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Performance evaluation in Romanian industrial organisations.

Abstract: The present paper presents the main results of a research on performance management practices, focused on different methods used for performance evaluation, as well as on the main results of this process. The fieldwork was undertaken in several Romanian industrial organisations from Moldova region. Overall, the research revealed that many of the management practices widely used in the Western companies in the field of performance management are less known, and thus less used in the Romanian companies. In this view a critical issue, to be dealt with for a smooth and successful integration in the EU structures, is pro-active education of the human resources in order to be able to adapt to the cultural and structural changes to be faced in the following years.

Key words: performance management, performance evaluation, evaluation results

1. INTRODUCTION

An important part of a manager's job is about making judgements and evaluations on the performance of a business unit and its employees.

To support this there were developed in the last years various methods and tools, including IT tools, for performance measurement and management. Despite of these developments in many organisations there are still used heavy administrative systems in an attempt to give a certain structure to processes sometimes chaotic, so that individual performance can be evaluated, accomplishments can be recognised and improvement solutions can be found.

However, as managerial problems are becoming more and more complex worldwide, issues such as career development, reward systems, motivation are becoming more important and the process of evaluating individual performance is becoming more complex and should be used to achieve more than one objective, always having in view the ultimate aim, to make a significant contribution to the overall corporate performance. The new economic landscape of the global world together with the mobility of its hierarchies are shaping the idea that in considering the performance of an organisation the major issue is not to increase it but to improve the way in which organisational performance is measured and managed (Lynch., 1995, Neely, 1999).

2. THE RESEARCH FRAMEWORK

The study of methods and tools used for performance evaluation, as well as the results of this process, were among the specific objectives of a broader research undertaken by the author in Romanian organisations aiming at identifying the stage of development of various policies and practices which can be attributed to performance management (Avasilcai, 2001).

Textbook definitions as well as previous research undertaken in Western Europe suggests that performance management is in place when the following conditions are met by an organisation:

* It has clearly formulated and communicated to all employees its vision and major (strategic) objectives

* It sets performance requirements / targets at individual and departmental level, which are related to wider objectives

* It develops a process of formal assessment to monitor the progress towards performance targets

* It uses the formal assessment process also for identifying training, development and reward outcomes

* It evaluates the effectiveness of the whole process with a view to its continuous improvement.

Although in Romania the field of performance management is not yet well defined, either within the academic community or in organisational practice, the investigation was based on the assumption that in most organisations there are various initiatives for measuring and managing performance. The identification of these initiatives, of the way in which these are translated into organisational practices and procedures and integrated into a structured framework was done by means of evaluating the organisational situations encountered with reference to a conceptual model of performance management developed by the author in earlier research.

In this view, the conceptual model was further developed into a framework of evaluation consisting of 5 organisational characteristics, 24 major variables and 115 defining variables.

The organisational characteristics were the following:

* C1: "Communicating vision/mission statement and major objectives"

There were investigated the following issues:

--Do organisations have a vision/mission statement?

--How is the vision/mission statement used?

--Do organisations communicate objectives and results?

* C2: "Setting performance objectives"

Within the context of performance management the process of setting individual performance objectives that reflect the organisation strategic objectives was investigated by means of:

--Methods of expressing performance requirements/targets

--Communicating performance requirements/targets

--Frequency of performance requirements/targets setting

--Links between performance requirements/targets and payment systems.

* C3: "The performance evaluation process"

The degree to which the objectives are translated into reality can be known through the process of performance evaluation, which within the context of performance management can provide an elaborate framework to assess the achievements against the agreed objectives. So, improvements in the performance level can be recognised and there can be identified specific interventions for improving a low performance level.

* C4: "Rewarding performance"

This organisational issue gained an increasing importance also within Romanian organisations, so the research aimed at identifying if performance related pay systems were used in Romanian industrial organisations, to what extent these systems were used and if this process is rather objective or subjective.

* C5: "Effectiveness of the performance evaluation process"

3. RESEARCH FINDINGS

Concerning the third organisational characteristic related to performance management, "The performance evaluation process", the current research was focused on three major issues which were considered major variables:

* practices adopted for employee performance evaluation

* characteristics of the performance evaluation process

* performance evaluation results.

These major variables were further refined in 25 defining variables.

