Analysis of Performance Appraisals and Psychological Contracts

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INTRODUCTION TO HUMAN RESOURCE MANAGEMENT & LEARNING AND TALENT
DEVELOPMENT ASSESSMENT

Table of Contents
MANY ORGANIZATIONS FAIL TO EVALUATE TRAINING AND THEREFORE CANNOT PROVE THAT IT IS A
WORTHWHILE BUSINESS INVESTMENT. HOW MIGHT THEY GO ABOUT AN EVALUATION PROCESS?........2
IDENTIFY THE POSITIVE AND NEGATIVE ASPECTS OF APPRAISALS AND THE IMPACT OF THEM ON THE
PSYCHOLOGICAL CONTRACT.......................................................................................................................5
OBTAIN AN ORGANIZATION'S RECRUITMENT AND SELECTION POLICY/PROCEDURE AND CRITICALLY
DISCUSS THE CONTENT OF THIS IN LIGHT OF BEST PRACTICE.....................................................................8
REFERENCES..............................................................................................................................................12
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MANY ORGANIZATIONS FAIL TO EVALUATE TRAINING AND THEREFORE
CANNOT PROVE THAT IT IS A WORTHWHILE BUSINESS INVESTMENT.
HOW MIGHT THEY GO ABOUT AN EVALUATION PROCESS?
Training for Employees is a very important element for almost every type of business.
Whether it's in the manufacturing sector or service sector an employer has to make sure
his employees work as per the necessary standard and know how to utilize their full
potential for the benefit of the business. Training is also very important for an
employee's perspective it provides an opportunity for learning, skill development,
personal enhancement and overall growth in career. A business also has to make sure
it has the most feasible, effective and efficient training program for its employees which
provide required outcomes. This part of the assignment will discuss the impacts of a
training process and evaluation of the outcomes and results of a company's investment
in it.
The primary objective or first and foremost impact of a training program is the skills it
generated or the knowledge provided to the employees. These are the key skills which
the employer expects from the employee for a particular job. An employee's ability to
perform will come in questions if he fails to learn these skills and acquire this
knowledge. Another impact of the training process can be seen on the efficiency of the
employee in performing a task post a training program. Next is the cultural impact,
which can be observed by the decrease in the number of complaints to the HR, and
employees' cooperation with each other. Next and very important psychological impact
is employee satisfaction which can be observed by employees' happiness and the
career opportunity he sees for himself post the program. Last but the most important is
the economic impact, the revenue increase post the program keeping other variables
aside, where an employer can see his investment giving returns (LMS, 2016).
We have few methods of evaluation, one of those is Donald Kirkpatrick's four levels of
evaluation method which assess the benefits with the help of four sequenced questions
first is ‘How do learners feel about the instruction?’ second is ‘Did learners achieve the
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learning objectives?' The third is ‘Can learner apply the knowledge and skills to the
job?'. And last is ‘What is the impact on the organization?' (LS, 2018). But for more
objective analysis for the cost incurred, there is an "ROI model approach". This
evaluation of the worthiness for the investment an employer does in the training
program, it helps in systematic assessment of an ROI calculation from a training
program. The first step of the model is Collecting Data post the program. Here both the
soft data (work habits, attitude, work climate, etc.) and hard data (cost, time, quality,
etc.) are collected. Certain tools like Follow-up Questionnaires, Performance monitoring,
etc. can be used for the data collection.
The second step of the model is isolating the effects of Training. Here the direct effects
of a training program are obtained which helps to assess where more improvement is
done and where it is needed. Certain tools like control group, where a trained and an
untrained group are asked to perform an operation and difference in the outcome are
recorded. Approaching participants, supervisors or senior manager for assessment can
also help in this step. The Third step is Converting Data to Monetary Values. Here the
qualitative data of the first two steps is quantified in monetary values this can be done
using numerous techniques based upon the person performing the task. Yet some of
the key bases of conversion are cost saving, improvement in quality, decreased
wastage, increase in the speed of operation, profit generation, etc. The fourth step is
Tabulating Program costs; for the calculation of ROI, it is very necessary to obtain the
cost a training program incurs.
