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Performance Appraisal:

Once an employee is selected and trained for a job then management would like to see how he performs his work. It helps in evaluating the performance of employees and in assessing the hiring and training methods followed in an organisation. The employees are recruited with some objectives in mind, whether these have been achieved or not has to be regularly evaluated. Merit rating is a 'process of evaluating an employee's performance of a job in terms of its requirements'. The rating of a man by another man is as old as mankind, but formal merit rating systems are of relatively recent origin. Merit rating is also termed as Performance Appraisal or Employee Appraisal. Moreover, people differ in their abilities and aptitudes. Even if the same basic education and training is given to them, these differences cannot be s eliminated. There will always be difference in the quantity and quality of work - done by different employees even on the same job. Thus, it is but imperative for the management to know these differences so that the employees having better abilities may be rewarded and the wrong placement of employees may be rectified through transfers. The individual employees may also like to know their level of performance in comparison to others, so that they can improve upon it. All this emphasises the need to have a suitable performance appraisal system to measure the relative merits of each employee. MEANING Performance appraisal is the process of measuring quantitatively and D qualitatively an employees' past or present performance against the background N of his expected role performance, the background of his work environment, and about his future potential for an organisation. The evaluation of the the calibre of an employee so as to decide salary increment, whereas performance appraisal focuses on the performance and future potential of the employee. Merit rating measures what the person is (traits) and performance appraisal measures what the person does (performance). performance and personality of each employee is done by his immediate superior or some other person trained in the techniques of

merit rating. Various rating techniques are employed for comparing individual employees in a group in terms of personal qualities or deficiencies and the requirements of their respective jobs. A few important definitions of performance appraisal are as follows: According to Edward Flippo "Performance appraisal is the systemetic, periodic and an impartial rating of an employee's excellence in matters pertaining to his present job and his potential for a better job." . According to Dale Yoder "Performance appraisal includes all formal procedures used to evaluate personalities and contributions and potentials of group members in a working organisation. It is a continuous process to secure information employees." According to Randall S. Schuler "Performance appraisal is a formal, structured system of measuring and evaluating an employee's job related behaviour 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 will benefit." According to Dale S. Beach "Performance appraisal is the systematic evaluation of the individual with respect to his or her performance on the job. and his or her potential for development. " According to C. Heigal "Performance appraisal is the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employed for purposes of administration including placement, selection for promotion, providing financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally." Performance appraisal is a broader term than merit rating, even though these two terms are used synonymously. In merit rating, the focus is on judging the necessary for making correct and objective decisions on

calibre of an employee so as to decide salary increment, whereas performance appraisal focuses on the performance and future potential of the employee. Merit rating measures what the person is (traits) and performance appraisal measures what the person does (performance). The main characteristics of performance appraisal are as follows: I . Performance appraisal is a systematic process consisting of a number of steps to be followed for evaluating an employee's strengths and weaknesses.

2. It is a systematic and objective description of an employee's strengths and weaknesses in terms of the job. 3. The appraisal is an ongoing and continuous process where the evaluations are arranged periodically according to a definite plan. It is not a one shot deal. 4. The performance appraisal seeks to secure information necessary for making objective and correct decisions on employees. 5. Performance appraisal may be formal or informal. The formal system is more fair and objective since it is carried out in a systemetic manner using printed appraisal forms. OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal can be carried out with various objectives in mind and these objectives can be classified under the following four heads: (a) Work-Related Objectives (i) To assess the work of employees in relation to job requirements (ii) To improve efficiency (iii) To help management in fixing employees according to their capacity, interest, aptitude and qualifications (iv) To carry out job evaluation (b) Carreer Development Objectives (i) To assess the strong and weak points in the working of the employees and

