Employee Appraisal System at Server Host Ltd.

Table of Contents

Declaration

Executive Summary

1. Introduction

2. Problems and Solutions for the Current Appraisal System

3. Legal Foundations of Staff Involvement and Benefits from Collaborating with the Staff

4. Creation of a New Employee Appraisal System for Server Host Ltd
4.1 Planning, Preparation and Gaining Management Support
4.2 Designing the System
4.3 Discussing about the System
4.4 Getting Agreement with the Employer/Works Council
4.5 Training the Users
4.6 Review, Monitor and Revise

5. Conclusions

References

Declaration

Hereby, I do express that this case study is my personal work, and all the additional information used in this case study can be found in the reference list.

Ratingen, 23rd of April 2012

Ilhan Yuce

Executive Summary

Server Host Ltd. has recently been bought by a competitor located in Austria having a corporate culture that is going for restructuring. Currently, the company has several problems concerning corporate culture, trainings, old employees, new managers, likely high number of employees and employee appraisal system. An employee appraisal has recently been realized in order to make the distribution of seminar seats more efficient. During the decision making process of the employee appraisal system, the ideas of works council and the staff were not asked. In this case study, an analysis of current employee appraisal is evaluated by mentioning the problems and making suggestions for the solutions. Major problem at the end is related to not consulting works council and the staff during the creation of the employee appraisal system which caused low grades in recently done evaluation. The second part of this study is dealing with the legal sides of workers’ involvement while preparing a new employee appraisal system. Collaboration with the workers will also bring to Server Host Ltd. many benefits like transparency, more motivated staff and trust between the employees and employer. The third part is mentioning about the creation and implementation of a new employee appraisal system at Server Host Ltd. The criteria according to the objectives of the organization are determined. It is emphasized that involvement of the employees/works council is necessary for a transparent and fair organization. With the new appraisal system, it is thought that Server Host will be successful.

1. Introduction

Server Host Ltd. has recently been sold to a competitor in Austria; due to restructuring, facing several problems concerning corporate culture, trainings, old employees, new managers, likely high number of employees and employee appraisal system. A possible solution to overcome all of these problems is to implement a new appraisal system which will satisfy all stakeholders at the organization.

2. Problems and Solutions for the Current Appraisal System

New managers at Server Host Ltd. have recently realized employee appraisals in order to make the distribution of seminar seats more efficient. The evaluations were done by direct supervisors. The given grades were 3, 4 and 5 to the employees who have been working at the company before the handover as well. It means that there is a significant difference how the older management evaluated the grades of their old employees in comparison to new management. It can be said that the current evaluation system at Server Host is ineffective, not transparent and variable from the appraiser to appraiser. Actually, there are different ways of conducting performance appraisals. All kinds are effective if they are done suitably; explained to and agreed by the staff involved (Performance Appraisals 2012). If the employees involve in designing the appraisal system, they can be hesitated to do it more and the benefits will be reaped by the staff and managers (Performance Recommendations 2012).

Server Host Ltd. before the handover was a family-oriented company being slow, not innovative, likely closed to improvement suggestions; additionally more or less blocking the initiative and creativity of the employees. Another point is related to lack of know-how of the lower management, especially for the basic and specialized knowledge areas. However, the Austrian company necessitates increased qualification requirements by having a different company culture. It should be mentioned that the new corporate culture should be explained to all employees clearly and they should be motivated for creating new ideas and taking initiative. The points which require trainings, especially about basic and specialized knowledge, should be determined and necessary trainings should be given to lower management.

The trainings for the introduction of a comprehensive information and communication system were unplanned and the attendees to the trainings were possibly unknown.

Special seminars were being gradually offered, but the participants were not still being selected by managers in an organized manner and likely everybody was not getting the same trainings. The manager should plan the trainings and ensure that everybody has the training for the intro of a comprehensive information and communication system. A matrix usage could be a way to follow this up. Participants for the special seminars should directly be selected by the managers and followed as well. An evaluation sheet can also be filled in after each training to measure the efficiency and satisfaction of the training receivers. The trainings and seminars should also be evaluated by the participants as well for further improvement and quality of the other trainings and seminars. A fair appraisal can be conducted if everybody has the equal and same trainings.

