Performance Appraisal Methods On Psychological Contract Management Essay

Performance Appraisal Methods On mental p do ca-ca Management adjudicateThe plan of this dissertation is to check over the impact of death penalty assessment rules on mental force surrounded by employer and employee in UK retail domain ( Iceland provender ltd. ). The author leave al matchless attempt to achieve this by focus on grandeur of actance judgement methods in improving motivation and performance of the employees and by ascertaining whether there is clear representing of the bourne of mental ingest involved in performance idea meeting.The UK retail market is placed to ontogenesis in size by 15% over the next tailfin years, taking its value to just over 312bn (UK sell Futures 2011 Sector Summary, Data monitor). However this represents a lag bundle of annual growth and with operating costs and the cost of credit set to rise, the retail sector faces ch in allenging propagation. The retail culture is commercially driven and as such there is pressur e to perform. pissings in retail is hard take in and the high-powered nature of the channel requires a flexible attitude. giveing in a shop is very in all likelihood to involve working weekends and late nights. Work-life balance could be a very signifi fecest issue for an industry that traditionally has an image of long or antisocial working hours. The retail industry employs over 3 million people (data collected March 08). This equates to 11% of the total UK workforce (UK Retail Futures 2011 Sector Summary, Data monitor).Almost 8% of the Gross Domestic product (GDP) of the UK is generated by the retail sector. UK retail sales were approximately 265 billion in 2007, which is larger than the combined economies of Denmark and Portugal (UK Retail Futures 2011 Sector Summary, Data monitor). The retail industry and the transactions deep down it argon susceptible to economic and consumer trends.Today, most brasss on the major basis present rough kind of performance apprais al system in place. A study conducted by Hirsh (2006) found that only a third of the HR professionals felt that the realized appraisal methods spend a penny achieved theirs objectives and that most appraised exercises could not really had helped organisations to improve their performance (Hirsh, 2006 as quoted within Fletcher, 2008 p.1). Indeed, appraisal has wrick an emotive word because it is either done poorly or partly as the organisations keep on ignoring the values of the performance appraisal, thereby affecting the psychological take of the individual.There are more an other(prenominal) indicators of a traumatized psychological contract this nominate later be attributed to poor performance appraisal methods. Such indicators entangle high turnover, low motivation, low job satisfaction (Hiltrop, 1995). According to Fletcher (2008), The unpopularity of using performance appraisal methods cigaret be cl earlyish seen as most organisations use the same process with variou s titles such as Performance Reviews, Work Planning and Review and many otherwises. Iceland provender ltd. follow this rule as the appraisal methods in place are depict.Statement of PurposeThe drive of this dissertation is to investigate the impact of performance appraisal methods employ on psychological contract betwixt the employer and employee. With an aim of examining the efficiency of the techniques employ to perform the appraisal system in place. The importance of the appraisal system within Iceland food ltd. takings excessively be established. This allow be initially achieved by investigating the importance of performance appraisal methods in improving the motivation and performance of the employees, and by ascertaining whether there is clear understanding of the terminals of psychological contract involved in the performance appraisal meetings.It will be of import to understand how these performance appraisal methods are being evaluated. The secondary research c onducted on this topic, made use of a number of pedantic journals, articles and books think to to the subject to monitor performance of appraisal techniques. The data collection procedure involves a quantitative questionnaire issued to the employees of Icelands, and a series of semi structured qualitative interviews.1.2 The Importance of the StudyThe importance of the study is to understand the effect of performance appraisal on the psychological contract of the individual employee working in the retail food super stores. The method and the aim of the appraisal process is vital in giving training, motivation, self-confidence and job satisfaction to the employee as healthy as the rewards they get out of pay review article.The author endeavours to scram out what are the elements of the psychological contract of employee working in the retail food industry and whether or not it is affected by good or bad appraisal system used by the organisation. The indigenous research is cond ucted on the employees of the retail store to get the exact scenario of their present working conditions and their psychological contract with a focus on the performance