10.10. IMPLEMENTATION STRATEGY WITH EMPHASIS ON EMPLOYEE CONTRIBUTION

The preceding discussion identified some of the underlying issues associated with the performance appraisal system. Commenting on performance appraisal, Dalton (1971, p. 1) states that "few things have been more baffling to managers than the results of their attempts to develop workable performance measures and controls, thus channeling the energies of their employees towards the firm's objectives."

Recognizing that many complex issues are involved in implementing a meaningful performance appraisal system, it is nevertheless useful to focus on three items:

• What an individual's performance depends on

• Why performance appraisal is needed

• A suggested strategy

10.10.1. Performance Dependency

One of the fundamental questions in an R&D organization that needs to be addressed is: What does the performance of an individual really depend on? For a technology-based R&D organization, Roberts (1978, p. 7) points out the following:

Theory Y is lovely, and McGregor and Maslow are fine. But if you look for explicit measures of what affects a technical person's productivity, then all of the boss's [human] relations skills turn out not to matter very much at all. What matters far more, at the first-line technical organization level, where you're really talking about employing the scientist and engineer more productively, is the technical competence of this first-line supervision.

This is not to say that the supervisor should be insensitive to people and not have the ability to motivate and stimulate the researcher; rather it stresses the crucial role the supervisor's technical competency plays in productivity and excellence.

Studies indicate that in an R&D organization, the diversity in professional activities and the diversity in skills of American scientists both relate to enhanced levels of performance. Scientists who work on diverse R&D functions (such as basic research, applied research, and consultation) make greater scientific contributions and are more useful to their organizations than those who do not work in diverse areas. In addition, scientists who spend part of their time in teaching or doing administrative work outperform those whose sole activity is research. Diversity in terms of knowledge of several areas of specialization (rather than just one) and involvement in more than just a single research project are also related to higher levels of performance (Andrews, 1979, p. 269).

Lawler (1973, p. 9) suggests that an individual's performance depends not only on motivation but also on ability. This can be described as follows:

Performance = f (Ability × Motivation)

where

Ability = f (Aptitude × (Training + Experience))

Motivation = f (Extrinsic Rewards + Intrinsic Rewards)

The performance of a researcher then would depend on factors such as aptitude, training (academic and on-the-job training), experience (e.g., working with colleagues who impart knowledge through discussions and examples), extrinsic rewards (rewards given by the organizations—e.g., pay, promotion, job assignments, fringe benefits, and conference travel), and intrinsic rewards (rewards giving internal satisfaction, belonging to the essential nature or constitution of an individual). For intrinsic rewards, all the organization can do is to create conditions (e.g., a proper work environment) that make it possible for the individual to experience these rewards internally.

As we have seen in Chapter 6 on motivation, motivation can be broken down into social factors, the affect toward the behavior, and the perceived consequences of the behavior times the value of these consequences. The affect toward the behavior can be considered an intrinsic reward; the other two factors can be considered extrinsic rewards.

The performance of an individual thus depends on many factors. Organizations and their management can influence some factors—but not all. A person's aptitude, academic training, and previous experiences are givens, and only some aspects of these can be modified with time. Even when poor performance is caused by low motivation, management can work on extrinsic rewards and create conditions for the individual to experience the intrinsic rewards. In the final analysis, it is the individual who, by building on his or her abilities (aptitude, training, and experience) and by looking at the extrinsic rewards and the satisfactions provided by the work environment, puts in the necessary effort to perform effectively.

Regarding intrinsic rewards, it is important to note that if researchers are to be committed to their work, they must feel that their research efforts are inherently worthwhile and serve some useful social purpose. It would seem that the researchers' interaction with the user community and their participation in technology transfer would provide the necessary feedback concerning the utility of their research effort and would further reinforce the intrinsic reward structure. If researchers are fundamentally opposed to the overall goals and objectives of an R&D organization, the real commitment may be difficult to achieve. In such a case, it would be best for the individual to seek employment in a different organization.

10.10.2. Performance Appraisal Purposes

As suggested by McGregor (1972, p. 133), performance appraisal could have the following purposes:

Evaluation. To provide a systematic means of evaluating an employee's performance to back up salary increases, promotions, transfers, and sometimes demotions or other adverse personnel actions.

