Performance Management Essay
Effective Performance Management Essay
2181 Words9 Pages
Performance management relates to an organization’s ability to implement a system to evaluate and advance employee performance. Achieving peak performance requires consistency, clear objectives, and constructive employee evaluation. According to Mithas, Ramasubbu, & Sambamurthy (2011), an organization must design the performance management system based on extensive research about the organization’s mission, and then properly communicate the purpose of the system to employees, stakeholders, and decision makers. After the performing the research, the information should be used to establish the appropriate performance management specialized for the organization. In addition, an effective performance management system should align…show more content…
The article shows that management innovation involves initiation, adoption, and implementation. In this article written by Walker, Damanpour, & Devece (2011), effective management innovation occurs when stakeholders (employees, clients, or customers) actually accept and use the innovation routinely (p. 369). As a result, some organizations do not experience innovation regarding performance management because the strategic objectives are not successful implemented by management.
Therefore, organizations that develop successful performance management systems must evaluate the current level of performance, and then use management innovation to establish new performance goals for the future (Walker, Damanpour, & Devece, 2011, p. 372).
One of the challenges of performance management involves the use of performance data. The federal government evaluated how to create a performance management system that safeguarded information while developing research. Recently, the subject of performance information occurred within the Obama administration when the Chief Performance Officer remarked that performance management is not effective until you know how the information is used (Moynihan & Pandey, 2010, p. 850). The challenge is that most organizations do not reward the use of performance information only employee performance. However, if employees know that the organization values the use of performance information, then employees have an incentive to
The importance of performance management as a human resource tool
rodrigo | March 12, 2015
There has been a phenomenal change in the world of business over the last few decades. Globalization and the influx of technology have not only created new markets but also intense competition for businesses. Performance management has developed into an important organizational process and since the 1990’s there has been increasing stress on ‘high performance’ and ‘High commitment work practices’ (Armstrong, 2009, pg 26). The full development of the Human capital is considered vital in this knowledge-based economy. Organizations that ensure employee satisfaction, motivation and active employee participation have a distinct competitive advantage. A motivated workforce also helps the organization reduce turnover rates and boost the productivity significantly. Thus effective performance management has become an integral aspect of the HR management. In today’s organizations employee management is the crucial component for success and employees are at the forefront. The HR departments in organizations therefore actively pursue performance evaluation and optimization through several techniques and approaches. This research will focus on the importance of performance management as a human resource tool. How employee performance is measured and managed and how it contributes to the overall productivity in organizations?. Particularly, this paper will use these findings and try to apply them to the case study of the Co-operative Store in Northampton.
The Co-operative Group, or “Co-op” as it is commonly known, is a leading international consumer co-operative that, in 2005, boasted more than £1 billion in assets and £7 billion in revenue. While a strong worldwide presence, the company’s headquarters are situated in Manchester, UK.
The Co-op primarily operates within the food retail industry but also offers services in insurance, business, travel, pharmacy and even agricultural services.
The Co-operative is also the parent organization for the Co-operative Financial Services (CFS), of which CIS (Co-operative Insurance Society) and The Co-operative Bank plc are operating subsidiaries. This case study will work with a retail branch of the co-operative that is located in Northampton.
1.2. PERFORMANCE MANAGEMENT
Performance management is a comprehensive topic that includes several aspects such as performance measurement or appraisal, motivation, employee involvement or participation, trust, etc. Performance measurement is a part of performance management. The concept of “performance measurement” is widely discussed, although an acute definition of the topic remains elusive. Neely et al (2005) define it as “the process of quantifying action, where measurement is the process of quantification and action leads to performance.”
All operations need some kind of performance measurement as a prerequisite for improvement are important in assessing the abilities of managers and supervisors who are responsible for knowing how, when, and where to apply a variety of changes which cannot be implemented without having any knowledge of the suitable information that is required.
1.3. LEARNING OBJECTIVES
Recently, performance measurement has come under much scrutiny from a range of academics, practitioners, consultants and policy makers. Indeed, thousands of companies have invested their time and wealth into constructing and apply effective performance measurement systems.
However, despite all of this investment, very little empirical research has been put towards discovering the answer to key questions such as “what impact do performance measurement systems have on the way that organizations are managed and how can organizations maximize the positive impact of such systems?”
This study looks at the usefulness of performance management strategies and how it could be used as valuable input for HR in designing policies that could optimize both individual productivity and overall organizational performance. The research will look to identify suitable performance management techniques that could be applied to the Co-operative Group Ltd. By identifying a suitable approach for continuous improvement, this study intends to propose a performance model that can facilitate the building upon the Co-op’s current organisational strengths to improve their overall performance.
The overall aim of this study is to highlight the significance of performance management techniques in building for the Co-operative Group’s future, especially with regards to the ever-increasing level of competition in the industry.
1.4. RESEARCH QUESTIONS
This research would aim to answer the following question:
“what impact do performance measurement systems have on the way that organizations are managed and how can organizations maximize the positive impact of such systems?”
1.5. ADOPTION OF LEARNING OBJECTIVE IDEA
The reason for the choice of the retail branch of the Co-operative in Northampton as the case study is because I have worked there. This has provided me with a valuable insight into the performance of the store, and the store has enjoyed great performance in the past. However, intense competition from new superstores has drastically affected the profitability of the Co-operative society stores. This suggests the possibility of the lack of HR centric performance management polices, particularly at a time when increasingly organizations are relying on the HR division for improving the organizational performance. It is for this reason that I began researching this topic.
1.6. DESIGN OF RESEARCH
The research design provides the spine of the research; it is what structures the research, and displays the way the key areas of research interlink and interact. This is a fundamental part of addressing the core research question.
My proposed research design is as follows:
• Provide an introduction to Performance Management.
• Explain effective performance measurement and management techniques
• Provide an introduction to Co-operative group, their businesses and their business strategy.
• Examine the Performance management system currently used in the retail Co-op in Northampton.
This study on performance Management has been split into several chapters. The structure of these chapters is as follows:
• Introduction: this offers an introduction to whole dissertation.
• Literature Review: In this chapter I have covered the relevant literature to understand the meaning of Performance Management, its importance and its related theory. The performance appraisal and performance management techniques that are currently used by the company under study are also discussed.
• Methodology: This chapter details the procedures/processes that were adopted to achieve the required aim.
• Conclusion of study
1.7. SCOPE OF RESEARCH
This research will look to relate to the various concepts surrounding performance management and the significance of these techniques for the organization. In particular, the research will touch upon important topics such as employee motivation, participation and other positive performance enhancing concepts that organizations employ to create high performance workplaces. The underlying idea of this research is to have a better understanding of these various theories and practical concepts that surround performance management. Furthermore, these findings would provide better insight on the influence of these performance measurement and management techniques upon an organization.
More practically, the findings shall help Co-operative’s management team to identify the potential sources of inefficiency in the area of measurement and management of their employee’s performance.
2. LITERATURE REVIEW
In recent times, gaining competitive advantage has become a major target for organisations. As a result, organisations have made several attempts to sustain competitive advantage in the relevant industries all over the world (Kavanagh et al., 2007). Performance management plays a very key role in today’s organisation. It is a very useful tool that is being used by many organizations to achieve efficiency, effectiveness and organisational goals. Performance management can be done both at the individual level as well as the organizational level (Latham et al, 2004) Hence, it is of utmost importance to have a good performance management system in place in organisations in order to facilitate the attainment of organisational objectives.
