Essay: Business environment is highly competitive

Performance Improvement Program

Introduction

In the present day business environment which is highly competitive, the contribution by the employees of an organization is of vital importance for the success of the organization. The success or otherwise of any business entity depends largely on the performance of its employees. Hence it becomes crucially important the organization measures the performance of its employees and employ necessary Performance Improvement Plans to improve the productivity and efficiency of the organization. “Performance appraisal is a vital component of a broader set of human resource practices; it is the mechanism for evaluating the extent to which each employee’s day-to-day performance is linked to the goals established by the organization”. (Coutts and Schneider) Emery and Giauque also found that non-monetary forms of remuneration, such as the organization of working hours, improvements in equipment and work resources and the development of skills, are appreciated by employees. In some of the instances the inefficiencies in employee performance may be the result of an inconsistent behavior of the people representing the management. A number of behavioral issues may be responsible for this state of affairs. There is an absolute necessity of diagnosing the performance management problems to identify the causes for the inconsistencies in the behavior of the management towards subordinates. Such an examination becomes vitally important in the case of a service organization such as a consulting company, since the revenues of the organization depend entirely on the performance of the individuals working with the organization. The analysis of the performance management problem will lead to the implementation of a proper Performance Improvement Plan. The purpose of such a plan is to identify weaknesses and strengths as well as opportunities for improvement and skill development of the individual employees. This report examines the performance management problems being faced by International Assignment Services

PricewaterhouseCoopers, Hong Kong Limited, a multinational consulting organization, due to lack of an effective system of performance improvement plan and feedback in the company and also to suggest a suitable Performance Improvement Plan for the organization to improve the performance of the organization.

International Assignment Services – A Background

PricewaterhouseCoopers Hong Kong Limited is an international consulting organization with a number of professionals working with the organization at various levels. The company has an ‘International Assignment Services (IAS) department providing consulting services to different types of clients in Hong Kong and China. The structure of the department consists of professionals working in different hierarchical levels such as Partners, Senior Managers, Managers, Senior Consultants and Associates. The individual job responsibilities and hierarchical position of people at these levels is provided below. This presentation assumes importance to understand the intricacy of the performance management problem in the organization.

Partners

The highest level within the department, who set objectives and gives direction to the team, have at least 10 years of experience in the fields, with strong relationship with commercial clients and officials in the China and HK tax bureau.

Senior Managers

Have years of experience in IAS, have a strong client base, work closely with Partners in setting team objectives and most of the tax compliance and consultation work will be delegated to Senior Consultants. Other than client work, Senior Managers will have other internal roles in the department, e.g., Head of the Coaching team, System improvement/ developer, Career Counselor, etc.

Managers

Less experience than Senior Managers, fewer clients than Senior Managers, so for most of the time, Managers will be out to seek for new clients, for example holding tax seminars to build a stronger client base. Managers also will delegate compliance and consultation work to Senior Consultants, they will need Senior Consultants and Associates help in researching and preparation of materials for seminars/presentations.

Senior Consultants

Assist Partners, Senior Managers and Managers on clients’ consultation and compliance work. Partners, Senior Managers and Managers will assign ad-hoc projects to Senior Consultants from time to time. Senior Consultants had a portfolio of clients, but the number of clients will change from time to time depending on the new clients that management will bring in. The client base, for most of the time, continues to grow, and the client compliance work is on an on-going basis. Senior Consultant will delegate some simpler work to Associates. Senior Consultant role is also to coach new associates in both technical and soft skills in dealing with clients and tax officials.

Associates

Assist Senior Consultants and Managers on clients’ compliance work only, most of their time will be preparing tax calculations and tax returns for Senior Consultants’ review. After Senior Consultants review their work and find them all in order, Senior Consultants to pass the work to Managers / Senior Managers to sign off before the work is sent out to clients for approval.

Background of the Problem

Partners / Senior Managers / Managers (hereinafter in this paper referred to as ‘Management’) always have personal favors on a few senior consultants and will delegate work to that few specific senior consultants.

This may be because that few specific senior consultants:

1. cooperate well with the Management and Client;
2. their working attitude are better than others;
3. their work can be provided to the Management on a timely basis;
4. their performance on their work is better than others; or
5. they are willing to work longer hours than others.

