Strategic Human Resource Management Scenarios: Cathay Pacific

I. Cathay Pacific Airways
Cathay Pacific Airways is a Hong-Kong based airline that has a comprehensive network of flights to over 90 destinations around the world. It is considered as one of Asia’s biggest and most regarded airlines. The company was founded in 1946 in Hong Kong. The company since then has continued to develop Hong Kong’s airline industry and supported Hong Kong’s position as a major transportation centre in the region. The airline company was founded by (American) and (Australian). Cathay Pacific was founded in Hong Kong on the 24th of September, 1946.

Cathay pacific is one of the most well known airline company in the world. It competes with different airline companies for prestige and notoriety in the airline industry. Recently the company underwent a change in image and strategies to counter the problems its industry has. It shifted the focus of its strategy into making sure that there will be an increase of clients who demanded their services, it also made sure that the services and technologies they use can be competitive to other airlines company. In 2006 the company was acquired by Dragon air but it still continues to operate in its own brand. This does not hamper it from continuously trying to provide the best service to its clients. This shows that with proper strategies used, a company can stay in the industry for a longer period of time.

II. Environmental Analysis
Internal Environment: Strategic Capabilities

1. Human Resources/ Human Capital

Human resources or human capital is the intangible resources of abilities, effort, and time that workers bring to invest in their work (1999). The people at Cathay Pacific are the major contributors of strategic capability to the company. One of the advantages of Cathay Pacific over its competitors is the quality of service that the staffs provide to its customers. Service has a big impact on the customers’ perceptions about the company’s product. Because of the importance of its people, Cathay pacific formulated an employee development strategy through proper and effective training. This strategy is expected to strengthen Cathay Pacific’s position in the marketplace. Employee development can be an essential ingredient of an organization’s competitive advantage. Employee development includes all of the education and training that organizations might invest in their employees such as training employees to perform effectively in their current jobs, orienting employees to the workplace, developing them for advanced positions or programs, and building organizational capability for future success. Cathay Pacific promotes a working environment wherein the employees are free to act in both the company’s and passengers’ best interests. 2. Organizational Processes and Culture– Service Straight from the Heart

Cathay Pacific believes that its business is selling experience to the passengers. The emotional bonding with the passengers is the key to building loyalty and one of the major factors that encourage the customers to repurchase the airline products. The biggest difference of Cathay Pacific to its competitors is its people. The employees at Cathay Pacific

are the ones who bridge the gap between product development and customer expectation. The passengers in Cathay Pacific always feel welcomed, appreciated and reassured. Passengers that travel with Cathay Pacific know that they are in good hands. Service Straight from the Heart is a programme that aims to develop cultural change within the airline focused on improving customer service. Service is the principal means of differentiating between airlines and is highly influential in customer choice. Cathay Pacific has expressed within its programme its understanding of the importance of the people within the organization and its recognition of the contribution of those people to its success.

3. Customer Retention and Loyalty Customer retention and loyalty are among the primary causes of Cathay Pacific’s success. Customer service is a very vital aspect of the company. Cathay Pacific maintains its leader’s status in the airline industry through its constant improvement in service. The company continuously makes effort to develop its self-help strategy in order to encourage growth among its employees. Self-help benefits are seen to make career management, career planning including blended learning opportunities possible within the company. The development program aims to equip the employees with the necessary knowledge and skills to fulfil their current positions as well as prepare them for future career advancements. One of the most significant improvements that Cathay Pacific employs is incorporating human touch in its high quality, reliable, and predictable service. The company wants to achieve growth through sustained, profitable growth. The company is committed to employee development and continues to enhance service and equip the employees with the ability to control the means of increasing the company’s productivity, reduce costs and ensure customer loyalty by focusing on the areas that matter most to the customers. Emerging business needs and organizational challenges inevitably require improved performance from employees.

assess career choices and clarify career paths and milestones to help the employees plan their advancement. Human resources are among the top contributors to Cathay Pacific’s strategic capability. Human resources as an internal resource of a firm are one of the sources of strategic capability. A good ED system will generate substantial opportunity for performance improvement and serve to remedy deficient performance.Providing learning and development that are focused on critical performance improvement needs is one of the methods by which managers continuously improve organizational effectiveness. reducing the costs of external recruitment and selection. . Cathay Pacific needs to make its employees feel important and show concern for the personal health and welfare of the employees. Employee development also has an impact on employee morale. Key Internal Strength: Human Resources One of the keys to successful competition in the global market is the effective deployment of human resources to achieve strategic capability and competitive advantage. The employee development of Cathay Pacific provides learning linked to career growth that will increase the likelihood that employees will remain satisfied and that competent people will be available to fill new openings. Effective management of an organization’s human resources according to (2002) is a major source of competitive advantage and may even be the single most important determinant of an organization’s performance over the long term. The employee development of Cathay Pacific helps employees to define career opportunities.

