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Performance Management Case Study: Fossil Group

Jocelyn Stange

February 4, 2021 | 2 minute read

In this blog, we'll share how Fossil Group evolved its performance management process and 3 simple steps.

The Evolution of Fossil's Performance Management Process

Fossil Group was using a complex, 100% paper process for performance reviews and check-ins for more than 15,000 global employees. They wanted to move toward a digital performance management strategy, but knew they needed to simplify the process first.

Fossil Group set up four traditional components that were stretched across three strategic touch points throughout the year. These touch points were supplemented with ongoing performance conversations that could be initiated by any employee, at any time.

As Fossil Group evolved its company-wide performance appro a ch , they were happy to see immediate progress.

92% of employees were participating in goal-setting reviews, setting an average of six goals per employee.

However, when they dug into the data, they found that 35% of individual goals created were misaligned or did not have an impact on the organization and its strategic priorities. They knew they needed to get better at goal alignment if they wanted to meet important business objectives.

Explore the three ways Fossil Group simplified performance management.

1. They scheduled ongoing performance conversations and continuous feedback.

Although the three formal performance touch points in place were working, Fossil Group knew teams needed to have goal conversations more frequently. They implemented informal “check-ins” that could be launched by any employee at any time.

To ensure  adequate time was made for important performance conversations and other performance related activities, Fossil Group implemented "Performance Days" — days strictly dedicated to employee performance. On these days, n o task-related meetings are scheduled, and all work is set aside for the day. Conversations between managers, employees, and teams are all centered on performance.

2. They created intuitive goal conversation templates.

Fossil Group recognized that simply having more performance conversations wasn’t enough — the conversations needed to include healthy dialogue, debate, and collaboration from managers and employees. They created 1-on-1 templates to help guide managers and employees through an effective and productive goal conversation.

Check-in templates could be customized to the needs and work of individual teams and team members. The templates helped ensure conversations were focused on creating clear, aligned, and motivating goals. 

3. They used recognition to keep performance conversations fresh.

Fossil Group wanted to bring performance conversations full circle by recognizing employee performance daily. They created recognition toolkits for managers including fun notecards, gift cards, and employee recognition tips. They  also  launched an online, peer-to-peer recognition program that generated an average of 140 recognition stories each week.

By  taking time to uncover the needs of its employees, and delegating time for managers to focus on perf ormance,  Fossil Group  was able to listen and act on employee voices and evolve their performance strategy f or  succes s .

Download our latest ebook: Making Time for Performance Management to get more tips for simplifying your performance management process.

Published February 4, 2021 | Written By Jocelyn Stange

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International Conference on Advanced Intelligent Systems and Informatics

AISI 2020: Proceedings of the International Conference on Advanced Intelligent Systems and Informatics 2020 pp 681–693 Cite as

Performance Appraisal on Employees’ Motivation: A Comprehensive Analysis

• Maryam Alsuwaidi   ORCID: orcid.org/0000-0001-9281-8560 19 ,
• Muhammad Alshurideh   ORCID: orcid.org/0000-0002-7336-381X 19 , 20 ,
• Barween Al Kurdi   ORCID: orcid.org/0000-0002-0825-4617 21 &
• Said A. Salloum   ORCID: orcid.org/0000-0002-6073-3981 22  
• Conference paper
• First Online: 20 September 2020

4215 Accesses

39 Citations

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 1261))

Several analysis studies have been carried out with a view to providing valuable knowledge into the existing research outline of the performance appraisal and employee motivation. The current study systematically reviews and synthesizes the performance appraisal and employee motivation aiming to provide a comprehensive analysis of 27 articles from 2015 to 2020. The research will aim to establish the impact of performance appraisal fairness on the employees’ motivation in an organization. To achieve its objective, the study will adopt descriptive research. It will be informed of a survey, and there will be a sample selection to make the process economical. This shows that there will be a use of different techniques of information collection since the data to be collected a primary data. There will be interviewing of the sample size, and their responses will be noted down. The presence of the researcher may influence some people, and this necessitates the use of questionnaires for the respondents to fill on their own. In addition, most of the analyzed studies were conducted in Malaysia, China, Pakistan, and India. Besides, most of the analyzed studies were frequently conducted in job satisfaction and performance context, employee motivation followed by organizational effectiveness context. To that end, the findings of this review study provide an insight into the current trend of how performance appraisal affects employee’s motivation.

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Maryam Alsuwaidi & Muhammad Alshurideh

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Alsuwaidi, M., Alshurideh, M., Al Kurdi, B., Salloum, S.A. (2021). Performance Appraisal on Employees’ Motivation: A Comprehensive Analysis. In: Hassanien, A.E., Slowik, A., Snášel, V., El-Deeb, H., Tolba, F.M. (eds) Proceedings of the International Conference on Advanced Intelligent Systems and Informatics 2020. AISI 2020. Advances in Intelligent Systems and Computing, vol 1261. Springer, Cham. https://doi.org/10.1007/978-3-030-58669-0_61

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Performance Appraisal Systems and Their Impact on Employee Performance

The purpose of this study was to understand the relationship between employee performance appraisal systems, employee motivation, and employee job performance. A cross-sectional survey of 393 employees of an Indian service organization showed that the performance appraisal system has a direct impact on employee job performance, and that this impact is moderated by the employee's motivation. Respondents were asked about 36 appraisal system, performance, and motivation attributes. Implications of the findings for the future research directions and practice are discussed.

