Strategic management of human resources

Section A


Cadbury Schweppes, a world renowned company, is a global leading company famous for their confectionery products. With such great power in the market, it is inevitable that Cadbury Schweppes relies heavily on its workforce to manufacture products reaching the expectations of the customers. It is recorded that Cadbury Schweppes has total employees exceeding 50 thousand worldwide. It is said that HR is the backbone of any organisation. Thus, Cadbury Schweppes practices effective strategic human resource management (SHRM) to oversee their employees aligned with their current company's objective to deliver superior shareholder performance.

This essay will access the Cadbury's approach in its human resource management using the best fit and resource based view models. Section 3 will evaluate the effectiveness and the impact of Cadbury's change in the human resource management. Section 4 will discuss the HR functions and the importance of HR functions towards Cadbury as well as any other organisations.

Cadbury HR Model

According to the Strategic Management of Human Resources, 2007, there are three SHRM models; best practice view, best fit view and resource based approach. Best practice view suggests that organisation adopts effective strategies from the achievements of other organisations. Whereas, best fit view adapts strategies prior to the environmental changes and the business strategies coherent to the current business objectives. Resource based approach focuses on the maximization of the organisations' tangible and intangible resources resulting to a growth in organisations' core competencies.

When Cadbury first begins, Cadbury practices resource based approach in managing its employees. The utilization of this strategy is seen in Cadbury adopting the Quaker tradition whereby Christian values and employees' welfare are prioritized. Evidently, Cadbury also focuses on providing employees benefit ranging from housing to advanced factory conditions and welfare rights.

In 1977, Cadbury had implemented a programme known as Managing for Value. This programme aims to increase employees' understanding towards the organisation objective to become a result focused organisation. The implementation of the 3A's standard; accountable, adaptable and aggressive, strives to create awareness in the employees towards the organisation's goals and to motivate employees to work towards achieving such goals. As a step to reinforce Cadbury's strategy, the Sharesave scheme, 1974, had proved its purpose. By implementing these strategies, Cadbury has added value and a sense of belonging towards the employees.

The drastic evolution towards Cadbury occurs during their acquisition of Trebor Bassett and Adams in 2003. As the business grew to an international level, Cadbury has slowly adopts the best fit view model. Realizing the organisations' cultures were different, Cadbury implemented a Working Better Together framework in order to resolve conflicts and creating unity in its diverse workforce. Never the less, Cadbury recognized that employees' performance still plays a huge role in organisation sustenance. Thus, as part of the resource based approach the Growing Our People programme was introduced. This programme aims to unlock employees to their full potential for maximizing organisation's resources.

It is inevitable that conflict may arise in such a huge workforce. The dissatisfaction of employees comes from the unfair treatment between the high and low performance employees. In resolving to this matter, using the best fit view, Cadbury implemented the Passion for People programme which aimed to provide fair treatment towards the employees. This action proves to be essential during that stage as fair treatment can motivate employees to perform at their fullest. Moreover, the quick action of Cadbury realizing the dissatisfaction through a global climate survey had brought contentment towards the employees.

Cadbury's human resource management has proven to be effective as their actions had gained employees satisfactions as well as the organisation's objectives had been achieved. It is evident that there is no accurate model that fits any organisation. By adopting best fit view along to the initial resource based approach, Cadbury has executed unique and effective changes that had affected the employees' performance in every situation that had arises. Never the less, in this ever evolving market, Cadbury is required to implement changes overtime towards their human resource management consistent to the market trends and global market changes.

Cadbury Changes

SHRM has always been an evolving element in an organisation. The ever evolving market patent had force SHRM to change in accordance to the market trends. Jan Tucker, 2007 classified change into three types; developmental, transitional, and transformation change. Developmental change suggests the improvement of the current organisations' processes. Transitional change occurs when organisation changes their processes into something new. Transformation change happens when the whole organisations undergo major restructuring as a whole.