and reward employee performance at work (). and allows for a blend of quantitative and qualitative evaluations. Performance management is the integration of performance appraisal systems with broader HRM systems as a means of aligning employees’ work behaviours with the organization’s goals.Key Internal Weakness: Inadequate Employee Performance Management Performance management helps organizations sustain or improve performance. However. It does not encourage the employees to take responsibility and does not help them to improve. A performance management system consists of the processes used to identify. Performance management helps organizations link evaluations to employee development and to a merit-based compensation plan. . measure. Performance management provides a process that helps manage employee expectations of job demands and factors that reveal how well the job is done (1991 cited in and 2000). improve. The employee performance management process that Cathay Pacific uses is not adequate to support the company’s goals. The system that the company uses creates a standardized process. Moreover. permits individual input during the evaluation process. and provide high quality feedback. promote greater consistency in performance evaluation. it forms a basis for coaching and counselling. encourage. evaluate. this process also supports wrong values around performance management.

. Internally. the company is doing well. Because Cathay Pacific operates worldwide. The company does not authorize the delivery of some services that will cause outbursts or complains from different group in the society. The growth of other Asian economies pushed Cathay Pacific to expand its operations. Social The company makes sure that the services it offers and the technology it uses to tender its services will be accepted by the public. The company makes sure that it has a very good relationship with different sector in the society. Economic Economic factors also affect the company. The company continuously asses the political environment and prepares itself for any possible problems and issues concerning the political sector. For the past years Hong Kong experience economic growth as well as other Asian countries.External Environmental Analysis: PEST Political One of the external factors that have big effects on the operation of Cathay Pacific is government regulations and policies. It constantly assesses the economies of the countries where it operates as economy affects the decision-making process and buyer behaviour of the customers. it is greatly affected by different regulations and policies. The company also engages in social activities that tend to develop a better relationship between it and the clients. Cathay Pacific was greatly affected by the Asian Economic crisis.

If other companies use new technologies to provide services. The company makes sure that the services they offer are updated with regards to what technology is used to tender their services.Technological The company offered new innovations in its technological aspect and introduced new concepts with regards to its industry. the company has the technology capable of competing with such technologies. Since technology rapidly changes the company makes sure they are updated to what is happening and they can adjust to these changes. .

the flourishing Asian economy is expected to contribute to the growth of the company. Cathay Pacific remains among the most profitable airlines in Asia. further expansion through mergers and acquisition is expected. maintained competitive advantage. As of the moment the company is not affected by the emergence of low-cost carriers in the Asian region. However. Cathay Pacific will be forced to downsize in order to cut cost. Moreover. Expansion (Mergers and Acquisitions) caused by stable economy. Merger and acquisition strategies are important to firm growth and success in the 21st century.III. Through M&As Cathay Pacific aims to acquire excellent businesses and talented people. If business will continue to do well for Cathay Pacific. Cathay Pacific strengthened its position as Hong Kong’s top home carrier in 2006 by integrating Dragonair and enhancing its partnership with Air China. technological innovations and employee loyalty. Pessimistic Future Scenario for Cathay Pacific: Downsizing Downsizing caused by unstable economy and emergence and growth of budget airlines. if Asia is to experience economic crisis like what happened in 1997. Future Scenarios Optimistic Future Scenario for Cathay Pacific: Mergers and Acquisitions Mergers and acquisitions have become one of the most important corporate-level strategies in the new millennium. Cathay Pacific will be severely affected. . Because of these negative scenarios. The threats posed by the increasing numbers of budget airlines in Asia and elsewhere will become a serious problem in the future.

