Download - Cathay Pacific
Strategic Human Resource Management Scenarios: Cathay
Pacific
I. Cathay Pacific Airways
Cathay Pacific Airways is a Hong-Kong based airline that has a comprehensive
network of flights to over 90 destinations around the world. It is considered as one of Asia’s
biggest and most regarded airlines. The company was founded in 1946 in Hong Kong. The
company since then has continued to develop Hong Kong’s airline industry and supported
Hong Kong’s position as a major transportation centre in the region. The airline company
was founded by (American) and (Australian). Cathay Pacific was founded in Hong Kong on
the 24th of September, 1946.
Cathay pacific is one of the most well known airline company in the world. It
competes with different airline companies for prestige and notoriety in the airline industry.
Recently the company underwent a change in image and strategies to counter the problems its
industry has. It shifted the focus of its strategy into making sure that there will be an increase
of clients who demanded their services, it also made sure that the services and technologies
they use can be competitive to other airlines company. In 2006 the company was acquired
by Dragon air but it still continues to operate in its own brand. This does not hamper it from
continuously trying to provide the best service to its clients. This shows that with proper
strategies used, a company can stay in the industry for a longer period of time.
II. Environmental Analysis
Internal Environment: Strategic Capabilities
1. Human Resources/ Human Capital
Human resources or human capital is the intangible resources of abilities, effort, and
time that workers bring to invest in their work (1999). The people at Cathay Pacific are the
major contributors of strategic capability to the company. One of the advantages of Cathay
Pacific over its competitors is the quality of service that the staffs provide to its customers.
Service has a big impact on the customers’ perceptions about the company’s product.
Because of the importance of its people, Cathay pacific formulated an employee development
strategy through proper and effective training. This strategy is expected to strengthen Cathay
Pacific’s position in the marketplace. Employee development can be an essential ingredient
of an organization’s competitive advantage. Employee development includes all of the
education and training that organizations might invest in their employees such as training
employees to perform effectively in their current jobs, orienting employees to the workplace,
developing them for advanced positions or programs, and building organizational capability
for future success. Cathay Pacific promotes a working environment wherein the employees
are free to act in both the company’s and passengers’ best interests.
2. Organizational Processes and Culture– Service Straight from the Heart
Cathay Pacific believes that its business is selling experience to the passengers. The
emotional bonding with the passengers is the key to building loyalty and one of the major
factors that encourage the customers to repurchase the airline products. The biggest
difference of Cathay Pacific to its competitors is its people. The employees at Cathay Pacific
are the ones who bridge the gap between product development and customer expectation. The
passengers in Cathay Pacific always feel welcomed, appreciated and reassured. Passengers
that travel with Cathay Pacific know that they are in good hands. Service Straight from the
Heart is a programme that aims to develop cultural change within the airline focused on
improving customer service. Service is the principal means of differentiating between airlines
and is highly influential in customer choice. Cathay Pacific has expressed within its
programme its understanding of the importance of the people within the organization and its
recognition of the contribution of those people to its success.
3. Customer Retention and Loyalty
Customer retention and loyalty are among the primary causes of Cathay Pacific’s
success. Customer service is a very vital aspect of the company. Cathay Pacific maintains its
leader’s status in the airline industry through its constant improvement in service. The
company continuously makes effort to develop its self-help strategy in order to encourage
growth among its employees. Self-help benefits are seen to make career management, career
planning including blended learning opportunities possible within the company. The
development program aims to equip the employees with the necessary knowledge and skills
to fulfil their current positions as well as prepare them for future career advancements. One of
the most significant improvements that Cathay Pacific employs is incorporating human touch
in its high quality, reliable, and predictable service. The company wants to achieve growth
through sustained, profitable growth. The company is committed to employee development
and continues to enhance service and equip the employees with the ability to control the
means of increasing the company’s productivity, reduce costs and ensure customer loyalty by
focusing on the areas that matter most to the customers. Emerging business needs and
organizational challenges inevitably require improved performance from employees.
