Sample Essay on Improving Organizational Performance

Improving Organizational Performance

Performance in an organization is an important aspect that ought to be monitored on a routine basis. Organizational performance makes it possible for the management of the firm to assess the extent to which the available human resources were utilized in achieving the set goals and objectives of the company. Line managers and staff to help in formulating objectives for the company as well as assessing the level of work done by each employee and manager in the firm use it. Different organizations have various methods used for measuring the level of performance in their firms. Normally they rely on management and employees to attain the set performance levels. Most companies assess this level after a given period, normally one year. Many companies take the evaluation of their performances seriously, as they believe that it is a procedure that helps them come up with future methods of operations.

This paper is an analysis of two case studies for Hitachi and DHL companies. The article seeks to compare and contrast the two organizations based on their methods of performance management procedures.  As stated above, different firms use varied methods to measure and achieve performance management. All these companies are well-known European firms whose operations are known internationally. The two companies were selected based on their nature of operations, which makes each of them have different ways of evaluating performance. As will be seen in the discussion, each company uses a different process for measuring individual performances and competencies. They take part in different offering merchandise around the globe as well as have varied ways of performance negotiations and some similarities in setting objectives.

DHL

DHL is an affiliate of the German-based company Deutsche Post DHL. It offers international express mail services, which take place through air and sea (DHL, 2014). It has branches in most parts of the world and is one of the world’s most reliable express mail delivery services. Further research shows that this company is an international market leader in the global express and logistics industry. The firm currently has 45,000 employees in Europe (DHL, 2014).

Hitachi Europe

Hitachi Europe is a company that is found in the United Kingdom. The company specializes in supplying machinery for infrastructure. This organization also takes part in supplying machinery for making roads, railways, and other infrastructure in Europe and around the world (Hitachi, 2014). It is an internationally recognized firm with high-quality products for various uses. The company has many branches in Europe and many other countries around the world that is not only involved in the supply of machinery but also in the construction of roads and railway. Their products include tractors, trailers, and power tools. It is also involved in data storage solutions, technology, and transportation systems. This company has been providing various services in Europe since 1982 (Hitachi, 2014).

The performance management process for DHL and Hitachi Europe

These organizations have annual performance management procedures, which begin at the start of their business year (Armstrong, M., 2009). The business calendar for DHL commences in August of every year. The performance management process starts when the top-level management designs the bonus framework and the core elements of the company. During this process, the management comes up with the necessary aims and objectives. The senior staffs then gather in mid of September to decide and set targets for the company.

The targets are eventually communicated to the rest of the employees as individual personal objectives prior to discussions between line managers and human resources. The main aim of communicating and passing the set target downwards to the rest of the employees is to ensure that the targets are altered to side with each individual’s actual job (Armstrong, M., 2009). This is closely followed by more discussion to decide and state what each target means for employees in practice and their implications for competencies. Around the same period, the management of DHL convenes a meeting for evaluating and scoring attainment levels based on the previous year’s performance.  The managers also determine bonus levels and salary rises during the meeting.

Around the middle of January, a procedure for recording performance aims for individual and financial performance for the coming year is formulated. The company then announces its financial results in the middle of February (Armstrong, M., 2009). This announcement makes it possible for the company to determine if there are available bonus payments and salary increments relating to the financial results from the past year. The company also plans to carry out a salary review in April and the employees are paid their bonuses either in March or in April.

The DHL Company usually set the pace for the year at the beginning of every business period. During this process, the management formulates objectives and other aims that will steer clear the expectations of the firm for both managers and employees. The organization ensures that conditions change annually while the priorities of the senior managers aim at reflecting on the current state of affairs (Armstrong, M., 2009). The company also come up with core individual objectives such as health and safety, quality of service to customers and appraisals among others. On the contrary, the organization allows flexibility for low levels managers, making them able to change objectives in order to suit their individual needs. The system also allows general flexibility in terms of timing.

Just like DHL, Hitachi Europe has a well-planned performance management process. Unlike DHL, Hitachi’s business calendar begins in April every year. The performance management process includes two-way discussion meetings between employees and managers. These meetings take place twice a year as opposed to that of DHL which occurs once annually (Armstrong, M., 2009). The management of Hitachi mainly concentrates on present and past performance as well as future development plans during the meetings just like in DHL. Whereas in DHL the bonus and pay increase methods have a direct relationship with the system, at Hitachi there is no distinct link between the system, bonus and pay increments. In this organization, the system only helps in deciding the payment mode. This is linked to just one of the five bonus plans found within the organization. This firm allocates payment to their employees based on performance ratings as opposed to DHL where there is a salary scheme for employees at different levels. The performance assessment process of Hitachi involves setting objectives and allowing interactions between employees and managers as they plan for the coming twelve months (Armstrong, M., 2009).

Hitachi views performance management procedures as a process that is more about forming relationships with employees in order to come up with what is reasonably attainable in the year, and it involves setting objectives. The company finds this an important procedure since it enables employees and managers to develop clear focused attention and cultivates new thinking on the way they work instead of continuing with the old methods of doing work on a regular basis (Armstrong, M., 2009). The procedure for performance management of Hitachi Europe is a development plan that involves discussions about performance planning and development planning. The performance planning discussion mainly focuses on whether previous objectives were achieved and the intended future targets.

