1. Introduction
Oman Oil Company (OCC) is one of the biggest commercial organizations of Oman, undertaken by the Government of the country. The company was set up in 1966, headquartered in Muscat, Oman (Oman-oil.com, 2016). Pursuing the investment opportunities in oil and gas and other energy sectors, Oman Oil Company has become one of the leading companies of Sultanate of Oman. Identifying the investment opportunities both inside and outside the country, the company has developed an impressive HRM to manage the organizational operations affirmatively. The HRM of the organization supports the employees to deliver their best performance for organizational benefits. Realizing the importance of performance management system in the HRM, Oman Oil Company has developed suitable performance appraisal system to encourage the performance level of human resources.
2. Literature Review
2.1 Introduction to HRM
In today’s competitive business world, human resources management has played a significant role in any organization’s potential growth. It is the responsibility of the HRM to implement the best policy and resources so that organization can stand out in the competitive global market platform. HRM of any global organization needs to control many organizational management works such as hiring the appropriate human resources, arranging significant training facility system, developing performance management system and directing the employees to the organizational objectives and goals (Cobbold, Lawrie and Issa, 2004, p. 629). In addition to that, it is the duty of an HRM to maintain effective communication system and workplace safety. Delivering efficient guidelines and knowledge skills, human resources management of an organization develops a suitable workforce environment to make the best use of the resources.
2.2 Performance Management System (PMS)
Performance management system (PMS) is a methodical process to enhance the performance as well as work efficiency of organizational employees. There is an orderly system to be maintained in the PMS to get the ultimate results (Harbour, 2009, p. 11). A figure has been presented herein to show the orderly steps of PMS.
Performance Management System (PMS)
Source: (Guerra-López and Hutchinson, 2013, p. 151)
Identifying the objective and goals of an individual organization, a five-phase PMS can be developed including assessment, development, training, implement and improvement of performance of organizational human resources. In the first phase, reviewing the current performance status a total assessment must be done. In the next phase, conducting the job analysis, performance development strategies have been set. According to the requirement, perfect training methods can be adopted in the next step in PMS. Developing organizational objectives, significant performance appraisal plan and reward system can be implemented. Eventually, revising the PMS added improvement has to be made to complete the PMS structure (Guerra-López and Hutchinson, 2013, p. 165). Such design of PMS can improve the overall organizational performance indeed.
2.3 Importance of Performance Management System
There is significant importance attached to performance management system as discussed below.
Organizational Goal Setting: An efficient performance management system can deliver clear understanding and objectives of an organization towards its human resources. Identifying the organizational goals, employees can be directed to the right direction to achieve the objectives (Beheshti, 2010, p. 455).
Management and training: Performance management system can effectively deliver proper management system to an organization to maintain the potentiality of the workforce. In addition to that, PMS can identify the need of training and performance appraisal system to increase the productivity of the workforce.
Development Planning: Performance management system can identify the skill gaps of the employees so that most suitable training facilities must be given to the workforce. In this way, an organization can develop the career progression of its employee for long-term benefits.
2.4 Merits and Demerits of Performance Management System
Identifying the impact of performance management system on the employees, the merits and demerits of PMS have been briefed herein below.
2.4.1 Merits
Performance oriented argument: As the managers of the organizations do not find time to discuss performance oriented matters due to a busy schedule, PMS has provided them the chance to discuss the problems and issues of human resources. Identifying the performance flaws within the human resources (Chattopadhayay and Ghosh, 2012, p. 883) PMS can turn the weaknesses of the human resources into strengths.
Enhance employee motivation: Most of the organizations in the competitive business world utilize significant compensation and reward plan to enhance the performance of the employees. Hence, employee motivation can be increased through PMS.
Make a note of employee performance: PMS has provided the HRM to make a note of the performance level of individual employee or a group of employees. Therefore, according to the need of the employees, significant changes can be made to improve the overall performance of the organization.
2.4.2 Demerits
Time-consuming: Most of the modern organizational managers tend to avoid the PMS as it consumes too much precious time out of their schedule. Hence, the factor of time consumption can be considered as one of the disadvantages of PMS.
Inconsistent message delivery: Due to the busy work schedule sometimes managers have failed to keep a proper record of the employee’s performance on a regular interval. Therefore, in the time of the performance appraisal, best employees cannot get the proper appraisal. Hence, the system can affect the confidence of the best employees negatively.
Employee discouragement: As the PMS has kept the record of good as well as the negative performance of the human resources, most of the organizational employees can be discouraged by the system.
2.5 Different Types of Performance Appraisal System and their Merits and Demerits
There are a different set of performance appraisal systems utilized by the modern organization to improve the performance status within the company. Meanwhile, management by objective, 360-degree appraisal, and behavioral checklist can be identified as the most significant performance evaluation methods to be discussed herein.