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<p>Employee performance has traditionally been accorded prime focus by human resource managers. As a result, a number of performance appraisal techniques have over time been devised to help establish employee’s performance. In the contemporary times, the use of performance appraisals has been extended beyond rating of the employee’s performance to aspects such as motivation. Accordingly, this study sought to investigate effectiveness of performance appraisal systems and its effect on employee motivation. The study’s main objectives pertained to establishing the moderating role of performance appraisal as a motivation tool as well as potential challenges.</p><p>The study findings show the presence of significant positive outcomes when the organisation uses performance appraisal as a motivation tool. Further, the study finds that the use of more than one appraisal techniques helps yield greater satisfaction and consequently higher motivational levels. The specific aspects of performance appraisal systems (PAS) that help improve motivation include the linking of performance to rewards; using the PAS to help set objectives and benchmarks; as well as the use of PA to help identify employee’s strength and weaknesses.</p>

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The general objective of the study is to determine the role of performance appraisal and its impact on employee. The study is guided by the following specific objectives: to establish the extent to which performance appraisal process affects employee motivation, to determine the extent to which appraisers affect staff motivation and to determine the challenges in appraising employee performance. The study adopted descriptive research design. The population of interest consists of 120 employees of Service Industry in Nepal. Data is collected using structured questionnaires and additional qualitative data is collected using the reference from the questionnaire and the objectives of the study. The data is analysed using statistical tools such as frequency distribution, percentages and Pearson correlations. Data is presented using tables and charts. The research findings suggest that regular assessment of performance leads to employee motivation. Performance appraisal rating can be considered as a technique that has a positive effect on work performance and employee motivation. Employees may be motivated if the appraisal process is based on accurate and current job descriptions. On the challenges of performance appraisal on employee motivation established that some managers tend to be liberal or strict in their rating of staff which may affect the employees’ motivation. The manager’s ability to address the skills gaps can have a significant impact on the employee’s motivation. Regular ratings may affect the performance and motivation of the employees. Fair assessment of the employee’s performance may enhance their motivation.

360-Degree Feedback in Educational Institutions and its Applicability in Kerala

The Performance Appraisal of the employees’ job performance is evaluated as per the standards already set for the category such as leadership, teamwork, output, supervision etc. This study is made to know about the Pros and Cons of the Performance Appraisal methods that are adopted in many organisations. The Management get to know the strengths and weaknesses of the organisations using the 360-degree feedback. Here an attempt is made to focus on the effectiveness of the performance appraisal system in various educational institutions in Kerala. Various arts colleges are considered for this study. It is very important to know the present scenario of education that is being imparted to the students who are the pillars for the next generations. The employees are expected to have a high degree of commitment and effort and the performance appraisal should be considered as an important function of every employer. The Performance Appraisal, if done rightly, can lead to better performance of the employees and ultimate effectiveness. It is also a systematic way for ensuring that the employer and the employee discuss regularly on the current/existing performance, the issues and arrive at consensus which will be beneficial for both. Here we have made an effort to Study on the performance appraisal system which is done to improve the condition for a better performance of employees at various colleges and know the effectiveness of various appraisal systems. The usual way of Top Down Performance Appraisal, in which only the supervisor appraises the subordinate is changed and even the subordinate has a chance to review the supervisor and vice-versa is practised in 360-degree performance appraisal. This paper contributes primary study of 360-degree feedback, the needs to link leader assessment and development efforts to individual, team, and organisation results and its need in educational institutions.

Linkage between Performance Appraisal System and Employee Performance: Does Motivation Moderate?

The concept of performance appraisal came into ideal practice in the 1940s, helping a system to launch merit rating during the era of the Second World War as a fair wage system (Lillian & Sitati, 2011). Lots of research in recent decades have been done on the assessment of results (Bretz et al., 1992; Fisher, 1989). Often, a key aspect of human resource management is the performance assessment process. The target population of the present study consisted of all the employees working in the three private (Multan Medical complex, Care Family and Ibne Sina) hospitals of Multan, Pakistan. The study follows a convenient sampling technique for the determination of sample size and having n=131. Adopted questionnaire of Al-Ghamdi (2011) Verhulp (2006) was used with a 5-point Likert scale starting from 1= strongly agree, 2=agree, 3= uncertain, 4=disagree and lastly 5= strongly disagree. The study findings indicate 63% of the respondents belong to a male category, while on the other hand, 37% of the respondents belong to the female category. The study findings verified the fact that there exists an association between performance appraisal systems and seem to suggest that hospitals are interested in improving their performance through the performance appraisal systems. The findings verified the fact that there exists an association between motivation with employee performance.

