Boosting Productivity with Performance Appraisal at John Lewis Partnership

 

 

 

 

 

Integration of performance appraisal system (PAS) as a HR tool for improving organizational productivity at John Lewis Partnership

 

 1.0 Introduction

John Lewis Partnership (JLP) is a well-established and renowned retail chain in the United Kingdom. The firm’s headquarters are located in London, UUK. The firm has established several retail outlets that include convenience stores and supermarkets. Gently, the firm stocks over 350,000 different products including household items, furnishings, and fashion products. The firm’s product portfolio also comprises insurance services, a catalog, and an online business. JLP has segmented its operation into two, viz. John Lewis and Waitrose. Currently, JLP has established 39 retail outlets across the UK. Moreover, JLP also operates 291 Waitrose supermarkets (John Lewis Partnership PLC 2016). The firm has maintained leadership in the UK retail industry. The firm has maintained industry leadership concerning revenue and workforce for over 90 years. The years,  the global economic slowdown experienced in 2008/2009, JLP has experienced consistent sales growth. During growth. 2008 global economic recession, JLP experienced a slight change in sales revenue (MarketLine 2011).During 2011). 16 fiscal year, JLP’s revenue amounted to $15,233 million. The compound Annual Growth Rate (CAGR) between 2012-2016 averaged 5.5%. In 2016, JLP had an operating margin of 5.45%, which represents an increase from the 4.64% recorded in 2015 (MarketLine 2011).Appendix 1 2011). JLP’s trend about changes in revenue and profit margin between 2012 and 2016. Contrary to most retail firms that are owned by external stakeholders through shareholding, JLP is owned by its employees through trust. To ensure that trust. Employee-ownership model is valuable to the firm’s performance, JLP is focused on fostering the development of an effective internal environment. In line with its commitment to establishing an attractive work environment, JLP has entrenched workplace democracy as one of the fundamental aspects of its organizational culture. Additionally, JLP offers employees an annual profit-share bonus. This ownership strategy has significantly contributed to the firm’s performance (MarketLine 2011).JLP i2011). Committed to developing employee partnerships, undertaking long-term planning, and improving its brand strength in the pursuit of long-term excellence. A review of available literature shows that JLP considers employees as one of the most valuable internal resources. To succeed in leveraging its human capital resources, JLP must incorporate effective human resource (HR) tools and techniques. One of JLP’s motives in entrenching the HR tools is to stimulate the firm’s organizational productivity. Robbins et al. (2014) have described organizational productivity as a measure that is used in the determination of the extent to which employees efficiently and effectively undertake the assigned job roles and responsibilities. Sena (2011) argues that the UK retail sector is important in the country’s economic growth and development.  A study conducted in 2004 revealed that the retail sector absorbs approximately 20% of the country’s total workforce (Sena 2011). Despite the expansion that has characterized the UK retail sector, Griffith and Harmgart (2005) assert that it does not match the sector’s performance based on the level of productivity. Sena (2011) notes that the retail sector accounts for approximately 33% of the slowdown in the country's total factor productivity. A decline in sector productivity might adversely affect the future sustainability of the industry players. Amongst the strategies through which JLP can enhance its productivity is integrating a well-designed performance appraisal system (PAS). Saimuna (2015) defines performance appraisal (PA) to include the process through which an organization undertakes a systematic review of its workforce to evaluate the employees’ knowledge and work behavior. The rationale of the review is to examine whether employees have the requisite skills and knowledge to undertake the assigned job tasks. This paper entails an analysis of how JLP can succeed in integrating PAS as a tool for improving organizational productivity. The analysis will focus on PA aspects, models, processes, and techniques that JLP can integrate in redesigning performance management. Through this approach, the firm will be able to enhance the attainment of long-term organizational productivity.