This section will look to analyze and explore the various pieces of literature that surround performance Management. While a fairly recent topic, performance Management has seen a large boom in volume of literature, which examines and explains the concept. Performance management is widely described to be the process of consistently recording the various outputs and outcomes produced by different programs. It is an effective tool that permits a company to track both the level of and impact of a particularly type of work upon program beneficiaries. The following figure illustrates the various aspects of performance management.
The majority of literary sources share the consensus that a successful organization will apply performance management to every aspect of their industry – from manufacturing to customer service – which is all dependant on the way in which the company makes use of critical data.
Performance measurement is undeniably a very helpful device when used to manage various organizational programs. For example, it aids the tracking of the progress of a program towards larger overall goals, as well as helping to identify areas of strength or weaknesses. Indeed, it is for these reasons that Soo and Lewis (2009) state that employees and managers should be actively involved in performance measurement activities in order to track inputs and outcomes.
The fundamental need for this type of measurement program is to attain accurate feedback with regards to a company’s objectives, which helps to improve the company’s likelihood of reaching those objectives in the best way.
Kotelnikov (2005) explains “if an organization is successful in measuring its performance correctly, the data generated will show that where this company is, how is it doing, and where is it going.” Therefore, the ultimate target for implementing a performance measurement system is to develop the overall performance of an organization.
Many of the writers on performance measurement state the implementation of this concept for a specific process requires a vast amount of “cognizant employees” to stimulate ideas and strengthen the concept that it is a team effort (Kotelnikov, 2005).
These authors also comment that there were “substantial benefits” which were realized by companies who implemented performance measurement programs (Project Star, 2003). It is observed that every staff member appreciates the advantages of these systems, although an improved understanding of performance measurement could benefit a company. In addition to this, employees will be provided a chance to receive a broadened perspective of a company’s functions.
Therefore it can be established that performance measurement is a “positive appraisal system” which can be used to make sure that a company or individual is fulfilling pre-set goals or aims. Should it be found that these goals are not being reached, then remedial action can be taken to make sure that they will be corrected. Overall, then, performance measurement can be seen as a “means of supporting the organization or individual and not a means of seeking fault with them” (Latham et al, 2004).
2.1. SIGNIFICANCE OF PERFORMANCE MEASUREMENT
James et al (2006) state that performance measurement is crucial to companies because it “improves products and services, improves communication, helps justify programs and their costs and it helps to demonstrate Stewardship.” Performance measurement, therefore, can be widely applied to evaluate just how effectively a person or a company has performed against pre-set objectives
Performance measurement offers managers an effective way to gather data about the way that various resources and efforts are being used, as well as how best to use them. It is also an effective system, which ties in program partners whose focus is also towards the main objectives of a program.
Essentially, performance measurement can be defined as the use of statistical evidence to determine a company’s progress toward a specific goals or objectives. This can include providing evidence of actual fact – such as the measurement of pavement surface smoothness – and measurements of client perceptions – such as what could be achieved via a customer satisfaction survey.
Performance measurement begins by outlining any services that a company promises to offer. It then provides data to the company’s managers regarding just how effectively and efficiently these services are being delivered (Neely, 2002).
However, this information, which is supplied via performance measurement, is only a small aspect of the data, which managers or policy makers in organizations require to make well-informed decisions. Performance measurement, therefore, constitutes only a part of the organizational performance management process. It has to be combined and assessed with other vital information to develop the manager’s comprehension as to why particular results occur, and in what ways do these programs bring value to an organization or its processes.
Employee assessment is important as if employees are aware that they aren’t being assessed then they may take the choice to do less work, take their remuneration, or not participate constructively towards a company’s goals. All of these attitudes and actions generate a negative effect on a company, and will also likely mean that the company will lose the skills and knowledge of these employees, and also any customers who could experience indifferent customer service. Alternatively, if employees are conscious that they must reach certain objectives, this can add motivation to deliver a higher standard of work as well as to provide better quality customer service.
The underlying goal of any employee assessment program is performance enhancement. Care should be exercised since employee assessment programs as usually connected with employee compensation and any open admission by employees relating to their need for development would directly affect their pay decisions. This could be a detrimental effect and undermine the very purpose of having an employee assessment program. Poor implementation of such practices could negatively impact employee morale and organizational performance. (Bach, 2004) As long as the standards, which are used, are considered to be fair, and reward systems are tied in with the staff reaching their goals, then employees will look to reach the objectives. Consequently, a company can fully benefit from making use of the abilities and intellect of staff, and customers can benefit from the more motivated employees.
2.2. PERFORMANCE MANAGEMENT CRITICISMS
However, there is mounting criticism against performance management systems. Performance management is perceived as adding undue pressure to a short-term view, especially among managers in the UK, and this may in the long run affect organisational performance (Redman and Wilkinson 2009). Again, according to Redman and Wilkinson (2009) because performance management systems have been presented in a very rigid way (as opposed to it being very flexible) by scholars in the field, there is the tendency to neglect important variables like the level of unionisation and degree of centralisation of different organisations. Ferris et al (2008) support this view by arguing that the actual practice of performance management is extremely diverse. This is because a performance management system that works in one organisation may not work in another.
For performance management to achieve its purpose of increasing organisational performance, it is supposed to be line management driven. However, research carried out indicates that the line managers do not show enough commitment and that the process of performance management has been taken over by organisations chief executives and the HR department (Fryer et al, 2009)). Again, because performance management systems seek to improve organisational performance, they tend to add undue pressure and thereby stress employees who are pushed to perform without much regard to their welfare (Brown and Benson 2003). As stated by Bratton and Gold (2007) when they researched into performance management, there is no correlation between supposedly high performing organisations and the operation of a performance management system. This is against the back drop that performance management processes increase organisational performance.
According to Armstrong (2006) performance management should be seen as a process and not as a system. This is because the term system makes it too rigid and bureaucratic against the concept of being flexible. This argument is supported by Wikman (2006) who sees performance management as being concerned with directing and supporting employees to give their best in line with the peculiar needs of the organisation.
2.3. PERFORMANCE MANAGEMENT STAGES
Performance management is a continuous process with different features linking together. There are stages which when followed, will ensure a systematic and efficient performance management process. As stated by Sandeep et al (2008) organisations should clearly define their aims and objectives. This clear definition will in turn support the setting up of unit, team and individual objectives. The second stage in the performance management process is when an agreement is reached on training and development plans. This according to Bratton and Gold (2007) will ensure that learning needs and objectives can be met and achieved.
Another stage in the performance management process as posited by Brown and Benson (2003) is that there has to be a regular review of progress towards targets. This is when objectives are examined to see if they have been achieved or not. The feedback stage is also very important according to Sandeep et al (2008) because it is at this stage that individuals or teams assess the extent to which their objectives have been achieved or not. Financially, financial and non financial rewards have to be distributed as a means of enhancing individual performance.
Scholars in the field of performance management like Soo and Lewis (2009), Bratton and Gold (2007) and Storey (2009) agree that performance management is a natural process of management and went further to state that the performance management cycle consists of basic activities which according to Armstrong (2006) include planning, action, monitoring and reviews. In this performance management cycle, planning is when an agreement on objectives and standards to be achieved is spelt out. Here, the level of competence to be attained and agreements on performance improvement and personal development plans are reached.
The cycle continues with action being taken to implement the plans so as to achieve the required standards and meet objectives. The individual employees who are given all the necessary support needed by the line managers carry out this action in day-to-day work. Armstrong (2006) further states that both the individuals and their managers then monitor these actions on a continuous basis. Reviews, according to the author, take place at any time in the course of the year. These reviews may be formal or informal and are meant to take stock of action taken and find ways of improvement, if necessary.