High-involvement innovation: views from frontline service workers and managers

Purpose The purpose of this paper is to examine the experience of call centre employees who have been involved in high-involvement innovation (HII) activities to understand what frontline and managerial employees think of these involvement activities. Design/methodology/approach A qualitative case study approach is utilised, drawing on evidence from seven UK call centres. Various sources of data are examined, i.e. interviews, observation, call listening and documentary. Findings From the analysis of the testimonies, it is found that job design, the mechanisms and practices as well as other people’s perceptions of involvement influence the experience of frontline and managerial employees. The findings highlight that HII has the potential to intensify jobs (both frontline and managerial employees) when the quantity of ideas submitted becomes a component of the employee performance appraisal system. Research limitations/implications This research has shown that the heightened targets used in many of the cases have reduced the ability of employees to be involved in any innovation activities. What is not clear from the findings is that if performance measures can be used in a more participative way with employees so that they can have less time pressure allowing them to become more involved in innovation activities. Thus, an interesting direction for future research would be to consider the effects of performance measurement systems in the role they play in facilitating HII activities. Practical implications The findings show that HII has the potential to enrich frontline employees’ jobs, making them feel more valued and giving them some variety and challenge in their job. Therefore, practitioners should approach employee involvement in the innovation process as something potentially fruitful and not just wasted time away from the phones. Originality/value This research is important as it explores what effects these involvement initiatives have on the employees and managers involved in them. This is valuable since there is no real consensus across human resource management, labour process and critical management fields resulting in a limited conceptualisation of the relationship between management practices, employee experiences and the outcomes. This research makes a contribution through the elaboration of current theory to understand the complexities and subtleties that exist between the high involvement management practices and the experience of workers and their managers.

Training Appraisers: An Orientation Program for Improving Supervisory Performance Ratings

This paper addresses management's need to train supervisory personnel in the use of employee performance appraisals. First, the application as well as the usefulness of the appraisal system is described — as dictated by and in relation to — recent litigation concerning discrimination charges. After exploration of the various approaches to employee evaluation, recommendations for effective training of supervisory personnel in implementing appraisal systems are presented. These recommendations take into consideration often neglected factors such as employee motivation, employee aptitude and discussion of performance evaluations with the employees.

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Case studies: FedEx and HSBC's revamped performance management approaches

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Eric Tan, Managing Director, FedEx Singapore, and Vishesh Dimri, Lead - HR Consulting, HSBC, both place importance on trust, honesty, transparency, and ownership in their approaches, as we find out in these interviews.

Fedex singapore’s new management system drives trust & transparency.

Eric Tan, Managing Director, FedEx Singapore, shares insights into this performance review approach — from its inception, to what it entails, along with what employers could consider in the intended shift to such a model.

Delivery service provider FedEx Singapore (FedEx) is a keen advocate of a culture of continued engagement and transparency at its workplace, one where open communication and trust thrive amongst its over 1,000 employees.

This is done through a series of engagement initiatives such as its ‘Open Door Policy’ and ‘Survey Feedback Action’ (SFA), says Eric Tan, Managing Director, FedEx Singapore (pictured above, left) . “This allows our employees to understand the big picture and the part they play in the success of the organisation. FedEx lives up to our corporate philosophy of ‘people-service-profit’: By taking care of our people, they will provide outstanding service for our customers, which enables business growth, and we reinvest this revenue back into our people. All programmes and policies, at every organisational level, synchronise with this philosophy,” he affirms.

One way the company has been driving this is through a change in its performance management system — from a conventional performance appraisal system that utilised a comparative 10-point rating scale leveraging the bell curve methodology, to an enhanced performance review structure, which focuses on the work that employees accomplish (goals), and how it is accomplished (competencies).

Tan explains: “As a ‘people’ company, FedEx strives to continuously improve its performance management processes to drive individual, team, and organisational performance. To achieve this, we assume a holistic approach towards performance management and the employee experience. With a continuous improvement mindset, FedEx across Asia Pacific proactively anticipates process and technological enhancements so as to enable us to successfully transition into a new performance management process.

"These are all part of our concerted efforts to sustain a workplace culture where our people stand at the centre of our corporate philosophy."

What this enhanced performance review structure entails

According to Tan, this enhanced structure is designed to provide an in-depth understanding of what success looks like for the employee. It adopts an absolute rating scale to evaluate employee performance, based on the ratings of “Exceeded Expectations”, “Met Expectations”, and “Did Not Meet Expectations”.

Competencies refer to observable behaviours that an employee exhibits in their role when applying their knowledge, skills and abilities. To ensure these competencies are applicable to employees’ job roles, varying competency models for frontline employees, professionals and managers have been built for their individual application. To illustrate:

• Frontline employees are customer-centric and team-focused. Hence, the focus for them is to adapt to changes and communicate well to both internal and external customers.
• For professionals, having a business thinking mindset is imperative, so they need to build on their analytical skills and make timely decisions and recommendations.
• As for managers, it is critical for them to be equipped with the ability to lead, influence, inspire, and serve, as well as to cultivate exceptional team performance while ensuring their team members are valued and empowered in their day-to-day responsibilities.