finding remedies for weak points through training (ii) To determine career potential (iii) To plan promotions, transfers, lay offs etc. of the employees (iv) To plan career goals (c) Communication (i) To provide feedback to employees so that they come to know where they stand and can improve their job performance (ii) To clearly establish goals i.e. what is expected of the employee in terms of performance and future work assignments (iii) To provide coaching, counselling, career planning and motivation to employees (iv) To develop positive superior subordinate relations and thereby reduce grievances. (d) Organisational Objectives (i) To serve as a basis for promotion or demotion (ii) To serve as a basis for wage and salary administration and considering pay increases and increments (iii) To serve as a basis for planning suitable training and development programmes (iv) To serve as a basis for transfer or termination in case of reduction in staff strength. BENEFITS AND USES OF PERFORMANCE APPRAISAL The important benefits and uses which justify the existence of a system of performance appraisal in an organisation are as follows: (i) An effective system of performance appraisal helps the supervisor to evaluate the performance of his employees systemetically and periodically, it helps in the placement of the employees on the job for which they are best suited. (ii) The results of performance appraisal may be used by the supervisor in constructively guiding the employees in the efficient performance of their jobs.

(iii) Performance appraisal provides the management an objective basil. for discussing salary increases and special increments of the staff. (iv) Performance appraisal can be used for transfer and promotions of employees, if the performance of an employee is better than others, he can be recommended for promotion, but if he is not doing well, he may be transferred to some other job for which he is best suiteil, (v) Appraisals can be used to analyse the training and development neeas and evaluating the effectiveness of existing training programme!, Weaknesses of the employees revealed through performance appraisall can be removed through further training. (vi) Performance appraisal facilitates human resource planning, career planning and succession planning. (vii) When achievements are recognised and rewarded on the basis 01 objective performance measures, there is improvement in worK environment. (viii) Performance appraisal provides'an incentive to the employees to better their performance in a bid to improve their rating over others. . (ix) Systemetic appraisal of performance helps to develop confidence among employees. It will prevent grievances, if the employees are convinced of the impartial basis of the evaluation. Thus, performance appraisal is a significant element of information and control system in organisations. It can be put to several uses concerning the entire spectrum of human resource management functions. LIMITATIONS OF PERFORMANCE APPRAISAL In the words of W. Edwards" Annual performance review leaves people bitter, dejected, depressed and in despair for months." Both the appraiser ana the appraised consider it an unpleasant task as no performance appraisal system can be perfect and free from personal biases and other defects, Performance appraisal may not yield the desired results because of the following elements:

1. Halo Error. The hallo error or effect is a tendency to evaluate a person on the basis of one trait of characteristic. The appraiser judges a person on the strength of a specific trait and does not base his inference on his overall performance. An individual may be consistently rated high, average or low on various traits depending upon the rater's overall judgement of the person. If the rater is friendly to a worker, he may consistently rate him outstanding, on the other hand if a person is unfriendly then he may be rated below average even if his performance on the jot> is very good. Hallo effect may be controlled ,if the rater is given a list of characteristics and is asked to evaluate personal characteristics wise. 2. Central Tendency. It is the most commonly found error in merit rating, This error arises when the rater is not sure about the performance of a person, may not be well conversant with his work or may have less time at his disposal. He will like to play safe in evaluating persons and will rate them as average. Neither he will rate them having poor performance not he will rate them outstanding. The rater follows a via media and gives mediocre reports to the subordinates about whom he does not want to commit. This type of tendency on the part of evaluators distorts the evaluation, making them most useless for promotion, salary or counselling purposes. 3. Leniency or Strictness. The evaluators have their own value system which acts as a standard for evaluation. Some evaluators may be lenient and will give high rating to everyone. On the other hand, an evaluator may be strict and will give low ratings to all persons. The tendency of giving high rating is known as positive leniency error and the tendency of giving low ratings is called negative leniency error. Both the trends can arise from varying standards of performance observed by supervisors and from different interpretations of what they observe in employee performance. The raters should be trained for evaluation purpose and be told of what is expected from ratings. 4. Similarity Error. This error arises from the mental make up of an evaluator. The evaluator uses his own trait as a basis for assessing the employees. If the rater is aggressive then he will try to fmd this trait in subordinates. Those who have this trait will be rated high and those who do not have it will be rated low. This error can be washed out if the same rater appraises all employees in the organisation. 5. Miscellaneous Biases. Bias may exist on the ground of sex, race,