In the same light, Bratton and Gold (2007) posit that as soon as a plan has been formulated and agreed upon, work is carried out in line with it in order to achieve the set objectives. However, in the process of undertaking the plans to achieve the set objectives, there is continuous coaching and mentoring going on simultaneously to identify training and development needs, which are then addressed immediately. Intermittently, performance and objectives are reviewed. This is done so as to monitor the progress or otherwise of achieving the objectives. Feedback is of utmost importance in the performance management cycle as it is used to review performance and the outcome of these reviews is then used to improve performance (Bratton and Gold 2007).
Storey (2009) is of the opinion that performance management cycle develops as individuals observe and appraise environmental conditions around them, determine what is expected from them and what they expect from other people and then use these expectations to set goals and objectives. The cycle, according to the scholar, moves on to when the individual takes in the feedback he has received and takes positive steps to develop them by changing behaviours and attitudes and thereby improving performance which he will eventually benefit from or face the consequences of failure. The performance management cycle involves not only the individual but colleagues, clients and customers. These individuals have certain expectations and they take part in objective and goal setting and also in monitoring performance, they also provide feedback, coaching and mentoring where necessary and deliver both financial and non-financial rewards (Storey 2009).
Torrington et al (2008) points out that performance management is the process of improving the quality and quantity of work done and bringing all activity in line with the objectives of the organisation. To this end, there are a number of tools and methods through which performance management may be reviewed.
360-degree feedback as defined by Wilkinson et al (2004) is the systematic collection and feedback of performance data on an individual or group, derived from a number of stakeholders in their performance. 360-degree feedback is the process of collecting perceptions about an individual’s behaviour and the impact of that behaviour from the individual’s manager, direct reports, and colleagues, fellow members of project teams, internal and external customers, and suppliers (Neely et al, 2005). However, as stated by Armstrong and Baron (2005), while it is common knowledge that feedback is of utmost importance in organisations, especially with regards to managing employee behaviour, research suggests that the flow of feedback in organisations is somewhat constrained.
The Performance and Development Review process is another important part of managing and assessing the performance of individuals in organisations as it is used to value employee’s achievements and contributions and promote clarity and understanding of their roles. The purpose of performance and development reviews is to provide employees with the opportunity to reflect and consider what they have done, to receive feedback on their contribution and to set further objectives and also to identify any training and development required to support these objectives. The review process must be constructive and various techniques can be used to make it open, free flowing and honest (CIPD 2010).
The performance review is linked directly to the organisational plan. This is so because performance review helps line managers to determine employee’s objectives to help the organisational plan. Thus by reviewing an employee’s work, improved individual performance and efficiency can be achieved (Hopson, 1999). The development review on the other hand, as argued by Hopson (1999), involves the manager and an employee reviewing specific personal and development steps that are in line with the organisations larger development policy.
2.4. CHARACTERISTICS OF GOOD PERFORMANCE GOALS
It is important to observe that the characteristics of “good” performance measurement objectives should include the following:
“Quality over quantity”: Performance measurement objectives must be relevant to the overall program objective and towards the overall outcome of what the program is intended to achieve. This postulates the importance of having a select few, but high standard, measures. However, it should be noted that programs must not feel compelled to collapse complex activities to a single measure for these ends, especially if that measure is a proxy for the true objective.
“Public clarity”: performance measurement aims must be understandable to users who are utilising what is being measured. Companies should internally and externally publicize what they are measuring to helps these program partners comprehend the expectations of a particular program.
“Feasibility”: performance measurement goals must be feasible, yet “not the path of least resistance.” Selecting performance measurement aims based on their relevance to the outcomes, and not for additional reasons. Where necessary, businesses can terminate “less useful” information to help fund more useful ones.
“Collaboration”: agencies and their partners have to work together and not fight over their “turf” (OMB, 2003). When implemented properly, Performance measures can drive greater accountability, visibility, and transparency. This is because these measures offer managers and executives an effective tool to assess an organization’s progress, but can also be used to motivate and “set direction for the organization, and encourage alignment from top to bottom” (Chan et al, 2002).
While performance measurement is useful to keep track of the progress towards organizational goals it is only a step towards optimizing employee performance. Once performance appraisal is conducted it would provide a clear idea as to the areas that require improvements and how to bring about this positive change (Fryer et al., 2009). There is quite a difference between performance measurement and performance management though the employee performance literature often seems to use these two words interchangeably. While performance measurement is simply a quantitative or qualitative reporting of a process, performance management on the other hand concerns the actual action that is undertaken as a result of the performance measures in order to bring about a positive change in these measures. This might involve steps taken to increase employee motivation, commitment, satisfaction, involvement, etc. (Fryer et al., 2009).
Already there is a plethora of research that has focussed on the relationship between these related aspects such as employee motivation, participation and performance gains. This is the next important stage as it provides a clear-cut task for the HR to introduce programs that would enable the organization to realize the productivity gains. We will now look into the current literature on these important performance factors.
Several researchers who focussed on employee performance improvement have reported that besides providing training, salary hike job security, etc, the most important factor that contributes directly to improved employee performance is the availability of ‘Employee involvement programs’ in the organization. (Shields J, 2007, pg 91) In fact the literature is replete with conclusions that organizations that have comprehensive employee involvement programs fair much better compared to organizations where no such programs are in place (Applebaum et.al, 2000).
There are two types of employee involvement namely:
• Direct involvement and
• Representational involvement.
Some of the examples of direct involvement include:
• Office Newsletters,
• Suggestion boxes,
• Quality circles etc.
Since involvement directly contributes to improved performance it is necessary to focus on ways in which organizations can promote employee involvement. Research reveals that the following practices are common among organizations that have successfully implemented employee participation programs. These are ‘Team briefing’, ’Team working’, ‘Downward Communications’, ‘Two way communication’, ‘Suggestion schemes’, ‘Problem solving Groups’, ‘Financial participation’, etc. (University of Essex). In fact some management researchers have defined employee participation as “ a conscious and intended effort by individuals at a higher level in an organization to provide visible extra role or role-expanding opportunities for individuals or groups at a lower level in the organization to have a greater voice in one or more areas of organizational performance ” (Douglas and Craig, 2006). In other words, it is implied that promoting employee participation may in fact involve active involvement of senior management and may not be purely relegated to the HR level.
2.5. TOOLS FOR MEASURING PERFORMANCE
There exist a wide variety of tools that can be used to measure performance. This section will examine a selection of some of the most effective tools for measuring business performance:
2.5.1. Balance Scorecard
Balanced Scorecard (BSC) is a management and measurement tool, which facilitates the clarification of an organization’s vision and strategy, and helps to translate this into actuality. BSC also supplies feedback around “the internal business processes and external outcomes in order to continuously improve strategic performance and results” (Bourne and Bourne, 2000).
Implementing a Balanced Scorecard system into a company is not a straightforward, although vastly rewarding, process. It is important then when implementing this tool; the company outlines an explicit vision for the Balanced Scorecard, which will aid the transition of getting all the staff up-to-speed with the tool. Perhaps the most overlooked aspect of implementing Balanced Scorecards – is that companies do not clearly establish a long-term vision or philosophy. Bourne and Bourne (2000) explain that a Balanced Scorecard philosophy is “simply a clear statement that describes what the Balanced Scorecard will look like, how it will operate, how it will be built, and how the organization will use it.”
To make sure that the company is successfully implementing Balanced Scorecards it is very important to establish a “Balanced Scorecard philosophy” very early on in the development and implementation of the tool. By doing this, the company can make sure that the consensus between implementation of the Balanced Scorecard team-members, management, and the company is effective and efficient, both in the present and in the future.
