Performance Management and Feedback: Creating Value for Employees, Essay Example

Problem Definition

Performance management and feedback has often posed challenges to employers, mostly due to the application of the wrong strategies. What managers must realize however is that employee performance is highly influenced by the kind of treatment extended by employers (Levesque, 2007). It is notable that satisfied employees are likely to perform better than unsatisfied employees (York, 2009). The issue of employee value creation is therefore inevitable for companies that desire to excel. Managers must aim at creating value for employees so as to induce outstanding performance and thereby increase profitability (Lee & Bruvold, 2003). It is notable that employee turnover rate has been on the rise. This is mostly prompted by employee dissatisfaction and the availability of better opportunities in other companies. The advancement in globalization and the increased value associated with efficient employees has increased competition for highly qualified employees among companies; such that firms must strive to create outstanding value and hence be in a position to retain their employees (Edwards and Rees, 2006).

Justification for Creating Value for Employees

Employees are a company’s most valuable assets (Levesque, 2007). This is because employees are fundamentally responsible for the company’s performance; given that they implement the company’s strategic objectives. It is therefore the duty of companies to ensure that employees are satisfied and this can only be achieved through creating value for employees.

There is an increase in the demand for highly qualified personnel as companies realize that employees play a significant role in firm success. Employee turnover is therefore expected to be high in companies where the management does not take care of employee needs (Levesque, 2007). Such employees are likely to move to competitors where they are assured better employment conditions (Lee & Bruvold, 2003). Companies must therefore create value for employees in order to maintain knowledge and skills within the company. It is notable that effective employees leave with knowledge that may not be transferable thus leading to high losses for companies; hence the need for companies to create value.

Creating value for employees leads to increased employee morale, commitment and greater productivity (Lee & Bruvold, 2003; Levesque, 2007). These benefit the company significantly through higher profitability, thus the need to create value for employees. This proposition and the others identified above then lead to the question of how employee value creation should be undertaken and any precautions that should be exercised to ensure that the desired results are obtained.

Alternative Courses of Action

There are number of approaches that a firm can use create value for employees in order to enhance performance. Notably, most of these approaches target motivation as the basis for creating value. Selection of the best approach however depends on the firm’s objectives and availability of resources.

Investing In Employee Development

The call for effective employee development stems from the fact that firms are slowly recognizing the value of human resources in firm success (Lee & Bruvold, 2003). Employee development is a high-commitment strategy which mostly involves developing the employees’ skills and abilities. According to Lee and Bruvold (2003), investing in employee development entails furnishing employees with new knowledge and skills such that they are capable of anticipating new job requirements. Employee development offers personal and career development opportunities to employees, through enhancing current skills and gaining new ones (Lee & Bruvold, 2003; York, 2009). When employees perform effectively, the firm’s competitive advantage increases; such that employee value is considered to be an effective management strategy.

Rewards and Recognition

Employee value is highly influenced by the rewards and recognition received. Employees are more likely to appreciate their work if the benefits they receive match with the effort they are exerting (Levesque, 2007). They also feel valued whenever their efforts are recognized by the management. This does not have to come in the form of rewards; praise makes a significant difference. Higher or fair rewards often depict that the company values their employees and the services they offer to the company. Firms could therefore use rewards and recognition as a means of creating value for employees.

Improving Employee Participation

Companies can improve employee value through allowing employees to participate in company decision making processes. This makes employees appreciate their jobs because they are assured that their employers value their contribution towards the success of the company (York, 2009; Levesque, 2007). This improves motivation and employees are therefore likely to portray better performance than where employees do not have a say in the company’s operational decisions.

Employee Autonomy

In today’s economy, employees are exerting relentless efforts to obtain high levels of knowledge and skills in order to develop their professions (Edwards & Rees, 2006). This means that most employees are highly qualified and have invaluable skills that they can utilize for the benefit of the company. The value of such employees can be improved by allowing them to exercise independence in the course of their work. This basically involves reduction of supervision, which allows them to make independent decisions regarding their duties. According to York (2009), employee autonomy gives employees a sense of control; and therefore improves their performance and managerial skills. This creates employee value and improves their effectiveness.

Evaluation of Alternatives

Investing In Employee Development

There are various advantages associated with investing in employee development. Employee development helps employees in identifying and obtaining new knowledge and skills (Lee & Bruvold, 2003). Investment in employee development makes employees feel appreciated by the company. In return, they are likely to devote greater effort, remain loyal to their employer and generally perform better. Further, employees gain a higher sense of control over their vocations which is considered to be a motivational factor (Lee & Bruvold, 2003). The end result of investing in employee development is higher profitability for the company.

This approach however has its disadvantages. To begin with, certain forms of knowledge and skills are non-transferable. These are better known as tacit knowledge. The company is therefore bound to lose significantly when employees leave (Lee & Bruvold, 2003; Edwards & Rees, 2006). Considering the heavy investment undertaken in employee development, the loss suffered by the company is expected to be quite colossal. Replacing such knowledge calls for high financial outlays, yet the risk of losing the newly trained employees is also high.

