NATIONAL ECONOMIC UNIVERSITY BUSINESS SCHOOL Bui Khanh Linh THESIS TOPIC IMPROVING PERFORMANCE APPRAISAL AT PJICO’S HEADQUARTER HANOI, 2018 NATIONAL ECONOMIC UNIVERSITY BUSINESS SCHOOL IMPROVING PERFO[.]
NATIONAL ECONOMIC UNIVERSITY BUSINESS SCHOOL Bui Khanh Linh THESIS TOPIC IMPROVING PERFORMANCE APPRAISAL AT PJICO’S HEADQUARTER HANOI, 2018 NATIONAL ECONOMIC UNIVERSITY BUSINESS SCHOOL IMPROVING PERFORMANCE APPRAISAL AT PJICO’S HEADQUARTER SUPERVISOR STUDENT CLASS : Assoc.Prof PhD BUI DUC TUAN : BUI KHANH LINH : EMBA15B HANOI, 2018 ACKNOWLEDGEMENTS Firstly, I would like to express my sincere gratitude for my supervisors, Assoc Prof PhD BUI DUC TUAN Without his helpful guidance and suggestions throughout the process, this thesis would have never been accomplished Secondly, I gratefully acknowledge to all the lecturers and staffs at Business School for their continuous support during the past four years Moreover, I dedicated my thanks to EMBA program for furnishing me with the best learning condition where I not only acquire knowledge to broaden my horizons, but also have various chances to take part in activities that improve my soft skills Then, I consider it a great privilege to share my deep appreciation to the board of directors and all the employees at PJICO’s headquarter for allowing me to conduct the study and for the assistance in collecting the data needed to complete my thesis Finally, to my beloved family and my friends, I am very grateful to your encouragement, understanding and timely support Thank you TABLE OF CONTENTS ACKNOWLEDGEMENTS TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION Rationale Literature Review Research Objectives .11 Research Questions 11 Research Methodology 11 Scope of the Research 12 Research Structure 13 CHAPTER 2: THEORETICAL BACKGROUND 14 CHAPTER 3: RESEARCH METHODOLOGY 32 3.1 Research Methodology .32 3.2 Survey Questionnaire 32 3.3 Interview 33 3.4 CURRENT SITUATION OF PERFORMANCE APPRAISAL AT PJICO’S HEADQUARTER .33 CHAPTER 4: Research Findings .46 CHAPTER 5: RECOMMENDATIONS TO IMPROVE PERFORMANCE APPRAISAL AT PJICO’S HEADQUARTER 59 CONCLUSION 67 REFERENCE 68 APPENDIXES 69 ABBREVIATIONS PJICO PJICO INSURANCE CORPORATION PA Performance Appraisal HRM Human Resources Management MBO Management by Objectives BARS Behavioral Anchored Rating Scale LIST OF TABLES Table 3.1 Labor Structure of PJICO’s headquarter 33 Table 3.2 Authority to evaluate 37 Table 3.3 PJICO’s Appraisal Stage 38 Table 3.4 Classification rating for performance of employees 41 Table 4.1 Evaluating company’s performance appraisal identification .46 Table 4.2 Evaluating company’s appraisal method and result 52 Table 4.3 Evaluating company’s appraisal management 54 Table 5.1 New Criteria 63 LIST OF FIGURE Figure 1: The research process 11 Figure 2.1: A model of performance appraisal 16 Figure 4.1 Gender of respondents .43 Figure 4.2 Age of respondents 44 Figure 4.3 Education background of respondents .44 Figure 4.4 Working years of respondents 45 Figure 4.5 Perception of employees about the appraisers 50 Figure 4.6: Perception of employees about appraisal frequency 51 EXECUTIVE SUMMARY Performance Appraisal has been considered as one of the most important tools for any organization The information it generates and provides are highly valuable in making various decisions related to Human Resources Management regarding different level of employees There has been more concern about performance appraisal in many Vietnamese businesses However, performance appraisals are beset with difficulties as a result of their complex nature Recognizing the importance of performance appraisal, PJIOCO is one of these companies trying to tackle with this problem Although the company has tried to develop performance appraisal every month, there are still some drawbacks due to standardized performance criteria Therefore, the thesis focused on the current situation of performance appraisal at PJICO’s headquarter based on theoretical background Basically, two types of data sources were used to obtain information Primary data was collected from interviews with managers and a survey questionnaire for employees administered by the author Secondary data was gathered from PJICO’s policies and procedures, published textbooks, performance appraisal journals and reports, and other human resource publications After thoroughly examining the current situation of performance appraisal at PJICO’s headquarter, the thesis identified some problems: The purposes of the evaluation are to serve only for administration not really focused on developmental purposes The performance criteria not cover many areas and reflect the specific characteristics of each subject of appraisal Current rating scale and method is quite general among departments, the assessment is mainly based on the views of the immediate supervisors There is still lack of feedback and communication at PJICO’s headquarter Insufficient training for appraisers and employees Based on theoretical background and research findings, the author has proposed some recommendations to improve performance appraisal at PJICO’s headquarter: Improving performance appraisal purposes by focusing