In any organisation, career training equips employees with the requisite skills and knowledge that enable them to do their present job competently and achieve high performance. Investment in training is often associated with improved productivity and a better competitive advantage for a firm operating in a particular industry (Tobias & Fletcher, 2001). It nurtures an environment of creativity and innovation and creates more opportunities for organisational growth. In recent years, performance management has become an important career development tool in most companies’ human resource practices.
It is considered an important HR process because it has significant impacts on “both financial and program components” of a firm (Jafari, Bourouni, & Amiri, 2009, p. 96). Employee appraisals are an important part of performance management in organisations. Appraisals help organisations manage their human resource in a manner that meets their objectives and mission. An appraisal also gives each employee an opportunity to assess his/her performance and identify areas for improvement.
Performance management is a complex human resource function. It entails the identification of each employee’s skill deficits for purposes of further training and development. It can serve as a tool for employee development, strategic planning, or both. With regard to employee development, performance appraisal reveals the strengths and weaknesses of the staff, which can be used to identify its training needs. Under some circumstances, performance management can be used as a strategic planning tool.
However, due to discrepancies associated with appraisers’ judgment, evaluation, and cognition, it is rarely used in strategic planning (Prowse & Prowse, 2009). Nevertheless, a proper appraisal system is important in employee training and development. This paper critically analyses the links between performance management and career development systems. It also illustrates the relationship between the two systems in HSBC Bank plc.
The process of performance management unearths an organisation’s staffing needs. It varies depending on its role in the firm and the nature of the organisation. In most organisations, it is considered a systematic interaction process between an employee and an appraiser that seeks to assess the employee’s job skills and/or inadequacies and recommend areas for career training and development.
Thus, performance appraisal entails continuous review and evaluation of an employee’s performance with the aim of identifying opportunities for individual growth (Meschi & Metais, 1998). Performance appraisals also serve as tools for measuring an employee’s progress. It is also through performance appraisal that HR managers are able to make certain personnel choices to maintain an organisation’s competitiveness and performance.
Performance management can impede or promote the creation of core competencies within a firm. Such core competencies and skills set to give a firm a clear competitive edge over rivals in the industry through innovation and technology (Ubeda & Santos, 2007). In this view, performance appraisal is essentially the process of assessing and developing “employees’ performance” in a firm (Ubeda & Santos, 2007, p. 91).
Most organisations consider performance management as an integral and strategic tool crucial for business success. Furthermore, in the 21st century, employee appraisal is a crucial success factor for any company. However, a faulty employee appraisal system can hinder organisational performance or growth. Such a system may not identify and evaluate each employee’s skills and match his/her competencies with job requirements. In this regard, performance appraisal is an indispensable process in the modern business environment.
Performance management has evolved to become an important tool in organisations because of people’s tendency to make judgments about themselves and others. It is an inherent human trait to judge themselves and others according to certain expected standards. However, this does not mean that the judgment is correct or unanimous to everybody involved. Soltani, Van Der Meer, and Williams (2005) attribute the inaccuracies and inconsistencies in human judgments to our differences in perception and understanding.
In this view, to be a successful appraiser, one has to learn to understand others and develop an accurate rating format. Designing an appraisal system that not only assesses each employee’s performance accurately but also fits his/her skills within the wider organisational needs is often difficult. However, such a system guarantees a firm a performance management process that meets its needs as well as those of the employees.
Employee appraisal systems are often unique and non-transferable. In this view, each organisation must design and implement a system that best matches its HR requirements and employee needs. Foong-ming (2008) notes that human resource practices that “motivate the workforce and enhance personal growth” result in improved employee performance, which translates to organisational growth (p. 12).
It is evident that performance management is closely tied to employees’ career growth and development within the firm. Career development encompasses a range of training activities aimed at creating rich skills set required by an organisation. It entails formal training and work-related experiences as well as the development of an employee’s skills and natural abilities to improve his/her performance.
Given its close association with performance management, career development often involves concerted effort from the firm and the staff member. It is through this collaboration that organisations can improve each member’s abilities, knowledge, and skills to achieve a better performance in their present or future position. Besides being a collaborative process, a career development plan must reflect organisational needs and involve an approach that serves the interests and career goals of the employee. Since both the employer and the employee benefit from the development plan, each party must play his/her role effectively. However, employers should be more proactive in providing career development opportunities to employees since they stand to benefit from the new skills.
