Discuss about the Human Resource Management for Performance Reviews.
Performance management is one of the most important core functions of human resource management as it is concerned with the optimising of workplace performance. Performance management is an approach that helps business organisations in planning, monitoring and analysing the performance of the individuals, departments and an organisation on the whole. Performance management is important in the present day business world because of the increasing competition between rival firms in the market.
Accenture, one of the top multinational companies in the world, recently planned to drop its performance reviews in order to bring about a massive change in its internal operations because the seniors of the company identified that the system of performance reviews failed in achieving their primary purpose of fostering better performance amongst the employees. Instead of performance reviews, Accenture has planned to implement a system of performance feedback, which is a major change for a company having a workforce of almost 330,000 employees. Therefore, this report is aimed at gaining a deeper insight into the case of Accenture’s performance management system and the impact that it will have on the business operations of the company in the future. The report also makes certain recommendations that the company can use to strengthen its new performance management system.
Abandoning Formal Performance Reviews
The business world is evolving and is experiencing changes at a rate that could have never been predicted by even the top multinational companies in the world. The changes in the business world are making survival for business organisations tougher than ever before and is forcing them to drop certain traditional practices altogether, no matter how effective they have proven to be in the past. Performance reviews is one such traditional human resource management practice that has become obsolete and needs to be either modified completely or dropped altogether (Melnyk, Bititci, Platts, Tobias, & Andersen, 2014).
According to the Harvard Business Review, almost one-third of the U.S. companies have already dropped performance reviews. Companies like Accenture, Deloitte, PwC, etc. have taken a firm decision to drop their performance management systems because of the existence of inefficiencies in them and their failure in achieving what they were intended to achieve (Tavis, 2016). To some extent, the decision of such multinational companies to abandon their performance reviews is justified. Accenture has already identified that its performance review system is causing a great wastage of company’s resources. The company is investing excessive time, money and effort in conducting its performance reviews but the system in inefficient in itself (American Management Association , n.d.). The management of the company believes that assessing the employees on the bases of forced rankings and plotting distribution curves to assess their performance is in no way helping in achieving higher performance and is rather causing dissatisfaction amongst them (performance-appraisals.org, n.d.). A system of performance ratings is becoming obsolete and is merely causing the employees to lose their morale and engagement because of the inability of the companies to effectively use that data that they collect through performance ratings (Rock & Jones, 2015).
On the other hand, Accenture has a better performance management system in its mind. The company wants to implement a performance management system where it would assess the performance of the employees in the roles that they are given to play. Rather than forcing performance objectives and rankings upon them, the company is aiming at adopting a strategy under which it would empower the employees to take business decisions and drive their performance on their own and is planning to make it more effective by strengthening its recruitment process to recruit the right people for the right job (NISEN, 2015).
Therefore, if a system of performance reviews is costing a lot of time and money to the company and is still failing in achieving what it is intended to achieve, it is justified on the part of the company to drop the performance review system and implement new strategies that will help in enhancing workplace performance and fostering a positive work culture in the organisation.
Consequences of Dropping Performance Management Reviews
Performance management systems are an important part of human resource management because the employees tend to perform better when they feel that their performance is being monitored and that the performance they will show will help the company in achieving its organisational gaols and objectives (Patricia, 2015). To a certain extent, abandoning performance management system altogether, can have some serious implications for the company in the longer run. Even though abandoning the performance review system might look like an attractive proposition to the company because of the cost and other resource benefits associated with it, it can have some long lasting impact on the organisation in the long run (Beehivesoftware, 2017). Certain implications of dropping the performance review system for Accenture are discussed below:
First of all, dropping a performance management system will have a serious impact on the competitive environment in the workplace. Performance reviews have been found to have a positive impact on the competitive environment of a workplace, especially when they are attached with performance appraisals. Abandoning the performance reviews will foster leniency in the workplace and the competition amongst employees will drop down (Michael Armstrong, 2014).
Secondly, removal of performance reviews will have a direct impact on the performance levels of the employees. It has been found that employee performance levels can decrease by 10 percent in case a company removes its performance management system because it becomes difficult for the managers to manage the employees without having some serious information in hand and also because of the fall in employee engagement levels (CEB HR, 2016).