No doubt, this change involved several key considerations, with the most impactful one being to instil a growth mindset that encourages employees to focus on future performance as opposed to reflecting on past performance.

It also came with its own set of challenges, with the main one being to manage this change as well as facilitate it. To address this, the HR team developed a collective approach to help prepare and support all employees through the transformation, ensuring a seamless process from start to end.

The employees responded “very well”, as a result. Tan notes: "We focused on employee engagement and concentrated our efforts on fostering genuine commitment between the manager and employee as we recognise the value in supporting our employees in their learning journeys as they develop and grow professionally. We believe this will, in turn, result in higher levels of productivity by our team members."

Overall, this new system goes hand-in-hand both with FedEx’s rewards framework, and career development framework. Tan highlights: “Building a performance-based work culture not only serves to boost employee morale, productivity, and performance, but also prepares the company for strategic workforce planning. It is especially pivotal for us as industry leaders to look at a blend of individual and organisational components to instil a growth culture for our people to be successful.

"Every employee is given the chance to pursue their dream in FedEx, and support is always readily available to help maximise their potential, through training and development platforms accessible to all."

Words of advice

Like Tan and his team, more leaders are shifting away from “quantitative” rating scales, to a more “qualitative” approach to appraisals. Yet, there are still leaders who prefer the former approach. And as Tan points out, there is no perfect structure to follow, as every approach comes with its unique pros and cons.

Thus, he says, it is more important to look at the direction the organisation is headed and adapt a model that works best for both the employees and the organisation at each stage. "The goal is to move all stakeholders, including employees, in a concerted manner toward our collective goal that serves people growth and business profitability."

At FedEx, this also means that apart from working closely with key stakeholders including but not limited to HR and senior management teams, the management is well supported in performance, development, and management skillsets through avid training programmes.

This encompasses effecting a mindset change by shifting from system-related work to providing resources and tools, to empower managers to conduct effective and meaningful performance & development conversations, build manager-employee relationships, and consistently engage their team members by leveraging coaching and feedback skillsets.

Reflecting on the company’s experience, Tan shares his words of encouragement for employers intending to improve their own performance management processes. "Performance is an ongoing journey, and we need to recognise the importance of continuously looking at improving the overarching employee experience by encouraging ongoing learning and communication rigorously and regularly. In any scenario – whether personal or professional – one should not stop learning, developing and upskilling to make the most of their talents and grow on the right trajectory, thereby bringing value to their teams and peers.

"Human performance is the function of many influences: accountability, feedback, motivation, skills and knowledge, rewards and recognition. These influences are interdependent and ultimately result in the desired performance."

HSBC drives manager-employee ownership of performance & development

Vishesh Dimri, Lead - HR Consulting, HSBC, shares how a focus on digital enablement, process effectiveness, and people manager capabilities helps drive open and honest conversations during feedback, foster stronger relationships, and more.

Banking and financial services firm HSBC focuses on three key pillars in driving the new way of work — digital enablement, process effectiveness, and people manager capabilities. 

These pillars are what help ensure a holistic approach towards performance management and enablement for both its employees and managers,  Vishesh Dimri, Lead - HR Consulting, HSBC (pictured above, right)  shares.

First, as part of digital enablement, HSBC has in place an HR mobile application that allows an "easy and simple" adoption of everyday performance on a real-time basis, where employees and managers are able to capture achievements and share regular, two-way feedback via the use of technology. More than an app, it is "a demonstration of flexible and remote working, without compromising on outcomes or comfort", Dimri highlights. 

With this app, employees are able to access an HR to-do list, their everyday performance & development plans, online learning resources (Learning On-the-Go), manage personal and employment information, as well as view real-time people manager dashboards, HSBC connections, and the organisation chart. 

Additionally, managers are empowered to handle key approvals on-the-go, as well as manage the personal and job details for direct functional reports.

Next, process effectiveness involves the use of everyday performance principles including goal setting and regular check-ins to facilitate the achievement of career aspirations as well as maintain productivity. 

"It fosters stronger relationships between managers and colleagues. Managers can support their team members in the right ways and, at the right times, towards a meaningful year-end assessment," Dimri explains. 

Finally, the third pillar of people manager capability is enhanced through constant engagement, coaching, and providing content support such as training and briefings, support resources, and guides.

One of the key elements of HSBC's year-end assessment is the 'Fairness Review', which has in place the following governance processes to ensure it remains unbiased: 

• seeking risk stewards’ inputs relating to non-financial performance,
• senior management reporting,
• audit checks, and
• evidence of all Fairness Review meeting discussions.

Dimri and his team also make it a point to support people managers in carrying out these reviews, through scenarios-based, bite-sized videos available via e-learning; briefing sessions; by refining the HSBC values to align with its behaviour rating scale to reflect the focus on Fairness Review, as well as via a continuous feedback tool.

Elaborating on this tool, Dimri shares that the feedback functionality enables employees to give, request and receive feedback. This can be done on a continuous basis — for example, when an employee has completed a key meeting or project milestone — or he/she can request feedback on a specific activity.