Employee development brings many significant benefits to the organisation. It underscores a company’s commitment to investing in staff growth by providing opportunities for career development, which brings new and advanced skills in the organisation. This translates into staff motivation, which, in turn, fosters collaboration in teams. Thus, organisational commitment to employee training plays a role in staff motivation, which results in improved performance and workplace productivity. The development also enhances staff skills and abilities, which makes employees perform better.
Performance Management and Career Development
As already stated, performance management is a many-sided human resource tool, which, if well structured, could facilitate employee development and organisational growth. However, achieving a well-structured appraisal system for employee development is often a difficult task.
Factors such as the “appraiser’s subjectivity, impartiality, and lack of respect” as well as non-involvement of staff in designing the career development plan can hinder the progress of the appraisal process (Wilson & Western, 2001, p. 28). The system can also fail to achieve the development goals if the employee lacks motivation, exhibits indifference, or holds the view that a firm’s appraisal process is poorly executed and yield recommendations that are not binding.
Organisations often conduct appraisals as a strategy for ensuring improved productivity. It requires designing an effective system that not only motivates each employee but also encourages him/her to focus on his/her tasks in order to increase productivity. An organisation’s workforce is an important resource for its future growth. For this reason, firms invest heavily in human resource development in order to have an effective and high performing workforce.
In the past, performance appraisals were not considered an essential component of employee development because there was little or no staff involvement in the process (Prowse & Prowse, 2009). In recent years, organisations have realised that staff development requires an effective employee evaluation system to identify skills deficits and equip workers with competencies that can bring a positive change to the firm.
The sole purpose of performance management is to improve the performance of an employee in his/her present job or prepare him/her to another position in the future. In this way, organisational productivity improves, and a firm’s competitiveness in the industry increases. The other reason why organisations develop performance management systems is to create a supportive environment that fosters teamwork and innovation.
From a management perspective, an appraisal process seeks crucial information about the employee and evaluates his/her roles in the firm in order to determine staff output, motivation, job satisfaction, and working conditions, among others (Prowse & Prowse, 2009). This indicates that performance management is an essential first step in designing an employee development plan.
Performance appraisal has clear links to employee development. Kluger and DeNisi (1996) state that appraisals and career development are intertwined because the need to improve a workforce must start with a performance evaluation of the employees. An employee’s level of productivity depends on a number of factors, including his/her “personality, attitude, ability, and values” (Kluger & DeNisi, 1996, p. 254). These variables influence a person’s cognitive and perceptual abilities, motivation, job satisfaction, and performance. Employees need support from the management to enhance their performance and meet individual goals. One approach that managers use is training and development, whereby employees undergo formal training to acquire specialized job skills.
It is through performance management that a staff member can achieve his/her full potential. Boice and Kleiner (1997) write that performance management helps improve staff performance and enables them to realise their potential through training. Appraisals play a crucial role in skills development. Since employees desire to grow in their career, they need to feedback regarding the skills they possess and the ways of improving them. Organisations can help their employees develop their skills by laying out clear performance expectations. Through effective performance management, employees get the assurance that the organisation is committed to improving and developing their skills. This results in improved motivation and performance, which benefit the employer.
Performance appraisals give recommendations useful in performance improvement. Rasch (2004) argues that if a firm’s goal is to improve productivity or the quality of its services, then performance management is an essential tool for staff motivation and development. In this view, HR managers should consider performance management as an important approach in staff development and organisational growth. This approach facilitates an individualised training and development to improve their skills and enhance their productivity. It is through training that the efficiency and effectiveness of an organisation’s workforce.
The Relationship between Performance Management and Employee Development
The main role of the employee appraisal tool is to evaluate the performance of a firm’s workforce. Performance statistics can be obtained from two main sources: (1) the supervisors who oversee subordinate staff and thus, understand their needs and (2) the employees through self-evaluation. In the process of appraising the employees, supervisors often seek the views of other managers and peers to develop a complete and objective evaluation of an individual’s job performance. The 360-degree feedback gives a more detailed picture of an employee’s skills, knowledge, and abilities compared to upward feedback.