Providing learning and development that are focused on critical performance improvement
needs is one of the methods by which managers continuously improve organizational
effectiveness. A good ED system will generate substantial opportunity for performance
improvement and serve to remedy deficient performance. Employee development also has an
impact on employee morale. Cathay Pacific needs to make its employees feel important and
show concern for the personal health and welfare of the employees. The employee
development of Cathay Pacific helps employees to define career opportunities, assess career
choices and clarify career paths and milestones to help the employees plan their
advancement. The employee development of Cathay Pacific provides learning linked to
career growth that will increase the likelihood that employees will remain satisfied and that
competent people will be available to fill new openings, reducing the costs of external
recruitment and selection.
Key Internal Strength: Human Resources
One of the keys to successful competition in the global market is the effective
deployment of human resources to achieve strategic capability and competitive advantage.
Human resources as an internal resource of a firm are one of the sources of strategic
capability. Human resources are among the top contributors to Cathay Pacific’s strategic
capability. Effective management of an organization’s human resources according to (2002)
is a major source of competitive advantage and may even be the single most important
determinant of an organization’s performance over the long term.
Key Internal Weakness: Inadequate Employee Performance Management
Performance management helps organizations sustain or improve performance,
promote greater consistency in performance evaluation, and provide high quality feedback.
Performance management helps organizations link evaluations to employee development and
to a merit-based compensation plan. Moreover, it forms a basis for coaching and counselling,
permits individual input during the evaluation process, and allows for a blend of quantitative
and qualitative evaluations. Performance management provides a process that helps manage
employee expectations of job demands and factors that reveal how well the job is done (1991
cited in and 2000). Performance management is the integration of performance appraisal
systems with broader HRM systems as a means of aligning employees’ work behaviours with
the organization’s goals. A performance management system consists of the processes used
to identify, encourage, measure, evaluate, improve, and reward employee performance at
work ().
The employee performance management process that Cathay Pacific uses is not
adequate to support the company’s goals. It does not encourage the employees to take
responsibility and does not help them to improve. The system that the company uses creates a
standardized process. However, this process also supports wrong values around performance
management.
External Environmental Analysis: PEST
Political
One of the external factors that have big effects on the operation of Cathay Pacific is
government regulations and policies. Because Cathay Pacific operates worldwide, it is greatly
affected by different regulations and policies. The company continuously asses the political
environment and prepares itself for any possible problems and issues concerning the political
sector.
Economic
Economic factors also affect the company. Cathay Pacific was greatly affected by the
Asian Economic crisis. For the past years Hong Kong experience economic growth as well as
other Asian countries. The growth of other Asian economies pushed Cathay Pacific to expand
its operations. Internally, the company is doing well. It constantly assesses the economies of
the countries where it operates as economy affects the decision-making process and buyer
behaviour of the customers.
Social
The company makes sure that the services it offers and the technology it uses to
tender its services will be accepted by the public. The company does not authorize the
delivery of some services that will cause outbursts or complains from different group in the
society. The company makes sure that it has a very good relationship with different sector in
the society. The company also engages in social activities that tend to develop a better
relationship between it and the clients.
Technological
The company offered new innovations in its technological aspect and introduced new
concepts with regards to its industry. Since technology rapidly changes the company makes
sure they are updated to what is happening and they can adjust to these changes. The
company makes sure that the services they offer are updated with regards to what technology
is used to tender their services. If other companies use new technologies to provide services,
the company has the technology capable of competing with such technologies.
III. Future Scenarios
Optimistic Future Scenario for Cathay Pacific: Mergers and Acquisitions
Mergers and acquisitions have become one of the most important corporate-level
strategies in the new millennium. Merger and acquisition strategies are important to firm
growth and success in the 21st century. Cathay Pacific strengthened its position as Hong
Kong’s top home carrier in 2006 by integrating Dragonair and enhancing its partnership with
Air China. Expansion (Mergers and Acquisitions) caused by stable economy, maintained
competitive advantage, technological innovations and employee loyalty. If business will
continue to do well for Cathay Pacific, further expansion through mergers and acquisition is
expected. Moreover, the flourishing Asian economy is expected to contribute to the growth of
the company. Through M&As Cathay Pacific aims to acquire excellent businesses and
talented people.