"We believe that by receiving feedback from their people manager, team members or colleagues can help each employee to better understand how he/she is progressing against his/her goals and what he/she may need to do differently to be successful in the future."

The process also helps to present evidence of employees' performance & development outcomes for their year-end assessment, wherein f eedback employees receive can flow into their year-end review forms.

"With this tool, feedback can be requested and sent to multiple colleagues at the same time across a wider network. This supports teamwork, collaboration, and agile ways of working," Dimri notes.

Top tips for employers

Having benefitted from this revised performance management process, the leader shares his learnings and words of advice to employers looking to improve their own processes in this area.

First, he shares, managers must focus on everyday performance & development by having simple conversations throughout the year supporting performance, development, and wellbeing.

"A two-way open and honest conversation is the key to successful performance management, developing trusting relationships, and supporting career aspirations."

Next, he notes the importance of recognition in driving successful performance management. "Recognising our people not only for a job well done, but also for effort and even for taking up a challenging or difficult task. In HSBC Singapore, we have 'At Our Best Recognition', an online tool for employees to celebrate colleagues who bring HSBC values to life. The programme helps to promote a better understanding of values in everyday practice and enables a consistent and equal way of recognising people globally."

Last, he also adds that having enabling tools to help support the performance & development conversation is critical. At HSBC Singapore, this involves a continuous performance tool that helps employees to stay connected with their manager and colleagues, anytime, and anywhere, playing an even more critical role with the "majority of the workforce working from home.

This tool lets employees take ownership by:

• Creating and tracking key activities, including regular conversations with managers, at their convenience; and sharing daily key activities with managers and documenting progress.
• Facilitating regular feedback such as conversations that can be initiated by the employee, manager, or colleague to request, give, or receive feedback to recognise positive performance and behaviour or support future improvements.
• Raising a topic for discussion — for example: discuss the strengths & development plan and focus on wellbeing development.
• Capturing achievements — celebrate success and share experiences.

4 key steps to implement a performance management strategy that supports your business objectives

From the Human Capital Implementation Toolkit , we share a snapshot on how employers can work towards a performance management strategy that cultivates the right environment that connects employees with the organisation and motivates them to excel.

Step 1: Set a strategic performance management philosophy

HR plays a strategic role in ensuring that company goals can be met through Human Capital programmes.

• Establish strategic organisational goals with senior leadership, detailing the key thrusts, KPIs and targets needed in the short, medium and long term to support their vision.

Step 2: Cascade and communicate goals

Provide a clear line of sight to create a more engaged and motivated workforce.

• Cascade corporate goals through business units down to individual employees, enabling them to understand how their actions influence the success of the organisation.
• Communicate strategic objectives and how each performance measure supports those objectives.
• Develop training/development plans for employees to achieve the capabilities to reach these goals.

Step 3: Manage performance

Supporting managers as the main link between employee performance and business outcomes.

Differentiate rewards  

• Cultivate a strong pay-for-performance culture.
• Communicate the wage structure so employees understand how it impacts them and how to change their behaviours.
• Design discretionary monetary or non-monetary recognition schemes.

Empower managers

• Empower managers to recognise and reward beyond targets and goals.

Reinforce desired behaviours

• Address the past year’s performance gaps and set new goals for the next year.
• Reinforce desired behaviours by recognising, rewarding and cultivating them. Identify role models within the organisation to be champions of certain desired behaviours.

Step 4: Evaluate and reward performance

Managers’ ability to evaluate and reward performance, and optimise touchpoints for growth and learning will be key to the success of this step.

Track performance

• Track performance against targets and schedule periodic performance reviews.
• Seek timely and multiple sources of performance feedback, e.g., managers, peers, customers, etc. to provide a fair and holistic assessment.

Equip and train managers to

• Drive and evaluate performance.
• Coach poor performers.
• Conduct performance conversations.

Conduct performance conversations regularly at meaningful points

• These allow managers to manage employee expectations, identify performance gaps, address performance concerns, discuss future growth plans, and enable employees to voice their opinions.

While systems and practices are essential, a key differentiator for an effective performance management practice is the alignment between culture, values and systems. This involves establishing an organisational culture that provides steadfast support to employees in their personal learning and development that views every touchpoint as a growth opportunity.

The performance management process should not be solely centred on employees’ past contributions but perform as future-focused stay conversations that support and engage employees in ways to grow, learn and improve.

FedEx Singapore and HSBC are Human Capital Partners in the Human Capital Partnership Programme .

The Human Capital Partnership (HCP) Programme is a tripartite initiative that brings together a community of exemplary employers in Singapore who have progressive employment practices in their organisations and are committed to developing their human capital.

Photos: Provided (L-R Eric Tan, MD, FedEx Singapore, and Vishesh Dimri, Lead - HR Consulting, HSBC)

Follow us on  Telegram  and on  Instagram  @humanresourcesonline for all the latest HR and manpower news from around the region!

Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!

