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Category: Miscellaneous

Autor: Moihlobudi 10 August 2011

Words: 4934 | Pages: 20

1. Introduction 2

2. Definition of concepts 2

2.1 Performance appraisal 2

2.2 Work engagement 4

2.3 Job satisfaction 4

3. Elements or characteristics of an effective performance appraisal system 6

3.1 Description of the five elements or characteristics of an effective appraisal system and the practical measures linked to them 6

4. Evaluation of the "effective performance appraisal systems" questionnaire 11

4.1 Elements revealed on the questionnaire 11

4.2 Elements not revealed on the questionnaire 12

5. Evaluating the companies we work for with the "effective performance appraisal systems questionnaire" 13

6. The link between the effectiveness of a performance appraisal system, work engagement, job satisfaction and intention to quit – A literature review 15

6.1 Link between the effectiveness of a performance appraisal system and work engagement 15

6.2 Link between the effectiveness of an appraisal system and job satisfaction 15

6.3 Link between the effectiveness of a performance appraisal system and intention to quit 16

7. The link between the effectiveness of a performance appraisal system, work engagement, job satisfaction and intention to quit – An empirical glance 17

8. Executive Summary 20

9. References 21

Annexure A: Performance appraisal system questionnaire

1. Introduction

The main aim of this assignment is to discuss performance appraisal system and its correlation with the attitudinal outcomes, viz: work engagement, job satisfaction and intention to quit. The focus of the initial part of the assignment is on the definitions of these four concepts and characteristics of an effective performance appraisal system. Furthermore, the "effective performance appraisal systems questionnaire" that has been completed by individual members of the study group is analysed based on the salient themes, pointing out problems with performance appraisal systems as well as the level of compliance in our environment.

Secondly, a literature review is conducted in order to find the link between the effectiveness of a performance appraisal, work engagement, job satisfaction and intention to quit. Here reference is made on our own group's levels of work engagement, job satisfaction and intention to quit in relation to the effectiveness of the performance appraisal system that the group is exposed to. Three charts drawn from the average scores obtained from every individual member of the group are plotted on the Y-axis (performance appraisal system) and X-axis (work engagement, job satisfaction and intention to quit). The individual performance appraisal systems scores on the Y-axis are then correlated with the corresponding outcomes on the X-axis. The trends depicted on each of the three charts are analysed in order to reveal the relationship between the Y-axis and the X-axis. The assignment is concluded with an executive summary which briefly outlines how the entire project was executed.

2. Definition of concepts

This section provides three definitions of each of the following four concepts based on the available literature: performance appraisal, work engagement, job satisfaction and intention to quit. A comprehensive definition of each of the concepts is provided at the end of the three definitions of each concept.

2.1 Performance appraisal

2.1.1 Performance appraisal: First definition/description

Performance appraisal is defined as a "method by which the job performance of an employee is evaluated, generally in terms of quality, quantity, cost and time" (Ahmed, Hussain, Ahmed & Akbar, 2010: 62).

2.1.2 Performance appraisal: Second definition/description

Other authors (Swanepoel, Erasmus & Schenk, 2008: 369) defines performance appraisal "as a formal and systematic process by means of which job relevant strengths and weaknesses are identified, observed, measured, recorded and developed", the primary purpose being to improve the individual performance of an employee.

2.1.3 Performance appraisal: Third definition/description

According to Gerber, Nel & Van Dyk (1998:169), "Performance appraisal system is defined as the process of identifying, measuring and developing human performance. Performance appraisal systems must not only accurately measure how well an employee is performing a job, but they must also contain mechanism for reinforcing strengths, identifying deficiencies and feeding such information back to employees so can improve such performance."

2.1.4 A comprehensive definition of performance appraisal

Performance appraisal can be defined as a process of evaluating an employee's job performance (Ahmed, et al., 2010) with the purpose of identifying, measuring and improving areas of employee's performance (Swanepoel, et al., 2008) that are linked to the attainment of organisational objectives. The evaluation is done in accordance with agreed standards. The results of the performance appraisal will provide a feedback related to where performance improvements are needed.

2.2 Work engagement

2.2.1 Work engagement: First definition/description

Michael, Christian, Garza & Slaughter (2011: 89) describe work engagement "as connoting high levels of personal investment in the work tasks performed on a job".