Bratton and Gold (2007) also explain “in order to survive and prosper in today’s world, companies can no longer manage using financial measures alone.” This means that organizations must track the various non-financial measures, such as “speed of response” and “product quality”, externally focused measures such as “customer satisfaction” and “brand preference”, and forward looking measures such as “idea management” and “employee satisfaction”.
Overall, BSC methodology helps to translate a company’s strategy into action. By implementing a BSC approach can allow managers to outline all the essential perspectives and objectives which will motivate the staff and deliver the best results, and how to measure them (Douglas and Crag, 2006). BSC allows organizations to align various strategies and units to the overall organizational strategy through the linking of certain deliverables to key perspectives to deliver the best results. Overall, then, the balanced scorecard system provides a “clear understanding of the company strategy, and how it is supported by the commitment to objectives from various divisions and functional units of the organization” (Ferris et al, 2008).
Advantages of BSC
BSC supplies a framework that allows an organisation to focus on particular perspectives, which will, in turn, generate success and provides a framework to assess performance against targets.
It can help to align essential performance measures with this strategy across all levels of a company.
Provides manages with a comprehensive view of overall business goals and strategies at all levels
The balanced scorecard forces managers to look at the business from four important perspectives. The Balanced Scorecard is an important tool for strategic management system as it provides “performance measurements within a framework of strategic hypotheses that enable to learn what works best in an organization” (www.2gc.co.uk).
Framework for creating a Set of Measures
Balanced Scorecard systems offer a framework for designing an array of measures for activities that can be utilized by companies as the main drivers of their business. It is a system that “promotes a more holistic balanced view of any organization by having four distinct perspectives; i.e. financial, customer, internal process and innovation and learning” (Bourne & Bourne, 2000). Thus, through the creation of their own measures using these headings, it would be difficult for a company to miss any areas of particular importance. However, it must be noted that a lot of the success of BSC is dependent on the way in which measures are agreed, the way that they are implemented and the way in which the organization applies them; “the process of designing the scorecard is just as important as the scorecard itself” (Bourne & Bourne, 2000).
There are many varying definitions for benchmarking, but essentially it is a process, which involves learning, sharing information and adopting best practices to bring about step changes in performance. In short, benchmarking can be defined as an approach of “continuously measuring products, services, and practices against tough standards set by competitors or renowned leaders in the field”, or at its simplest, it means “improving ourselves by learning from others” (www.benchmarking.gov.uk). The performance levels of other companies are known as “benchmarks”; the ideal benchmark stems from a company that is acknowledged as being a global leader in their respective industry area.
The process of benchmarking encompasses comparing a particular organization’s performance against that of another. This is a process that allows a company to clarify exactly where they are in relation to any competitors and can also help them to identify the processes that are especially essential to their industry. It is, therefore, a key technique that can be used “to help companies become as good as or better than the best in the world in the most important aspects of their operations” (www.mas.dti.gov.uk).
Benchmarking involves systematic identifying and implementing of “best” practices. Numerous experts divide benchmarking into a variety of types, which are as follows:
• “Internal Benchmarking”: this process contrasts the common processes amongst diverse functions within a single organization.
• “Competitive Benchmarking”: this examines direct competitors and their processes, to measure levels of customer loyalty, customer satisfaction, and market share. This information then indicates what customers’ value most about an organization’s products or services as well as their opinion as to if they believe an organization is profiting, doing well, or providing a suitable service/product. This strategy can also be used to assess any potential candidates for mergers and acquisitions.
• “Functional Benchmarking”: this focuses on processes as well as the organizations that use similar processes, regardless of their industry. This information can therefore be used to show a company’s “overall manufacturing strategy, training requirements, a plant’s scrap and rework cost, a plant’s warranty costs, and a plant’s on-time delivery rate” (Harry & Schroeder, 2000).
• “Performance benchmarking”: this is the comparison between the achieved performances across various operations. For example, “an organization might compare its own performance in terms of some or all of performance objectives- quality, speed, cost, dependability and flexibility- against other organizations’ performance in the same dimensions” (Greenberg and Baron, 2008).
• “Non-competitive benchmarking”: is “a benchmarking against external organizations, which do not compare directly in the same markets” (Greenberg and Baron, 2008).
2.5.3. Performance Matrix
Kavanagh et al (2007) identify a crucial stage in the creation of these performance measurement strategies, as the “derivation of a ranked (or rated) list of competitive factors such as quality, flexibility, cost, etc.” These features are utilized either to infer an appropriate a set of operations decisions or to prioritize the competitive factors. This “Performance Matrix” can therefore be used to record a company’s performance, and primarily comprises nine-point importance and performance scales, as shown in this diagram:
(1) Provides a crucial advantage with customers – as “the main thrust of competitiveness” – thus, the attention falls upon the client’s requirements.
(2) Provides a significant advantage with most customers
(3) Provides a considerable advantage with most customers
(4) Needs to be at least at a good industry standard
(5) Needs to be around the median industry standard
(6) Needs to be within close range of the rest of the industry
“Less important” objectives:
(7) Does not typically come under the client’s consideration, but may become more influential in the future;
(8) Comes very rarely into client’s considerations
(9) Never comes into customer’s consideration and is never likely to
The “Nine-point Performance Scale”
These are the 9 important considerations that comprise the nine-point performance scale and can be used to show how, within this particular market sector, the company achieving the performance in every of the individual performance objectives:
“Better than competitors”:
(1) Consistently considerably better than our nearest competitor
(2) Consistently clearly better than our nearest competitor
(3) Marginally better than our nearest competitor
a. “The same as competitors”:
(4) Often marginally better than most competitors
(5) About the same as most competitors
(6) Often within striking distance of the main competitors
b. “Worse than competitors”:
(7) Usually marginally worse than most competitors;
(8) Usually worse than most competitors;
(9) Consistently worse than most competitors
2.5.4. Performance Appraisal:
Shields (2007) explains that a key performance measurement tool is “Performance appraisals”; which refers to “the annual meeting between manager and employee to review the performance of the latter over a specific period.” These usually involve reviewing the objectives that have been set within the previous year, in order to evaluate the way in which staff has performed against these targets. In view of this, the next year’s objectives are discussed and agreed upon. Within some appraisal systems used by organizations, there exists a relationship between an employee’s performance and a particular reward – in which the employee’s performance at work is assessed for pay review purposes.
Performance appraisal involves “the process of evaluating the performance and behaviour of individuals in the context of their specific positions of employment” (Soo and Lewis, 2009). The behaviours analysed “should be tangible, objective components of the employee’s job and should not include subjective, evaluative statements that focus on personality and attitude” (Soo and Lewis, 2009). Soo and Lewis (2009) also states that “the primary objective of the appraisal must be the improvement of the individual and the institution, thereby creating a more positive working environment for all concerned.”
It is also cited by Soo and Lewis (2009) that “the best performance reviews let managers and employees communicate — share ideas, opinions, and information. Unfortunately, most traditional reviews put managers into the position of uncomfortable judges, ostensibly telling employees how their work either fit the bill — or didn’t.” This means that most conventional reviews are “no better than the manager’s off-the-cuff judgements, and some may be illegal” (Soo and Lewis, 2009).
As a performance measurement tool, performance appraisal has many supporters as well as critics. For example, many writers claim that performance appraisal is very beneficial to an organization as it is an effective means as to give staff comments and feedback on their work. According to Wikman (2006): “appraisal regularly records an assessment of an employee’s performance, potential and development needs. The appraisal is an opportunity to take an overall view of work content, loads and volume, to look back in what has been achieved during the reporting.”