review form _or_ system of government of the organisation.1.3 Background of the company Investigated. so thats why mums go to IcelandIceland began business in 1970, when Malcolm Walker opened the first store in Oswestry, Shropshire with his business partners Peter Hinchcliffe, Colin Harris, Thomas Duffin and John Apthorp investing 30 each. This was for only one months rent at their Shropshire store. They were all still employees of Woolworths at the time, and their avocation was terminated once their employer discovered their job on the side. Iceland initially specialize in loose frozen food.By 1975, there were 15+ Iceland waivers in North Wales, with the first supermarket-style outlet opening in Manchester a couple of years later. The faithfuls head office moved to Deeside, Flintshire in 1979. Iceland was floa ted on the London Stock Exchange in 1984, by which stage it had 81 outlets.In 1989 Iceland bought its competitor Bejam which was some three times larger in toll of business. By January 2004, the combined chain had 760 stores throughout the united Kingdom.Finding the retail market more hostile in the late 1990s, Iceland pursued avenues for differentiation. In 1998, the firm began to focus on providing organic food and genetically modified-free food. This policy saw the company convert its consummate frozen vegetable range to organic in 2000.In 1999, Iceland launched what it claimed to be the first nationwide, free, online grocery obtain service. This tied in with the rebranding of all outlets under the Iceland.co.uk. However, the rebranding exercise appears to call for been quietly abandoned in the early 2000s, as the unadorned Iceland digit is now used more widely, although some stores still have the Iceland.co.uk name on display.Iceland was renamed the Big Food Group in Feb 2 002, and attempted a refocus on the dodge sector with a bid for Londis. Grimsey remained until the takeover and demerger of the Big Food Group by a family led by the Icelandic company, Baugur Group in February 2005.Since Malcolm Walkers return to the company, Iceland has reduced the workforce by vitamin D jobs at the Deeside Head Office, with approximately 300 jobs moved in September as a go a elan of a relocation of a distribution warehouse from Deeside to Warrington. During July 2006, 300 workers took industrial action with the support of their union, stop several Lorries from entering the depot. Despite this, the transfer to Warrington took place and the new warehouse was later outsourced to DHL in April 2007.In January 2009, Iceland announced that it would buy 51 stores in the UK from the failed Woolworths Group chain three days after the closing 200 Woolworths stores closed their doors for the last time.In April 2009, Iceland announced plans to close its appliance showroom s by September 2009 to narrow on food retailing. Icelands sales for the year ended 27 March 2009 were 2.08 billion, a 16% increase on the previous year, with net profits of 113.7 million.Iceland is a successful and growing business, and to maintain our momentum we motivation to help all our people to fulfil their ambitions and realise their potential. We take pride in our training and gravelment, and our 2009 ply survey showed that 87% of our employees considered that they had all the training they ask to do their job tumefy. In addition to gainful close attention to the results of these steady surveys, we conduct individual performance reviews designed to identify strengths, ambition and potential, and are strongly committed to providing opportunities for those who wish to give out their careers within Iceland. Over 60% of our store managers have win their positions through internal promotion.Currently Iceland is having over 750 stores through out the UK. And more than 18 000 employees work within Iceland food ltd.Iceland have employees hand book that is handed over to the employees during the induction. This employees handbook is basically designed for the frontline staffs, which includes the entire inside in organisation of the induction procedure, probationary period, performance appraisal, disciplinary, dress policy, dignity at work and grievance procedures and other important elements of the contract. The entire information on the Icelands was known to the author with the help of store manager of the Iceland food ltd. And from the Iceland food ltd website and staff hand book.AIMThe aim of the research is to investigate the effectiveness of appraisal method on the psychological contract between the employer and employee.ObjectivesTo examine the concept and theories related to psychological contract.To examine the concept and theories related to performance appraisal.To describe and compare performance appraisal methods used by Iceland food ltd.To critically essay the effect of performance appraisal method on psychological contract.1.6 Overview of the StudyThe dissertation will be presented in a series of the following chapters. Brief description of each chapter is written below with a diagrammatic representation (Figure 1.0 and Table 1.0 Overview of the study).Chapter 1IntroductionChapter 