Introduction: Company Background
Our company (UNIQLO) is one of the popular casual wear retailers in Hong Kong. It has a wide array of fashion products for men and women. The company offers many clothing pieces with different styles and designs. The products are fashionable, comfortable to wear and competitively priced.
The company is among the most successful fashion retailers in Hong Kong. It was founded in Japan and has expanded globally. Fashion retailing and merchandising is a competitive industry. The company, through its years of experience and expertise has developed a business model that generates success through commitment to quality, research and development and affordability. The product line consists of fashion essentials in a trendy and hip designs and styles.
The organization values its people. HR processes – performance management, reward management, training and development, health and safety and disciplinary policy, all aim to communicate the company’s goals and objectives and its commitment to its human resources.
Industry Analysis: Hong Kong Apparel Industry
Hong Kong Apparel Industry is one of the major manufacturing sectors in Hong Kong and has gained worldwide reputation for delivering high quality apparel in a short lead-time. Some apparel manufacturers are incorporating higher value-added activities such as design and brand development some have expanded into the retailing business locally or internationally (www.mshk.com). Among the major competitors of UNIQLO in Hong Kong in Bossini and Giordano.
UNIQLO Products
At UNIQLO, the basic merchandising concept is to offer clothes that can be worn by anyone, anywhere, anytime. UNIQLO’s goal is to offer fashionable, high-quality basic casual wear at reasonable prices so that everyone can enjoy the quality, color and style of UNIQLO clothing (Fast Retailing Annual Report, 2004).
UNIQLO People
Fast Retailing is a merit-based company. It evaluates each employee’s ability and performance regardless of age, gender or nationality. It is UNIQLO’s people who provide customers with a compelling shopping experience and deliver the ultimate in merchandise and service. In the development and training of employees, UNIQLO aims to maintain an organization in which each store manager, supervisor, merchandiser and head-office employee functions as a accomplished professional, demonstrating the commitment of an independent entrepreneur (Fast Retailing Annual Report, 2004).
UNIQLO Business Model
The mission and visions of UNIQLO is to continuously offer fashionable, high quality, basic casual clothing that everyone can wear at reasonable prices. The mechanisms of unifying and connecting production bases in China and other countries and UNIQLO stores in more than 700 distant locations around the world is the cornerstone of the UNIQLO business model devised to accomplish this mission (Fast Retailing Annual Report, 2005).
Performance Management
Performance management is an important element in Human Resource Management. Performance management helps the organization in sustaining or improving performance, promoting greater consistency in performance evaluation, and providing high-quality feedback. Performance management is related to other processes such as reward management and training and development. Through performance management, the contributions and accomplishments of each employee are measured. Performance management also identifies the strengths and weaknesses of each employee. The information gathered through performance management are used in compensating and rewarding employees as well as determining their training and developmental needs. Performance management according to Sims (2002a) is the integration of performance appraisal systems with broader HRM systems as a means of aligning employees’ work behaviors with the organization’s goals. Thus, a performance management system consists of the processes used to identify, encourage, measure, evaluate, improve, and reward employee performance at work.
Purpose of Performance Management
The main purpose of performance management is to ensure that work is progressing according to the organization’s plans. Performance management is used to control employee performance. Control is accomplished by comparing actual performance with predetermined standards or objectives and then taking action to correct any deviations from the standard (Sims 2002a). The company has established a well-designed performance management system, which aims to achieve the following objectives:
1. Establish Performance Standards – in order to set expected performance levels, performance is used to establish performance standards.
2. Monitor Performance – the primary purpose of monitoring performance is to provide information on what is actually happening in the organization.
3. Take Necessary Corrective Action – corrective action can be taken after the actual performance has been assessed and compared with performance standards.
Performance Planning
A job description indicates the role of an employee within the organization and what results they are expected to achieve on the job. Ideally, job descriptions present a clear picture of employees’ roles, responsibilities, required outputs, and standards used to judge the quality of their performance (Gilley and Maycunich 2000).
