TQM and Performance Appraisal: Complementary or Incompatible?

• Author: Ebrahim Soltani,Adrian Wilkinson
• Published date: 01 March 2020
• DOI: http://doi.org/10.1111/emre.12317
• Date: 01 March 2020

TQM and Performance Appraisal:

Complementary or Incompatible?

EBRAHIM SOLTANI

1

and ADRIAN WILKINSON

2

1

School of Business and Quality Management, HBMSU, Dubai, UAE

2

Centre for Work, Organization and Wellbeing,Griffith University, Nathan, Queensland, Australia

Despite the scholarly interest in performance management as a key determinant of the effectiveness of enterprise

process improvement methods such as total quality management (TQM) and its derivatives, few empirical studies

have explicitly explored the practice of performance management systems in TQM-focused organizations. In order

to redress thisimbalance, this study aims to describehow organizational and managerialforces led to a performance

management systems failing to embrace the core principles of process improvement methods such as TQM. Using a

qualitativestudy of six large UK-basedautomobile and auto partsmanufacturers, our resultsillustrate how manager-

controlled, individual-focused, past-oriented,long-cycle, and narrowly definedperformance appraisal (PA) systems

can intervene to underline the ultimate potentialof TQM. The paper concludes with the discussion of implicationsfor

theory and practice of TQM and human resource performance management.

Keywords: performance management; performance appraisal; quality management; qualitative study; automotive

industry

Introduction

Despite the popularity of total quality management

(TQM) as the most celebrated enterprise process

improvement method and performance appraisal (PA) as

the most ubiquitous and pervasive human resource

management (HRM) practice, a review of the extant

literature empathically informsus that both practices have

consistentlyfaced a battle to justify theirpositions in terms

of supporting employees and improving organizational

performance (Bowman, 1994; Coens and Jenkins, 2000;

Fletcher 2001; Latham et al., 2007; Giangreco et al.,

2011; Iqbal et al., 2015; Nisen, 2015; Adler et al., 2016;

DeNisi and Murphy, 2017).

To date, studies of the adoption and implementation of

performancemanagement and appraisal systemsin TQM-

focused organizations have concentrated on the extent to

which either of these practices could achieve their

intended objectives but little on the potential links and

synergies. This inattention is despite the argument of

scholars such as Murphy and Cleveland (1991: 72) who

assert that ‘the system that is usedto appraise performance

needs to be consistent with the culture and principles that

guide the conductof the organization’(see also Ghorpade

et al., 1995). In fact, the absence of the necessary

congruence between PA systems with those of TQM

criteria forperformance review has ledthe most influential

quality guru (i.e., Deming, 1986) andseveral like-minded

scholars and practitioners (e.g., Scholtes, 1993; Cardy

and Dobbins, 1994; Waldman, 1994; Cardy, 1998;

Buckingham and Goodall, 2015; Cappelli and Tavis,

2016) to be particularly vocal in expressing their

disapproval of PA systems. Deming (1986) cites

traditional PA as a ‘deadly disease’which engenders fear

than hope and creates more anxiety than motivation.

Scholtes (1993: 349) observes that ‘The two [PA and

TQM] approaches represent a fundamental choice for

leaders: one or the other; not both’. Recently high profile

companies such as General Electric, Microsoft, Google,

Netflix, Adobe and Accenture (and many other Fortune

500 companies) h ave jettisoned tradi tional year-end

evaluations as being unfit for purpose in terms of helping

and engaging employees and driving performance

(Buckingham and Goodall, 2015; Adler et al., 2016;

Cappelli and Tavis, 2016; Ewenstein et al., 2016).

Despite these pessimistic views aboutthe compatibility

of PA systems with enterprise process improvement

methods, other TQM and HRM experts defend PA as a

mechanism to regularly track progress against goals and

an invaluable source of feedback. As Prince (1996: 44)

Correspondence: Ebrahim Soltani, Faculty member,Professor, School of

Business and Quality Management, Hamdan Bin Mohammed Smart

University. E-mail E.Soltani@hbmsu.ac.ae

DOI: 10.1111/emre.12317

©2018 European Academy of Management

European Management Review, Vol. 17, –(2020)

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–,

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has succinctly put it, ‘presenting a caricature of poor

appraisal practices hardly bolsters the argument that all

appraisal practices should be eliminated’. However, the

popularity of enterprise process improvement methods

such as TQM and the ubiquitous nat ure of PA have not

been matched by the development of empirical insights

which could advance our understanding of the alleged

contradiction between them. Give n the centrality of

enterprise process improvement methods and PA to an

organization’s functioning and long-term survival (see

Waldman, 1994; Powell, 1995; Cappelli and Tavis,

2016), it is somewhatsurprising to find that littleempirical

research has explicitly focused on how they might work

together (or not) in practice. Hence, the present study is

intended to contribute to this debate by examining the

manner in which PA systems are actually applied in a

sample of quality-focused organizations in the UK.

