EBM 3033 HUMAN RESOURCE MANAGEMENT

1.0 INTRODUCTION

Every organization has their own resources to create capabilities which act as the source
of generating core competencies. There are two types of resources, which are tangible and
intangible resources. Tangible resources are the firms assets that can be quantified and are
able to be detected, such as annual reports, manufacturing plants, trademarks and more.
However, intangible resources are assets that are embedded strongly in the organizations
history and are difficult to imitate, which are human, innovation and reputational (Hitt, Ireland
& Hoskisson, 2007). Through effective utilization of both tangible and intangible resources,
an organization could achieve their goals with sustainable competitive advantages and above-
average return.

Dessler (2012) describes the function of human resource management as extracted from
the management process planning, organizing, staffing, leading and controlling. Hence,
human resource management has a crucial role to support an organization in their recruiting,
training, appraising and compensating employees process. According to Beer et al. (1984), the
objective of human resource management is to ensure the integration of organizational,
commitment between employees, flexibility and quality of work. Besides that, human resource
management is the best approach for managers to consider the employees as a key resource in
maximizing organizational performance, while also providing guidelines for managers in
implementation of suitable practice in managing people (McKenna & Beech 2008).

Before recruitment can be conducted, human resource planning is necessary for

determining the nature of each job position and labor demands in the organization. Foot and
Hook (2011) mentioned that when an organization is facing matters related to human resource
such as relationship between employees, change of work methods, new workforce planning,
employees shortage, strategic change and investment on human resource development. Next
is the recruitment and selection process. After filtering high volume of resume or curriculum
vitae, managers can conduct interview session to recruit the most suitable employees.
Managers should consider interviewees expertise, knowledge and ability which can fit the
actual qualification of job requirement.

Besides that, managers have the responsibility to provide training for their employees.
The employee's performance can be enhanced with the support and coaching of managers or
senior level subordination. The need of training exists when there is a gap between the present
and preferred performance of a group of employees. As mentioned by Latham and Dello (2008),

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training is designed with planned efforts, to improve employees relevant knowledge, skills
and attitudes.

Moreover, the appraisal and performance management are the focus on decisions which
are related to salary, promotion, compensation and benefits. Gilmore and Williams (2009)
claimed that an appraisal is a process which the review of performance is facilitated with agreed
objectives between manager and employee. Thus, Akhtar and Khattak (2013) concluded the
employees acceptance and commitment towards the organization can be determine through
the performance appraisal activities. Employees are motivated when they have a sense of
belonging to the organization if the salary or compensation are valued to them.

A study by Armstrong and Baron (2004) found that performance management has
significantly contributed to high levels of organizational performance by managing human
resource. In performance management, managers and employees are continuing to work
together, with planning, monitoring and evaluating employees performance. This can ensure
the synchronization between job orientation of employees and the organizations strategic
direction. Therefore, an integrated cycle of performance management system should be
emphasized and conducted in three phrases (Schneier et al., 1987).

In the beginning (Phase 1), managers are responsible to develop and plan the desired
results from employees. Hence, the development plan should be outlined with objectives and
getting commitment within the organization. The communication between managers and
employees may be two-way communication by exchanging ideas to set an agreed target for the
performance plan. Next is managing and reviewing employees performance. This involves the
activities of maintaining and revising the objectives set from previous phase. Managers may
assess whether employees performance are deviating from, or in accordance with, the
objectives, provide feedback, or discuss problems and coaching. Besides that, employees
should be rewarded in the Phase 3 according their performance. Personnel development can be
carried out when any employee shows opportunity to grow, and managers may offer
encouragement to them, such as promotion or training programs. Lastly, a new performance
management cycle begins.

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2.0 BACKGROUND OF COMPANY

Deloitte Touche Tohmatsu Limited, also known as Deloitte, originated from United
Kingdom. Founded by William Welch Deloitte, the company offers professional services
including risk management, audit, tax, financial consultation, and other related services.
Deloitte is currently headed by Punit Renjen, and the company is one of the Big Four
accounting firms, recording up to US$38.8 billion of revenue in 2017 (Marriage, 2017).
Deloitte caters to various geographic locations and is considered to have the largest number of
clients in 2017. The company also commands the highest market share in India, with up to 263,
000 employees as their human resources. Additionally, Deloitte was ranked as one of the best
employers in 2016 that allowed employees to grow exponentially upon entering the firm.

Deloitte is made up of 5 different subsidiaries which specialize in their own field: audit,
consulting, financial advisory, risk advisory and taxations. Each subsidiary is legally
categorized as an individual entity and is detached from any obligations besides the task at
hand for their customers. The biggest subsidiary is their consultation firm, which helps their
customers in the IT sector, strategy implementation, human capital, and serves as an
outsourcing guide. They are able to help clients to initiate strategy formation in implementation
and monitoring to ensure success in public and private business environments.

Deloitte would not have been as successful as it today had the firm not merged with
other firms such as Haskin & Sells in 1952, Touche Ross in 1989 and Tohmatsu in 1993
(Deloitte, n.d.). Then, the merged firm was renamed Deloitte Touche Tohmatsu to set up a
consultation subsidiary in 1995, which is known as Deloitte Consulting today. The firm
continued to expand steadily through organic growth, where focus is placed on developing new
products, hiring of talented workers and effective marketing. At that stage, Deloitte strategies
to divide the firms subsidiaries to maximize resources in increasing the firms efficiency to
cater to clients around the world. Where Deloitte Consulting provides services to international
businesses, Management Solutions accommodates for medium-to-large companies, and
Emerging Markets Group serves small-to-average firms and also governments in growing
economies. This approach has enabled the firm to boost their revenues by 22% and gradually
become the Deloitte as we know today.

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3.0 PERFORMANCE MANAGEMENT PRACTICE

Performance management is the continuous process of identifying, measuring and

developing the performance of individuals and teams, and the alignment of said performance
with organizational goals (Dessler, 2011). The contribution and effort paid by employees can
be measured through the instruments of performance management. Thus, the reviews from
performance management are used in training and development needs which reflects the
strength and weakness of employees. There are four types of performance management
systems are used by Deloitte namely potential candidates, Management by Objectives (MBO),
graphical rating scale and 360- degree feedback.

Human capital and human resources plays an essential role for an organization to
accomplish its business future goals (George & Slabbert, 2014). Interviewers at Deloitte are
the front line of the companys performance planning process. When looking for new hires,
interviewers are the first to encounter them. As Deloitte wishes to hire the employees to fill in
vacant positions, interviewers are tasked with the responsibility of recruiting those people.
Recruiters performance is based on whether they have accepted someone who would fit in
well with the organizational culture at Deloitte. New employees who feel dissonant at Deloitte
may not perform well, resulting in lower individual performance levels.

Deloitte practices Management by Objectives (MBO), where specific goals are set by
the management and employees at the beginning of the year, whereby the goals are aligned
with the overall objectives of the organization. Moreover, the employee appraisals are routinely
conducted by managers after completion of projects (Buckingham & Goodall, 2015). As the
term Management by Objectives was initiated by Peter Drucker in 1954, this approach is still
widely used in many organization (Kravel, 2011). In this context, MBO can be explained as
identifying organizational objectives, planning for achieving identified goals and monitoring
the organization through the plan that has been set earlier. Supervisors regularly check in with
their subordinates to ensure that they are following the objectives set. These objectives will
serve as a benchmark to gauge employee performance across the company. Kravel (2011)
mentioned all the objectives that are set should be SMART (Specific, Measurable, Achievable,
Relevant and Time-determined). By implementing MBO approach in organization can boost
the overall performance in the organization, but it can be disadvantageous if the specific
objectives are contracting with the overall ones.

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Another traditional method of appraising performance of employees was the graphical

rating scale, where supervisors would assign values to traits that they think their subordinates
have, which would be tallied at the end of the review (Dessler, 2011). Deloitte practices the
graphical rating scale method because it is easy to conduct and is predictable for employees,
who feel that it is a fair process (Buckingham & Goodall, 2015). Employees are rated virtually,
according to the dimension of performance, characters and behavior. Employees ratings are
discussed at the end of the year by their supervisors, who then gauge the performance of all
employees against the standards set earlier in the year. Employees who perform less than
expected will require training to bring them up to par, while excellent performing employees
may receive an incentive.

Deloitte also practices 360-degree feedback (Buckingham & Goodall, 2015).

Supervisors are the first to evaluate the performance of employees. At the end of the year,
ratings are collected from colleagues, subordinates, and internal and external sources such as
business clients and customers, which have the interactions with the respondent. These ratings
are used to judge performance of employees to see how they measure up to organizational
standards. The anonymity of the 360-degree feedback method allows for a more objective
appraisal, as subordinates can give their real evaluation without fear of reprisal. According to
Basu (2015), he mentioned a balanced-review of employees performance within the area of
leadership, management, interpersonal communication, teamwork, work habits, contribution
and accountability are provided from the 360 degree feedback. The managers are allowed to
set specific questions, hence top management analyze and organize the feedback collected to
be used for annual appraisal. Besides, managers and subordinates also communicate with each
other to discuss for further planning of improvement.

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4.0 ISSUES ARRISING

Deloittes corporate executives have figured out that their current performance
management system was no longer functioning well. According to Figure 1 shown in the
appendix, the results reflect that their current performance management system does not
produce high performance engagement process and is a huge waste of time, while nearly half
of the survey identified the performance management system are weak in driving business
value, provide feedback or enhance development.

As mentioned earlier, performance management system conducted by Deloitte was

referring to a batched evaluation or annual 360-degree feedback. This evaluation is carried out
at the end of the year annually by groups of people to assess each others performances. Besides
that, the performance appraisals, goal-setting and feedback were conducted and collected at the
end of the year. They focused all the matters and discussed together at one time instead of
periodically conducted or reviewed. Due to the batch of issues that needs to be discussed in a
single meeting, this approach is generally less effective than discussions conducted from time
to time about the actual performance.

Based on above situation, the process can be very time consuming, wasting roughly
about 2 million hours per year. Leaders spend a lot time rating past performances and
commenting about their performances that happened in the past. This clearly shows that
managers and executives are more focused on evaluating performance rather than coaching
and developing people. As mentioned by Holloway (2012), the performance evaluated in the
past are not capable of change regardless of the success and failure of the employee.

The rating method can be lead to unreliable data measurement by evaluating someones
skills. A rater might evaluate performance based on his internal perception and judgement
towards the matter itself (London, 2001). This idiosyncratic rater effect creates a situation
where performance rating systems are more concerned about the opinion of the rater instead of
the rated individuals performance. The views of performance by every person has different
insights and are very subjectively measured throughout the rating performance measurement.

On the subject of above rating method, the leader evaluates each individual based on
opinion-based evaluation in which the quality and skill of the employee are more emphasized
in order to fulfil their expected rating score of their performance. They paid less consideration
towards employees qualitative scale and their rankings. Thus, employees might gradually
neglect the other contributions which could have contributed to the organization. In addition,

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leaders are too focused on employees self-assessment instead of group assessment. Due to
culture differences, employees are much more encouraged to complete work tasks individually
rather than through group discussion. Therefore, employees are discouraged to work in group
as they realize that working in a team does not contribute majorly to their job performance
evaluation.

Sometimes, the employee performance evaluation has pushed the average and below-
average performers to the bottom as they are over-rewarding the top performers. Due to the
halo effect, the top performers always seem to be good. If the employers found something good
from their employees, those employees are likely to be known as good and constantly being
rewarded throughout the time. On the other side, contrast causes the middle-level performers
failure to motivate themselves for further contribution to the organization because the
employers always compare the quality work done by the top performers with them. By
observing the reward system made by employer, it indicates that the system is not being
effectively used. Apart from that, the employees are only evaluated by their subordinates and
they are not orally authorized to act as part of the evaluators to access their managers
performance.

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5.0 SUGGESTIONS AND RECOMMENDATIONS

According to the issues of traditional performance management system mentioned

earlier, it is obvious that Deloitte should proceed with a paradigm shift in their performance
management. Buckingham and Goodall (2015) stated that most of the employees and managers
agreed that the traditional performance management system is not helping on the employee
engagement and performance. The workforce nowadays is more diverse in terms of age groups,
genders and races, such as the experienced, world-weary baby boomers, the serious, no-
nonsense generation X, and the energetic, non-conformist attitudes of generation Y. The mix
of generations has created managerial challenges for managers. On the other hand, Deloitte is
looking for an agile, personalized and real-time approach. At the same time, they want a
performance measurement method that is forward looking which can provide future insights
on the employees career development.

Agile performance management is a performance management that encourages

collaboration, frequent feedback and enhances an employees skills and promotes career
development. Deloitte is encouraged to opt for the new system which allows the managers to
frequently review employees performance and provide immediate feedback for their
improvement. Instead of reviewing employee through a frustratingly tedious questionnaire
once a year, the review could be done at the end of each project or on a quarterly basis. For
example, the employees should report their performance updates and check-in weekly with
their superiors to make sure they can cope with the standard or make necessary improvement
immediately in case they arent.

