Evaluating the Performance Measurement System at CERA

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HRM
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Executive Summary
The report has been prepared for throwing light on the performance measurement system
implemented in CERA. The company follows a system for measuring the performance of
employees. There are certain factors that limit the management to enjoy all the fruits of the
adopted performance measurement system. These limitations are described that are developed
due to the organizational strategy as well as the current developments of the HR practices.
Further, this report shows the recommendations regarding the appropriate performance
measurement approaches as well as indicative methods.
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Table of Contents
Introduction.................................................................................................................................................4
Limitations of Performance Measurement System in CERA........................................................................5
Recommendations for More Effective Approaches and Indicative Methods..............................................8
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
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Introduction
Performance measurement refers to the methodology of gathering and analysis of the
information in relation to the performance or output results of the processes, organization or the
individuals. Performance management can be seen as the vital part of the organization for
controlling and improving the performance of individuals of an organization. This report
analyses the performance measurement system of CERA. CERA is a Sydney-based company
engaged in the business of civil engineering, planning as well as smart structures. The company
follows the performance measurement method of management by objectives. Under this method,
it utilizes Performance Planning and Review (PPR) in which the review takes place on a half-
yearly and yearly basis. This report consists of the limitations of this system along with the
recommendations for addressing these limitations.
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Limitations of Performance Measurement System in CERA
CERA was established in the year 2007 having about 45 employees and associations with more
than 15 independent contractors. Performance management offers a platform to the managers as
well as the supervisors for measuring the performance of employees and ensuring whether the
expectations of the company are being fulfilled by them. The method of performance
measurement differs from company to company depending on the size, business type, work
environment, and employee occupation as well. It can be seen that CERA utilizes the method of
management by objectives for the purpose of measuring employee performance (Islamia, et. al.,
2018). Management by objectives is a type of management model in which the objectives are
clearly defined and agreed by both the employees and management as well. The main aim of this
model states as the enhancement of organizational performance.
This model involves the development of an information system by management in order to make
a comparison between the actual performance and objectives with the pre-determined objectives.
It would not wrong to consider that the adoption of management by objectives model offers
benefits such as better communication, and enhancement in employee commitment and
motivation as well. However, the management of CERA thinks that the implementation of this
model looks good only in speaking but in real terms, there is something more than this.MBO
requires absolute support of the top management which cannot be seen in CERA. They think that
this model is not taken seriously by the company until something wrong takes place in the
company (Hamukwaya, and Yazdanifard, 2014). It can be seen that after the results of the
performance measurement, more attention is given to those who performed below the standard.
This ultimately leads to the little attention to those who have performed exceeding the
expectations by the company.
In CERA, the bonus-type arrangement involves the cash reward to the area that performed
exceeding the expectations. The bonus received used to be divided among the staff members
mainly on the basis of seniority. This means that the senior staff receives more rewards and
facilities than the junior employees. Such practice brings de-motivation and dissatisfaction of job
among the junior employees. the people also realized that the company is practicing a bonus-
system that possesses misalignment. This misalignment has become the cause of developing
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tension among the employees and enhancing negativity at the workplace. Although the managers
of the company are aware of this fact they ignore this consideration due to some reason (Synnott,
2017).
Many organizations including CERA think that adoption of MBO brings several organizational
problems. They think that the implementation of MBO is the cure for all the problems of
performance measurement reality is somewhat different. A wide gap can be realized in the
expectations of management and the employees. In CERA, the employees keep their objectives
and target simply while the management aims at achieving higher level objectives. It can be said
that MBO leads to the establishment of conflicts between the objectives of management and that
of employees (Festing and Barzantny, 2008). In MBO, a point comes when the employees are
highly pressurized for the purpose of achieving objectives being determined for them by
management. In this method, the main objective is to follow the process of achieving goals on a
constant basis.
Many times, employees fail in achieving those objectives within the determined time period.
This model provides the provision of penalized those employees and rewarding the employees
who effectively achieve the pre-determined objectives within the prescribed timeline. Therefore,
this model follows the approach of reward-punishment for measuring the performance of
employees. However, it should not be ignored that this approach develops a high level of stress
among the employees that can surely affect their efficiency (Managementstudyhq, 2019). CERA
follows MBO in which the objectives are set mutually for the employees and are measured by
comparing the actual objectives achieved with the planned ones.