Our study extends the literature in several ways. First,

previous studies have rarely assessed the actual practice of

PA systems in quality-focused organizations. In fact, much

of the literature on TQM and appraisal is not empirical.(e.g.,

Murphy and Cleveland, 1991; Scholtes, 1993; Bowman,

1994; Waldman, 1994; Ghorpade et al., 1995; Petrick and

Furr, 1995; Prince, 1996; Cardy, 1998; Bach, 2000; Haines

et al., 2004). Indeed Fletcher (2001: 474) observes that

while there has been no shortage of research on PA, it

would be difficult to argue that previous appraisal research

has led to any significant improvements in actual PA

practice. We present the findings from an empirical study

and describe the extent to which PA systems and the

precepts underpinning TQM are compatible.

Second, the absence of recent empirical evaluations of

PA in organizational environments with a TQM

orientation suggests that prior studies fail to account for

developments in contemporary organizations which have

been transformed by adopting various enterprise process

improvement methods. We draw our conclusions from a

cross-case comparison of six TQM-focused firms and

describe the ways in which the TQM context influences

the nature and extent of PA systems and the extent to

which TQM-focused organizations are willing to create a

balance between HRM and TQM approaches to PA

systems (see Ghorpade et al., 1995; Prince, 1996; Cardy,

1998; Wilkinson et al., 1998). In this respect, our study

contributes to literature that highlights the importance of

a commitment and enabling (as opposed to control and

coercive) HR system (Organ, 1988; Arthur, 1994; Adler

and Borys, 1996) as well as the research that treats PA as

a communication process that occurs in well-defined

organization context (Murphy and Cleveland,1995,p.30;

Murphy and Cleveland,1991) such as TQM which requires

the best cultural fit, if the TQM organization is to succeed.

The pursuit of a quality culture and workplace context

conducive to employee development and continuous

performance improvement comes as organizations try to

avoid superficial template applications of TQM, and shift

away from an overreliance on traditional quality control

tools. Hence, under this interpretation, employees are most

committed, trusted and enabled to use their discretion to

regain control in case of non-compliance and system

breakdown and ‘live’quality in their actions rather than

simply obeying an edict from on high or being coerced into

compliance out of fear of being dismissed (see Hesseling,

1984; Organ, 1988; Arthur, 1994; Adler and Borys,

1996; Abrahamson and Fairchild, 1999; van der Wiele

et al., 2000; David and Strang, 2006; Jiang et al., 2012;

Srinivasan and Kurey, 2014). Finally and third, we provide

practical insights into PA issues in organizations with a

TQM orientation, pointing out ways that TQM-focused

organizations can develop a contextually-appropriate PA

system that realizes TQM’s value proposition, and

highlighting the expected synergistic effect of both TQM

and PA (see Jiménez-Jiménez and Martínez-Costa, 2009).

Performance appraisal and quality

management: A review of the literature

As stated in the introduction, the aim of this study is to

explore and describe the current practice of performance

management and appraisal systems in organizational

environments with a TQM orientation. It is accordingly

necessary to examine these constructs at the conceptual

and theoretical levels so it may serve as a benchmark

against which to interpret the qualitative fieldwork data.

Performance management

Performance management (PM) has been defined as ‘a

continuous process of identifying, measuring, and

developing the performance of individuals and teams and

aligning their performance with the strategic goals of the

organization’(Aguinis, 2013: 2). As a dynamic, year-round

way of managing business, PM has been deemed essential

for accomplishing organizational strategy. It serves a

myriad of purposes, ranging from strategic, administrative,

informational, developmental, organizational maintenance

to documentational purposes (Aguinis, 2013). Several

HR-related activities assist PM to achieve these different

purposes. These include strategic planning (i.e., inputs into

what one wants to evaluate in our performance

management system), method of identifying performance

requirements in a particular job (i.e., job analysis and

design), training and development, performance

appraisal/review, and issues related to compensation and

employee motivation. While every HR function plays a

part in accomplishing PM intended objectives, PA has been

regarded as one of the most common tool for organizations

to achieve performance goals. As Aguinis and Pierce

(2008) have observed, PM activities (e.g., feedback, goal-

setting, training, reward systems) begin with PA as a

E. Soltani and A. Wilkinson

©2018 European Academy of Management

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