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July – December 2019

The relationship between employee performance assessments, self-esteem, self-efficacy and intention to stay

The relationship between employee performance assessments, self-esteem, self-efficacy and intention to stay

By Tarryn Gill Mushfieldt

  • DEC 2019
17 minutes to read

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Achieving a high-performance organisational culture

Attributes of high-performance organisations include a clear vision and value proposition, realistic and measurable objectives, inspired leadership, and a commitment to act in the best interests of shareholders and customers. Yet at the heart of these organisations are the employees whose day-to-day efforts play a significant role in the organisations’ ultimate success. While organisational effectiveness is heavily dependent on employees’ skills and experience, how employees are treated in the workplace and how they view their own contribution are equally (if not more) important.

Various studies have shown that effective performance management practices are key to ensuring high-performance employee behaviour. Managers need to strike a balance between ensuring that the work gets done in line with organisational objectives and recognising that employees have different personalities, emotional triggers and stress tolerance levels. Pushing too hard, for example, can lead to despondency and under-achievement. Similarly, an impersonal, task-driven approach can prove to be counter-productive. Managers should rather aim to get the best out of their employees by acknowledging their strengths and shortcomings, and helping them to satisfy their own personal career aspirations. Providing sufficient opportunities for training and professional development is critical for productivity, while involving employees in decision making and work design can boost their motivation levels. Even offering reward-based incentives can encourage excellent performance.

While organisational effectiveness is heavily dependent on employees’ skills and experience, how employees are treated in the workplace and how they view their own contribution are equally (if not more) important.

An important tool in the process of building a high-performance organisational culture is the employee performance assessment. Here a manager gives employees feedback on their performance over a specified period against agreed objectives, as well as a performance rating. Feedback invariably covers both positive and negative aspects of individuals’ performance. Not surprisingly, some employees do not take kindly to criticism – even if it is intended to be constructive. To be found wanting in certain areas can be a blow to some people’s self-esteem. As a result, they might start to doubt their self-efficacy, which is their perceived ability to cope with the demands of the job, and to question whether they should stay at the organisation.

How performance assessments impact employees’ self-esteem, self-efficacy and intention to stay is of great importance to results-driven and quality-focused organisations. However, to date, research on the interrelationships among these different phenomena has been limited. The main purpose of this study (which formed part of the researcher’s Master of Business Administration degree) was to address this knowledge gap by examining how feedback from managers during the performance assessment process impacts employees’ self-esteem, self-efficacy and intention to stay. The study, which was qualitative in nature, comprised a literature review and semi-structured, face-to-face interviews with a group of employees (spanning different occupational levels and performance categories) in a financial services organisation in South Africa.

Employee performance assessments: A double-edged sword?

Performance assessments have a dual purpose: on the one hand, they tell employees how they have fared in relation to agreed financial and/or operational targets, which could prompt rewards or some sort of remedial action; on the other hand, they provide a yardstick of whether or not the organisation as a whole has met its objectives, which could necessitate changes of a more strategic nature. Thus, while laying the foundation for employees’ ongoing development, performance assessments also offer clues to the organisation’s overarching challenges and priorities.

A performance assessment relies on a set of key performance indicators (KPIs) which managers evaluate at regular (say, six-monthly) performance reviews. Managers also provide a performance rating, indicating how well an employee has performed relative to the standard. The fact that performance can be measured helps to ensure that the award of any merit bonuses is objective and fair.

Notwithstanding the structured approach followed in performance assessments, the quality of execution is dependent on the relationship between the manager and the employee, as well as the nature of the support provided by the manager from one performance review to the next. When conducted in a professional and caring manner, a performance assessment can be a positive, worthwhile experience which prompts higher levels of employee engagement and achievement. When conducted in a careless or insensitive manner, it can be a demoralising experience, which focuses on the negative rather than on finding ways to leverage an employee’s existing talents and enhance performance through training or mentorship.

How performance assessments influence employees’ self-esteem, self-efficacy and intention to stay are discussed in more detail below.

Managers need to strike a balance between ensuring that the work gets done in line with organisational objectives and recognising that employees have different personalities, emotional triggers and stress tolerance levels.

  • Self-esteem

Self-esteem refers to how positively people view themselves – that is, whether they feel capable of performing, achieving success and making a valuable contribution. Self-esteem is linked to concepts like self-confidence, self-respect and self-worth.

Employees’ experience in an organisation strongly influences their self-esteem, which is evident in their attitudes and behaviour. The interactions they have with their manager will contribute significantly to their organisational experience and self-esteem, particularly as a superior‒subordinate relationship is characterised by a certain amount of tension. Self-esteem in turn has a strong bearing on an employee’s job performance. Therefore, a manager should, in assessing performance, aim to keep the individuals’ self-esteem intact or even boost it if possible. That is not to say that unsatisfactory performance should be overlooked, but a cautious approach is recommended – particularly if the sub-optimal performance might be attributable to stress or feelings of being unappreciated.

  • Self-efficacy

Self-efficacy is linked to self-esteem, but refers to people’s belief in their ability to perform a designated task or job in a particular environment. It is therefore more situational. Yet it influences future behaviour because it is associated with people’s expectations of their ability to deliver positive results on a sustainable basis.

In an organisational context, a lack of self-efficacy among employees can be linked to a perceived lack of proficiency or even a lack of knowledge as to how to execute a task. This can result in employees feeling insecure and self-critical, which erodes their self-efficacy. The more complex a task or job to be performed, the higher is the risk of employees’ self-efficacy being compromised.

When it comes to performance assessments, managers need to ensure that employees are properly informed about the expectations surrounding a task or job and, furthermore, that they receive proper training in order to develop the necessary competencies. Regular interactions with, and feedback from, the manager are important. When employees receive positive and/or constructive feedback, their self-efficacy will rise. This provides a firm foundation for continuous improvement.