2Literature ReviewChapter 3 methodologyChapter 4ResultsChapter 6Conclusionand RecommendationIntroduction This chapter gives the introduction to the study, covering the aim and objectives of the study. It includes the education of purpose and the background of the company investigated.Literature Review This chapter plys the critical analysis of all the secondary research conducted by the author on the performance appraisal, psychological contract followed by the discussion of the effects of former on latter.Methodology This chapter explains the research aim and the research process undertaken by the author to fulfil the research questio ns depict in previous chapter. It also includes the primary method conducted by the author to gather the research data.Results This chapter includes the findings of the primary research conducted by the author. It also includes the charts and graphs that explain the findings of the research.Discussion and Analyses This chapter includes analyses of the finding of the primary research. It also includes the comments of the interviews as well as analyse the outcome of the survey conducted by the author.Conclusion and Recommendation This is the final chapter of the study which will give a synopsis of all the findings and cross refer it with the objectives express in the initial chapter. It will also offer the recommendations for further research.Chapter 5DiscussionandAnalysesCHAPTER 2LITERATURE REVIEW2.0 IntroductionA literature review as defined by Fink (20053) isa systematic, explicit and reproducible method for identifying, evaluating and synthesising the existing body of completed and recorded work produced by researchers, scholars and practitioners (Fink 2005, p.3)AIMThe aim of the research is to investigate the effectiveness of appraisal method on the psychological contract between the employer and employee.ObjectivesTo examine the concept and theories related to psychological contract.To examine the concept and theories related to performance appraisal.To describe and compare performance appraisal methods used by Iceland food ltd.To critically analyse the effect of performance appraisal method on psychological contract.To draw conclusion and make recommendation about the effectiveness performance appraisal method on the employees of Iceland food ltd.This section therefore, attempts to review some related literature relevant to this study. Moreover this literature review seeks to justify the uniqueness of this study in the light of the works of other known scholars in the orbital cavity of performance assessment strategies on the psychological contract, f ocusing on the performance appraisal method used by Iceland food ltd, U.K.This section is arranged into themes in line with the research objectives and questions outlined in the precedent chapter. The review will begin with the purpose of the psychological contract and the appraisal method, followed by the different types of the appraisal methods. Then the performance appraisal method used by the Iceland food ltd U.K. will be critically reviewed and how the performance appraisal affect the psychological contract between the employer and employee will be discussed. Lastly the advantages and limitations of this grammatical constituent and the importance of this study will be presented.In addition, a recent view is of Conway and Briner where they define What Psychological Contract is ?To examine the concept of the psychological contract, a review of existingdefinitions and research needs to be assessed. Origins of the term psychological contract derived from Argyris in the 1960s who referred to it as the unquestioning understanding between a group of employees and their foreman, while Schein in 1965 further developed the concept focussing on the high take aim family between the employee and the organisation (Wellin 2007).Furthermore, Kotter in 1973 (as quoted within Roehling 1997) described the psychological contract as, an unuttered contract between an individual and his organisation which specifies what each expects to give and receive from each other in their relationship. (Kotter as quoted within Roehling 1997 p.210)psychological contract as, the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other (Conway and Briner (2005) as quoted within CIPD 2009) However, Rousseau (1995) (as quoted in Guerrero and Herrbach 2007) believes that the psychological contract is formulated in the minds of the employees,individual beliefs, shaped by the organisation, regarding ground of an replacement agreement be tween individuals and their organisation.