This case study examines the practice of performance appraisal in an NHS Trust hospital. North Trust (NT) is a whole district Trust in the northeast of England serving a community of a quarter of a million people. It provides 32 major healthcare services, including the full range of in-patient, day case and out-patient services alongside a comprehensive primary care service including health visiting and district nursing services. It employs some 2,200 ‘whole time equivalent’ (WTE) staff. The Trust has recently been relatively successful, meeting all its financial targets thus far. However, at the time of the study – the late 1990s–mid 2000s – it was, similar to many other Trusts, experiencing increasing difficulties in meeting the demand for healthcare services within the constraints of its current resources.

The development of appraisal at NT

Appraisal at North Trust, a variant of the national Individual Performance Reviews (IPR) scheme, was first implemented for senior managers in 1988. Between 1988 and 1994 it was largely restricted to managerial and senior professional groups. In 1994 a review of IPR was conducted. An initial analysis found patchy coverage of IPR and a half-hearted commitment to it. Following the review a decision was taken to revise and re-launch the IPR scheme and ‘roll it out’ to a wider group of staff.
There were two key influences underpinning this decision.
First, a new chief executive with a much greater belief in the value of performance management was appointed. Second, a decision to pursue the Investors in People (IiP) award resulted in a decision to commit more time and effort to making IPR work. The next 18 months thus saw the revising of policy, the redesigning of supporting paperwork, and the committing of major training resources to IPR.
Final written agreement was secured in March 1995 and the new policy and procedure were ‘signed off’ by the chief executive in June 1995. The key aims of IPR at NT were articulated in the new policy document as ensuring all staff understand the Trust’s goals and strategic direction; are clear about their objectives, how these fit with the work of others and the organization as whole and are aware of the tasks they need to carry out;
are given regular feedback and explicit assessment of performance; and are developed to improve their performance.
The revised policy document made an explicit commitment to implement IPR for all employees.
The revised IPR policy at NT placed greater emphasis on measurability as a key aspect of the setting of individual objectives. The policy document outlines the principles underpinning individual objective setting as following the acronym ‘SMART’. Here objectives should be specific, measurable, agreed/achievable, realistic and time-bound, with the form of measurement for each objective to be agreed at the time that they are set. According to the CEO, when he first arrived, this aspect was perceived as being very weak in practice:
Most people didn’t know what an objective was if it sat up and bit them on the backside. Objectives here tended to be half-a-dozen or so generalized statements with no measurable outcome, no timescale, no agreement about how something is to be judged and whether it has been done or not, with the result that there is little accountability. For the CEO the result of this was major problems in ‘getting things done’ at the Trust:
We don’t have a performance culture here. This place was just great for talking about things. Only talking about things, not actually doing them.
Thus a key aim for the CEO was to ‘toughen up’ IPR.
This was to be attained in part by an increased emphasis on the evaluation of the achievement of work objectives and to encourage detailed measures to be established for all new objectives. However, the CEO’s view of the direction that IPR should go in did not seem to be shared by its ‘owners’: the personnel department.
Here a softer, more developmental focus for IPR was envisioned:
What is important is the manager taking the time out to talk to the individual about how they are progressing. How they feel things are going. And talk about training and development. These things really help morale. Forget the form filling and objectives, and all the other bits. It is these things that really make the difference.
In the remainder of this case study we describe the practice of performance appraisal in North Trust.

The IPR process Mechanics

IPR at NT is designed to cascade downwards through the organization. The business plan is formulated by December/January each year and reviews conducted during February and March for senior managers. The majority of appraisals for other staff take place during April and May. A minority of managers, because of the large number of appraisals they conducted, in one case over 50, scheduled the appraisals over the full year, which in effect largely undermined the direct link with business planning for the majority of their staff. However, linkages with the business plan, especially for lower levels of staff, were also difficult to discern in the accounts of the IPR reviews conducted by those managers who did these in phase with the business planning process. Here managers’ descriptions of how they appraised healthcare assistants, porters, domestics, catering staff, laundry workers and nurses rarely mentioned anything other than the loosest of connections with the business plan.
The IPR policy specifies very much a ‘top-down’
process, noting that only occasionally might it be beneficial to involve another manager closely involved with the objectives being measured (such as a project manager).
In practice, no examples of this were found. A particular problem reported by the interviewees was that of continuity of appraisers between appraisal cycles. Owing to high levels of managerial turnover, caused by resignations, promotions, transfers, secondments, etc. of both appraisees and appraisers, nearly a third of interviewees reported having different appraisers from one cycle to the next. This level of managerial change, because of the need for a close working relationship between manager and employee for appraisal to be effective (see below), was generally felt to limit IPR’s potential.
Interviewees described how continuity between appraiser and appraisee was important because reviews were generally perceived as improving as both parties got to know each other better and the discussion became more useful and open.........

Question

1 Is IPR a failure at North Trust?
2 Should IPR be retained by the organization? If you recommend retention, what changes would you advise?
If you recommend it should be scrapped, what would you advise should replace it?
3 According to Wright (1991), a paradox of performance management systems is that the meaningful is rarely measurable and the measurable is rarely meaningful. What evidence is there to support such a criticism in North Trust?
4 A key for managers in measuring individual performance under systems of performance appraisal is distinguishing between ‘real’ and ‘created’ performance achievements. The danger is that managers may actually measure an employee’s ‘ability to perform in the theatrical rather than task oriented sense’ (Randle and Rainnie, 1997). What evidence is there that this is a problem at North Trust? How can the problems of ‘impression management’ be minimized?
5 It has been suggested that the key challenge currently facing performance appraisal systems is their upgrading, renewal and re-invention such that they are more compatible with business environments. To what extent does IPR fit the business environment of the ‘new, modern and dependable NHS’ (Department of Health, 1997)?
6 Some analysts have suggested that the NHS is moving from a bureaucratic mode of organization to a network mode of organizing. What are the implications of such a development for IPR practice?