 

2.0 Analysis

 

The link between PA and organizational productivity and an organization’s performance can be assessed by employing diverse criteria, among them being the level of profitability, customer satisfaction, productivity, and marketing effectiveness (Selvarajan & Cloniger 2012). The inclusion of these aspects in evaluating an organization’s overall performance indicates a strong correlation between an organization’s long-term performance and the level of employee performance (Locke & Latham 1990). Organizational productivity is a fundamental element that enables a business to achieve long-term sustainability. Different units of an organization endeavor to be productive by maximizing output by applying the minimum amount of input (Robbins et al. 2014).Employees cons014).  An important internal organizational resource is available to an organization, which affords such organization leverage in maximizing productivity. Deepa, Palaniswamy, and Kuppusamy (2014) accentuate that improving the efficacy with which employees undertake the assigned roles and responsibilities is critical in improving organizational productivity. Nevertheless, the level of employee productivity depends on the extent to which they are satisfied with their work.  Deepa et al. (2014) assert PAS is critical in an organization’s quest to define and design job roles and responsibilities, develop job descriptions, promote continuous learning, and hence enhance organizational productivity.  Thus, to stimulate a firm's performance, organizations must rethink the effectiveness of their HR practices in enhancing employee performance (Bhatnagar 2013). According to Gungor (2011), organizations are progressively investing in different HR management models and systems to motivate employees. Performance appraisal systems constitute effective tools available to organizations to aid in assessing job-related behaviors of their workforce. Deepa et al. (2014) corroborate that PAS provides a firm’s management team with useful insights into the employees’ current performance. Management teams can use the results obtained from a PA to project the likelihood of the employees’ performance to stimulate the organization’s long-term success (Bhatnagar 2013). Mathis,2013). on, and Valentine (2015) have identified PA as an essential HR tool because it provides a firm’s top management with valuable information that they can rely on while making critical HR decisions. Examples of decisions that a firm can formulate using the findings of PA include reward management and employee training and development (Tsui & Lai 2009). Nevertheless, the implementation of performance appraisal in businesses’ operations continues to be a challenge for most firms despite its significance. According to Kondrasuk (2012), most employees approach PA with fear and antipathy. Amongst the factors that contribute to the emergence of negative perceptions amongst employees of an organization towards PA is the lack of commitment amongst top management to utilizing the feedback obtained from the appraisal. In his opinion, Kondrasuk (2012) argues that employees dislike PAS because they are not adequately consulted or involved in the establishment of PA. The value of PAS in enhancing organizational performance depends on the effectiveness with which it is designed and implemented (Pulako2009). ). A PAS that is poorly designed and implemented can result in negative outcomes. Helm, Holladay, and Tortorella (2007) argue that if employees think that if firm’s management team does not value the results of the PA, they might not take the process seriously. For example, such a performance system might create a negative employee perception of the fairness of the PAS (Sahoo & Mishra 2012). To enhance the effectiveness of its PAS, JLP must consider entrenching effective PA practices.  To achieve this outcome, JLP should take into consideration the critical components of the PAS.

 

2.2 Integration of PA in Work Redesign 

 

Work design is an essential aspect of the operations of an organization. Work design constitutes an umbrella term that is used to define different job-related aspects. Work design is positively linked or correlated to an organization’s goals and strategies (Tiem, Moseley & Dessinger 2012).  Elsewhere, Armstrong (2009) emphasizes that work design involves a blueprint that illustrates how job tasks in an organization are structured.  Work design is a critical component in companies' pursuit of efficiency..  JLP is cognisant of the value of the job in its pursuit of excellence. The company considers the job to be a critical component in its quest to achieve success in the retail industry.   

 

Despite its appreciation of the value of the job, JLP’s management team must see to it that job tasks are optimally designed to be of value to its workforce.  In this regard, JLP must ensure that job tasks are designed in such a way that they contribute to employees’ personal and professional development.  Job tasks should assist employees’ progress through the desired career path.  Conducting PA is one of the techniques that the firm’s management team can adopt in determining the value of the job to employees. By acting on the PA results, JLP can undertake an optimal and effective job redesign (Helm et al. 2007).

 

 JLP has integrated employee training and development as one of its HR management approaches. In its training and development program, JLP intends to improve employees’ skills and knowledge (John Lewis Partnership 2016). The training and development program is enshrined under Rule 56 of the firm’s Partnership Constitution.  Learning at JLP commences with an induction program and progresses through the employees’ period of employment. JLP can succeed in improving employees’ perception of the significant job roles assigned to them.

