Solution

3.0 Question 3- For and Against use of performance appraisals in formulating pay progression decisions

3.1 Introduction

Adopting the definition of CIPD (2022c) performance appraisal also identified as performance reviews is a significant factor in the larger set of processes of performance management. Through performance appraisal, administrative decisions are informed (including pay, bonus, promotion and redundancies) and/or supporting professional growth and improvement. Further, according to Al-Jedaia and Mehrez (2020), performance appraisals are applied in organisations for the purpose of evaluating employees performance. This is a critical tool used in motivating employees to achieve their goals by reward strategies, promotions, development and improved workforce capabilities. This is by establishing the employees contribution on organisation growth and development, reviewing their progression and rewarding highly performing employees. Further, as evidenced in CIPD (2022d) pay progression entail an individual moving to higher remuneration within a grade mostly identified as measurement of real wage growth. This is different from pay rise as it is associated with inflation or formal promotion of employees to a higher band. Therefore, through the provision of pay progression, it is possible encouraging and rewarding appropriate employees behaviours.

3.2 Benefits

In reward approach, Nitika and Arora (2020) argued that through pay appraisal, it is possible to note the required salary increase. The gain of this is to assist an evaluation of pay packages offered to particular employees. In specific, the benefits of using performance appraisals include;

Encouraging high performance level through an integration of performance-based pay– After successfully completing an annual revie and employees are noted as having performed well, pay progression act as a source of their motivation. According to Stamolampros et al. (2019) this benefit of the process is noted through the employees motivation by linking their rewards level with job-based performances. In a situation where pay incentivises employees, the outcome would be an improved performance for the employees.

Integration of entrepreneurial/High-Performance Culture in Organisations– As defined by Chiat and Panatik (2019) an entrepreneurial/High-Performance Culture is the capacity for an entity to resource employees based on achievement of their goals and results. Hence, through appraisals, specific parameters are evaluated which are determinants of initiating a high-performance working culture in an organisation. Further, in CIPD (2022a), through an implementation of performance appraisal, the employees are made aware of the scope of their achievements and become ready for rewards provision. Hence, through performance appraisal, the basic assumption is that informing employees on their discrepancies of organisation standard and current performance mean they achieve lower than other employees. The outcome of this is motivation of employees in achieving an increased performance level.

Performance appraisal initiate Equity/Fairness– According to McKinsey & Company (2018), the efforts which are noted in performance appraisals being integrated, they appeal distinctly to their employees. This is achieved through highly performing organisations accruing on an increase pay contrary to the low performing or non-dedicated employees or low performers. Through performance appraisals, employers are in a position of assisting their staff appreciate their strengths and weaknesses. The outcome of this is the employees effectively appreciating on their functions in an organisation and putting in place appropriate planning for achieving future career development. This view is supported by Ogbu Edeh PhD et al. (2019) using the equity theory and note that through performance appraisals, it is possible to balance an assessment of employees input to their job roles with pay and other rewards linked with their success.

3.3 Challenges

Lack of objectivity of performance appraisal– Often, as noted in Ullah et al. (2021), most of the performance appraisal issues hold the view that they are unfairly targeted in pay progression decisions. As opposed to the performance judgement, the employees would have worries and uncertainty with inappropriateness of the judgements made. For example, considering Saudi Aramco operations, in regard to the managers, what is identified as high-level standard could in other instances be noted as insufficient in terms of rating to a different colleague.

Comparison of Employees with Co-Workers– According to Sun et al. (2021),….

Please click the following icon to access this assessment in full