The firm encourages managers to use examples to illustrate to employees where they have performed reasonably, exceptionally, and below expectations during these deliberations. This process also requires managers to discuss the role they have played in achieving past goals and objectives and other relevant contributions that they have made to the company. Development planning discussion on the other hand helps the managers and employees in considering the individual’s development needs (Armstrong, M., 2009). It as well helps them find out training and other requirements necessary to enable them to achieve future objectives. The managers and employees are expected to have mutual understanding and agreement, especially on matters pertaining to past objectives and major future actions for the organization.

Setting objectives for the two companies

Both DHL and Hitachi Europe require their objectives to follow the acronym SMART (Armstrong, M., 2009). The process involves line managers who then trickle the information down to their respective employees. For DHL, the set Objectives are recorded in a document called the ‘target agreement form’. The company has other documents such as performance evaluation tools, which record information on levels of achievement while the performance development plan is used for recording training and support needs (Armstrong, M., 2009). On the contrary, Hitachi Europe does not have many documents for recording various levels of achievement within the firm as the line managers are expected to have an account of such events. DHL involves its manager in setting objectives just the way Hitachi Europe does.

The only difference is that the latter does not allow managers to influence the thinking of employees. Clearly, DHL believed in regular training of employees and managers as they aim at achieving set objectives for the year. On the contrary, Hitachi Europe does not believe in the training of employees. In fact, the company views training as not being very important since according to them, there are other better options than training. The organization has a guidance method, which highlights training on-the-job, and learning as it believes that these are the most effective modes of developing and attaining new skills, knowledge, and experiences.

Performance measurements and scoring

DHL has a method of rating performance based on giving points from zero to 133.33 percent. A mark of 100 percent shows attainment of a standard or the expected performance (Armstrong, M., 2009). The company competency ratings are on a scale of one to five where five is exceptional and one is unsatisfactory. The results are interpreted as follows; Far exceeds expectations – here the person consistently shows the expected competency behaviors effectively and can be considered a role model.  Exceeds expectations – the person exhibits the capability behaviors above the normal expectations (Armstrong, M., 2009). Fully meets expectations – in this case, the individual shows behaviors that fully correspond with what is expected in the current role. Partially meets expectations – in this case, the individual demonstrates minor deficiencies in their character. Does not meet expectations – here the individual has failed to demonstrate behaviors expected in the present assigned role.

Hitachi Europe does not have such an elaborate method of demonstrating scores. Their results for individual competencies and performance are based on the factors based on four levels such as O-, which denotes that the individual failed to meet objectives. S – indicates that after assessing performance against objectives, the individual has met some of the objectives. The letter M shoes that the person has achieved expectations and has completed all objectives. The M* in the fourth level indicates that the person has achieved significantly more than the agreed objectives so performance was exceptional (Armstrong, M., 2009)

Discussion and analysis

Performance management may be defined as the system through which a firm engages its employees in improving the effectiveness within the organization. Armstrong (Armstrong, M., 2009, 65), states that the practice of management performance in most organizations today incorporates activities such as performance appraisal and management by objectives. From the analysis of the two companies, it is only Hitachi that uses appraisal as a means of paying their employees. Both companies however apply the use of objectives to achieve some required goals in the company. All these two firms notably set their objectives at the beginning of their new financial year (Queensland Government, 2002, 1). The author continues to say that performance management is a method of managing the business. It entails everything done by line managers and is not an annual procedure of human resources. Thus, performance management is a process that takes place naturally between line managers and employees below them (Armstrong, M., 2009, 65).

Performance management should be an activity that helps in achieving culture and behavioral change within an organization. It should be integrated in major human resource activities such as the management of human capital, reward, talent, and as well as the development of learning. Thus, it helps in achieving horizontal integration within an organization by combining human resource practice so that the two work together in harmony (Leonard, B. & Cardy, R., 2011, 23). Performance management is also seen as an important part of high-performance work practice. Studies by most authors have shown that performance management is a process that requires highly integrated skills. This is a natural process that needs to be nurtured properly by the management. The procedure of managing performance in an organization follows a cycle such as the one shown below:

Performance management cycle

The above-shown cycle is one adopted by many organizations such as Hitachi Europe and DHL among others. In these organizations, the management plan for the upcoming fiscal year by coming up with prioritized objectives (Rolstadas, A., 1995, 102). They also design the methods they intend to use in order to improve the performance of each individual as well as meet the set objectives and goals. The performance cycle includes a clause where every individual is involved in doing the necessary duties to help meet the goals (Harrogate Borough Council, 2004, 6). In this category, managers should help employees to achieve better performance results. This process should as well involve employees’ self-preparation on what to do to achieve the set goals for the firm.