However, this creates long office hours and heavy workload for that few consultants, while others have much slack time. This personal favoritism practices from Management influence the choice of Associates for Senior Consultants. The Senior Consultants will choose the Associates according to favoritism to help them on their daily work.

This imbalance of workload within the department has created high turnover rate, especially in the Senior Consultant level. With lesser Senior Consultant in the department, Management sometimes has to delegate their work directly to Associates, which create heavier workload for Management as well, since they need to review and monitor the work of Associates whom have less experience in the field.

Identification of the Current Management Problem

The performance management evaluation needs to be carried out with emphasis on objectivity, thoroughness and the evaluation needs to be backed by proper documentation to ensure future analytical studies of the findings and suggest suitable Performance Improvement Plans. It is essential that both qualitative and quantitative data are collected about the current performance of the company. The analyses should provide reasonable conclusions which are based on clearly demonstrated facts. The data collection should consider all the relevant sources of information and points of view. When there is a variety of opinions about the performance outcomes or effectiveness of performance, it is necessary to cover the full range of opinions and explore them with appropriate diligence. Clear documentation in the form of written notes and summaries enables referring them at a later time to arrive an important management decisions and effective organizational learning (AdventConsultingAssociates).

The performance management and program evaluation may involve the following steps:

1. Planning
2. Design research
3. Gathering evidence and
4. Reporting and communication

The first step in identification of the current management issue is to understand the problem in the performance. The purpose of the study determines the plan to be adopted for the identification of the issue. In some cases the evaluation might be undertaken for the purpose of monitoring and updating the progress of on-going programs in which case information need to be gathered on the existing performance appraisal programs. In the case of PricewaterhouseCoopers, Hong Kong Limited a performance appraisal program does not appear to be in place to provide the feedback on employee performance. Therefore careful planning is necessary to collect all information and data necessary to formulate a new performance appraisal program to improve the efficiency in the performance of the company.

Designing the method to evaluate the existing performance gap is the next step for suggesting a suitable performance improvement plan. If a program for improvement of performance is improved without a detailed planning for evaluation, such program may not yield the desired result. It is important that objective measures are applied instead of subjective measures to evaluate the existing performance status and arrive at the shortcomings.

Gathering and analyzing data based evidence provides the basis for implementing a sound performance improvement plan. In the case of PricewaterhouseCoopers, Hong Kong Limited, ‘focus group’ method of collecting data and information would provide information that would go beyond the data collected using the interview method. Organizing and using a semi-structured approach and facilitating discussion of group members are likely to bring out the system deficiencies. Groups may be formed having 4 to 6 members and everyone should be encouraged to contribute their views about the existing issues and their suggestions for improving the performance of the organization.

Once the data and information is collected it becomes easier to assimilate the date, analyze them and present in the form of reports. The report should be analytical in presenting the root cause of the problem, likely effects of the deficiencies and suggest suitable Performance Improvement Plan for improving the performance of the organization under review. For PricewaterhouseCoopers, Hong Kong Limited the focus group method identified the following repercussions likely to result from the management inconsistencies in assigning the jobs to few particular senior consultants.

Results of the Management Problem

The detailed analysis of the views expressed by focus groups has led to the conclusion that there are inconsistencies in the behavior of Partners, Senior Managers and Managers representing the management. The management has the practice of favoring a few senior consultants who are considered efficient and in the good books of the management, neglecting the skills and expertise of other senior consultants in service delivery. There in fact is a performance appraisal system being followed by PricewaterhouseCoopers, Hong Kong Limited for evaluating the performance of the employees and the system is not that effective to provide for the future development of the individual employees, except that the appraisal system is being used mainly as the basis for reviewing the past performance of the employees to determine the pay rise and bonuses that are payable to the employees. Although an employee rating system is in practice this system is proved to be inefficient as it does not take into account the real efficiencies of the employees. This has hence resulted in disproportionate rewards to the employees causing frustration among the employees who excel in their work.

