Strategic Management and Performance Appraisal System: Chapter 3 Draft
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Table of Contents
Chapter 1: Introduction 1
Statement of the Problem 2
Purpose of the Study 3
Introduction to Theoretical or Conceptual Framework 4
Introduction to Research Methodology and Design 5
Research Questions 6
Significance of the Study 7
Definitions of Key Terms 9
Chapter 2: Literature Review 17
Theoretical or Conceptual Framework
Chapter 3: Research Method
Research Methodology and Design
Population and Sample
Materials or Instrumentation
Operational Definitions of Variables
Chapter 4: Findings
XXX of the Data
Evaluation of the Findings
Chapter 5: Implications, Recommendations, and Conclusions
Recommendations for Practice
Recommendations for Future Research
Appendix A XXX
Appendix B XXX
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This research is intended to examine the relationship between strategic performance and appraisal systems in contemporary organizations. Strategic management in organizations refers to setting goals, procedures, and objectives to gain a competitive advantage. The strategies aim at making businesses distinct from their competitors while attracting consumers to the market. Stakeholders in business entities use strategic management approaches to execute short- and long-term organizational projects. Some strategies include innovation, product segmentation, and corporate social responsibility. On the other hand, a performance appraisal system refers to identifying, evaluating, and developing the work performance of employees to aid in the process of achieving the organization’s goals and strategies. The organization has to track the performance progress of each employee to keep them accountable for their roles at the workplace.
The definition of the appraisal system and strategic management incorporates objectives and goals. Consequently, strategic management and performance appraisal aims to deliver the existing objectives and stay ahead of competitors. The performance appraisal system denotes the type of assessment used by an organization to measure performance. There are different assessment methods. One of the evaluation techniques is the straight ranking appraisal, where employees are ranked from the best to the poor. Another assessment criterion is grading, where employees are assigned specific grades for their performance in different areas. There is also the management-by-objective method of review. The employees and managers set goals under the approach and measure them at the end of the agreed time. Organizations may also assess their employees based on their behaviors and conduct at the workplace. Lastly, organizations can adopt a 360-degree assessment method to evaluate employees and managers. Organizations use one or a combination of the frameworks for assessing employees and improving performance.
The purpose of this study is to examine the relationship between strategic management and performance appraisal systems. The study will determine whether managers consider their strategies when selecting the appraisal system or consider other factors. Also, the study will assess the implications of choosing an appraisal system based on the existing strategic method in different organizations and the impacts of ignoring organizational strategies when deciding on the performance of the appraisal system. The findings will be crucial in the administrative and human resource management field, further research.
Statement of Problem
A brief literature review reveals little to no information on balancing appraisal systems and organizational strategies. Most researchers tend to focus on how appraisal systems boost organizational performance. Also, many scholars are interested in understanding how appraisal systems affect employee motivation, performance, and job satisfaction. Hence, the research study will focus on determining the roles of organizational strategies when formulating appraisal systems. Failing to conduct this study will mean that the appraisal system continuously does not contribute to strategic management. A case study for analysis is the McDonald’s performance appraisal system (Goldsmith & Carter, 2010). Before 2003, McDonald’s had an informal and less structured performance evaluation system that did not reflect its strategies (Goldsmith & Carter, 2010).
Consequently, it would not match its competitors or expand its business. The same challenge faces modern organizations. A lack of an appraisal system reflecting strategic approaches risks the success of an organization, business expansion, and employee empowerment.
I will approach the research using the system management theory. The theory acknowledges that all organizations are made of subunits that strive to achieve set goals, obtain new skills and improve their competencies (Garavaglia-McGann, 2019). The theory is vital in explaining employers’ approaches to appraisal systems. The goal orientation theory will provide employees with a clear focus on the company. They will dedicate their efforts towards enabling their organizations to achieve their strategies.