Pessimistic Future Scenario for Cathay Pacific: Downsizing
Downsizing caused by unstable economy and emergence and growth of budget
airlines. Cathay Pacific remains among the most profitable airlines in Asia. As of the moment
the company is not affected by the emergence of low-cost carriers in the Asian region.
However, if Asia is to experience economic crisis like what happened in 1997, Cathay Pacific
will be severely affected. The threats posed by the increasing numbers of budget airlines in
Asia and elsewhere will become a serious problem in the future. Because of these negative
scenarios, Cathay Pacific will be forced to downsize in order to cut cost.
IV. Strategic Human Resource Management
Mergers and Acquisitions
In an optimistic scenario, Cathay Pacific is expected to continue to grow. To support
growth, Cathay Pacific is expected to restructure. Mergers and acquisitions are seen as
strategies that will help Cathay Pacific improve its services and acquire competitive
advantage. Mergers and acquisitions are also seen as an expansion strategy. Human resources
or the company’s people are one source of sustainable competitive advantage. In a fast-
changing environment where technological innovations and other strategies can be copied, it
is the human resources that bring a sustainable competitive advantage. During restructuring it
is important to establish HRM policies and practices that will help create and sustain a
climate of trust. Some of the issues that arise in mergers and acquisitions are HRM planning,
recruitment and selection. The HRM function focuses its activities on ways to help the
organization achieve corporate goals like growing operations through recruiting and hiring
employees, orienting and training them, and making their initial and future job assignments.
Strategic HRM Planning
Human resource management needs to be closely integrated with managerial planning
and decision-making. A closer integration between top management’s goals and HRM
practices helps to elicit and reward types of behaviour necessary for achieving an
organization’s strategy. Strategic management of human resources includes HRM planning.
The planning process involves forecasting HRM needs and developing programs to ensure
that the right numbers and types of individuals are available at the right time and place. Such
information enables the organization to plan its recruitment, selection, and training strategies.
It is important that the management value human resources as a means of increasing
productivity. The HR managers must be involved in the strategic management process. The
HRM concerns must be integrated into the decision-making at the executive level. This will
help Cathay Pacific deal effectively to changes in the industry as well as the changes in the
business environment. Strategic planning leads to informed, purposeful actions. By
articulating a clear common vision of why the organization exists, now and in the future, a
strategic plan provides direction and a cornerstone for making important HRM decisions.
Planning HRM activities expands awareness of possibilities, identifies strengths and
weaknesses, reveals opportunities, and points to the need to evaluate the probable impact of
internal and external forces.
Recruitment and Selection
Once HRM needs are determined, the next step is recruiting employees. It is
important that Cathay Pacific hire the most qualified people. Not only is it important to find
the most talented applicants, but it is equally important to be viewed as the employer of
choice with a strong value proposition. Identifying the right skills necessitates knowing not
just the current culture and structure of the organization, but much more importantly, what
the future of the organization needs to be. Selection of key talent and key employees begins
with an understanding of the vision and the purpose of the organization. Recruitment and
selection is critical to the success of strategy implementation. During mergers and
acquisitions, it is vital to recruit and select applicants that will fit the new organizational
environment and will quickly integrate with the new organizational culture.
Downsizing
According to (2004) downsizing is commonly the result of a broader process of
organizational restructuring, which refers to planned changes in a firm’s organizational
structure that affect its use of people. Such restructuring often results in workforce reductions
that may be accomplished through mechanisms such as attrition, early retirements, voluntary
severance agreements, or layoffs.
Effects of Downsizing to Employees
Downsizing and other restructuring strategies such as takeovers and mergers and
acquisitions have adverse effects on employee attitudes and beliefs. Restructuring is seen by
millions of employees as a breach of the ‘psychological contract’ between them and the
employer ( 2004). This breach of psychological contract leads to a rise in stress and decrease
in satisfaction, commitment, intentions to stay and perceptions of an organization’s
trustworthiness, honesty, and caring about its employees.
