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INTRODUCING A PERFORMANCE APPRAISAL SYSTEM AT CNV VAKCENTRALE

Master thesis, Human Resource Management

University of Groningen, Faculty of Management and Organization

June 19, 2012

MARIJN TANGE

Studentnumber: 1702289

Broekfinne 17

9213 RL De Wilgen

Tel.: +31 06-41800885

e-mail: m.e.tange@student.rug.nl

Supervisor/ university

J. van Polen

P. H. van der Meer

Supervisor/ field of study

T. van Lagen

Manager HRM at CNV Vakcentrale, Utrecht

Acknowledgements: I would like to thank Hans van Polen for his useful feedback and support

during the writing process. I would also like to thank Theo van Lagen for giving me the

opportunity to conduct research at CNV Vakcentrale and for providing me access to all

relevant information within the organization.

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ABSTRACT

Purpose – This study aims to investigate the best kind of performance appraisal system for

CNV Vakcentrale by examining five different approaches for performance appraisal. The

cultural values, strategy, and job descriptions were identified at CNV Vakcentrale to be able

to draw a conclusion.

Design/ methodology/ approach – One board manager and seven department managers were

interviewed. Organizational documents and direct observations were used as data collection

methods. These data were analyzed according to the constant comparison analysis.

Findings – The quality approach appeared to be the best kind of performance appraisal

system for CNV Vakcentrale.

Research limitations/ implications – Non- profit organizations are better aware of which

factors to take into account when choosing a performance appraisal system. Ways to enhance

the success of choosing a performance appraisal system are suggested. Further research is

needed to increase generalizability.

Originality/ value – Empirical evidence to support the choice for a performance appraisal

system.

Keywords – Performance appraisal system, strategic purpose, administrative purpose,

developmental purpose, performance appraisal approaches, non-profit organization.

Paper type – Case study

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INTRODUCTION

Organizations are paying more attention than ever to the performance and productivity

of employees in order to remain competitive or to survive which makes the human resource

function more important (Wright, 2002). And if an organization wants to have an integrated

human resource system that supports its business plan, it is important to have performance

appraisal (Lawler III, Mohrman & Resnick, 1984). This also has to be done well, because it

influences the effectiveness of the overall human resource management system (Lawler III et

al., 1984). Judge & Ferris (1993) also acknowledge the importance of performance evaluation

systems by claiming that it could be one of the most important human resource systems.

Furthermore, ‘performance appraisal can be a critical part of a company’s success because it

allows the organization to retain and reward high performers and offer guidance and

improvement for poor performers’ (Smith & Rupp, 2003, p. 107). However, performance

appraisal still faces system failures (Wright, 2002). Henderson (1984) found that it is difficult

to develop a performance appraisal system that accurately reflects employee performance and

that performance appraisal systems are not generic or easily passed on from organization to

organization. These studies show the importance of performance appraisal systems for

organizations, however they also indicate that adopting a performance appraisal system

successfully is easier said than done.

A performance appraisal system can have multiple purposes, Noe, Hollenbeck,

Gerhart & Wright (2008) divided the purposes into three sections: strategic, developmental

and administrative. Firstly, the strategic purpose is realized through goal setting and feedback

(Lee et.al., 2010) which are set in line with the business strategy. Feedback is used for

strategic purposes by monitoring whether employee performance is in line with the previously

set goals (Jackson& Schuler, 2003). Secondly, objectives of performance appraisal systems

are developmental ones, these are attained through monitoring, coaching and motivating

employees (Noe et al., 2008; Jawahar, 2003; Brumback, 1988 & Nickols, 2007). Thirdly,

performance appraisal systems have administrative purposes, they are used for decisions such

as pay increase, promotion and retention (Jawahar, 2003).

The previous section showed that a performance appraisal system has the potential to

be an important HR tool for an organization and that it has multiple purposes. CNV

Vakcentrale is about to adopt a performance appraisal system and is questioning which

performance appraisal system would best fit their organization. This case study wants to find

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out which performance appraisal system will fit CNV Vakcentrale. The main research

question which is derived from this is:

What kind of performance appraisal system fits best with CNV Vakcentrale?

In the theory section, performance appraisal systems are clarified and its purposes are

elaborated. Furthermore, criteria for effective performance appraisal are identified. The

comparative, attributive, behavioral, results and quality approach to designing a performance

appraisal system are elaborated. The theory section ends with factors which are important in

the choice of a performance appraisal system. This is followed by the method section which is

followed by data analysis and results. This study will end with a discussion and conclusion

part. In this part, the results will be discussed and advice is given to CNV Vakcentrale.

THEORY

In this chapter, performance appraisal systems are further elaborated and its uses are

pointed out. Performance appraisal systems are defined in many ways, however, all

definitions agree that it is a systematic approach to evaluating performance (Nord, 1979;

Schuler & Jackson, 2003; Seldon & Sowa, 2011; Mondy, Noe & Premeaux, 2002; Gómez-

Mejía et al., 2006; DeNisi, 2000; Cardy & Dobbins, 1994; Noe et. al, 2008; Den Hartog et al.,

2004; Fletcher, 2001). However, these authors do not all agree on how performance should be

evaluated. For instance, should the evaluation be conducted by one qualified person (Nord,

1979) or should it be done by multiple sources using 360 degree feedback (Schuler &

Jackson, 2003; Seldon & Sowa, 2011; Mondy et al., 2002)? Another part of debate is the

extent to which the performance appraisal is considered systematic: should the performance

appraisal system have a systematic or standardized approach to indicate the level of individual

performance (Nord, 1979; Seldon & Sowa, 2011; DeNisi, 2000) or should it be more of a

process which links individual performance to organizational performance (Den Hartog et al.,

2004; Fletcher, 2001; Cardy & Dobbins, 1994)? The variability in defining performance

appraisal systems is caused by the environment in which it operates, the function of a

performance appraisal system is dependent on the organization in which it is present (Den

Hartog et. al, 2004; Fletcher, 2001; Cardy & Dobbins, 1994). To find out whether an

organization adopted a performance appraisal system successfully, the system has to be

effective. A general definition of effective performance appraisal is the extent to how good a

performance appraisal system is operating as a tool for the assessment of performance (Cardy

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& Dobbins, 1994). The effectiveness of a performance appraisal system is best regarded as an

ultimate criterion (Aguinis & Cascio, 2005) that cannot directly be measured but rather is

assessed through the measurement of other subordinate criteria (Cardy & Dobbins, 1994).

These subordinate criteria for effective performance appraisal will be extensively discussed

later on this chapter.

As was briefly mentioned before, a performance appraisal system can have a strategic,

a developmental and an administrative purpose. (Noe et al., 2010; Scott & Einstein, 2001;

Cleveland et al., 1989; Youngcourt, Leiva & Jones, 2007). The strategic purpose can be

described as connecting employee activities to organizational goals (Noe et al., 2008; Bach,

2005). This purpose can be attained through defining the results, behaviors, and, to some

extend employee characteristics that are necessary for carrying out the strategy. Then,

measurement and feedback systems have to be developed that will maximize the extent to

which employees exhibit the characteristics, engage in the behaviors and produce the results

(Noe et al., 2008). In the view of Barney (1991) & Barney, Wright & Ketchen (2001), the

competitive advantage of organizations is dependent on how valuable, rare, difficult to imitate

and difficult to replace its resources are. The way that employees, as resources, are managed

can therefore be a source of competitive advantage which indicates the strategic purpose of

performance management systems (Youngcourt et al., 2007).

The developmental purpose is attained through identifying the needs of employees to

improve their performance, a well designed performance appraisal system not only identifies

deficiencies in employee performance but also indentifies the causes of deficiencies (Noe et

al., 2008). Murphy & Cleveland (1995) stress the importance of the within-person distinctions

as a purpose of performance appraisal systems, this purpose is met through using appraisal to

identify training needs, make placement and transfer decisions and provide feedback.

Research indicates that the structure of an organization has influence on the developmental

purpose of the performance appraisal system (Cleveland, Murphy & Williams, 1989). They

found that flat organizations with few departments use feedback in a performance appraisal

system to support the strategy more often than large bureaucratic organizations. Furthermore,

in organizations where the coordination is high, organizations use the developmental purpose

of performance appraisal systems more often. This can be explained by the high need of

technically and interpersonally skilled employees in these companies (Cleveland et al., 1989).

