Workable or Myth
We are fast approaching the fourth quarter of the year and that means almost getting to the end of the year. Line managers and supervisors are likely to be done with the process of performance evaluation (Performance Appraisals) of their teams for the first half of the year while preparing to have a second go at the process for the year. Performance appraisals have always been used interchangeably with Performance management. Performance Management and Performance Appraisals should be understood as separate activities or terminologies and should be treated differently and implemented as such.
Employee Performance management has become the one most important activity in the workplace today for achieving success in all business management processes. Indeed, a lot of organizations are struggling with contemporary performance management. “Employees are the most valuable resource of an organization” and they can make or break a business. This statement, though overly lip-serviced is not a rhetoric but factual and has been proven time and again in research findings. Individual employee performance is parallel to the overall performance of the organization.
The effective management of employees’ performance however does not and should not be limited to the job performance of that employee but the overall performance of the employee in the workplace. Hence, performance management goes far beyond the evaluation of the job performance of employees. Employee behaviour and employee conduct are other performance indicators that can be managed and improved to make employees more productive in the workplace.
Performance Management should also go beyond the simple evaluation of performance for reward purposes. Performance evaluation results or information can be used to inform the development of HR Strategic Functions such as Employee Development, Succession Planning, building and maintaining skills and competency repositories, Employee Coaching and Mentoring as well as other Employee Assistance Programmes.
Measuring Employee Productivity
All life forces depend on one primary principle which is the principle of growth. If the sustenance of a business depends greatly on the people who work in it, then it is important to continuously seek to have the people perform at higher levels. One simple way this can be done is the continuous measurement of the level of their performance with respect to minimum allowable targets of productivity.
In measuring employee productivity, the entire scope of employee performance comes to play. Areas of job performance, behavioural performance and employee conduct must be assessed periodically to ensure continuous improvement.
Every organization has the opportunity to mould employee attitudes positively. While moulding employees into what an organization expects of them, there remains a dilemma of how to deal with the already corrupted employees.
Every organization has the opportunity to mould employee attitudes positively. While moulding employees into what an organization expects of them, there remains a dilemma of how to deal with the already corrupted employees. It is simple but quite expensive. Employees are often taken through corrective institutional training to imbibe in them the accepted standards. After that, employees are evaluated on performance and behaviour periodically in a specialized programme, using fair and effective appraisal systems. In many cases, employees are appraised only on their specific performance in their jobs. The evolved best practice in performance management currently is to also appraise employees on expected or standard behavioural traits that evolve from organizational values and norms. Employees must live and reflect organizational values and hence be evaluated on such values. Then employees can also be appraised on their own specific, stated and agreed personal goals and objectives over the appraisal period.
Performance Management Processes
The performance management process begins with the evaluation of all jobs within the organization and specifically, the determination of key performance indicators (KPIs) for each job and established positions within the organization. Then educating all stakeholders of the process such as employees, supervisors and line managers etc. on the specific performance evaluation processes. Education is on the various aspects of the process, forms to be completed and time frame of the programme as well as key performance indicators. The next will often be the target setting process where supervisors discuss and agree of specific performance standards or targets for the year or half year as the case may be. Another process is the private performance appraisal conference which is held before the appraisal period between an employee and his/her direct supervisor. Appraisal conferences ensure that the employee and the supervisor or manager agree on the specific terms of the performance appraisal process. They agree for example on the appraisal period, key performance indicators to be evaluated, expected behaviour and employee’s personal growth objectives or goals. The performance appraisal conference also ensures that employees understand their specific roles and behaviour as expected of them and the consequences of performing below expected targets.
After the appraisal conference, the next is the actual performance evaluation process. Actual performance is measured against expected performance and employees graded. Depending on the outcome of the evaluation, an employee may be assisted to perform better, rewarded for performing well or sacked (terminated) for continued non-performance. Assisting employees to perform better may take several forms. These include training, retraining, implementing employee assistance programmes or the discipline of employees through prior agreed progressive disciplinary procedures.
The most visible use for performance appraisal results is for reward purposes. Reward comes in several forms – kind or cash. For the purpose of this article, we will concentrate on the cash side of reward. A lot of organizations today are considering and implementing pay for performance. Let’s call it cash for performance. Cash for performance is simply the payment of cash or money as a reward for good performance by an employee. But are we sure pay for performance is helpful for the bottom line?
Cash for Motivation
Recent Human Resources or the more contemporary Human Capital theorists have identified employee motivation as one of the most important factors that drives productivity in organizations. Since the 1970’s through to the 20’s, workplace experts have sought to sustain or increase productivity through the introduction of policies that seek to motivate the workforce.
Let’s take a closer look at the motivation component of pay or what is technically termed compensation. Two very interesting theories explain how fast money or pay can create unmotivated workforce. The first is Adam’s Pay Equity Theory. The pay equity theory simply states that employees measure their relative worth and the contribution they make to an organization. They then compare what they earn with their colleagues and judge whether by virtue of their contribution, what they are getting is fair as compared with their colleagues in same or similar jobs. Where they find an unfair comparison, they become apathetic and feel they are not getting what they deserve. They will therefore agitate until they get what they believe they should get or simply and silently just refuse to work – Hard.