2.2.2 Work engagement: Second definition/description

De Lange, De Witte, & Notelaers (2008: 202) refers to work engagement as "a positive affective-motivational state of fulfilment that is characterized by vigour, dedication and absorption"

2.2.3 Work engagement: Third definition/description

Thirdly, Attridge (2009: 383) provided a slightly different and yet succinct definition of work engagement. According to Attridge, work engagement is the extent to which employees are involved with, committed to, enthusiastic and passionate about their work.

2.2.4 Comprehensive definition of work engagement

Work engagement is therefore a work-related mental state of an employee characterised by positive outlook, personal commitment to his/her work, enthusiasm and passion.

2.3 Job satisfaction

2.3.1 Job satisfaction: First definition/description

Job satisfaction is the pleasurable or positive emotional state of the employee as a result of the appraisal of one's job and job experiences (Ahmed et al, 2010: 63).

2.3.2 Job satisfaction: Second definition/description

Weiss (2002: 175) defines job satisfaction as "positive or negative evaluative judgment one makes about one's job or job situation."

2.3.3 Job satisfaction: Third definition/description

According to Swanepoel, Erasmus & Schenk (2003: 22) job Satisfaction is the degree of discrepancy that exists between what a person expects and to gain from work and what that person perceives is actually gained.

2.3.4 A comprehensive definition of job satisfaction:

Job satisfaction is an emotional state revealing the employee's level of happiness with their job, which translate into effectiveness and productivity.

2.4 Intention to quit

2.4.1 Intention to quit: first definition/description

Grobler, Warnich, Carrel, Elbert & Hatfield (2006: 243) define intention to quit as the desire for an employee to choose to leave the organisation without giving the normal period notice.

2.4.2 Intention to quit: Second definition/description

An individual's intention to quit can be described as a psychological response to specific organizational conditions which fall along a continuum of organizational withdrawal behaviours ranging from day-dreaming to the physical act of quitting (Tett and Meyer, 1993).

2.4.3 Intention to quit: Third definition/description

Kuvaas (2006: 509) defines turnover intention ‘as the behavioural intent to leave an organization'

2.4.4 A comprehensive definition of Intention to quit

Intention to quit is an attitude of intending to leave an organization which an employee develops in response to a number of factors and conditions affecting negatively his/her working conditions in an organisation,.

3. Elements or characteristics of an effective performance appraisal system

According to Cascio (2010) the following are the five (5) main elements or characteristics of an effective performance appraisal system:

• Relevance;

• Sensitivity;

• Reliability;

• Acceptability; and

• Practicability.

The above five (5) elements are described below.

3.1 Description of the five elements or characteristics of an effective appraisal system and the practical measures linked to them

3.1.1 Relevance

Description

Relevance refers to clear links between the standards of performance for a specific job and organizational objectives and between the critical job elements identified through a job analysis and the dimensions to be rated on an appraisal form (Cascio, 2010: 336). This implies an effective performance appraisal system is the one which unambiguously and explicitly specifies which aspects of the employee's job performance will be evaluated against the key organizational objectives.

Practical measures linked to Relevance

There are three processes that need to be undertaken to ensure relevance of the performance appraisal system, namely: establishing clear links between the performance standards of all jobs and the organisational goals; ii) establishing unambiguous correlation between critical elements of the job and performance dimensions to be rated on the appraisal form; and (iii) ensuring regular maintenance and updating of job descriptions, performance standards and appraisal systems (ibid: 336).

3.1.2 Sensitivity

Description

According to Cascio (2010: 337) sensitivity implies that a performance-appraisal system is capable of distinguishing effective from ineffective performance. If best performers are not rated differently from poor performers then the whole appraisal system will merely be a pointless and fruitless exercise. It will therefore not assist employees to develop, and will undermine the motivation of both supervisors and subordinates.

Practical measures linked to Sensitivity

While the performance appraisals ratings should primarily be used for developmental purposes, it would be insensitive for organizations not to incentivise good performers and disincentivise poor performers through distinct rewards of one kind or another. Organizations should have in place clear policies that will unambiguously have distinct package of rewards and recognition for good performance on the one hand, and corrective and punitive measures for poor performance on the other hand. Examples of rewards for good performance include performance bonuses, performance excellence awards and other performance-related incentives that the organization chooses to have.