Lastly, performance appraisal systems can have an administrative purpose (Noe et al.,

2008). When the system supports this purpose, the organization uses the performance

appraisal information for decisions about pay raises, promotions, retention-termination,

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layoffs, and recognition of individual performance (Cleveland et al., 1989; Baron & Kreps,

1999; Gómez-Mejía, Balking & Cardy, 2006; Bach, 2005; Aguinis & Cascio, 2005). This

purpose is also acknowledged by Murphy & Cleveland (1995), who name it between-person

distinctions. Now the purposes which a performance appraisal system can pursue are

elaborated, criteria for attaining those purposes are discussed.

Criteria for effective performance appraisal

As was stated above, a performance appraisal system is considered effective when it is

operating well as a tool for the assessment of performance. A system is operating well when it

pursues its intended purposes successfully, to evaluate the effectiveness of a performance

appraisal system Noe et al. (2008) use five different criteria. These criteria make sure that the

performance appraisal system optimally pursues the above mentioned purposes (Noe et al.,

2008). Noe, Hollenbeck, Gerhart, and Wright (2008) identified strategic congruence, validity,

reliability, acceptability, and specificity. The five different criteria for effective performance

appraisal are elaborated in the next section.

Strategic congruence can be defined as the extent to which the performance management

system elicits job performance that is consistent with the organization’s strategy, goals, and

culture (Noe et al., 2008). The alignment of HR practices will result in higher firm

performance (Huselid, 1995). Once the performance appraisal system is implemented it

should be kept up to date. When the firm’s strategy changes, the performance appraisal

system has to change with it (Noe et al., 2008; Schuler & Jackson, 1987). The importance of

strategic fit will be further elaborated in a later section of this study, since it is also a factor

which influences the choice of performance appraisal system.

Validity is the extent to which a performance measure assesses all the relevant and only the

relevant aspects of job performance (Noe et al., 2008). It is concerned with maximizing the

overlap between actual job performance and the measure of job performance. This is referred

to as content validity (Noe et al., 2008). In other words, a performance appraisal system has to

measure all aspects relevant to performance. When it does not measure all aspects the system

is deficient. However, when the system also measures aspects of performance which are

irrelevant it is contaminated. Both contamination and deficiency should be minimized in the

performance appraisal system. Validity is seen as an accurate criterion for measuring

performance appraisal system effectiveness (Kluytmans, 2001; Longenecker & Nykodym,

1996 & Noe et al., 2008; Bretz, Milkovich & Read, 1992 & Lee, 1985).

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Reliability refers to the consistency of a performance measure; the degree to which a

performance measure is free from random error (Noe et al., 2008). There are various types of

reliability; firstly, interrater reliability refers to the consistency among the individuals who

evaluate the employee’s performance. It is reliable when two different raters give one ratee

the same evaluation. Secondly, internal consistency reliability refers to the extent to which the

items rated are internally consistent (Noe et al., 2008). The third and last type of reliability is

test-retest reliability and refers to the consistency of a measure over time. For example, when

an employee is evaluated on number of clients successfully helped, this should be measured

on a monthly basis and not only for the number of clients helped in a certain month.

Reliability has proven to be an accurate criterion for evaluating performance appraisal system

effectiveness (Kluytmans, 2001; Longenecker & Nykodym, 1996 & Noe et al., 2008; Bretz et

al., 1992 & Lee, 1985).

Acceptability is the extent to which a performance measure is deemed to be satisfactory or

adequate by those who use it (Noe et al., 2008). Those who use it refer to the raters and ratees

who use the performance appraisal system (Noe et al., 2008). Ratee acceptance is an

important criterion in the effectiveness of the performance appraisal system (Cardy &

Dobbins, 1994; Carrol & Schneier, 1982; Lawler, 1967; Murphy & Cleveland, 1995). High

ratee acceptance will lead to higher motivation and productivity, and improves the

organization’s ability to retain high performing employees (Roberts, 1992). However, low

system acceptance can cause the ratees to reject the performance appraisal system (Bernadin

& Beaty, 1984). One way to increase ratee acceptance is to enhance their participation in the

performance appraisal process (Greenberg 1986; Evans and McShane, 1988; Dobbins, Cardy

& Platz- Vieno, 1990; Cawley, Keeping & Levy, 1998). Cawley et al. (1998) found that

employee participation was positively related to employee satisfaction with the appraisal

session, the appraisal system, perceived utility of the appraisal, motivation of employees to

improve performance, and perceived fairness of the system. When participation is missing,

the rating is more likely to be perceived as improper (Greenberg & Folger, 1983). Whereas,

participation can enhance the perception that the rating is calculated and perceived as a

rational judgment. The participation can be enhanced through the use of two way

communication in the performance appraisal which means that the ratee also has the

opportunity to give his or her opinion about the appraisal (Dobbins et al., 1990).

Rater acceptance of the performance appraisal system is important for the

effectiveness of the system (Ilgen, Fisher & Taylor, 1979; Jawahar, 2007; Klein, Snell &

Wexley, 1987). After all, the rater is burdened with the difficult task of constantly observing

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employees and transferring information to assign ratings (Roberts, 1992). This means, that the

attitude of the rater towards the system is of great influence in the effectiveness of the

performance appraisal system (Bettenhausen & Fedor, 1997; Carroll & Schneier, 1982).

When raters have low acceptance of the system they tend to appraise in such a way that will

maximize their own profit (Fedor, Bettenhause & Davis, 1999). Furthermore, low acceptance

can lead to rater errors, general or ambiguous feedback, inadequate documentation of the

ratings, and lack of confidence in the usefulness of the performance appraisal system (Carrol

& Schneier, 1982; Roberts, 1994). These occurrences will result in a loss of effectiveness or

even ineffectiveness of the performance appraisal system (Bernadin & Beatty, 1984; Roberts,

1994).

Specificity is the extent to which a performance measure gives detailed guidance to

employees about what is expected of them and how they can meet these expectations (Noe et

al., 2008). This criterion is especially relevant to the strategic and developmental purpose of

performance management appraisal. When a measure does not specify what is expected of an

employee, he or she does not know what he or she has to do for the organization to achieve its

strategic goals. This way the performance appraisal system cannot fulfill its strategic purpose

(Noe et al., 2008). Furthermore, it is critical that a measure indicates performance problems of

employees, otherwise, it is almost impossible for the employees to correct their performance

(Noe et al., 2008).

Performance appraisal system approaches

Performance can be managed by focusing on employee attributes, behaviors or

outcomes (Noe et al., 2008; Scott & Einstein, 2001; Scheneier, Richard & Lloyd, 1986).

Employees attributes or competencies are the skills, abilities, knowledge, and so on which

employees have to possess in order to perform a job (Scheneier et al., 1986). Behavior is what

employees have to do to perform a job. For instance, a sales person with good product

knowledge and interpersonal skills can talk about the advantages of various brands and can be

friendly and helpful (Noe et al., 2008). The outcomes are the measurable, tangible outputs of

the work (Noe et al., 2008). Furthermore, individual performance can be measured in a

relative way by making overall comparisons among individuals, finally, a measurement

system can be developed that combines the preceding measures. Noe et al. (2008) indicate

five approaches to establish a performance appraisal system, the comparative, the attributive,

the behavioral, the result and the quality approach. These approaches serve as means for

achieving the former mentioned purposes. They will be discussed next and are evaluated on

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the above elaborated criteria for effective performance appraisal. The different approaches

with their purposes are listed in table 1.

Comparative Approach requires that the rater compares individual’s performance with that of

other individuals (Gómez-Mejía et al., 2006). This approach is effective in differentiating

between employee performance which eliminates problems of leniency, central tendency and

strictness (Noe et al., 2008; Aguinis & Cascio, 2005). Leniency and strictness occur when a

rater gives ratings that differ substantially from the scale midpoint. When the ratings are

overly high (leniency) or overly low (strictness) these problems occur. Central tendency is

assumed when ratings cluster near the scale midpoint (Murphy & Cleveland, 1991).

