level of commitment and loyalty to the work, in addition aspiration which is about the
desire and the degree of the handling challenges at work. Assessing potential and predicting
future performance is far more challenging than categorizing current performance. As with
performance, organizational decision makers are tasked with classifying their talent pool along
three dimensions: high potential (known as Hi-Pos), medium potential, and low potential.
Indeed to identify potential conduct some form of employee assessment on each member in the
talent pool. Important to mention, the needs of the employees differ from stage to stage and their
reactions and involvement in the dynamic environment. By which age may affects this changes
in needs for example.

Performance potential matrix framework

The performance potential matrix categorizes the employee to nine boxes. This categorizing
means developing nine plans, systems and procedures for each category. To illustrate the idea in
different way first we should define the nine boxes:

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Under Performer category refers employees who have poor performance, spotty track record
of delivering results, not considered ready, willing or able for future roles. Employees in this
dark corner of the performance potential matrix are often said to be icebergs not because you
can only see the tip of their potential, but because they are capable of sinking your organization.
An often overlooked component of succession planning is the ability to recognize a failure of the
system and people with no potential and below average performance who need to be moved
rather quickly to another box, or be moved out of the organization. Regrettably, there is often an
investment of more training resources rather than fewer in dealing with this category of
employees.

Effective category groups employees who have a value but narrow and non-transferable skill set
and limited to current role but they have solid performance and comfortable with where they are.
The ideal path for effective employees is to move up/out. The Effective category refers to those
performing acceptably and possesses limited potential for future growth. Depending on short
term and long term business priorities and organization goals, sometimes you may want to leave
this category alone, they may not exceed expectations but they are steadily reliable. It is
recommended though to push to formulate action plans for this group to improve performance
and/or enhance the limited potential they display.

Dilemma category classify employees with low or no demonstrated track record, future
potential is unclear and may be trying hard but struggling to achieve results, where the match
between the role and their skills is questionable. These are employees who have some potential
to be great, yet are not high performers. These Dilemmas pose unique challenges for your
succession plan. If they are new to the organization, consider reviewing their on-boarding
experience.

Was

something

poorly

communicated

during

orientation?

Is

there

misunderstanding about job expectations? Are there disconnects between recruitment

expectations and the realities of the role? New members to an organization often find themselves
in this particular box because something has gone wrong. Alternatively, you may have a

60

Dilemma who is rudderless in your organization. Seek out root causes for the performance issues
and encourage the employee to develop and own an action plan for remedying deficits.

Trusted Professional category sort employees who are strong performance, recognized for a
valued, unique, and expert skill set, can exceed expectations and can serve as seasoned advisors.
Thought leaders who typically enjoy their area of expertise and do not typically desire upward
mobility. These individuals are exceeding expectations along performance but failing along
potential. They are high performing employee considered the backbones in organization and
possess limited potential. These are the high value experts that are the attended people when
there are problems. They are, currently, performing extremely well in their current role and the
classic mistake in management practice has been to promote these individuals.

Enigma category clusters employees who highly driven, ambitiously aspire to move swiftly
upward in the organization, junior to the organization or new to the industry and do not have a
fully demonstrated track record of performance. These individuals are exceeding expectations
along potential but failing along performance. They are the problem children who are high
potentials (hi-pos) that are not performing up to standard. These Enigmas are much harder to
crack they are employees who have all the potential for greatness, yet fail to meet expectations.

Core employee category sort employees who are considered backbone to success of business
and team, well placed with opportunity to grow within current role, strong performance and may
exceed expectations at times.

High impact performer category arrange employee who have very high performance and
consistent results, worry-free candidate for future growth and development. Their potential may
be limited by their global mobility or own aspiration. The High impact performer category shows
some potential for having a greater impact. Often, it's a matter of readiness that prevents them

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from moving into those larger roles. Accordingly, the focus should be on development and
preparation for longer term opportunities.

Growth Employee category categorize employee who are considered high growth employees,
high capacity and ambition to expand role, scope, and complexity. Solid performance most of
time and at times exceed goals is a description of those who belongs to this category. These are
employees of your talent pool who may not have achieved in performance what they reveal in
potential. The key is to focus on competency gaps and remove performance barriers in an effort
to shift this group from good to great.

Future leader category combines the best of the best, exceptional performance employee who
deliver consistent and sustainable results possess enormous drive for achievement and ambition.
These employees are realizing their full potential while performing at the peak. They are well
equipped to take on any assignment and poised to transform your organization into a better
version of itself. But caution must be taken with this group; for they can easily become bored and
to your dismay, may be lured elsewhere.