The answers to the questions the study raised with respect to the performance appraisal system in PricewaterhouseCoopers, Hong Kong Limited are:

1. There is a behavioral issue concerning the management in allocating jobs to senior consultants resulting in uneven distribution of work leading to frustration in both performing and non-performing consultants. The consultants who are assigned more jobs had to overwork and this causes frustration among them. Those who have the capabilities are not assigned jobs based on their abilities and this causes frustration among these consultants. The inconsistent behavior of the management is one of the serious issues that need to be addressed by a revised performance improvement plan.
2. There is a serious deficiency in the organizational performance due to improper assessment of the performance of employees at different levels.
3. Though there are some rating system presently being practiced by STR this does not take into account a realistic view of the employees’ performance in different jobs
4. No rating is being done on the basis of sex or race
5. The employees have not been provided with a clearer perception of the organizational goals so that they can work towards the achievement of the same
6. Although there is no question about the credibility of the managers who are entrusted with the assessment of the performance of the employees in the absence of a proper system of assessment more often they had to use their personal opinion about the performance of the subordinates. Another serious issue the manager’s face in assessing the performance is the absence of set targets for the subordinates against which their performance can be assessed.
7. There is no proper performance management system in practice with set policies and procedures that can be followed by the managers and supervisors.
8. The employees are not very happy about the existing system of performance evaluation as it had resulted in disproportionate rewards
9. The existing rating system does not bring out the strengths and weaknesses of the performance of the employees and provides for proper rewards for the meritorious employees.
10. The existing rating system is biased and subjective and is unable to provide any positive feedback to the employees on their lacking in the case of poor performers.
11. Several monetary factors like incentives, bonuses, and cash awards were suggested to have positive impact on the performance of the employees. Similarly non-monetary factors like promotion to the next cadre, change of designations were also suggested.
12. The existing system does not provide for any scope for the development and career growth of the employees as they lack in objective
13. The existing rating system in the company does not in any way fulfill the needs of the personal development of employees, as it does not identify the training needs of the employees at different levels.

In effect the above deficiencies are likely to result in the following organizational issues which need to be addressed by the introduction of an effective performance improvement plan.

Unequal Distribution of Work

The foremost problem faced by the organization was an unequal work distribution among the senior consultants and associates. Without a proper assessment of the job load of the individual employees the jobs were distributed based on the whims of the management. This has resulted in a smaller number of employees who had better capabilities continue to work and another group of employees without a proper workload managed to spend time without giving any valuable output. Since the customers’ requirements were always kept in the front the workload was somehow managed without a proper distribution. This had led to frustration among the best employees and the overloaded professionals started looking for alternative employment opportunities.

No Effective Feedback on Performance

There was absolutely no way that the senior consultants and associates could represent their view points on the allocation of work among them. This was due to the fact that there were no effective performance improvement plans, which can provide positive and constructive feedback from the employees on their performance during any particular period. In fact performance improvement plans can help the employees to improve their performance by giving specific feedbacks about needs for development. Similarly the performance improvement plans will also enable the employees who excel to continue to excel continue to better their performance by providing positive reinforcement. This type of feedback is vitally important to improve the performance of the employees functioning at all levels of the organization and also to make an overall assessment of the organizational performance.

Suboptimal Promotion and Pay Revision Decisions

In the absence of an effective and efficient performance improvement plan the management tend to take the risk of making suboptimal decisions about the promotion and pay revisions of the employees. As a result it may so happen that one senior consultant gets an enhanced pay while the efficiency and skills of another consultant may be ignored. This might led to frustration among those consultants who otherwise are able to perform better. It is important that the performance of all the consultants and associates need to be recognized in the form of promotions or pay revisions.

Increased Cost

The lack of recognition of the performance of all the senior consultants have led to payment of salaries and other perquisites to those who work only less than their actual capabilities and efficiency levels. In the absence of a performance improvement plan and set performance targets, there are no means of assessing the difference between the expected performance and the actual performance levels result in a significant performance gap which escalate the administrative and other costs to PricewaterhouseCoopers. The frustration among the employees whose skills are not recognized leads to a higher level of attrition. With the number of employees leaving the organization there are additional cost to the company for selection and recruitment of employees in replacement for the departing employees.