The study aims to determine the relationship between organizational strategies and appraisal systems. Each organization uses different strategic approaches to remain relevant and competitive (Subekti, 2021). The focus is on identifying whether the performance appraisal system should align with strategic management and how the stakeholders can achieve the objective (Zondo, 2018). The researcher’s goal is to aid managers in developing an appraisal system that would assist them in attaining organizational objectives while enhancing employee performance, attracting investors, and motivating labor capital.
I will use a qualitative exploratory study design method to advance the study. The aim is to understand the relationship between strategic management and performance appraisal that researchers could use in future studies. The variables in the research are strategic management and performance appraisal systems. The research will target managers and employees in American companies. The participants will give their views on the performance appraisal system and how they contribute to achieving organizational aims. In particular, the managers will state how they craft employee assessments within their organizations. The research will be conducted in California in the manufacturing industry. One hundred participants from five different companies will participate in the study. They will be selected randomly to participate in the study. Random sampling is preferable in the study because it creates an equal chance of selecting participants with different attributes (Reeger, 2019). I will collect data using questionnaires. Each participant will respond to thirty questions sent via their emails. Employees’ questions will be different from managers’. Data will be analyzed using the thematic data analysis approach. The study’s findings will help organizations create evaluation techniques that suit their organizational culture.
Introduction to Theoretical
The study aims at establishing the relationship between strategic management and performance appraisal systems. Organizations use performance systems to promote accountability, responsibility, and performance among the employees and the leaders (Subekti, 2021). Nevertheless, very little research shows the connection between strategic management and performance appraisal.
Organizations use strategies to gain a competitive advantage over others. The competitive advantage makes them unique and profitable in the markets. A competitive advantage is obtained through process and behavior, improving employee performance, proper human resource management that reduces turnover and dissatisfaction, and conforming to the legal provisions in the business environment. The research will be premised on the system management theory of management. The system theory of management is based on coordination between multiple components within an organization that works harmoniously to function appropriately (Management theories, 2019).
Based on the theory, employees are crucial components of any organization. Therefore, they must work together with other organizational entities to ensure that the organization succeeds. Employees work best when their work environment is motivating (Brefo-Manuh et al., 2016; Dangol, 2021). One employee motivating factor that this research paper tackles is fair performance appraisal. However, many organizations fail to develop just employee evaluation mechanisms, and that demotivate the employees, creating system imbalances within the organization. Another core component in business organizations is management. The management’s actions can lead to the success or failure of organizations. One of their roles includes developing performance appraisals within organizations. Some assessments cause disagreements within organizations and could lead to high employee turnovers. Consequently, the managers must develop justifiable performance appraisals, which most have failed.
Other components within the organizational system include departments and business units. Each of these units has varying roles that the management must continuously evaluate. The appraisal system should capture the respective business objectives and that explains why strategic management and performance appraisal need to be integrated into business organizations.
Theoretical Model Diagram
Makes or breaks organization
Can motivate or demotivate employees
The diagram shows that the entire organization is a system that depends on managers, employees, and departments. The managers create appraisals for all employees or individual departments. These appraisals can motivate or demotivate the employees, affecting the entire system. Therefore, the study will propose the integration of strategic management and performance appraisals to ensure that the organization remains intact since assessments based on business strategies will be perceived as fair by employees.
A case study research design shall be used in the research process. The case study involves a detailed study of a particular phenomenon or organization. I will use the case study design because my focus is to undertake a thorough analysis of the selected organization. I will assess the specific strategies and appraisal system in detail to understand the connection between organizational strategy and performance criteria. The rationale for favoring a case study method is the depth of collected data. Also, case study analysis requires less money and, thus, will be a convenient way to conduct the study. Lastly, the case study design will make comparing different information easily accessible (Yin, 2003).
The study aims to help managers understand the correlation between strategic management variables and the performance evaluation system. The qualitative case study design method will help managers gain in-depth information on the topic (Roth, 2006). Also, the research will capture the detailed findings from the study that will assist in decision-making for managers with an interest in aligning organizational management and performance appraisal systems. Also, case study analysis will allow for analysis of existing company documents to get the correct, accurate information for the research.