First of all, the whole process is highly time-consuming and it should also be noted that setting
up of objectives cannot be done in quick time. This model requires the conducting of regular
meetings of CERA management for assessing whether the performance measurement system is
working properly and effectively or not. And these meetings consume a high amount of time.
The method of management by objectives seems a simple process but CERA has realized that
this process fails to provide a significant degree of durability to the organization. It does not
provide adequate space for grabbing new opportunities and implementing significant changes
(Raj, 2012). MBO is majorly utilized for the purpose of measuring employee performance in a
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quantifiable manner. It is clearly stated that this model emphasizes significantly on the
quantifiable aspect of the objectives ignoring the qualitative aspect.
In CERA, it can be seen that the model of MBO has failed to educate the employees properly
regarding the working of MBO, its benefits to all the employees and management, role in
performance measurement, and how it works. Employees are following this model without
having an in-depth understanding of this model. It is evident that there is an absence of teaching
philosophy to the employees under the method of MBO. The strategy of CERA can be stated as
offering a high-quality and high contract service to the clients with the maximization of the
adoption of the virtual technologies as well as the deployment of the superior, relational,
marketing, and technical skills of the employees (Wenceslaus and Ifeoma, 2014). The strategy
mainly focuses on the improvement of services and involves the changes that are necessary in
the technological world. At this time, it becomes difficult for CERA to implement changes in the
objectives of the management and employees since MBO does not provide a sufficient degree of
flexibility.
As per the strategy, the management requires changing of the earlier objectives to technological
objectives. The business environment is dynamic in nature which gives rise to new changes
every short time. Therefore, a specific objective becomes obsolete and valid after a certain period
of time. This specific objective may become obsolete due to the modified policies, revised
organizational objectives, and changed premises as well. The company possesses an adequate
amount of talent that is crucial for the success of the organizational strategy. CERA itself thinks
that out of them, there are some employees in the company who are treated like school children
during the process of performance management (Qureshi, and Hassan, 2013). It is a wrong HRM
practice in MBO that does not motivate those employees to do work beyond their capabilities
and objectives. It can be said that this practice leads to the unfair measurement of the
performance of all the employees. it also hinders the optimum utilization of the talent available
to the company.
CERA needs to understand that this talent when utilized and rewarded properly can lead to
effective outcomes. Apart from all these limitations, it should not be forgotten that the method of
MBO increases the paperwork for the employees and the company. This model of performance
management put an avalanche of paperwork on the company in the form of newsletters, manuals
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for training, booklets for instruction, and other manuals. However, the progress reports and other
documents also add to the avalanche of paperwork that employees require submitting. One of the
executives of CERA thinks that many companies are taking second thought regarding the
utilization of the MBO model for the aim of managing employee performance (Dey and Giri,
2017). Due to the changes in the business environment, this model requires adoption with some
degree of flexibility and durability. But such a facility cannot be expected from this model for
which several big companies are supporting the fact of abandoning this model.
Recommendations for More Effective Approaches and Indicative
Methods
Considering the limitations being faced by CERA, it would be highly recommended to either
replace the current performance measurement method or utilize it with an additional approach. It
can be seen that the boat of performance management in CERA is sailing on the single approach
of performance management named Management by Objectives. Keeping in mind all the
limitations, the company should adopt the behavioral as well as result approach of performance
appraisal for addressing the issues developed by MBO.
Behavioral Approach
The behavioral approach of performance measurement is considered as the most utilized
approach in which certain vertical scales are used on the basis of specific parameters. This
approach survives on the view of getting the correct level of employee performance on the basis
of analyzing the desirable behaviors of employees. Instead of focusing on the efforts, this
approach identifies and ensures the right behavior of employees. The approach involves a clear
definition of behavior being expected from the employees from the initial phase (May, 2013).
This approach would definitely be helpful in eliminating the tension among the employees in
CERA as can be seen under the MBO method. This approach mainly emphasizes the employee
behavior which ultimately depicts the process that is being utilized by the employee in order to
attain the pre-determined objectives.
Unlike MBO, this approach does not require much paperwork while it involves only the
evaluation forms that state the general as well as specific behavior of the employee. Such
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evaluation assists the employees in making them aware what behavior should be utilized at the
workplace by depicting a minimum competency level. This approach can be adopted for
performance measurement by using two significant methods named Behaviorally Anchored
Rating Scale (BARS) and Behavioral Observation Scale (BOS) (Sattar, et. al., 2018).