Inefficient Training Programs

The absence of feedback on the employee performance and the arbitrary allocation of jobs by the management to the senior consultants have led to the situation where there is no room for any skill development through training programs. In a progressive consulting organization there is an inherent necessity to impart adequate training to the employees for improving their technical and professional skills on a continuous basis. Lack of training to the employees will greatly hamper the performance level of the employees and will consequently affect the revenue generation by the company. Since there was no proper performance improvement plans instituted, the company could not develop the required skills in specialized areas by organizing internal and external training programs to the needy employees. Apart from the fact that there was no proper training for the required employees, there may be cases that training would be provided to wrong people in areas where they did not have any exposure. Such chaos will mainly be the result of not properly assessing the performance of the employees and arriving at the training needs.

Customer Complaints

Since more jobs were allotted to lesser number of people without proper assessment of the job load there is likely to be a drastic increase in the number of customer complaints which mainly related to quality of service and delay in the provision of service. A proper performance improvement plan would easily eliminate these inefficiencies from the organization.

Diagnosis of the Performance Management Problem

Based on the viewpoints of the focus groups, the existence of a clear imbalance in the workload within the International Assignments Services department could be diagnosed as the major performance management problem. This problem leads to unequal work distribution among the senior consultants and associates. With the result there is higher level of dissatisfaction among the consultants and associates who have not been favored by the management. This also leads to a higher number of senior consultants leaving the services of the company either due to dissatisfaction or due to their inability to bear heavy overload of work. With less number of senior consultants working in the department, the management sometimes may have to assign work directly to the associates. Sometimes the managers and senior managers themselves have to work on the assignments. This leads to heavy workload even for the managers and senior managers which include a stricter overview of the work carried out by the associates who do not possess adequate experience. This also affects the quality of the work and there is always the danger of missing the customer deadlines for submission of the completed assignments. The absence of an effective performance feedback system also contributes to the performance management problem. There is no way that the senior consultants and associates could express their viewpoints on the job allocation and the under-utilization of their capacities. This adds up to the seriousness of the performance management problem.

Causes for Inconsistent Behavior of Management

The objectives of performance appraisal can be as administrative, informative, and motivational which classification encompasses a complete definition for performance appraisal. This classification is of relevance since depending on the level of motivation the employee’s performance standards vary and those who excel can be considered for elevation to the higher levels of hierarchy. However there are differences between intrinsic and extrinsic motivation which makes this theory blurred (DeVoe and Iyengar; Hernandez and Iyengar). There is a close association between the organizational culture and performance of the executives. In the case of International Assignment Services division, it can be stated that the organizational culture of delegating the work by the partners, senior managers and managers to the consultants and associates based on the working attitude of the subordinates is the main reason for the inconsistent behavior on the part of management. This may be also in the interest of the management to earn their rewards based on the timely and quality submission of their assignments to the customers. For meeting their deadlines the management may have to depend only on those senior consultants and associates who cooperate with them and who have a serious working attitude. In the course of time this becomes the organizational culture and people at senior levels follow this practice without thinking of the performance and morale issues of other senior consultants and associates who are not favored by them. The management does not realize the point that such inconsistent behavior affects both the set of senior consultants – those who are favored as well as who are not assigned enough work. Those who get the assignments frequently tend to overwork at the cost of quality of performance. It may also affect the work-life balance of these senior consultants leading to more employee turnover. At the same time those senior consultants who are not assigned enough work and who otherwise are competent may get frustrated with their position and look for alternatives. In either case the inconsistent behavior of the management is detrimental to the improvement in the performance of the organization.

Performance Issues resulting from the Problem

The inconsistent behavior and absence of an effective feedback system on the performance of the employees is likely to result in serious issues like higher degree of employee attrition, increased cost of replacing the required talents, loss of best talent from the company, loss of quality of service resulting in customer dissatisfaction and lack of employee morale due to lesser opportunities for self-development. These are the potential issues when the management continues to follow the practice of favoring only few senior consultants and associates for delegating their work. Longer working hours and heavy work load is sure to frustrate the efficient senior consultants and they will look for other available job opportunities to avoid over working. With the result the company will be losing high performance individuals representing the best talent the company possessed. This is likely to have serious consequences in terms of reduction in overall earnings as the company may not be able to accept more assignments in the absence of efficient people to handle such assignments.