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Employees’ Perception of Performance Appraisal System: A Case Study

2012, International Journal of Business and Management

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Texila International Journal of Academic Research

Texila International Journal

Performance appraisal systems used by a multitude of organisations globally should pose a major concern to all who use this employee evaluation process. This is mainly because performance appraisals do have an effect on employees. Whether this effect is for good or bad is the primary goal of this paper. Using data from a named organisation, the study will strive to determine whether the performance appraisal methods of that organisation have indeed had intrinsic effects on the performance of individual employees and whether this has indeed trickled down to the entire organisation as a whole. Both quantitative and qualitative research approaches were chosen as a primary and secondary data source. Questionnaires and interviews were used for primary data collection. Secondary data were collected from different articles, books, and online sources as well as the organisation under consideration. The results showed that, indeed, inherent in a performance appraisal system may be factors that need special attention if it is to work out for the benefit of the organisation. Whereas the procedures of the system may in themselves be very beneficial, the implementation thereof may be lacking and expose holes that may need to be filled from top management, middle management, and supervisees alike in order for the organisation as a whole to realise the full benefit of the performance appraisal system. The researcher recommended that the organisation take these factors into consideration if they are to achieve organisational objectives and goals.

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• International Journal of Business and Management
• Vol. 7, No. 2 (2012)
• Boachie-Mensah

Employees’ Perception of Performance Appraisal System: A Case Study

•   Francis Boachie-Mensah    
•   Peter Awini Seidu    

Performance appraisals are essential for effective evaluation and management of staff. Since perceptions influence people’s judgement and attitudes towards particular phenomena, it could be expected that the staff of an educational institution might hold diverse opinions about the performance appraisal system in the institution. This study focused on employees’ perceptions of performance appraisal biases or errors, and examined the implications for developing and implementing an effective appraisal system in a polytechnic in Takoradi, Ghana. The study also sought to identify pragmatic ways to ameliorate any appraisal biases that may be present in the institution’s appraisal system. Data was collected from 140 employees of the institution, which included both academic and administrative staff who had worked in the institution for at least two consecutive years, and whose work had been appraised previously. A content validated semi-structured interview schedule was used to interview the respondents. The data collected was analysed, using descriptive statistics, in order to address the research questions. The results of the study indicate that employees of the institution perceive that the performance appraisal system of the institution is affected by subjectivity, and is influenced by some major errors. The findings have serious managerial implications for training, motivation and provision of resources for effective performance appraisal. A major limitation of the study is that, due to financial constraints, it was conducted in only one institution. Therefore, the findings may not be described as a reflection of the general state of affairs in the other educational institutions in the country.

• DOI: 10.5539/ijbm.v7n2p73

• ISSN(Print): 1833-3850
• ISSN(Online): 1833-8119
• Started: 2006
• Frequency: bimonthly

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Performance Management and Appraisal: A Case Study of Gap Inc.

The performance management system is a key process in any given organization. Through the process, firms are able to communicate organizational objectives, promote individual accountability, and track and evaluate the performance of employees (Gruman & Saks, 2011; Selden & Sowa, 2011). With the increased changing competitive business environment, organizations require to regularly review the system, with the aim of improving various points to keep up with the market demand and competitors (Moynihan, & Pandey, 2010). Being a competitive firm, Gap Inc. required to review its performance management for a number of reasons. To begin with, both managers and subordinates disliked the cumbersomeness of the existing method. Notably, they did not like the frequent briefing meetings that required them to explain their contributions to the performance of the company. Moreover, management considered the “nice” culture to be a favorite; however, it was not an honest approach to performance appraisal. Resultantly, there was a need to transform the culture from “nice” to “nice and honest.”

“Traditional” Performance Management System

A performance management system is a method used by a corporation to measure the results of the employees. A traditional performance management system is characterizedwith aspects that have attracted many critics, such as its focus on employee weaknesses, reliance on annual reviews, failure to provide timely feedback, setting of goals that do not align with workers’ needs, and its tendency to reward annual performance and the duration of serving the company (Becker, Antuar, & Everett, 2011). Notably, these aspects make the system to rank some employees highly, yet their productivity may not commensurate with the award they receive. For example, a method such as forced ranking inherently requires that only a few employees rank at the top and bottom while concentrating the rest in the middle (Cascio, 2016; DeNisi & Murphy, 2017). Therefore, this method often fails to fairly reward some of the employees, while rewarding others excessively.

Process Adopted in Setting up GPS System

In the creation of a new performance management system, it is crucial to follow certain steps. Ollander-Krane, the employee tasked with the development of the new policy adopted three stages in the development of the new system, including defining performance, facilitating performance, and encouraging performance. In defining performance, he ensured that every employee understands his or her role in the company. To achieve this, he ascertained that there were clear goals, measures, and assessment methods. According to Cascio (2016), goals direct employees to the achievement of the specific performance target. For example, Gap Inc. had goals of increasing the market share. In addition, the company should be able to determine the level of attainment of the set goals. Vague aspects, such as the success of a company are not measurable; hence, they are not useful in the creation of a performance management system. Moreover, once the measurement is determined, it is necessary to assess how progress is made toward accomplishing the set goals. It is essential to have regular performance appraisals to direct the employees toward the achievement goals.