Besides that, the company can opt for investing in a feedback platform, which is a
database system to keep all the employees performance feedback, and thus the employees are
able to access to their own feedback regularly. With this continuous feedback system,
employees will be able to identify their strengths and weaknesses, while simultaneously
improving themselves from time to time.

Moreover, the role of managers is paramount in executing a new performance

management system. Therefore, Deloitte should provide leadership development training for
all levels of managers to equip them with adequate skills and knowledge to guide and coach
their subordinates. Deloitte should empower their managers by providing them authority to
evaluate and reward performance of the employees. By utilizing the continuous feedback
systems and the skills taught in the leadership development program, managers can be well-

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informed of the strengths and talents of the employees, and they can then make use of these
information to make a better decision on an employees promotion and remuneration packages.

As mentioned earlier, the previous performance management system of Deloitte was

focusing on reviewing past performance of employees. However, Deloitte is searching for a
more forward-looking kind of performance management method. Therefore, Deloitte is
suggested to employ new rating system or review questions that are focusing on the future
development of employees instead of reviewing their success or failure in the past. For example,
the questions should focus on asking how much compensation that managers would give to
well-performing employees, is the employee ready to be promoted, or whether the employees
performance is subpar, which will consequently harm the organization. These questions allow
the managers to look at what they can do with the employees by either encouraging them to
maintain their performance, promote them to a higher position or provide the impetus to
dismiss them from the company.

Besides that, the employee recruitment process of firms usually includes looking
through a group of candidates and selecting a potential recruit with the best qualification.
However, this process usually ends with hiring employees that are unable to contribute the
expected amount of input to the company. A more extensive and comprehensive recruitment
of potential employees involving skill and personality tests are able to match employees to the
applied jobs. For example, an IT expert with an outgoing personality applying for a desk job
would be a waste of talent, and they would most probably end up with job dissatisfaction. An
effective human resource planning is necessary to narrow down candidates qualification and
background to match each job vacancy.

Next, humans are driven by rewards and incentives as it is in everyones primitive

instinct to act only if there is something in it for them (Fitzpatrick, 2010). Hence, it is vital that
employers must understand each employees motivation or desire in working at the company.
Some may have a preference of monetary rewards, whereas others may consider recognition
or appreciation as a more important factor. This reward system can be classified into two
factors which are intrinsic and extrinsic motivation. Deloitte managers have to figure out what
motivates their employees to work harder than ever so that performance remains at an ideal
range. Employees that are more compelled with monetary rewards may be awarded cash,
bonuses or company stocks once certain outlined objectives are achieved. Additionally,
rewards such as group based assessment can be implemented to tackle toxic working
environments. Deloitte traces its roots to 19th-century United Kingdom, while its modern-day

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headquarters is located in New York City in the United States, and this gives Deloitte a
stereotypically Western corporate culture. Western cultures encourage individualistic
behaviors and thus individuals may be viewed as self-serving, which would usually lead to lack
of communication within a team. The new reward system can attune employees working style
into a more team-orientated one so that projects are more coordinated.

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6.0 CONCLUSION

After having stuck with the same mold of gauging employee performance for years,
Deloitte eventually realized the traditional system of performance management was using up
too much resources for too little returns. The expended time and manpower could have been
better used in training and coaching underperforming employees instead of judging them based
on arbitrary numbers, which itself is purely reflective of the person giving the score at that
point in time, and is absolutely not an objective way of judging performance.

Senior management at Deloitte should push for a revamp of the performance

management system the company was employing. By using new methods such as an agile
performance management and a feedback platform, employees at Deloitte can see real-time
data of their performance levels, and they can make subtle changes to improve themselves over
time instead of waiting for supervisors to tell them how they have performed at the end of the
year. Employees are less likely to be defensive of their behavior if change occurs at a gradual
pace, instead of demanding that they change their behavior overnight due to poor performance
reviews. The new systems will also help save time and costs, as employees have easy access
to real-time performance measures, which they can use to improve themselves. Supervisors
can keep track of employee performance, and accurately judge whether an employee is in need
for more training, or should receive a much-needed reward.

To summarize, adopting the new performance management systems will help Deloitte
improve performance of employees across the board.

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