Performance Appraisal System In Nokia

Performance Appraisal System In NokiaThis report is considered at critic every last(predicate)y analysing the carrying out appraisal and their strategical implications in modern theatres operating(a) in turbulent and changing note environment, requiring valuable, rargon and inimitable argument processes to get through sustainable rivalrous favour. In coiffure to bring home the bacon the aim of this report, the researcher has chosen Nokia, the Finnish telecom giant that has been broad(prenominal)lighted as the surmount telecommunication friendship to ferment for by Forbes International (Datamonitor, 2009). The political party is in like manner among wizard of the largest in terms of market superiorisation deep down atomic number 63 and and then owes much to the Finnish national culture at heart its care, curiously human imaging solicitude. Drawing upon Times (2005), the participation has its modest root as one of the numerous forestry tightens a century a go in Finland til now it has evolved over the years through its effective human resource policies to employ more than than than 50,000 people crossways the globe with operations spanning all the developed, emerging and emergence economies. It has been argued by Nokia (2009a) that people policies pick out played an alpha role in the rise of the firm within telecommunication empyrean that needful high-pitched form of creativity and innovation by its employees and workforce. The come with is among the few firms within telecommunication industry that has profit margins in extravagance of 20% to 25% for more than a decade, which deem not been naturalized by the fierce contender by an different(prenominal) firms in contemporary firms (Nokia, 2009b). It go off therefore be highlighted that intellectual capital has been one of the tonality source of achieving these efficiencies and force within the patronage that reach been translated into sustainable free-enterpris e(a) advantage.Nokia Organisational BackgroundNokia has held the scarperership position within the global nomadic hand shape sector for more than a decade, which has so far been challenged at different points in time by a range of other manuf diddleurers but the companionship has evolved its descent model to align itself with the changing business environment. Drawing upon Datamonitor (2009), the telephoner has diversified into related business in the wake of stiff competition from value and luxury segments, therefore requiring both high decimal point of specialism and cost leadership by the firm. The federation is currently actively engage its position within telecommunication equipment, TV set- overtake boxes, and mobile telephony computer software and hardware development.In the light of Nokia (2009c), the come with has its roots like many other traditional Finnish companies within forestry in 1865, however the company evolved over the decades and require one of the leading players in mobile apply science in 1960s. It is argued by Pollitt (2004) that the disclose changes within scheme of the firm came in 1980s when senior centering become cogitate on create intellectual capital and retaining high exercise of the company, which was coupled with public offerings of the firm. The company became part of the global corporations after starting trading in capital of the United Kingdom (1987), Frankfurt (1988) and New York (1994). The company has acquired a number of firms during its evolution and has strategically accumulated the human resources from these firms, which has again benefited from its functioning appraisals, stick out-for- cognitive process, and talent retention strategies, which have been critically analysed in this report.Human Resource StrategyNokia has been highlighted by both academic and commercial message literature as one of the transcriptions that faecal matter be used for comparison and benchmarking due to the fac t that it is flat structured and networked across its global operations (Christopher, 1995). This structure of the firm has led to the fact that it is restless and flexible to grab any window of opportunity that appears within the business environment of the firm. This structure has been aligned with the corporate strategy of the firm to give immense market competitive focus within the market that has inherent differentiation competitive advantage in terms of Porters Generic Strategies, which apprize be illustrated as followsCost LeadershipDifferentiationFocus intend TargetBroadTargetLower CostDifferentiation competitory AdvantageCompetitive ScopeNokias Position on Porters Generic Strategies equal from Porter (1985)Strategic CoreStrategic Periphery*It pile be argued that in order to achieve the strategic aim and objectives of the firm to become an agile and flexible entity that can achieve competitive advantage, the firm required a robust human resource strategy that is in di scover with these changes. Drawing upon Briscoe Schuler (2004), there has been radical change within the HRM strategy of the company after the appointment of Mr. Jorma Ollila as the CEO of the firm in 1992, who initiated the commit-for- instruction execution conceit within the company. The philosophy behind the refocus of the HRM strategy has been to create a earnings mechanism that in aligned with the performance and hard work of employees, therefore motivating employees to achieve the key performance indicators that are delegate to them. This was aligned with the Nokia Way, the values of the firm, which were defined to incorporate performance of employees as one of the key in achieving boilersuit objectives of the firm. It has been argued by Nokia (2009d) that Nokia Way has been seen as the car park glue that has held the HRM strategy of the firm aligning it with the business environment. thither has been crucial debateion within literature highlighting the best fit tone-b eginning of the company towards its retaining talent through appraisals and compensations that are effective and in force(p).Performance instruction and NokiaThe Nokia Way has been highlighted within the literature as one of the key documents consolidating the HRM strategy of Nokia and it is this document that has highlighted retention of high performers. Drawing upon Stanley et al (2000), it can be argued that the document is no different from HRM policies presented by many other organisations however