Comparative approach systems are valuable when the results are used for administrative

decision making such as pay raises and promotions, furthermore, these systems are relatively

easy to develop and easy to use (Noe et al., 2008). This approach is best suited for adopting a

performance appraisal system which needs to attain the administrative purpose (Meyers,

1999).

There are, however, some problems with this technique. Firstly, this technique is not

suited for the strategic purpose because the link between evaluation and the extent to which

individuals’ performance support the strategy is rarely made explicit (Noe et al., 2008). A

second problem is the subjectivity of the ratings, this makes the actual validity and reliability

dependent on the rater. This problem can be reduced by using multiple raters, however, most

organizations do not do this which makes the validity and reliability modest (Noe et al.,

2008). The third problem with this approach is that it is not suited for the developmental

purpose, because it lacks in giving specific feedback (Gómez-Mejía et al., 2006). Due to their

relative rankings, individuals do not know what they must do to improve their ranking and

performance. This causes managers to give complementary feedback beyond the system

which makes the approach score low on specificity (Noe et al., 2008). A last problem with

this approach concerns the acceptability of the system. Because employee performance

evaluations depend on how employee’s performance relates to other employees rather than to

an objective/absolute standard, managers and employees may perceive the system to be

unfair, the system will not be fully accepted which results in low effectiveness (Roberts,

1992).

Attributive Approach focuses on the extent to which individuals have certain attributes

believed desirable for the company’s success. When this approach is used, individuals are

evaluated on personal attributes (Ilgen & Favero, 1985). The techniques are easy to develop

and are generalizable across a variety of jobs, strategies, and organizations which makes this

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the most used approach in organizations and suits the administrative purpose best (Noe et al.,

2008). Furthermore, when attention is devoted to identifying relevant attributes for job

performance, the reliability and validity can be moderately high (Noe et al., 2008).

There are some drawbacks to this approach, the strategic congruence of this approach

is usually low, due to general goals which result in interpretation differences (Noe et al.,

2008). This results in very general and vague performance standards that can be applied to

multiple strategies which can make them ineffective for a specific strategy (Henderson, 1984),

this makes the approach not suited for organizations that pursue the strategic purpose.

Furthermore, the varying interpretations by raters will result in low validity and reliability,

this can occur when there are circumstances in which rated attributes do not take place (Enzle

& Schopflocher, 1978). These methods do not provide specific guidance on how an employee

can improve which results in insufficient support for attaining the developmental purpose

(Noe et al., 2008).

Behavioral Approach attempts to define the behaviors an employee must exhibit to be

effective in the job. Various techniques define those behaviors and then require managers to

assess the extent to which employees exhibit them (Noe et al., 2008). A technique that is often

used is the critical incidents approach which requires managers to keep a record of specific

examples of effective and ineffective performance on the part of each employee. Another well

known technique is the behaviorally anchored rating scales (BARS) technique, it is designed

to specifically define performance dimensions by developing behavioral anchors associated

with different levels of performance (Smith & Kendall, 1963). These are two examples of the

variety of techniques available for the behavioral approach. This approach can be very

effective, through the gathering of behavioral data effective behaviors can be identified which

can support organizational goals (Kearney, 1976). This makes the approach score higher on

strategic congruence than the afore mentioned, therefore, this approach can be used for the

attainment of the strategic purpose. Most of the techniques used in this approach rely on in-

depth job analysis, this results in valid measurements (Noe et al., 2008). To successfully

implement this approach, a substantial investment has to be made in training raters which

make the techniques reasonably reliable (Noe et al., 2008). Another advantage of this

approach is that employees receive very specific feedback, they know exactly what is

expected of them which makes it appropriate for the developmental purpose (Kearney, 1976).

The administrative purpose can be attained by making decisions about pay raises and

promotions based on displayed behavior.

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A drawback to the behavioral approach is the time it takes to develop a system. Every

job has to be specified in detail and effective and ineffective behavior has to be specified

(Kearney, 1976). This makes the acceptability of the system moderate (Noe et al., 2008).

Furthermore, raters must have the opportunity to observe the ratees which can be very time

consuming. Another drawback is that it assumes that there is one best way to do the job (Noe

et al., 2008) which can result in standardized employees (Kearney, 1976). This makes the

approach more suitable for less complex jobs, where there is one best way to achieve results.

However, in jobs where there are multiple ways to perform the job successfully, the

behavioral approach is less suited (Noe et al., 2008).

Results Approach focuses on managing the objective, measurable results of a job or work

group (Noe et al., 2008). This approach assumes that subjectivity can be eliminated from the

measurement process and that results are the closest indicator of one’s contribution to

organizational effectiveness (Patten, 1982). The most famous technique in this approach is

Management By Objectives which sets goals for employees, based on results, which are in

line with the organizational strategy (Locke & Latham, 1990). These goals are used as

standards by which an individual’s performance is evaluated (Carroll & Tosi, 1973) which

makes the approach suitable for the administrative purpose. The strategic congruence of this

approach is high because its techniques are able to structure the long and short term goals

(Wohlking, 1972). Furthermore, this approach scores high on specificity, through setting

goals, employees know exactly what is expected of them (Huse, & Kay, 1964, Meyer, Kay &

French, 1965). Its objective and quantifiable indicators of performance make this approach

also highly accepted by raters and ratees (Noe et al., 2008). High specificity and high strategic

congruence indicate that this approach can be used to pursue the strategic and developmental

purposes successful.

However, there are some disadvantages to the results approach. The techniques can be

both deficient and contaminated (Noe et al., 2008). It can be contaminated by things that are

not under the employee’s control. For instance, when a sales person has to make a certain

amount of sales, but does not reach this goal due to an economical crisis. It is deficient when

not all important aspects are included in the set objectives. Another disadvantage of the results

approach is that individuals tend to become focused on aspects of their own performance and

are not willing to help coworkers (Wright, George, Farnsworth & McMahan, 1993).

Quality Approach focuses more on performance of the system instead of individual

performance (Waldman & Kennet, 1990). Furthermore, its focus is on improving customer

satisfaction, internally and externally (Noe et al., 2008). Such a system emphasizes on factors

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which influence the appraisal system and employee (Bowen & Lawler III, 1992), it also

emphasizes on solving performance problems between managers and subordinates together. It

also advocates multiple sources of to evaluate person and system factors (Cardy, 1998). The

focus of this evaluation should be on how employees can continually improve their

performance which makes this approach suitable for organizations that are pursuing the

developmental purpose (Noe et al, 2008; Bowman, 1994; Jawahar & Selegna, 2003).

Subjective feedback about the personal qualities of the employee has to be given by peers,

managers and customers. Employees should be evaluated on dimensions such as cooperation,

attitude, initiative and communication skills. Objective feedback based on the work process

itself should be given by using statistical quality control methods (Noe et al., 2008). The

quality approach argues that employees should not be held accountable for outcomes effected

by system factors, it is believed that this results in dysfunctional behavior. Furthermore,

because employees do not have control over the quality of the system in which they work,

employee performance evaluations should not be linked to compensation. Compensation rates

should be based on prevailing market rates of pay, seniority, and business results which are

distributed equitably among all employees (Noe et al., 2008). This makes a performance

appraisal system itself not very suitable for the administrative purpose because it undermines

the quality approach philosophy. Since the system is developed by both managers and

employees, the acceptability is high (Noe et al., 2008). Through the extensive feedback and

continuous improvement the strategic congruence of the quality approach is also high which

makes the quality approach suitable for the strategic purpose. The validity and reliability of

this approach can be high but is dependent on the measures used (Noe et al., 2008). When the

system measures all and only the relevant measures it is valid. However, when the rater and

ratee agree on measures which do not include all the relevant measures, the system can score

low on validity. The quality approach combines two traditional approaches and merges them

into one system, according to Noe et al. (2008) it combines mostly the attributes and the

results approach, however, Jawahar and Selegna (2003) say it combines behavioral and results

approach. Which means that it is probably possible to combine different approaches in the

quality approach that suit the organization best.

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TABLE 1

Approaches to performance appraisal and its purposes.

Choosing a performance appraisal system.

In this section, the factors which influence the choice of performance appraisal system

are discussed. There are many paths that can be taken in de design and implementation of a

performance appraisal system. However, independent of the organization, there are several

factors that influence the content of the performance appraisal system (Armstrong, 2009;

Weatherly, 2004). If the performance appraisal system has to meet the strategic,

administrative, and developmental purpose, these factors have to be taken into consideration

for the best match possible between the organization and the performance appraisal system.

These factors are cultural values, strategy, job description (Noe et al., 2008; Weatherly, 2004).

These factors will be elaborated now.

Cultural Values. Denison (1996) found that organizational culture can reinforce the link

between an HR system and firm performance. Performance appraisal works best when it fits

the organizational values of the organization (Armstrong, 2009, Weatherly 2004, Ghorpade &

Chen, 1995). An often used perspective on culture is Schein’s (1992) perspective. He defines

organizational culture as ‘a pattern of shared basic assumptions learned by a group as it

solved its problems of external adaptation and internal integration, which has worked well

enough to be considered valid and, therefore, to be taught to new members as the correct way

you perceive, think, and feel in relation to those problems’. According to him the best way to

analyze the organizational culture is to divide it into four different levels, these levels are:

artefacts, norms, values, and basic assumptions. Artefacts are the visible symbols of the

deeper levels of culture, an example of an artefact is the observable behavior of its members

(Schein, 1992). A slightly deeper level include the norms which are guiding how members

should behave in a particular situation. In most cases, these are explicit and laid down, like a

smoking ban (Hagedoorn & Bloemers, 1997). The third level is represented by values, these

prescribe what ought to be in organizations. They tell members what is important and they are

supported by the artefacts and norms (Schein, 1992). The deepest level of organizational

Approach Administrative

purpose

Developmental

purpose

Strategic

purpose

Comparative � - -

Attributive � - -

Behavior � � �

Results � � �

Quality - � �

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culture consist of basic assumptions. Basic assumptions consist of taken-for-granted

assumptions, they tell members how to perceive, feel, and think about things (Schein, 1992).

These different levels of culture make clear that organizational culture is a complex and broad

concept, it comprises a comprehensive, interrelated and ambiguous set of factors (Cameron &

Quinn, 2006). Focussing on the most important factors of culture makes it easier to manage

(Kamann, 1996). The organizational values are seen as the heart of the culture (Boxx, Odom

& Dunn, 1991; Hagedoorn & Bloemers, 1997; Kamann, 1996; Posner, Kouzes & Schmidt,

1985; Deal & Kennedy, 1982). Organizational values are acquired and experienced as the

only correct way of thinking feeling and acting (Neuijen, 1992; Soeters, 1990). Therefore, the

performance appraisal system should fit the organizational values (Noe et. al, 2008;

Armstrong, 2009).

Strategy. The performance appraisal system has to be aligned with the critical performance

measurements which represent the organizations strategy and vision (Weatherly, 2004). In

order to be able to adapt the right performance appraisal system, the critical performance

measurements should be identified and used in the performance appraisal system (Noe et al.,

2008). Wei (2006) found that it is critical for an organization that it develops an effective HR

system to align this system with the organizational strategy, this helps in creating a

competitive advantage (Noe et al., 2008). Lawler et al. (1984) suggest that the performance

appraisal system should be linked to the human resource strategy. Torrington, Hall, Taylor &

Atkinson (2011) also say that performance systems have to be linked to the objectives of the

organization, so that the resulting performance is more likely to meet the organizational

needs. This believe is confirmed by Murphy & Cleveland (1995) who found that performance

management systems are most effective when they support organizational goals. Performance

appraisal links the activities of individuals to organizational effectiveness (Scott & Einstein,

2001; Grote, 2002), this can be accomplished by setting personal goals in performance

appraisal which contribute to organizational goals. By providing employees with insight of

how they are contributing to the organizations goals, a cynical stand towards the

organization’s strategy can be prevented (Tosi, Rizzo & Carrol, 1970; Levinson, 2003).

Job description. Employees need to see the direct relationship between their job descriptions

and the goals and objectives which are targeted in the performance appraisal system

(Weatherly, 2004). This should be done by linking the performance appraisal system clearly

to the job descriptions, by doing this, the employees will be able to see the link between their

job requirements, job descriptions and the goals and objectives included in the performance

appraisal system (Noe et al., 2008). According to Nelson & Macleod (1994) a job description

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outlines tasks, duties, and responsibilities of a particular job. When performance appraisal

matches the job descriptions the effectiveness of the performance appraisal system will be

enhanced (Lee, 1985). Nelson and Macleod (1994) also say that performance appraisal has to

be based on job descriptions which increases the accuracy of the performance appraisal.

More specifically, the focus of performance appraisal format should be based on job

descriptions. For example, if the goal of the job is to develop alternative ways to get an

outcome, the appraisal system should not be focused on specific behaviours. Instead, it should

be focused on task outcomes and should generate creativity with regard to ways of achieving

these outcomes (Cummings, 1984). According to Gómez-Méjia, Balkin, and Cardy (2001) the

first step in developing a performance appraisal system is developing performance dimensions

which are aspects of performance that determines effective job performance. These

dimensions are based on job descriptions. In other words, the effectiveness of the performance

appraisal system is dependent on the link between the performance appraisal system and job

descriptions.

METHOD

Procedure

In order to answer the research question, data was collected at CNV Vakcentrale

which is a non- profit, union organization and consists of 220 workers. In this case study,

triangulation of sources was used, because it created depth and increased the scope of the

study, furthermore, it enhanced the validity of the research (Denzin & Lincoln, 2000). By

using this method, data about the cultural values, strategy and job descriptions of CNV

Vakcentale was collected, in order to be able to choose the best fitting performance appraisal

system. Triangulation of sources is ideal in fieldwork through a combination of interviews,

observation and organizational documents (Patton, 1999). Therefore, these methods have been

used in this case study.

Interviews give a rich amount of data and the opportunity to capture perceptions and

opinions of respondents (Barnball & While, 1994). This was relevant for this study since the

cultural values and opinions about the uses and fit of performance appraisal systems at CNV

Vakcentrale had to be explored in order to be able to make the best fit between a performance

appraisal system and CNV Vakcentrale. The interviews contained open ended questions and

consisted of three different parts. In the first part, the participants were asked to answer

questions about the cultural values which was followed by a part with questions about the

strategy of CNV Vakcentrale. The final part of the interview consisted of questions about the

16

possible fit between a performance appraisal system and the job descriptions at CNV

Vakcentrale. These different parts are further elaborated below in the measures. The

interviews took about an hour and half and were recorded for the data analysis. In the

introduction, the interviewees were informed about the purpose and procedure of the

interview. The questions were asked in a open not misleading way in order to have the

participants give honest answers (DiCicco-Bloom & Craptree, 2006).

The second method used in triangulation of data sources was direct observation (Yin,

2003). The strength of direct observation lies with its capability to add a new dimension to a

phenomenon or context under study (Yin, 2003) and is useful to fully understand the

complexity of what people say in interviews (Patton, 2002). Here, direct observation was used

to form an accurate view of the cultural values of CNV Vakcentrale, through feeling and

experiencing them (Kamann, 1996). According to Yin (2003), direct observations can range

from formal to informal, for this study a less formal way of direct observation was used. This

qualitative approach (Tashakkori & Teddlie, 2003) of direct observation was used to describe

the experienced cultural values. This was done by taking extensive notes of attended business

meetings and business lunches (Schein, 1990). According to Sriramesh et al. (1996)

qualitative observation is useful when little data of the organizational culture exist. Therefore,

regular working activities, coffee breaks and informal activities were also observed in order to

receive more relevant data. During these activities, attention was paid to the extent to which

the cultural values which emerged from the interviews were translated towards regular

activities. Reactivity can be a problem in direct observation (Yin, 2003), the displayed

behavior of the participants can be altered through the presence of an observer. This study

tried to reduce the reactivity by observing multiple times over a period of 6 months, this way

the participants had time to adapt and become familiar to the observer process (Sulzer-

Azaroff & Mayer, 1977). Furthermore, the observer tried to reduce reactivity by explaining

the purpose of the study to the participants, but the specific cultural values were not pointed

out. This was done to prevent emphasis on preferred possible cultural values by participants.

The third source of data consisted out of organizational documents which were HR-

organizer, A3-annual plan, risk inventory & evaluation plan, and Passion, Focus and

Performance. HR-organizer is a system in which every task at CNV Vakcentrale is specified

and documented. Passion, Focus and Performance is a document that contains information

about the organizational strategy and vision for the upcoming years. The A3-annual plans are

strategic maps for every department at CNV Vakcentrale. In the risk inventory & evaluation

plan are the working conditions at CNV Vakcentrale defined.

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These organizational documents served as an extra dimension of data, to interpret the

interviews and observations. In HR-organizer the job descriptions are extensively written

down. How these documents were used is described below in the measures section.

Participants

A member of the board and the managers of departments (7) were interviewed for this

study. The member of the board was selected for his extensive knowledge about the

organizations strategy and the organizational values which CNV Vakcentrale wants to exhibit

and how the performance appraisal system could fit in. The managers of the departments were

interviewed for information about the execution of the strategy at the departmental level, how

the organizational values are perceived and executed, and what kind of performance appraisal

system could fit their department.

Measures

Cultural Values. Data about cultural values were collected through the use of

interviews, organizational documents, and observation. This multi method approach for

gathering data about cultural values is recommended by Hofstede (1998) and Thöne (1990).

By doing this, a complete and correct picture is created about the cultural values of an

organization (Hofstede, 1998; Thöne, 1990). As mentioned in the theory section, cultural

values have to match a performance appraisal system in order to be effective, therefore, data

about the cultural values were gathered at CNV Vakcentrale. This data was obtained by

interviewing a member of the board and the department managers. They represent the heroes

at CNV Vakcentrale. Heroes personify the organizational values of an organization, they are

great motivators and the persons in the organization where everyone will count on when

things get though (Deal & Kennedy, 1982). These participants were chosen because they lead

the organization and generate and execute the organizational culture of CNV Vakcentrale

(Van Reenen & Waisfizs, 1995), therefore their view on what performance appraisal system

would fit into the culture is important. The open interview questions were about the current

culture of the organization, the aspects of the culture they wanted to change, and about what

performance appraisal system would best fit, see the appendix for the interview schedule. An

example of a question is: ‘What values do CNV Vakcentrale employees have to posess?’. The

questions about the cultural values are based on Schein (1992) and the question about the fit

with a performance appraisal system are based on Noe et al. (2008) and Armstrong (2009).

The risk inventory & evaluation plan was used for supplementing data about the

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organization’s culture and provided an extra dimension which increased the validity of the

study. As a third source, observation was used to identify the cultural values of CNV

Vakcentrale which was done to fully understand the interviews and organizational documents.

This enhanced the validity of the research Several activities were observed as mentioned

above, during these observations attention was paid to the expression of the cultural values

that were pointed out in the interviews. Furthermore, attention was paid to additional cultural

values which did not became apparent during the interviews. This approach was used since

there it is almost impossible to determine all the relevant cultural values on forehand (Schein,

1990)

Strategy. The other part of the interviews consisted out of open questions about CNV

Vakcentrale’s strategy and how and what performance appraisal system could best fit the

strategy, see the appendix for the interview schedule. For example: ‘What are the

requirements of a performance appraisal system to be effective at CNV Vakcentrale?’.

Questions about the strategic fit were asked because a strategic fit is essential for the

effectiveness of a performance appraisal system (Wei, 2006). The interview questions about

the strategy were based on Torrington et al. (2011), questions about the fit with a performance

appraisal system were based on Wheatherly (2004), Murphy and Cleveland (1995), and Wei

(2006). The departmental managers and the member of the board were interviewed about this

subject, they were chosen because they are responsible for developing the strategy and have

the power to influence events, such as choosing a performance appraisal system (Child &

Smith, 1987). For this measure, the organizational documents Passion, focus, and

performance and the A3-annual plans have been used as additional source to enhance the

validity and the depth of the study. Passion, focus, and performance contains a strategic plan

for CNV Vakcentrale as a whole and what the aims of the organization are in the upcoming

years. This was done to add a new dimension to the research. The A3-annual plans are written

documents that represent the specific goals of each department, they were used as a guideline

for the strategic part of the interviews with the department managers which increased the

relevancy of the interviews.

Job description. To obtain the information for the job description at CNV

Vakcentrale, organizational documents and interviews have been used. The last part of the

interview concerned the job descriptions, since the accuracy and effectiveness of the

performance appraisal system is dependent on its match with the job descriptions (Nelson &

Macleod, 1994). The department managers were selected for this subject since they have

extensive knowledge of the job descriptions at their departments (Noe et al., 2008). The

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managers were asked what kind of system would best fit the job descriptions at their

department, for example: ‘What are the core activities at your department, and how could a

performance appraisal system fit in?’. These questions were based on Nelson and Macleod

(1994) and Lee (1985). To increase the validity of the research, HR-organizer was also used

as a source of collecting data. HR-organizer contains information about all the jobs at CNV

Vakcentrale, the responsibilities, duties and tasks are written down in this system. This makes

HR-organizer very useful for analyzing the jobs at CNV Vakcentrale.

Data analysis

The data was analyzed by using the constant comparison analysis method which was

created by Glaser and Strauss (1967) and is the most often used method for analyzing

qualitative data (Leech & Onwuegbuzie, 2007). This method is useful in analyzing interview,

observational, and documental data in a case study and is appropriate for interpreting different

perceptions of data (Leech & Onwuegbuzie, 2007). Therefore, the constant comparison

method was used in this study. The triangulation of sources was used to validate the

perceptions of the interviews (Patton, 1999). The constant comparison analysis begun with

reading the entire set of data which consisted of the interviews, the organizational documents

and observations, secondly the data was cut into smaller, more meaningful parts. Then the

parts were labeled with a descriptive codes, every new part of data was compared with the

previous codes. This way similar parts were labeled with the same codes. When the coding

was completed, the similar codes were grouped together and a theme was identified and based

on each grouping. Afterwards, the themes were analyzed for finding the best fit between a

performance appraisal system and the organization under study. When writing the results, it

was necessary to divide them in broad themes (Glaser, 1965) which consisted of cultural

values, strategy, and job description.

RESULTS

After the method section the results will be elaborated beneath. In order to choose the

best fitting performance appraisal system for CNV Vakcentrale, the cultural values, strategy

and job descriptions of CNV Vakcentrale were measured. These three themes are linked to the

three purposes of performance appraisal systems which are the administrative, strategic, and

developmental purpose.

Cultural values. In this section the results about the cultural values of CNV Vakcentrale are

elaborated. When a performance appraisal system is adapted, it has to match the culture of the

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organization to function optimally. First the results about the cultural values of CNV

vakcentrale will be described which is followed by the fit between a performance appraisal

system and the cultural values of CNV Vakcentrale.

All managers indicate that a cultural change is necessary and they are all in the process

of establishing that. Originally, CNV Vakcentrale had an open culture where mistakes were

not pointed out and people did not communicate about their work, as the manager of the

Shared Service Centre (SSC) HR pointed out: ‘From an historic view, people used to become

automatically member of CNV Vakcentrale, therefore our organization was very rich. The

employees who worked here did not have to care about money and did not have to be result

oriented. However, this has changed, employees have to become more result oriented and

customer focused in order to retain and attract members.’ Another cultural aspect that the

managers want to change is the customer focused view of the employees, they are used to

doing their work according to their own schedule. This has to change towards a large

customer focus, as the manager of Info puts it: ‘the culture at CNV Vakcentrale is that we

already exist for a 100 years and we will exist for another 100 years. The behavior that

results from this kind of mindset is that the workers are internal focused and think that the

customers will wait on them. However, this has changed and we need every customer badly in

order to survive, therefore we need to treat the customers differently.’ Furthermore, 6 of the 8

interviews say that employees are intrinsically motivated and are not used to competition.

This became apparent during direct observation of a business meeting when there was

discussion about the introduction of performance management, when employees showed their

doubts about the success of pay for performance. Another cultural aspect of CNV Vakcentrale

is that people are used to have elaborate consultation and discussion before decisions are

implemented. An example of this are the multiple times that a plan for employee development

had to be revised after consultation of the works council (direct observation).

These cultural aspects have to be altered and combined to the desired cultural values

which are shown in table 2. These wanted cultural values are divided per department and

established by the managers.

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Table 2

Cultural Values per Department

Department: Most important values:

Management Social responsibility Transparency Flexible Critical

SSC Finances Social responsibility Supportive Transparency Honesty

SSC HR Customer focused Proactive Result oriented Security

SSC Facility Social responsibility Flexibility Result oriented Transparency

SSC ICT Proactive Coherent Transparency Critical

Member service Transparency Trust Flexibility Critical

Legal Aid Economic responsibility Transparency Security Customer focused

Info Transparency Flexibility Organized chaos Customer focused

The organization emphasizes on transparency, this is important for the employees because by

showing what you are doing employees will be likely to accept decisions from coworkers and

managers (Member of the board, Manager SSC Finances, Manager SSC Facility, Manager

Member service, Manager Legal Aid, Manager Info, Manager SSC ICT). To enforce this, the

employees of SSC ICT have the ability to log in at the computer of their manager to check

certain contacts (direct observation). Furthermore, the employees of CNV Vakcentrale ought

to behave in a social responsible way, this value is a consequence of the political and social

background of CNV Vakcentrale (Member of the board, Manager SSC Finances, Manager

SSC Facility). This means that the employees are considerate and tolerant towards each other

and the customers. ‘Since the environment of CNV Vakcentrale is changing we have to be

flexible in order to be able to adjust to the wishes of the customer’ (Member of the board).

Next to being flexible, a critical working attitude is also important for multiple departments,

by being critical, employees are able to learn from each other (Manager SSC ICT). Another

endorsed cultural value is acting proactive to find new ways to satisfy the customers better

(Manager SSC HR). Another important value is that CNV Vakcentrale workers have to

become more result oriented in order attain goals and become more efficient (Manager SSC

Facility). The manager of SSC ICT pointed out that her department has to become one and be

coherent to the outside world so customers know what they can expect. According to the

manager of Legal Aid, economical responsibility is a cultural value that has to be reinforced,

the employees are not used to be considerate of the costs made. Direct observations confirmed

this when an employee at this department wanted to start an expensive lawsuit instead of

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paying a small fine which gave the same result for the customer. This cultural aspect has to be

changed in order to become more efficient (Manager Legal Aid). The manager of Member

service indicates that trust is an important value for employees to feel free to accomplish their

tasks. According to the manager of the Info department, organized chaos is necessary for the

department to perform at their best which means that his department functions best when

there is a lot of rumor and busy people who are constantly walking and talking at the

workplace. This is in contrast with the other departments where employees work in a calm

ambiance (direct observation).

When the data was analyzed, it became apparent that the cultural values at CNV

Vakcentrale indicate that the performance appraisal system should support the developmental

purpose (interviews, direct observation). All employees at the Info department had positive

attitudes, after a meeting where recorded phone calls were analyzed in order to improve the

communication skills of the employees (direct observation). Furthermore, all interviewees

said that they wanted a performance appraisal system that supports the developmental

purpose. However, the managers of Info and SSC Finances also indicated that they would like

to use the performance appraisal system for the administrative purpose to give their

employees an extrinsic reason to attain goals. The strategic purpose was linked to the cultural

values of CNV Vakcentrale by stimulating flexible employees which makes the organization

more likely to adjust to its environment (Member of the board). Table 3 represents the

purposes of a performance appraisal system per department linked to the cultural values.

Table 3

Purpose of PAS per department linked to cultural values

Purpose Strategic Developmental Administrative Management x x SSC Finances x x SSC HR x x SSC Facility x SSC ICT x Member service x x Legal Aid x x Info x x x

Strategy. As was mentioned before, for a performance appraisal system to be effective, it has

to be aligned with the organizational strategy. The vision of CNV Vakcentrale for the

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upcoming two years is: ‘Be a financially healthy organization, with reliable suppliers who

offers a qualitative good service to their customers. To become the first choice as a service

center for the connected unions. CNV Vakcentrale works with committed, and competent

employees in a creative, open, and collaborating atmosphere’ (Focus, Passion, and

Performance). On the organizational level, CNV Vakcentrale wants to accomplish this to

make sure that they have employees who are qualified, experienced, take initiative, and are

constantly trying to improve their work, through training and education (Focus, Passion, and

Performance). These employees have to deliver a high quality product against low prices

(Passion, Focus, and Performance, member of the board). Customer satisfaction is very

important which is attained by setting clear guidelines with them and be a flexible

organization that can adjust easily (A3 annual plan). Furthermore, customer satisfaction

should be enhanced by outstanding communication skills (Focus, Passion, and Performance).

The low prices are realized by emphasizing effectiveness and efficiency (Focus, Passion, and

Performance), this should be attained by a more simple and cheaper organizational structure

and by working harder and smarter (Member of the board). Table 4 shows the strategic goals

of CNV Vakcentrale at the organizational level.

Table 4

Strategy of CNV Vakcentrale

Strategic Goals of CNV Vakcentrale customer focused organization committed and qualified employees focus on development and sharing of knowledge and talent financial healthy and preserve continuity transparent open to feedback unite forces trust each other

This corporate strategy was implemented in November 2011 and has been translated to

every department (A3 annual plans), according to the interviewed managers of the

departments, customer satisfaction and competent employees are highlighted in their

department strategy. For instance, ´at the end of 2012, 90 % of the employees at Legal Aid

have to be considered competent and 75% of the customers are satisfied’ (A3 annual plan of

the department Legal Aid). Another strategic focus is uniting the departments and focus on

efficiency (Member of the board, Focus, Passion, and Performance). Five of the seven

departments are implementing new systems to increase efficiency (Manager SSC HR,

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Manager Legal Aid, Manager SSC Facility, Manager SSC Finance, Manager Member

service). All interviewees wanted to set clear guidelines with their employees to successfully

implement the new strategy. A performance appraisal system that aligns the strategy with

individual goals fits with CNV Vakcentrale (Focus, Passion, and Performance).

Job description. For effectiveness and accuracy reasons a performance appraisal system has

to be based on the job descriptions at CNV Vakcentrale. The core jobs performed at the

departments at CNV Vakcentrale are summarized in table 5. At the SSC Finance department,

the jobs are measurable (HR organizer). The department has to register and control financial

data of customers, in order to give correct, time bound, and complete information to those

customers (Manager SSC Finance). Within those tasks, the employees need to be customer

focused, time bound, accurate and need to work together (HR organizer). ‘Employees should

be appraised on personal skills and displayed behavior’ (Manager SSC Finances).

Table 5

Core jobs at CNV Vakcentrale

departments Job descriptions SSC Finances Give time bound, complete, and recent information to unions, so they have

controlling information. This is all administrative information. SSC HR Front office: give HR advice on a reactive and proactive basis

Back office: salary administration which needs to be accurate and time bound SSC Facility Responsible for buildings and hardware, facilitating and supporting software,

and responsible for project control and systems SSC ICT Responsible for anything that has to do with ICT Member service Organize training, tax service, and education for the members of the unions Legal Aid Insurance company which gives legal aid to insured people Info Call centre, 1st line: helpdesk, 2nd line: legal advice, 3th line: member

recruitment

The SSC HR department consists of two parts, a back office and a front office, the performed

jobs in the back office are concerned with salary administration (Manager SSC HR). This

administration has to be accurate, and on time, the employees are best appraised on behavior

and results (HR organizer). The displayed behavior should lead to optimal customer

satisfaction (Manager SSC HR). Customer satisfaction is also the main parameter for the front

office, the main task is giving customers advice on all areas that have to do with HR

(Manager SSC HR). Since this is also a Shared Service Centre (SSC), normally the customers

will ask for advice. However, to enhance the customer satisfaction the front office also has to

be proactive and foresee problems in the future and respond to them in advance. ‘One of our

aims with the front office is that we want to act on a more strategic level, therefore we need to

25

be convincing and act proactive. The front office can best be appraised on behavior and

results, the results are the hard side but are attained through the soft side which is the

displayed behavior’ (Manager SSC HR). The SSC Facility department has just been

restructured and are now working with more generalist workers who have to perform multiple

tasks (Manager SSC Facility). The department is responsible for the buildings, hardware,

software, and project and system control (Manager SSC Facility). They have to deliver high

quality service to enhance customer satisfaction which has to be done in a time bound and

financial responsible way (HR organizer). The employees at this department can best be

appraised on competences and behavior, since they consider results as a nasty term (Manager