In this scenario, the employees can decide to come up with their own individual goals, which will lead them to achieve the organizational objectives. It also involves them helping each other to perform better. The performance management cycle also states that an individual should carry out a review of their actions. Such an evaluation enables managers and employees to evaluate themselves from time to time to see if they are on the right track (Jenkins, A., 2007, 7). They are as well able to find out if their actions make them a step closer to achieving activities set for the year. Thus, each individual, management, and groups within the firm are able to assess the impact of their actions as well as aim at working together for the sake of achieving activities for the firm. Finally, the performance management cycle makes it possible for individuals within the company to conduct a revision of their activities. At this point, individuals tend to change what they do in order to maximize their levels of performance
(Sahu, R., 2009, 13).

Other companies also use factors such as input, output, ongoing activities, and feedback to evaluate performance levels. This is shown in the model below

The typical performance management process

Source: http://www.oshr.nc.gov/Guide/PerformanceMgmt/docs/PM_Roadmap%20to%20design_implement_eval_Pulakos.pdf

Most companies base their theoretical framework of performance management in the corporate levels of activities.  On the contrary, Hitachi Europe and DHL use the conceptual departmental framework (Conte, J. & Landy, F., 2010, 45). This concept allows line managers from a different departments to work hand in hand with the employees below them. The managers help their employees to tackle difficulties that they may encounter. They lead all the operations within the firm and ensure smooth communications between them and employees. A study by Jenkins, (Jenkins, A., 2007, 4) has shown that the management of performance is beneficial to the company, employees, customers, managers as well as other people who are directly affected by the outcome of activities within the organization such as stakeholders.

Some organizations take occupational safety as an important factor that can improve levels of performance. As such, they apply the model below to assess their performance levels.

The occupational safety model for measuring work performance

Source: http://web.business.queensu.ca/faculty/jbarling/papers/high%20performance%20work%20systems%20and%20occupational%20safety.pdf

High-performance work practices

High-performance work refers to the quantity of workload that employees within a firm have to undertake to ensure the attainment of set objectives ((Ashton, D. & Sung, J. 2000, 3). High-performance work practices include activities such as high employee involvement activities such as self-directed teams, quality circles, self-appraisal and assessments, and sharing or having access to organizational information. Human resource practices for example sophisticated staffing procedures, performance appraisals; redesigning work, and mentoring others also form part of HPWPs. This process as well entails reward and commitment practices that include allocation of different financial rewards, family-friendly policies, job rotation, and flexible working hours as well as high job retention procedures (Ashton, D. & Sung, J. 2000, 6).

Studies have indicated that most firms in the United Kingdom have adopted the use of high-performance work. For example, currently, 95% of companies use appraisal schemes for rewarding their employees. It is as well evident that many companies in the region have adopted the use of HPW with those using more of the thirty-five HPW reporting greater employee involvement in the activities of the organizations (DuBrin, A. 2008, 34). The companies are reported to be more effective in delivering adequate training, motivating their staff, managing change, and providing career opportunities. Similarly, those adopting more high-performance work practices also have more employees whose earnings is over £35,000 and fewer staff earning less than £12,000(DuBrin, A. 2008, 34).

High-performance levels can be evaluated using the Performance Appraisals (PA) and Succession Planning (SP) model . This is used for multilevel performance management as shown in the model below.

PA/PS model for multi-valued evaluation

An Integrated Conceptual Model of Performance Appraisals (PA) and Succession Planning (SP) on the basis of Succession Planning (SP) Multi-valued Evaluation Model (MEM))

Source http://www.iobm.edu.pk/PJETS/V2N2/6.%20An%20Integrated%20Conceptual%20Model%20of%20Performance%20Appraisals%20and%20Succession%20Planning%20Using%20Multi%20Valued%20Evaluation.pdf

Conclusion

Most if not all organizations rely on performance management to help them assess the attainment of their set goals and objectives. As per the discussion, all companies have varied methods of assessing performance levels and awarding scores to employees. Performance management and high-performance practices in a firm work together with human resources to ensure that all the formulated goals, objectives, and assigned duties are completed within the specified period. Normally many organizations evaluate their levels of performance after one year as seen in the two selected companies

References

Armstrong, M., 2009. Armstrong’s handbook of performance management: An evidence-based guide to delivering high performance: New York: Kogan publishers

Ashton, D. & Sung, J., 2002. Supporting workplace learning for high performance working, Geneva: I L O

Conte, J. & Landy, F., 2010. Work in the 21st century: An introduction to industrial and organizational psychology. New York, NY: John Willey and Sons

DHL, 2014 [online] Available at: <http://www.dhl.co.uk/en.html> [Accessed on 18 Ap. 2014]

DuBrin, A., 2008. Essentials of Management, Belmont, CA: Cengage Learning

Harrogate Borough Council, 2004. Performance management framework.

Hitachi, 2014. Hitachi in UK. [online] Available at: http://www.hitachi.co.uk/about [Accessed on 18 Ap. 2014]

Jenkins, A., 2007. Performance management framework. Australia: South Wales

Leonard, B. & Cardy, R., 2011. Performance management: Concepts, skills, and exercises. New York, NY: M. E Sharpe

Queensland Government, 2002. Managing for outcomes: performance management framework

Rolstadas, A., 1995.Performance management: A business process benchmarking approach. New York, NY: Springer

Sahu, R., 2009. Performance Management System. Mumbai, India: Excel Books Indi