In BARS, the parameters are developed and agreed to by the employees and management as well
on the basis of which certain scales are established. This method involves the employee
anchoring of poor, average and good on the basis of their behavior along with performance. This
method can be seen as the fusion of the traditional methods of the rating scale and essay
evaluation. In CERA, it is realized that MBO provides the judgmental or subjective performance
measurement. In such a case, BARS are the most suitable method for CERA as it provides
performance evaluation on an objective basis.
Another method, BOS is considered as the improved version of the method BARS that offers the
behavioral description of an employee in a more specific as well as frequency manner. Both the
methods provide reliable and accurate data regarding employee performance and behavior. This
approach provides attention on the employees individually along with providing them feedback
on their performance and behavior that was absent in the MBO method in CERA. This approach
and its methods would assist CERA in enhancing productivity and decreasing costs along with
providing confidence and transparency among the employees.
Result Approach
As the name implies, the results-based approach of performance measurement involves the
evaluation of employee performance on the basis of the outcomes by the employee efforts. This
approach can be said more objective than all the approaches since it is absolutely based on the
end results of the actions of employees. apart from this, it is suitable and relevant for many
significant circumstances in the workplace. This approach works better when the employee
possesses adequate skills for job accomplishment and improves those skills regularly
(Bhattacharyya, 2016). This approach would provide CERA a huge degree of flexibility and
durability and also provide the employees for utilizing their resources and knowledge for
achieving desired performance.
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CERA can use this approach by using the Balanced Scorecard method and Productivity
Measurement and Evaluation System (ProMES). Balanced Scorecard involves financial
measures along with operational measures for evaluating employee performance. This method
emphasizes significant areas such as customer, learning and growth, financial; and operations
and internal. It develops a connection between the key aspects such as core values, initiatives,
mission, vision, measures, objectives, and strategic focus areas and so on. Instead of focusing on
objectives, CERA would be able to give attention to all the significant areas of employees and
the company that is relevant for the success of a strategy (Maimela and Samuel, 2016). This
method would be helpful in improving the strategic communication that takes place internally as
well as externally. With such a method, a company can undertake strategic planning in a better
way.
It would become easier for CERA to improve the reporting process of employee performance
more effectively. Balanced Scorecard demands the development of key performance indicators
for the attainment of significant strategic objectives. This method would definitely assist CERA
in allocating the bonus equally to those who performed well without any seniority basis.
Moreover, this method improves the morale of employees and develops a positive working
environment since it eliminates the subjectivity in performance evaluation. Productivity
Measurement and Evaluation System (ProMES) refers to the performance management on the
basis of productivity which is a key component of performance (Maimela and Samuel, 2016).
This system is adopted with an aim of distinguishing the acceptable and unacceptable
performance level of employees.
The results-based approach of performance management provides high importance to the
external environment as well such as growth and learning, and customers. Rather than relying on
financial factors, it also focuses on the operational indicators. It leads to the conversion of
strategy into reality by making desired operations possible. CERA would be able to provide
motivation of the employees for the purpose of enhancing their productivity along with the
measurement of the feedback received. These approaches have the ability to recognize the
strengths as well as the weaknesses of the employee and the associated work (Giri, 2017). The
employees become known to the organizational goals that make them motivated to enhance their
skills for the attainment of these objectives. However, one of the reasons for adopting these
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approaches is the establishment of better communication between the employees and the top
management.
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Conclusion
CERA has been facing several organizational and other problems due to the system utilized for
performance measurement. It is required relying completely on the current management method
for evaluating the employee performance. A combination of result-based and behavior-based
approach should be adopted by the company for getting better results. This would definitely lead
to the fair and equal treatment to the employees without the discrimination on the basis of
seniority. However, changes in the HRM practice of CERA are also vital for employee retention
and survival in the dynamic business environment. The combination of these approaches would
be costly but at least it would provide a positive working environment to the employees of
CERA. Adopting different approaches at a time all together can have a positive impact on the
employees and the workplace as well as intent to better performance. It is a well-known fact that
the business environment is highly dynamic in nature which requires periodical changes.
Keeping this in mind, more effective approaches and methods are developed in order to analyze
the performance and productivity of the employees and the organization as well.
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