Performance appraisal practices: How do they link with performance pay in Cyprus Private bank organizations? Essay

Performance appraisal practices: How do they link with performance pay in Cyprus Private bank organizations?

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Trends of performance appraisal practices are emerging topics of significant interest in human resource management (HRM).  The purpose of this thesis proposal is to investigate how various performance appraisals practices have emerged over the past and their implication on HRM relations.  A quantitative approach will be used for the study to carry out a survey on Cyprus Private Bank Organizations in which the performance appraisal practices will be linked with the performance pay in the Cyprus banks.  The study will combine both primary and secondary research.  Data gathering for the primary research will involve structured questionnaires which will be randomly administered to the respondents and these are employees and managers of the private banks in Cyprus.  The secondary research will involve review and critical analysis of scholarly literature that address issues similar to this research problem.  This study will take a period of two months to allow time for compiling, getting feedback and analyzing the questionnaires.  Measures that have been taken include language translation in the questionnaires, and offering gift vouchers for the respondents.   The study will contribute to the body of knowledge on performance appraisal and thus will benefit the HRM practitioners and HRM scholars.

Introduction

The focus of this study will be to investigate the performance appraisal practices trends and how they are linked with performance pay in the private bank organizations in Cyprus.

The central idea is that performance appraisal methods vary and their impact on performance pay in organizations differ.  The study will analyse; – First, the reason for performance appraisal in private bank organizations in Cyprus.  Second, the various kinds of performance appraisals and how they link with performance pay in the Cyprus private banks, and third; the performance practices that yield the highest employee performance when utilized in organizations like the private banks.

This is a topic of interest because of the revelation that emerging performance appraisal methods are many and their effects vary on performance and employee motivation.  As a concept and a set of practices, performance appraisal has widened and performance management has become an integral part of HR practices and business policies (Fletcher 2001: 473).  Importantly, methods that yield positive results in certain industries can have negative gains when used in others.  HR researchers and practitioners will benefit from the findings of this study and will thus get a chance to evaluate appropriate methods for specific firms.

Relation to previous research

Addison and Belfield (2008) define performance appraisal as annual rating of non-managerial workers for the purpose of evaluating performance.  Studies on performance appraisal have shifted beyond the traditional confines of performance measurement ratings, and now include motivational and social aspects of appraisal (Fletcher, 2001; Turnpenny et al., 2009), as new approaches.  Nowadays, performance appraisal entails a variety of organizational activities which seek to assess the staff (van der Heijden & Nijhof, 2004), develop the employees’ competence (Skærbæk & Thisted, 2004), enhance the performance of the organization (Bakir, 2005), and distribute rewards (Nurse, 2005; Spears & Parker, 2002).  These can be summarized into three major purposes-evaluative, developmental, and motivational.  Fletcher (2001) analyzes the performance appraisal in the terms of the nature of appraisal and the context under which the appraisal operates.  The nature of appraisal entails goal orientation, contextual performance, and self awareness, while the context entails the appraisal process which is usually the kind of interaction between the appraiser and appraisee, and the feedback from a multi-source.  Williams (1998) describes three models that can be used for the purpose of performance management-organizational performance management system, employee performance management system, and a system that integrates organizational management and employee performance.

Performance appraisal plays important roles which may vary and incorporate performance-related pay, team-based pay, competency-based pay, and profit-related pay among others.  Tziner, Murphy and Cleveland (2001) approach the performance appraisal concept from process view in which they assert that a variance in attitudes and beliefs on the organization and the existing rating systems determine the feedback in which the appraiser decides on how to separate good and poor performers. Brown and Heywood (2005) assert that rater appraisals are prone to rater errors as the appraiser may distort performance ratings for the purpose of motivating an employee to work towards attaining the firm’s goals. This speculation of discriminatory appraisal has also been noted in the study of Rasch (2004).

Waite and Stites-Doe (2000) asserts that total quality management is important for banks today is all aspects of the organization considering that competition has stiffened in the industry.  Firms keen on performance shift from performance pay as the only appraisal method to motivate employees, and instead incorporate supportive and other team-based models (Eales et al., 2005).  Therefore, banks should seek the most appropriate performance appraisal systems.

A study on performance appraisal practices and link with performance pay can help establish appropriate appraisal methods.