The study will involve 100 participants from five American companies. The participants will include managers and employees working in the selected company. The participants in the research will be identified through a random sampling technique. The rationale for using the random sampling technique is to provide an equal chance for participants to partake in the study (Zondo, 2018). Participation shall be voluntary, and information privacy will be upheld. Data will be collected through questionnaires and interviews. The questions will be sent via emails to each selected employee participant. To gain in-depth information, I will visit the selected companies’ sites to interview the managers and their opinions on the relationship between strategic management and appraisal performance (Zondo, 2018). Therefore, the organizational management in the selected companies will provide information through interviews. The data on five companies will provide reliable and valid data on the state of the performance evaluation system and strategic management.
How does strategic management affect the nature of performance systems in organizations?
How do organizations align strategic management with performance appraisal systems?
How does lack of alignment between strategic management approaches and performance appraisal systems affect organizational performance?
How can performance appraisal systems be aligned to strategic management to enhance organizational productivity?
Strategic management and performance appraisals emerged and spread during the last half of the 20th century. Strategic management is primarily based on economic theory, international theory, and industrial organization (The historical development of the Strategic Management Discipline, 2015). Currently, strategic management helps organizations work in a dynamic, complex, and uncertain business environment (The historical development of the Strategic Management Discipline, 2015). On the other hand, performance appraisal analyzes whether employees meet organizational expectations. The employers reward or punish employees based on the results of the performance appraisals. Understanding and establishing the relationship between strategic management and performance appraisal systems will solve the problem of poor goal setting, which frequently occurs in organizations that adopt strategic management (Bouvier, 2019). Also, aligning strategies to performance appraisal will enable the employees to connect to the overall organizational system. Additionally, linking strategic management and performance appraisal will assist managers in tracking progress, adopting robust strategies, and dropping those that do not contribute to organizational success (Bouvier, 2019).
In the field of organizational behaviors, the study will facilitate the emergence of more studies to understand whether the performance appraisal system is part of strategic management or a particular activity in management. Also, it will highlight the crucial considerations that managers should incorporate when formulating their strategies. The research will also equip managers with the knowledge to apply the concept of strategic management and performance appraisals concurrently in their management. Lastly, the study will enable managers to align strategies to organizational assessments, improving overall success.
Strategic management and appraisal systems are of concern to many stakeholders because; there is yet an approach that can enable them to integrate strategic management and appraisal systems. The solution to the challenge will redefine the strategic management landscape. First, appraisal systems and strategic management are at the heart of all business organizations. Therefore, integrating the two tools will help managers enhance organizational and employee performance through an appraisal system (Al Khajeh, 2018). Secondly, there are no articles to explain the relationship between strategic management and appraisal systems in organizations. The study will address the existing gaps in the literature. Lastly, the study will help stakeholders to implement a strategy-oriented appraisal system.
The research paper focuses on integrating performance appraisal and strategic management in organizations. This section reviews various studies to understand the state of assessments, their role on employee and manager perception, and their impacts on employee motivation, satisfaction, and performance. Further, the section evaluates strategic management articles to bolster understanding of strategic planning and sustainable development concepts. The main gaps in the review are identified and discussed. All reviewed articles are recent to ensure that the current state of appraisals in organizations is captured.
The human resource department or top managers can conduct performance appraisals in organizations depending on the size of individual organizations. Evaluation data is collected and stored in the form of HR analytics. HR analytics is then applied in improving employee performance in the respective organizations (Sharma & Sharma, 2017). HR analytics largely influences employees’ willingness to improve by encouraging or discouraging improvement. (Sharma & Sharma, 2017) found that subjective biases in the existing HR analytics prevents employee improvement. Their study adopted a conceptual framework that integrated academic and practitioner knowledge in HR analytics. The study’s main strength is that it highlights the importance of performance appraisal in improving employee performance. However, it lacks a statistical basis as it relies on concepts that may be hard to prove.