SSC Facility). The core tasks performed at SSC ICT all involve anything that has to do with

ICT to make the customer satisfied (Manager SSC ICT). They are about to change the design

of the department, at this moment they have three different sections (HR organizer), this will

change into two sections; a front and a back office (Manager SSC ICT). By doing this the

department is better able to act as one to the outside world (Manager SSC ICT). This

department makes use of job rotation in order to become more efficient and more productive

(Manager SSC ICT). ‘Employees are responsible for their own work and are allowed to make

mistakes, they are appraised on a combination of behavior and results because they are

linked to each other’ (Manager SSC ICT). The jobs performed at the Member service

department differ from the rest because they work with volunteers (Manager Member

service). These volunteers give training, tax service, and education to members of CNV

Unions, these volunteers are coordinated by Memberservice. ‘Our coordinators have to

control the volunteers and keep them enthusiastic in order to keep the quality of the training

programs as high as possible. Furthermore, they have to have good contacts with the unions

because our success is dependent on their actions.’ (Manager Member service). Important

criteria for Member service employees are customer focus, working together, financial

responsible, and goal attainment (HR organizer). According to the manager of Memberservice

the employees can best be appraised on competences and behavior. ‘In an insurance company

the employees need to give legal aid to insured, and the jobs at the Legal aid department are

not different. The core job here is that when an insured person has a problem, the legal

department has to solve that problem’ (Manager Legal Aid). These problems have to be

solved in a way that the customer is satisfied, they try to attain this by giving high quality

service in a financial responsible way. ‘Every individual case is different, that requires

knowledge, but also skills and the correct displayed behavior in order to give the customer its

rightful legal outcome. Therefore, my employees can best be appraised on a combination of

26

competences and behavior’ (Manager Legal Aid). Employees who work here have to be time

bound, financial responsible, customer focused, critical, team oriented, innovative (HR

organizer). At the Info department call center jobs are performed and consist of three teams

(HR organizer). They have a helpdesk team which is concerned with incoming calls of

members (HR organizer). The second team is concerned with incoming calls from members

who have legal problems about their work situation and the third team consist of member

recruiters who perform outgoing calls (HR organizer). In these jobs, clarity and customer

satisfaction is important (HR organizer). This can best be appraised on results and behavior,

because the jobs are measurable and controllable (Manager Info). All the managers want to

link the tasks and responsibilities at their departments to the developmental purpose. The

managers of the HR department and the Member service department claim that it should also

attain the strategic goal, so these job descriptions should also be linked to the organizational

objectives (Manager SSC HR & Manager Member service). The managers of the Finance and

Info department also want to use the system for the administrative purpose because the tasks

performed at their departments are measurable and can easily be linked to rewards, as is

shown in table 6.

Table 6

Purpose of PAS per department linked to job descriptions

Purpose Strategic Developmental Administrative SSC Finances x x SSC HR x x SSC Facility x SSC ICT x Member service

x x

Legal Aid x Info x x

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DISCUSSION

The aim of this study was to investigate what the best kind of performance appraisal

system would fit CNV Vakcentrale. Based on previous studies, this was done by focusing on

the three goals (strategic, developmental, and administrative) a performance appraisal system

can attain. These goals were linked to five performance appraisal system approaches

(comparative, attributive, behavioral, results, and quality). Cultural values, strategy, and job

descriptions appeared to be the most important variables in choosing the best fitting

performance appraisal system. In this section the findings will be discussed and a conclusion

will be drawn. Furthermore, strengths & limitations and practical implications will be

discussed. This study ends with suggestions for future research.

Discussion & Conclusion

According to the findings, the cultural values fit best with the strategic and

developmental goal. However, the findings were not unambiguous about the fit between

cultural values and the administrative purpose. When the findings are linked to the

performance appraisal system approaches, it has a possible match with three approaches: the

behavioral, the results, and the quality approach. The behavior approach could be suited

because the specific behaviors could reduce the discussion and consultation time about

measures in the performance appraisal system which could speed up decision time. However,

the moderate acceptability of the system could also give the employees more reason to discuss

the outcomes of the system which could slow the process down. Furthermore, developing the

different behaviors is very time consuming (Noe et al., 2008) which will even take more time

in a discussion and consultation culture. Another possible match is the results approach, it

also supports the desired performance appraisal goals of the organization under study.

However, this approach has the tendency to create a hostile punishment-reward environment

in the organization which creates competition between employees and groups (Levinson,

2003). The results indicate that a culture has to be created in which departments work together

and act as one, therefore the results approach is not the best fit with the cultural values. The

third possibility is the quality approach, this approach focusses on solving performance

problems together between employer and employees (Bowen & Lawler III, 1992) which

matches the discussion and consultation culture of CNV Vakcentrale. The findings indicate

that there is some ambiguity whether the cultural values can support the administrative

purpose. Two interviewees indicated that they wanted to implement a performance appraisal

28

system which pursues the administrative goal. This means that the quality approach is not

very well suited. On the other hand, the observational data indicated that workers at CNV

Vakcentrale are intrinsic motivated. This is not in line with the administrative purpose

because it gives workers an external inducement to work harder and is therefore not very

useful for intrinsic motivated employees (Seong & Lewis, 2009).

The results about the strategy indicated a link with the quality approach, the strategy

focuses on customer satisfaction and on development and sharing of knowledge. The findings

about the strategy also indicate that the organization under study wants to work with

competent workers which is attained by training and education which links the strategy to the

developmental purpose. Furthermore, transparency and feedback are important in the new

strategy. The quality approach also focuses on these aspects, its objective is to satisfy internal

and external customers and create an environment of continuous improvement (Bowman,

1994). In the quality approach, information of all actors is involved which makes the system

transparent and uses elaborate feedback (Noe et al, 2008).

The findings suggest that the job descriptions at the departments have more or less the

same goals which are derived from the organizational strategy, however the nature of the

tasks in the departments differ. Some tasks are relatively easy to measure and there are tasks

which need more proactive acting in order to anticipate on the customers, another aspect

which makes the jobs more divergent is that not every department works for the same

customers. The findings show that there is a need to fulfill all the three purposes of

performance appraisal systems but the developmental goal is the most prevalent. This means

that the behavioral or the results approach could be suited. The behavioral approach would fit

the departments where the jobs are specified and measurable, this would save time in

developing the system (Kearney, 1976). Another advantage of this approach at these

departments is that it provides specific feedback on the task (Kearney, 1976). However, the

behavioral approach does not fit well with the departments where proactive performances are

required, since it assumes that there is one best way to perform a job (Noe et al., 2008). At

these departments the results approach would be more suitable, as it allows for multiple ways

to attain objectives (Cummings, 1984). Another possibility could be the quality approach, data

analysis showed that managers want to appraise their employees on a combination of

performance appraisal system approaches. A feature of the quality approach is that it has the

ability to combine approaches (Jawahar & Selegna, 2003; Noe et al., 2008), however, as was

pointed out earlier, this approach has problems in fulfilling the administrative purpose.

29

The conclusion is discussed in this section. The prevailing approach is the quality

approach, it secures the strategic fit with the organization, since it has the same spearheads.

The cultural values support the quality approach for its suitability with intrinsic motivated

employees and discussion and consultation culture. Furthermore, it has potential to fit with the

different job descriptions in the organization, for its ability to combine other approaches.

There is, though, a problem with this approach, it does not support the administrative purpose.