To support growth. and training strategies. During restructuring it is important to establish HRM policies and practices that will help create and sustain a climate of trust. Strategic management of human resources includes HRM planning. Some of the issues that arise in mergers and acquisitions are HRM planning. . Human resources or the company’s people are one source of sustainable competitive advantage. A closer integration between top management’s goals and HRM practices helps to elicit and reward types of behaviour necessary for achieving an organization’s strategy. Mergers and acquisitions are also seen as an expansion strategy.IV. orienting and training them. Strategic HRM Planning Human resource management needs to be closely integrated with managerial planning and decision-making. Cathay Pacific is expected to continue to grow. The planning process involves forecasting HRM needs and developing programs to ensure that the right numbers and types of individuals are available at the right time and place. Cathay Pacific is expected to restructure. In a fast changing environment where technological innovations and other strategies can be copied. Such information enables the organization to plan its recruitment. Mergers and acquisitions are seen as strategies that will help Cathay Pacific improve its services and acquire competitive advantage. The HRM function focuses its activities on ways to help the organization achieve corporate goals like growing operations through recruiting and hiring employees. recruitment and selection. Strategic Human Resource Management Mergers and Acquisitions In an optimistic scenario. and making their initial and future job assignments. selection. it is the human resources that bring a sustainable competitive advantage.

what the future of the organization needs to be. but it is equally important to be viewed as the employer of choice with a strong value proposition. Recruitment and Selection Once HRM needs are determined. Selection of key talent and key employees begins with an understanding of the vision and the purpose of the organization. Identifying the right skills necessitates knowing not just the current culture and structure of the organization. it is vital to recruit and select applicants that will fit the new organizational environment and will quickly integrate with the new organizational culture. but much more importantly. and points to the need to evaluate the probable impact of internal and external forces. . reveals opportunities.It is important that the management value human resources as a means of increasing productivity. now and in the future. purposeful actions. Strategic planning leads to informed. This will help Cathay Pacific deal effectively to changes in the industry as well as the changes in the business environment. Not only is it important to find the most talented applicants. Recruitment and selection is critical to the success of strategy implementation. It is important that Cathay Pacific hire the most qualified people. the next step is recruiting employees. a strategic plan provides direction and a cornerstone for making important HRM decisions. By articulating a clear common vision of why the organization exists. Planning HRM activities expands awareness of possibilities. The HRM concerns must be integrated into the decision-making at the executive level. During mergers and acquisitions. identifies strengths and weaknesses. The HR managers must be involved in the strategic management process.

These factors need to be as objective as possible in order to protect the organization from legal and governmental challenges.Downsizing According to (2004) downsizing is commonly the result of a broader process of organizational restructuring. This breach of psychological contract leads to a rise in stress and decrease in satisfaction. and seniority. Restructuring is seen by millions of employees as a breach of the ‘psychological contract’ between them and the employer ( 2004). The criteria that the organization can use are: . Employees leaving and remaining must perceive that management was fair when determining which employees will be let go and which ones will stay. honesty. Such restructuring often results in workforce reductions that may be accomplished through mechanisms such as attrition. Managing Lay-Offs: Selection The management needs to determine the criteria for selecting which jobs will be eliminated. Effects of Downsizing to Employees Downsizing and other restructuring strategies such as takeovers and mergers and acquisitions have adverse effects on employee attitudes and beliefs. Depending in part on the corporate culture. commitment. which refers to planned changes in a firm’s organizational structure that affect its use of people. voluntary severance agreements. and caring about its employees. or layoffs. early retirements. the type of work remaining to be performed. the criteria used frequently are a combination of job performance evaluations. intentions to stay and perceptions of an organization’s trustworthiness.

or other strategies.o Job Performance – job performance implies that the organization has fairly. Employee Retention Employee retention is one of the biggest issues in downsizing. It is important to identify the most valued employees first. Typical methods for conducting these assessments include interviewing and testing techniques. they lost motivation and employee loyalty diminishes. Retention Tools o Focus Groups – are discussions with 8 to 10 employees with a facilitator in order to understand employee complaints and concerns so that management can take quick action o Exit Interviews – are individual discussions with departing employees so that management understands very clearly the reason for their departure . Retaining valued employees is important. and systematically evaluated the contributions of employees and selected those individuals for dismissal who are least effective. Because employees feel betrayed. objectively. use of outside consultants or psychologists. o Work Remaining to be Performed – another selection factor is the work remaining to be performed. o Seniority – aside from employees covered by union contracts where seniority is the primary determinate of layoff selection. length of service often is a factor in downsizing ( 2003).

o Retention Bonuses/Contracts – contracts and retention bonuses can be attractive to retain key employees and management level people o o Rotational Assignments – can be used to enrich an existing assignment New Hire Orientation – can be used to infuse the culture of the new organization by communicating the core values through a common orientation program in which various executives are invited to speak to groups of new hires on a regular basis ( and 2001) References .