In facilitating performance, the manager ensures that there are no limiting factors towards the achievement of the set goals. For instance, Ollander-Krane established that the current system demotivated the employers. In particular, they focused on their grades after evaluation instead of their actual performance (Margolis, McKinnon, and Norris, 2015). Therefore, setting up a new system would eliminate hindrance. All the steps were facilitatedby researching and reading books. Specifically, the manager read books such as  Get Rid of the Performance Review ,  Coaching with the Brain in Mind , and  Mindset . The books had unique lessons which aided Ollander-Kane to set up a new performance management system.

Four Main Components of the New System

The new performance appraisal method Gap Inc. adopted had four components: performance standard, goals, touch base, and rewards. The four approaches form the core-components of Grow, Perform, Succeed (GPS) – the new performance management system.

Performance Standard

The performance standard replaces the annual reviews that characterized the traditional system. Instead of the traditional ratings and rankings, employees would adhere to a set performance standard on a daily basis. Notably, the new system set tough objectives that will motivate employees to work hard to achieve the set targets. In such a way, the company will probably increase its market share owing to its hard work, company values. Furthermore, the standard allows the corporation to learn from its failures whenever employees are unable to meet the set targets (Bolden, 2016). In addition, managers can train their employees to equip them with skills that will aid them to effectively achieve the set targets. Feedback will also be provided to employees; hence, providing a basis on which to improve upon their weaknesses and strengths.

To set goals, the new system ensured that employees settled on few goals that are easy to attain. Goals provide a sense of direction for the employees because it dictates what is to be achieved (Pulakos, Hanson, Arad, & Moye, 2015). The goal setting process will be capped at eight, with some goals having a short time spun while the rest lasting for a few years. The company also encourages the employees to evaluate their targets more than once in a year, as opposed to the rigid year-end reviews that characterized the old system.

GPS intended to change the traditional way of discussing performance amongst employees with “touch base” sessions which focused on their performance instead of informal business discussions of reports. Rather than taking notes in these meetings, Ollander-Krane discouraged managers from taking notes during the session, but to concentrate in the meetings. In this way, he hoped to achieve a well-motivated workforce. Interestingly, employees were given an equal responsibility as their managers to ensure they met regularly. In 2014, a survey by the human resource department found out that there were regular touch base meetings (Margolis et al., 2015). Therefore, the regular meetings resulted in better performance of the company.

Employees in Gap Inc. used to receive awards on a yearly basis in the old system. Currently, employees are given rewards on account of how much they contribute to the output levels. When every employee is awarded individually, they are motivated to improve their performance (Arnaboldi, Lapsley, & Steccolini, 2015). Consequently, personal output amount will result in increases in the general performance of the firm. Annual bonuses given to employees will change to a clear structure that identifies company performance as the most critical reward determiner, accounting for 75% of the total bonus. The remaining 25%will be based on individual performance. In this way, the firm’s employees strive to improve the business results of the company since they account for most of the rewards. Moreover, the company increased its delegation of bonus allocation to the managers (Margolis et al., 2015). Since rewards will not be pegged on the annual evaluations, the organization’s reward system offers incentives to employees, eliminating the need for regular update meetings characterizing the traditional system.

Challenges that Faced Gap Inc. in Implementing GPS

Although the management accepted the proposal of Ollander-Krane, its implementation, as is the case with any change in an organization,was not without challenges. The adoption of GPS as a replacement to the traditional appraisal method began in 2014 and was characterized by a few issues. For example, some managers were not aware of the need for a new management system. In fact, some did not understand the rationale of GPS. Even though the managers disliked the “traditional” method that conducted reviews at the end of the year, it is what they understood. However, this challenge was overcome by educating all the managers about the old and new system, aiding their understanding. It turned out that the new system would create freedom for them to manage their employees. The system would promote the acknowledgment of top and low performers.

In addition, even after understanding the new system, some managers considered GPS as a new method by the management to reduce their ability to earn bonuses. They thought the new method would limit their avenues of obtaining more income(Margolis et al., 2015). Regardless of the attitude of the managers, the system proved to be effective in increasing the market share and company performance. It is common for humans to resist any change due to the uncertainties it presents.

Furthermore, managers faced difficulty in adopting and getting accustomed to the new system. In other words, the new system involved a different approach to giving and receiving feedback, which is vital in notifying employees about their performance levels (Sargeant et al., 2015). In fact, discussions about the year performance were easier in the “traditional” system. The previous system allowed managers to give feedback to employees about specific measures that made their performance to be evaluated at a certain level. Nevertheless, this challenge would be overcome with the right amount of training, time, and effort in using the GPS system.

Another challenge is the fact that the regular touch base meetings posed their unique problems, such as disruptions in the course of the year. As a result, the affected employee misses some meetings. When they resume, it becomes difficult for them to be at par with their colleagues because they might have lost a sense of the future strategic direction of the company or department. In such a way, the implementation of the system is hampered directly by even its components.