 

  In redesigning job roles to the PA results, JLP should consider entrenching an employee-centric approach. The rationale of this move is to ensure that employees’ needs are taken into account (Bhattacharyya 2011).  There are different work design approaches that JLP should take into account in their quest to make jobs valuable to both employees and the organization. Some of the notable work design approaches that the firm should take into account include job enrichment, job enlargement, and job rotation.  In employing these job redesign approaches, the firms’ management teams must incorporate PA as one of the fundamental aspects (Niles 2013).

 

2.2.1 Job enrichment

 

Swansburg and Swansburg (2002) argue that job enrichment is positively correlated with employee productivity. Job enrichment results in the creation of a high level of job satisfaction.  Job enrichment involves the provision of higher responsibility and flexibility amongst employees such as providing employees with sufficient autonomy in planning and executing the different tasks outlined in their job responsibilities. The inclusion of job enrichment results in employees feeling valued (Swansburg & Swansburg 2002). Moreover, job enrichment has a positive effect on the employees’ level of motivation because of the additional or challenging job tasks assigned.  Integration of job enrichment enables an organization to utilize its human capital to the maximum (Hayes & Ninemeier 2009).

 Nevertheless, Swansburg and Swansburg (2002) emphasize that job enrichment demands that HR managers ensure the process is optimally designed and carefully implemented.  Undertaking an effective PA comprises an important HR technique that the management team of a firm should take into account in planning and implementing job enrichment.  The link between PA and job enrichment is anchored in the ability of the HR manager to identify employees who have developed techniques that can enable them to take up added responsibilities or assignments (Bott 2005; Goel 2012). Thus, in entrenching job enrichment as an approach to job redesign, JLP should undertake a comprehensive performance process. This will aid in ensuring that the implementation of a job enrichment strategy is not only valuable to the employees but also for the organization.  At the same time, employees will develop the perception that the firm appreciates their need to achieve the intended career progression goals, thus prompting them to develop a high degree of identification with the organization.

 

2.2.2 Job rotation

One of the purposes of PA is to evaluate gaps in the performance of an employee concerning job tasks and responsibilities assigned to them (Deb 2006). By addressing the performance gaps identified, it is possible for an organization to positively contribute to improvement in the level of organizational productivity. Integration of job rotation constitutes one of the techniques that a firm can employ in promoting productivity.  Kurtulus (2010) defines job rotation as a job design approach in which HR managers assign different tasks to employees (for example, entrenching lateral transfer). Job rotation largely constitutes an on-the-job training approach that contributes to the acquisition of new skills and knowledge that ultimately enhances employees’ personal development and performance. The overall impact is that the organization’s productivity is improved.  

 

Integration of job rotation as a work redesign approach can enable JLP’s employees to develop an all-rounded experience through the provision of cross-training programs. However, JLP should undertake periodic assessments of the impact of job rotation on employees’ performance upon completion of every rotation.  What this seems to indicate is that PA should constitute one of the key elements of job rotation as an approach to job redesign.  Rothwell and Kazanas (2000) assert that PA on job rotation should focus on two main issues which include performance issues and developmental issues. Developmental issues entail assessing the degree to which employees accomplish the stipulated performance objectives of the rotation (Lutwama, Roos & Dolamo 2013). Conversely, performance issues should examine the extent to which the employees are effective in undertaking the job requirements of the task that they rotate.  

 

2.3 Fundamental issues in designing and implementing a PAS

 

According to Armstrong (2009), PAs are vital in an organization’s quest to achieve three main purposes namely, employee development, and administrative and program assessment.  Gilmore and Williams (2012) assert that the administrative purpose of PAS is to assist the management team of an organization in making rational decisions relating to different personnel aspects such as promotions, labor terminations, transfers, and demotions. Conversely, employee development involves utilizing the PAS as a tool to assist an organization develop a strong workforce by determining areas of employees’ skills and knowledge that require advancement or improvement through training.

 

Hernandez and O’Connor (2010) affirm that implementation of an effective PAS is critical in an organization’s quest to attract and retain valuable employees. The overall outcome is that the firm’s productivity is improved significantly. To succeed in applying PAS as a tool for improving organizational productivity, JLP should optimally design the system. One of the issues that the firm’s management team should take into account in designing the PAS is to integrate a sufficient level of cross-functionality (Farndale & Kelliher 2013).  Thus, the PAS should be applicable in evaluating employees in different job positions (Baier 2008).  The significance of ensuring that the PAS is characterized by a substantially high level of cross-functionality is founded on the need to ensure that there is uniformity in applying the system. Baier (2008) corroborates that lack of uniformity makes the appraisal process difficult. According to Grote (1996), PA becomes challenging when employees or teams to be assessed are not homogeneous but cross-functional.  In addition to cross-functionality, JLP should ensure that the PAS is fully integrated by aligning the PAS with the firm’s mission and vision.  