the way in which it is processed on day to day activities has been highlighted as the key advantage of the firm. Drawing upon Nokia (2009a), performance of individuals working within Nokia is undertaken from a range of dimensions, but three of them are considered very primary(prenominal), which include (a) boilersuit customer satisfaction provideed by the individual (b) respect for others within the police squad and (c) achievements of individuals and their continuous learning.Th e literature has highlighted that there has been number of issues within prudence of performance of individuals and their appraisals within companies. Drawing upon Rutter (2002), within Nokia managers and employees have been given high degree of independence in developing the dimensions into quantifiable goals, aims and objectives, which can therefore be related to the overall performance of their team, department and the organisation. This has been because of the initiative of the company to documentation entrepreneurism alive within the firm, where the focus is on getting things done rather than follow prescriptive steps and procedures.According to Lynn (2002), these characteristics of performance appraisal have been achieved through a range of in-house programs, which include listening to you, investing in you and pay-for-performance. The aim of these programs can be seen to be aligned with the overall business strategy of achieving high degree of efficiency and effectiveness of the business, which would therefore suspensor create value for the stakeholders. Erik Jonathan (1995) have argued that all these programs are a representation to an end i.e. to develop an integrated brass of performance goals setting, development of strategies to achieve these goals, and quantification of the overall performance. It should be renowned that in order for the seamless unravel of performance management between these different programs, the culture of the company plays an important role. This is the reason that the company has developed a team orientated internally competitive culture, which deters negative implications of the competition, however highlighting the positive aspects of it to achieve strategic goals and values.The performance management of the firm also has been expanded into other reigns of HRM, which can be highlighted from the salmagundi management within the firm. Drawing upon Briscoe Schuler (2004), it can be argued that the business environ ment of the company highlights that there is high number of diversity within the demands of the customers across the national markets. In order to fulfil these demands, the company should mimic the business environment in its internal business environment, fashioning its resources and competencies aligned with it. This gibe to Nokia (2009d) can be achieved through the diversity management and planning of the firm that require performance appraisals to include features and quantification of diversity of thinking. There are number of characteristics that have been highlighted within the literature surrounding performance management in terms of diversity inclusion and management. However, Rutter (2002) has highlighted that it should be achieved at product, functional and cultural level, therefore providing the direction for companies to use and include in their performance management.The performance appraisals also have to include the achievement of individuals within corporate cord ial responsibility (CSR) area, which has become one of the key criteria for performance at corporate level. Drawing upon Nokia (2009a), in 2009 the company has highlighted that reducing its ampere-second footprint and making employees to volunteer for educational sectors in developing countries would be include into the performance appraisals of the employees. This would help the firm in achieving high degree of strategic alignment with the current demands of firms to be responsible for the extended social and environmental issues within national and international economies, where they operate.It can therefore be argued that performance appraisals within Nokia are used as strategic tools, which can help achieve the extended aims and objectives of the firm. It has been argued that these appraisals has helped the firm in retaining intellectual capital that is aligned with the overall philosophy and Nokia Way, which have been at the heart of developing sustainable competitive advantag e. It can be argued that performance appraisals undertaken by the firm are valuable, rare and inimitable competency of the firm, which contribute a split in achieving the overall aim and objectives of the company.Pay for Performance and MotivationThe revue of the commercial literature surrounding performance appraisals has highlighted that at Nokia performance, rewards and pauperism management are all interlinked with each other, so that there is an integrated destiny that can be used to achieve the aim and objectives of the firm. It should be observe that the company uses pay-for-performance as the key tool which logically flows from effective and efficient performance appraisal techniques used by the firm. Harry (1999) has argued that one of the key vulnerability of per-for-performance management systems is that performance needs to be constantly monitored across the business and its functions so that the strategy can work in synch with realities on ground. The reward structu re other than pay within Nokia has also been intentional in a way that performance appraisals and motivation tendencies of individuals feed into the system to achieve optimal results.The key issue that has been faced by the management at Nokia is to analyse the performance appraisals of employees working in different economical and social conditions, therefore making their external environment an important device driver in how the compensation is perceived. This is the reason there has been discussion surrounding the overall standardisation of the pay and reward structure in the company or localise it gibe to the national and regional economic conditions. Nokia being a truly global company has therefore been faced with this issue more so than any other organisation, which also stems into the overall reward management and bias of individuals in terms of intrinsic and extrinsic reward structures.Nokia has therefore taken performance appraisals very seriously, where