For the assessment of cost, one should consider both explicit and implicit cost of the
program. which includes the cost of designing and developing the program, cost of
trainer and facilities provided, salaries provided during the training period and the cost
of travel, lodging, food if any. Then comes the last step of Calculating the ROI; this is
the last and very important step of the model, which involves some calculation based on
the assessment and conversions from the previous steps. Some of the key results
obtained from this step are Benefits Cost Ratio (BCR) i.e., program benefits divided by
costs. A higher the value of this ratio goes the more it will prove to be beneficial for the
company. Another tool is the calculation of Net benefits i.e., Program benefits minus
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program costs. The benefits here will be in monetary terms so a higher net benefit
means more money in the business which is what every business dream of. There is
one more tool where ROI percentage is obtained by dividing the net benefits by
program costs and multiplying with hundred (MH, 2019).
Many organizations fail to recognize the benefits of a training program. A training
program which is selected wisely helps in the overall growth of an organization and its
employees. Some organization worries about the cost involved in the training process.
But contrary to this issue experts advise that the cost incurred in the procurement of
already skilled employees is far higher than the cost incurred in the training of new
employees (Praslova L., 2010). Some organizations avoid training their employees
because they simply don't want to invest scarce resources in a new process. Such
organizations find it hard to build a good HR culture. This is because employees’ loyalty
towards the organization will always be fluctuating if they don't see opportunities for self-
development and career enhancement. A well-trained workforce can be the key to
success for every organization. It not only helps in profit and revenue maximization but
also in building a brand name, goodwill, market share, finding business opportunities
and a lot more beneficial things.
4

IDENTIFY THE POSITIVE AND NEGATIVE ASPECTS OF APPRAISALS AND
THE IMPACT OF THEM ON THE PSYCHOLOGICAL CONTRACT
Performance Appraisal is a tool used by HR managers to evaluate employees over a
period of time. It considers various factors such as employee productivity, Behaviour
with colleagues, commitment to work, etc. It is among the most sensitive process of
human resource department. It requires a high degree of fairness and transparency.
The result of the process also depends on the rater. Some people don't favor this
activity while most of the companies follow this practice (RG, 2019). The process of
Performance appraisal has some advantages and disadvantages which will be
discussed further. The assignment will also talk about the effect of those advantages
and disadvantages on the Psychological contract. The psychological contract refers to
the implicit contract of mutual obligation between an employer and an employee. It goes
beyond the formal agreement of employment and addresses a series of mutual
expectation including the rights, obligations, etc.
Motivation is the foremost upcoming of a positive performance appraisal report.
promotion, salary enhancement or bonus a candidate feel highly motivated and try to
set a higher standard for himself which benefits the whole organization. Next is the
clarification of expectation; employees have to be clear about the expectation of the
employer and should work as per the standards of requirement and performance
appraisal report assist the employer and employee about this issue. Feedback is also a
very positive aspect of performance appraisal. Many employees expect to know the
feedback on their work and performance appraisal process provides an opportunity for
it, which helps employees in working on their shortcomings. Another positive aspect of
the performance appraisal process is Future planning. With this report, it gets clear for
the employees and employer about the standard they should target soon, which helps in
the continuous revision of work requirement and aligning it achievable targets.
Communication between manager and employee also serve as a positive aspect
because it provides a platform for an uncomfortable conversation.which has to be
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addressed sooner or later and failing to which can make losses to the organization (TB,
2018).
Despite being very popular among employees, many negative aspects of the
performance appraisal process are also observed. A biased evaluator is the primary
concern of many critics, Therefore, managers try to eliminate any biases in the process.
But still, the ratings of an employee can always be sabotaged by the perception about
the employee in the mind of the evaluator. Another negative aspect of the process is
that it's a Tiring process. Often a single manager is given the job of assessment of many
employees which takes the toil of a manager and chances of mistakes being made
increase. It can also create a Stressful environment for the manager and employee
where employee angry about his assessment might cross the line of etiquettes between
him and his manager. The whole process can also become a waste of resources and
time if the assessment is not done properly. Therefore managers make sure the whole
process is done properly to save such happening (TB, 2018).