Performance Management Systems and the Effectiveness of GPS

Most managers mistakenly use the performance appraisal and performance management interchangeably. Unlike the former which is used to identify the strengths and weaknesses of employees in the execution of their job description, the latter is a method applied by the human resource department to give direction to subordinates or seniors. In fact, the adoption of GPS as a new performance management system is a move in the right direction. Ollander-Krane reports that in the first year, the new system had achieved some positive changes in the company. For example, some employees stated that their touch base had increased, while others acknowledged that they had not spoken with their superiors for several months before the adoption of GPS. The increased meetings amongst the employees probably increased the working relationship of the subordinates and their superiors (Selvarajan, Singh, & Solansky, 2018; Duncan, & Malini, 2016; Forrester, 2011). Therefore, the new method was impactful to the organization’s performance.

Moreover, the system is linked to the company’s ticker symbol, reminding employees that their performance is evaluated by the share prices of the company. As a result, they will direct their efforts in the growth of the company’s financial performance. The system also enhances objectivity and honesty in the sharing of feedback between managers and employees. Moreover, it provides employees with a sense of direction. For instance, it gives them their current performance level while providing the expected output from their efforts for the future.

If I were to recommend a new performance management system to a company that is still traditional, I would suggest GPS as a better alternative. The new system is easier to implement than other systems. It requires little participation by the management in deciding the amount of bonus to give to employees. Moreover, the method allows managers to determine how to allocate bonuses amongst their employees. Consequently, some business units were able to invent their own incentive scheme that motivated employees to provide overwhelming performance. The method also increased the efficiency of service delivery within the company and reducing the workload for the human resource personnel tasked with performance appraisal (Tziner & Rabenu, 2018; Tziner & Rabenu, 2018). In this way, the time will be used in other equally important tasks.

The new system is also effective because it has reduced the number of customer complaints. In particular, the complaints reduced to one from between 30-40 calls in previous years. Owing to this, it is possible that the system will blend well in other organizations increasing their customer satisfaction. Since customers are contented, the firm is able to retain customers while growing its market share.

In summary, performance management should not be confused with performance appraisal. The former promotes the strengths of employees by providing an avenue to direct their efforts in meeting the company objectives, while the latter is used to measure performance and offer bases for which promotions and firings in an organization are done. It is important for the management to adopt a good management system since it aids in increasing the productivity of employees and the profitability of the firm.

Arnaboldi, M., Lapsley, I., & Steccolini, I. (2015).Performance management in the public sector: The ultimate challenge.  Financial Accountability & Management ,  31 (1), 1-22.

Becker, K., Antuar, N., & Everett, C. (2011). Implementing an employee performance management system in a nonprofit organization.  Nonprofit Management and Leadership ,  21 (3), 255-271.

Bolden, R. (2016). Leadership, management and organizational development. In  Gower handbook of leadership and management development  (pp. 143-158).Routledge.

Cascio, W. F. (2016).  Managing human resources: productivity, quality of work life, profits  (10th ed.). New York: McGraw-Hill.

DeNisi, A. S., & Murphy, K. R. (2017).Performance appraisal and performance management: 100 years of progress?  Journal of Applied Psychology ,  102 (3), 421.

Duncan, M. S., & Malini, N. (2016). Best practices of sales force compensation within small, to medium sized enterprises: The metrics associated with performance appraisal.  The Association of Collegiate Marketing Educators ,  123 , 120-127.

Forrester, G. (2011). Performance management in education: milestone or millstone?.  Management in Education ,  25 (1), 5-9.

Gruman, J. A., & Saks, A. M. (2011).Performance management and employee engagement.  Human Resource Management Review ,  21 (2), 123-136.

Margolis, J., McKinnon, P., and Norris, M. (2015).Gap Inc.: Refashioning Performance Management. Harvard Business School

Moynihan, D. P., & Pandey, S. K. (2010). The big question for performance management: Why do managers use performance information?.  Journal of Public Administration Research and Theory ,  20 (4), 849-866.

Pulakos, E. D., Hanson, R. M., Arad, S., & Moye, N. (2015). Performance management can be fixed: An on-the-job experiential learning approach for complex behavior change.  Industrial and Organizational Psychology ,  8 (1), 51-76.

Sargeant, J., Lockyer, J., Mann, K., Holmboe, E., Silver, I., Armson, H., …& Power, M. (2015). Facilitated reflective performance feedback: developing an evidence-and theory-based model that builds relationship, explores reactions and content, and coaches for performance change (R2C2).  Academic Medicine ,  90 (12), 1698-1706.

Selden, S., & Sowa, J. E. (2011).Performance management and appraisal in human service organizations: Management and staff perspectives.  Public Personnel Management ,  40 (3), 251-264.

Selvarajan, T. T., Singh, B., & Solansky, S. (2018). Performance appraisal fairness, leader member exchange and motivation to improve performance: A study of US and Mexican employees.  Journal of Business Research ,  85 , 142-154.

Tziner, A., & Rabenu, E. (2018). Ways to improve the performance appraisal system 2: Alternative strategies for assessing and evaluating performance. In  Improving Performance Appraisal at Work .Edward Elgar Publishing.

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