Performance evaluations are important tools that enable the management review the performance of employees. They are a common feature of most contemporary organizations. Organizations may use different types of performance evaluations. Performance review enables the management to have one-on-one chat with employees of the organization. This enables the management to discover the skills the employees may possess or interests in a certain area of the business. This enables the management to assign the employees to roles that would enable them add value to the organization. This helps in improving the operations of the business. In addition, if the organization undertakes the performance review in an efficient manner, employees would respond favorably. On the other hand, if the organization treats performance review as a necessary evil, it may have a negative effect on the morale of employees. Therefore, it is vital for an organization to ensure that performance review is an integral part of the organizational culture. This ensures that employees respond positively to the performance review, which leads to improvement of their morale (Smith & Mazin, 2011). The major aim of performance reviews is to determine weaknesses in the performances of employees. This enables the respective manager to determine methods that would enable the employees increase their performance. Using the performance review for this purpose helps in improving retention of employees as the managers act their mentors (Liebowitz, 2008).
In the performance evaluation report in exhibit 1, James had a score of above par in financials. He exceeded the financial targets set by the company. In the strategy implementation section, James’ score was par. He fulfilled the company’s targets on strategy implementation. In customer satisfaction James’ score was below par. This was the major area of James performance that needed improving. James’ score on controls was par. His score on people management was also above par. He was excellent in people management. This is highlighted by the fact that his brand had minimal employee turnover. James’ score on standards is above par. He strives to ensure that his subordinates maintain high standards. James overall evaluation is par. Despite the fact that he had a score of above in most performance evaluation measures, scoring a rating of below par reduces the impact of the previous measures. This is due to the fact that customer satisfaction is critical in the long-term success of the company. It helps in improving loyalty to the company.
Companies usually appraise or evaluate the performance of its employees in different manners. How the company appraises or evaluates its employees is dependent in the organizational culture. The approach of evaluating the employees is also dependent on the worth of employees within the company. The approach of performance review should also fit with the approach used. Some of the purposes of performance review include promotion and transfer, determining whether the increase remuneration package, determining where an employee standards, personnel research, and training and development. A company may use three approaches to performance appraisal. It may use a casual and unsystematic approach, traditional, systematic approach, or mutual goal setting (Smith & Mazin, 2011).
Casual, unsystematic approach was very popular in the past. The person appraising the employee would ask questions in a haphazard manner to determine the performance of the employees. One of the major limitations of this approach is that it does not provide qualitative and quantitative measurement of the performance of employees. This made this approach lose its popularity. A company may also use the traditional approach. In the traditional approach, the individual evaluating would strive to determine employee characteristics, contribution, or both. When using this approach, all employees all employees are appraised using similar standards. This facilitates the comparison of the performance of the employees. Most large organizations use this approach in appraising its employees. Mutual goal setting is also referred to as the behavior approach. In this approach, the individual evaluating the employee and the employee sit down and agree on the goals that the employee should attain within a given time frame. Upon the expiry of the period, employees are evaluated to determine whether they attained the goals agreed previously (Smith & Mazin, 2011).
James is one of the most important branch managers of the Citibank. His bank contributes a significant proportion of revenues in the California area. Over the past year, he has exceeded the bank’s goals except in customer satisfaction. In reviewing James’s performance one should use mutual goal setting approach. Using this approach would make James feel valued by the company. From the results of the performance in the previous year, it is evident that James is a high performer. Giving him the responsibility of determining his performance in the future would help in improving the overall performance of the branch. This is due to the fact that he would strive to exceed his current performance. This would avoid setting a low performance target, which he can easily achieve.
When reviewing James’s performance, the reviewer should first ask questions on the positive aspects of James’ performance. Therefore, the reviewer should begin by asking James what are some of the factors he thinks helped him achieve his goals during the period under review. He should then ask James how the management can help in reinforcing the factors to ensure he has good performance in the future. The reviewer should then ask questions on the negative aspects of James’ performance. The reviewer should ask what factors prevented him from reaching his goals in the period under review. Therefore, one should ask questions such as, what do you think are some of the factors that made you achieve or fail to achieve your goals in the period under review? Upon answering the question, one should ask determine the measures that James has taken to solve any issues that prevented him from attaining his goals in the period under review.