When people leave, they take knowledge of the business, skills and institutional memory with them, often leaving a void that is difficult to fill.

  • Intention to stay

Employees’ intention to stay at an organisation is influenced by a number of factors, with emotional well-being being a key driver. Having a clear purpose, the opportunity to learn, and being recognised and valued are important contributors to employees’ emotional well-being, and therefore their desire to stay. Such aspirations can be satisfied through a well-designed personal development programme and an effective performance management system. In contrast, reasons for employees leaving an organisation include inadequate remuneration, a lack of recognition, a lack of trust in the leadership, a poor work culture, ineffective performance management practices, and limited career prospects.

Strained manager‒employee relationships will, as noted earlier, erode employees’ self-esteem and self-efficacy and could hasten their departure from the organisation. In this regard, employee complaints could range from managerial neglect to excessive micro-management and a fixation with short-term performance at the expense of personal growth. Of course, employees might decide to leave because they are poor performers, despite being given ample opportunities and encouragement. They are simply not prepared to put in the effort to meet the standards of the organisation or to uphold its values.

Employee retention is an ongoing challenge for organisations. When people leave, they take knowledge of the business, skills and institutional memory with them, often leaving a void that is difficult to fill. This hampers productivity and puts additional pressure on remaining staff members. An effective performance assessment system can help to detect employee dissatisfaction or waning morale before negative feelings escalate into an irreversible decision to leave the organisation in search of greener pastures.

What the interviews revealed

All participants highlighted the importance of management feedback – in fact, they considered it to be the most important element in the employee performance assessment process, with transparency being a central pillar. Regular feedback helps to ensure that performance remains in line with expectations, thereby acting as a sort of continuous assessment ‘dipstick’. This should minimise the risk of ‘surprise’ ratings being awarded when the formal performance reviews are conducted. In addition, participants emphasised that ongoing two-way communication is valuable because it facilitates timeous corrective action or a change in direction, if necessary.

Interestingly, those participants who were in the top-performer category met with their managers more frequently than those in the bottom-performer category. Besides having regular monthly meetings with their managers, top performers reported having frequent, impromptu conversations about various aspects of the work – which they found useful. Bottom performers reported having fewer feedback sessions with their managers and also that sometimes the performance ratings they received did not correlate with the feedback they had been given at their monthly meetings – that is, the ratings were lower than anticipated. This suggests that their managers found it difficult to speak openly and honestly about their sub-standard performance, even though the monthly meetings provided the ideal opportunity to raise the subject and discuss possible solutions in the lead-up to the formal review sessions.

Regular feedback helps to ensure that performance remains in line with expectations, thereby acting as a sort of continuous assessment ‘dipstick’.

All participants were of the view that managers should give balanced feedback, offering recognition for a job well done, while also suggesting ways in which they could improve. In a high-performance environment, they said, there is unfortunately a tendency for managers to dwell on what has not gone well. Focusing more on the positive aspects of their performance, and not simply taking the latter for granted, would go a long way towards boosting their morale. Participants said that they did not enjoy feedback sessions in which their manager did all the talking. The value of the session, they said, was in the exchange of opinions and ideas. They also said that they appreciated it when their manager took an interest in their personal lives and did not confine their discussions to work only. This paved the way for a better long-term relationship.

Although the employee assessment process can be a source of anxiety and (depending on the outcome) can negatively affect employees’ self-esteem and self-efficacy, a number of participants reported that they had grown accustomed to the idea that the rating reflected their performance in defined circumstances. It did not validate or invalidate them as human beings; nor was it a predictor of how they would perform in the future. Furthermore, performance at work should not simply be in reaction to external stimuli and events; employees’ own sense of purpose and their inner spirit should be the main driving forces behind their professional endeavours and accomplishments.

The participants were generally of the view that the organisational culture had a major influence on their decision to stay – more so than their relationship with their manager. Mixing with high-calibre staff, contributing towards the realisation of an exciting vision and living the kind of values that make for a better society all helped to give them an identity. However, the importance of an effective performance management system should not be downplayed. It is, after all, one of the keys to persuading employees to aspire to greater things.

To wrap up

Encouraging high levels of performance among employees is a complex undertaking. There is no magical formula that will work in all organisations, all of the time, among all categories of employees. Employee performance invariably fluctuates in response to external stimuli and internal drivers and concerns, some of which are difficult to discern from a management perspective. In this regard, the employee performance assessment can be a valuable tool. When used effectively, it gives definition to the management task ‒ ensuring the systematic scoping of work and the setting of realistic targets, which can be measured, reported and acted on. It also provides a useful framework for an employee development programme, taking fears, concerns, hopes and aspirations into account. When viewed together, the insights gained from employee performance assessments constitute a useful barometer of the organisational climate, which can inform human resources and other strategies.

When viewed together, the insights gained from employee performance assessments constitute a useful barometer of the organisational climate, which can inform human resources and other strategies.

Among the recommendations flowing from the study are: (1) to delink the performance rating – which is often used to arrive at a monetary reward – from the performance assessment, which should mainly have a developmental focus; (2) to build a strong feedback culture in the organisation which encourages managers to face performance issues (both positive and negative) head on when they occur; and (3) to hold employees accountable for upholding the organisation’s values through their behaviour and results.

  • This article is based on the research assignment of Tarryn Gill Mushfield – an MBA alumnus of USB. The title of her research assignment is: The relationship between employee performance assessments, self-esteem, self-efficacy and intention to stay.
  • Her study leader was Prof Mias de Klerk, Professor of Leadership and Organisational Behaviour, Director: Centre for Responsible Leadership Studies (Africa) and Head of Research at USB.

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