(Rousseau (1995) as quoted within Guerrero and Herrbach 2007 p.4)Taking all that into consideration, the nature of the psychological contract can be seen as the implicit unwritten expectations and beliefs that one holds in relation to their employment relationship. These contracts can be highly subjective and what makes them binding is what they are perceived to be (Hughes and Palmer 2007).Conway and Briner (2002) state that the beliefs refer to employee perceptions of the explicit and implicit promises regarding the counterchange of the employee contributions such as effort, ability and dedication for organisational inducements such as pay, promotion and security. Moreover, Bloisi, Cook and Hunsaker (2003) supports this statement by stipulating that workers are expected to input their skills, time, effort, allegiance and loyalty to the organisation in return of wages, benefits, job security, opportunity to progress their achievement, powe r, status and affiliations. Witte et al. (2008) clarifies further that the idea of balance is key to these mutual exchanges within this dynamic and informal contract so that the employee feels that what is offered by the organisation balances what the individual brings to the relationship. Perceived imbalance could consequently result in the perception of contract violation. The CIPD (2005) highlighted a simplified lymph node computer simulation (1996) of the psychological contract as illustrated in Figure 2.1.The influencing factors that feed into the contract include the human resource practices, organisational content and the individual characteristics of the employee. The psychological contract content can be measured in terms of fairness of treatment, trust, and the amount of which the implicit get laid or contract is perceived as being delivered in reflection of a set of obligations or some sort of exchange (Guest 1996).The outcomes as a result of the content of the contrac t are the employee attitudes and behaviours. The CIPD (2005) found that employees attitudes of trust, fairness and delivery of the deal are major determents to gaining a psychological contract which creates employee commitment and satisfaction. Robinson (1996) (as quoted within Bosch-Sjtsema 2007) claimed that expectations are often shaped by past experience, social norms and observations that are influencing factors to the contract. It was also maintain by Rousseau (2001) that these promise based psychological contracts take the form of a mental model or schema over time. She found that an employees pre-employment experiences, recruiting practices within the company and on the job socialisation as influencing factors to the formation of these schemas which may differ the content or form that an individuals psychological contract takes.2.1 The Purpose of Psychological ContractAccording to Bloisi et al., (2003 p.123) the psychological contract is considered as workers implicit expec tations about what they are expected to contribute to an organisation and what they will receive in return (Bloisi et al., 2003 p. 123)In a similar way Schein (1965) defined that The fantasy of a psychological contract implies that there is an unwritten set of expectations operating at all times between every member of an organisation and the various managers and others in that organisation (Schein 1965 as quoted within Armstrong 2003, p 297).According to Hiltrop (1995), it has been noticed there is a significant rate of change of the economic environment in which the organisations work during the last twenty years. Increasing competition, globalisation of markets has demanded greater flexibility and productivity of organisations, as well as new strategies focused on innovation and speed.In the psychological contract the perceived state of an organization influenced by employees expectation ( Cheong Kim 2009).As a result, the terms of old psychological contract has changed radica lly which primarily gave security, stability and predictability to the relationship between employer and employee (Hiltrop, 1995 p. 286 287). Moreover, the supra definition stated by Schein (1965) was amplified by Rousseau and Wade-Benzoni (1994) who stated that Psychological contracts refer to beliefs that individuals hold regarding promises made, accepted and relied upon themselves and another. (In case of organisations, these parties include an employee, client, manager, and/or organisation as a whole.) Because psychological contracts represent how people interpret promises and commitments, both parties in the same employment relationship (employer and employee) can have different views regarding specific terms. (Rousseau and Wade-Benzoni, 1994 p. 463-89)Guest and Conway (1998) summarise stating that since the psychological contract is not written down formally it lacks the characteristics of the formal contract due to which it has no beginning and no end and which is why it c annot be en forced in a court or a tribunal.Guest and Conway (1998) also believe that The psychological contract is best seen as a metaphor a word or a phrasal idiom borrowed from another context which help us make sense of our experience. The psychological contract is a way of interpreting the state of the employment relationship and helping to plot significant changes (Guest and Conway, 1998 as quoted in Armstrong, 2003 p. 298).2.1.1 The importance of Psychological ContractThe importance of the psychological contract was emphasized by Schein (1965) suggests that the extent to which people work effectively and are committed to the organisation depends on the degree to which their own expectation of what the organisation will provide them and in