Thirdly, it will become more difficult for the managers to carry out their job duties and responsibilities. Managers are the people who have to lead others by keeping a check on what they are doing. In absence of employee performance system, the managers will have no knowledge about the performance of their juniors and it will ultimately become difficult for them to communicate with their juniors (Sarvani, n.d.).
Fourthly, in absence of performance management system, the employers will be unable to communicate the performance expectations to the employees and the employees will feel less engaged because of absence of clarity of goals and objectives. Thus, the staff will be less engaged and will show less job satisfaction and job commitment (Hanks, n.d.).
Fifthly, the organisation itself will lose the ability to keep a check on what all is going on in the organisation. In absence of a performance management system, the management will only be able to recognize certain issues when they will pile up and will give rise to certain major issues in the longer run. By that time, they would also lose the ability to deal with the problem, which will further make the situation more difficult (Smith, 2011).
Sixthly, the management will also not be able to identify performance gaps and take necessary steps to bridge them using training and development programs, which will be a collateral damage to the organisation. Ultimately, the company might start losing its competitive edge in the market in the longer run (Hansen, n.d.).
Lastly, the overall scenario will make it difficult to manage the human resources of the company properly and the employee turnover ratios will mount up, which will be the worst case scenario for a company like Accenture (Reh, 2017).
Recommendations for Improvement
Dropping the performance management system altogether might have some serious implications for Accenture, as discussed above. As a result, the company should try to improve its performance management system rather than killing the annual performance reviews. Certain recommendations that the company can look into in order to strengthen its performance management system are discussed below:
First of all, Accenture should put an end to performance ratings but should implement a system of performance feedback. In a performance feedback system, all employees working in an organisation receive feedback from the employees who are working around them, such as peers, juniors, seniors, managers, etc. (Landy & Farr) It acts a self-assessment tool that can help the employees in keeping a track of their performance and analysing the skills that they lack. Further, these feedbacks are anonymous and getting multiple feedbacks for assessing the performance of a single employee will make the information more reliable and accurate (Zenger & Folkman, 2012).
Secondly, the management at Accenture can also include the S.M.A.R.T. goal model in its performance feedback system (Bogue, 2005). The SMART goal model proposes the important of formulating S.M.A.R.T goals i.e. Specific, Measurable, Achievable, Relevant and Time-bound, as they can have a great impact on the performance of the employees (Conzemius & O'Neill, 2011).
Thirdly, the company should try to make the performance management system more oriented towards the future rather than laying more stress on what has happened in the past (Abd, 2014 ). Using the information collected through performance management systems to shape the future human management practices can prove to be of a greater benefit than using the same information to look into the past and continuously discussing on what went wrong (Ben-Oz & Greve, 2012).
Fourthly, rather than considering performance management system as an annual practice and conducting performance appraisals once a year, Accenture can start using it as a regular human resource management practice. The company can provide performance feedback to the employees on a regular basis, such as weekly or monthly and can provide the employees with certain rewards and recognitions for the performance levels that they show (Wyse, 2015). Regular performance feedback will help in fostering a competitive workplace environment and rewards will help in re-enforcing positive behaviour amongst the employees (Malik, Butt, & Choi, 2015).
Lastly, Accenture can also introduce a system of self-review where the employees will be asked to provide an assessment of their own performance levels every month. The self-review document will also ask the employees to formulate certain goals and objectives for themselves and the time frame in which they plan to accomplish them. Such a system will allow the employees to assess their own performance levels and identify performance gaps if they fail to achieve their goals and objectives in the desired time frame (Ahlrichs, 2015). If the company can spare more time and resources, it can also include a self-development plan in the self-assessment strategy, where the employees can mention the skills or competencies that they wish to achieve in the near future. Such initiatives will foster a lot of positivity in the workplace and will help in engaging the employees (Roberts, 2003). Further, it will also become possible for the company to offer better growth opportunities to the employees.
The decision of the company to drop its performance review system is justified on the grounds that it is proving to be a wastage of important resources as it is failing in meeting its objective of fostering a better performance level in the workplace. Even though the company might be able to save a lot of resources (in terms of operational costs and time) but will have to face some serious implications in the longer run, that might have a detrimental effect on its business activities and market position. Thus, the company should carefully consider all options and should look into the above recommendations to strengthen its performance management system rather than dropping it altogether.
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