Abstract:

Performance appraisal is a vital tool to measure the frameworks set by any organization to its
employees. It is utilized to track individual contribution and performance against organizational goals
and to identify individual strengths and opportunities for future improvements and assessed whether
organizational goals are achieved or serves as basis for the companys future planning and development
.This study examined the status of the performance appraisal system of Nass Construction Company and
its implication to employees performance. The respondents of this study were tenured employees . The
purposive sampling technique was used in the selection of respondents. Quantitative and qualitative
method of research was utilized in the gathering of data. Interviews, focus group discussion and survey
questionnaires were the main instrument used in this study. The result of the study showed that the
performance appraisal system of the company are in place, aligned with the vision and mission of the
institution , and is accurate in terms of content and purpose. On the other hand, the results reflected
that the performance appraisal system of the company has brought about both positive and negative
impact on the employees performance. Further, the respondents identified some major gaps in the
implementation of the companys appraisal system: no appropriate rewards are given to best
employees, appraisal system was not fully explained to employees, no feedback of results and
employees do not participate in the formulation of evaluation tools. It is recommended that the
company should revisit and redesign its appraisal system that is align to its vision and mission towards
the attainment of its organizational goals.

Keywords: Company Performance, Employee Efficiency, Employee Motivation, Employee Reward

System,
APPRAISALS AT YARRA BANK
Yarra Bank has a five-level performance appraisal system using a forced ranking
distribution. Superior performers (the top 10 per cent) are rated 1, good
performers (the next 25 per cent) are rated 2, acceptable performers (the next
45 per cent) are rated 3, marginal performers (the next 15 per cent) are rated 4
and unsatisfactory performers (the bottom 5 per cent) are rated 5. Employees
rated 5 are 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 1 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 organisation. 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 co-workers as really belonging to
another ranking group. This fosters envy and a reluctance to communicate and
cooperate. The typical attitude is that if they
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are hotshots, let them solve the problem. Likewise, a problem 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 demotivated, and the better ones (the
borderline 2s) 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 favouritism
occurs, it is recognised that some managers are reluctant to fire troublesome non-
performing employees who belong to a union (and especially those who are
members of the United Union of Australia).
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 claim that the forced
distribution of employees (where managers rank each employee from 15) creates
too much ill feeling and is not fair. Some managers (especially the more politically
powerful), argue that their department is different (because most of their people
are stars or starlets) and refuse to rank anyone as a 4 or 5. Managers who strictly
follow the system feel that their employees are disadvantaged as a result. The
annual performance appraisal program thus creates considerable tension and
dissatisfaction among Yarra Banks managers and workers.
DISCUSSION 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.
https://books.google.com.ph/books?id=spAY7_nLHcwC&pg=PA227&lpg=PA227&d
q=disadvantages+of+five-
level+performance+appraisal+system&source=bl&ots=0y_VcoJIsU&sig=BXa244Z81C
aGiwVvYXgcvZql5rY&hl=en&sa=X&ved=0CCoQ6AEwAmoVChMIwPrD2uLKxwIVyc
2ACh0kbAiV#v=onepage&q&f=false

http://www.workforce.com/articles/pros-and-cons-of-performance-appraisal-
rating-systems

http://smartchurchmanagement.com/advantages-and-disadvantages-of-
performance-management/

A stakeholder is a person (for example, an employee or a shareholder) or group

(for example, a company, trade union or government) that has a vested interest in
an organisations operations and performance (see figure 1.10). Stakeholders try to
influence the way an organisation operates by supporting or opposing its
strategies.156 For example, employees may go on strike or quit, customers may
buy elsewhere, shareholders may sell their shares and trade unions may create an
industrial dispute.

Rated 1 employees -
Rated 2 employees-the better ones (the borderline 2s) quit the company
Rated 3 employees -Likewise, a problem 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 demotivated
Rated 4 employees-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.
Rated 5 employees who belongs to a union -
Rate 5 employees who do not belong to a union-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.
managers - Although the company denies favouritism occurs, it is recognised that
some managers are reluctant to fire troublesome non-performing employees who
belong to a union (and especially those who are members of the United Union of
Australia).
managers who are politically powerful -One consequence of this is that many
managers claim that the forced distribution of employees (where managers rank
each employee from 15) creates too much ill feeling and is not fair. Some
managers (especially the more politically powerful), argue that their department is
different (because most of their people are stars or starlets) and refuse to rank
anyone as a 4 or 5.
Managers who strictly follow the system- feel that their employees are
disadvantaged as a result.

HR Department

Strengths - goal oriented

- performance based appraisal
weakness- tension

Ref

STONE, R. (2013) Managing Human Resources 4e. [Online] Australia. John Wiley & Sons.
Available from: http://online.vitalsource.com/books/9780730302582/epubcfi/6/34 .
[Accessed: 28th of August 2015].

http://www.essec.edu/faculty/showDeclFileRes.do?declId=240&key=__workpaper__

http://www.managementjournals.org/ijems/23/IJEMSi2n3i7i1222217.pdf

http://moodle.baskent.edu.tr/pluginfile.php/68770/mod_resource/content/1/Fletcher.pdf

http://blogs.wsj.com/indiarealtime/2011/04/29/career-journal-making-performance-
appraisals-more-effective/

http://www.emeraldinsight.com/doi/abs/10.1108/02683940410543605

http://online.vitalsource.com/#/books/9780730302582/epubcfi/6/42%5B;vnd.vst.idref=cha
p8%5D