In contrast to previous research on HR performance evaluation in quality organisational environments, which is mainly confined to the literature and theory-based studies, this paper provides a partial answer to the question: ‘what is a typical quality-oriented HR performance evaluation system’? In this study, an attempt is made to highlight the key generic criteria of a quality-driven HR performance evaluation system through a questionnaire survey of Scottish-based quality-driven organisations. It allows the reader to map the most important issues in HR performance evaluation in a quality management context. In addition, the study analyses the degree of effectiveness of the currently conducted HR performance evaluation in identifying training needs, employee motivation, improvement in future performance and overall performance of the organisation. Finally, suggestions are offered for moving towards a quality-based HR performance evaluation.
The literature contains few references to empirical studies on performance evaluation in the context of quality management. Moreover, the number of theoretical articles is not impressive (e.g. Moen, 1989, Cardy and Carson, 1996, Cardy, 1998, Ghorpade et al., 1995, Scherkenbach, 1985, Scholtes, 1995, Waldman, 1994, Simon and Schaubroeck, 1999, Bowman, 1994 and Cardy et al., 1998). Although the majority of these articles confirm the disadvantages of HR performance evaluation practices in a TQM context, some of them (e.g. Deming, 1986 and Scholtes, 1993) argue that performance evaluation and quality management precepts are not compatible. The findings of Cardy, 1998 and Scholtes, 1993, as well as Ghorpade et al. (1995), for instance, criticise performance evaluation function and support Deming’s view in 1986 that TQM and HR performance evaluation are incompatible. As Scholtes (1993) puts it, ‘organisation managers can choose to promote either of these approaches but not both’. In particular, the attack on HR performance evaluation in a quality management context was spearheaded by Deming (1986) since he lists ‘performance evaluation, merit rating and annual review’ as the third of his ‘seven deadly diseases’ and comments that the effects of this disease are devastating industries. Moreover, attempts to redesign and administer current performance evaluation systems so as to resolve this problem have, so far, been unsuccessful. This, in turn, was followed by other TQM researchers critiques in the 1980s and 1990s, in which they observed the central problem of performance management was an incorrect understanding of variation in performance phenomena, including the work performance of employees. It is noteworthy that none of these studies attempted to explore empirically the issue of HR performance evaluation in a TQM organisational environment. However, performance evaluation practices seems to have survived these opposing points of view since the majority of organisations surveyed (over 95 per cent) continue to apply a formal HR performance evaluation system, and various studies continue to be published in this area.
Thus, identification of the main criteria of a quality-driven HR performance evaluation as an important issue for measuring HR contribution is widely and frequently emphasised by the above researchers who also express concern about the high rate of failure among TQM-driven organisations due to such deficiencies. In addition to these theoretical approaches to performance evaluation in a quality-based organisation, further investigation may be necessary in order to bridge the gap between current performance evaluation and a TQM-based HR performance evaluation, and identify those criteria and measures of employee performance that could benefit both organisations and employees.
This research addresses two principal questions. First, what are the main criteria of a TQM-focused HR performance evaluation? Second, to what extent are the current HR performance evaluation practices effective in improving TQM objectives and employees expectations? Fundamental to the development of such a research project is the notion that the system that is used to appraise performance needs to be consistent with the culture and principles that guide the conduct of the organisation. Unless consistency is retained, anything that is developed is liable to be rejected. As described in the earlier literature survey, guidance from the literature appears to be largely absent. Guidance from academic practice is also problematic with little empirical back up.
Using a questionnaire survey, we collected data on HR performance evaluation practices from 64 Scottish-based TQM-focused organisations. While many of the organisations surveyed were awarded different quality prizes, and some of them have become popular and feature among the most successful companies in the UK, their HR performance evaluation systems continue to focus on non-TQM measures for assessment of employees’ performance rather than the ongoing task of renewing and revisiting these criteria compatible to the organisational context. Such focus may be insufficient as TQM-driven HR performance management expands beyond the traditional approach to performance evaluation. As noted earlier in this paper, Deming (1986) established that 95 per cent of variance in the performance is due to system factors. However, very few organisations have included such factors as their approach to identifying the variance in performance. Hence, many current performance evaluations may require modification in order to meet the challenge of incompatibility between HR performance evaluation and TQM precepts and assumptions. Thus a research issue of the highest importance is to construct a TQM-focused HR performance evaluation system. As a first step toward filling this void, this paper has described the main set of criteria that empirically support effective HR performance evaluation in quality organisational environments. However, before designing any system or implementing any model based on these findings, more detail and rigorous studies should be undertaken across a broad-based sample of organisations to ascertain the most dependent, relevant, consistent, and congruent measures.