3.1.3 Reliability

Description

According to Swanepoel, et al (2008: 373) the performance appraisal system must produce evaluations or ratings that are consistent and repeatable. Cascio (2010: 337) seems to agree with this assertion as he equates reliability with consistency of judgement. He further argues that each rater must be given an opportunity to observe what the employee has done and the conditions under which he/she has done it so that there is no confusion between unreliability and unfamiliarity.

Practical measures linked to Reliability

Cascio (2010) seems to suggest that ratings made by supervisors during performance appraisal should be considered to be the most reliable measure for the employee's actual performance than those made by his/her peers. To some extent this practice would render the appraisal system reliable since the employee's supervisor is primarily the one who is mostly familiar with the conditions under which his/her subordinate perform.

However, the reliability of the performance appraisal results of the employee by the supervisor should also be validated through the process of moderation in order to ensure that the rater's bias or subjectivity is eliminated. For instance, the process of moderation in a number of organizations is conducted after the supervisor has formally evaluated the employee or group of employees. The moderation process involves a Manager who holds a more senior position above the employee's supervisor and another manager who is not necessarily from the same department or business unit.

3.1.4 Acceptability

Description

Acceptability of a system is considered to be a very important element of an effective performance appraisal system. Swanepoel, et al (2008) support this notion as they assert that the support and legitimacy that a system receives from managers and employees will probably carry more weight in determining its success than its inherent technical makeup.

Thus, acceptance of performance ratings by employees renders the performance appraisal system legitimate, valuable and fosters employee's ownership over the process (Roberts, 2002).

Practical measures linked to Acceptability

For performance appraisal system to be acceptable as legitimate, both managers and employees should be fully involved during its development, implementation and maintenance (Swanepoel, et al., 2008). Similarly, Allan (1994) advises that users should be involved when designing a performance appraisal system as that would be helpful in identifying potential trouble spots and considering practical aspects of administration.

The key advantage of entrenching a genuine employee participatory element in performance appraisal is that it results into an atmosphere of cooperation and employee support, which encourages the development of a coaching or counselling relationship. This will to a greater extend reduce appraisal-related tensions, defensive behaviour and rater-ratee conflict (Roberts, 2002).

Another important mechanism to render the performance appraisal system acceptable is to make it very explicit to employees what aspects of job performance they will be evaluated on (Cascio, 2010).

3.1.5 Practicability

Description

Practicability means that the performance appraisal system and its instruments are easy for managers and employees to understand and use (Cascio, 2010, & Swanepoel, et al, 2008).

Practical measures linked to Practicability

In practice, the performance appraisal system should be user friendly and manageable in terms of amount of administration (time and paper work) and its cost effectiveness (Swanepoel, et al., 2008: 374). Allan (1994: 5) is in support of this measure in that he points out that there should be fewer forms to complete, so that it becomes less burdensome to managers.

The element of practicability could further be enhanced through adequate training of performance appraisers in reducing uncertainties so that appraisers acquire the necessary capacity and ability to assign accurate ratings (Laird and Clampitt, no year of publication:).

Allan (1994) also attest to the importance of training raters/appraisers on the philosophy of the performance appraisal system, how it fits in with the organization's goals and strategies, how it will help managers, and the actual mechanics of the system, including how to use the rating forms. Allan came to the conclusion that training on the performance appraisal system should help develop skills for managers for observing and recording employee's behaviour and for giving them appropriate feedback.

On a practical level studies also confirmed the importance of training appraisers. For instance, the need for training of appraisers was revealed in the survey of Fortune 500 companies (Laird and Clampitt, no year of publication). Eighty nine (89) of these companies reported that training programmes resulted with positive attitude towards performance appraisals and improved appraiser rating skills.

4. Evaluation of the "effective performance appraisal systems" questionnaire

4.1 Elements revealed on the questionnaire

The "effective performance appraisal systems" questionnaire covers elements of an effective performance appraisal, and these are relevance, sensitivity, practicability, reliability and acceptability.

4.1.1 Relevance

Questions 1, 3, 4, 10, 11 and 14 put more emphasis on the relevance of the performance appraisal system, as a tool for assessing performance of employees. Some of these questions try to establish the link between standards and targets set for performance and organizational-wide objectives – and probes the extent to which the relevant aspects of the job are included in the performance appraisal system.