Managing Lay-Offs: Selection
The management needs to determine the criteria for selecting which jobs will be
eliminated. Depending in part on the corporate culture, the criteria used frequently are a
combination of job performance evaluations, the type of work remaining to be performed,
and seniority. These factors need to be as objective as possible in order to protect the
organization from legal and governmental challenges. Employees leaving and remaining
must perceive that management was fair when determining which employees will be let go
and which ones will stay. The criteria that the organization can use are:
o Job Performance – job performance implies that the organization has fairly,
objectively, and systematically evaluated the contributions of employees and selected
those individuals for dismissal who are least effective.
o Work Remaining to be Performed – another selection factor is the work remaining to
be performed.
o Seniority – aside from employees covered by union contracts where seniority is the
primary determinate of layoff selection, length of service often is a factor in
downsizing ( 2003).
Employee Retention
Employee retention is one of the biggest issues in downsizing. Because employees
feel betrayed, they lost motivation and employee loyalty diminishes. It is important to
identify the most valued employees first. Typical methods for conducting these assessments
include interviewing and testing techniques, use of outside consultants or psychologists, or
other strategies. Retaining valued employees is important.
Retention Tools
o Focus Groups – are discussions with 8 to 10 employees with a facilitator in order to
understand employee complaints and concerns so that management can take quick
action
o Exit Interviews – are individual discussions with departing employees so that
management understands very clearly the reason for their departure
o Retention Bonuses/Contracts – contracts and retention bonuses can be attractive to
retain key employees and management level people
o Rotational Assignments – can be used to enrich an existing assignment
o New Hire Orientation – can be used to infuse the culture of the new organization by
communicating the core values through a common orientation program in which
various executives are invited to speak to groups of new hires on a regular basis ( and
2001)
References
Performance Management
I. Performance Management
According to (2002), performance management is the integration of performance
appraisal systems with broader HRM systems as a means of aligning employees’ work
behaviors with the organization’s goals. A performance management system consists of the
processes used to identify, encourage, measure, evaluate, improve, and reward employee
performance at work (). Performance management is the process of identifying, evaluating
and developing the work performance employees in the organization, so that organizational
goals and objectives are more effectively achieved, while at the same time benefiting
employees in terms of recognition, receiving feedback, catering for work needs and offering
career guidance ( 2003).
Performance Management Process
Performance Planning
A job description indicates the role of an employee within the organization and what
results they are expected to achieve on the job. Ideally, job descriptions present a clear
picture of employees’ roles, responsibilities, required outputs, and standards used to judge the
quality of their performance ( and 2000).
Performance planning is the process where in goals are set. Goal-setting should be
done by the manager and the employee. To create a good performance plan, employees need
to know where they are now (the current state) and where they want to go (the goal state).
Goals should be measurable and achievable. The plan should include process and support
during the execution phase to help managers and employees do the things necessary to have
the plan succeed. This includes monitoring progress, identifying and addressing problems,
and helping employees stay on their edge to maximize their growth and their performance.
The plan should be modifiable during the execution phase to respond to changing
circumstances ( 2000).
Performance Review/Performance Appraisal
Performance appraisal is the process by which an employee’s contribution to the
organization during a specific period of time is assessed (, 2002).
Performance appraisal is integral to the successful operation of most organizations. During
this process, employees are evaluated formally and informally to determine the nature of their
contributions to the organization. Appraisal occurs during time periods and in meetings that
are scheduled to produce reasoned consideration of contributions, but it also occurs
informally as employee contributions are observed, or when an evaluation is brought to the
attention of others (, 1993). Performance appraisal is treated as an evaluation and
development tool, as well as a formal legal document. Appraisals review past performance –
emphasizing positive accomplishments as well as deficiencies and drafting detailed plans for
future development. The performance evaluation also serves a vital organizational need by
providing the documentation necessary for any personnel action that might be taken against
an employee (, 2002). Performance management typically relies heavily upon performance
appraisals but performance management is a broader and more encompassing process and is
the ultimate goal of performance appraisal activities (, 2002).