Feedback. The appraisal can serve as a means of telling the employee how he or she is doing and suggesting needed changes in employee behavior and attitude. In turn, the employee should be encouraged to bring out any concerns about the supervisor's behavior. That may not be easy for the employee to do. The supervisor could, however, ask the employee if he or she has any concerns about their mutual working relationship. This way, the employee does not have to attribute the problem only to the supervisor. The employee can also be asked to provide suggestions for making his or her work professionally more rewarding and for improving the organization's effectiveness.

Counseling. The performance appraisal system can also be used as a basis for counseling the employee and identifying training and other developmental needs.

Added to these are the following suggested purposes:

• Increasing the motivation of the employee

• Instituting organization control and goal congruence

• Enhancing organizational effectiveness and excellence

A comprehensive study that included 1200 R&D employees from 55 organizations in Korea provides insight into performance measurement systems appropriate to research intensive organizations (Kim and Oh, 2002). The major findings were as follows:

10.10.3. Suggested Strategy

No specific list of performance elements and no rigid step-by-step strategy would properly encompass the many complexities inherent in R&D or other professional organizations. The following categories of performance elements, along with suggestions that follow, might provide a framework or a general guide for developing a performance appraisal system at different levels of the organization. It is important to keep in mind (a) the manifold problems and issues related to implementing effectively a performance appraisal system, and (b) understanding on what the performance of a researcher or a manager really depends.

Emphasizing employee contribution to the organization, the three categories of elements suggested are as follows:

Process Measures: Routine activities, short-run outputs

Result Measures: Ends-oriented activities, tangible, significant outputs

Strategic Indicators: Indicators focusing on recognition, awards, and reputation internal and external to the organization

It is important to note that these category titles are identical to the ones used in Chapter 3, "Creating a Productive and Effective R&D Organization." The items included under these categories, however, have different emphases; the emphasis is on employee contribution to organizational goals and objectives. Organizational effectiveness is ultimately based on the performance of the individuals that comprise it. In other words, in order to achieve a one-to-one correspondence of individual performance and organizational effectiveness, there should be a goal congruence between individuals and their organization.

Specific elements in the appraisal would also depend on the position the individual occupies in an R&D organization. For example, a first-line supervisor or a principal investigator may have "quality of leadership in project planning" as an important element for her appraisal, while an associate investigator or a research assistant may have "completion of assigned project tasks within allotted time and budget" as an important element of his appraisal. To focus effectively on this, employee position descriptions can be used.

Because research activities are a collaborative effort of many participants, considerable similarity in the performance elements of many participants, albeit at different levels of the organization, is quite understandable. Performance appraisal can be used to further strengthen this collaborative effort by giving some employees primary responsibility for certain elements and others supportive or secondary responsibility. For example, while "project planning" may be the primary responsibility of the principle investigator, associate investigators may also have project planning as a secondary responsibility. Since effective project planning is important to the ultimate success of the project, this would encourage associate investigators to provide input to project planning and facilitate the collaborative process.

The level of detail and actual appraisal elements would further depend on the organization itself. For a commercial, profit-making organization, ultimate profitability from research outputs may be given appropriate emphasis. Even for not-for-profit organizations, return on investment studies conducted by a third party can provide important information for individual employee performance and for organization effectiveness.

As an example, at the end of this chapter (Appendix 10.13), three documents used by the Argonne National Laboratory for performance review purposes are included. One document describes the main steps for effective performance review, and a second document is a typical position description. Measures of effectiveness included in the position description can form a basis for developing appraisal elements. The third document is the actual form used to document performance assessment.

Some other suggestions that might assist in the performance appraisal process include the following:

• The employee and the supervisor should attempt to look at the performance appraisal process beyond "judging" or evaluating the employee. The focus ideally ought to be on the employee contribution to the organization. In addition, focusing on other important aspects (such as feedback, counseling, motivation, and goal congruence) discussed earlier in this chapter would, to a great degree, overcome the problem of reluctance on the part of the employee and the supervisor to participate in the appraisal process.

• Generally, supervisors are very reluctant to rank-order employees or give them overall ratings such as exceptional, excellent, good, fair, or unsatisfactory. Before deciding to rank-order employees, or giving them an overall rating, one should consider the purpose this would serve and what benefits or problems would result. Among the benefits might be an explicit message to the employee as to his or her performance vis-à-vis other employees. To do this, in practice, each performance element would have to be related quantitatively. In addition, performance elements themselves would have to be rank-ordered or given relative weights, and all subjective elements would require some implicit quantification. In a typical performance appraisal case, one is dealing with more than 20 such elements. Reducing the number of elements is a good idea, but experience shows that the number of elements actually grows over the years. Even if the number is small, this quantification is subjective and using this approach creates some problems.