religion, position, etc. The persons on higher positions may be given higher ratings. A rater may also give high ratings to his group because persons in other groups may not get higher pay rises than his subordinates. A rater may have preference for persons belonging to his own sex, race, religion, etc. 6. Faulty Assumptions. There are faulty assumptions about the performance appraisal system both by the superiors and the subordinates. These assumptions work against the effectiveness of this system. The assumptions are: (a) The assumption that superiors will make impartial assumption of subordinates is not practical. Both show tendency to avoid appraisal processes. (b) It is assumed that appraisal system once implemented properly will be utilised in every project. This is too much of expectation from the system. (c) Superiors sometimes feel that their personal judgement of the

subordinates is better than that of appraisal system. (d) The thinking that employees want to know about their appraisal is not correct. In fact employees try to avoid appraisal system. 7. Psychological Blocks. The utility of appraisal system will depend upon the skills of the users. This system will depend upon the psychological characteristic of managers, no matter' what method is being used. There are many psychological blocks working against this system. Managers consider appraisal as an extra burden, they try to treat subordinates' failure as their own, dislike to communicate unfavourable reports to subordinates. Because of these psychological blocks managers do not tend to become impartial or objective in evaluating the subordinates. PERFORMANCE APPRAISAL PROCESS Performance appraisal should be done on the basis of certain standards or criterion fixed in advance. The employees should also have the knowledge of the yardsticks to be used for evaluating them. Unless a proper process is used for evaluation, it will not give good results. Following process is used for merit-

rating: 1. Establishing Standards. The employees will have to be rated against the standards set for their performance. There should be some base on which one may say that the performance of a person is good, average, bad etc. The standards may be in quantity and quality of production in case of workers; personality traits like leadership, initiative, imagination in case of executives; files cleared in case of office staff, etc. These standards will help in setting yardsticks for evaluating performance. 2. Communicating Standards to Employees. The standards set

forperformance should be communicated to the emp10yees. They should know what is expected from them. In the absence of any knowledge of standards, the employees will keep on guessing only. When the standards are made known to employees, they will try to make their performance equal or above them. Even later on they will not resent adverse reports if they fail to achieve certain standards. It is essential to get feedback from employees whether they have followed the standards as is intended by the management. 3. Measuring Actual Performance. The next step in evaluation process is to measure actual performance of employees. The performance may be measured through personal observation, statistical reports, oral reports, written reports etc. 4. Comparing Actual with Standards. The actual performance is compared to the standards set earlier for finding out the standing of employees. The employee is evaluated and judged by his potential for growth and advancement. Deviations in performance are also noted at this stage. 5. Discussing Reports with Employees. The assessment reports are periodically discussed with concerned employees. The weak points, good points and difficulties are indicated information for helping by employees employees to improve their their performance. The received influences

performance. It also influences their attitude and work in future. It may be easy

to convey good reprots but it requires tact to discuss adverse reports. 6. Taking Corrective Action. Evaluation process will be useful only when corrective action is taken on the basis of reports. One corrective action may be in the form of advice, counsel, warning etc., other action may be in the form of additional training, refresher courses, delegation of more authority, special assignments, coaching etc. These actions will be useful in helping employees to improve their performance in future. METHODS OF PERFORMANCE APPRAISAL Several methods and techniques are used for evaluating employee performance. These may be classified into two broad categories as shown in the following figure:-

PERFORMANCE POORAISAL TRADITIONAL METHODS A. Traditional Methods Traditional approach is also known as traits approach. It is based on the evaluation of traits in a person. This system may list ten to fifteen personal 'characteristics such as ability to get along with people, competence, judgement, initiative, leadership etc. There may also be added work related characteristics such as job knowledge, ability to complete an assignment, success in carrying out plans, efforts in cost reduction etc. In the recent past, personal traits have outnumbered work related characteristics. The rater appraises subordinates on the basis of these standards and gives his rating. Since there may be different methods of rating people on the basis of such dimensions, there are several methods based on this approach. Some such methods are discussed as follows: 1. Confidential Report. In most of the government departments and public enterprises, performance appraisal is done through annual confidential reports. These reports differ from department to department and from level to level. The confidential report is written for a unit of one year and relates to the MODERN METHODS