Inescapably, Cadbury also practices change in their SHRM in order to create an effective environment for the employees to achieve organisation's objective. Over the 70 years of history, Cadbury had two transformational changes and implemented five SHRM strategies to manage this change. The first change happens when the organisation changes their organisation's objectives from a Quaker tradition organisation to a result focused approach. The second change occurs during the acquisition of Trebor Bassett and Adams (2003). Both of these changes ties in with the current Cadbury's goals to deliver superior shareholder performance

Bob Stack as HR Director

Bob Stack was appointed as the board of director in 1996 (Cadbury Schweppes: Board of Director n.d.). Bob Stack sits as the HR director overseeing the human resource management of Cadbury. Such a step is relevant as Bob Stack can work as a communication link between the employees and the board of directors. Ronald R. Sims, 2002 says, "Historically, HR was seen as an organisation cost and expense." This means that organisations will put less effort in HR actions. However, with Bob Stack in the board of director, he will make sure that the necessary is done to improve the employees as well as provide comfortable working environment for the employees.

Managing for Value Programme (1977)

As Cadbury change their objectives from being a Quaker tradition organisation to profit oriented organisation, Cadbury has implemented a programme called Managing for Value. This programme is intended to raise understanding to employees towards the new objective. As a whole new culture is being develop, Cadbury started the 3 A's standard; accountable, adaptable and aggressive. This standard sort to increase awareness and performance of the employees in regards to their new policy so that the employees will adapt to the change. As another element to motivate its employees, Cadbury implemented the Sharesave scheme where employees can become a part of Cadbury's family through purchasing of shares. This scheme not only adds a sense of belonging towards its employees but also provide a special benefit to the employees. As the result, the employees had accepted the profit driven approach of Cadbury.

It is an essential step at that time as a normal individual perception towards change is to avoid it. Cadbury's effort to induce a sense of belonging had gained employees' satisfaction prior to its goal of profit. As a step to identify the effectiveness of its plans, Cadbury had conducted a global climate survey with the result of 90 percent of employees understood the organisation priorities and are privilege to become a part of it. This proves that Cadbury had managed this change effectively.

Working better Together

An extreme change had occurred in Cadbury in 2003 where Cadbury acquired Trebor Bassett and Adams in a short space of time. This event has caused a major impact towards the workforce of Cadbury. In bringing two businesses as one, a diverse workforce in relation to two different cultures was created. On of Cadbury's way to solve the conflict was to shift the organisation to a more decentralized way. This served the purpose to ease collaboration between five regions of workforce and to create unity among the diverse workforce. Thus, Working Better Together framework was implemented. This programme opts to resolve conflicts and collaborate between two different cultures of people to create unity.

The change occurred brought major reorganizing in Cadbury. Cadbury solve their problem through a joint problem solving approach that seeks to create better adaptability towards its employees. In this transitional period, Cadbury effective approach has brought its organisation to raise to the occasion countering any problems that had arises.

Growing Our People Programme

In conjunction to the acquisition, Cadbury had sought to unlock the potentials of the employees. Hence, Growing Our People programme was implemented. This programme conducted in a three days workshop focuses to develop the inner strength of the employees. This occurred as Cadbury realize that its employees had collaborated in the working environment. Thus, maximizing the employees' performance opts to be the next steps towards reaching the organisation goals.

Passion for People Programme

One of the major impacts towards the change was the rise of dissatisfaction among employees. Another global climate survey was conducted showing the result that employees were dissatisfied with the treatment between the high and poor performance employees. The employees felt that people with high performance should have better rewards compared to poor performance. Thus, in order to resolve this conflict, Cadbury implemented a programme known as Passion for People.

Cadbury steps in managing change were effective in reliance to the organisation's objectives. This is proven as Cadbury had the capability to employ more than 50 thousand employees reaching the result of being the world's top 50 confectionery markets.

