Finbank management pay

As a matter of fact, nowadays a growing number of staff and managers have appeared to lose faith in applying PRP in practice. Apart from its adverse influence mentioned above, the major reason could be due to the difficulty in implementing performance appraisal, which, however, lies at the heart of PRP. According to the survey conducted by the Institute of Personnel and Development(IPD), one third of employees believes that their bosses merely regard appraisals as "a bureaucratic chore", and one in eight managers would prefer to have a dental appointment instead of doing an appraisal (Hilpern, 2000). 

Why does performance appraisal sometimes not work? In general, it is perceived as arbitrary, subjective and therefore lack of justice. The study of Inland Revenue staff found that 87 percent of the interviewees felt that "PRP has made staff question the fairness of appraisal system"; 63 percent believe that "a good appraisal is too often overruled by someone higher up"; 35 percent felt that "people get a good box marking not because of their performance but because managers want to reward their favorites" (Cannel and Wood, 1992: 90). 

As it is shown in the above study, the outcome of assessment is mainly based on the subjective view of the appraisal, which can be easy to be changed in accordance with individual's arbitrary will. And what makes the process much worse is that managers who are responsible to measure people's performance are not well-trained and qualified enough to conduct such performance appraisals. Thus their judgments on subordinates are usually unconvincing.

Certain figures generated from similar study indicate that manager's ratings are often manipulated to suit different motives (Redman and Wilkinson, 2001). Longnecker et al.'s study of 60 senior managers also found that a variety of factors, other than the subordinate's actual performance, influenced the ratings managers allocated their subordinates (Bach and Sisson et al., 2001: 252). For example, supervisors are reluctant to give unfavorable ratings to their subordinates since this will reflect their own poor performance as well.

Another difficulty which causes problems with performance appraisal is setting the objectives or criteria. Firstly unrealistic targets may be set by inexperienced managers. Some targets may be too easy while others are too difficult. Secondly, it is especially challenging for individuals to reach the organization's objectives. That is to say some variability of macro environment is not controllable. Even if great endeavors have been made in work, there is still little likelihood for individuals to reach the organization's objectives. For instance, in financial services the economic climate produces far more influence than individual effort, which can easily demotivate employees' performance when it is in close relation with reward (Redman and Wilkinson, 2001).

Thirdly, since jobs of each employee are not identical, and people vary considerably in their ability and motivation, it is impossible to find single universal criterion or target for managers to assess every one's performance. Some managers tend to give everyone a similarly intermediate-high score of performance to make every one happy. The case in Finbank ( See Table 1) shows that around 90% of employees are assessed as "Fully Effective" and "Excellent" which are intermediate-high grades (Lewis, 1998). But in such cases, when every one has the same score of performance, there is no reward in fact. At the same time, since the employees cannot find a universal standard to compare their own work with other employees, they might think the appraisal is unfair to them even though it is fair.