The second theory is Vroom’s expectancy theory. This theory predicts, as stated by Bohlander, Snell and Sherman (2001) that one’s level of motivation depends on the attractiveness of the rewards sought and the probability of obtaining those rewards. Because humans are thinking, reasoning and emotional beings with beliefs and anticipations of the future, they will exert greater effort in the attainment of their desires and dreams. Where this anticipation is let down or disappointed, there is intense indifference or apathy. It is just like a rabbit and carrot situation. Dangle a carrot long enough and the rabbit will exert greater effort to get it – the bigger the carrot, the greater the effort supposedly.
So we know that good pay or salary motivates employees only to an extent. We also know that using money as a motivator is not sustainable. So what can we do to make motivation sustainable? Frederick Herzberg, a psychologist and motivational theorists (as he then was) believes that motivators such as increased Job Responsibility & Accountability, Personal Achievement, Recognition, Growth and Advancement and Learning don’t only motivate workers in their jobs, they also sustain such motivation over time.
Comparing these motivators to Maslow’s Hierarchy of Human Needs, you would see that most of these Motivators, if not all, fall within the upper hierarchy of Maslow’s theory which is Self Esteem/Self Worth, Self-Actualization and Knowledge needs. This revelation leads to the practical principle of Job enrichment which according to Herzberg, answers the workplace dilemma of job satisfaction and hence the motivation of workers.
Job enrichment can be described as the systematic loading of jobs in an organization to gradually introduce motivators into employee tasks with the view to increasing satisfaction and hence performance. Job loading seeks to increase the personal contribution of an employee in work tasks. The vertical loading of jobs basically means increasing the accountability and responsibility of workers in their jobs, creating room for more learning opportunities for the employee, ensuring recognition through the appropriate reward systems which will create a sense of achievement in the employee.
Horizontal job loading however has been the problem for an older practice of job enlargement where employee job tasks are increased in terms of quantity and routine and have been found to reduce motivation in staff.
The Good, Bad and Ugly
So we know that there are other things that work better than cash in the motivation of workers in an organization. The myth that more pay for workers will do the trick is not entirely true. Neither is the myth that when you necessarily tie pay to performance it will do the trick.
The Good is that it works for a while. It does work for some organizations when other factors and functions of HR are tweaked and manipulated to compliment the pay for performance system. Employees begin to understand the principle of earning a reward. And for that knowledge, they work harder to make a handsome bonus as reward for good performance. Beyond a few years of implementing the pay for performance policy, employees get used to the habit of earning a reward and tend to demand higher rewards until the organization is unable to sustain such high rewards. What you want to do as a Human resources professional is focus on implementing those HR functions that have an inherent motivational capabilities. This has been proven to be more sustainable than the excessive focus on pay for performance. So pay for performance is good, will be good for a while but might outlive its objectives of sustained motivation. There are several other alternatives for reward such as non-cash related mechanisms. Exploring them may be just the solution you need rather than solely focusing on pay for performance.
Then there is the Bad. Pay for performance can drive employees to focus on results to the detriment of creating a fair, relaxed, less stressful and less friendly working environment. In the midst of the haggle and bustle to make more cash through good performance, employees may step on each other’s toes, do each other in, exhibit negative competition and create an acrimonious work environment which is devoid of mutual trust, cohesion and unity. Competition is good, but too much competition should not be encouraged. Team work does not necessarily mean trust, unity and absolute interdependence. Pay for performance sets the stage for competition and this must be managed always.
The Ugly is that too much emphasis on cash as reward for performance may result in de-motivation of staff. When quantum of reward is not sustained for example, de-motivation may set in after a few years down the line. I am sure experts in employee or employment psychology will agree with the fact that cash and more of it is addictive in the workplace. And the more promise of cash, the more ‘intoxicating’ it can be for workers. Where cash incentives are not sustained over time, employees may become demotivated. An organization must avoid keeping de-motivated workforce because it becomes unsustainable to run the organization effectively. De-motivation is a negative force in a work system. It eats the system from inside out. It is like the worst worm you have ever encountered – the worst virus to ever exist.
De-motivated employees are bitter, angry and disgruntled. They continuously scheme to sabotage business operations. They are blinded by greed, revenge and the need to settle personal scores. A de-motivated workforce is mostly wasteful. Because they don’t care and have no conscience, they hardly consider the interest of the employer, business or organization in doing their work. They work only in waiting for their salary and reward. That may not be a good basis for sustaining motivation and hence productivity. How about commitment, passion for the job, going the extra mile?
De-motivated employees are also accident prone. An increase in accidents in the workplace sometimes points to high levels of de-motivation in the workplace. Accidents sometimes lead to the death of some employees. Because a de-motivated employee is angry and working with very little care, it is easy to overlook some basic safety requirements or procedures for operations. De-motivated workforces normally sleep on duty. They mostly have very little interest in the jobs they do and hence find solace in sleep, dreams and dozing. De-motivated employees also increase levels and frequency of absenteeism. A de-motivated worker finds no reason for coming to work at all or coming to work on time or even stay till closing.
So you see, there are several functional HR issues that may be adversely affecting productivity and not necessarily pay for performance.
Pay for performance should be one of the solutions and not the solution.
Is it workable in Ghana? Sure it is.
However, the process design and implementation must be considered and applied differently in typical Ghanaian outfits.