performance, ability and character of the employee during that year. A very casual attitude is found among raters while filling confidential reports of the employees working under them. The report is not data based but subjective. No feedback is provided to the employee bring appraised and therefore, its credibility is very low. The method focuses on evaluating rather than developing the employee. The employee who is appraised never knows his weaknesses and the opportunities available for overcoming them. In recent years, due to pressure from courts and trade unions, the details of a negative confidential report are given to the appraiser. 2. Graphic Scales Method. The graphic rating scale is the simplest and most pop,ular method for appraising performance. A rating scale lists traits and a range of performance values for each trait. The supervisor rates each subordinate by circling or checking the score that best describes his performance for each trait. The assigned values for the traits are then totaled. The selection of factors to be measured on the graphic rating scale is an important point under this system. These are of two types of characteristics such as initiative and dependability and (il) contributions such as quantity and quality of work. Since certain areas of job performance cannot be objectively measured, it is likely that graphic scale will continue to use a mixture of both characteristics and contributions. Rating scales are of two types viz. continuous and discontinuous. In continuous scale the degree of a trait are measured in numbers. ranging from 0 to 5 whereas in a discrete or discontinuous scale, appropriate boxes or squares are used. The following figures contain the rating scales: The graphic scale is the most common method of evaluation of an employee's performance. Its main advantages are that it is easy to understand. easy to use and permits a statistical tabulation of scores of employees. When ratings are objective in nature, they can be effectively used as evaluators. Graphic scales, however, impose a heavy burden upon the supervisor. He must report and evaluate the performance of his subordinates on scales involved as many as five degrees on perhaps ten different factors. Moreover, this method

may be arbitrary and the rating may be subjective. It may be difficult to decide about relative weightage of different traits and it may be difficult to ensure uniformity as rating would differ with different ~aters. In practice, rating tend to cluster on the high side under this system. A supervisor may tend to rate his men high to avoid criticism from them. 3. Straight Ranking Method. It is the simplest and old method of merit rating. Every employee is judged as a whole without distinguishing the rates from his performance. A list is then prepared for rating the workers in order of their performance on the job so that an excellent employee is at the top and the poor at the bottom. It permits comparison of all employees in any single rating group regardless of the types of work. The difficulty of this method is that it is very difficult on the whole when they differ in qualities, attitudes, etc. This method only tells' us about the standing of various persons and, not the actual difference among them. We can only say who is number 1, 2, 3 and so on but cannot say how much the person at number one is better than that at number two. This method is suitable only when there are limited persons in an organisation. 4. Paired Comparisons Method. In this method every person is compared trait-wise, with other persons, one at a time, the number of times on~ person is compared with others is tallied on a piece of paper. These numbers help in yielding rank orders of employees. For example, if there are five persons to be compared. A's performance is first compared with that of B to find out who has better performance, then A is compared with C, D and E in turn and performance is recorded. Then B is compared to C, D and E, since he has already been compared with A. In turn C is compared with D and E and so on. The results of these comparisons are tabulated and a rank is assigned to each employee. The number of rank order in this would be n(n-2) where n represents the number of persons to be compared. This method gives more reliable rating than straight ranking. But it will be suitable only when the number of persons is small. 5. Grading System. Under this system certain features like analytical ability, co-operativeness, dependability, job-knowledge, etc. are selected for evaluation. The employees are given grades according to the judgement of the rater. The.

grades may be such as : A-outstanding; B-very good; C-satisfactory; D-average; E-below average, etc. The actual performance of every employee is rated with various grades in mind. 6. Forced Distribution Method. Some raters suffer from a constant error i.e. either they rate of employees as good, average or poor. They do not evaluate the employees properly. This system minimises rater's bias so that all employees are not similarly rated. This system is based on the presumption that all employees can be divided into five categories i.e. Outstanding, above average, average, below average and poor. The rater is asked to place 10 per cent persons in outstanding group; 20 per cent in above average; 40 percent in average; 20 percent below average and 10 percent in poor category. The main idea in this system is to spread ratings in a number of grades. This method obviously eliminates the room for subjective judgement on the part of the supervisors. Besides this the system is easy to understand and administer. But in this method employees are placed in a certain category and not ranked within a category. This method is based on the questionable assumption that all groups of employees have the same distribution of good and poor performances. The rater does not explain why an employee is placed in a particular category. Specific job related criteria is not used in ratings. Forced distribution of rankings is feasible for a large group of employees. The spread out of ratings in the form of a normal distribution curve is shown in the following figure: 7. Check List Method. A check list is a list of statements that describes the characteristics and performance of employees on the job. The rater checks to indicate whether the behaviour of an employee is positive or negative to each statement. The performance of the employee is rated on the basis of numbers of positive checks. There are three types of check lists that can be used: (a). Simple Check List. Under this method he supervisors are provided with printed forms containing descriptive questions about the performance of employees. The supervisor has the answer in yes or no. After ticking these questions the forms are sent to Personnel Departfnent where final rating is done. Various questions in the form may be weighed equally or certain questions maybe given more weightage than others.