2.5.5. Self Assessment:
Self-reviews are founded on the concept that staffs are those who are most familiar with their line of work, and as a result of this, their involvement is crucial.
Using this system, staff members rate themselves against a score for a number of criteria. This is typically carried out using a formal survey form, and may include the possibility of suggesting improvements. In studies carried out by Wikman (2006), it was found that overall staff members were “surprisingly realistic in assessing their own performance, providing it does not link directly to a performance related pay.”
This system can be used to clarify a staff member’s own goals as well as to expose any particular areas of weakness, in order for them to be worked on. Within some organisations, the manager can be excluded from these assessments, although an exchange of opinions between the employee and their manager could help their working-relationship, as well as improve the employee’s understanding of their role in the organisation, and the organisations overall goals. According to Mintzberg (2008), involving the employee “as an equal in the review process” is more likely to increase commitment to action plans, “making the entire process both more satisfying and more productive”.
Also, Sandeep et al (2008) observed that “self-review changes the role of the manager to counsellor, rather than judge – a role from which the manager can do more to support people.” He also added that self-review “enhances the subordinate’s dignity and self respect.”
Despite all of these positive aspects of this type of performance measurement, it should be noted that – as observed by Sandeep et al (2008) – “people may not see their own deficiencies as others do”; thus, self-assessment must be used with other assessment methods. “”to determine root cause and corrective action to prevent recurrence of problems.”
I now intend to construct a comprehensive framework with which I can examine the appropriation of Performance Measurement tools and improve performance management within the company. I believe that my research will illustrate just how effective contemporary literature is at embracing the various issues surrounding performance management.
Fundamental Concepts and Themes of my Research Methodology
reached.” Thus, my Methodology section will be used to offer justification towards my selection of performance measurement program; I will examine and explain my chosen research strategy, and also give light to alternative methods, systems, processes for interpretating information, and will conclude by examining the quality of my research.
3.2. PHILOSOPHY AND APPROACH
Saunders et al (2008) explain that a research philosophy depends “on the way a researcher thinks about the development of knowledge.” These authors are also responsible for established 3 of the primary views which characterise the research process: “Positivism”, “Interpretivism” and “Realism”. For the purposes of this study I will adopt an “interpretive” approach as my aim is to comprehend the subjective reality of the various performance measurement programs that I will study.
I have structured my research approach into two types: the “Deductive Approach” – where a researcher comes up with a hypothesis and builds a research strategy to test this hypothesis – and the “Inductive Approach” – where a researcher attains data and develops his theory based on this data. I will adopt an “inductive” reasoning approach for the purposes of this research study.
3.3. RESEARCH STRATEGY
I have undertaken a research strategy that is dependant on “what questions the problem leads to and what end result is desirable” (Saunders et al, 2008).
Consequently, I have chosen to adopt a case-study approach. I have chosen this type of approach because of the nature of my chosen research question. Saunders et al (2008). stated that this case studies are “appropriate to answer ‘HOW and WHY’ questions, when the focus is on a contemporary phenomenon with a real life context.” These authors also stated that “case studies are suitable for practical problems, which are often problem centred” (Saunders et al, 2008). A primary benefit advantage of case studies is their ability to attain data from a wide variety of sources; such as interview, observations and historical data.
Yet it must be considered that case-study approaches are susceptible to being manipulated to better suit the researchers aims and they also are not suitable for comparisons; this is because “no two businesses are the same – results will be different on the bases of time consumed by the organisation in the” (Hague, 2002). Therefore for the purposes of my study, I believe that a single case-study strategy would be suitable as case studies are “empirically grounded and exploratory” (Hague, 2002).
3.4. RESEARCH METHOD
Hague (2002) outlines the definition of a Positive approach to a research methodology: “generated from testing hypothesis generated from theory, mainly quantitative data and statistical analysis. It decides if results confirm or refute the theory.” Thus, the quantitative approach renders it feasible to apply statistical comparisons and can be used as “exploratory” tool (Hague, 2002).
Douglas and Craig (2006) discuss the “phenomenological approach” to research, which formulates conclusion based upon the process of investigation > qualitative data > and then allows “the investigation to guide the project.” Consequently, this approach “increases the understanding of the case studied since it can penetrate deeper into each care” (Douglas and Craig, 2006).
Another type of research methodology is the “Methodological triangulation” in which the researcher collects qualitative and quantitative data, but negates “using just these extremes” (Hague, 2002).
For this research i will focus on the case-study of the Co-operative Society and analyze how performance management policies and tools could drastically improve their productivity and profitability by gathering evidence mainly from existing organizational literature on performance management and measurement. Hague (2002) explains that there exist two main advantages of making use of multi-methods in this study; which is that “different methods can be used for different purposes in a study”.
3.5. DATA COLLECTION
Robson (2002) explains that for case-studies, data (or evidence) can come from 6 types of source: “documents, articles, interviews, direct observation, participant-observation and physical artefacts.” He explain that material can be primary or secondary nature, and that primary data “is collected to satisfy the specific purpose of the study” while secondary data is “published findings from earlier research studies” (Robson, 2002). Bouma and Saunders et al (2008) observe that secondary data is best collected at the beginning of research “to provide a background and basic information about the topic being researched.” Finally, Hague (2002) explains that combining these types of data “will give a deeper understanding of the quantitative data.”
However, since this is purely a secondary research, the main focus would be on studying the existing performance measures and performance management policies and to suggest implementation of new policies and approaches that would promote better employee satisfaction and participation which are key to overall organizational performance. Therefore, the present study will utilize comprehensive secondary data analysis with a view to providing the HR team with useful information that they could adapt to obtain significant performance gains individually and collectively from the organizations perspective.
3.6. RESEARCH VALIDITY AND RELIABILITY
Hague (2002) states that “to have a successful research methodology the quality of it must be high, to judge this the validity and reliability is assessed.”
Elsewhere, Wikman (2006) states that validity “concerns the issue whether or not the findings can be shown to be valid for the problem that is being investigated.” Therefore the information that is collected has to be relevant to the research question; otherwise this will produce data of a low validity: “irrelevant data and unnecessary information leads to low validity” (Wikman, 2006).
Given the secondary nature of the research, the current study relies purely on valid and peer reviewed management research material that is focussed on promoting employee performance and organizational productivity. Conclusions drawn from this research material would then be recommended to the CO-OP under study.
Collis and Hussey (2003) explains that “reliability concerns the issue of consistent results of the study if it was replicated […] A good guideline is to make sure that if someone did the project again, the same results would be found.” Therefore, reliability is a crucial part of a case-study and the main objective of reliability is to reduce the amount of unreliable data or errors in the research study; “a prerequisite for reliability is that all the documentation is in proper order and can be easily found” (Wikman, 2006).
In order to fulfil the aims of this research study, it is important to pre-plan how I will collect and use the data effectively. The following table indicates the way in which I will use the collated data and how it is suitable to the intended research question:
4. CASE STUDY AND ANALYSIS
This chapter would discuss a case study on performance management at the Co-operative group. Background information on the company would be presented, followed by data found on performance management within the company (based on employee observation).
4.1. THE CO-OPERATIVE GROUP
The Co-operative Group is a £5 billion turnover business with interests in food retail to financial services. The food retail division of the Co-op Group generates almost half of the entire annual turnover and, with over 1000 food stores nation-wide, also provides around 45000 jobs in the UK (www.morse.co.uk).