Rewards and Recognition

The most notable advantage of rewards and recognition is the ability to motivate employees. Employees are expected to work harder when they are promised better rewards (Levesque, 2007). Fair rewards and motivation reduce employee turnover and thus help in maintaining valuable knowledge and skills within the company (York, 2009). Recognition also leads to employee loyalty and commitment due to the fact that employees feel appreciated by their employer.

The disadvantage with using rewards to create value is that it could lead to poor performance, especially where rewards are given according to the amount of work done. Employees may rush through their work in order to make more money, thus compromising on quality. Raising rewards and recognition packages in order to please employees may cost the company’s profitability due to the increase in employee expenses.

Improving Employee Participation

Employee participation improves motivation since it sends a signal that employees and their ideas are highly appreciated by the company (Levesque, 2009). Such a sense of appreciation improves employee morale and hence promotes loyalty and productivity. Employees are also in a position to utilize their knowledge and skills through participating in decision making. Employee participation is imperative to the company for the reason that it helps in making more informed decisions. Participation brings in different views that managers may not produce on their own.

Employee participation on the other hand may derail decision making. According to Edwards and Rees (2006), decision making is slowed where many people are involved due to differences in views and ideas. Employee participation may also bring conflict, especially where ideas suggested by some employees are not utilized. This may create a feeling of discrimination and rivalry among employees.

Employee Autonomy

Allowing employee autonomy increases employee morale, given that employees are in a position to utilize their knowledge and skills. This helps in bringing out their potential which is used for the benefit of the firm (York, 2009). Employee autonomy also increases employee commitment as individuals strive to prove their effectiveness.

A major disadvantage of employee autonomy is poor performance due to lack of supervision. Employees are likely to relax thus leading to underperformance and poor quality work. This is unlike where employees are guided on what to do at each particular time.

Conclusions and Recommendations

The best strategy for increasing employee value would be a combination of employee development, rewards and recognition. This is because each of these alternatives increases employee motivation and hence promises effective results for the company. Levesque (2007) notes that happy employees are more likely to be productive. Investment in creating employee value through employee development, rewards and recognition would certainly yield desirable results. The above discussion establishes that employee development effectively creates value for employees. The same is echoed in the discussion concerning rewards and recognition, which establishes that employees deserve to be treated fairly and in accordance to their level of performance.

Investing in employee development is considered to be a popular method of creating employee value. Studies by Michael Porter indicate that industries that heavily invest in training and employee development are the most competitive in developed countries (Reich, 1991). The knowledge and skills obtained play a significant role in enhancing the company’s profitability besides promoting the employee’s professionalism (Lee & Bruvold, 2003). Once the employees are well vast with the required knowledge and skills, they are expected to perform better and hence earn more profits for the company. Accordingly, it is only fair for companies to share such gains with employees, who are essentially responsible for the good performance (York, 2009). Further, firms may want to avoid losing what they have invested through training and development. Rewards and recognition are therefore inevitable in order to prevent efficient employees from joining competitors. A company must strive to ensure that employees are rewarded according to their efforts and contribution to the company so as to increase loyalty and profitability.

The implementation of these strategies will involve a number of players. The Human Resource Manager (HRM) would be highly involved in ensuring that training programs are set. The HRM is responsible for identifying the employees to be included in the development program and the type of training to be received. This however cannot be done without the involvement of general managers who must make approval of the proposal. Once the projects have been approved, the HRM should present the budget to the Chief Financial Officer (CFO) for approval and release of funds. Training can then commence as planned. Creating value through rewards and recognition would involve supervisors under the guidance of the HRM. Supervisors should be in a position to identify high performing employees and forward their reports to the HRM for advice. Supervisors may also undertake the simple duty of recognizing efforts through verbal praise. The issue of increasing rewards should be discussed by the HRM, the general managers and the CFO so as to determine whether the budget allows for such undertakings. Once they come to a consensus, the proposed rewards may be given in accordance to employee performance.

Follow Up and Evaluation

The adequacy of these approaches in creating employee value may not be effectively determined if proper follow-up and evaluation are not undertaken. This is a duty that the Human Resource Manager should undertake. Follow-up and evaluation would involve the determination of whether there are notable differences between output recorded in the past and the output witnessed after the implementation of the strategies identified. The comparison variables would be company profitability and production units recorded per employee. An increase in these variables would mean that the strategies are working in accordance to the company’s expectations. Their effectiveness can also be gauged by observing general employee attitudes such as gestures, work commitment and the ability to do better quality jobs as opposed to prior attempts. The HRM should make an evaluation time table, preferably one month after implementing the changes. On the table, changes on the identified variables should be recorded on a bi-weekly basis. Comparisons can then be done in order to effectively establish the effectiveness of the approaches applied.

References

Edwards, T. & Rees, C. (2006). International human resource management: globalization, national systems and multinational companies. London: Financial Times Prentice Hall.

Lee, H. & Bruvold, N. T. (2003). Creating value for employees: investment in employee development. International Journal of Human Resource Management, 14 (6), 981-1000.

Levesque, P. (2007). Motivation: Powerful Motivators That Will Turbo-Charge Your Workforce. New York: Entrepreneur Press.

Reich, R. B. (1991). The work of nations: Preparing ourselves for the 21^st century capitalism. New York: Knopf.

York, K. M. (2009). Applied Human Resource Management: Strategic Issues and Experiential Exercises. London: SAGE.