Performance Improvement Plan

A Performance Improvement Plan (PIP) represents a formal process used by the supervisors to enable employees improve their performance or modify the behavior. The objective of PIP is to identify the performance and behavioral issues that needs to be corrected. The PIP creates a written plan of action to guide the improvements and the corrective actions need to be taken. Fundamentally a PIP can be regarded as a communication tool which is designed to facilitate constructive discussion between the subordinates and supervisors. An effective PIP will be able to provide the following benefits to the organization in improving its performance.

1. It identifies the specific performance or behavioral issue that needs to be improved or corrected
2. It provides a statement of clear expectations and metrics about the work to be performed by the subordinate or the behavior that needs to be changed
3. It identifies the support and resources available to help the employee to bring the required improvements in the performance or change in the behavior
4. It establishes a plan for the review of the progress of the employee and provides feedback to the employee on the performance improvement or changed behavior
5. It specifies the likely consequences in the event the performance standards as recommended by the PIP are not met (UniversityofTexas).

A PIP is usually instituted instead of disciplinary proceedings to correct the behavior of the employees. A PIP can be put in place almost at any point of performance of the employee. A PIP can be used to correct the workplace behavior that affects the performance, productivity and relationship among the employees. PIP also becomes useful where there is an unsatisfactory annual review of performance. PIP provides the employees an opportunity to correct a situation rather than implementing serious actions in the form of disciplinary proceedings.

360 Degree Performance Evaluation

The problem of inconsistency in management behavior and other related issues in the case of PricewaterhouseCoopers can be addressed by the introduction of a 360 degree feedback approach. 360 degree leadership is different from the traditional type of performance feedback system in a number of ways. Since the system uses a multi-rater assessment, it gathers information on the performance of an individual from more than one source. In addition the person who performs the rating has some degree of familiarity with the person being rated and this enables providing comprehensive feedback information than the most of the traditional methods. While 360-degree appraisal provides a broader perspective about the performance of an employee, it also facilitates greater self-development of the employees. It enables an employee to make a comparison of his or her perception about self with those of others. The assessment by 360 degree approach is a powerful tool for helping individuals improve, grow and develop their interpersonal skills by gathering information from several people in the organization. For instance the performance of a manager or senior manager in PricewaterhouseCoopers Hong Kong Limited will be subjected to the review of the Partners, other managers and senior managers, senior consultants reporting to the manager or senior manager and the associates. This eliminates the one-sided approach of the traditional performance evaluation systems.

Since the subordinates are given a chance to review the work of the partners, senior managers and managers. In the review report the senior consultants can openly express their views about the under-utilization of their skills and competencies for the management’s information. Irrespective of the position of the person being assessed it is important to evolve a feedback on the perception of others about the performance of the individuals in the organization (Smith). This will provide an opportunity for the manager or the senior manager to correct their behavior and avoid favoritism in assigning the jobs to specific senior consultants. In fact many organizations choose to conduct 360 assessments on their senior level managers and executives for removing any inconsistencies.

Implementing 360 Degree Feedback

Multi-rater feedback system and 360 degree feedback methodology requires the application of a wide range of approaches. The application methodologies and constructs have to be evolved based on the needs, organizational culture, leadership style and expected outcomes of the individual organization. As a first step, the need and purpose of the 360 degree system is to be established. It is also important that specific competencies that are required to be studies are to be established around which the reporting will take place. The most important criterion is the ways in which the organization will use the information gathered from the 360 degree feedback.

The implementation of 360 degree requires the commitment and support from the executive-level management in the organization. In the case of PricewaterhouseCoopers it is essential to get the concurrence of the partners and the senior managers for the implementation of the 360 degree performance evaluation. The organization must arrange for the necessary resources including time, funds, personnel and even assistance of an external agency. The resources must include those required for pursuing any development in future. The next step is to obtain the commitment from the employees who will be rating and be rated. This involves the existence of some trust between the employees, the organization and the entity that will conduct the feedback system. In order to be effective it is advisable to employ an external consulting agency for conducting the surveys and present the compiled reports. It is also essential to maintain confidentiality and those involved must be assured of their anonymity to ensure honest and informative response. The next step is to construct a survey instrument that will be used for information collection. “The best way to ensure that the survey instrument will contain valid and specific questions relating to the ratee’s job is to base the questions on job-specific criteria, such as that generated by a job analysis.” (Edwards and Ewen)

Process of 360 Degree Feedback System

The following process will make a 360 degree feedback system effective and successful.