Management by Objective (MBO): Modern HRM has tactically utilized MBO method to complete the given tasks to its employees. By using Management by Objective method, the human resources manager sets tasks with an effective deadline (Mamoon, 2013). Completing the task within the given period can provide effective reward and compensation to the employees. In this way, employees of any organization can successfully motivate their employees to deliver more effort at work.
360 Degree Appraisal Technique: The 360-degree appraisal method has been utilized by the HRM to make a note of the performance of the employees based on proper feedback from the managers, supervisors, line managers and appraisers (Maylett, 2009, p. 55). Analyzing the information from the comments, the significant appraisal must be given to the employees.
Behavioral Checklist: Identifying the capabilities and determination of the employees, a behavioral checklist can show the performance of an employee according to the job position. Using this particular method, HRM of an organization can analyze the performance of an individual employee without making any comparison with others.
2.6 Challenges of Performance Appraisal System
There are significant challenges and issues to be dealt with in order to decide the most effective performance appraisal system. Some of the issues have been discussed below.
Employee Resistance to change: Employee resistance can be a significant challenge to performance appraisal system of any organization (Burkett, 2007, p. 2). If the human resources are not satisfied with the performance appraisal system, the system will eventually not work out. Therefore, significant research must be done in order to implement the best and most affordable PMS so that organizational employees do not resist to the situation.
The inexperience of the Appraiser: Lack of significant experience of the appraiser can become one of the biggest concerns in PMS (Kromrei, 2015, p. 55). If the inexperience of the appraiser has failed to implement suitable performance appraisal system, it can affect in a negative way.
Biases of Appraiser: Sometimes biases of the appraiser can lead to inconsistent decision making in performance evaluation. Hence, it is the duty of the management to note that best employees must get an appraisal for their contribution at the workplace.
3. Performance Appraisal System at Oman Oil Company
3.1 Current Performance Appraisal system
3.1.1 Performance appraisal process of the organization
Tracking the daily activities of the employees is a part of performance appraisal system. Oman Oil is a public sector organization that has a separate set of policies to appraise the performance of its employees. The aim of the company is to provide its products at a lower price to meet the growing competition in the market. Oman Oil Company follows a procedure to prepare and maintain the performance appraisal system that is discussed herein below.
The management of the Oman Oil Company identifies the performance standards that are described in the job description and details.
The supervisors monitor the performance of the employees, and both the supervisors and employees are provided with a performance appraisal form to record their views regarding their performance in the organization.
The supervisors are responsible for preparing the report on the performance of the employees and on the basis of the report; the standards of jobs are prepared for the upcoming period.
The employees are provided with the performance appraisal form to defend their role in the organization.
The management of the company reviews all documents related to the performance of the employees and provides the employees with extra compensation on the basis of their performance.
3.1.2 The method/type of performance appraisal system used
The company uses different methods of performance appraisal system. The performance evaluation methods used by Oman Oil Company are discussed herein below.
Training: Supervisors identifies the weak performing employees and provides them with proper training to improve their skills and knowledge. The training method does not focus on continuous development of the employees skills (Hisano Barbosa and Andreotti Musetti, 2011, p. 341). It is provided according to the needs of the employees.
Annual Appraisal: An annual evaluation process is conducted every year in which the performance report of the employees are prepared and presented to the management. On the basis of the performance appraisal report, the employees are rewarded and asked for further training.
Reward: Employees are rewarded on an annual basis with monetary and non-monetary compensation. They are awarded for their good performance on every annual function of the company. But, the awards are mainly given to executive class and not the line employees.
3.1.3 The role of appraiser & appraise
Supervisors are responsible for monitoring the activities of the employees. They note the performance of the employees and recheck the performance appraisal for submitted by the employees. Hence, supervisors play the role of the appraiser in the Oman Oil Company. An appraisal is the most important part of performance management. It helps the supervisors to identify the lower performing employees and their problems in the workplace (Kulatunga, Amaratunga and Haigh, 2011, p. 302). It helps the management to develop the working environment and provide proper training and development program to improve the performance of the employees. Along with that, the appraisal helps the management of Oman Oil Company to motivate them to perform better.
3.1.4 The frequency of appraisal process
The appraisal process takes place at the end of every financial year. Hence, it can be seen that the interval between the appraisal processes is too long that makes the employees forget about the need of maintaining a proper level of performance in their work.
3.1.5 The objectives of the PA system
The primary objective of the Performance Appraisal system is to improve the quality of services rendered by the employees. Along with that, the appraisal system aims to motivate the employees to enhance the productivity of the organization. The appraisal system is used by the management of the Oman Oil Company to identify the good performing employees and promote them to a higher position.