However, this might not necessarily cause problems in the organization under study. Intrinsic

motivated employees might not be motivated by external rewards which is pointed out by

Selden & Sowa (2011) who conducted a study in nonprofit organizations, they found a

modest link between pay for performance and job satisfaction. Furthermore, Seong & Lewis

(2009) found no positive link between productivity and external rewards at public

governments. These studies give reason to believe that employees in nonprofit and public

organizations are not very sensitive for external rewards. Instead, intrinsic motivated

employees are triggered by being involved in system design (Wright, 2001) and that

increasing workers’ experience of meaning, responsibility for outcomes, and knowledge of

results will enhance their motivation (Hackman & Oldham, 1980). Another solution to the

presented problem could be to implement a different system which is suitable for the

administrative purpose, separate from the performance appraisal system for the developmental

and strategic purpose. This line of thought is pointed out by Armstrong (1976): ‘not the best

idea to combine performance review with reward review, when the developmental

performance review is confused with a salary review, everyone becomes over concerned

about the impact of the assessment.. It is better to separate the two’. Implementing two

systems will probably lead to higher costs, on the other hand, there are only two departments

that want to use the administrative purpose which are also the departments in which the jobs

are already being measured quite detailed. This means that a separate system does not has to

go hand in hand with high extra costs. When these issues are taken into consideration, it can

be concluded that the best kind of performance appraisal system for CNV Vakcentrale, is a

performance appraisal system with the qualitative approach.

Practical & Theoretical Implications

After the conclusion, the practical and theoretical implications are drawn. First the

practical implications will be discussed which will be followed by the theoretical

implications. Theory and results indicated that there are actions that organizations can take to

enhance the success of the choice for a performance appraisal system. Firstly, that

30

organizational support for the choice of performance appraisal system is very important

(Vinke, 2012; Jongbloed, 2012). The first step in creating support is making sure that senior

management truly believe in the success of the performance appraisal system. It is important

to have senior management support from the outset, this will facilitate company wide

acceptance of the performance appraisal system (Weatherly, 2004; Armstrong, 2009). Once

senior management support is created, employees also have to accept the new performance

appraisal system. This can be done by getting them involved in the process, this will help the

system to adapt to the employees needs and enhance acceptability of the system which will

result in a more effective system (Roberts, 2003). Secondly, as was mentioned before, the

quality approach is not very suited for including external rewards in the performance appraisal

system. However, the results indicated that the organization under study has intrinsic

motivated employees, who are likely not triggered by external rewards. There are multiple

possibilities for motivating those employees, Armstrong (2009) suggests multiple ways in

which performance management can stimulate employees in a non- financial way. These are

recognition, provision of opportunities to succeed, skills development and career planning,

enhancing job engagement and commitment. Furthermore, intrinsic motivated employees are

triggered by involvement in the design and implementation of the performance appraisal

system (Wright, 2001). Kuvaas (2006) also found that intrinsic motivated employees receive

more work satisfaction when they had a certain amount of autonomy in the performance

appraisal.

Now the practical implications have been drawn, the theoretical implications will be

pointed out. A theoretical implication of this study is that it combined theory of the profit,

non-profit, public sector, this was done to make it useful for non-profit organizations who try

survive in a competitive environment which is relevant because managers of non-profits have

long been eluding performance management of employees (Kaplan, 2001). Furthermore, there

are few comprehensive examples which highlight critical elements for successful adopting a

performance management system in non-profits (Becker et al., 2011), this study tried to add to

this literature by investigating a non-profit organization that wanted to implement a

performance appraisal system. Another theoretical implication is that the results of this study

are in line with earlier findings that performance appraisal systems are not generic and easily

passed on from organization to organization, the results indicated that the performance

appraisal approach has to be modified to the organization under study.

31

Strengths & Limitations

After the practical and theoretical implications this discussion section will continue

with the strengths and limitations of this study. First, the strengths will be discussed which is

followed by the limitations. A strength of this study is that it used triangulation of methods

which enhanced the quality of the case study (Yin, 2003). This was done by combining

interviews, direct observation, and organizational documents. It provides a view of different

perspectives on the organization under study. Another strength is that it contributes to the

existing literature, by elaborating all the prevailing performance appraisal approaches which

makes it relevant for the organization under study. Furthermore, the moment of the study was

well chosen, the research was performed just before the organization was considering to

implement a performance appraisal system and just after the announcement of the new

strategy. This made it possible to match the performance appraisal approach to the new

strategy. Furthermore, the moment was well chosen because the organization under study was

facing the afore mentioned external threats which made the case study relevant.

This study also has some limitations. The first limitation is that the direct observation

technique used, might have been too informal. Several events, mentioned in the method

section, were observed and extensive notes have been made during these events. However,

this does not have to be constraining since qualitative direct observation (Tashakkori &

Teddlie, 2003) fit with the kind of information that was needed. This choice of direct

observation was made, because the cultural values of the organization were observed and it

was not possible to identify the most important cultural values on forehand which would be

needed for a more quantitative observation approach. Another drawback of direct observation

could be reactivity. When an event is observed, the observed people could behave differently

because they are being observed. This study tried to reduce reactivity by observing over a

longer period which is confirmed by Kirmeyer (1985) who concluded that reactivity effects

reduce over time. The reactivity effects of observations are questionable and may be small

(Kent & Foster, 1977; Haynes & Horn, 1982; Kazadin, 1982; McCall, 1984). Furthermore,

this study relies for a part on in depth interviews with managers which could make the study

dependent on subjectivity. However, this decision was made since the managers had expert

knowledge on the new strategy and the cultural values which partly still had to be

implemented. They also had knowledge about the tasks, responsibilities, and duties performed

at their departments which made them suitable for the study. Another limitation is that only

qualitative research was conducted, it might have been stronger when it was combined with

quantitative research. A combination of the qualitative and quantitative approach might have

32

indicated relationships which would not have been salient in conducting qualitative research

alone (Eisenhardt, 1989). This study failed to do so, since the organization under study had

problems with the response rate of questionnaires. The response rate was too low to be

representative, therefore, it was decided to conduct qualitative research only. The last

limitation of this study is, that it focused on a niche, it was conducted at a non-profit

organization in the Netherlands. There are few organizations that are comparable which

makes the generalizability somewhat limited.

Suggestions for Future Research

Finally, this study ends with suggestions for future research. Firstly, to enhance the

generalizability, it would be useful to see how non-profit unions are using performance

appraisal systems in other European countries. Secondly, research to the motivation of the

employees of CNV Vakcentrale could be done to find out how they can best be motivated.

This study found indications that the employees are intrinsically motivated, however, future

research might shed more light on this. A third suggestion for future research is to find out

whether the main conclusion is still applicable after the cultural change. The results indicated

that CNV Vakcentrale is going through cultural change, they are trying to implement new

cultural values which fit with the newly implemented strategy. Since cultural change is hard

to implement successfully (Schein, 1990), it would be useful to find out whether the choice

for performance appraisal system is still relevant after the implementation of the new

organizational culture which is in line with Torrington et al. (2011) who say that the

performance appraisal system has to change in line with the organization. A last suggestion

for future research is how the performance appraisal system can be successfully implemented

at a Dutch non-profit organization and what has to be taken into account while doing this.

33

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42

APPENDIX

Interview schedule Wat is uw naam?

Wat is uw leeftijd?

Functieomschrijving?

Part 1: Cultural values

- Kunt u de cultuur van CNV Vakcentrale omschrijven?

- Wat zijn kenmerkende waarden waar binnen het CNV belang aan wordt gehecht?

- Hoe kunt u de werksfeer bij het CNV omschrijven?

- Hoe zou de ideale CNV medewerker zich moeten gedragen?

- Welke culturele waarden kunnen worden verbeterd bij CNV Vakcentrale?

- Welk van de drie doelen past volgens u het best bij de cultuur van CNV Vakcentrale

en waarom?

Part 2: Strategy

- Wat is de strategie van CNV Vakcentrale?

- Waarin kan CNV Vakcentrale zich in onderscheiden?

- Wat is de kracht van CNV Vakcentrale?

- Wat zijn verbeterpunten van CNV Vakcentrale?

- Wat zou een beoordelingssysteem voor uw afdeling kunnen betekenen?

- Waaraan moet een beoordelingsysteem voldoen om bij het CNV effectief te zijn?

- Welk van de drie doelen past volgens u het best bij de strategie van CNV Vakcentrale

en waarom?

Part 3: Job descriptions (alleen voor de afdeling managers).

- Wat zijn de kerntaken die op uw afdeling worden uitgevoerd?

- Wat zijn de verantwoordelijkheden die met die taken gepaard gaan?

- Welke doelstellingen zouden bij uw werknemers passen?

- Hoe zou een beoordelingssysteem hier bij passen?