II. Performance Management in Oman International Container
Terminal
Weaknesses of the Company’s Performance Planning (Job Description)
1. Complex and difficult to understand
The job descriptions are so complex. The lengthy statements of duties, authorities,
responsibilities and accountabilities are confusing not only for the employees but for the
Managers as well.
2. Inaccurate Information
There are so many unimportant tasks and duties that are stated in the job description that
makes it hard to understand. The employees also feel that the job descriptions set
unachievable goals and exaggerated job responsibilities.
3. Imposed and inflexible
The job descriptions are often written and imposed on job holders from above. The
jobholders do not have any participation in the performance planning and the creation of job
description. Because the job descriptions are made at the top of the organizational hierarchy
without any input from the job holders, they are often inflexible and not up-to-date.
Current Performance Appraisal Tool: Rating Scale
The company uses a rating scale in appraising employee performance. The rating
scale is among the widely used method of appraising the performance. The method is simple
and easy to use. Rating scales according to (2003) are readily adaptable to suit specific jobs
and organizations, and there are virtually no limit to the aspects of person or performance that
can be rated. In simple terms, rating scales require the reviewer to rate the employee’s
performance in an absolute sense, not in comparison to other employees. Employees can be
rated on virtually any trait or characteristic or dimension of performance or behavior. The
characteristics to be assessed are chosen and each step on the scale is given a brief description
in terms of quantity and quality.
Problems with Rating Scales
Rating scales are among the popular performance appraisal tools. They are easily to
construct, use and understand. However, there are significant problems in using rating scales.
1. Ratings are sometimes subjective.
2. Not all the characteristics of a job are equally important and certain characteristics are
more important for some jobs than for others.
3. Ratings can be given easily enough for individual characteristics or dimensions, but it is
more difficult to turn into a valid or useful overall assessment.
The performance appraisal tool that the organization uses is simple and easy to
understand which is good because performance appraisal should be like that. However, it also
has limitations and weaknesses.
Sample Performance Appraisal Form: Rating Scale
Performance Ratings
5 Points – Consistently Exceeds Expectations
o Employee displays at all time, without exception, a consistently high level of factor
related skills, abilities, initiative, and productivity.
o All assignments/responsibilities are completed beyond the level of expectation.
o Initiative and self-direction are characteristic.
4 Points – Often Exceeds Expectations
o Employee displays a high level of factor related skills, abilities, initiative and
productivity, exceeding requirements in some areas, but not consistently or not
without exception.
3 Points – Meets Expectations
o Employee displays and maintains an effective and consistent level of performance of
the job factor under review. Work output regularly achieves desired or required
outcomes or expectations.
o Problems and errors are reported and corrected quickly.
2 Points – Some Improvement Needed
o Employee at this level displays inconsistency in the performance of the job factor
under review and output frequently falls beyond acceptable levels.
o Tasks may be significantly late at times or incomplete, with serious or potentially
serious consequences.
1 Point – Major Improvement Needed
o Work output is consistently low, regularly fails to meet required outcomes, and error
rate is high requiring repetition of duty or completion by others.
o The employee may require constant supervision, and show an indifference to job
responsibilities.
Performance Factors Rating
5 4 3 2 1
Quality of Work
Productivity
Knowledge of the Job
Adaptability
Dependability
Initiative and Resourcefulness
Judgment and Policy Compliance
Interpersonal Relations
Attendance
Safety and Security
Weaknesses in the Performance Review (Performance Appraisal)
1. Personal Bias
Perhaps the biggest problem in performance appraisal that our organization
encounters is the tendency of the manager to be bias. I think this is due to lack of proper
training on the part of the managers. The performance review process gives more emphasis
on the personality of the employee. According to and (2001) an evaluator’s personal feeling
about the person being appraised can significantly affect the result of a performance
appraisal. Appearance, mode of dress, hairstyles, mannerisms, and a host of other factors may
cause an evaluator to like or dislike particular employees and produce negatively or
positively skewed appraisals.