Proposed methods

            This thesis proposes the methodology that will be used to study the performance appraisal practices with link to performance pay in private bank organizations in Cyprus.  A primary quantitative survey methodology by use of structured questionnaires is proposed for this study, as well as a secondary review of literature on performance appraisal practices. A quantitative approach is suitable for this study because the data needs to be expressed numerically, and analyzed statistically (UL 2009).  A number of banks will be surveyed, and a number of performance appraisals methods will be sorted out. The sample data will present the whole population.  On the other hand, a qualitative approach will not be so efficient for the study because the method does not seek to generate numbers, but express concerns (UL, 2009).

            For the primary research, data will be collected through questionnaires which will be distributed to the respondents in banks institutions.  All branches of the two banks in Nicosia will be administered the questionnaires in print form, while the respondents at branches in Larnaca and Limassol will be e-mailed, so as to reduce the transport costs. The survey questionnaire will be initially written in English, and then translated to Greek, to allow all the respondents to comprehend the questions effectively.  A sample size of 100 respondents is targeted from the bank branches across the three cities.  Ethics will be considered before involving the respondents in the study.  The questionnaires will be accompanied by a cover letter that will explain the purpose of the study, the importance of the findings to the bank industry workers, and why the respondents need to participate.  Questionnaires will have short closed structure questions that will require the respondent to tick the most appropriate answer, and a two-line pace for any additional comments after the question.

 It is easy to reach many respondents at a fairly low cost when questionnaires are used.  Moreover, the structured questionnaires take a shorter time to answer, as it is understood that bank workers are very busy people.

Secondary data will be generated from books and peer reviewed articles from the University of Leicester digital library and other public libraries, for instance the local libraries of the University of Nicosia, and the European University.  Secondary research is fast, easier to carry out and affordable.  Moreover, the researcher will be able to appraise or criticize articles and compare findings with that of other studies.

Reflections

The completion of this study is expected to yield significant knowledge that will benefit the human resource practitioners and researchers.  However, the study is prone to challenges and obstacles that may in one way or another interfere with the findings, or the process of the study.

First, the problem of access in the primary research in which the banks to be surveyed are in different cities.  For respondents who will be e-mailed the questionnaires it is uncertain that all of them will get the e-mails and respond in time, considering that mails fail to reach the recipients at time especially where there are errors in the addresses.  Additionally, a lot of keenness and error reduction needs to be done on the process of language translation to ensure that the original meaning is maintained. Accessibility to secondary data is also demanding because the researcher has to review a lot of books and scholarly articles to ensure that the intended study is original.  This takes a lot of time and also the process of reviewing, appraisal, and criticizing can be met with misunderstandings.  On questionnaires, it is expected that some respondents may fail to return or complete the questionnaires.  This is why a motivational aspect has been included in which respondents who complete the questionnaires in time will be rewarded with gift vouchers.

            Another challenge entails the inconsistent theoretical framework concerning performance appraisal.  The research phenomenon keeps changing and the description of performance appraisal in the classical times does not apply in the present.  The researcher will have to add extra keenness while appraising the secondary data by putting in mind the time frame in which the concepts were developed.

            Research ethics is important especially for studies that involve human subjects (UL 2009).  First of all, the researcher will ensure that ethical issues are met by first seeking informed consent from the respondents.  This will begin by introduction of the researcher and the study to the respondents.  The purpose of the study will be stated and the respondents will be told how the findings of the study will benefit them.   The respondents will be assured of confidentiality and their responses will be taken in anonymity.  To ensure that the respondents participate at their own free will, they will be advised to quit the survey if they do not wish to continue participating, or they can just fill some of the questions.  Respondents will be required to sign a letter indicating that the participation is at their own free will.  The researcher will keep a copy of this letter.

            As a researcher on management issues, it is part of my responsibility to issue studies that will benefit the society as far as human resource relation practices are concerned.  Firms are out to seek performance from their employees and it is necessary that management practices- such as appraisals-which can lead to the optimal performance, are applied.  This study will thus be of benefit to human resource practitioners who seek management practices for improved performances.