Cadbury HR Functions

There are five human resource functions which a human resource department plays in an organisation. There are recruitment and selection, training and development, compensation and benefit, employees' relation and industrial relation, and employees' health and safety. It is unavoidable that all organisations are required to utilize the HR functions in order to gain employees satisfactions. Similarly, Cadbury also uses these functions in their business strategies.

Recruitment and selection

Recruitment and selection occurs during the hiring of employees. In all organisation, recruitment and selection plays a vital role as it determines the amount and the criteria of people being hired. This allows organisation to select the best of the best among the interviewees suited for the job descriptions. However, if the recruitment and selection is not done accurate, it may result to an inefficient job performance. Thus, it is vital for organisation to select the right person to do the right job. Similarly, Cadbury hires Bob Stack as the HR director. This is because Bob Stack has the background in HR and can help the organisation to oversee the employees' needs. Thus, Cadbury can work towards a result focused attitude while protecting the employees' rights. In addition, as Cadbury changed their objective to become a result focused organisation, recruitment and selection is done by employing individuals with the result focus criteria. More over, Mike Tyson was also appointed as the board of director as he has the leadership skills and aggressive behavior that Cadbury sought.

Training and development

Training and development are required when organisations would want to improve their employees. Training and development can be done through seminars and counseling which allows employees to understand their full potential and unlock them for self improvement and the benefit of the organisations. However, as people come from different culture and background, training and development needs to be customized to fit the respective employee. In addition, training and development cannot stand alone and needs to come along with rewards and benefits. Rewards and benefits will motivate the employees to attend and achieve maximum outcome. Cadbury offers programme called Growing Our People as a method to unlock its employees' potential and to motivate them for better performance. On the other hand, Cadbury had implemented the Managing for Value programme. This programme is implemented because Cadbury desired its employees to understand the objectives of Cadbury to become a profit driven organisation.

Compensation and benefit

Compensation and benefit provides fundamental needs to the employees such as annual leaves, medical care and maternity leaves. This department makes sure that employees get what they deserve as a method to motivate them for better improvement. The Shareshave scheme operated in 1974 seeks to provide benefit to the employees. This scheme allows employees to purchase shares in a five year plan by investing GDP 25 monthly. While this scheme was initial planned to raise understanding of employees towards organisation goals, it indirect provides employees with another saving method that has better returns.

Employees' relation and industrial relation

Employees' relation and industrial relation protects the rights of the employees against unfair treatment. Employees' relation is appointed parties such as Union that oversees employees' dissatisfaction against any particular issues that are related to the individual. Industrial relation protects employees against any harm that may occur due to the carelessness of the employer during operation hours. In example, the staircase lights were not switched on during working hours and had caused injuries to a particular employee, the employee will seek help from the industrial relation. Cadbury conducted a climate survey showing dissatisfaction among employees about unfair treatment. As a step to counter employees' dissatisfaction, Cadbury implemented a programme known as Passion for People.

Employees' health and safety

Employees' health and safety refers to the employees' welfare during working hours. This department makes sure that the working environment fulfills the safety and regulation standard. Thus, organisation will need to make sure that proper attire is worn by the employees during operating hours. It is said that HR is the backbone of any organisations and in any organisation, change is an unpreventable process. However, people mindset tends to avoid change rather than to adapt to it. Thus, HR plays the role to motivate employees to accept changes. Through training and development, HR can grow individual to the new culture enabling the utilization of the new procedures.


Cadbury had been an astonished organisation. It is recorded that Cadbury is the 8th ranked in the world's most admired companies in the consumer food products industry (Worlds's Most Admired Companies 2008). Undeniably, Cadbury people management has proven to be effective by collaborating between the employees' needs and the organisation objectives. However, human resource management is an ever evolving process and there are no methods that will last. New SHRM techniques should be implemented following the generation trends and market needs thus, ensuring that employees are satisfied in ages to come.