The Co-operative Group, the trading name of Co-operative Group Ltd, is a leading global consumer-owned business. The company was initially known as the Co-operative Wholesale Society Limited, although this name was changed in 2001as there was a transfer of engagements of Co-operative Retail Services to the Co-operative Wholesale Society.
The Co-operative Group owns ¼ of the co-operative retail business in Britain, and has substantial shares in other industries – including funerals and pharmacy. In food retail, however, it can boast 5% of the British market, although this has reduced from 30% sixty years ago.
The Co-operative group has more than 1500 food retail stores across Britain. These stores can be categorized as “Welcome” convenience stores; “Market” Town small supermarkets; and “Superstores” full-scale supermarkets.
Finance and Travel services
Co-operative Financial Services (CFS) consists of the Co-operative Bank and the Co-operative Insurance Society. CFS operates Britain’s largest independent travel agency, “Travel care”; boasting as many as 400 branches and direct-sales via telephone/internet.
Co-operative Funeral Services is Britain’s largest funeral director with over 400 branches.
Co-operative Group Pharmacy Ltd is a leading pharmacy operator in Europe and has more than 250 branches in Britain.
Shoefayre, which was formerly an independent footwear retailing companies, is now owned and managed by Co-operative Group, who has almost 300 high street footwear stores.
The Co-operative Society manages almost 90 000 acres of land across Britain under the Farmcare banner.
Property and Legal services
The Co-operative Society also boasts a property business which manages investment and trading properties.
The Co-operative Society has sold the department stores of the former CWS estate. While CWS withdrew from the non-food market several years prior to the merger, the Co-op kept two stores open as trials of a new style of department store; however these stores were closed in 2006 (although there is still an internet business retailing electrical goods and designer beds).
The Co-operative Group has formed over the span of 150 years, resulting from the merger of several independent retail societies and their wholesale societies and federations (www.co-op.co.uk). In 1843 the Rochdale “Pioneers” opened the first co-operative and then in 1863, the North of England Co-operative Society was launched. By 1872, this had taken on the title of “Co-operative Wholesale Society” (CWS).
By the end of the 20th century, CWS’s market share had decreased dramatically; provoking the response that the Co-op was no-longer a sustainable or viable business. The selling of CWS factories in 1994, and the controversy surrounding Andrew Regan’s £1.2 billion bid for the company had instigated these views in 1997. This move was surrounded by “carpet-bagging” accusations, with employees looking to make money, or commit fraud.
Regan’s bid was eventually beaten when 2 senior CWS executives were arrested and charged on account of fraud. While Regan was cleared of all charges; these events “recharged” CWS who, following Labour Government’s Co-operative commission, made significant insights towards the co-operative movement, including the organization and marketing of the retail societies. At the turn of the century, CWS merged with Co-operative Retail Services, Britain’s second largest society (Boards of Co-operative group, 2007).
In 2007, the Co-operative Society held discussions with United Co-operatives, who were Britain’s second-largest Co-operative, with regards to a proposed merger between the two societies. Currently, the Society is in the process of choosing whether to engage in transfer engagements with a Scottish Nith Valley Co-operative Society, which “is suffering a burden with its pension fund commitments” (www.co-op.co.uk).
4.1.3. Business Strategy
Bach (2004) defines a business strategy as “a plan that describes what an organization proposes to do to achieve a stated mission.” The reason for these strategies is to improve and facilitate and the running of a successful organization and can take many forms, including: “company strategies, product and services strategies, HR strategies and strategies that drive operational, support and management process”.
The Co-operative Group Ltd is a group of businesses that provides a variety of services and products, and whose core values are “honesty”, “openness” and “social responsibility” (The co-operative group, 2005). The Co-operative Group Ltd strives to deliver high-quality services and products to its customers as well as to contribute to the enrichment of society – via honest operating practices and by re-investing their profits in their business and in the communities they serve (The co-operative group, 2005).
As mentioned in the previous section, the Co-operative Group Ltd has recently experienced a lot of series change and transformation; this is outlined on the co-operative website as including: “…by selling off any business that did not accord to the Group’s commercial or co-operative aims, cutting-costs and revamping poor performing businesses, invested in new systems and new businesses, revitalised the management team and improved customer service. The next stage of their strategy is to take advantage of new business opportunities where they can make a difference for their customers” (www.co-op.co.uk/foodretail).
The Co-operative Group’s core objective is to “optimize profits from businesses where their co-operative values give them a positive marketing advantage” (The co-operative group, 2005). This allows them “to serve [their] members and to deliver [their] social goals as a successful co-operative, while making a reasonable financial return to their member-owners, both corporate and individual” (Sustainability Report, 2005).
The co-operative groups consider ethical and honest trading to be at the heart of good practice, as well as democratic accountability and participation. The company’s trading areas are managed by fifteen-member Area Committees who have annual elections and meetings. These members elect people onto “regional boards”, which look to report to all members in the region. “National board” encompasses directors who are elected via regional boards. Each Co-Operative Group store can also have member forums.
As Britain’s biggest co-operative, the Co-operative Group Ltd has an n important role within the larger co-operative movement. The Group subscribes to Co-operatives UK and the Co-operative Party, and is also a major sponsor of “new co-operative ventures, local initiatives through Co-operative Action and Fairtrade promotion” (The co-operative group, 2005).
4.1.4. Co-operative principles
These are the key principles of the Co-operative Group Ltd., as outlined on their website (The co-operative group, 2005): “Voluntary and open membership”; “Democratic member control”; “Member economic participation”, “Autonomy and independence”; “Education, training and information”; “Co-operation among co-operatives”; “Concern for community” (The co-operative group, 2005).
4.2. PERFORMANCE MEASUREMENT AND THE CO-OPERATIVE GROUP LTD.
4.2.1. Performance Measurement in Co-Operative Group
Naturally, as an organization with so many different markets and industries, the Co-operative has to deal with a wide range of reporting challenges. In order to handle these, the Co-operative Group introduced a consolidated approach to its corporate responsibility reporting that was designed to indicate a transparent overview of the their social, ethical and environmental performance, as well as to indicate their management and reporting standards, as well as to satisfy the demands of the individual business.
In order to gauge the performance of an organization across the range of these very different industries and markets, a selection of management programs and “impact indicators” were created.
These measure the “management infrastructure” of an organization and aim to motivate the embedding of programs that deal with “social performance”. This program is installed to encompass areas that are material to the Group, such as diversity, environment and community investment.
Another type of significant process indicators are “impact indicators”; these quantify a Society’s social performance and facilitate goal setting and “trend analysis”.
Every one of these indicators are based upon a generic management system, the fundamental aspects of which are as follows:
• “Policy to show that it is of sufficient importance to the business”
• “Governance is in place to ensure that the process is managed effectively”
• “Systems in place to ensure that it is implemented across the business”
• “That the systems are being monitored”
• “That as a result of monitoring, results are reported, evaluated and any issues arising are addressed.
A definition for each aspect of the management system is then developed, tailored to the performance area, which internal audit can then use to assess each businesses performance” (Chan et al, 2002).
This study will focus primarily on the food retail aspect of the Co-operative group; this is because, as outlined earlier, I have worked at a food retail outlet in Northampton. Therefore the next section will look to expand and examine the significance of performance management in Co-operative food retail stores.
In the current climate, retailers are facing severe budget and performance pressures. This means in order for them to survive, they must stay ahead of their competitors which means making sure all staff members are suitably trained and have the necessary skills to carry the organization into a profitable future. However, in large organizations this can prove to be extremely difficult – especially if there are many levels, departments or regions to monitor.