Organizations achieve their goals by constant and efficient evaluation of the employees. Consequently, many organizations have executed performance appraisals at their workplaces to improve employee performance (Brefo-Manuh et al., 2016). Nevertheless, few organizational managers comprehend the role of appraisal results in their organizations except as a basis for reward and punishment. (Brefo-Manuh et al., 2016) postulate that performance appraisal outcomes can improve internal communication in organizations. The results assist managers in understanding whether organizational goals are adequately communicated to the subordinates (Brefo-Manuh et al., 2016). Also, they state that performance appraisal is critical in motivating employees in organizations through reward and punishment (Brefo-Manuh et al., 2016; Dangol, 2021). The management rewards best-performing employees with monetary incentives or promotion while punishing poor performers through dismissal or demotion.
Besides motivation and improving communication, organizations may use performance appraisal to design training and career development programs. The appraisal outcomes highlight employees’ weaknesses, which the management can address through training (Brefo-Manuh et al., 2016). Additionally, performance appraisals are crucial in improving overall organizational success. Involving every employee in the evaluation process creates room for creativity and trust among employees (Brefo-Manuh et al., 2016). The research study succeeds in highlighting the uses of performance appraisal systems in organizations. However, the authors fail to consider the impacts of biasness on the effectiveness of performance appraisal. Partiality in performance appraisals demotivates employees and creates mistrust between the staff and managers (Sharma & Sharma, 2017). Also, the study does not discuss how organizations can integrate performance appraisal with strategic management.
Performance appraisals and appraisers can impact employee performance positively or negatively. Also, the existing challenges in the appraising method can culminate into mistrust within an organization (Dangol, 2021). Descriptive research by Dangol (2021) showed that the performance appraisal system has a significant role in the organization’s survival. The study’s setting was in a Service Industry in Nepal and comprised 120 participants who served as employees. The research design method was cross-sectional, and data was collected through questionnaires. He discovered that the factors that affect the influence of appraisals include rating accuracy, clarity in the purpose of the assessment, and the prospect of skill development (Dangol, 2021). The appraisers should be respectful, competent, and impartial for the outcomes of appraisals to motivate employees. One challenge that faces performance appraisal is providing accurate feedback to the employees and setting performance expectations. Each employee has unique expectations, which, when unmet, may create mistrust.
The researcher’s findings resonate with the study by (Brefo-Manuh et al., 2016). They both recognize the motivating role of performance appraisal in organizations. Further, both studies acknowledge that performance appraisal is crucial in training employees. However, while Dangol (2021) recognizes the challenges that emanate from the reviews, Brefo-Manuh et al., (2016) do not. Both studies fail to provide statistical evidence and do not discuss strategic management’s role in the success of performance appraisal.
The quality of performance appraisals is measured in terms of trust, clarity, communication, and fairness. The quality of assessments determines the employees’ perceptions of it. Evaluations that seek to empower employees are associated with increased employee trustworthiness of the performance appraisals (Baird et al., 2020). Communication is also a crucial asset in assessments. The appraisers should discuss the progress made by employees towards attaining organizational goals (Baird et al., 2020). Moreover, the managers should help employees improve their weak areas through different approaches such as initiating development programs. In fairness, employees are fulfilled with appraisals that accurately assess them reasonably and justifiably. Assessments may encourage employees when done fairly (Krishnan et al., 2018, Sharma & Sharma, 2017).
Furthermore, the managers should focus on clarity before undertaking performance appraisals. According to (Baird et al., 2020), the employees must understand the appraisals’ purpose and functioning. Also, the employees ought to understand performance expectations within their organizations (Baird et al., 2020). These requirements show that performance appraisal quality determines its usefulness among the employees. However, the study by (Baird et al., 2020) emphasizes quality appraisals for employee empowerment instead of improvement. Also, the researchers compare the quality of estimates based on fairness, communication, trust, and clarity instead of how it contributes to achieving business goals.