Section B Question 2 - Learning Organisation


Poole,1990 defines strategic human resource management as strategic; it involves all managerial regards people as the most important single asset of the organisation; it is proactive in its relationship with people; and it seeks to enhance company performance, employee 'needs' and societal well being (Mabey, Salaman & Storey 1998). A learning organisation is an organisation skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights (Gavin 1993). Ajay Agarwal adds learning in an organisation means the continuous testing of experience, and the transformation of that experience into knowledge- accessible to the whole organisation, and relevant to its core purpose. Thus, it is derived that learning in an organisation sought to continuously improve employees' knowledge and unlock the potential of the employees in order to achieve organisations' goals.

Learning Organisation Activities

In line with creating efficiency, David Garvin stated that effective learning organisation should consist of five learning activities; systematic problem solving, experimentation with new approaches, learning from their own experience and past history, learning from the experiences and best practices of others, and transferring of knowledge quickly and efficiently throughout the organisation. Systematic problem solving provides analytical tools eliminating assumptions during problem solving stage. This element insists on solving problems based on information acquired. Experimentation involves the ongoing development of new knowledge with close reliance to innovation of employees. With experimentation, learning from own experience and past history can be done. Employees can learn from their own strengths and weaknesses utilizing the elements for the success of further projects. Learning from others implies the use of others' experience and cultivate them into their own thus eliminates the possibility recurrence of failures. Transferring of knowledge is learning through the information of the organisation through reports and training and development programme allowing employees to development their skills in line with organisations' mission. An effective learning organisation will cultivate these activities in developing their employees ensuring maximization of learning.

Factors Influencing the Effectiveness of Learning

As learning aims directly to provide stable growth in a human, it is inevitable that there are factors that influence the effectiveness of learning organisation culture. Sally Sambrook, 2003, categories these in four categories; motivation, HRD, culture and pragmatics.


Psychologically, human behavior towards learning is closely related to the motivation available. Thus, manager plays a vital role in the learning behavior of the employee. Motivation can bring out the enthusiasm of employees to learn effectively. Sally Sambrook, 2003, derived the lack of motivation can be due to the following reasons (Streumer 2006):

  1. the lack of time (due to the organisation of work and work pressures);
  2. the lack of reward for learning (at the organisational and HR functional level);
  3. the lack of enthusiasm in the concept of the learning organisation or training and development in general; and
  4. the lack of confidence to learn and/or take responsibility for learning (at a personal level).

Thus, the skill of manager in motivating the employees is interrelated to the effectiveness. The involvement of manager in the learning process of the employees can create an interest and define the purpose of learning in the eyes of the employees.


In the HRD section, Sally Sambrook, 2003, proposed that often employees lack understanding towards to HRD objectives. Thus, employees had less clarity towards the purpose of learning and the procedures and the objectives in regards to the development plan. The lack of understanding is closely related to the communication of the organisation towards the employees. Miscommunication often brings down the learning purpose thus creating confusion and diversified learning environment to the employees.


The learning culture of individual reflects the enthusiasm of individual to learn. Individual who possess a learning habit tends to learn things faster. However, employees have the problem in developing this culture. Jones and Hendry, 1992, found that a learning-oriented culture enhances successful learning, whereas it is very difficult to create learning situations in companies with cultures characterised by bureaucracy and inter-functional rivalries and politics. Thus, the capability of organisation to develop learning culture will determine the effectiveness of HRD.


Sally Sambrook, 2003, identified that the lack of time and HRD resources is the main issue pertaining to the effectiveness of learning. The lack of learning time caused by the work pressure of fulfilling specific task, intervene the time for employees to learn. As a result, employees find little availability towards the actual learning that the organisation had implemented. Moreover, the lack of investment in the HRD proves less initiative towards developing the employees.

Purpose of Learning Organisation

According to the Strategic Management of Human Resource, 2007, learning organisation serves four strategic purpose; skill gaps, catalyst for change, achieving competitive advantage and creating learning environments. These four purposes will be discussed below linking the use of HRD to bring benefit towards the organisation.