This is where integrated performance management programs come into play; they allow retail managers to have real-time access to the required data to construct good business decisions. These are also significantly beneficial to senior executives, allowing them to make sure that the functional, departmental, and staff goals are in alignment.
Chan et al (2002) observed that retailer managers are confronted with “a variety of high-impact decisions that must be made as quickly as possible in response to a variety of problems including fraud, out-of-stocks, ad misprints, employee scheduling crises, and customer service issues.” Consequently, these managers cannot handle all of this different information and responsibilities, so priorities must be established.
In recent years, a wide selection of programs and tools, such as “human resource”, “point of sale” and “inventory control systems”, have been made available to assist managers to establish priorities and to help them to make difficult decisions. However, as a result of this, managers in retailer have to rely on several different programs, and while there is a lot of data, it is often kept locked away, “making it difficult for employees to access and share as well as for executives to use in decision-making” (Elicker et al, 2006).
Thus, managers in retail long for a possibility to integrate this information technically and functionally. Through integrating technologies and systems, manages can make the most of their data as well as of the time and efforts of their staff. A considerable development towards this is for managers to supply the staff with suitable information that is structured so that they can quickly see what actions need to be taken and an integrated performance management program helps to accomplish this.
In most retail operations today, it is not uncommon for managers to not have access to real-time sales information. This can be as a result of the various operations levels, regions etc. but all of these factors renders it difficult for the manager to get access to important data which could assist them to advance work performance.
4.2.2. Performance Management in Retail
The Retail sector of the Co-operative Group provides the company with the largest profits than any of their other industries. The company can boast its own range of labelled products – many of which that are of high quality than their competitors – all in order to satisfy their customers’ needs.
The Co-operative Group aims to reward staffs who have performed well in the organization. The Co-op installs clear employment policies and practices, which set out what they expect from staff.
In 2004, the Co-op carried out an “employee satisfaction” survey, which showed that more than half of staff considered themselves to be “generally happy” to work for the Co-op (The co-operative sustainability report, 2005). However, just as many stated that they desired “more freedom to deliver outstanding service to their customers” (The co-operative sustainability report, 2005). Consequently the organization worked hard to address these statements, as well as with other comments submitted; which included entering into a partnership with “Solutions” in order to provide an “Employee Assistance Programme” offering free advice and counseling support. This also led to the foundation of the “Diamond Recognition Scheme” where staff can be nominated for “outstanding performance” in the workplace.
Elsewhere, a review of staff conditions was undertaken by Co-op’s internal audit function; this observed that a working relationship with trade unions existed, and that the chief executive supported this.
Furthermore, in order to make sure of the effective monitoring of employee conditions the HR Leadership Team meets monthly and report to the Board on a quarterly basis (The co-operative sustainability report, 2005).
4.3. THE CO-OPERATIVE, NORTHAMPTON
The Northampton Co-op is one of the largest retail stores in the UK.
4.3.1. Performance Review
In order to record staff performance, the co-op carries out a performance review two times every year.
This review is carried out by an interview arranged with every staff member, in which they ask questions such as if they “are happy” with their work, or if they require “some kind of training” (The co-operative sustainability report, 2005). Then, the retail executive will look to come up with a solution to help improve the staff member’s skills or training. Managers may also pass on positive or negative feedback accordingly.
Personally, I believe this to be an effective means as to measure staff members’ performance and feelings because it gives every staff member a chance to directly share their opinions with managers.
4.3.2. Leakage meetings
The company also carries out “leakage meetings” whereby they ask staff members specific questions that relate to the company and their role. Here the manager will pass out details about the company, including how much profit and loss the organisation has made during a specific time period. Managers will also explain any reasons for loss and explain how that staff member could help develop the business with improved work.
The aim of this type of review is to find out just how conscious staff are of the organization at large and to motivate them to work harder with view of the “bigger picture.” Every staff member must attend these types of interview.
4.3.3. Benchmarking in co-operative
The Co-op also carries out internal benchmarking where they compare their own organization as in within co-operative group. For example, the Northampton co-op will compare its business performance with other co-op stores in Britain.
4.3.4. Talk back meetings
The Co-op also carry out talk-back meetings in which the manager gets a group of staff together and asks them to express their opinions on the organization’s performance or maybe ask them to provide some fresh ideas as to how the company could potentially improve.
This gives staff members a chance to express their opinions. I experienced this type of feedback first hand when I was part of a talk-back meeting in 2007. It was a very interesting experience and I could see why and how it could benefit an organization, as so many people expressed unique and insightful opinions.
Though there are such programs where the input from the staff was obtained by the management it was not enough to motivate the employees. The first and foremost concern among the staff members was that these meetings and sessions were more or less routine events at the co-operative society and employee input did not carry any weightage. In other words, employee voice was not really heard but only a namesake communication took place. This is not a unique problem to Co-operative society. Literature abounds with instances of several corporations, which knowing full well the importance of employee voice fail to properly implement appropriate policies. (Robinson 2006; Kular et.al, 2008)
One of the important inferences is that boosting individual performances via promoting employee participation is the ideal method of improving organizational productivity. For the Northampton Co-operative society a step by step approach is recommended. This would facilitate better change management. To really initiate this positive change and bring about a transformation in the organization it is very important that the top level management participate actively in the change management process. When the management is serious about listening to employee voice and taking suitable actions to address their concerns and involves them actively in the organizational decision making process, the employees feel empowered and feel important. Research has indicated that employee satisfaction arising out of the feeling that they are being listened to gives rise to affective reactions which increases the employee’s commitment and fervor. (Perry et.al, 2006)
So the first stage of providing a participative climate in the organization should be followed up with the next stage of continuing or ‘moving ahead’ with the process that is already initiated. It is only by really acting on the suggestions given by employees, organizations can encourage active and continued employee participation. If these recommendations are adhered to, the Northampton Co-operative society will transform into a high performance organization. Since the current complaint is that employee opinions and concerns are only heard for formality sake, a real transformation wherein employee input is seriously acted upon would result in great enthusiasm and promote employee involvement in the organization. Finally, employee involvement should not be perceived as a pure policy which is occasionally practiced but should become integrated with the organizational culture (Soo and Lewis, 2009).
Another important aspect of performance management is the use of appropriate performance measurement tool. The following discussion centres on the various performance management tools and the programs in operation at the Northampton store.
4.4. BEST AVAILABLE TECHNIQUES
Performance measurement is a crucial tool for any organization and comprises a central aspect of effective management. This also means that the selection of performance measurement tool utilized by an organization must be suitable for the industry, the company, and the long-term goals they hope to achieve. What the managers and organization decide to implement will have a significant impact across the entire organization, and must be used to motivate the operational actions of the company, and to construct realistic targets for the future.
In this section I have gone through the various performance measurement programs, explaining how they work and their strengths and weaknesses. Of all of these mentioned, I believe that for the purpose of the food retail Co-op store, “Benchmarking” performance measurement would be the most effective. This should be done internally and also externally. By carrying out this form of performance measurement externally – i.e. comparing their company to competitors such as ASDA, Morrisons, Sainsburys etc. – will enable managers to see the areas in which they are strong or possible weak, and need work on. From external benchmarking the Co-op could learn a great deal of vital information from these leading companies, which will help drive the Co-op to be the best British food retailer.
The second type of performance measurement program that I believe the co-op should implement is “balance score card” (BSC). This is because it is an effective tool for measuring the total performance of a company, from the perspective of the staff, and across all levels, departments and regions of the company. This will help to give the company a wide range of feedback and opinions which will help it to develop and possibly give the Co-op a competitive advantage in the market.