2. Lack of Appraiser Training
The manager is the one who appraise or review employee performance. Presently,
there is little training in how to evaluate performance and conduct performance appraisal
interviews. The lack of training among appraisers has led to other difficulties and problems.
The organization at present do not give much attention to training the managers in performing
performance appraisal.
3. Insufficient Information
Insufficient, inadequate and incorrect information is also a problem in the
performance appraisal. Standards and processes in the performance appraisal are not well-
defined. Also, the employees do not fully understand the purpose of the performance
appraisal aside from ‘judging or measuring’ their contributions. The managers do not clearly
communicate the importance of performance appraisal in identifying their development needs
and their level of compensation and rewards. The performance appraiser (manager) fails to
effectively document employee performance. The documentation is inadequate to support
accurate assessment of employee accomplishments.
4. Lack of Objectivity
The organization uses a rating scale in reviewing employee performance. The rating
scale that the organization is using measures personality traits or characteristics such as
attitude, loyalty, appearance, resourcefulness and personal conduct that are not only difficult
to measure, but are also open to completely subjective interpretation.
I think the main problem in the performance appraisal that the company is using is the
lack of appraiser training. Because the appraisers are not properly trained and educated they
fail to perform their responsibility effectively. Many problems arise because of the
inadequate training. Another issue is that the performance appraisal happens only twice a
year. I think that in order for a performance appraisal to be effective, it should happen on a
daily basis. It should be continuous.
III. Performance Management in Hewlett Packard
Hewlett-Packard (HP) is a technology solutions provider to consumers, businesses
and institutions globally. The company’s offerings span from IT infrastructure, personal
computing and access devices, global services and imaging and printing for consumers,
enterprises and small and medium businesses.
The HP Way
The HP values are the centrepiece of the Hewlett-Packard Way. The HP values are
not uniquely different from most large companies. What sets the HP values and the HP way
apart is the seriousness with which values are treated as management tool. The central
element in all activities in Hewlett Packard is the ‘HP Way’, a set of beliefs, objectives and
guiding principles, and described by as the policies and actions that flow from the belief that
men and women want to do a good job, a creative job, and that if they are provided with the
proper environment they will do so. It is the tradition of treating every individual with respect
and recognizing personal achievements ( and 1982 cited in 2001). The HP Way is probably
best illustrated from a number of words and concepts. These are love of the product, love of
the customer, innovation, quality, open communication, commitment to people, trust,
confidence, informality, teamwork, sharing, openness, autonomy, responsibility ( 2001).
Performance Appraisal at Hewlett Packard
The activities of HP employees were guided by a comprehensive system of
management by objectives (MBO). It began with the establishment of long- and short-range
objectives derived from company and group objectives. At each company level, overall
objectives were communicated and subunit objectives were negotiated. Objectives were goals
and provided much freedom in how the goals would be accomplished. The goals were made
to interconnect horizontally and vertically throughout HP. The entire MBO process was part
of annual tactical and strategic planning that defined a job’s objective and major
responsibilities and performance measures. Although MBO was initiated from the top, the
accustomed nature of the MBO planning cycle provided ample opportunity for individual
initiative and influence in setting overall objectives. Employees were expected to suggest
ways they could help attain the unit’s goals in order to create individual accountability ().
In an MBO system an employee meets with his or her manager, and they collectively
set goals for the employer for a coming period of time. These goals are usually quantifiable,
they are objective, and they are usually written. During the specified timeframe, the manager
and the employee periodically meet to review the employee’s performance relative to
attaining goals. At the end of the specified period, a more formal meeting is scheduled in
which the manager and employee assess the actual degree of goal attainment. The degree of
goal attainment then becomes the individual’s performance appraisal (, 2002).
HP combined MBO with the paired-comparison approach. The paired comparison
approach, according to (2002), measures the relative performance of employees in a group.