Psychological contract as stated earlier is an unwritten contract between employer and
employee which includes things like employees commitment towards the work, loyalty,
employee satisfaction, healthy working environment. Performance Appraisal can highly
affect the psychological contract between an organization and an employee (BD, 2019).
In a study, it was found that the employees who receive exemplary performance
appraisal feel that the organization is taking care of the psychological contract. Their
performance also gets enhanced in the future and they start thinking that they
understood organizations explicit expectation and organization understood their implicit
expectation. Many a time an exemplary performance appraisal has proved to strengthen
the psychological contract between the employees and the organization (J.F., 2009). It
also gained the loyalty of the employees in the long run. Employees started feeling that
this organization is the place they want to work nowhere else, no one else will
understand their needs and expectations like this organization. Whereas some
employees, who don't receive exemplary performance appraisal sometimes get
demotivated. A sense of self-doubt starts prevailing in them, which turn out to be lethal
for their future performance. They sometimes start questioning their competence which
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in future affects their competence. Some employees feel their psychological contract
breached and they start having a feeling of dissatisfaction from the job, which leads
them to resign from the job. The psychological contract has severe effects when the
process of performance appraisal is not properly conducted. Biased evaluation of
employees' performance can generate severe doubts in the minds of employees about
the reward for their hard work, their future in the organization, organization's
expectations from him, etc. Any misconduct in the process can cost the loyalty of the
employee to the organization. And sooner or later the organization has to look for new
employees to hire whose training and induction will cost a great deal to the company.
Performance appraisal and Psychological contract are mutually linked in several ways
where one will always affect the other. The change could be positive or negative
depending upon the situation. Transparent and unbiased reports of performance
appraisal have to be properly communicated with the employees if the organization
wants to save itself from probable negative outcomes. Whereas Psychological contract
has to be properly aligned with what the organization can offer and what the employee
should expect to have an amicable long term relationship between the organization and
the employee.
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OBTAIN AN ORGANIZATION'S RECRUITMENT AND SELECTION
POLICY/PROCEDURE AND CRITICALLY DISCUSS THE CONTENT OF THIS
IN LIGHT OF BEST PRACTICE.
A recruitment and selection policy is very necessary for an organization for a
transparent selection process for the selection of a candidate solely based on the merit
of the candidate. A properly framed policy can help in creating a proper job description
which is required by the organization and judging the candidate on all necessary
parameters. It also helps in creating a lawful and transparent process which does not
raise questions and no one feels marginalized. This part of the assignment will discuss
recruitment and selection policy by citing the example of Nestle.
Recruitment refers to obtaining potential candidates who want to do the job. Nestle
recruit candidate through three main channels. First is Off Campus recruitment through
posting of the job description of the available job on online portals like LinkedIn etc.;
second is through on-campus drives. Both the channels favor high reach to masses.
The third channel is internal recruitment where existing employees are invited,
promoted or demoted to a job. Here candidates suggest a candidate they know who
would be a good fit for the job title. Many times dependents of a deceased employee or,
retired or retrenched employees are also recruited for a job.
After recruitment, it comes to the process of selection. Selection procedures for both the
channels are different though they judge the candidate based on proficiency in the
same skillset. In off-campus selection, a job description is prepared which is uploaded
on the portal to invite candidates. Candidates who feel they have the skills and
qualifications required for the job can apply there. The candidate is then screened by an
HR committee and if found fit for the requirement he will be called for an interview. The
interview can be telephonic and then face to face or have multiple rounds of personal
interview based on the job title. Qualifying in all previous phases will get the candidate
an offer letter which will have detailed information about the job duties and
responsibilities. Along with remuneration paid, working hours, how any conflict will be
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resolved, etc. In an on-campus selection process, in the first step CV's of candidates
who want to join the organization are evaluated. In the next step candidates who have
required qualification for the job are invited to appear for a group discussion. Then the
candidates' performance in the GD is evaluated based on standard criteria's like ethics,
clearness in thoughts, thought-process, any public speaking anxiety, etc. The last round
is the interview round; here candidates appear before a panel for face to face
assessment of the candidate. Some of the common questions asked in an interview are
about one's hobbies, how much the candidates know about them (strengths and
weaknesses). Sometimes about past experiences and technical experience required for
the job, etc. The key factors of evaluation in the interview are candidates critical
thinking, teamwork, discipline, teamwork personality, etc. If a candidate found fit in the
interview then he is offered a job with an explanation about the title, location, duties &
responsibilities, remuneration, etc. (TC, 2019).