4.1.2 Sensitivity

Questions 2 and 7 are in line with Cascio's (2010) description of the sensitivity of the performance appraisal system. Question 7 asks if the performance appraisal system is capable of distinguishing between poor performers from good performers – and that the rewards are reflective of the individual's ratings on the system.

4.1.3 Reliability

Questions 5, 6 and 13 focus on the consistent use of the performance appraisal system in the rating of employees by supervisors.

4.1.4 Acceptability

The performance appraisal system questionnaire also probes the level of acceptability through Questions 9 and 12 since it asks the question whether the system is accepted and supported by all parties involved, and whether it entails the negotiation between managers and each of their team members' performance targets.

4.1.5 Practicability

Question 8 of the questionnaire focus on how practical is the performance appraisal system as it focuses on how easy it is to administer the performance appraisal system from the perspective of both the manager and the subordinate.

4.2 Elements not revealed on the questionnaire

4.2.1 Training of performance appraisers

This is an important aspect in ensuring that managers, as performance appraisers acquire the requisite skills for dealing with the complexities of performance rating. This aspect has been omitted in the questionnaire. Without adequate training it would be difficult for the performance appraisers to assign accurate ratings and provide the necessary feedback to the employees being rated.

According to Roberts (2002) the performance appraisal system fails to meet its primary goal if the manager is unskilled at conducting the appraisal interview or is incapable of providing clear guidance and counselling.

4.2.2 Subjectivity and Unfair rating of the employee by the supervisor

Question 5 of the questionnaire questions the reliability of the performance appraisal system. In this instance, a negative element is revealed in terms of the level of subjectivity that would potentially result in underrating and/or overrating of the employee by their supervisor, i.e. the problem of inflated ratings.

4.2.3 Insensitivity of the performance appraisal system

Question 6 of the questionnaire reveals the insensitivity of the performance appraisal system in that factors beyond the employee's control that causes decline in performance are not always taken into account when rating the employee.

4.2.4 Frequency and feedback sessions on employee performance appraisal

The frequency with which performance appraisal and feedback sessions are conducted is not revealed in the questionnaire. Without regular scheduled feedback sessions, employees are deprived of an opportunity to address key issues with their managers. Interaction with employees is critical as this implies that the employer should provide more time to interact with employees one-to-one in order to evaluate their strengths, limitations and growth potential. The conversation between the employer and the employee provides a valuable opportunity to discuss potential financial rewards and promotions, which can be a source of increased job interest on the part of the employees (Javitch, 2006).

4.2.5 Lack of recognition of self-appraisal

The performance appraisal system questionnaire does not cover the aspect of self-appraisal by the employee. Roberts (2002) indicates that several studies point out that self-appraisal increases employee preparation and readiness for the performance appraisal session, contribute positively to overall satisfaction, increases perceived appraisal fairness and reduces defensive behaviour when used for developmental purposes.

5. Evaluating the companies we work for with the "effective performance appraisal systems questionnaire"

The sample group of six (6) people rated the effective performance appraisal systems questionnaire. The analysis of the results is presented according the level of compliance to the group's environment in relation to the five (5) elements of effective performance appraisal systems.

Relevance, Sensitivity and Practicality

The three elements of an effective performance appraisal questionnaire, namely: relevance, sensitivity and practicability were rated high by the group. This implies that the performance appraisal system across the group's organizations conform to relevance, sensitivity and practicability. It therefore implies that the performance appraisal system as experienced by the group is highly effective in so far as relevance, sensitivity and practicality are concerned.

Acceptability and Reliability

In contrast, those aspects of the questionnaire that relate to acceptability and reliability were rated moderately by the group, which implies that the performance appraisal system is either less reliable or acceptable or the level of acceptability and reliability of the system is not satisfactory.

Comments on the themes identified and shortcomings

The mean appraisal scores of the sample group reveal that the effectiveness of performance appraisal system in their organizations is relatively high.

One key observation noted is that the questionnaire as an instrument used has some shortcomings, since it is more biased to relevance, sensitivity and practicability, with less emphasis on reliability and acceptability.

Inconsistency in the use of performance appraisal system

The scoring of the performance appraisal system by the sample group reveals shortcomings that are inherent in some organizations. This means the findings seem to suggest that the performance appraisal system is not always used consistently and fairly amongst different teams and individuals doing different jobs for the achievement of same organizational objectives.