New managers are complaining about the old employees because of being inflexible, not initiative and demotivated. It can be said that the old employees were used to working like this. On the other hand, the new managers do not show enough sensitivity in dealing with the staff, for instance, some managers do not directly communicate with their employees. Even some managers do not likely give instructions to their staff and avoid making decisions. The experiences of the old employees should be utilized; on the other hand, they should be encouraged to take initiatives, to be flexible. A good appraisal system and suitable appraisal meetings can help improve the motivation of the staff (Forsyth 2000). A training ‘how to motivate and communicate with the employees’ should be given to new managers as well. It could also be an idea to arrange appraisal meetings to overcome the communication problem. Managers entail guidance, training and emboldening in how to do employee appraisals (Performance Appraisal System Overview 2012).

The new managers were recruited with the hope that they will instruct and train the employees themselves. It was seen that they are not specialized enough for their positions because of coming from classical manufacturing companies. If any manager in the future will be recruited, his expertise areas should be examined detailed and well. If the managers are not successful, how could they do a proper employee appraisal? All good managers should be able to do employee appraisals (Salon Staff Appraisals 2012). Of course, if they are successful in their jobs as well.

The other problem is related to the high number of employees. Many new hires were done without having achieved higher profits. It is supposed that a larger number of workers will be fired. That is why, employees are uneasy. Works council at Server Host did not involve during the decision making process of the employee appraisal system. Staff my think that the company did this intentionally to create redundancies and decrease the costs by decreasing the number of the employees. Due to this fact, employee appraisals should be agreed with the representative of the employees as well. The employees can refuse the appraisal criteria (Performance Appraisal Feedback 2012).

As a result, it can be said that Server Host really requires a new appraisal system which will improve the transparency and provide cooperation of the employees and the employer. This will provide motivated staff and trust between the staff and the company. It is suggested to think twice of dismissing people, which may cause lack of qualified and experienced employees.

3. Legal Foundations of Staff Involvement and Benefits from Collaborating with the Staff

Employee appraisal systems should meet legal requirements and standards. These standards suppose an appraisal system to be fair and equitable evaluation for the staff performance (Legal Standards for a Performance Appraisal System 2012). The German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) provides works councils (Betriebsrat) with participation and co-determination rights in relation to managerial decisions involving personnel, social, and operational matters.

A works council has five permanent employees to be eligible to vote and three of them who must be eligible for being elected. The employer must be active in this process. The works council size is dependent upon the size of the operation (Kirchner et al. 2010). The works council is the representative of the employees and has the rights in dismissal and hire. In Germany, almost all the companies employing more than 250 employees have got a works council. Works council has the right of codetermination on issues (Works Council 2012). The BetrVG § 94, sections 1 and 2 describe the codetermination right for the intro and design of an employee appraisal system (§ 94 Personalfragebogen, Beurteilungsgrundsätze 2012). The works council at Server Host deprecated its codetermination rights against current employee appraisal system. That is why, Server Host as an employer had to consult to works council during the design stage of the employee appraisal system at the beginning.

The other related legal aspect related to Server Host is BetrVG § 82, section 2. The employee may appoint a member of the works council to participate in employee appraisal meeting (§ 82 Personalfragebogen, Beurteilungsgrundsätze 2012). Server Host should also consider this point.

As a result, the new employee appraisal system at Server Host must be agreed by employer/works council which will provide transparency, also increase the employee motivation and reinforce the bonds of the trust between the employees and the employer.

4. Creation of a New Employee Appraisal System for Server Host Ltd.

It is a difficult task to create a new employee appraisal system (Ten Tips for Creating a Terrific Employee Appraisal System 2005). That is why; a new employee appraisal system should be created in a structured manner and after a deliberation (How to Structure a Performance Management System 2012). The following stages can be suggested for creating a new employee appraisal at Server Host Ltd.

4.1 Planning, Preparation and Gaining Management Support

The current system at Server Host should be examined and its strengths and weaknesses should be determined. This is basically the first step for the creation of an employee appraisal system (Schuler 2004). Top management should actively involve in the activities. Without top management support, the activities cannot be successful. The appraisal system should be appropriate to the goals and strategic plans of the company (Ten Tips for Creating a Terrific Employee Appraisal 2005). It is important for Server Host to care about the legal aspects of the new appraisal system. On the other hand, increased qualifications requirements and new corporate culture should be considered during the planning and preparation phase of the new appraisal system at Server Host.

4.2 Designing the System

In a company’s human resource policy, it can be said that appraisals should be at the heart (Manghnani 2000). A design process covers the combination of the political, rational, and participative approaches.

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