The check list may contain such questions: (i) Is the employee hard working? (ii) Is he regular on the work? iii) Does he co-operate with his superiors? (iv) Does he maintain his equipment well ? (v) Does he follow instructions well ? The supervispr's bias remains in this method because he can distinguish between positive and negative questions. It is also difficult to put all possible questions in the check list because it will become lengthy. (b) Weighted Check List. This method is used particularly with the objective of avoiding scope for personal prejudices. In this method, weights are assigned to different statements to indicate their relative importance. The weighted check list may be as follows: Traits 1. 2. 3. 4. 5. 6. Regularity Knowledge of the Job Dependability Interpersonal Relations Loyalty Leadership Potential Weights 0.5 1.0 1.5 2.0 1.5 1.5 Performance Scale Ratings (1-5) I

Weighted Checklist : Weighted check list method involves a very lengthy. and time consuming procedure. Moreover this method is a relatively costly affair. Financial burden is increased when diverse jobs are evaluated as a separate procedure must be established for each job. .

(c) Forced Choice Checklist. In this checklist, five statements are given for each trait, two most descriptive statement'i, two least descriptive statemen~ and one neutral statement. The rater is required to tick one statement each from the most descriptive and least descriptive ones. The aim is to minimise the rater's personal bias. A specimen of forced choice check list is as follows: 1. Regularity Most Least (i) Always regular (ii) Informs in advance for absence or delay (iii) Never regular

(iv) Remains absent without prior notice (v) Neither regular nor irregular Forced Choice Checklist The main advantage of forced choice check list is that it has greater objectivity than most other methods. But it is very expensive to instal this system. Secondly, the procedure involved is very lengthy and time consuming Thirdly, it is difficult for the supervisor to discuss rating with subordinates because these items are scored by the personnel department. 8. Critical Incident Method. This method attempts to measure worker's performance in terms of certain-events or incidents that occur in the course of work. The assumption in this method is that the performance of the employee on the happening of critical incidents determines his failure or success. The supervisor keeps a record of critical incidents at different times and then rates him on this basis. Examples of critical incidents are: (i) Refused to accept instructions with a detailed discussion. (ii) Refused to accept instructions even when these were clear. (iii) Increased his efficiency despite resentment from other workers. (iv) Showed presence of mind in saving a worker when there was accidental fire. (v) Performed a difficult task even though it was outside his regular duties. (vi) Displayed a courteous behaviour to a supplier. (vii) He helped fellow employees in solving their problems. Critical incident method provides an objective basis for conducting a thorough discussion of an employee's performance. The evaluation, under this met4od, is based on actual job behaviour. This method also avoids recency bias (most recent incidents get too much emphasis), as raters record ratings throughout the rating period. Finally, this method can increase the chances that the subordinates will improve because they learn precisely what is expected of them. However, this method has significant limitations: (i) Outstanding incidents may not happen very regularly. (ii) Negative incidents are, generally, more noticeable than the positive ones. (iiz) The supervisor may not record an incident immediately and forget it later on. (iv) It may also be very difficult for a supervisor to decide whether an incident is critical or not.

(v) Very close supervision may result, which may not be to the liking of the employees. (vi) Supervisors may unload a series of complaints about incidents during an annual performance review session. The feedback may be too much time and thus, appear as a punishment to the ratee. 9. Free Essay Method. Under free essay method, the supervisor writes a report about the employee which is based on his assessment. The supervisor continuously watches the subordinates and writes his assessment in the report. While preparing an essay on the employee, the rater generally considers the following factors: (i) Job knowledge and potential of the employee (ii) Employee's relations with co-workers and supervisors (iii) Employee's traits and attitudes (iv) Employee's understanding of the companies programmes, policies, objectives etc. (v)' Development needs for future etc. Essay evaluation is a non-quantitative technique of appraisal. It provides a good deal of specific information about the employee and can reveal even more about the supervisor. The essay method may suffer from personal & human bias because of likings or dislikings of the supervisor. An appraiser may not be able to express his judgement in apropriate words and it will limit the utility of appraisal reports. Moreover, a busy appraiser may write the essay hurriedly without properly assessmg the actual performance of the employee. On the other hand, if the appraiser takes a lot of time in preparing the essay it becomes uneconomical from the point of view of the firm, because time is a very costly factor. 10. Group Appraisal. Under the group appraisal method, employees are rated by an appraisal group, consisting of their supervisor, and three or four other persons who have some knowledge of their performance. The supervisor explains to the group the nature of his subordinates' duties. The group then discusses the standards of performance for that job, the actual performance of the employee and the causes of their particular level of performance and offers suggestions for future improvements, if any. This method is devoid of personal bias, since appraisal is done by multiple judges. Moreover, it is a very thorough and simple method. The only drawback at one

is that this method is very time consuming. 11. Field Review Method. Under the field review method, an expert from the personnel department interviews line supervisors to evaluate their respective subordinates. The expert questions the supervisor and obtains all the important information on each employee and takes notes in his note book. There is no rating form with factors or degrees, but overall ratings are obtained. The employees are usually classified into three categories as outstanding, satisfactory and unsatisfactory. The interviewer questions the supervisor about the requirements of each job in his unit and about the performance of each man in his job. He probes to find out not only how a man is doing but also why he does that way and what can be done to improve or develop him. The supervisor is required to give his opinion about the progress of his subordinates, the level of the performance of each subordinate, his weaknesses, good points, outstanding ability, promotability and the possible plans of action in cases requiring further consideration. The questions are asked and answered verbally. The success of this method depends upon the competence of the interviewer. He can contribute significantly to accurate appraisals only if he knows his job. This method relieves the supervisors of the tedious writing work of filling in appraisal forms. Moreover, supervisors are kept on their toes by this evaluation and biases and prejudices are reduced to the minimum, because the process ~ largely controlled by the personnel department. This method is useful for a large organisation only. The main limitation is that it keeps two managerial personnel busy with the appraisal. 12. Nominations. Under the nominations method, appraisers are asked to identify the exceptionally good and exceptionally poor performers, who are then singled out for special treatment. 13. Work Sample Tests. In this method, employees are given, from time to time, work related tests which are then evaluated. B. MODERN METHODS Modem concerns use the following methods for the performance appraisal: 1. Assessment Centre

First developed in the U.S.A. and the U.K. in 1943, the assessment centre is gaining popularity in our country. Crompton Greaves, Eicher and Hindustan Lever Limited are using the technique with highly positive results. Earlier, assessment centre was being used for executive hiring, but now-a-days, these are being used for evaluating executive or supervisory potential. An assessment centre is a central location where the managers may come together to participate in job related exercises evaluated by trained observers. The principle idea is to ..evaluate managers over a period of time, by observing and latest evaluating their behaviour across a series of select exercises or work samples. Managers are asked to participate in in-basket exercises, work groups (without leaders), computer stimulations, role playing and other similar activities. which require the same attributes for successful performance as on the actual job. After recording their observations, the raters meet to discuss these observations. The decision regarding the performance of each manager is based upon the discussion of observations. Self appraisal and peer evaluation are also used in for final rating. An assessment centre generally measures iriterpersonal skills,

communication skills, ability to plan and organise, self confidence, resistance to stress, mental alertness etc. Assessment centres are not only a method of appraisal but help to determine training and development needs of employees and provide data for human resource planning. This method is also used to select candidates for entry level positions. All candidates get an equal opportunity to prove their merit. They are evaluated by a team of trained evaluators under similar conditions. Rater's personal bias is reduced. Assessment centre is a time consuming and expensive method. The ratings of this method are said to be strongly influenced by the participant's interpersonal skills, judges tend to evaluate the quality of the individual's social skills rather than quality of the decisions themselves. Further, the organisation and decision making abilities are measured by in-basket exercises, verbal ability and personal traits. Thus, the relatively inexpensive paper and pencil tests for measuring potential may be as accurate as the high-cost high stress assessment centre. Another drawback of this method is that the candidates who receive a negative