These are the two performance measurement systems that I believe, if probably implemented and appropriated by the Co-op, will produce the most useful information to help the company manage its performance, and to set realistic targets for the future that will take the company to becoming the leading food retailer in the UK.
4.5. DATA ANALYSIS
After searching the literature for keywords such as performance management, ‘Employee satisfaction’, ‘employee involvement’, ‘High powered workplaces’ ‘performance measurement’, ‘Employee appraisal’, etc a vast amount of journals and texts were studied and the correlation between ‘employee performances’ and good HR management practices and policies were identified. Furthermore, as the case study, important organizational reports and HR case briefs were consulted to have a better idea of the current HR management practices that exist in the Northampton Co-operative society store. These policies were then compared with that of the performance enhancing policies that are adapted in successful high-powered organizations.
Once the research material pertaining to performance management was thoroughly studied and the important performance optimizing factors were identified, the current policies at the Northampton Store were compared to see if positive performance oriented HR policies are being adapted or not. It turns out that the HR department at Northampton store has some routine sessions such as ‘talkback meetings’ ‘internal benchmarking’, ‘leakage meetings’ etc. However these meetings are more or less like ‘Downward communication’ wherein the management briefs them about the current performance of the organization and the expected performance levels. Internal benchmarking, for example, concerns purely about the performance of the store against other Co-operative Society stores in the nearby areas. While leakage meetings are again simply routine sessions wherein the management briefs the staff members about the organizational goals and ambitions, future plans ext. Only the ‘talkback meetings’ provide a two way communication where the staff members are encouraged to explain the problems they face and how these could be addressed. Even these meetings are purely conducted as an employee reappraisal forum rather than as a powerful tool to motivate employees and improve their participation. This problem is actually a main problem face by many organizations today.
Even well established organizations with a huge HR department fail in their HR approach to improving performance management. As Kular et.al, (2008) reported, even though organizations understand the importance of promoting employee participation they most often fail in promoting the same and often end up with HR polices and procedures that are simply increasing the ‘Downward Communication’ instead of creating a ‘Two way communication’. For instance, the case of the NHS, the huge public health care organization is the UK, constitutes an excellent example of this failed approach to performance enhancement. A recent review of the HR policies at NHS that promote employee participation revealed that there were an “impressive array of top down communication mechanisms” (Bach, 2004) but there was a distinct absence of ‘Two way communication’.
This problem exists in many large organizations that spend a lot on improving their human resources and it stems from the failure in having a clear-cut understanding of what exactly contributes to employee performance enhancement and how to address the problem. One of the important findings of this study is that employee performance is directly connected with employee participation more than any other factor. Therefore efforts to boost employee performance should focus on measures to promote employee involvement in the organization. This involves making the employee count and let his voice be heard in the organizational decision making process. Last but not the least, promoting employee voice within the organization must be “genuine engagement rather than just tokenism” (Wilkinson et.al, 2004) as the chief executive of the Aqua company explains. Only when the employees feel that their opinions and ideas are acted upon they feel more involved in the organization and this is identified as the most important factor to boost employee performance.
One of the important recommendations of this study is that the Northampton Co-operative society store has to focus on improving employee participation. Improving participation is the key to improving employee performance. For this, establishing a clear two way communication channel is indispensible. The current HR approach at the Northampton store clearly does not encourage employee participation and most of the HR programs that they have in place are ineffective and do not contribute to improving employee involvement. As mentioned before even the ‘Talkback meetings’ that are a routine at the store are used only as an employee reappraisal medium and it does not invite employees into the active decision making process. Appreciating this crucial difference is the key to making the employees more participative in the organization. Participation empowers the employees, makes them feel good and wanted and is the best tool that could be used to boost performance.
However, as Perry et.al (2006) point out, participation should be on a much broader context. When participation is sparsely encouraged it does not yield the same performance results. In other words, what this implies is that employee participation and employee voice should become an integral part of the culture of the organization. Just the HR department cannot achieve this. The HR managers should approach the management of the Co-operative society to create such an organizational culture. So the priority at the Northampton Co-operative society should be to initiate a two way communication process that not just serves as an employee reprisal forum but also seeks to actively involve the employees in developing the organizational strategies.
This study investigated the influence of performance measurement and performance management tools because it is something that is crucial for organizations. In particular, the aim of this study was to analyze and suggest ways to make actual improvements and developments within the performance of the Co-operative food retail store in Northampton. As discussed in this paper, there are many ways in which the store could improve its performance by applying several of these key performance measurement and management tools. From the data obtained from the organizational reports it was clear that there are very few HR initiatives that are directly focused on enhancing employee performance. The current HR programs do not highlight performance management and the various activities such as ‘leakage meetings’ and Talk back meetings’ are more of downward communication rather than a two way communication.
Furthermore the ‘internal benchmarking’ as a performance review is very limited and a more comprehensive approach would be to have external benchmarking. As explained elsewhere in the paper, external benchmarking would provide the organization with a more exact appreciation of its strengths and weaknesses and would constitute effective inputs for the strategic business decisions. Also, this study recommends the use of the ‘Balanced Score Card’ (BSC) system in order to better align the organizational activities with its overall strategic objectives. Furthermore the BSC would also promote improved internal as well as external communication. The knowledge and growth perspective, which is a part of the BSC focuses on continuous employee training and performance improvement that is crucial for improving the competitiveness and comparative advantage over the competitors.
The HR programs that are currently in operation at the Northampton store clearly fall short of these objectives. Therefore there is an urgent need for implementation of both effective performance measurement as well as performance management tools. . This study has presented with the chance to examine a real-world business issue, as well as looking at just how far an organization can implement or apply these measurement tools. A clear fact that could be inferred from the case study is that though the company wants to improve its employee performance and to achieve its organizational targets very little is being done to address the important parameters that could contribute to this change. For instance, though promoting employee voice and employee participation in the organization is well known as a crucial component of optimizing organizational productivity the current HR policies do not highlight this.
5.1. LITERATURE APPRAISAL
This study researched and analyzed the existing literature connected with performance measurement and performance management tools and approaches. This research aimed to supply the most suitable tools and programs for this study. Findings from the literature were compared within the organizational context in order to break-down the concept into more manageable sections for further analysis.
5.2. RESEARCH METHODOLOGY
This research presented the methodology for this study as a review of existing literature around performance measurement and management techniques, The aim of this section was to construct a research plan with which to draw comparative conclusions for the Co-op Society in order to identify the existing performance measurement systems and to discover current policies and their shortcomings from the performance management perspective. Various performance management related research articles were consulted and the observations from these reports were analyzed with the HR policies prevailing at the Northampton Society store. Although interviews and questionnaires would have provided more valuable input and an employee centric observation to the study, this research being purely secondary in nature, did not include such quantitative data. Such an approach could be recommended for a future study as it would provide a more comprehensive outlook and help ascertain more valuable information that could contribute as valid input for future strategic decisions for the organization.
5.3. KEY FINDINGS FROM THE LITERATURE
Research into existing literature was essential as it highlighted the relevant performance measurement techniques that could be useful to an organization. With this knowledge, this research recommended ways to improve performance, and to improve the company’s internal and external standards; factors that are critical for the organization’s competitive advantage. Examining the literature was particularly useful because it highlighted the need for performance management within organizations, and the various tools to achieve them.
The literature review chapter also provided an overview of the Co-Operative Group Ltd., including their history and business strategy – which is significant information. It also examined the contemporary performance measurement system used by the organization.