For instance, in most of our group's organizations, sales teams are normally rewarded (either monetary reward or promotion) based on the number of sales they closed in the previous period. This means the results of the performance appraisal system are either ignored or demoted to a secondary decision making tool in the evaluation process.

On the other hand, teams like support or maintenance are never rewarded by the number of issues they have resolved in the previous period. The issues resolved by these teams cannot be traced directly to the revenue generated by the company in that period.

These two groups of people belong to one company and therefore share the same organisational objectives, but are rewarded using different decision tools and parameters. This clearly shows how a performance appraisal system falls short in handling such issues.

6. The link between the effectiveness of a performance appraisal system, work engagement, job satisfaction and intention to quit – A literature review

This section focuses on the link between the effectiveness of the performance appraisal system with each of the three attitudinal outcomes, based on the literature reviewed. We recognise that the sample size is very small (only 6 participants), which may limit the reliability of the results.

6.1 Link between the effectiveness of a performance appraisal system and work engagement

Irrespective of the performance appraisal system, Bernardin (2002) contends that the majority of workers who receive a less than perfect appraisal are less motivated to increase productivity and more motivate to seek employment elsewhere.

6.2 Link between the effectiveness of an appraisal system and job satisfaction

Studies conducted by Ahmed et al (2010) and Pettijohn, Pettijohn & d'Amico (2001) reveals a correlation between appraisal systems and job satisfaction.

The study completed by Ahmed et al (2010) concluded that performance appraisals are positively related to employee job satisfaction. Satisfaction with performance appraisal system is important, as dissatisfaction with the process negatively affect job performance and employee satisfaction. In this instance, this also implies that important outcomes such as good job performance would be revealed if the performance appraisal system is perceived by employees to be good.

Pettijohn et al (2001) in their study of salespersons revealed that an effective appraisal system that put emphasis on feedback to employees reduces ambiguity, which in turn increases job satisfaction. It is further argued by these three authors that employees who perceive the performance appraisal system as fair would have higher job satisfaction than those who perceive the system to be unfair.

On the other hand if employees fail to understand or accept the criteria included in their performance appraisals then job satisfaction would decline.

An effective performance appraisal system which is integrated with good human resources practices has the likelihood to increase employee job satisfaction (Ahmed, et al., 2010).

6.3 Link between the effectiveness of a performance appraisal system and intention to quit

Shaw, Dineen & Fang (2009) contend that formal performance appraisals and close monitoring of employee behaviour is a good barometer for performance distinctions among employees and provide a setting in which turnover forces increase for poor performers and decrease for good performers.

Ahmed et al (2010: 64) observed positive findings regarding turnover intention with performance appraisal satisfaction. His observation is that those employees who are satisfied with how performance appraisal is conducted tend to have lower intentions to quit.

Other attitudinal outcomes relate to perception of individual employees about performance appraisal politics in their work environment, which negatively influence their jobs, their feelings towards colleagues and eventually their intention to leave increases. Thus, employees who viewed their workplace as political are more inclined to develop intention to quit (Ahmad, Lemba & Ismail, 2010).

These studies, as highlighted by Ahmad et al (2010) point out that in instances where the performance appraisal system is manipulated due to the rater's bias and intent to punish subordinates, the intention to quit increases.

Other attitudinal outcomes relate to perception of individual employees about performance appraisal politics in their work environment, which negatively influence their jobs, their feelings towards colleagues and eventually their intention to leave increases. Thus, employees who viewed their workplace as political are more inclined to develop intention to quit (Ahmad, Lamba & Ismail, 2010).

These studies, as highlighted by Ahmad et al (2010) point out that in instances where the performance appraisal system is manipulated due to the rater's bias and intent to punish subordinates, the intention to quit increases.

7. The link between the effectiveness of a performance appraisal system, work engagement, job satisfaction and intention to quit – An empirical glance

The above graph illustrates the correlation between the effectiveness of performance appraisal system and work engagement.

The trend line slopes slightly towards the left. This would imply a positive correlation between effectiveness of the performance appraisal systems and the work engagement of participants. Thus, put simply, as the effectiveness of the performance appraisal systems increases, so does work engagement increase as well. This is consistent with the literature on the link between the effectiveness of the performance appraisal systems and the work engagement, as discussed above.