Conclusion

Performance appraisal practices revive over time as firms seek to establish ways in which they can achieve the best performance.  Performance-pay related appraisals have especially been applied in organization as some studies reveal that money is the main motivating factor for improved employee performances.  However, in recent years, several performance appraisal practices are emerging as studies link social, and team based appraisal strategies to optimal employee performance.  All the same, there are limited studies that point to a specific appraisal practice as being the most suitable for employee performance, with some studies suggesting an integration of the practices. Therefore, it is necessary that studies are done to further evaluate how different appraisal practices can be harnessed for optimal employee performance.  The findings of this study are anticipated to assist the HR practitioners in making policies that will enable their organizations to perform better, and relate well with employees.   The study will also be a bonus for the HR educators who may use the literature to educate those intending to undertake careers in HR. The study is limited to the private bank organizations of Cyprus, and the aim is to establish performance appraisal practices and how they link with performance pay.

Timetable

Task
Start date
Completion date
Topic selection, and Proposal preparation;
12/7/2009
25/8/09
Obtain secondary data by reviewing literatures in books, and scholarly articles from UL digital library, and other local libraries
12/7/08
25/8/08
Develop and finalize literature review
4/7/09
31/8/09
Development of research questions
5/7/09
31/8/09
Completion of the draft proposal
5/09/08
17/09/2010
Development of research methods
17/1/10
18/2/2010
Revision of draft proposal
1/3/2010
14/3/2010
Submission of Human subject form for ethics approval

15/3/2010
Proposal approval

15/6/2010
Human subject ethics approval

23/6/2010
Data collection
15/7/2010
12/7/2010
Commencement of data analysis
3/8/2010
30/8/2010
Complete dissertation thesis draft
1/9/2010
28/9/2010
Submit revised dissertation thesis draft

15/9/2010
Exam

23/10/2010
Approval of Doctorate research project.

6/10/2010
List of References

Addison, J., & Belfield, C. 2008. “The determinants of performance appraisal systems: a note (Do Brown and Heywood’s results for Australia hold up for Britain?” British Journal of Industrial Relations, 46(3): 521-531.

Bakir, S. 2005. “A quality control chart for work performance appraisal,” Quality Engineering, vol. 17(3): 429-434.

Brown, M., & Heywood, J. 2005. “Performance appraisal systems: determinants and change.” British Journal of Industrial Relations, vol. 43(4). 659-679.

Eales, R., Smith, S., Twigged-Ross, C., Sheathe, W., Ozdemiroglu, E., Fry, C., Tomlinson, P., & Foan, C. 2005. “Integrated appraisal: Emerging approaches to integrated appraisal in the UK,” Impact Assessment and Project Appraisal, vol. 23(2): 113-123.

Fletcher, C. 2001. “Performance appraisal and management; The developing research agenda,” Journal of Occupational & Organizational Psychology, vol. 74(4): 473-488.

Rasch, Lee. 2004. “Employee performance appraisal and the 95/5 rule,” Community College Journal of Research and Practice, 28: 407-414.

Nurse, L. 2005. “Performance appraisal, employee development and organizational justice: Exploring the linkages.” International Journal of Human Resource Management, vol. 16(7): 1176-1194.

Spears, M., & Parker, D. 2002. “A probit analysis of the impact of training on performance appraisal satisfaction,” American Business Review, vol. 20(2):12-17

Skærbæk, P., & Thisted, J. 2004. “Unit costs in central government annual reports: A critical appraisal of the practices developed, European Accounting Review, vol. 13(1): 7-38.

Turnpenny, J., & Radaelli, C., Jordan, A., & Jacob, K.  2009.”The policy and politics of policy appraisal: emerging trends and new directions,” Journal of European Public Policy, vol. 16(4): 640-653.

Tziner, A., Murphy, K., & Cleveland, J. 2001. “Relationships between attitudes toward organizations and performance appraisal systems and rating behaviour,” International Journal of Selection and Assessment, vol. 9(3): 226-239.

University of Leicester (UL). Research methods. England: Learning Resources, 2009.

van der Heijden, B., & Nijhof, A. 2004. “The value of subjectivity: problems and prospects for 360-degree appraisal systems,” International Journal of Human Resource Management, vol. 15(3): 493-511.

Waite, M., & Stites-Doe, S. 2000. “Removing performance appraisal and merit pay in the name of quality,” Journal of Quality Management, vol. 5(2): 187-207

Williams, R. 1998. Performance management. London: International Thomson Business Press.

 

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