In implementing the PA system, JLP should take into consideration environmental and people factors.  Environmental factors are associated with the workplace environment. Armstrong (2009) asserts that the workplace environment is a major source of PA problems. Conversely, the people factor relates to the workforce’s level of intelligence, prerequisite abilities, and stress tolerance (Lyster & Arthur 2007). JLP should ensure that the employees charged with the responsibility of implementing PAS are knowledgeable on how to optimally apply the PA system.  The PAS should be well designed by entrenching employees’ goals, values, and rewards. Inclusion of these aspects is critical in influencing the development of a positive employee perception of the relevance of the system to employees and the firm (Agbola & Abena 2011).   In conducting PA, the firm’s management team should factor in four main components including defining the expectations, measuring and evaluating performance, communicating performance results to employees, and recording the performance for future reference as illustrated in Appendix 2.

 

1. 2.3.1 Gathering and utilizing PA data
2. In designing and implementing a PA system, it is imperative to ensure that the system employs effective data collection procedures. According to MacLean (2001), HR managers are duty-bound to ensure that data collection is undertaken continuously. The rationale behind the continuous collection of employee performance data is to develop a file that documents employees’ performance (Lyster & Arthur 2007). In designing the PA system, JLP should ensure that their HR decisions are based on a work-related performance criterion. The firm can use such appraisal data to identify specific employee training needs. Rothmann and Cooper (2015) think that the PAS should be designed by the employee’s job tasks. In this case, the PAS should be job-focused and include articulated performance standards.   
3. The PA data collected should be optimally utilized to improve its value to both the employee and the organization. For example, the firm’s management team should consider PAS as a tool for the identification of various areas of performance that require improvement (Latham 2013).  Therefore, JLP’s management team should eliminate the chance of the PA data being utilized negatively. Agbola and Abena (2011) argue that some managers might use PA data to victimize lower-level employees, hence negatively impacting the employees’ perception. Moreover, there is the risk that some managers might use the PA data to dismiss or exert pressure on employees who belong to trade unions.  
4. In the implementation of PAS, organizations should ensure that all political motives are avoided. Additionally, the results of the PA should not be manipulated. Employees may avoid involvement in the PA process if they perceive that it is biased and intends to punish them. Such practices are a clear indication of an ineffective PAS. In extreme situations, an ineffective PAS may trigger the formation of voluntary turnover intention amongst the employees.
5. 2.3.2 Employee involvement
6.  Roberts (2003) notes that PA involves a complex HR technique that firms use to determine ubiquitous problems in their daily operations.  Therefore, there is a need for firms intending to employ PA as a tool for stimulating organizational productivity to incorporate the fundamental issues, concepts, procedures, and techniques.  One of the key issues in the designing and utilization of PA is fostering the level of employee participation (Roberts 2003). Thus, JLP’s success in implementing the PAS as an HR tool to enhance organizational productivity depends on the extent to which the system is accepted by employees as part-owners of the firm. Roberts (1994) emphasizes that the employees’ attitude toward HR practices adopted by a firm has a considerable impact on the value of such practices on the firm’s short-term and long-term success.  In the process of implementing their PA system, JLP should be committed to ensuring that the PAS is accepted by their employees. One of the ways through which JLP’s employees can enhance acceptance of the PAS is by making sure that the appraisal system is accurate, fairly administered, and aligned with the employee’s goals and values (Roberts 1994; Ochurub & Goosen 2012).
7. Employee involvement in designing PAS constitutes another fundamental aspect that the organization’s management team should consider as they maximize the value of the system (Armstrong 2009). Lack of employee involvement or participation may lead to the implementation of a dysfunctional PAS (Roberts 2003). Kirkpatrick (2006) asserts that employee involvement is critical in assessing the effectiveness of the PA system. For example, employee involvement in designing PAS aids in the identification of the efficacy of the system in determining gaps in employee performance and hence the need to undertake the necessary improvement, for example through the inclusion of a training and development program on the issues identified.   Ensuring the optimal level of employee participation increases the level of employee participation and subsequently their commitment in providing feedback on performance issues requested.
8. In a quest to improve the significance of employee participation in designing the PA system, the JLP management team must integrate three dimensions of participation in the appraisal process as evaluated herein.