A supervisor soon finds out that the employee who is ranked number 6 in a group of 15 feels the ranking should have been better than one who is ranked number 5 and certainly equal to the one who is ranked number 3. Number 3 does not understand why he or she is not ranked number 1, and number 1 has a hard time understanding how number 3 could have received that high a ranking, and so on. Giving overall ratings (such as exceptional, good, unsatisfactory) creates similar problems.

In organizations where performance elements can be explicitly stated and where reviews are conducted by a panel or a committee to minimize biases, such ratings or rankings may work well, as shown in our example for a university department. Normally, where possible, rank ordering or overall personnel ratings should be avoided. They do not serve as an effective means of communication between the employee and the supervisor. They also tend to affect adversely a mutually supportive environment so necessary within an R&D group. Assigning ratings to individual performance elements without assigning an overall rating to the individual is preferable.

Many R&D organizations, however, require managers to assign an overall rating to the employee. So, what is a manager to do? One approach might be to downplay the overall rating and focus more on the individual performance elements than on the overall rating or rank ordering when discussing performance appraisal with an employee. From our experience, this works quite well. The employee is more relaxed and there is more feedback and counseling than would otherwise be the case.

While the appraisal system can interact with the reward system, linking the appraisal system tightly to monetary awards is not desirable. This suggestion seems contrary to the accepted wisdom—higher pay for higher performance. So, let us examine the situation.

A higher-performing employee can indeed get a higher salary. The point here is that during performance appraisal reviews, discussion of pay and monetary rewards, as indicated earlier, would reduce the probability of any feedback or counseling. Organizational policies should encourage the utilization of a repertoire of items for rewards beyond the monetary aspects. If the premise is that pay will motivate an employee, one finds very quickly that pay has only limited ability to do that. The suggestion here is simply that it is not very useful to tie pay tightly to performance determined during the appraisal process. Of course, in situations where performance requirement can be specified explicitly and individual biases are minimized by using a committee or a panel, it may work quite well.

• In developing performance measures and goals, the supervisor needs to work with the employee so that the employee's needs are positively related to the organizational goals. This can assist in establishing goal congruence. In fact, this means that the employee first establishes performance goals for himself or herself based on his or her knowledge of the goals and objectives of the organization. The supervisor then reviews performance elements and helps the employee relate career goals to the needs and, indeed, the realities of the organization.

• To the degree possible, performance appraisal elements should comprehensively cover all activities an employee is expected to perform and all results an employee is expected to achieve, as well as the total contribution an employee is likely to make to the organization beyond the performance appraisal period.

• Working with the employees, managers should set goals that are specific and difficult, but realistic. They should emphasize a code of ethics, such as the one we discussed in the chapter on managing conflict (Chapter 9). They should schedule special events to celebrate reaching goals, and they should give recognition to those who have been unusually successful. They should not hoard information. They should provide and communicate a vision of an organization that focuses on excellence and productivity.

• At times, a vexing problem in dealing with poor performers or problem individuals is not easily handled. Such a problem could result from employee ability, organization environment, or conflict between the employee's personality and that of the supervisor and/or the organization culture. At times, separating such an employee from the organization is best for all concerned. When that is not easily done—for example, in the case of a tenured employee—a different strategy is needed.

In one case, a new laboratory director found that the research organization environment had been confrontational rather than collaborative. Serious turf problems were endemic. Researchers had to compete for research funding, special-purpose equipment, and laboratory and office space in such a way that all problems were viewed as zero-sum games. Poor performance and low organization effectiveness were the direct cause of the organization culture.

In another case, a new laboratory director found that one research division director who had been viewed as a "star performer" actually focused mainly on process indicators. He did what the previous laboratory director asked him to do and never took any initiative or provided any technical or management leadership. Division productivity over the years was mediocre.

Such organizational culture and individual behavior problems cannot be changed precipitously or rashly. Methodical change, while reinforcing the positive behavior, would indeed take some time. During the performance review session, the supervisor may focus on the following: