PERFORMANCE APPRAISAL

LOCATING PERFORMANCE APPRAISAL IN HRM PROCESS

JOB ANALYSIS
JOB DESCRIPTION AND JOB SPECIFICATION

ESTABLISHING STANDARDS OF PERFORMANCE

COMMUNICATING PERFORMANCE STANDARDS TO

EMPLOYEES

MEASURING ACTUAL PERFORMANCE

COMPARING ACTUAL PERFORMANCE WITH

STANDARDS AND DISCUSS WITH EMPLOYEES

INITIATING CORRECTIVE ACTION, IF NECESSARY

Definition: “Performance appraisal is the systematic, periodic and an impartial

rating of an employee’s excellence in matters pertaining to his present job and
his potential for a better job” - Flippo
“Performance appraisal is a formal, structured system of measuring and
evaluating an employee’s job, related behaviours and outcomes to discover how
and why the employee is presently performing on the job and how the employee
can perform more effectively in the future so that the employee, organisation
and society all benefit” – R.S. Schuler

THE PERFORMANCE APPRAISAL PROCESS

Objectives of
Performance Appraisal

Establish Job
Expectations

Design an
Appraisal Programme

Appraise
Performance

Performance
Interview

Use Appraisal Data for

Appropriate Purposes
  Objectives of Performance Appraisal

APPROACHES TO PERFORMANCE APPRAISAL

Traditional Systems

Guiding value Attribution to individual Attribution to system

Primary goals Control, documentation Development, problem
solving
Leadership practices Directional, evaluative Facilitative, coaching
Appraisal frequency Occasional Frequent
Degree of formality High Low
Reward practices Individual orientation Group orientation

 Establish Job Expectations

This includes informing employee what is expected of him or her on the job.

 Design an Appraisal Programme

Designing an appraisal programme poses several questions which need answers.

They are, (i) Formal versus informal appraisal; (ii) Whose performance is to be
assessed? (iii) Who are the raters? (iv) What problems are encountered? (v)
How to solve the problems? (vi) What should be evaluated? (vii) When to
evaluate? (viii) What methods of appraisal are to be used?
Formal versus informal appraisal

Whose Performance should be Rated: To the question as to whose

performances should be rated, the answer is obvious-employees. When we say
employees, is it individuals or teams? Specifically, the ratee may be defined as
the individual, work group, division or organisation. It is also possible to define
the ratee at multiple levels. For example, under some conditions, it may be
desirable to appraise performance both at the work-group level for merit-pay
increases and at the individual level to assess training needs.

Who are Raters? Raters can be immediate supervisors, specialists from the HR
department, subordinates, peers, committees, clients, self-appraisal or a
combination of several.

Problems of Rating: Performance appraisals are subject to a wide variety of

inaccuracies and biases referred to as “rating errors”. These errors occur in the
rater’s observations, judgment and information processing and can seriously
affect assessment results. The most common rating errors are leniency or
severity, central tendency, halo effect, rater effect, primacy and recency effects,
perceptual set, performance dimension behaviour, spill over effect and status
effect.

Solving Rater’s Problems: Rater’s should be trained to improve his or her

accuracy in connection with following factors:

 The rater has observed and is familiar with behaviors to be appraised.

 The rater has documented behaviors to improve the recall
 The rater has a checklist to obtain and review job-related information

What Should be Rated? Evaluation Criteria :

1. Quality
2. Quantity
3. Timeliness
4. Cost effectiveness
5. Need for supervision
6. Interpersonal impact

Timing of Evaluation : Organisations conduct performance appraisal once a

year. Newly hired employees are rated more frequently than the older ones.
Frequent evaluation gives constant feedback to the ratee, thus enabling him or
her to improve performance if there is any deficiency.
  METHODS OF APPRAISAL: TRENDS IN PERFORMANCE APPRAISAL

Item Former Emphasis Present Emphasis

1. Terminology Merit Rating, Performance Evaluation and Control Employee Appraisal/Performance Appraisal

2. Purpose: Determine the basis for wage increase, transfer, Employee development, team building
promotion layoff, etc.

3. Application: Four hourly paid/casual/temporary workers For technical, professional and managerial
employees

4. Factors rates: Heavy emphasis on personal traits Emphasis on results, accomplishment, performance

5. Techniques: Rating scales with emphasis on scores. Statistical Management by objectives, mutual goal setting,
manipulation of data for comparison purpose critical incidents, groups appraisal, mutual
consultation. Performance analysis and human
resource development, more qualitative standards.