Figure 8: nine boxes of performance potential matrix

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After defining each category, the classification can be easily adopted based on the result of the
performance appraisal. This is the most important part in the performance management.
Grouping employees is not the only step needed. But it goes beyond to informing how
employees are being classified, and the important is informing the managers with the plans and
the compensation system in addition to the career path that is separate from the path of the
matrix. Plans include training plans as well as project plans. In the same sequence, essential point
must be mentioned, characterized with how the training plans can be achieved. Moreover
employees must be aware for the reason of classification and this point is being modified in the
performance appraisal while providing constructive feedbacks, which by turn lighten the
weakness area and mentions the training needed to develop skills and capabilities. In addition to
brighten the road for the employee by clarifying that improvement in the performance enhance
both career path and performance potential path. Important to illustrate, that the career path is
completely different from the path of performance potential matrix. Since the last related with
the behavior and the potential of the employee and the first is linked with promotion. For more
clarification, employee at the end of the year may move up or down in the matrix in the same
position regarding the reasons. But if he achieve promotion this cannot translate upward in the
matrix of performance potential.
The performance potential matrix is tool that classifies the employees in order to generate the
suitable training plan for the right employee. In addition, it can aids in delivering the suitable
rewards and compensation system for each category. This shows that managers can also specify
a budget of benefits or even a salary scale or each classification that may differ from other.

Tips for dealing with each category

Under Performer Category: Find a more appropriate assignment for them. You may be able to
facilitate placement of the person into more appropriate roles with more suitable direction,
purpose, or opportunities. If you want to retain the person, consider taking a performance
management approach instead of a developmental approach; an improvement action plan rather
than a tailored developmental plan. Coaching and feedback should be remedial. Sometimes
employees in this category may be "stuck" due to issues they perceive to be beyond their control.

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As such, you should counsel, build trust and try to understand the issues. Clear roadblocks and
set them on the path toward improved performance and perhaps improved potential. In a few
cases, your inquiry may reveal hidden potential toward a path different from the one prescribed
by their current role. Uncovering these disconnects often leads to a new understanding of what
role the employee should be in. The under performer in this case is a mismatch and needs to be
reassigned. An often unforeseen consequence of not dealing with under performers is that they
can form a sort of roadblock in the organization, keeping others from realizing their full
potential. Because of this, it is important to identify and remove the blockers, poor performers
with a limited future who stand in the way of potential stars.

Effective Category: Put the ball in their court rather than invest development dollars in people
with limited potential. If, after working their action plan, the employee can move up, then you've
achieved success with a minimal outlay of resources. Perhaps other roles exist in the
organization where they can continue to perform, but do so with more potential for the future.
Sometimes employees in this category may come to the realization that being OK in a role is
not enough for them and will seek more promising opportunities elsewhere.

Dilemma Category: Dilemmas benefit greatly from a peer mentor who can guide them through
the predicament they are facing. Assessing the role match is essential and key master. If
addressing performance barriers and action planning do not work to move them up in the nine
boxes, then moving them out to a different role is another option. The Up or Outs in the
organization form heavily tactical portions of the nine boxes; the impact and scope of these
decisions tend to be smaller. Actions taken in the lower left three boxes should be focused on
employee efforts to change and move up or out.

Trusted professional category: Encourage their retention as a key asset in their present role.
Watch for signs of boredom, lack of challenge and other retention risks. Provide recognition and
rewards for their accomplishments. Look for ways to publicly acknowledge their efforts. Have
them take the lead on presenting information or explaining processes to others (corporate
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presentations, participation at external conferences, etc.). Provide them with opportunities to

develop in places where they can grow a deeper and broader skill set and knowledge base.
Utilize their assets toward teaching or coaching others.

Enigmas Category: Find the root cause of the failures in performance and collaborate on a
development plan to address identified deficiencies. If the issue is more about poor fit than role
failure, consider moving them to different roles in the organization. After you have taken actions
to address any issues, review the assessment you did on their potential. Are these employees
truly "hi-pos" in your organization? Make their developmental plan contingent on performance
improvement. Include efforts to give them the technical skills they need to perform at the
required level. Ensure that any investment in development only occurs after measurable
improvements are made. If these employees do not respond, consider moving them to another
role or out of the organization. One another action for the above two categories that you can take
is asking a trusted professional to mentor and coach an Enigma. Explore the possibility of
attaching these employees to higher performing members of your organization, and more the
better if those mentors are also "hi-pos." Both these categories offer tremendous opportunities for
your organization if they can be directed back toward the stream of your succession plan. When
that happens, you can really start to focus your development dollars on the creation of the gifted
talent that will move your organization to greatness.