Performance Management I. job descriptions present a clear . Performance Management According to (2002). evaluating and developing the work performance employees in the organization. while at the same time benefiting employees in terms of recognition. Performance Management Process Performance Planning A job description indicates the role of an employee within the organization and what results they are expected to achieve on the job. improve. performance management is the integration of performance appraisal systems with broader HRM systems as a means of aligning employees’ work behaviors with the organization’s goals. receiving feedback. measure. Performance management is the process of identifying. A performance management system consists of the processes used to identify. and reward employee performance at work (). encourage. Ideally. so that organizational goals and objectives are more effectively achieved. catering for work needs and offering career guidance ( 2003). evaluate.

Performance appraisal is integral to the successful operation of most organizations. Goals should be measurable and achievable. The performance evaluation also serves a vital organizational need by . responsibilities. and helping employees stay on their edge to maximize their growth and their performance. Goal-setting should be done by the manager and the employee. Performance appraisal is treated as an evaluation and development tool. Performance planning is the process where in goals are set. required outputs. employees are evaluated formally and informally to determine the nature of their contributions to the organization. This includes monitoring progress. Appraisals review past performance – emphasizing positive accomplishments as well as deficiencies and drafting detailed plans for future development. To create a good performance plan. identifying and addressing problems. employees need to know where they are now (the current state) and where they want to go (the goal state). as well as a formal legal document.picture of employees’ roles. Performance Review/Performance Appraisal Performance appraisal is the process by which an employee’s contribution to the organization during a specific period of time is assessed (. and standards used to judge the quality of their performance ( and 2000). 2002). During this process. 1993). but it also occurs informally as employee contributions are observed. The plan should be modifiable during the execution phase to respond to changing circumstances ( 2000). Appraisal occurs during time periods and in meetings that are scheduled to produce reasoned consideration of contributions. or when an evaluation is brought to the attention of others (. The plan should include process and support during the execution phase to help managers and employees do the things necessary to have the plan succeed.

2002). responsibilities and accountabilities are confusing not only for the employees but for the Managers as well. Imposed and inflexible The job descriptions are often written and imposed on job holders from above. The lengthy statements of duties. 3. Performance management typically relies heavily upon performance appraisals but performance management is a broader and more encompassing process and is the ultimate goal of performance appraisal activities (. Performance Management in Oman International Container Terminal Weaknesses of the Company’s Performance Planning (Job Description) 1. The jobholders do not have any participation in the performance planning and the creation of job . 2002).providing the documentation necessary for any personnel action that might be taken against an employee (. Complex and difficult to understand The job descriptions are so complex. authorities. II. The employees also feel that the job descriptions set unachievable goals and exaggerated job responsibilities. 2. Inaccurate Information There are so many unimportant tasks and duties that are stated in the job description that makes it hard to understand.

Current Performance Appraisal Tool: Rating Scale The company uses a rating scale in appraising employee performance. 2. rating scales require the reviewer to rate the employee’s performance in an absolute sense. 1. The method is simple and easy to use. and there are virtually no limit to the aspects of person or performance that can be rated. use and understand. .description. there are significant problems in using rating scales. but it is more difficult to turn into a valid or useful overall assessment. In simple terms. 3. They are easily to construct. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality. Ratings can be given easily enough for individual characteristics or dimensions. Because the job descriptions are made at the top of the organizational hierarchy without any input from the job holders. The rating scale is among the widely used method of appraising the performance. Rating scales according to (2003) are readily adaptable to suit specific jobs and organizations. However. they are often inflexible and not up-to-date. Not all the characteristics of a job are equally important and certain characteristics are more important for some jobs than for others. Ratings are sometimes subjective. Employees can be rated on virtually any trait or characteristic or dimension of performance or behavior. Problems with Rating Scales Rating scales are among the popular performance appraisal tools. not in comparison to other employees.