9. Performance standard participation; this dimension underscores the importance of ensuring that the PAS is based on clear and explicit performance standards.  Selvarajan and Cloniger (2012) argue that the performance standards integrated into the PAS directly impact the validity and reliability of PA results. Therefore, in implementing a PA standard, JLP should formulate performance standards that are aligned with the respective job tasks. Moreover, the formulated performance standards should have the capacity to assess individual and group performance. Ensuring an adequate level of employee participation in the development of performance standards to be applied in the appraisal is vital as it encourages employees to accept the standards adopted.
10. Rating form participation; in addition to being involved in the formulation of performance standards, employees should also be included in developing appraisal procedures and rating forms. The rating form entails a summary of work-related issues that the firm considers critical for appraisal.  Seeking the input of employees is critical in developing the rating form.  Brown and Purcell (2007) assert that employees may prefer the application of diverse systems in line with the area of focus of the PA. For example, if the focus is on gathering global feedback as opposed to seeking information on individual performance, the employees may prefer the pass/fail system.  
11. Self-evaluation; to enhance the acceptability of the appraisal system, a firm’s management team needs to consider integration of self-evaluation as one of the key aspects of employee participation. Roberts (2003) accentuates that the inclusion of self-evaluation increases the level of employee preparation and acceptance of organisational-wide appraisal.  Andrews and Siengthai (2009) argue that employees tend to resist PA processes that are undertaken by supervisors.  JLP can improve the acceptance of PA through the inclusion of self-evaluation. For example, the firm can develop an appraisal form that employees can use to undertake self-evaluation. Through this approach, the firm will succeed in undertaking PA. This arises from the fact that employees will not develop defensive behavior towards the organizational-wide PA system. The overall effect is that the organization will succeed in evaluating employees’ performance because of limited resistance toward the system.
12. Developing rater-rate relationship; employee involvement in designing and implementing a PA should also involve the establishment of a strong relationship between the ‘rater’ and the ‘rate.  Roberts (2003) emphasizes that one of the outcomes of a PA process entails employees’ appraisal ratings, which depict the employees’ performance.  The ratings should have intrinsic and extrinsic value.  Intrinsic value arises if the rating perfectly communicates the employee’s performance while extrinsic value arises from the belief that the organization’s top management will use the ratings in making HR decisions.  
13. Nevertheless, to ensure that the PA process contributes to the creation of intrinsic and extrinsic value, a firm’s management team should ensure the establishment of a positive relationship or connection with the personnel undertaking the appraisal, ‘rater’, and the ‘rate’ or the employee being appraised. One of the aspects that should be included in developing a rater-rate relationship entails the rater being sensitive to the employees’ needs. The rater should ensure that confidentiality and privacy of the rate performance information is maintained. Moreover, the rater should focus on developing employee confidence in how the process is conducted.  For example, the rater should provide the employee with undivided attention (Lawson, Stratton & Hatch 2003).
14. 2.3.3 Internal communication system
15. One of the issues that JLP’s management team should take into account in fostering acceptance of the PAS is to integrate an effective internal communication system (Kirkpatrick 2006). The significance of communication is that it improves employees’ level of understanding of the value of the PAS. In addition, communication has a positive lead on the development of a strong degree of organizational identification amongst the employees due to the created perception of inclusion in the implementation of the PAS (Armstrong 2009).  In entrenching an internal communication system, JLP should consider the 360-degree feedback mechanism which has been shown to facilitate promoting employee participation.
16. 2.4 PA techniques and tools
17. From the above analysis, it is evident that the integration of PAS and the improvement of organizational productivity are strongly correlated.  Implementation of a PAS aids in the identification of gaps in employees’ skills and knowledge. Subsequently, an organization’s management team can succeed in designing an employee training and development program that sufficiently addresses the gaps identified in employees’ knowledge and skills. Moreover, conducting PA enables an organization to decide on the extent to which employees are satisfied with their job tasks. From such knowledge, the management team can decide on how to undertake job redesign. Therefore, conducting a PA enables an organization to respond to internal challenges that might negatively impact an organization’s productivity. 