A manager lists the employees in the group and then ranks them (). HP managers invested
considerable time and energy ensuring that an individual’s pay level within their salary range
reflected their performance when compared to others. Performance was judged by the
immediate supervisor but adjusted based on a ranking process, conducted by managers in
face-to-face meetings, which compared employees in different departments with similar
responsibilities.
IV: Comparison and Recommendations
Hewlett-Packard is famous because of its revolutionary management strategy. The HP
way was considered an innovation not only in management but also in managing
performance. Based on the information that I gathered, I can say that the HP has an effective
and efficient performance management system. The performance management strategy is
aligned with the overall strategy of the company.
Goal Setting
Hewlett Packard
In Hewlett Packard, there has been a long tradition of targets being determined by
both boss and employee. This reflects not only the longstanding policy of decentralization
within the organization but also the difficulty of imposing performance targets on employees
who are facing changing demands and working in fast-changing markets. These
conversations are participative. The discussions attempt to cover the diversity of situations
the employees would face. In the monthly formal meetings as well as in informal settings,
manager and employee have the opportunity to revise these targets in light of new
information about the environment of client behavior. The revisable nature of the
performance targets, together with the degree of influence employees have over their goal
setting, means that perceptions of fairness are high in terms of the targets being realistic and
achievable.
What I noticed as the main difference between the performance management systems
of HP and our company is that in HP the performance setting and appraisal happens
continuously. Performance is being discussed in formal monthly meetings and in informal
settings. In OICT, the performance appraisal tends to be formal. It happens only twice a year.
The performance are not reviewed informally (during the actual execution or performance)
which I think is important. Another difference is the level of employee input and influence in
the performance setting. In HP the employee have more influence in the goal-setting process,
while in OICT, the goals tend to come form top management and then imposed on the
employees.
Performance Evaluation
In HP, the performance appraisal is used primarily as a development tool. Formal
meetings between manager and employee are held every quarter, culminating in a full annual
appraisal. Employee voice in the evaluation was strong. Self-assessment exercise are strongly
encouraged in HP. Managers devote a great deal of time not only to discussing problems and
identifying areas for improvement, but also to giving feedback. This occurred not only in
formal meetings, but also on an ongoing basis. This informal process helped to cement new
organizational values by correcting and reinforcing behaviors and attitudes. In order to
achieve a rounded picture of employee performance, the company has introduced socially
based measures of evaluation such as 360-degree appraisal ( 1999).
In OICT, the performance appraisal is primarily used to determine the strengths and
weaknesses of the employees. It does not give focus on the training and development needs
of the employees. It is more focused on identifying and rewarding top performers. I can say
that the performance appraisal system in OICT is effective in its objective, which is to
identify and reward top performers. The appraisal system aims to encourage employees to
perform better by giving rewards. However, I also believe that long-term benefits will be
achieved if the company gives more importance to employee training and development.
Rewards
Perhaps management of rewards is the most problematic area of the performance
management system. Both companies experience difficulties in this area. In order to motivate
and retain employees, the reward systems of both HP and OICT have been structured to
ensure that the distinctions between excellent and average performance are recognize and
compensated. Hewlett-Packard uses a ranking system while OICT uses rating scales.
Training and Development
The performance evaluation process in HP is used primarily as a means of identifying
an employee’s training and development needs. The company invest heavily in employee
training and development. In Hewlett-Packard, training and development is considered as the
number one priority ( 1999). In OICT, the HR department tries to give training and
development opportunities for those employees who perform less adequately. However, as I
said earlier, this is not the priority of the management. Provision of formal training programs
are accorded less priority in OICT.
Recommendations
1. Align the Performance Management System with the Organizational Goals
There is no single best way of designing and implementing performance management
systems. What works in one organization might fail in another. However, based on the
experience of a wide range of organizations tend to point out that effective performance
management systems have the following characteristics ( 2001):
o The performance management system has clear aims and measurable success criteria.
o Employees are involved in the design and implementation of the system.
o The system is simple to understand and operate.
o Effective use of the performance management system is at the core of manager’s
performance goals.
o The system allows employees a clear ‘line of sight’ between their performance goals
and those of the organization.
o The system focuses on role clarity and performance improvement.
o The focus on performance improvement is closely linked to an adequately resourced
training and development infrastructure.
o The purpose of any direct link between the performance management system and
employee rewards is made crystal clear, and proper equity and transparency
safeguards are built in.
o The performance management system is regularly and openly reviewed against its one
success criteria.