Skill gaps

Learning organisation culture serves to bridge skill gaps in relation to the ever changing business strategy. This means to organisation will improve or develop employees' skill resulting in a new set of ability to achieve organisation objectives. Thus, this will provides flexibility in conducting daily routines thus ensuring the ease of conduct towards each operation accomplished. Moreover, building essential skill can synchronize employees' capability towards the business strategies. In other words, employees' can achieve efficiency towards the current business strategies creating proficient towards the business procedures. Thus, less time is taken to conduct the job.

There are six actions to take charge in bridging skills gap (Homer & Griffin 2006).

  1. Understand your organisation's strategies and key performance metrics.
  2. Organisation will communicated the objective through the development of business strategies using the SWOT analysis. This will ensure clarity towards the employees on the understanding of organisation's purpose in meeting the goals.

  3. Identify competencies that map to these strategies and performance metrics
  4. Organisation will identify the core talent to be grown in the employees in achieving these strategies. Thus, develop plans to improve employees using the HRD strategy.

  5. Access the skills gap
  6. Organisation understanding towards the demographic of the employees and the talent of each employee will determine the skill to be developed. Providing essential timeline in the growth of the employees will allow organisation to review long term planning in their business strategy.

  7. Set goals for closing the gap and map out a plan to reach those goals.
  8. Organisation should derive to the development which individual in regards to deliver the HRD strategy. Thus, organisation segments their employees through the learning capability of each employee. Organisation will also decide to hire or develop the skill through HRD strategy in order to save time and resources.

  9. Implement learning solution
  10. Organisation will execute the plan in regards to develop individual skill gap. This can be done by implementing effective training and development plan customized based on individual criteria. Thus, this will creates core competencies and opportunities in the employees.

  11. Measure the results and communicate the impact
  12. Organisation will measure the result of the learning programme towards the organisation's objective deriving the learning curve of the employees. This can be gauge by using the performance management system that will provide organisation an overview underlining the effectiveness in the HRD strategy to bridge the skill gap and the necessary improvement that can be done.

Catalyst for change

In relation to the ever changing market situation, change in an organisation has become an inevitable element towards sustenance. Organisation changes in order to promote greater efficiency in the overall operations. However, the attitude of human towards change becomes the drawback in effective change. People tend to avoid change rather than to embrace it with a positive attitude. Sparkes 2001 adds that the failure of change usually the failure to achieve right culture. Thus, HR acts as a supporting agent in an organisation motivating employees to accept change and providing sufficient time to develop this culture.

As mentioned, the problem in employees accepting change is influenced by the clarity of information presented. The ability to communicate and provide a clear reason towards change will become a superior element that denotes the success of change. HR roles in providing effective communication will ensure the success of the training and development plan. Providing sufficient information linking to the rewards and benefit related to the development plan can boost employees' interest towards adopting changes. Newall, 2001 said, "Change needs to come from within. If people are going to accept it, they need to know why and how it affects them. They are even more likely to accept it if they can shape how it affects them. Change is always personal." Thus, an effective training and development programme needs to be customized to add a personal touch towards the employees.

Achieving competitive advantage

Mabey, Salaman and Storey, 1998 states, "The basic argument is that competitive advantage will accrue to those organisations best able to exploit environmental opportunities and avoid or survive threats; and that the strategic management of human resources will assist organisations in this by encouraging and generating the appropriate sorts of behaviors, attitudes and competencies from employees." Thus, the ability of creating a learning organisation culture can lead to competitive advantage.

Nonetheless, performance, ability, capability and talent are unique attributes in each and every individual. Hence, the development of this attributes prior to the environmental factors will benefit organisation by creating economics of scale in the workforce of organisation. This means that organisation can recruit and hire employees in the quantity best fit in the organisation, ensuring that wastage of resources can be minimize. Thus, employees will be prepared for the ongoing changes in business strategies eliminating the needs to hire new talents to fill in the job. Moreover, the development of current employees will provide necessary countermeasure when unforeseen circumstances arises. As such organisation can easily relocate workforce when the needs arise.