. and productivity. exceeding requirements in some areas. 3 Points – Meets Expectations o Employee displays and maintains an effective and consistent level of performance of the job factor under review. 4 Points – Often Exceeds Expectations o Employee displays a high level of factor related skills. abilities. it also has limitations and weaknesses. initiative and productivity. Initiative and self-direction are characteristic. but not consistently or not without exception. o o All assignments/responsibilities are completed beyond the level of expectation. abilities. a consistently high level of factor related skills. initiative. without exception.The performance appraisal tool that the organization uses is simple and easy to understand which is good because performance appraisal should be like that. Sample Performance Appraisal Form: Rating Scale Performance Ratings 5 Points – Consistently Exceeds Expectations o Employee displays at all time. Work output regularly achieves desired or required outcomes or expectations. However.

and error rate is high requiring repetition of duty or completion by others.o Problems and errors are reported and corrected quickly. and show an indifference to job responsibilities. o Tasks may be significantly late at times or incomplete. Performance Factors Rating . regularly fails to meet required outcomes. 1 Point – Major Improvement Needed o Work output is consistently low. o The employee may require constant supervision. 2 Points – Some Improvement Needed o Employee at this level displays inconsistency in the performance of the job factor under review and output frequently falls beyond acceptable levels. with serious or potentially serious consequences.

5 Quality of Work Productivity Knowledge of the Job Adaptability Dependability Initiative and Resourcefulness Judgment and Policy Compliance Interpersonal Relations Attendance Safety and Security 4 3 2 1 Weaknesses in the Performance Review (Performance Appraisal) 1. The performance review process gives more emphasis on the personality of the employee. and a host of other factors may . Personal Bias Perhaps the biggest problem in performance appraisal that our organization encounters is the tendency of the manager to be bias. According to and (2001) an evaluator’s personal feeling about the person being appraised can significantly affect the result of a performance appraisal. Appearance. I think this is due to lack of proper training on the part of the managers. mode of dress. hairstyles. mannerisms.

The documentation is inadequate to support accurate assessment of employee accomplishments. the employees do not fully understand the purpose of the performance appraisal aside from ‘judging or measuring’ their contributions. but are also open to completely subjective interpretation. Also. . Presently. The managers do not clearly communicate the importance of performance appraisal in identifying their development needs and their level of compensation and rewards. Lack of Objectivity The organization uses a rating scale in reviewing employee performance. 4. there is little training in how to evaluate performance and conduct performance appraisal interviews. inadequate and incorrect information is also a problem in the performance appraisal. The performance appraiser (manager) fails to effectively document employee performance. resourcefulness and personal conduct that are not only difficult to measure. loyalty. 3. The rating scale that the organization is using measures personality traits or characteristics such as attitude. 2.cause an evaluator to like or dislike particular employees and produce negatively or positively skewed appraisals. The lack of training among appraisers has led to other difficulties and problems. Standards and processes in the performance appraisal are not welldefined. Insufficient Information Insufficient. appearance. Lack of Appraiser Training The manager is the one who appraise or review employee performance. The organization at present do not give much attention to training the managers in performing performance appraisal.

The HP Way The HP values are the centrepiece of the Hewlett-Packard Way. It should be continuous. a set of beliefs.I think the main problem in the performance appraisal that the company is using is the lack of appraiser training. I think that in order for a performance appraisal to be effective. Another issue is that the performance appraisal happens only twice a year. The HP Way is probably . It is the tradition of treating every individual with respect and recognizing personal achievements ( and 1982 cited in 2001). The HP values are not uniquely different from most large companies. and that if they are provided with the proper environment they will do so. Performance Management in Hewlett Packard Hewlett-Packard (HP) is a technology solutions provider to consumers. The central element in all activities in Hewlett Packard is the ‘HP Way’. personal computing and access devices. objectives and guiding principles. businesses and institutions globally. Because the appraisers are not properly trained and educated they fail to perform their responsibility effectively. global services and imaging and printing for consumers. Many problems arise because of the inadequate training. and described by as the policies and actions that flow from the belief that men and women want to do a good job. III. a creative job. it should happen on a daily basis. enterprises and small and medium businesses. What sets the HP values and the HP way apart is the seriousness with which values are treated as management tool. The company’s offerings span from IT infrastructure.

