Implications of Performance Appraisal at General Electric Company

In competitive periphery, performance management is considered as essential ingredient for any business’s survival. Since 2000, performance management developed itself as a legislative condition for any type of organization all over the world. In management toolbox, very few winwins strategies are left and performance management is considered as the best strategy. In the light of recent downturn in economy around the globe, performance management and appraisal played a significant role in the effective management for the employees in any viable organization of any industry and enhanced the satisfaction, commitment and organizational performance. Most of the organizations have poor reputation with the implementation of performance management system and performance appraisal process because of non-serious attitude of top management. Accordingly, this study aimed to highlight the importance of performance management system within General Electric Company. Implications for practicing managers are presented. INTRODUCTION Performance management defined by Armstrong (2009) as “a means of getting better results from the whole organization or teams or individuals within it, by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements”. DeNisi and Pritchard (2006) defined performance management is set of activities which helps the organizations in improving the performance of individual employees? Briscoe and Claus (2008) defined performance management as the approach how an organization make their goals, evaluate performance standards, work assignment and evaluation, feedback about the performance, conduct training and development analysis and allocate rewards. Armstrong (2009) claimed that first article appeared on performance management was on 1972 and 6607 articles were found on performance management till January 2009 (an EBSCO search). From all HR practices related to performance management systems, performance appraisal got paramount importance in the studies to increase the productivity or performance of an organization (Fletcher, 2004). To date, because of contextual factors, research reported the practices of performance appraisal implementation in multinational corporations did not attain the expected results (Chen and Eldridge, 2010). For instance, a study conducted by Hempel (2001) and argued that the best performance appraisal practices are not completely full filed when they applied in China. Similarly, Lunnan et al. (2005) suggested that initial barriers or national values may become hindrances in multinational organizations while implementation of “foreign best practices”. Another research conducted by Cheng and Cascio (2009) who also supported these lines and argued that there is obvious difference in the implementations of performance appraisal in different organizational cultures. Rater’s accountability is considered as significant topic in the literature of performance appraisal. Curtis et al. (2005) argued that accountability consists of two forms: downward from manager to employees and upward from manager to next level of management but in the literature studies were only highlighted the importance and shortfalls in downward accountability. Irrespective of the relationship between accuracy and raters’ accountability, employees are mostly held accountable to their supervisors for their ratings. Another important outcome is the security of the ratings. Stone et al. (2008) argued that security of the ratings get partial consideration from the researches from the perspective of employee performance evaluations. He also claimed that performance appraisal documents (complete appraisal form, SOPs, personal development plans etc.) are confidential and it should only accessible to the selective authorities. Redesign of work processes including the method of conducting or evaluating the performance appraisal in the technology-driven context also related to cost reduction and improve the quality of evaluation of performance appraisals (Kavanagh and Thite, 2008). Recently, Beckers and Bsat (2002) identified several importance of HRIS effectiveness includes “collecting appropriate data and converting it to information and knowledge for improved timeliness and quality of decision making”. LITERATURE – PERFORMANCE MANAGEMENT SYSTEM Neely et al. (2005) defined performance management system (PMS) as the set of metrics which is used to measure the actions’ effectiveness and efficiency. PMS also taken as dynamic and balanced system which helps in the process of decision making by collecting, analyzing and monitoring information related to performance (Garengo and Bititci, 2007; Bititci et al., 2000). Furnham (2004) argued that each organization required different management tools but PMS is poorly managed by the managers across the global. The real goals of PMS are consisted of threefold – to correct performance, to sustain the performance and to improve performance (Lee, 2005). Lawler (2003) contended that PMS involved in rewarding, controlling, monitoring and motivating the employees so that they put their best efforts to achieve strategic goals of the organizations. Biron et al. (2011) also explained the significant aim of PMS as the end result of individual and group performance with the ultimate objective of enhancing organizational effectiveness. Since each organization had its strategic direction, hence the best way of aligning the interests of top management and employees is the effectiveness of PMS (Becker et al., 2011). Another key contribution of PMS for the organization is to increase the organizational performance, fixing accountability, modify results and behaviors, helps in execution of organizational strategy and linked the individual employees with the organization’s effectiveness (Biron et al., 2011; Bae, 2006). In management toolbox, very few win-wins strategies are left and performance management is considered as the best strategy (Black and Marshall-Lee, 2011). Performance management is regularly being used by the management for enhancing the overall performance of the organization (Marr, 2004; Davis, 2004; Propper and Wilson, 2003) but, so as to make it successful, the performance-driven behavior and PMS of organization should be premium (Martins, 2000). Researches on PM is unequivocal, it delivers remarkable results related with profitability, revenue growth, employee turnover / retention and return on equity without any investment (Fitz-enz and Berggren, 2006; Mortimer, 2006). Murphy and Cleveland (1995) explained the performance appraisal as an annual and formal interview based on social interactions among employees and managers to take action on previous individual’s performance and planning of future developmental needs. Fletcher Sarwar, H. (2016). Implications of Performance Appraisal at General Electric Company. Archives of Business Research, 4(4), 82-93. URL: http://dx.doi. org/10.14738/abr.44. 3120. 84 (2004) argued that “. instead of only being a simple tool of recording and documenting employee’s performance, performance appraisal is considered as a more strategic and holistic approach to link a headquarters’ strategic plan with the subsidiary and individual performances”. Employees of any organization also put more emphasis on the fairness of the performance because this practice is directly related to their pay and fringe benefits and increase the acceptance rate and success of appraisal (Kavanagh et al., 2007; Narcisse and Harcourt, 2008; Erdogan et al., 2001). For the success of nay appraisal system, literature proved that empowerment and involvement of lines managers is considered as prerequisite factor because they participate actively in appraisal activities like performance rating and performance interviews (Asmuß, 2008). Another substantial topic of performance appraisal is employee satisfaction with the performance appraisal systems (Giles and Mossholder, 1990) because it’s directly related to the motivation, commitment, job satisfaction and employee productivity (Pearce and Porter, 1986; Ilgen et al., 1979; Cook and Crossman, 2004). Utility of performance appraisals is also an important research reaction (Cawley et al., 1998). Greller (1978) defined it as “the extent to which the employee learned valuable information from the evaluation, such as how he/she can do the job better, how to develop his/her skills, and whether he/she met supervisors’ expectations”. Nathan et al. (1991) claimed that “when the PA review process leads to career discussions, the PA process is also likely to be perceived as having greater utility”. Recency Effects are also played a key role in favorable or unfavorable biasness of the supervisors. In this scenario, recent occasions are observed by the supervisors that they used in the future performance appraisals. Equity and consistency may be distorted by ratings of appraisers, ethnicity and gender etc. The studies of White (1999) and Alimo-Metcalf (1991) forced these lines that the studies in UK and USA highlighted the gender subjectivity in performance appraisals systems. Geddes and Konrad (2003) also questioned the biasness of appraisers and appraisee’s ethnicity. Curtis et al. (2005) argued that accountability consists of two forms: downward from manager to employees and upward from manager to next level of management but in the literature studies were only highlighted the importance and shortfalls in downward accountability. Irrespective of the relationship between accuracy and raters’ accountability, employees are mostly held accountable to their supervisors for their ratings. Another important outcome is the security of the ratings. Stone et al. (2008) argued that security of the ratings get partial consideration from the researches from the perspective of employee performance evaluations. He also claimed that performance appraisal documents (complete appraisal form, SOPs, perso