Creating learning environments

Richard H. Axelrod, 2003, says, "I have seen repeatedly that as people come to understand the issues that are affecting them, they experience both depression and excitement. They become depressed about the complexity of the issues facing them, wondering how they will ever deal effectively with them, and then become excited about the possibilities for doing things differently that emerge in the process. Creating a learning environment means allowing all of these feelings to exist simultaneously."

Organisation capability to create a learning environment gradually increases excitement in learning. As knowledge is power, organisation learning environment will deeply impact the successes of learning. This is because as continuous effort is put in to create better understanding, employees can achieve a sense of belonging motivating them to strive to improve through ongoing development. Moreover the capability of organisations to provide HRD programme will create satisfaction in employees that their existence can make a difference and is important. Hence, employees' involvement in development programme will be affected. Some of the examples of organisation HRD programme are through coaching, counseling, and mentoring scheme (Strategic Management of Human Resource 2007). With specified learning, employees can achieve skills needed to fulfill the organisation goals. This will allow flexibility towards the job performance and ease tasks completion.


In conclusion, the organisation learning culture plays a crucial role in organisation. However, there is no learning culture that fits organisation. The alteration and customization of learning organisation elements need to be synchronized towards the business strategy of the organisation. Relating to learning, it is suggested that there are three types of learning; adaptive learning, generative learning and creative tension. Adaptive learning suggests the improvement of skills that employees do already have thus creating efficiency in job performance. Generative learning tends to provide a transformational change that will allow employees to learn new skills. Creative tension suggests the learning of current processes and creating a new element that will assist future processes. Thus, it is crucial that organisation combines these elements to create an ultimate plan that will achieve the objective of learning organisation.

Section B Question 4 - Performance Management Systems


Performance management system is defined as a tool in the strategic human resource management used by organisation to evaluate the overall performance of employees (Dessler 2005). He adds on saying performance management is a process that consolidates goal setting, performance appraisal and development into a single, common system, the aim of which is to ensure that the employee's performance is supporting the company's strategic aims(Dessler 2005). Raymond J. Stone later suggest that performance management systems aim to improve organisation, functional, unit and individual performance which incorporate job design, recruitment and selection, training and development, career planning and remuneration and benefits in addition to performance appraisal. Raymond J. Stone defines performance appraisal as concerned with determining how well employees are doing their job, communicating that information to employees, agreeing on new objectives and establishing a plan for performance improvement.

Traditionally, performance appraisal was done in a one way communication method. This means that the managers will evaluate based on their experience and memory upon the employees. This one way communication method proves to be problematic as biasness and unfair judgments will cause the breakdown towards the appraisal. Hence, the birth modern appraisal system eliminates these problems through a multi directional appraisal (360 degree appraisal). This appraisal strives to provide individual an overall evaluation process gathered from information of related parties that had engaged in operations with the employee. Thus, the accuracy of the data can be verified.

Corbrigde and Pilbeam (1998) suggest five main types of appraisal which includes top-down schemes, self appraisal, upwards appraisal, peer appraisal and multi directional appraisal (Strategic Management of Human Resource 2007). However, there are no absolute appraisal systems that can create ultimate effectiveness. It is often impacted by the environmental factors as well as people's behavior towards the appraisal. Ali et al (2001) says that when choosing methods of assessing employees' performance, organisation need to make sure that the end result has a positive effect on motivation and increases people's sense of self-worth, realistic targets, positive feedback and listening which are key factors (Ahmed & Dablan 2007).