The reviewer should also ask James if he as requested help from the management in solving the problem. If he requested help, what was the management’s feedback on how to tackle the issue? If he did not request help, the reviewer should also ask whether he needs management help to solve the problem. For example to increase revenue, he may request the management to increase spending on advertising in local California radio and TV stations and other channels of advertisements based in California. Upon the determination of factors that aided or prevented James from achieving his goals, the reviewer should ask James what are his future performance expectations. If there were any problems that prevented him from achieving his goals, the reviewer should ask James what are his expected future goals if the management helped in solving the problem. The reviewer should then state the company’s goals for the next review period. Both the reviewer and James should then determine whether it is possible to achieve the goals set by the company. They should then come to a consensus on the performance goals of the company of the next performance review period. This would be the final step in the performance review.
Citibank California should start using a balance scorecard in performance review instead of using the current system. The company’s current performance measures are heavily reliant on the financial metrics. Despite the fact that the conventional financial performance metrics are capable of showing the company’s past financial performance, they are incapable of predicting the future performance of the company. In addition, they cannot be used to implement the company’s strategic objectives. Analyzing other perspectives instead of focusing on the financial ones would enables managers to translate the strategies of the organization into objectives, which can easily be implemented. It is difficult for managers to quantify the non-financial objectives. However, they are as important as the financial objectives. The balanced scorecard helps in integrating the non-financial and financial objectives. This would enable Citibank California manage its performance by mapping the strategic objectives of the company into performance metrics. The balanced scorecard would measure the objectives of the company in four areas. These include financial, customer relations, learning and growth, and internal processes. Analysis of the above perspectives would enable the company determine the effectiveness of execution of its strategic plan. Therefore, Citibank California can make adjustments if they are necessary (Needles, Powers & Crosson, 2010).
The balanced scorecard would not only measure the current performance of Citibank California in financial terms; it would also provide an analysis of the company’s efforts for improvement in the future. In balanced scorecard, the term ‘scorecard’ means something that can be quantified. On the other hand, the term ‘balanced’ refers to a balanced system. The system is balanced between short term and long term objectives, financial and non-financial measures, internal and external performance perspectives, and lagging and leading indicators (Needles, Powers & Crosson, 2010).
Financial accounting is capable of tracking the physical assets of the company. However, it cannot effectively provide reports to company’s such as Citibank California, which have large intangible assets. Due to the fact that the intangible assets account for a significant proportion of the market value of the organization it is vital for the organization to formulate effective methods of measuring the assets. A clear example is in acquisition. A company may acquire a competitor in order to access its customers. It may discontinue the production of the competing line of products and convert the customers of the competing products into the customer of its own products. Despite the fact that the financial reports do not show the value of the acquired customers, they are valuable to the acquiring firm. This highlights the importance of having measures for intangible assets (Atrilll & McLaney, 2012).
Prior to the creation of the balanced scorecard, Citibank California should used both financial and non-financial measures to determine its performance. However, a balanced scorecard is different from the above system since it has four perspectives. These perspectives help in forming a cause and effect relationship. A good example is the fact that learning and growth may helps in improving the business processes. This helps in increasing customer loyalty, which would ultimately improve the financial performance of the company. The cause and effect relationship is vital in formulation of the strategic objectives of a company. The measures of the balanced scorecard show the chain of performance drivers that are vital in determining the efficiency of implementation of the strategic objectives of an organization (Atrilll & McLaney, 2012).
The non-financial objectives of an organization highlight the need for the creation of customized performance measures. All organizations do not have similar non-financial objectives. Generally, organizations have non-financial objectives that appeal to their unique needs. However, the non-financial objectives must be linked to the financial objectives. The balanced score card is the major tool that may help in showing the relationship between non-financial and financial objectives of an organization.
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