It's per1i›rmance review time and our friends in human resources have a spring in their step. It's theii favorite time of the year. Once again HR departments are cranking up their elaborate and costly systems to measure the performance of employees and, more importantly, capture their hopes, dreams and aspirations. This is HR's way of showing they care. They have a hide.

For the past several months, HR bureaucrats have been hovering menacingly over workplaces as thousands of Australians are retrenched. During this heartbreaking period of mass retrenchments, which saw unemployment climb to 5.7% in March, HR has played a visible but hardly supportive role.

When marked employees are called into their manager's office, even before the envelop is handed over and the death sentence is pronounced in a few soulless words, employees usually have a chilling harbinger of wlmt awaits them. It's the HR staffer who stands stony-faced by the boss's desk to witness the execution. In many cases, the HR angel of death will walk the devastated employee off the premises. Is it not bad enough that these employees are losing their jobs without these humiliations?

In most cases, the protocols governing these dismissals, including the ritual described above, will be determined by HR departments. That is, the very same starry-eyed HR departments that will shortly be i'oIling out the performance review systems designed to show how much employees are valued and cherished. These much-hated, time-wasting and utterly pointless reviews were derided by employees during prosperous times. Imagine how they will feel about them now.

More than any other corporate function - perhaps only with the exception of compliance departments - HR is adept at creating life-sustaining activity. But they have excelled themselves with performance review systems. (And let's not forget the carpetbagger consultants who reel them in hook, line and sinker.)

Why organizations remain wedded to formal performance reviews has always been a mystery. Has anyone ever heard a senior manager explain one positive contribution that performance reviews have made to their organization? A nuisance in the past, performance reviews are now just plain offensive.

No one in the current environment is safe from the prospect of retrenchment, no one is spared from having to do the work of five people and told they can like it or lump it. The least employers can do is top tormenting their harried employees and abandon the charade of performance reviews. How's that for hopes, dreams and aspirations?

QUESTION

1.        What HR issue has been raised in this newsbreak?

2.        Do you agree or disagree with the writer? Why?

SOURCE: D'Angelo Fisher, L. (2009) "Reviews fail the relevance test", BRW, 23-29 April, p. 47.

CASE STUDY 10.2: APPRAISAL AT YARRA BANK

Yarra Bank has a five-level performance appraisal system using a forced ranking distribution. Superior performers (the top 10%) are rated 1, good performers (the next 25%) are rated 2, acceptable performers (the next 45%) are rated 3, marginal performers (the next 15%) are rated 4, and unsatisfactory perfonners (the bottom 5%) are rated 5. Employees rated 5 aie given 3 to 6 months to improve their performance before they are considered for termination. Salary increases (awarded to those rated 1,2 or 3) and bonus payments (awarded only to those rated I or 2) are performance related. Employees rated 4 and 5 are given only legally required increases. Although meant to be confidential, employees quickly learn the ratings of other people in the organization. Those with a 1 rating are referred to as "stars", those with a 2 rating are called "starlets", and those with a 4 or 5 rating are called "dogs". Employees rated 3 are called "workhorses".

Problems arise when a "star" is perceived by coworkers as readily belonging to another ranking group. This fosters envy and a reluctance to communicate and cooperate. The typical attitude is that if' they are hotshots, let them solve the problem. Likewise, a pi'obIem exists with a number of employees rated 3 because they regard their rating as really meaning that they are only average. As a result, they become demotixated, and the better ones (the borderline 2's) quit the company. Finally, a major source of contention exists with those graded as "dogs". Employees rated 5 who belong to a union are seen as being treated more leniently when it comes to pay increases and terminations than employees who are not union members. Although the company denies favorism occurs, it's recognized that some managers are reluctant to fire troublesome non-perfonning employees who belong to a union (and especially those who are members of the United Union of Austialia).

A major problem also exists with those rated marginal. Although a distinction is made in the performance appraisal record between employees who have been given a 4 rating because they are new or learning a job and those whose performance is rated marginal because, although trained and experienced, they are failing to meet performance standards.

Although originally promoted as a management program, over time the performance appraisal program has become regarded more as a HR department exercise. One consequence of this is that many managers claitn that the forced distribution of employees (where managers rank each eiiiployee front 1-5) creates too much ill feeling and is unfair. Some managers (especially the more politically powerful) argue that their departments are different (because most of their people are stars and starlets) and refuse to rank anyone as a 4 or 5. Managers who strictly follow the system teel that their employees are disadvantaged as a result. The annual performance appraisal program thus creates considerable tension and dissatisfaction among Yarra Bank's managers and workers.

QUESTIONS

1.       Identify the major stakeholders and explain their likely views of the existing performance appraisal program.

2.        Identify the strengths and weaknesses of the present program.

3.        What changes would you recommend to revamp the current performance appraisal system?

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