3.2 Challenges faced by the company in performance appraisal process
There are several problems faced by the performance appraisal process of Oman Oil Company that are discussed in the points given below:
The resistance of employees: A continuous monitoring of the activities makes it difficult for the employees to concentrate on their jobs. Employees feel uncomfortable and do not support a continuous monitoring of job. There are some situations in which employees feel de-motivated when they are penalized for their poor performance.
The performance appraisal system to not focus on the development of employees: The performance evaluation system of Oman Oil Company does not concentrate on developing the personal skills of the employees. Training is provided to the employees who perform poorly in their jobs (Lawrie, Cobbold and Marshall, 2004, p. 367). Hence, it can be said that the performance appraisal process is not linked with the development of the careers of the employees.
Appraisers’ roles are not performed correctly: It has been seen that supervisors have a permanent employment in a public sector organisation. Hence, they carelessly perform in their job. There is no more to monitor the performance of the supervisors. The role of the appraisers is not performed correctly.
3.3 Critical evaluation of the effectiveness of their performance appraisal system
It can be seen that the performance appraisal system of Oman Oil Company is processed on a yearly basis. The management of the company uses the performance appraisal report to develop the performance standards for the next period. It PA system does not focus on developing the skills and knowledge of the employees on a continuous basis. The management only focuses on the poor performing employees and provides them with proper guidance. Hence, it can be seen that the management of Oman Oil Company is not capable of using the PA system for the welfare of the employees. There is a need to make necessary changes in the strategies to achieve a better outcome from the performance appraisal system.
3.4 Recommendations to the company
There is a need to make significant changes in the performance appraisal system of Oman Oil Company to develop the performance of the employees as well as the organisation. The suggested changes are presented herein below:
Continuous training and development program: There is a need of an ongoing training and development program that can help to improve the skills and knowledge of the employees to meet future challenges. It will improve the productivity of the organization by motivating the employees towards their job.
Short interval appraisal system: There is a need to reduce the interval between the performance evaluation processes. This will make the employees careful about their roles and duties played in the organisation.
Proper monitoring of appraiser’s duties: The management of Oman Oil Company must see that the appraisers perform their duty correctly. There must be a two-way monitoring process in which the supervisors will monitor the performance of the employees, and the employees will monitor the performance of the supervisors. It will help to improve the performance appraisal system.
4. Conclusion
Performance management system of Oman Oil Company can be identified as one of the strengths of the organizational HRM. The administrative management of OCC has worked out a most suitable performance management system to manage the workforce diversity. Furthermore, the existing performance management system of OCC has the efficiency to figure out the challenges associated with the human resources. Identifying the requirements of the employees, the HRM has delivered significant support to the human resources to encourage their performance level for organizational benefits. Meanwhile, the existing performance appraisal system of OCC has got the potential to bring out the maximum output from the human resources. In this way, the performance management system (PMS) of OCC has efficiently contributed to the growth of the company.
References
Beheshti, H. (2010). A decision support system for improving performance of inventory management in a supply chain network. Int J Productivity & Perf Mgmt, 59(5), pp.452-467.
Burkett, H. (2007). Performance support: Issues, challenges, strategies, and enablers. Performance Improvement, 47(1), pp.2-2.
Chattopadhayay, R. and Ghosh, A. (2012). Performance appraisal based on a forced distribution system: its drawbacks and remedies. Int J Productivity & Perf Mgmt, 61(8), pp.881-896.
Cobbold, I., Lawrie, G. and Issa, K. (2004). Designing a strategic management system using the third‐generation balanced scorecard. Int J Productivity & Perf Mgmt, 53(7), pp.624-633.
Guerra-López, I. and Hutchinson, A. (2013). Measurable and Continuous Performance Improvement: The Development of a Performance Measurement, Management, and Improvement System.Performance Improvement Quarterly, 26(2), pp.159-173.
Harbour, J. (2009). Integrated performance management: A conceptual, system-based model.Performance Improvement, 48(7), pp.10-14.
Hisano Barbosa, D. and Andreotti Musetti, M. (2011). The use of performance measurement system in logistics change process. Int J Productivity & Perf Mgmt, 60(4), pp.339-359.
Kromrei, H. (2015). Enhancing the Annual Performance Appraisal Process: Reducing Biases and Engaging Employees Through Self-Assessment. Performance Improvement Quarterly, 28(2), pp.53-64.
Kulatunga, U., Amaratunga, D. and Haigh, R. (2011). Structured approach to measure performance in construction research and development. Int J Productivity & Perf Mgmt, 60(3), pp.289-310.