Performance appraisal is an HR function in most companies. Line managers or supervisors conduct performance management and relay feedback to employees on a regular basis. Feedback may contain criticism for failure to meet the set goals. An effective appraisal system should review performance goals regularly as opposed to annually. It should identify the training needs of the staff as well as each employee’s abilities and skill deficits in order to rate each employee according to his/her performance.
Firms usually use job analysis to identify the “performance criteria or critical success factors” for each task assigned to an employee (Scarpello, Ledvinka & Bergmann, 1995, p. 16). The measures identified in this way give a valid and balanced performance appraisal of an employee. Performance ratings are usually affected by appraiser subjectivity and bias. In this regard, top management meetings should be held to review and assess the performance measures to ensure that they are in line with organisational goals.
Each organisation should create a workplace environment that favours career development. It should encourage learning, both formal and informal training, to help employees gain advanced job skills and share knowledge. Most firms organise training programs for their staff to equip them skills that match organisational needs. Ideally, training should be preceded by an evaluation of organisational and employee needs. It requires support from top management and employee awareness regarding the benefits of the training program. A weak internal communication will affect knowledge transfer within the organisation. Training programs tailored according to individual training needs are highly successful.
In most firms, continuous training is mandatory and employees who complete a training program are given opportunities to use the skills gained. Training approaches may include virtual or traditional classrooms with audio-visual technologies to facilitate instruction. Some organisations conduct “cross-training programs to facilitate job rotation” among the front-line staff (Murphy & Cleveland, 1995, p. 31). To create a learning environment within a firm, managers and subordinates must acquire skills that enable them to perform better. Firms help employees realise their career dreams through their staff development programs that are tied to organisational goals and mission.
A firm’s career development plan evaluates employees using tools such as performance appraisals to determine their skills, abilities, career goals, and interests. The company then compares these findings with organisational needs in order to design a development plan. The development plan outlines the employee’s “future career goals to be achieved based on individual and organisational needs” (Scarpello, Ledvinka & Bergmann, 1995, p. 22).
Thus, a development plan is often based on employee evaluation or appraisal system. Appraisal feedback helps employees develop individual career goals and identify their learning needs. Employees usually acquire new experience through job rotations, internal transfers, and promotions, which help them to learn new roles and define their development goals.
In conclusion, many important links between career development and performance management are evident from the analysis. Although most firms utilise performance management as a tool for promotions and wage increments, some use it for employee development. However, constraints such as wage considerations, the appraiser’s bias and misjudgment, and the inability to identify the training needs of the employees hamper the effectiveness of performance management.
Organisational Analysis: HSBC Bank plc
HSBC is a leading banking organisation that operates in over 80 countries globally. It has its headquarters in London, but has over 6,000 branches in various regions and markets, including the US and Canada (HSBC, 2014). Its staff population is estimated to be about 250,000. HSBC invests in employee development to tap into the creativity and talent of its staff and remain competitive in the financial services sector.
Hired employees are deployed into the firm’s commercial banking or branches. HSBC’s career development plan includes “on-the-job coaching, training classes, tuition reimbursement, and management preparation programmes” (HSBC, 2014, p. 3). In addition, the company trains its managers on international management through its ‘International Manager Program’.
HSBC has aligned staff training and development with its business strategy. It offers training opportunities to employees to develop their career path and improve their job performance. The banking institution considers training and development as central to organisational success. Its training is well structured and has clear learning outcomes (HSBC, 2014). For HSBC, formal training not only enhances the performance and efficiency of its employees, but it also serves as a tool for staff motivation and engagement.
The training centres on the development of its employees, as an important asset to the organisation. HSBC’s training cycle covers four key aspects of performance management: “needs analysis, evaluation, delivery, and design” (HSBC, 2014, p. 5). These are the four critical success factors of HSBC’s training programmes. Based on these factors, the company develops training programmes that hired employees go through before deployment. Its programs are categorised into three: (1) job specific coaching, (2) induction training for new employees, and (3) individual development plans (HSBC, 2014). HSBC uses the findings of its performance management system in the design and delivery of the training programmes.