overall objectives were communicated and subunit objectives were negotiated. commitment to people. These are love of the product. the accustomed nature of the MBO planning cycle provided ample opportunity for individual initiative and influence in setting overall objectives. sharing. Although MBO was initiated from the top. innovation. autonomy. 2002). and they are usually written. teamwork. The degree of goal attainment then becomes the individual’s performance appraisal (. Objectives were goals and provided much freedom in how the goals would be accomplished. The goals were made to interconnect horizontally and vertically throughout HP. . quality. and they collectively set goals for the employer for a coming period of time. they are objective.and short-range objectives derived from company and group objectives. responsibility ( 2001). At each company level. confidence. It began with the establishment of long. illustrated from a number of words and concepts. Employees were expected to suggest ways they could help attain the unit’s goals in order to create individual accountability (). open communication. a more formal meeting is scheduled in which the manager and employee assess the actual degree of goal attainment. love of the customer. the manager and the employee periodically meet to review the employee’s performance relative to attaining goals. These goals are usually quantifiable. openness. In an MBO system an employee meets with his or her manager. Performance Appraisal at Hewlett Packard The activities of HP employees were guided by a comprehensive system of management by objectives (MBO). At the end of the specified period. During the specified timeframe. The entire MBO process was part of annual tactical and strategic planning that defined a job’s objective and major responsibilities and performance measures. trust.

measures the relative performance of employees in a group. I can say that the HP has an effective and efficient performance management system. The paired comparison approach. The HP way was considered an innovation not only in management but also in managing performance.HP combined MBO with the paired-comparison approach. A manager lists the employees in the group and then ranks them (). The performance management strategy is aligned with the overall strategy of the company. Based on the information that I gathered. IV: Comparison and Recommendations Hewlett-Packard is famous because of its revolutionary management strategy. HP managers invested considerable time and energy ensuring that an individual’s pay level within their salary range reflected their performance when compared to others. according to (2002). which compared employees in different departments with similar responsibilities. Goal Setting . Performance was judged by the immediate supervisor but adjusted based on a ranking process. conducted by managers in face-to-face meetings.

In the monthly formal meetings as well as in informal settings. Another difference is the level of employee input and influence in the performance setting. manager and employee have the opportunity to revise these targets in light of new information about the environment of client behavior. In HP the employee have more influence in the goal-setting process. means that perceptions of fairness are high in terms of the targets being realistic and achievable. the performance appraisal tends to be formal. Performance is being discussed in formal monthly meetings and in informal settings. together with the degree of influence employees have over their goal setting. These conversations are participative. The revisable nature of the performance targets. This reflects not only the longstanding policy of decentralization within the organization but also the difficulty of imposing performance targets on employees who are facing changing demands and working in fast-changing markets. The discussions attempt to cover the diversity of situations the employees would face. The performance are not reviewed informally (during the actual execution or performance) which I think is important.Hewlett Packard In Hewlett Packard. the goals tend to come form top management and then imposed on the employees. there has been a long tradition of targets being determined by both boss and employee. It happens only twice a year. Performance Evaluation . while in OICT. What I noticed as the main difference between the performance management systems of HP and our company is that in HP the performance setting and appraisal happens continuously. In OICT.

In order to achieve a rounded picture of employee performance. but also on an ongoing basis. the performance appraisal is primarily used to determine the strengths and weaknesses of the employees. Formal meetings between manager and employee are held every quarter. The appraisal system aims to encourage employees to perform better by giving rewards. It is more focused on identifying and rewarding top performers. Rewards Perhaps management of rewards is the most problematic area of the performance management system. but also to giving feedback. which is to identify and reward top performers. the performance appraisal is used primarily as a development tool. I can say that the performance appraisal system in OICT is effective in its objective. the reward systems of both HP and OICT have been structured to ensure that the distinctions between excellent and average performance are recognize and compensated. This occurred not only in formal meetings. Hewlett-Packard uses a ranking system while OICT uses rating scales.In HP. This informal process helped to cement new organizational values by correcting and reinforcing behaviors and attitudes. In OICT. Training and Development . culminating in a full annual appraisal. However. In order to motivate and retain employees. It does not give focus on the training and development needs of the employees. Self-assessment exercise are strongly encouraged in HP. Employee voice in the evaluation was strong. Managers devote a great deal of time not only to discussing problems and identifying areas for improvement. Both companies experience difficulties in this area. the company has introduced socially based measures of evaluation such as 360-degree appraisal ( 1999). I also believe that long-term benefits will be achieved if the company gives more importance to employee training and development.