In the above graph, the trend line slopes slightly towards the left. This would imply a positive correlation between effectiveness of the performance appraisal systems and the job satisfaction of participants. Put simply, as the effectiveness of the performance appraisal systems increased, so did job satisfaction increase. This is consistent with the literature on the link between the effectiveness of the performance appraisal systems and the job satisfaction.

The trend line slopes slightly towards the left. This would imply positive correlation between effectiveness of the performance appraisal systems and the intention to quit of the group. Put simply, as the effectiveness of the performance appraisal systems increased, so did intention to quit increase.

The trend depicted in the above graph is not entirely consistent with most literature, on the link between the effectiveness of the performance appraisal systems and the intention to quit.

The other attitudinal outcome revealed in our study sample which has been omitted in the appraisal questionnaire is the perception of the individual about workplace politics, and in particular performance appraisal politics.

8. Executive Summary

The purpose of the research project conducted by the group was to link the effectiveness of a performance appraisal system to important outcomes such as work engagement, job satisfaction and intention to quit. The available literature as well as the workplace experiences of the group was used to analyse the effectiveness of the performance appraisal system questionnaire. The three graphs, which are based on the group's evaluation of the questionnaire were drawn and analysed in terms of the slopes of the trends. The first two results indicate that the work engagement and job satisfaction increase when the effectiveness of the performance appraisal system is high, which is consistent with the literature.

However, the graph emphasising the link between the performance appraisal system and intention to quit does not correlate with the literature. In the case of our group, the intention to quit increased though the effectiveness of the performance appraisal system was perceived to be high. Some other factors that are not necessarily revealed in the questionnaire could have influenced the trend. For instance, demographic factors and pay satisfaction would probably influence the intention to quit positively or negatively.

One of the key lessons learnt is that the smaller size of the group does also limit the accuracy and reliability of the research results, particularly in analysing certain attitudinal outcomes in an organization. This implies that the larger the sizes of the study group the higher the reliability of the results.

Therefore, the effective performance appraisal system and its correlation with the three outcomes should be expanded to take into account the other components of organizational performance management system.

9. References

Ahmad, R., Lemba, C., and Ismail, W.K.W. 2010. ‘Performance appraisal politics

And employee turnover intention', Jurnal Kemanusiaan, 16: 99-109.

Ahmed, A., Hussain, I., Ahmed, S. and Akbar, M.F. 2010.

‘Performance Appraisals Impact on Attitudinal Outcomes and Organisational Performance', International Journal of Business and Management, 5(10): 62-68.

Allan, P. 1994. ‘Designing and Implementing an Effective Performance

Appraisal System', Review of Business, 16(2): 3-8.

Attridge, M. 2009. ‘Measuring and Managing Employee Work Engagement:

A Review of the Research and Business Literature', Journal of Workplace Behavioural Health, 24: 383-398.

Bernardin, H.J. 2002. ‘Increasing the Accuracy of Performance Measurement:

A Proposed Solution to Erroneous Attributions', Human Resource Planning, 12(3): 239-250.

Cascio, W.F. 2010. Managing Human Resources: Productivity,

Quality of Work Life, Profits. 8th ed. New York: McGraw-Hill.

De Lange, A.H., De Witte, H. & Notelaers, G. 2008.

‘Should I stay or should I go? Examining longitudinal relations among job resources and work engagement for stayers versus movers', Work and Stress, 22(3): 201-223.

Gerber, P.D., Nel, P.S. & Van Dyk, P.S. 1998. Human Resources Management,

3rd ed., Halfway House: International Thompson.

Grobler, P., Warnich, S., Carrell, M.R, Elbert, N.F., & Hatfield, R.D.

Human Resource Management in South Africa. 3rd ed. London: Thompson.

Javitch, D. 2006. ‘Appraising Employee Performance',

Management Services, unreferenced Volume & Part numbers: 19-20.

Kuvaas, B. 2006. ‘Performance Appraisal Satisfaction and Employee Outcomes:

Mediating and Moderating Roles of Work Motivation', International Journal of Human Resource Management, 17(3): 504-522.

Laird, A. and Clampitt, P.G. unreferenced year of publication. ‘Effective Performance

Appraisal: Viewpoint from Managers', Journal of Business Communication, 22(3): 49-57.

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