Factors influencing effectiveness of performance appraisal

Nevertheless, there are still factors that can determine the accuracy of the appraisal systems. Factors such as demographics, culture, age, communication methods, perceptions and many others will determine the appraisal success as well as the accuracy of the information gathered. The degree of seriousness that employees have towards the appraisal strongly suggests the impact and accuracy of the result. Discrimination can also be a factor that caused a defective appraisal. Manager with negative towards the employees will provide negative evaluation. As a result, the employee will show minor improvement or needs to develop. Thus, organisation will customized the appraisal, integrating one or more system to perform effective evaluation towards an individual.

Purpose of performance appraisal

Buhler 2002 says that appraisals are conducted for the purposes of evaluation; provides input for the decision on promotion, transfer, demotions, terminations and compensations, and feedback; development of individuals. The purpose of evaluation provides a guideline for recruitment and selection in HR functions. As recruitment and selection plays a vital role in an organisation, PMS provides significant details on the employees' achievement from the last appraisal. Thus, organisation can gauge the performance level of each employee and later make decision on the where about of the employees. This will help organisation to identify the right people for the right job. Evidently, PMS result had led to the promotion of Bob Stack and Mike Tyson to the board of director in Cadbury.

The purpose of feedback provides a better understanding of the full potential of the employee, analyzing the strengths, weaknesses, threats and opportunities in line with the business objectives. Hence, training and development, another HR function, is conducted to motivate growth in an individual. This will allow individual to indentify the hidden natural strength and develop the strength to its full potential. Moreover, individual tend to have incremental learning capability as they drew enthusiasm that comes from within. Moreover, organisations can change employees' weakness to strengths and exploit the threats to opportunities. This will allow organisation to gain competitive advantage by developing the individual while reducing the need to recruit extra workforce. Similarly, Cadbury also implemented Managing for Value, Growing our People and Passion for People programme as their development steps. As Cadbury identified the need to growth its employees, "Growing our People" programme was initiated. Cadbury opts to unlock potential of its employees to maximize their performance in order to fulfill the organisation's objective to deliver superior shareholder performance.

Benefits of PMS

The crucial implementation of PMS satisfying the purpose above can draw benefit towards the individual, manager and organisations. Effectively managing of people through PMS can ensure the growth of individual and eventually causing competitive advantage in organisation. Below list the benefits according to an article by ESD, 2004.

Benefits for the individual:
  • Gaining a better understanding of their role
  • Understanding more clearly how and where they fit in within the wider picture
  • A better understanding of how performance is assessed and monitored
  • Getting an insight into how their performance is perceived
  • Improving understanding of their strengths and weaknesses and developmental needs
  • Identifying ways in which they can improve performance
  • Providing an opportunity to discuss and clarify developmental and training needs
  • Understanding and agreeing their objectives for the next year.
  • An opportunity to discuss career direction and prospects.

Benefits to the line manager/supervisor/team leader:

  • Opportunities to hear and exchange views and opinions away from the normal pressure of work
  • An opportunity to identify any potential difficulties or weaknesses
  • An improved understanding of the resources available
  • An opportunity to plan for and set objectives for the next period
  • An opportunity to think about and clarify their own role
  • An opportunity to plan for achieving improved performance
  • An opportunity to plan for further delegation and coaching
  • An opportunity to motivate members of the team.

Benefits to the organisation:

  • A structured means of identifying and assessing potential
  • Up-to-date information regarding the expectations and aspirations of employees
  • Information on which to base decisions about promotions and motivation
  • An opportunity to review succession planning
  • Information about training needs which can act as a basis for developing training plans
  • Updating of employee records (achievements, new competencies etc)
  • Career counselling
  • Communication of information

Integration of effective performance appraisal

There are six distinguishing features that make up for an effective PMS; objective setting, ongoing review of objectives, the development of personal improvement plans linked to training and development, formal appraisal with feedback, pay review and a competence-based organisational capability review(Strategic Management of Human Resource 2007). Inevitably, organisation follows this guideline in order to create an effective appraisal system suitable for the organisation.