Core Employee Category: Provide coaching and training that builds both technical expertise
and leadership skill. Give them short-term assignments or projects that expose them to the types
of challenges they'll face at the next level; gauge their reaction to the experience. Praise their
accomplishments in the present role and build trust with them so they will let you know when
they are ready to make the next move. Ensure that they know they are valued, listen to their ideas
and monitor their behavior for signs of complacence or dissatisfaction.

High Impact Performer: Look to provide them with stretch assignments projects that may
require them to do things they do not already know how to do or necessitate skills and abilities
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that are beyond their current role. Challenge them to be high performers in a higher profile role.
Find a mentor for them that is at least one level up on your organization chart. Make short-term
job rotations readily available to them; give them a chance to operate in a completely new role
and assess reactions to those experiences
Growth Employee Category: Challenge them with a start-up assignment where they have
responsibility for creating a new process or opening a new market; make it a high profile activity
that no one else has done. Consider matching them to a higher performing mentor who can help
them along the path. For more junior members, provide assignments where they have a chance to
step in and resolve conflicts or inefficiencies in a problem area, or task them to do a lean up in an
area of disrepair. Make short-term job rotations or job swaps readily available to them; give them
a chance to operate in a completely new role and assess reactions to those experiences.

Future Leaders Category: Find ways to make them shine. Give them challenging, stretch
assignments doing things nobody else has done. These employees should be tasked with high
stakes, high-profile assignments. Allocate them for start-ups or spin-offs where they will add
even more tools to their arsenal while helping to take your organization in new directions.
Identify parts of your organization that may need financial or operational turnaround and assign a
Future Leader to transform performance. Grant them access to exclusive training opportunities,
send them to national or international conferences, and appoint them to high-profile committees
in the organization. Consider the formation of a cross-functional association among future leader
that serves to build relationships and provide support to all of your key organizational players.
Allow them privileged access and exposure to the CEO, senior leaders and the governance
structures in your organization. Provide them with shadowing opportunities where they can
unlock from their present role and walk with another in a role they may hold in the future.

Assessing needs

Gathering a team of top performers and evaluating them against the essential criteria for
organizational leaders will set the stage for building out an explicit succession plan for each key

66

role. In doing so, the organization should plan for the institutions short and long term needs.
Planning for the short term involves identifying individuals who would be ready to step into key
roles with minimal additional development necessary (typically 6 months to 1 year). These
individuals possess most, if not all the identified competencies needed to succeed in a given
role. Even if the organization does not foresee a need for short-term transitions, it is valuable to
identify these potential replacements for key roles. It is hard to predict when a replacement might
be needed, and being prepared is better than being caught off guard. In the same sequence,
planning for the long-term needs of the organization involves Identifying pools of talent that
could potentially fill key roles with additional development. These individuals are strong
performers who show great potential. By which organization must cultivate and train them in
order to establish a reliable and growing base of talent from which to recruit for important roles
within the organization as will be needed in the future. Though succession planning is a targeted
process crafted around the most crucial organizational positions, when planning for the longterm it is important to evaluate talent at all levels of the organizational hierarchy. Identifying
high potentials early and working to support their development as soon as they begin to stand out
as top performers will help build their loyalty to the organization and will strengthen the overall
capacity of the organization along the way. Tracking the top potential employees for both
short and long-term organizational needs builds accountability and allows for consistent
evaluation of the talent pool as well as reflection on their development progress.

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Chapter 13 Conclusion and recommendation

In the final analysis of the thesis, a summary of important points can be realized. Performance
appraisal is a part of a whole performance management system. By which the way of
management is crucial. Hence it affects the performance of the organization. It is very important
to keep in mind the importance to adopting effective performance appraisal by avoiding the most
common errors in order to guarantee fairness between employees. In a result, performance
appraisal to be efficient and effective it is important to be linked with compensation and merit
system. The thesis includes a theoretical study about performance management at Bahman
hospital. And in conclusion, the performance management at Bahman hospital process several
changes till they adopt BARS technique, in an aim to maintain employees through providing the
most accurate motivation system linked with the suitable training plan.
I recommend adopting the 360 degree feedback. That is more accurate technique by comparison
with other technique. Obviously this technique proves its effectiveness in declining bias situation
in the evaluation. In addition performance potential matrix tool is high recommended to be adopt
in categorizing and classifying the employees while assessment and delivering plans. Since it is
the most appropriate tool based on practice that aid in assessing the needs for training to
improve. Finally, I strongly recommend that 360 degree appropriate to be linked and mingled
with performance potential matrix as well as to motivation and compensation system.

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