Performance appraisal must be free from bias and discrimination. The key is not which form
or which method is used but whether managers and employees understand its purpose. An
effective performance management system according to (2002) will be:
o Consistent with strategic mission of the organization
o Beneficial as a development tool
o Useful as an administrative tool
o Legal and job-related
o Viewed as generally fair by employees
o Useful in documenting employee performance
I believe that there is no perfect performance management system. Every performance
management system, tool and strategy has its own strengths and weaknesses. However, I
believe that I strategic performance management system can be useful for the organization.
The performance management must be strategically aligned with the objectives and goals of
the company. It should support the culture, employee behavior and attitude that the company
promotes. It should focus on performance not on the performer. Most of all it should be fair,
credible and reliable. The objective setting or the performance planning process must align
performance with business goals. I believe that a strategic performance management system
will result in achievable and realistic performance goals, clear and easy to understand job
descriptions, and motivated employees.
2. Flexible Job Descriptions/ Employee Influence in the Process
The manager and the employee should be the ones responsible for job analysis, job
design and job description. The organization’s generic or model job descriptions should be
used by managers and employees only as a basis for developing and agreeing their own
description of the job the employee really does. Job descriptions should not be written and
imposed on job holders from above. The responsibility of designing the job description
should remain with the manager and the job holders. The contents of the job description
should be agreed by both the job holder and the manager. Getting employees’ commitment is
a key to setting effective goals. Employees should participate fully in the setting of objectives
for their own jobs, and have an opportunity to contribute to planning the objectives of the
work group, the department and the organization as a whole. Each individual’s goals must fit
in with those of the wider work group or workplace. How much you involve employees in
setting their targets will depend on the organisation's approach to performance management
and on its style and culture generally. At the very least, managers should ensure that the
person responsible for achieving a particular objective understands and accepts it. Employees
will not feel committed to targets that are just handed down to them by management ( 2003).
3. Rate Training and Employee Education
One approach to performance appraisal training is to alert managers to common errors
of judgment so they can spot them in how they evaluate others and guard against them.
Appraisal methods that have clear performance dimensions are likely to reduce rating errors (
1997). For any appraisal system to be effective, training must focus on helping managers
develop specific skills and confidence in their ability to effectively evaluate others. These
skills should include goal setting, communicating performance standards, observing
subordinate performance, coaching, giving feedback, completing the rating form, and
conducting appraisal review. Appraisals without training is a sure route to ineffectiveness,
frustration and dissatisfaction. It is also important to make employees understand the
appraisal system. Everyone in the organization needs to understand why appraisals are being
conducted and how the system operates. The more clearly stated the organization's purpose
for appraisals, the less confusion and ambiguity surrounding the process. The goal should be
that everyone knows why you are conducting appraisals ( and 1992).
4. Rating Scales and Management by Objectives
I think the performance appraisal of the organization will be more effective if
management by objectives, which is a way to determine what an employee is expected to do
with behavioural rating scales concerned with how employees carries out job requirements or
behaves on the job.
Management by objectives is the best known of the results-oriented methods of
performance planning and review, and in some form, probably the most frequent used
approach to performance planning and review. In simple terms, MBO is a target-setting or
results-oriented approach to performance management. It recognizes that employees perform
better when they have targets, and even better when they have participated in setting those
targets. Job analysis is used to produce a job description that sets out the principal
accountabilities or key results areas of the job: in other words, the desired outcomes. In this
way, the traditional lists of tasks and duties, or inputs, give way to brief statements of
expected results in each area of a job. In turn, these are translated into specific targets to be
achieved over a particular time period ( 2003).