Problems with the modified PMS

1. I t f a i l e d t o l i n k t h e e m p l o y e e development with the appraisal. Using the information from

the employee’s self-appraisal form and observations, it should determine the developmental
opportunities that will assist the employee not only in achieving short-term goals, but long-term
career goals as well.

2. The modified PMS failed to provide the Individual Development Plans. The line manager’s
recommendations were ignored, which if taken into account, would have p l a y e d a v i t a l
r o l e i n a n a s s e s s m e n t o f t h e t r a i n i n g n e e d s o f t h e e m p l o y e e s . T h e Individual
Development Plan is an organized approach to professional development activities and
programs that are designed to improve the employee’s professional skills and the department’s
productivity. This is a joint process, both in design and execution, in t hat supervi sors are m ore
fam i l i ar wi t h the depart m ent ’s fut ure di rect i ons and t he employee is more aware of
specific, individual needs and aspirations. ARL failed to link the training and its relationship
with the appraisal process Training and performance appraisal have the same objective, to
improve performance, which means both behaviour and results.

3. The organization failed to relate the two plus there were fewer training opportunities
for the employees. Performance appraisal programs identify strengths and weaknesses in an
employee’s performance. These weaknesses can be translated into training needs, which
are a basic ingredient of practical training programs but at ARL there was an apprehension
of the PAC that after getting the training employees might leave the organization.

4. The organization could not define the competencies on the basis of which
t h e i r performance was being evaluated, their human resource professionals and supervisors did not
clearly specify the definition of the competencies or traits that served as the standards against which
the employee’s performance was being judged. The employees therefore were unaware of the
criteria and the required behaviours and competencies they were expected to have for
effective job performance and the line managers were having difficulties in differencing
them on the scale of 1 to 5.Meaningful increments were not given to the superior
performers due to which the employees could not see the difference between the top
performers and poor performers which resulted in decrease in the performance level

5. Another problem with PMS was that it consisted of bias errors. PAC members were not changed,
and members of committee were the same for every year. Committee members were seemed to
be biased by “First impression effect”. In this way employees actual
Page 5 9B15C015

Although a formal appraisal

process was followed with
structured forms, issues such as
objectivity,
differentiation and compensation
were left unaddressed. There was
a remote link between promotion
and
performance. Considering the
changing business dynamic and
organizational goals of the
company,
Khattak, then the HR manager,
felt the need to incorporate a
performance-oriented culture
backed by an
appropriate appraisal system.
Hence, major adjustments in the
appraisal system were made.
Post-1999
In late 1999, the company added
performance objective setting in
an attempt to create a
performance-
oriented culture. Major additions
and modifications were made to
the employees’ performance
evaluation.
The new system focused on
objective setting, which wasn’t
part of performance appraisals
previously.
Performance appraisal was
divided into three parts — A, A-1
and B. Form A was known as the
Management Personnel Targets
Appraisal, which provided the
format for setting targets
according to each
area of performance depending
on the responsibilities of each
individual. The targets were
assigned a
weight and assessed according to
predetermined verification
criteria. Performance ratings were
given on a
scale of 1 to 5 where 1 exhibited
outstanding performance and 5
represented below average
performance.
The specified weighting and
assigned rating were multiplied to
get the net result for each target.
They
were then accumulated to
calculate the total rating points.
Further, the weighted average
rating was
computed by dividing the total
rating points by 100, which
reflected a 30 per cent
contribution in the final
rating of an employee.
The Management Personnel
Performance Appraisal Record
(Form A-1) consisted of basic
demographics
and recorded an employee’s
performance on issues such as
attendance, counseling or
warnings,
discipline, targets achieved and
mid-term review. Form B, the
Management Personnel
Performance
Appraisal, outlined the 16
performance dimensions that
were assigned different weights
according to
different management grade
levels. After multiplying the
performance ratings with the
weights, the final
rating points were calculated for
Form B. The prescribed weights
of Form A and Form B were 30
per cent
and 70 per cent, respectively.
Adding the two resulted in a Final
Aggregate Rating of the
employee. The
percentage of increment was
decided based on the aggregate
rating.
In continuous pursuit of
performance improvement, in
2005 the appraisal forms were
amended. The three
parts were reduced to two parts
— Form A and Form B. Minor
adjustments in the forms made
the process
more effective. The weightings of
target setting and competencies
were changed. Target setting was
increased to 40 per cent and
competencies were reduced to 60
per cent. Slight changes in the
format were
incorporated, such as exclusion of
the appraiser’s promotion
recommendation section.
Furthermore, the
overall increment bracket was
changed. Details of increment
percentages corresponding to
final aggregate
ratings were outlined with the
respective appraisal forms (
The appraisal management
system at ARL was segregated
into two periods — pre-1999 and
post-1999.
Pre-1999
Before 1999, the appraisal system
was subjective and contributed
little to differentiating good from
poor
performers as it did not have
quantifiable objectives on which
the performance of employees
could be
evaluated. Rating an employee
was at the sole discretion of the
appraisers according to their own
wishes;
at times, they could not even
justify their evaluations in
appraisal meetings.
The annual appraisal process
included five steps. The initial
phase, Step 1, consisted of
appraising the
elements of performance broadly
based on five categories:
 What the employee
accomplished: The extent to
which the individual reached
expected results, what
was achieved in the review period
and reasons for success and/or
failure.
 How the employee worked:
The degree to which the
employee applied sound methods
in getting the
job done.
 How an employee’s personal
qualities contributed to
effectiveness on the job.
 The extent of the employee’s
knowledge in the relevant
functional and related fields.
 The employee’s general
attitude towards the company and
colleagues.
These five categories were further
expanded into 32 subcategories
(see Exhibit 2). Upon completion
of
Step 1, the appraiser provided
comments about the employee’s
potential, development needs and
career
progression. Once this section
was completed, PAC analyzed
the performance elements
appraised in Step
1 and identified training and
development needs pinpointed in
Step 2. Step 3 involved
appraising the
overall performance of the
employee based on a code of 1 to
5 where 1 indicated outstanding
performance and 5 specified
inadequate performance. In Step
4, PAC assessed the employee’s
capacity
for advancement in the current
organization unit. Once all four
steps were completed, the
appraisal form
was sent to the CEO for final
approval (Step 5), which formally
finished the appraisal process