The effectiveness of appraisal varies from sector and organization. (Homauni et al., 2021) investigated the effectiveness of performance appraisals on the employees working in the health sector. The researchers examined the Tehran University of Medical Sciences (TUMS). The number of participants in the study was 504 employees at TUMS. Data was collected using questionnaires and analyzed using ANOVA, t-test, Post hoc, and Tukey statistical tests. The analysis results showed that the performance appraisal at the organization was not practical from the employees’ standpoint (Homauni et al., 2021). The leading cause of ineffectiveness in performance appraisal is the lack of inclusivity of employees. The study reinforces other research on the use of performance appraisal systems. All researchers agree that performance appraisals are only effective when they are inclusive, fair, and well-communicated to the employees (Sharma & Sharma, 2017; Baird et al., 2020; Homauni et al., 2021). However, all these studies do not consider the role of strategic management on the quality and success of performance appraisals.
Performance Appraisal Perception
Performance appraisals are used to evaluate employee performance in many organizations. However, most managers have negative attitudes towards performance appraisal (Du Plessis & Van Niekerk, 2017). Consequently, most of them do not align their strategies with performance appraisal because of their perceptions. Also, the managers’ attitudes toward appraisals affect employees who view them as political and unnecessary (Du Plessis & Van Niekerk, 2017). Research by (Du Plessis & Van Niekerk, 2017) found that performance appraisal is an emotive issue for managers and causes discomfort making most of them distance themselves from the process. The researchers adopted a qualitative research approach that involved eight participants from the private sector in medium-size financial organizations. They selected the participants through purposeful sampling and collected data using in-depth interviews and naïve sketches. Their main finding was that managers felt uncomfortable with the appraisal system because it is politicized and distractive (Du Plessis & Van Niekerk, 2017). The study’s main weakness was using small sample size, potentially invalidating its findings. Future studies should use a large sample size for more accurate and reliable results.
Other studies have found differing attitudes towards performance appraisals between managers and employees. On the one hand, the managers may be optimistic about the appraisal system, while the employees may be unconvinced. (Mehraban et al., 2017) compared the perceptions of managers and the nursing staff towards performance appraisal. The study’s setting was Isfahan University of Medical Sciences, Isfahan, Iran. The researchers adopted a descriptive-analytical and cross-sectional study in their research. The participants were selected through a two-stage quota-random sampling. Seventy-five managers and 313 nursing staff participated in the survey, and data were collected through a researcher questionnaire.
They analyzed data using descriptive and statistical tests. The analysis showed that the managers’ perception of performance appraisal was 56.8%, while the nursing staff stood at 51.4%. Also, they found a significant difference between the managers’ and nurses’ perceptions of the performance appraisals. The variables used to measure the employee perception included the performance appraisal method, the consequences of the assessment, and the appraisal’s necessity. The results showed that the managers were more optimistic about the performance appraisal than the nursing staff. However, these findings differ from those by (Du Plessis & Van Niekerk, 2017), who found that managers had negative attitudes towards the performance appraisal. The study’s strength was using a relatively large sample size that makes the findings valid. However, the researchers failed to measure the perception towards performance appraisal based on organizational strategies.
Some organizations may reap from performance appraisal, while others may break. (Mehraban et al., 2017) found that managers may be more optimistic about performance appraisal than employees, creating mistrust. In other instances, the managers may also harbor an undesirable attitude towards the performance appraisal, diminishing its importance (Du Plessis & Van Niekerk, 2017). In other settings, both the managers and employees may support or reject performance appraisal (Kim & Holzer, 2014). The other issue that emerges with performance appraisals is that they are not used for performance improvement but as a means to reward or punish employees (Kim & Holzer, 2014). The motivation behind the implementation of performance appraisal impacts the employees’ reactions. The managers/supervisors have the mandate of developing and implementing performance appraisals. In that sense, they have to gain employee trust to succeed in the assessment. However fair the rating could be, employees may still feel betrayed by the managers or supervisors (Kim & Holzer, 2014). The result is the breaking of the organizations.
The way employees perceive performance appraisal impacts their organizational commitment in the respective organizations. (Krishnan