6. Post Appraisal: Supervisor communicates his rating to employees and Supervisor stimulates employee to analyze himself/
tries to sell his evaluation, seeks to have employee herself and set own objectives in line with job
confirm to his views requirements. Superior helps and counsels

7. Appraisers: Only Superiors Superiors, subordinates, peers, self, users of services

(customers) and consultants (3600 performance
Appraisal)

8. Degree of openness: Completely confidential Open appraisal

9. Leadership Style Autocratic Participative and Democratic

of the Appraiser
10. Subject Individual Team
 PERFORMANCE APPRAISAL TECHNIQUES

TRADITIONAL METHODS MODERN METHODS

PAST ORIENTED METHODS FUTURE ORIENTED METHODS

1. Unstructured Method 1. BARS – Behavioral Anchored

2. Straight ranking method
Rating Scale method
3. Paired comparison method
2. Result Oriented Appraisal or MBO
4. Man to man comparison method
5. Grading method method
6. Graphic rating method
3. Assessment centre method
7. Forced choice method
4. Human Resource Accounting method
8. Check list method
9. Weight check list method 5. Psychological Appraisal method
10.Free essay method
6. 360 Degree appraisal
11.Critical incidents method
12.Field review method
13.Confidential reports
 METHODS OF PERFORMANCE APPRAISAL

Trait Methods Behavioral Methods Results Methods

Productivity
Graphic Rating Scales Behavioral Checklist Method
Measures
Ranking Methods Critical Incident Method Balanced Scorecard
Behaviorally Anchored Rating Human Resource
Paired Comparison Method
Scales Accounting
Behavioral Observation Management by
Forced Distribution Method
Scales Objectives
Checklist Methods
(a) Simple Checklist
Assessment Centre
(b) Weighted Checklist
(c) Forced Choice Method
Essay/Free Form Appraisal Psychological Appraisal
Group Appraisal

Confidential Reports

The Balanced Scorecard

The balanced scorecard was developed by Robert Kaplan and David Norton. It
brings the linkages among financial, customer, processes and learning. Learning
and people management contribute to the enhancement of internal processes.
Inter processes (product development, services development etc.) are critical for
enhancing customer satisfaction and loyalty. Customer satisfaction leads to
customer value creation, which drives financial performance and profitability.

The balanced scorecard can be used to appraise employee performance. The

following recommendations ensure the successful application of balanced
scorecard to performance management.

• Translate the strategy into a scorecard of clear objectives.

 • Attach measures to each objective in order to know the details of
achievement of objectives.
• Cascade scorecards to the lowest level employees in order to enable all
employees to understand how their jobs and duties are aligned with
higher level goals and objectives.
• Provide performance feedback based on measures: Employees must be
provided with feedback on how they are accountable for achieving goals
to what extent they achieved them and the areas and reasons for failure
to achieve the unaccomplished portions.
• Empower employees for performance improvements.
• Reassess Strategy: Balanced Scorecard is a continuous loop process.
Management should make continuous adjustments to the strategy based
on feedback and feed-forward basis.

360 Degree Feedback

360 degree feedback was initiated by the US armed forces was back in the
1940s. However, it caught the attention of the administrator s and HR managers,
who were concerned with the authenticity of the feedback coming from a single
source. Known as the multi- rater appraisal, it is provided by the immediate
supervisor, the employee himself /herself, the peer group and the people
reporting to the individual whose appraisal is being conducted. 360 refers to the
360 degrees in a circle. The basic idea is to seek feedback from a variety of
sources so that the individual biases in the appraisal are controlled. Sometimes,
the appraisal also sought from the customers particularly for those employees
who directly deal with the end users of the products and services of the
organizations. The value of the 360 degree appraisal lies in generating data that
could be relied on for developmental efforts of the employees. It offers the
following benefits:

1. It helps in identifying the strengths and weaknesses as well as the

potential, of the employees.
 2. Hence, relevant training and developmental programmes san be identified
and or developed to overcome weaknesses, reinforce strengths and bring
out the potential of the employees.

3. It makes succession planning more realistic as the employees identified

for the challenges in higher level positions can be groomed.

4. Due to aggregate appraisal, individual employee reluctance to accept the

ratings by the supervisor can be minimized.

5. It also encourages open feedback, which gives new insights regarding the
employees.

6. It provides useful feedback to the supervisor in terms of his/her biases,

perceptions and idiosyncrasies.

7. The knowledge about the strength and potential of its workforce can
provide valuable support to the organisation to help it market the skill of
its employees.

Despite these benefits , it is often difficult to get feedback to data from

various sources in time .People take their own time in submitting reports
.However , with line feedback , the problem , to some extent , can be taken
care of.

 PERFORMANCE INTERVIEW:

Once appraisal has been made of employees, the rater should discuss and
review the performance with the ratee, so that they will receive feedback about
where they stand in the eyes of the superior. Feedback is necessary to affect
improvement in performance, especially when it is adequate. Specifically
performance interview has three goals;
1. To change behavior of employees whose performance does not meet

organizational requirement or their personal goals.

 2. To maintain behavior of employees who perform in an acceptable

manner.
3. To recognize superior performance behaviors so that they will be

continued.

 USE OF APPRAISAL DATA:

The data thus collected will be useful in the following areas of HRM:

1. Remuneration Administration/Compensation Management

2. Validation of Selection Programme
3. Employee Training and Development Programme
4. Promotion Transfer and Lay of Decision
5. Grievance and Discipline Programme
6. HR Planning

PO TENTIAL APPRAISAL

The objective of Potential Appraisal is to identify the potential of a given

employee to occupy higher positions in the organizational hierarchy and
undertake higher responsibilities.