Objective setting

Objective setting undermines the need of organisation to provide a clear cut employees' function to the individual. Thus, it enables employee the focus on their current position eliminating confusion between switching task. A clear objective will provide employees with a direction in line with organisation's objective prior to the mission and vision of the organisation. In line with objectives, organisations will provide a SMART objective; specific, measurable, achievable, realistic and appropriate timeline, to each employees. In example, organisation will annually set an achievable sales target for the sales department. This given task will be based on each individual performance as different people have different capabilities.

Ongoing review of objectives

Given the objective, organisation will have to review the performance of the employee prior to the timeline. This can be done either doing an annual or quarterly appraisal of the employee. By continuous reviewing the employee, organisation can identify the weaknesses or the problems that hinder the employees to fulfill the task. Thus, training and develop countermeasure can be allocated to motivate and improve the employee towards reaching the goal. Moreover, this can allow organisation to identify the strength of the employee so that relocation can be made.

Development of personal improvement plans linked to training and development

In relation to the performance of the employees, organisation will provide training and development. Training and development strives to draw out employees' potential and to motivate them for better performance. Often times, organisation would want to promote their employees with high credibility in their performance. Thus, organisation will develop improvement plans seeking to unlock potential growth of the employees while providing employees with a new set of knowledge that will ease their job. This improvement plan is customized as motivation techniques differ from each individual. Hence the development will result to a different in employees' learning curve.

Formal appraisal with feedback

Ongoing review of employees can allow organisation to monitor the effectiveness of the development plan. Formal appraisal system will provide organisation to review the performance compared to past year and conduct essential training and development plan to follow up on the past development plan. It is vehemently important for an organisation to conduct performance appraisal. This appraisal can not only identify the weakness of the employees but also exploit the employees' opportunities for further development and improvement. Organisation tied in the key performance indicator to the formal appraisal to provide an overall area of improvement of the employees. This system provides qualitative or quantitative measurements towards the growth and the area of improvement of the employees. Thus, organisation can gain competitive advantage through development of their core asset and promoting efficiency in organisations' operations.

Through this formal appraisal, organisation can take opportunity to develop their employees. This can be done by understanding the needs relatively the strength of the employees and implement programme that benefit them in that aspect. Career development planning also plays a crucial role in development plan. This is because career development planning can ensure the employees' future potential. On the other hand, through formal appraisal, organisation can choose between recruitment and retrenchment. This means organisation will hire potential employees and sack employees that do not perform to the standard of the organisation. This eventually will lead organisation to achieve economies of scale as the organisation achieve the right amount of workforce.

Pay review

Pay review is a crucial step in optimizing employees' performance in relation to the salary that they deserve. Pay review provides increment or decrement in salary towards employees prior to their performance in past year. This step not only can gain satisfaction from other employee but also act as a motivation element in the overall organisation for the employees. Nonetheless, people have becoming more materialistic as the result of influences of media. Thus, money is a critical issue. Thus, increment can boost employees' performance level causing them to work at their fullest.

Competence-based organisational capability review

In any performance appraisal, organisation approached should link directly towards the business strategy underlining the development plan towards achieving the business strategy. Hence, the organisation strengths and capacity to provide outstanding performance is closely related. Organisation other resources such as machines, methods, money, material, and management should provide allowance to the employees to achieve desired performance. In order words, organisations' power will closely relate to the performance of employees providing efficiency in making suitable decisions when required.


Underlining to the above benefits, the performance management system is an important concept in organisation and it is crucial for every organisation to practice PMS. Undeniably, performance management system can stand alone in an organisation provided that effective appraisal system stands out in the end result. Moreover, the information of employees is classified under private and confidential and should only be reviewed by authorized personnel. Nonetheless, performance management system should work hand in hand in the reward and benefit areas. This is because reward and benefit can increase the motivation of employees' in creating a positive attitude towards appraisal. Thus, this will create a win-win situation where organisation and employees get what they want in the end result.


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