report from the assessment centre may feel demoralised. Other problems include strong and unhealthy sense of competition among the employees, difficulty of conducting the tests frequently and the possibility of over emphasising the test performance. In order to make this method effective, it is necessary to state the goals clearly, to obtain top management support, to conduct job analysis, to train the evaluators and to periodically evaluate and revise the assessment programme. 2. Human Resource Accounting Human Resource Accounting Human resources are a valuable asset of any organisation. This asset can method attaches money values be valued in terms of money. Human resource Accounting method attaches lot values to the value of a firm's internal human resources and its external human resources and Its external customer goodwill. customer goodwill. When competent and well trained employees leave an organisation the human asset is decreased and vice versa. Under. this method, performance is judged in terms of costs and contributions of employees. Costs of human resources consists of expenditure on human resource planning, recruitment, selection, induction, training, compensation etc. Contribution of human resources is the money value of labour productivity or value added by human resources. Difference between cost and contribution will reflect the performance of employees. This method is still in the infancy stage and is, therefore, not very popular at present.

3. Behaviourally Anchored Rating Scales (BARS) A behaviourally anchored rating scale combines the benefits of critical incidents and graphic rating scales by anchoring a scale with specific behavioural examples of good 9r poor performance. Its proponents claim that it provides better, more equitable appraisals than do the other tools, discussed earlier. Developing a BARS typically requires five steps: (i) Generate Critical Incidents. Persons who know the job being appraised (Job holders and/or Supervisors) are asked to describe specific illustrations (critical incidents) of effective and ineffective performance. (ii) Develop Performance Dimensions. 'These people then cluster the

incidents into a smaller set of performance dimensions (say 5 or 10). Each cluster (dimension) such as 'conscientiousness' is thus defined. (ii) Reallocate Incidents. Another group of people who also know the job then reallocate the original critical incidents. They are given the cluster's definitions and the critical incidents and are asked to reassign each incident to the cluster they think it fits best. Typically, a critical incident is retained if some percentage (usual1y 50% to 80%) of this second group assigns it to same cluster as did the group in step (ii). (iv) Scale the Incidents. The second group is generally asked to rate the behaviour described in the incident as to how effectively or ineffectively it represents performance on the appropriate dimension (seven or nine point scales are typical). (v) Develop Final Instrument. A subset of the incidents (usually Six or Seven per cluster) is used as behavioural anchors for each dimension. BARS have certain important advantages as follows : (i) People who know the job and its requirements better than anyone; else develop the BARS. The result should therefore be a good and accurate guage of performance on the job. (ii) The critical incidents along the scale help to clarify what is meant by extremely good performance, average performance and so forth. (iii) The critical incidents may be more useful in providing feed back to appraisees than simply informing them of their performance rating and specific. behavioural examples. (iv) Systemetically clustering the critical incidents into 5 or 6 performance dimensions, helps in making the dimensions more independent of one another. not providing

(v) BARS evaluations seem to be relatively consist~nt and reliable in that different raters' appraisals of the same person tend to be similar. The technique is not biased by the experience and evaluation of the rater. However, BARS is very time consuming and expensive method. Secondly, behaviours used are more activity oriented than result oriented. Several appraisal forms are required to accommodate different types of jobs in an organisation. Despite its initial appeal, this method is not necessarily superior

to the traditional methods of appraisal. 4. Management By Objectives (MBO) In its basic form, management by objectives requires the managers to set specific measurable goals with each employee and then periodically discuss his progress to wards these goals. MBO can be on a modest scale with subordinates and superiors jointly setting goals and periodically providing feed back. However the term, MBO almost always refers to a comprehensive, organisation wise goal setting and appraisal programme that consists of the following steps.