18. To succeed in applying PA as an HR tool for enhancing organizational productivity, JLP should ensure that they adopt the relevant approaches, techniques, and processes of PA. There are different PAS that JLP can employ in assessing employee performance.  Some of these methods include the integration of behavioral checklists, management by objective, integration of 360-degree appraisal, and psychological appraisal.
19. 2.4.1 Psychological appraisal
20. Macky and Johnson (2000) assert that this method involves assessing employees’ psychological characteristics such as emotional stability, intellectual capability, and analytical capacity. Appraising employees on these parameters enables the management to gauge their ability to deal with work-related issues such as job stress. Based on the knowledge gained, the management team can optimally determine the programs to employ to enhance the employees’ capacity to deal with work-related issues.
21. 2.4.2Management by objective
22. Under this type of appraisal system, the management team of an organization designs the appraisal system on the basis the pre-determined organizational goals. Thus, the set goals are used as the benchmark for evaluating employee performance.
23. 2.4.3 360-degree appraisal
24.  This system of PA involves an organisational-wide appraisal in which the feedback of different stakeholders such as supervisors, line managers, and team members amongst others, on an employee’s performance, is sought. The 360-degree appraisal system is effective because it provides in-depth feedback on a particular employee's performance (Liu & Batt 2010).
25. 2.4.4 Behavioural checklist
26. This PAS focuses on assessing the employees’ job behavior.  The behavioral checklists are customized to a specific job task. This arises from the fact that behavioral requirements differ across different job tasks.
27. Moreover, JLP’s management team must consider the following issues.    
28. Rating employees’ performance; in determining the level of employees’ skills and knowledge, JLP should consider applying the rating technique. An example of the rating techniques that the firm should apply entails the Graphic Rating Scale, which enables a firm to construct a continuum that identifies the employees with a diverse level of performance about a specific dimension of performance.  The application of the graphic rating scale involves the inclusion of performance standards (Armstrong 2009).
29. PA forms; in undertaking a PA, JLP should design a comprehensive PA form that is comprised of several aspects that include the inclusion of the employees’ general information such as their technical knowledge of the job assigned, attendance and punctuality, level of commitment and integrity, and knowledge of customer service (Klenke 2008).  In addition to these aspects, the PAS should be comprised of specific targets that the employees should achieve in line with their job description.  The PA form should further be comprised of performance categories such as rating the employees’ performance hence identifying training needs.
30. Provision of feedback; JLP should ensure that the performance system is comprised of an effective feedback mechanism. The rationale for communicating performance feedback is to create awareness amongst employees of their performance.  To improve the feedback mechanism, the firm’s management team should include several issues.  First, feedback should be confidential (Liu & Batt 2010).  The feedback provision process should characterised by a high degree of interaction between the rater and the rate. This aspect will play a critical role in ensuring that individual employees are conscious of their strengths and weaknesses in undertaking job tasks. Furthermore, communicating feedback should be optimally designed. The firm can achieve this aspect by aligning the feedback design process with the organizational goals. This approach will play an essential role in improving the employee's understanding of the degree to which their performance is aligned or misaligned with the set organizational goals (Armstrong 2009).

2.5 Conclusion

            The above analysis underlines the existence of a positive correlation between employee performance and the extent to which it contributes to improvement in the organization’s overall productivity. Therefore, organizations should attempt to stimulate the level of motivation among employees to achieve organizational success. Motivated employees are likely to be committed to executing the assigned job tasks.  The PAS constitutes one of the HR tools that JLP should take into account in their quest to stimulate organizational productivity.   However, to leverage the benefits of PAS, the firm’s management team should ensure that the PA is professionally formulated and implemented.  Thus, the integration of effective PA tools and techniques is essential.  Additionally, JLP should ensure that the employees are adequately involved in the formulation and implementation of the PA system. By entrenching employee participation, the firm will foster a high level of acceptability of the system. Therefore, the firm will succeed in utilizing the PAS as a tool for enhancing employee development, which is critical in achieving the intended level of organizational productivity.  The firm should ensure that it continuously reviews the effectiveness of the PAS to undertake the requisite improvements.

 

 

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