Recommendations 1. the HR department tries to give training and development opportunities for those employees who perform less adequately. Effective use of the performance management system is at the core of manager’s performance goals. Align the Performance Management System with the Organizational Goals There is no single best way of designing and implementing performance management systems. based on the experience of a wide range of organizations tend to point out that effective performance management systems have the following characteristics ( 2001): o o o o The performance management system has clear aims and measurable success criteria. However.The performance evaluation process in HP is used primarily as a means of identifying an employee’s training and development needs. . as I said earlier. The system is simple to understand and operate. In Hewlett-Packard. Provision of formal training programs are accorded less priority in OICT. this is not the priority of the management. In OICT. o The system allows employees a clear ‘line of sight’ between their performance goals and those of the organization. The company invest heavily in employee training and development. However. Employees are involved in the design and implementation of the system. o The system focuses on role clarity and performance improvement. training and development is considered as the number one priority ( 1999). What works in one organization might fail in another.

and proper equity and transparency safeguards are built in. The performance management must be strategically aligned with the objectives and goals of the company. employee behavior and attitude that the company promotes. o The purpose of any direct link between the performance management system and employee rewards is made crystal clear.o The focus on performance improvement is closely linked to an adequately resourced training and development infrastructure. Every performance management system. o The performance management system is regularly and openly reviewed against its one success criteria. However. I believe that I strategic performance management system can be useful for the organization. Most of all it should be fair. . Performance appraisal must be free from bias and discrimination. The key is not which form or which method is used but whether managers and employees understand its purpose. It should support the culture. An effective performance management system according to (2002) will be: o o o o o o Consistent with strategic mission of the organization Beneficial as a development tool Useful as an administrative tool Legal and job-related Viewed as generally fair by employees Useful in documenting employee performance I believe that there is no perfect performance management system. It should focus on performance not on the performer. tool and strategy has its own strengths and weaknesses.

Rate Training and Employee Education One approach to performance appraisal training is to alert managers to common errors of judgment so they can spot them in how they evaluate others and guard against them. . At the very least. 2. The contents of the job description should be agreed by both the job holder and the manager. job design and job description. 3. The organization’s generic or model job descriptions should be used by managers and employees only as a basis for developing and agreeing their own description of the job the employee really does. clear and easy to understand job descriptions. Job descriptions should not be written and imposed on job holders from above. I believe that a strategic performance management system will result in achievable and realistic performance goals. Each individual’s goals must fit in with those of the wider work group or workplace. How much you involve employees in setting their targets will depend on the organisation's approach to performance management and on its style and culture generally. Employees will not feel committed to targets that are just handed down to them by management ( 2003). The objective setting or the performance planning process must align performance with business goals. Getting employees’ commitment is a key to setting effective goals. and have an opportunity to contribute to planning the objectives of the work group.credible and reliable. The responsibility of designing the job description should remain with the manager and the job holders. managers should ensure that the person responsible for achieving a particular objective understands and accepts it. the department and the organization as a whole. Flexible Job Descriptions/ Employee Influence in the Process The manager and the employee should be the ones responsible for job analysis. and motivated employees. Employees should participate fully in the setting of objectives for their own jobs.

In this way. These skills should include goal setting. and conducting appraisal review. The goal should be that everyone knows why you are conducting appraisals ( and 1992). training must focus on helping managers develop specific skills and confidence in their ability to effectively evaluate others. frustration and dissatisfaction. and even better when they have participated in setting those targets. Rating Scales and Management by Objectives I think the performance appraisal of the organization will be more effective if management by objectives. MBO is a target-setting or results-oriented approach to performance management. or inputs. the less confusion and ambiguity surrounding the process. completing the rating form. give way to brief statements of . coaching. The more clearly stated the organization's purpose for appraisals. Everyone in the organization needs to understand why appraisals are being conducted and how the system operates. observing subordinate performance. which is a way to determine what an employee is expected to do with behavioural rating scales concerned with how employees carries out job requirements or behaves on the job. Management by objectives is the best known of the results-oriented methods of performance planning and review. Appraisals without training is a sure route to ineffectiveness. probably the most frequent used approach to performance planning and review. the traditional lists of tasks and duties. communicating performance standards. For any appraisal system to be effective. Job analysis is used to produce a job description that sets out the principal accountabilities or key results areas of the job: in other words.Appraisal methods that have clear performance dimensions are likely to reduce rating errors ( 1997). In simple terms. giving feedback. the desired outcomes. 4. and in some form. It recognizes that employees perform better when they have targets. It is also important to make employees understand the appraisal system.

In turn. these are translated into specific targets to be achieved over a particular time period ( 2003). .expected results in each area of a job.

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