return what the organisation expects of them and the nature of what actually is exchanged for example, money in exchange for time at work, security in exchange for hard work and loyalty, and various combinations of other things (Schein, 196 5 as quoted within Armstrong, 2003, p 299).The HR profession will have significant role to play in the management and balancing of the general or specific psychological contracts of employees. The HR function can act as a focal point for helping to discover employees expectations through collective channels or individual mechanisms, while seeking to provide for the meeting of employees expectations (e.g. Sims, 1994) (Holden and Breadwell, 2001 p. 546). The HR professionals must make sure that different facets of human resource management and the different managers shape and support the psychological contracts in consistent, integrated and fit manner, (Rousseau and Greller, 1994 p. 385-401).If employees feel that their psychological contract has been disrupted or breached, and then they may withhold or describe from the relationships, consciously or unconsciously, (Spindler, 1994 326- 327).2.1.2 The Guest model of Psychological ContractThis model was formulated by Guest et al, 1996 suggests that the contract should be measured in terms of fairness of treatment, trust, and the extent to which the explicit deal or contract is perceived to be delivered.Figure 2.1 A Model of the psychological contractCausesOrganisational cultureHRM policy and practiceExperienceExpectationsAlternativesConsequencesFairnessTrustThe delivery of the dealContentOrganisational citizenshipOrganisational commitmentMotivation happiness and well-being beginning Guest et al, 1996The simplified Guest model of the psychological contract as illustrated above in Figure 2.1 (as quoted in CIPD 2006) defines it in terms of linkage between the inputs, being the HR practices the employee features and the companys characteristics together with the content, being the fairness and trust and finally the outputs being the employees behaviour work performance and delivery. ODonnell and Shields (2002) believes that Guests extended model of the psychological contract (from employee perspective) represents a particularly useful way of understanding the attitudinal and behavioural impact of employment practices at the aim of the individual employee (Guest 1998 659-60) Hiltrop (1995) states that this psychological contract has two important aims, the first for providing a sens for employers of the type of outputs they are going to obtain from employees and secondly by employees contributing their time and effort for the level of rewards they will receive.2.1.3 The ever-changing nature of the Psychological ContractAccording to Hiltrop (1995), there is considerable evidence that shows the changing of the psychological contract in the past decades. Now the employers want to know in advance the outcome of the employees efforts and employees want to know what reward he will get in exchange of the hard work and time spend in the organisation.De Meuse and Tornow (1990) stated that since the 1970s, however, the force that connect employers and employees has become severely stressed organisati ons deal with the need to cut costs and kick upstairs efficiency, have ever more compacted their workforce and eradicated some of the elements (job security, regular promotions up the corporate ladder, annual wage increases, cheap mortgages, etc.) offered as a rule to employees in the earlier decades (De Meuse and Tornow 1990 p. 203-13).Moreover, people fill in the blanks along the way, and they sometimes do so inconsistently (Rousseau, 1994 as quoted in Hiltrop, 1995 p. 287). In addition to the above context, Kolb et al., (1991) have pointed out that a company staffed by cheated individuals who expect farther more than they get is headed for trouble (Kolb et al., 1991 as stated in Hiltrop, 1995 p.287).Conversely, optimistically, some organisations are trying to develop steps that can increase mutuality and to endow with scale for tangential career training and enhance knowledge and skills through opportunities for learning. It has been recognised that the organisations can no lo nger provide a guaranteed long term job to the employees they have to take responsibilities to build their skills and give a path for career development. In other words they take steps to improve employability (Armstrong, 2003 p. 302). Two diagrammatic representations are given below which shows the differences between the old and new employment contract by Kissler (1994) and the changing nature of the psychological contract by Hiltrop (1995).Figure 2.2 Difference between the old and new contract.OLDRelationship is predetermined and imposedYou are who you work for and what you doLoyalty is defined by performanceEmployees who do what they are told will work till retirementNEWRelationship is mutual and negotiatedYou are defined by multiple roles, many external to the organisationLoyalty is defined by output and qualityPeople and skills only needed when requiredLong-term employment is unlikely expect and prepare for multiple