In HSBC, there are clear links between its career development plan or training cycle and performance management. Its performance management system assists staff to set career goals, which the training programmes help them achieve. The company’s training cycle is a continuous process that proceeds in three phases that interlink with performance management. In the first phase of training (induction), performance management is utilised to identify the learning needs of the employees.
HSBC also uses performance management to design the induction program for new employees before taking up their responsibilities. The second phase of HSBC’s training is job specific coaching that seeks to teach employees skills essential for a particular position. During this stage, performance management helps managers to determine training needs and develop programmes. The process is also used to analyse the quality, relevance, and efficiency of the training.
The third phase of HSBC’s training cycle is individual development. Again, performance management helps define needs and plan a training that would enable each participant to grow and develop his/her career. It is through performance appraisals that a staff member can evaluate his/her skills against job demands and identify personal training needs. Before rolling out a training programme, organisations must first analyse the each participant’s skills, abilities, strengths, and weaknesses. The analysis, which involves performance appraisal, helps the firm’s management to determine the learning needs of its workforce. This example illustrates another link between HSBC’s career development plan and its appraisal system.
After identifying the training needs, the firm designs a training plan for the employee. The management makes a decision regarding the type of program that would meet the needs of the employee. Program design is followed by delivery, wherein the methods like virtual classrooms and video-conferencing are used to deliver content. This stage can last between a few weeks to months. It is followed by evaluation, whereby the participants are assessed to determine whether they meet the learning outcomes set earlier. Evaluation, which relies on performance management, concludes the training process at HSBC.
The personnel efficiency of any organisation depends on how well its performance appraisal system and career development plan interlink. At HSBC, the two systems are central to its business strategy. The company uses performance management to complement its development plan. In this way, employees are able to fulfil personal career goals while their improved staff performance and productivity help the company realise its objectives.
Moreover, the training brings new skills that the bank taps into to cement its leading position in the industry. The financial services sector is highly dynamic and thus, employee training is the only way an organisation can improve its efficiency and effectiveness. Employee turnover or attrition is also a major challenge to most organisations. An effective career development plan increases job satisfaction, which lowers the intent to leave a firm.
Staff motivation is at the centre of performance appraisal and career development. Besides training, the efficiency and effectiveness of the workforce depend on how well the employees are motivated. HSBC’s training is meant to enhance the work efficiency and motivation of the employees. Training makes employees more skilled and confident about their work roles, which translates into improved performance. Staff motivation increases when employees feel that their work in the company is valued and their needs are met. Maslow’s theory explains that human behaviour is motivated by the desire to satisfy certain needs or become self-actualised (Bernardin & Beatty, 1994). In this view, HSCB’s training helps its employees achieve career goals and growth, which increase their level of satisfaction and motivation.
HSBC’s HR practices also affect the relationship between the company’s performance appraisal system and development plan. The company’s “pay-for-performance” culture is anchored on performance management and training. The company creates an environment that allows employees to realise their dreams by providing them with learning opportunities and valuing their contribution into the firm. This motivates employees, reduces turnover, and increases performance. Employees are rewarded with benefit plans for improved performance, creativity, and achieving the set objectives. Complex tasks and responsibilities make staff more results-oriented and productive.
It is evident that HSBC’s HR practices motivates employees and helps them meet their career objectives. Its robust training plan also motivates staff and plays a role in staff development. The generous financial rewards including bonuses given to employees who meet their goals also aids in training and development. The company utilises a scientific approach that draws from its performance management plan to determine the performance goals for each position.
Performance management and career development are highly interconnected. Performance management encompasses appraisals, which seek to evaluate the skills, abilities, strengths, and weaknesses of employees. The outcomes of appraisals are used in training and development with an underlying aim of improving an employee’s productivity and performance. The training and development plan of HSBC entails induction, job-related coaching, and personal development. Its aim is to equip employees with relevant job skills that would make them perform better. Staff motivation is also at the centre of the company’s training programmes.
Many links are evident between the organisation’s performance management and career development plan. First, before induction or job specific coaching, performance management is used to identify the training needs of the employees and determine which plan suits them. Second, performance management helps employees set their career goals within the organisation. Third, the organisation uses performance appraisals as a tool for determining its human capacity. HSBC has used these two processes effectively to achieve greater efficiency and business success.
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