more on developmental aspects Improving performance appraisal criteria This requires conducting job analysis and redefining new performance criteria Replacing current appraisal method with MBO and BARS Providing communication and feedback for employees Organizing training programs for appraisers CHAPTER 1: INTRODUCTION Rationale Today, human resources is the key factor that determines the success or failure of any organization Since workers became the greatest assets for many businesses to exploit and develop, there has been growing concern about an effective performance appraisal system as a top priority in the companies’ strategy In fact, performance appraisal has become an essential part of the Human Resource Management in organizations PJICO over the years has developed a policy of rational human resource management to ensure the harmony of economic interests between the workforce and businesses However, before the demand for quality manpower increasing, companies PJICO has been facing many problems related to the administration of human resources to meet development requirements in the new period Special issue assess the work capacity are several issues that need improvement Therefore, the analysis of the true state assessment and propose appropriate solutions to help complete the work capacity assessment is the implementation of urgent problems need to be solved in the research company Understanding the role of performance appraisal, the researcher has realized that PJICO is one of these firms that has attempted to tackle this problem To begin with, PJICO is a insurance joint stock company, administered by Vietnam National Petroleum Group(Petrolimex) Although the company has tried to build some criteria to evaluate the productivity and efficiency of employees for human resource management, but there are still many drawbacks in terms of performance appraisal Firstly, current performance appraisal at PJICO is only considered as an administrative procedure for the purpose of rating and rewarding employees annually or paying monthly income Secondly, the company has not yet set up a standardized system of employee performance evaluation, which is not suitable for the position of corresponding titles After thoroughly examining the current situation of performance appraisal at PJICO, the thesis identified some problems: The purposes of the evaluation are to serve only for administration not really focused on developmental purposes The performance criteria not cover many areas and reflect the specific characteristics of each subject of appraisal Current rating scale and method is quite general among departments, the assessment is mainly based on the views of the immediate supervisors There is still lack of feedback and communication at PJICO’s headquarter Insufficient training for appraisers and employees As a result of this, with the desire to find out the current situation of this process at the company and then come up with some recommendations to improve its performance appraisal,the researcher was interested in decided to give the name of the study is: Improving individual performance appraisal at PJICO’s headquarter Literature Review T R Manoharan (2002) has written in this article authors have discussed that they have noticed that in many organizations appraisal systems are: (a) not relevant to organizational objectives, (b) subject to personal bias, and (c) are often influenced more heavily by personality than by performance To eliminate these negative things there is a attempt with a computer based tool called Data Envelopment Analysis (DEA) which is used in the working place to evaluate the performance of employees Sample size is 23 employees A DEA study provides the following four properties (Paradi, Smith & Schaffnit-Chatterjee 2002) An efficiency metric to represent the maximal performance measure for each DMU (Decision Making Units) measured by its distance to the frontier Specific targets or efficient projections onto the frontier for each inefficient DMU An efficient reference set or peer group for each DMU defined by the efficient units closest to the DMU Here regression analysis is used and correlation has been checked in between these factors of DEA data set: Job knowledge, customer relation, work habit, interpersonal relations, quality and quantity Through this analysis they have measured the efficiency and productivity of each employee Rafikul Islam(July 8-10, 2005) has discussed In this article scholars have discussed that to evaluate the performance of organization that it is meeting its goals or not, it is important to evaluate the performance of employees of the organization and for this evaluation effective performance appraisal system should be maintained They have mentioned two main objectives of this study first is to give rewards to those employees who have performed good in achieving organizational goals and second is to identify those objectives which are not met and make an action plan to ensure that they will achieved in future In this paper AHP (analytic hierarchy process) to evaluate employee performance The criteria is used for appraisal is: quantity/quality of the