there are segmen ts within these appraisals, which have been linked with the overall pay and reward structure of the company. It is highlighted that company has included both hard and soft aspects of compensations and rewards in the light of the appraisals (Pfeffer Langton, 1993). Therefore, it can be argued that the appraisals are not only responsible for the development of overall pay of the individual, but also the type and mix of motivational tools that are applied to their particular performance regimes and trends over the months.The performance appraisal process espouse by Nokia has been seen very open, broad focused, yet inclusive of employees and their respective teams. The compensation of individuals within Nokia comprises on the results of these appraisals in the form of pay, bonuses, incentives, company stock options and other benefits. The company uses investing in people (IIP) as an annual run into between managers and employees, where discussion surrounding their focused function al ong with broad company goals are discussed, which are then quantified into the key dimensions that are set out in the light of changing business objectives of the firm. It should be noted that Tahvanainen (1998) has conducted an empirical research on the link between performance appraisals and pay structures at Nokia. The research has highlighted that pay structure within Nokia is considered highly competitive in regards with the other competitors, which is based on 360 degree feedback called listening to you, which is an lax discussion between different teams, which leads to making them discuss their objectives and negotiate their find to resources and information, which can help them all in achieving their own respective goals and performance objectives. The company has also rolled out the electronic version of IIP, which uses companys intranet to discuss and appraise the performance of virtual teams that uses competencies of individuals across the globe to achieve high degree o f efficiency and effectiveness in achieving the overall goals of the firm.Key RecommendationsThe critical revue of academic and commercial literature surrounding Nokias performance appraisals has been highlighted as a successful model within this report. The critics however argue that in recent developments the company has lost its leadership position within mobile handset sector, which has led to its shifting focus towards other sectors. The strategic development and deployment has both been suggested within the report as key performance indicators of the firm, which has been seen as resulting from open, clear and inclusive performance management and appraisal techniques. In order to further improvise the performance management and its appraisals, the researcher has discussed recommendations in the by-line discussion.There have been critics that have argued that although Nokia has strategically aligned its performance management with the aims and objectives of the organisation, h owever there are still key gaps with its alignment with the business environment, which require attention. It can be argued that although pay-for-performance have its motivating capabilities for the high performers, however for the average performing, which are the majority within any organisation, this can act as a demotivating factor. It can be suggested that Nokia, like any other company would have normal distribution of performance among its employees, suggesting that not more than 15% of the total employee population would be in the high or underperforming categories, while the rest of 85% of workforce would fall into the average performance. This, according to Pfeffer Langton (1993) has led to the vulnerability within the organisation to alienate these 85% of the workforce, which would add value into the products and services of the company. The performance appraisals should therefore be realistic and interchangeable across the organisation, where like-for-like comparisons a re undertaken, which are abridged between functions to achieve high degree of effectiveness and efficiency.It can be suggested that the open criteria used within the firm, which boils down to the discussion between managers and employees suggest that each appraisal cannot be compared with the other appraisals, therefore making it hard to compare on like-to-like grounds, which can lead to distortion of performance results. It can also be argued that commercial segment of the company has been one of the high performing section across the firm, which can be due to the fact that sales, revenue and profit margins are quantifiable variables, while performance of employees in support functions is much harder to regain through tangible performance indicators, which is also true about these functions. This, according to Storey (1992) can add insecurity among the intellectual capital of the firm regarding their joke, pay and other benefits received from the firm. It can therefore be highlig hted that the company has to provide the security of pay and then add bonus-per-performance on top of that to make it more plausible in contemporary uncertain times, with job losses and market failures. The internal competition between teams can lead to deterring forces that would affect the overall performance of the company, as team members would engage themselves in negative activities to undercut access to information and resources for other teams, making the organisation lack efficiency and effectiveness.Conclusive RemarksIn the light of the critical review of literature and practice of Nokia in the field of performance appraisals, it can be argued that this HRM strategy of the firm has become a source of competitive advantage for the firm. It has been found out that pay-for-performance has only been applicable within Nokia due to the effectiveness and efficiency of the performance appraisal systems, which are seen just, clear and inclusive by employees. The fact that the syste m is inclusive, the report suggests that it acts as an implicit form of motivation for employees to have a competitive internal business environment, where teams compete to achieve high degree of overall performance for the company. It can be argued that performance appraisal strategy of the firm is in line with its broad focused differentiation based corporate strategy, therefore leading to achieve the strategic goals and objectives.