Performance planning is the process where in goals are set. Goal-setting should be done by the manager and the employee. To create a good performance plan, employees need to know where they are now (the current state) and where they want to go (the goal state). Goals should be measurable and achievable. The plan should include process and support during the execution phase to help managers and employees do the things necessary to have the plan succeed. This includes monitoring progress, identifying and addressing problems, and helping employees stay on their edge to maximize their growth and their performance. The plan should be modifiable during the execution phase to respond to changing circumstances (Zwell 2000).
For a sample of a job description form, please refer to Appendix 2
Performance Review/Appraisal
Performance appraisal is the process by which an employee’s contribution to the organization during a specified period of tine is assessed (Sims, 2002b). Performance appraisal is integral to the successful operation of most organizations. During this process, employees are evaluated formally and informally to determine the nature of their contributions to the organization. Appraisal occurs during time periods and in meetings that are scheduled to produce reasoned consideration of contributions, but it also occurs informally as employee contributions are observed, or when an evaluation is brought to the attention of others (Dickinson, 1993).
Evaluation of Performance Appraisal Tools
The performance appraisal tools that are used by the company are the following:
Management by Objectives
Management by Objectives involves a joint determination by subordinate and superior of common goals, major areas of responsibility, and results expected; these measures are used as guides for operating the unit and assessing contributions of members (Miner, 2002). MBO is the best known of result-oriented methods of performance planning and review and, in some form; probably the most frequently used approach to performance planning and review. MBO is a target-setting or results-oriented approach to performance management. It recognizes that employees perform better when they have targets, and even better, when they have participated in setting those targets.
For a sample of management by objectives forms, please refer to Appendixes 3 and 4
Evaluation of Management by Objectives
The strengths of MBO as a performance appraisal system are:
- It increases the employee’s involvement in setting performance objectives and increases the motivation required to reach those objectives
- It offers an objective, factual basis for measuring accomplishments
- It is entirely job centered
- It establishes the appraiser as a facilitator of performance rather than a critic of performance
- It assures the organization that all employees are working toward a common purpose
- It supports psychological concept that people will exercise self-direction and self-control in the accomplishment of organizational aims that they have participated in setting.
Organizations that use MBO frequently report that they are very effective, highly motivating performance appraisal systems. MBO systems communicate to employees exactly what is expected of them, and provide clear behavioral benchmarks for performance. Developmental feedback is inherent in the entire MBO process, because the employees skills and abilities are taken into account at the front end when goals are initially set and along the way as progress toward the goals is measured. In an MBO system, goals are highly personalized and reflect the employee’s experience and training (Kulik 2004).
MBO as a performance appraisal tool has also some weaknesses. These include the following:
- It is an organizational philosophy and can not operate at one organizational level without operating at all levels
- MBO ca not be implemented at all organizational levels simultaneously, nor can it be implemented from the bottom up – it must begin at the very top of the organization and works its way down
- It requires a total and sizable commitment of management support, interest, and time if it is to succeed
- MBO is not applicable to all types of jobs. Individuals performing routine, repetitive, or machine-paced jobs are better appraised by another method
- Employees require extensive training before they normally respond in a positive way to MBO (Caruth and Hadlogten 2001).
Rating Scales
In addition to management by objectives, the company uses rating scales to measure performance and other work-related factors. Rating scales according to Rudman (2003) are readily adaptable to suit specific jobs and organizations, and there are virtually no limit to the aspects of person or performance that can be rated. In simple terms, rating scales require the reviewer to rate the employee’s performance in an absolute sense, not in comparison to other employees. Employees can be rated on virtually any trait or characteristic or dimension of performance or behavior. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality.
For a sample of a rating scale form, please refer to Appendix 5
Evaluation of the Rating Scale
The company uses a rating scale in appraising employee performance. The rating scale is among the widely used method of appraising the performance. The method is simple and easy to use. Rating scales according to Rudman (2003) are readily adaptable to suit specific jobs and organizations, and there are virtually no limit to the aspects of person or performance that can be rated. In simple terms, rating scales require the reviewer to rate the employee’s performance in an absolute sense, not in comparison to other employees. Employees can be rated on virtually any trait or characteristic or dimension of performance or behavior. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality.
Problems with Rating Scales
Rating scales are among the popular performance appraisal tools. They are easily to construct, use and understand. However, there are significant problems in using rating scales.
1. Ratings are sometimes subjective.
2. Not all the characteristics of a job are equally important and certain characteristics are more important for some jobs than for others.
3. Ratings can be given easily enough for individual characteristics or dimensions, but it is more difficult to turn into a valid or useful overall assessment.
The performance appraisal tool that the organization uses is simple and easy to understand which is good because performance appraisal should be like that. However, it also has limitations and weaknesses.
My Personal Experience in Performance Appraisal
Through the performance appraisal process, organizations measure the adequacy of their employees’ job performance and communicate these evaluations to them. Performance appraisals assess how well employees are performing and determine appropriate rewards or remedial actions to motivate employees to continue appropriate behaviors and correct inappropriate ones.
Our company uses both informal and formal performance appraisals. The informal performance appraisal is done through regular communication between the manager and me. In an informal appraisal, the manager assesses my performance and tell me how I am doing with my assignment and how well I am collaborating with others in the organization. The formal appraisal is done only twice a year. The manager uses the formal appraisal to summarize and continue the informal interaction that takes place between him and me. The formal appraisal is done by:
- Referring to past feedback and documented observations of performance
- Describing my current performance
- Describing the desired performance
- Getting a commitment to any needed change
- Follow up
In order to clearly illustrate the importance and the benefits of performance appraisal, let me discuss my experience during my recent performance appraisal.
Before the schedule of the performance appraisal, the manager prepares the documentation and plans. During the appraisal, the manager explained to me that the purpose of the appraisal is to help me and everyone in the organization to improve and to gather information on how to effectively facilitate these improvement efforts. The manager asked me to assed my total performance for the last six months. Then he asked me to identify my personal strengths and allowed me to discuss. After that, the manager told me what he thinks my personal strengths are. Then he went on describing the areas that he thinks I should improve and work on. He used documentation to demonstrate his findings. After his assessment, he gave me a chance to voice out my opinions about the appraisal. After discovering the reasons and explaining my rating, the manager and I set new goals for performance for the next appraisal period. The manager was honest and considerable.
I consider the performance appraisal in our company as fair and reliable. The manager allowed me to talk about my performance. The meeting atmosphere was clear and free on interruptions.
The Benefits that I gained through the Performance Appraisal
- Motivation – The performance appraisal provided me with recognition for my work efforts
- Training and development – The performance appraisal helped my manager and I to identify the aspects that I need to improve on. I was given training and development opportunities.
- Because of the performance appraisal, I gained a better understanding of my role in the organization.
- I gained a better understanding of my strengths and weaknesses.
- The performance appraisal served as an opportunity for me to discuss and clarify my developmental and training needs with my manager.
- It also served as an opportunity to discuss my career direction and prospects with my manager.
Performance Discussion
The company holds performance discussions at least once a year, particularly at the end of each year. The aim of the performance discussion is to review the employee’s performance and to encourage the employee to participate in the review process. The performance discussion is a one-to-one activity in which the employee meets with his manager to discuss the results of the performance appraisal. The aim of the company’s performance discussion is to involve employees in the assessment of their performance and incorporate their suggestions as to how that performance might be changed or improved.
Personal Experience: Performance Discussion
The manager informed me about the schedule of the performance discussion and asked me to prepare for it. The performance discussion was done at the meeting room wherein employees are called one by one to meet with the manager. The performance discussion started with greetings and then the manager explained the objectives of the performance discussion. Then he asked me to talk about my job and my current responsibilities. He then asked me questions about my job. After that, we reviewed the performance goals that we set during the previous job discussions and then we explored whether these goals proved to be appropriate and attainable. Then we discussed my accomplishments and contributions. Then we identified the problem areas and we made a plan on how to improve existing performance and overcome problems or barriers. The manager assessed my performance and contributions.
Contributions of Performance Management to the Success of UNIQLO
Having a well-designed and properly implemented performance management system has contributed to the overall success of the company. Having a performance management system at UNIQLO has helped the company to continuously improved employee and organizational performance. Performance management helps UNIQLO reduce turnover of highly skilled or experienced employees by providing environments conducive to growth and development. Performance management helps motivate employees to take responsibility for their own development. Performance management permits employees to understand the urgency of keeping skills and abilities current and increase retention of experienced employees by providing career advancement.
The management believes that effective performance is key to productive, high-quality work groups and organization, and performance management is an excellent tool for maintaining and strengthening performance. Performance management allows the organization to obtain the highest quality work from employees, and allows employees to understand their performance and what they can do to improve it. Performance management facilitates and focuses communication of performance information between managers and employees and provides a method of assessing performance. Performance management helps employees improve their skills, abilities, competencies, or behaviors.
The impact of performance management on employee performance and to the overall performance of the organization are:
- Improved personnel work performance
- Personnel with potential for advancement are identified
- Business objectives are realized
- Improved morale
- Improved customer satisfaction
- A clear linkage between pay and performance is achieved
- A competitive advantage is obtained
- Improved quality of supervision
References
Caruth, D. L. & Handlogten, G. D. (2001). Managing Compensation (And Understanding It Too): A Handbook for the Perplexed. Westport, CT: Quorum Books.
Dickinson, T. (1993). Attitudes About Performance Appraisal. In J. Farr, H.
Schuler, & M. Smith (Eds.). Personnel Selection and Assessment: Individual and Organizational Perspectives (pp. 141-161). Hillsdale, NJ: Lawrence Erlbaum Associates.
Fast Retailing Annual Report (2004). FAST RETAILING group, viewed 28
August, 2008,
<http://www.fastretailing.com/eng/ir/library/pdf/annual2004.pdf>.
Fast Retailing Annual Report (2005). FAST RETAILING group, viewed 28 August, 2008,
<http://www.fastretailing.com/jp/ir/library/pdf/annual2005.pdf>.
Fast Retailing Annual Report (2006). FAST RETAILING group, viewed 28 August, 2008,
<http://www.uniqlo.co.uk/dynamic/company_reports/report/annual20
06.pdf>.
Gilley, J. W. & Maycunich, A. (2000). Organizational Learning, Performance and Change: An Introduction to Strategic Human Resource Development. Cambridge, MA: Perseus Books.
Kulik, C. T. (2004). Human Resources for the Non-HR Manager. Mahwah NJ: Lawrence Erlbaum Associates.
Miner, J. (2002). Organizational Behavior: Foundations, Theories, and Analyses.
New York: Oxford University Press.
Sims, R. (2002b). Managing Organizational Behavior. Westport CT: Quorum Books.
Sims, R. (2002a). Organizational Success through Effective Human Resources Management. Westport CT: Quorum Books.
Rudman, R. (2003). Performance Planning and Review: Making Employee Appraisals Work. Crows Nest, NSW: Allen and Unwin.
Zwell, M. (2000). Creating a Culture of Competence. New York: Wiley.
Appendices
Appendix 1
Sample Contract of Employment
This contract of employment is made the _______________ day of ________ 200___ between (Employee name) ________________________________ of (Employee address) ____________________________________________________________, hereinafter known as ‘the Employee’, and (Employer name) ____________________________________ of (Employer address) _______________________________________________________________, hereinafter known as ‘the Company’.
The Regulations and Conditions of Employment as set out herein will be deemed to constitute a “Contract of Employment”, in fulfillment of current employment legislation. All Employees will be required to sign at the space provided at the end of these conditions, agreeing to adhere to the Company’s Conditions of Employment.
Date of Commencement: _____ day of _______ 200__.
Place of Work: The Employee shall be based for the time being at ____________________________________.
Job Function: The Employee shall be employed as _____________ and he/she shall also be required to carry out associated functions as the Company may from time to time require.
Probationary Period: A probationary period of ________ weeks/months will apply. A letter, notifying the Employee of his/her appointment to permanent staff, will be issued at the end of a successfully completed Probationary Period.
Hours of Work: The hours of work shall be ______ a.m. to _______ p.m., or a total number of _____ hours per week, as shall be set out by the Company from time to time but in any event shall at all times be in compliance with the provisions of the governing law.
The Employee’s annual salary shall be ___________. Salary will be reviewed _______________. Payment shall be by direct debit into the Employee’s bank account, the account details to be provided by the Employee to the Company on the execution of the within contract.
Annual Leave: In addition to the nine Public Holidays, twenty working days holiday is allowed during a full calendar year, 1st January to 31st December in accordance with the provisions of the governing law.
On termination of employment, the entitlement will be a proportion of the appropriate annual holiday based on the number of calendar months completed during the calendar year of departure, subject to a minimum period of notice under the applicable government policy.
Absence Through Illness: The Manager must be notified as soon as possible after 9.00 am in all cases where a member of the staff is unable to attend at the place of work. A medical certificate is required if absence extends beyond three consecutive days and should cover the period until the staff member is declared fit for work. Dental appointments, visits to the doctors, etc, should, where possible, be arranged outside working hours.
Leave of Absence: Approval and duration of unpaid personal leave shall be at the discretion of the Company.
Grievance Procedure: The Company is most anxious that legitimate grievances raised by an Employee are expeditiously and fairly resolved. Any member of staff who has a grievance relating to his/her employment should discuss it with the Company.
Dismissal: The Company hopes that it will not become necessary to dismiss an Employee, however, it must be understood that there are certain breaches of Company Rules for which, after the facts have been ascertained, an Employee may be summarily dismissed or suspended, without pay, pending further investigations. In such an event, an Employee will be afforded a full right of representation of his/her case to the Company before a final decision is made. Continued failure to adhere to normal Company requirements, including timekeeping, attendance, job performance, confidentiality in relation to all the Company’s affairs and general conduct will result in an Employee being subject the following procedure:
The Employee will receive a verbal warning.
The Employee will receive a first formal written warning advising that continued failure to improve on the specific aspect of performance will lead to disciplinary action.
The Employee will receive a final formal written warning.
The Employee will be suspended for a fixed period, without pay.
The Employee will be dismissed in the event of it becoming absolutely clear that no, or insufficient, improvement on the aspect of performance is forthcoming.
At all times the Employer will abide by procedural fairness under current employment legislation when dealing with dismissals from the Company.
Notice Periods: Staff who wish to terminate their employment with the Company are expected to give the following notice:
All Employees on Probation – 1 week
Employees appointed to Permanent Staff – 1 month
Senior/Management Staff – 2 months
Or in times of conflict in accordance with the applicable government policy. Notwithstanding the foregoing, the Company, may, at its discretion, waive its right to notice.
Standard of Dress: All Employees are expected to conform to an acceptable standard of dress to ensure that the image as presented to customers, colleagues and associates is in keeping with the proper professional approach of the Company.
Where uniform is required dress, no personal additions will be made to the uniform, and it shall be cleaned by the Employee for the duration of their contract.
Confidentiality: The Employee will not, during or at any time after the termination of your employment, disclose to any person or persons (except to senior Employees of the Company) nor use for your own benefit any confidential information that you may receive or obtain in relation to the affairs of the Company or its Clients.
Governing Law: Your employment with the Company shall be governed by and construed in accordance with the laws of the Special Administrative Region of Hong Kong of the People’s Republic of China and the parties hereby submit to the Hong Kong courts or Labour Tribunal in respect of any dispute or matter arising out of or in connection with this employment agreement.
Alteration to Terms of Employment: Any alterations in the Regulations of Employment affecting staff individually will be notified by a letter or memorandum, but any general alteration will be communicated in a Circular to be seen by all members of staff.
I agree to be bound by the Regulations and Conditions of Employment as contained in the Foregoing
Signed:
______________________________________
Date:
______________________________________
Signed for and on behalf of the Company:
Signed:
______________________________________
Date:
______________________________________
Appendix 2: Sample Job Description
Appendix 3: Sample MBO Appraisal Form
Name of the Employee:
Designation:
Date of Joining:
Date of Last Appraisal:
Department:
Reporting Officer:
Current Responsibility:
Accomplishments:
Goals for the Next Appraisal Period:
Areas for Improvement:
Employee’s Perceived Training Needs:
Problems Faced:
Solutions Tried:
Appendix 4: Sample MBO Form
Employee’s Name:
Position:
Supervisor’s Name:
Title:
What are your goals for Successful Performance in Current Position?
What do you need this year to work towards your goals?
Notes:
Employee’s Signature
___________________________
Supervisor’s Signature
___________________________
Appendix 5: Sample Rating Scale Form
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