1. Getting the right design: The foremost requisite of an effective 360 degree feedback system is to provide a detailed and job-specific questionnaire to be completed by people who are familiar with the performance of the employee being rated. The questionnaire must contain questions relating to traits, behaviors, attitudes and values and competencies. The issues to be covered by the questionnaire are to be (i) agreed by the senior management, (ii) linked to the performance criteria, (iii) relevant to the job being handled by the employees, (iv) clear and unambiguous, (v) valid at face value, (vi) reliable and (vii) able to reflect observable behaviors. It is very important to be specific about the key issue of confidentiality as to who should have access to the results
2. Promoting the feedback system to reach its full potential – the system should be promoted to reach its full potential to reap the benefits of the broader perspective of the involvement of the partners, senior managers, managers, senior consultants and associates. 360 degree feedback system once implemented with its full potential will help the organization to enhance the self-development opportunities for the employees by providing an opportunity for self-evaluation.
3. Involving the employees – will enlarge the commitment of the employees to a great extent to the feedback process and therefore will contribute to achieving better results. The senior consultants while rating him will also have the opportunity to rate the senior managers/managers and this will help in changing the behavior of the management and remove inconsistencies in their behavior.
4. Training the rater – is an important step in the process of implementing a 360 degree feedback system. The raters should be able to understand the 360 degree approach in its proper perspective to ensure that the results of the feedback are useful in changing the inconsistent behavior of the management in assigning the jobs to the senior consultants. The raters should possess complete knowledge on the performance criteria against which they will be rating the employee. With little more time in training the raters the organization can expect considerable improvement in the quality of feedback.
5. Remaining objective – will make the feedback effective. This is possible by relating the feedback to the criteria and supports it by examples which will enable the employees to complete the survey with a full understanding of the meaning of the questions. It will also give a clear direction to the employees. Feedback may be provided both by written and oral forms.
6. Converting the feedback into development goals – will enable PricewaterhouseCoopers to take the necessary action for eliminating the inconsistencies in the behavior of the management. The feedback from the survey may be converted into development goals which the management need to follow with their full intent. A closer monitoring of these development goals will ensure that the performance of the organization improves drastically after the elimination of the management inconsistencies. It is vitally important to avoid any step-by-step action approach as they may not have the ability to solve the problem fully. It is also equally important that there is an agreement on the time limits for the completion of the actions proposed.

It is essential to look at 360 degree approach as a PIP rather than an individual performance management tool. The organization is likely to lose many of the potential benefits of the tool if it is viewed in isolation. When used effectively 360 degree feedback is sure to remove the inconsistencies in the behavior of the management of International Assignments Services department of PricewaterhouseCoopers Hong Kong Limited.

Conclusion

The report identifies 360 degree feedback system as an effective technique to remove the inconsistencies in the management behavior towards delegating their work to the senior consultants and associates leading to higher attrition in the International Assignment Services department of PricewaterhouseCoopers, Hong Kong Limited. This study made an attempt to bring out the salient features of 360 degree approach as an effective performance improvement plan for the company. Out of the research conducted it is found that the performance appraisal or review is essentially an opportunity for the individual worker and those who are in a position to assess and report on their performance to get together to have a joint review about the performance of the individual, development of the ability of the individual worker and the support that the managers can provide for the improvement in the performance. It is also observed out of the study that the performance appraisal or review cannot be a top down process in which one of the parties asks questions to be answered by the other. This must be a process in which there is a free flowing conversation between the appraisers and appraise which facilitates the exchange of views. As a contingency measure the company can improve its performance appraisal system by introducing a new performance appraisal form which takes into account the performance criteria which include as a part of the Performance Assessment Form comprises of a total of 8 criteria which need to be assessed and graded by the appraiser for judging the ability of the employee to be molded to a supervisory/managerial position. These criteria may include ability to dispose the work speedily, competence level, organizational ability, accuracy and efficiency, willingness/readiness to accept responsibility, stress management, ability to delegate, and ability to work in teams and team building capabilities