Lawrie, G., Cobbold, I. and Marshall, J. (2004). Corporate performance management system in a devolved UK governmental organisation. Int J Productivity & Perf Mgmt, 53(4), pp.353-370.
Mamoon, Z. (2013). Management Control System– MBO. IJBM, 8(5).
Maylett, T. (2009). 360-Degree Feedback Revisited: The Transition From Development to Appraisal.Compensation & Benefits Review, 41(5), pp.52-59.
Oman-oil.com. (2016). About Oman Oil Company S.A.O.C. [online] Available at: http://www.oman-oil.com/About.html [Accessed Mar. 2016].
Appendix
Performance Appraisal Form of Oman Oil Company
The University Mission
Our mission is to create, evaluate, share, and apply knowledge and to prepare students to be accountable leaders who will bring to their work dedication to the global community, a grasp of complexity, effective problem-solving and communication skills, and an enduring commitment to learning and ethical conduct.
Division/Department Mission (Complete this section with your division/department mission statement):
The performance appraisal is a communication tool designed to support each individual's contribution to the University. The appraisal provides a way to measure skills and accomplishments with reasonable accuracy and uniformity. It provides a way to help identify obstacles to top performance. It should help identify areas for professional growth. It should not, however, be considered the supervisor's only communication tool. Open lines of communication throughout the year help to make effective working relationships.
Each employee is entitled to a thoughtful and careful appraisal. Its success depends on the supervisor's willingness to complete a constructive and objective assessment, and on the employee's willingness to respond to constructive criticism and to work with the supervisor to overcome performance barriers.
If more space is needed for any section, additional pages may be attached to this form.
Goals Specific to the Individual during the Assessment Period
1. Goal:
A. Extent of Accomplishments and Achievements
B. Areas for Growth and/or Improvement
2. Goal:
A. Extent of Accomplishments and Achievements
B. Areas for Growth and/or Improvement
3. Goal:
A. Extent of Accomplishments and Achievements
B. Areas for Growth and/or Improvement
Future Goals for the Individual
1. Goal:
A. Objective of the Goal
B. Resources and Support required (e.g., course work, training, equipment, supervisor access, funding, etc.)
2. Goal:
A. Objective of the Goal
B. Resources and Support required (e.g., course work, training, equipment, supervisor access, funding, etc.)
3. Goal:
A. Objective of the Goal
B. Resources and Support required (e.g., course work, training, equipment, supervisor access, funding, etc.)
1. WORK QUALITY
Standard: Provides accurate, thorough, professional work regularly.
2. JOB KNOWLEDGE
Standard: Well-informed and educated in performing to the level expected for the job.
3. NEW KNOWLEDGE
Standard: Seeks new knowledge, applies it to the job and shares it with others.
4. ORGANIZATION & PLANNING
Standard: Organizes, plans, and forecasts work skillfully to meet job needs.
5. ANALYSIS & JUDGMENT
Standard: Analyzes problems skillfully; uses logic and good judgment to reach solutions.
6. DEPENDABILITY & CONSISTENCY
Standard: Personally responsible, steadfast and can be called upon for difficult and pressured challenges.
7. COMMUNICATION
Standard: Communicates knowledge clearly, accurately and thoroughly.
8. LISTENING SKILLS
Standard: Listens attentively and responds thoughtfully to needs, goals and aspirations.
9. INTERPERSONAL SKILLS
Standard: Works well with others; gets things done with people, and keeps information lines open at all levels.
10. INITIATIVE
Standard: Helps to determine the needs of the work place; helps all to meet the goals.
11. TEAMWORK
Standard: Coordinates own work with others, seeks opinions, values working relationships.
12. RESOURCE USE
Standard: Effectively uses human resources and funds available to accomplish the job.
13. SERVICE-CENTERED WORK
Standard: Regularly seeks to provide quality service to achieve customer satisfaction.
14. AFFIRMATIVE ACTION & DIVERSITY SUPPORT
Standard: Demonstrates a responsible commitment to affirmative action and diversity.
15. ATTENDANCE & PUNCTUALITY
Standard: Regularly present and punctual.
16. SAFETY & HEALTH OBSERVANCE
Standard: Regularly attentive to safety and health regulations.
Comments:
1. Supervisor's Overall Comments:
Satisfactory____ Unsatisfactory_____ (required only for employees represented by collective bargaining agreement)
Print Supervisor's Name: _________________________
2. Reviewer's Comments:
Print Reviewer's Name: __________________________
3. Employee's Comments:
Print Employee's Name: _________________________
Employee's Signature*: _________________________
*The Employee’s Signature acknowledges only the receipt of a copy of the performance appraisal along with the opportunity to respond. It does not signify agreement or disagreement with the appraisal.