Experts suggest some guidelines for the recruitment and selection process to be
followed by organizations in general for every step. First is the step of Creating job
descriptions, the description must include a description of the organization, summary of
roles of the job, information regarding necessary responsibilities and requirements.
Second is the Selection stages, the organization must standardize its selection process
through the manager can tailor the stages for different roles. The standard process of
selection includes Resume/CV screening, Phone screening, Assignments, Interview. A
series of work ethics is what makes a recruitment and selection policy best. Like, it is
advised to give proper feedback of the interview to the candidate and not to keep the
candidate in dark or expecting a selection. And the communication of the feedback
should also be cautiously done. With polite expression and the right choice of words
with a check from HR so it doesn't invite any legal action (RW, 2019).
Recruitment and Selection process is a very important process for every organization.
Any flaw in the process can induce lethal employees in the organization and will cause
severe monetary losses and will also affect the goodwill of the organization (Ekwoaba,et
al., 2015). It can certainly affect the working atmosphere of the organization and will
keep other good employees away from the organization. A transparent selection
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process can make the organization's stand strong against rejection or revocation of any
employee. It will save the organization from any legal matter and will also create a
sense of understanding in the minds of the rejected and selected candidates regarding
their comparative performance. Therefore, from the above explanation it can be
concluded that a good recruitment and selection policy should follow the principles of
transparency, unbiased treatment of candidates, meritorious selection, decision making
based on ethics, etc., (RL, 2016). Following these principles will best serve to attract the
best employees into the organization. Nestle has been climbing the ladder of success
because of adherence to these principles and its recruitment and selection policy had
successfully served to retain long term employees. Respect for Diversity is among the
main principles which can be seen in Nestle and it had successfully created a diversified
work culture in the organization.
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REFERENCES
 BD, 2019. Psychological contract. (Online) Available at:
http://www.businessdictionary.com/definition/psychological-contract.html
(Accessed on 19th April 2019)
 Ekwoaba, J.O., Ikeije, U.U. and Ufoma, N., 2015. The Impact of Recruitment and
Selection Criteria on Organizational Performance.
 Kirkpatrick, J.D. and Kirkpatrick, W.K., 2016. Kirkpatrick's four levels of training
evaluation. Association for Talent Development.
 LMS, 2016. How to evaluate the real impact of your employee training program.
(Online) Available at: https://www.talentlms.com/blog/evaluate-employee-
training-program/ (Accessed on 19 April 2019).
 LS, 2018. Donald Kirkpatrick's four levels of evaluation. (Online) Available at:
https://www.learningsolutionsmag.com/articles/241/avoiding-assessment-
mistakes-that-compromise-competence-and-quality (Accessed on 19 April 2019).
 MH, 2019. (Online) Available at:
https://managementhelp.org/training/systematic/ROI-evaluating-training.htm
(Accessed on 19th April 2019)
 Praslova, L., 2010. Adaptation of Kirkpatrick’s four level model of training criteria
to assessment of learning outcomes and program evaluation in higher education.
Educational Assessment, Evaluation and Accountability, 22(3), pp.215-225.
 RG, 2019. THE IMPACT OF PERFORMANCE APPRAISAL ON THE
PSYCHOLOGICAL CONTRACT OF THE REMOTE SUBSIDIARY MANAGER
(Online) Available at:
https://www.researchgate.net/profile/Jane_Maley/publication/47727887_The_infl
uence_of_performance_appraisal_on_the_psychological_contract_of_the_inpatri
ate_manager/links/53dfb0b20cf2a768e49bcb89 (Accessed on 19th April 2019)
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