relationshipsSource Kissler, 1994, p. 335-52Figure 2.3 ever-c hanging Psychological Contract .FROMImposed relationship (compliance, command and control)Permanent employment relationshipFocus on promotionFinite job dutiesMeet job requirementsEmphasise on job security and loyalty to the companyTraining provided by organisationTOMutual relationship (commitment, participation and involvement)Variable employment relationship people and skills only obtained or retained when requiredFocus on lateral career developmentMultiple rolesAdd valueEmphasis on employability and loyalty to own career and skillsOpportunities for self-managed learningSource Hiltrop 1995, p 286-294.Hiltrop (1995) also suggests that a new psychological contract is emerging which is more situational and short term that assumes that each party is less dependent on the other for survival and growth. This new contract was described by Hiltrop (1995) as a worker being employed as long as they provide added value to the company and in return they expect the right to demand interesting and important work with the freedom and resources to perform it well along with performance related pay and training and development.However Armstrong (2006) argued that this could barely be classified as a balanced contract because employers still dictate their workers employment terms and conditions apart from cases where workers are in demand and there is little supply of skills. Mant (1996) (as quoted within Armstrong 2006) classified workers as resources that are acquired or divested according to shortterm economic circumstances, therefore having little influence over the terms of the contract that their employer offers them. Additionally Taylor (2008) claims that the new relationship is less emotional and is simply an economic exchange, thus moving from comparative to transactional. Organisations that are now adopting the rationale behind the use of the flexible firm model (Atkinson 1984) will have developed diverse types of psychological contracts among their workforce.Rous seau and Wade-Benzoni (1995) (as quoted within McDonald and Making 2000) found that temporary staff usually have a transactional contract with significance given to the economic elements of the contract, whilst steadfast staff are more likely to have a relational contract involving commitment to the organisation.Additionally Guest (2004) found that the content of temporary workers psychological contract is narrower, transactional and easier to manage on both the employers and employees behalf which temporary workers preferred. An investigation into the company Flexco (Saunders and Thornhill 2005) found that forced change within the company structure through downsizing changed the psychological contract of those on permanent and temporary employment contracts. After the changes it was reported that the temporary workers contained mostly transactional expectations and most permanent employees were found to have relational expectations.However, there were a few exceptions regarding p ermanent employees, who felt that the changes had violated their contract in terms of interpersonal treatment. These employees felt insecure, and worried that they may face a temporary contract in the future, which emphasises that they no longer felt as though their job was secure.2.2 The purpose of the performance appraisal.Performance assessment is one of the many people management techniques that classify and order individual hierarchically (Townley, 1994, p.33).A performance appraisal is the process by which a manager evaluates an employees work performance by measurement and comparison with antecedently established standards (Palmer, 1991 p. 1).According to Palmer (1991), there are two major purpose of conducting performance appraisals. One purpose is to provide the information for the administrative decision making such as the increment of salary, bonuses, promotion and the administrative actions that can be brought by the work performance of the employee. This also helps the organisation to decide whether to introduce for instance, a new incentive system or to improve the present pay and promotion methods. In other words, it is a vehicle to validate and refine organisational actions.For example, it has been noticed in the appraisal data that one of the employee has constant conflicts with the fellow colleague or with the supervisor or manager. Some options can be concluded from the above case, which is, showing more importance to the interpersonal skill while recruiting the new staff or supporting the present employee to attend the sessions on the conflict management offered by various colleges or providing the employee with one-to-one counsel (Billikopf, 2003 p. 60).The other major purpose is to provide feedback to the employees on their work performance based on the standards established on the job description and analysis.Feedback provided by the supervisor or the manager give the employees an opportunity to develop their career path within the org anisation. Feedback can be positive or constructive. Positive appraisal has many benefits and beneficiar