(i) Set the Organisation's Goals. Establish an organisation wise plan for next year and set goals. (ii) Set Departmental Goals. In this step departmental heads and their superiors jointly set goals for their departments. (iii) Discuss Departmental Goals. Departmental heads discuss the department's goals with all the subordinates in the department and ask them to develop their own individual goals. In other words, every employee will state how can he contribute to the department's attaining its goals . (iv) Define Expected Results (Set Individual Goals). In this step, department heads and their subordinates set short term performance targets. (v) Performance Reviews: Measure the Results. Department heads compare the performance of each employee with expected results. (vi) Provide Feed Back. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate the latter's progress in achieving expected results. The MBO approach has done away with the judgemental role of the superiors in the appraisal of their subordinates. It leads to greater satisfaction, greater agreement, greater comfort and less tension and hostility between the workers and the management. This approach is considerably superior to the traditional approach of performance appraisal. It emphasises training and development of individuals. It is problem solving approach. This approach also has a built in

device of self appraisal by the subordinates because they know their goals and the standards by which their performance will be measured. MBO method suffers from the following limitations: (i) This method can be used only when the goal setting is possible by the subordinates. Blue collar workers are often unable to set their own goals. (ii) MBO p~ogramme involves considerable time, energy and expenditure. It is difficult to administer because continuous interaction between superiors and subordinats is required. If the span of supervision is quite large, it will not be possible for the superior to have discussion with each and every subordinate for setting up mutually agreed goals. (iii) This approach mainly emphasises counselling, training and development. But in practice, it is not possible to forego the critical aspect of performance appraisal. (iv) This approach is appropriate for the appraisal of executives and supervisory persoIIIlel who can understand it in a better way. (v) Setting objectives with the subordinates sometimes turns to a tug of war, with the management pushing for higher quotas and the subordinate pushing for lower ones. (VI) MBO can be self defeating if it fails to take into consideration the deeper emotions of the employees. Rating of every employee on the basis of specific targets may make it difficult to compare the ratings. MBO can be applied with great success if the performance appraisal programme consists of the following elements (I) Detailed job descriptions should be available to help setting of goals for different positions (il) Superiors should have trust in subordinates to establish reasonable goals (iii) Emphasis should be on problem solving rather than criticism of the performance of the subordinates. 5. 360 Degree Performance Appraisal The 360 degree technique is understood as systematic collection of

performance data on an individual or group, derived from a number of stakeholders-the stake holders being the immediate supervisors, team members, customers, peers and self'. In fact, anyone who has useful information on how an employee does the job' may be one of the appraisors. The appraisor should be capable of determining what is more important and what is relatively less important. He should assess the performance without bias.

The 360-degree appraisal provides a broader perspective about an employee's performance. In addition, the technique facilitates greater self development of the employees. 1lris appraisal provides formalised communication links between an employee and his customers. By design this appraisal is effective in identifying and measuring interpersonal skills, customer satisfaction and team building skills. However, there are some limitations of this method. Receiving feed back on performance from multiple sources can be intimidating. Further, organisations that use this technique take a long time in selecting the rater, designing questionnaires and analysing the data. In addition, multiple raters are less adapt at providing a balanced and objective feed back than the supervisors who are sought to be replaced. Raters can have enormous problems in separating honest observations from personal differences and biases. Despite the limitations, more and more firms are using the 360-degree technique to assess the performance of their employees. 6. Computerised and mob BaSed Performance Appraisal. Nowadays, several performance appraisal software programmes are also available in the market. These programmes enable the managers to keep notes on subordinates during the year and then to electronically rate them on a series of performance traits. Written text is also generated to support each part of the appraisal. Electronic performance monitoring (EPM) is in some respects ultimate in

computerised appraisals. In EPM, the supervisors electronically monitor the computerised data an employee is processing per day, and thereby monitors his performance. Nowdays, organisations use computer networks, sophisticated telephone systems and both wireless audio and video links to monitor and record the work activities of employees. Employees react to EPM in two ways: (i) Employees with the ability to delay or prevent electronic performance monitoring indicate higher feelings of personal control and demonstrate superiors task performance. These are the employees who want some control over how and when they are monitored. (ii) Participants who know exactly when the monitoring is taking place, express lower feelings of personal control than do those who do not know that the monitoring is. on.

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