The analysis conducted was based on a quantitative approach by means of a questionnaire based survey, conducted on a sample of 134 respondents from various Romanian organisations. Taking into account the complex nature of the target population and the cultural difficulties in accessing company data, the research used non-probability sampling methods. According to the nature and size of the employer organisation, the sample was structured as follows: large manufacturing companies producing industrial goods--group A (17%); medium-size manufacturing companies producing industrial goods--group B (31%); medium-size manufacturing companies producing consumer goods--group C (16%); small manufacturing companies producing consumer goods--group D (8%); service organisations--group E (28%). Among the practices adopted for employee

performance evaluation the analysis showed that the one of most used was the discussion between the employee and his/her manager. Only for a minority of employees performance evaluation was done based on manager's decision, without consulting with the subordinate. Also, within some of the organisations surveyed it was used the evaluation of work group performance, with significant differences (p=0,03) between groups C, D and E and groups A and B. The less used methods were self-assessment, evaluation using peer appraisal and evaluation using subordinates appraisal.

Concerning the characteristics of the performance evaluation process the analysis revealed the following:

--Specific forms are used in some organisations for evaluation purposes, although with significant differences (p=0,03) between groups of organisations

--In manufacturing companies the evaluation results are generally viewed by a third party, while in the service organisations this issue is not known

--The evaluation using a list of skills necessary for the job was less encountered, although with significant differences between various types of organisations (p=0,006)

--In most of the organisations the evaluation process was not linked to the promotion, although in this case also there are significant differences between organisations (p=0,019)

--Almost all the organisations surveyed declared that managers responsible for evaluation receive specific training

--Only in some organisations employee evaluation is done more than once a year

--For most of the organisations, payment is discussed separately

--Current evaluation process is less than 3 years old for most of the organisations, which can reveal some concerns for improving the process

--Ranking as part of the evaluation process is present only in some organisations

Concerning the performance evaluation results the analysis revealed the following:

--As a result of the evaluation process, identifying training needs for the current job is mostly present in the service sector, with significant differences from the other groups

--Identifying training needs for career development appears as a result of the evaluation process more in medium-sized and large manufacturing companies and less in small manufacturing companies and in the service sector

--Counselling for poor performers is less used in most of the organisations

--Counselling for best performers is more used in the service sector and less used in the manufacturing sector (p=0,019)

--Identification of promotion potential, as a result of the performance evaluation process, significantly differentiates the service sector from the manufacturing sector

--Succession planning appeared to be widely used in most of the organisations

--Generally, disciplinary measures or dismissal of poor performers were not among the results of the performance evaluation process

--For a large part of the organisations the review of recruitment methods was not done as a result of the performance evaluation process.

4. CONCLUSIONS

Overall, the analysis revealed that among the practices adopted for employee performance evaluation the most used appeared to be the discussion manager--subordinate and work group performance evaluation. Less used are some modern but "sensitive" methods like self-assessment, peer evaluation or subordinate evaluation. The approaches taken to evaluate employee performance vary according to specific organisational particularities. Among the positive aspects observed were the use of specific forms for evaluation purposes, the fact that managers in charge with evaluation receive specific training and that the current evaluation processes are less that 3 years old. The opportunities for improvements mostly concern linking the evaluation process with promotion, the frequency of performance evaluation, which should be higher, and pay for performance initiatives. It's worth noting that linking promotion with performance evaluation and performance related pay is significantly different from one managerial level to another. In terms of performance evaluation results, the training results are present on a small scale, while the career results are present only if linked to succession planning. Also, there are no disciplinary measures or reviews of the recruitment methods as results of the evaluation process. Performance management can play a key role in improving organisational performance and further research should be done to identify the best approach for Romanian companies in order to make the strategic shift from approaching human resources as "cheap labour force" to strategic asset.

5. REFERENCES

Avasilcai, S. (2001) Organisational performance management, Tehnopres Publishing House, ISBN 973-8048-54-0, Iasi

Bititci, U.S., Carrie, A.S., McDevitt, L. (1997) Integrated perrformance measurement systems: a development guide, International Journal of Operations & Production Management, 17: 5, 522-534, ISSN 0144-3577

Lynch, R.L. & Cross, K.F. (1995). Measure up! : yardsticks for continuous improvement (2nd edn), Blackwell Publishers, ISBN 1-55786-718-6, Cambridge, USA

Neely, A. (1999) The performance measurement revolution: why now and what next?, International Journal of Operations & Production Management, 19: 2, 205-228, ISSN 0144-3577

Tyson, S. (1997) Human resource strategy: a process for managing the contribution of HRM to organisational performance, The International Journal of Human Resource Management, 8:3, 227-290, ISSN 0958-5192
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Author:Avasilcai, Silvia
Publication:Annals of DAAAM & Proceedings
Article Type:Report
Geographic Code:4EXRO
Date:Jan 1, 2007
Words:1782
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