A Potential Appraisal system attempts to generate data about employees and

their potential for occupying higher positions from a variety of sources and
helps the top management to make decisions about the suitable persons for a
given job.
 STEPS TO BE FOLLOWED FOR INTRODUCING POTENTIAL
APPRAISAL SYSTEM

1. ROLE DESCRIPTIONS
A good Potential Appraisal System would be based on the clarity of roles
and the functions associated with them in the organization. This requires
extensive job descriptions to be available for each job. These job
descriptions should spell out the various functions involved in performing
the jobs.

2. QUALITIES REQUIRED TO PERFORM THE ROLES

These qualities may be broadly divided into three categories:
a) Technical knowledge and skills
b) Managerial capabilities and qualities and
c) Behavioral dimension

3. INDICATOR OF QUALITIES
A good Potential Appraisal System, besides listing the functions and
qualities, would also have various mechanisms of judging these qualities in a
given individual. Some of the mechanisms of judging these qualities are:

a) Rating by others
b) Psychological tests
c) Simulation games and exercises
d) Performance appraisal records

4. ORGANIZING THE SYSTEM

Once the functions, the qualities required to perform these functions,
indicators of these qualities and mechanisms of generating these indicators
are clear, the organization is in a sound position to establish and operate the
Potential Appraisal System. Such an establishment of the system requires a
clarity in the organizational policies and systematization of its efforts.

5. FEEDBACK ON POTENTIAL APPRAISAL FOR CAREER

DEVELOPMENT
A good Potential Appraisal System should provide an opportunity for every
employee to know the results of this assessment. He should be helped to
understand the qualities actually required for performing the role for which
he thinks he has the potential, the mechanisms used by the organizations to
appraise his potential and the results of such an appraisal.

6. INTRODUCING POTENTIAL APPRAISAL

 CAREER MAN AGE MENT

Career:
"Course or progress through life (or a distinct portion of life)".

Oxford English Dictionary

The particular occupation for which you are trained.

The general progression of your working or professional life.

So the basic question involved in one’s career is

How any individual’s work life develops over time and how it is perceived by
that person?

Only the person himself or herself can judge the success in his or her career.
Different people use different criteria to make this judgment.

Career management is defined by Ball as:

1. Making career choices and decisions – the traditional focus of careers
interventions. The changed nature of work means that individuals may
now have to revisit this process more frequently now and in the future,
more than they have done in the past.
2. Managing the organizational career – concerns the career management
tasks of individuals within the workplace, such as decision-making, life-
stage transitions, dealing with stress etc.
3. Managing 'boundary less' careers – refers to skills needed by workers
whose employment is beyond the boundaries of a single organisation.
4. Taking control of one's personal development – as employers take less
responsibility, employees need to take control of their own development
in order to maintain and enhance their employability.
 Career Anchors
Edgar Schein at MIT has identified eight themes and has shown that people
will have prioritized preferences for these. For example a person with a
primary theme of Security/Stability will seek secure and stable employment
rather than an employment that is challenging and riskier. People tend to stay
anchored in one area and their career will echo this in many ways.
Technical/Functional competence
This kind of person likes being good at something and will work to become a
guru or expert. They like to be challenged and then use their skill to meet the
challenge, doing the job properly and better than almost anyone else.
General Managerial competence
Unlike technical/functional people, these folks want to be managers (and not
just to get more money, although this may be used as a metric of success).
They like problem-solving and dealing with other people. They thrive on
responsibility. To be successful, they also need emotional competence.
Autonomy/Independence
These people have a primary need to work under their own rules and steam.
They avoid standards and prefer to work alone.
Security/Stability
Security-focused people seek stability and continuity as a primary factor of
their lives. They avoid risks and are generally 'lifers' in their job.
Entrepreneurial Creativity
These folks like to invent things, be creative and, most of all, to run their own
businesses. They differ from those who seek autonomy in that they will share
the workload. They find ownership very important. They easily get bored.
Wealth, for them, is a sign of success.
Service/Dedication to a cause
Service-oriented people are driven by how they can help other people more
than using their talents (which may fall in other areas). They may well work
in public services or in such as HR.
Pure Challenge
People driven by challenge seek constant stimulation and difficult problems
that they can tackle. Such people will change jobs when the current one gets
boring and their career can be very varied.
Lifestyle
Those who are focused first on lifestyle look at their whole pattern of living.
They not so much balance work and life as integrate it. They may even take
long periods off work in which to indulge in passions such as sailing or
traveling.

Career Path
A planned, logical progression of jobs within one or more professions
throughout working life. A career path can be planned with greater assurance in
market conditions of stability and little change. In times of great change and
uncertainty, there is no longer such a thing as a planned career path instead
experts place greater emphasis on the importance of Career Path Development
in order to maintain employability. The development depends on a variety of
factors like personal capabilities, skills, experience and the opportunities
available for training and advancement.