Appraising and Managing Performance

Process of Performance Appraisal

Adopted from: Aswathappa, Human Resource Management,

Objectives of performance

Text and Cases, 2008, p. 241

appraisal

Establish job expectations

Design appraisal program

Appraise performance

Performance interview
|Management
Performance

Archival appraisal data

Use appraisal data

 Performance Appraisal Process

3 Designing Appraisal Program

What methods? Formal vs informal When to evaluate?

Whom to evaluate? Appraisal How to solve?

Design

Who are the raters? What What to evaluate?

problems/errors?
 Designing Appraisal Program
Formal vs Informal

• Formal appraisal normally occur at specific time (six month or one year)

• Informal regular when supervisor feels need

Whom to Evaluate

• Individual or team performance

Who Should be the rater?

a) Immediate supervisor

b) Subordinates

c) Peers

d) Clients

e) Self appraisal
4 Performance Appraisal Errors
S. Performance Appraisal Description
No. Error
1 Leniency Error Extreme rating either on high or
low side
2 Similarity Error Bias appraisal because of
personal affiliation
3 Recency Error Recent behavior evaluation
instead of entire performance
appraisal period
4 Contrast Error Rating in comparison to other
members
5 Central Tendency Error Average rating for all
employees
6 Spill-Over Effect Past performance or standing
dominate recent evaluation
7 Hallo Error One characteristic or aspect of
performance dominate entire
performance appraisal rating
8 Perceptual Error The previous held believe of
 Designing Appraisal Program
5 Solving Rater’s Error

Training and Practice

6 What to evaluate

a) Traits
b) Behaviors
c) Results/Goals

Other dimensions
a) Quality
b) Quantity
c) Timeliness
d) Cost effectiveness
e) Independent working
f) Interpersonal and cohesiveness effect
 Designing Appraisal Program
7 When to Evaluate?

To decide the appraisal period (three months, six months or

year)

8) Methods of Performance Appraisal

No. Appraisal Method Description

1 Rating Scale
2 Check List
•Typical numerical rating
ranging from poor to
excellent of job related
performance criteria such as
initiative, honesty,
attendance, cooperation
etc.
•The rater rate each
statement and then sum up
numbers.
•The rater has to tick Yes or
No against the statements
defining personality
 Performance Appraisal Methods
No. Appraisal Method Description
3 Forced Distribution •Compel raters to evaluate
Method performance and distribute ratees on
all points given in rating scale
•For example: Excellent 20 %, Good 20
%, Average 15 Below average 25 %
and Unsatisfactory performance 20 %
4 Critical Incident •All critical behaviors that contributed
Technique to job success are recorded by
supervisor. These behaviors actually
differentiate between effective an
ineffective employee
Behaviorally •Also called behavioral expectation
Anchored Rating scale. It contains descriptive statements
of behavior from least to most effective
Performance Test •With few jobs for evaluation
performance test to check the
knowledge and skills of employee can
be conducted
Cost Accounting •Performance is evaluated on monetary
Method benefits employee has given to
 Performance Appraisal Methods

No. Appraisal Method Description

Comparative •Supervisor rate his subordinates on
Evaluation Method ranking from best to worst
a) Ranking Method: The rater rank
employees from best to worst
b) Paired Comparison: Each
employee is compared and ranked
with every employee in a group or
team
N (N-1)/2
MBO •The goals/outcomes are
established for each employee and
then performance is evaluated
based on attainment of these goals
 Performance Appraisal Methods
Appraisal Method Advantages Disadvantages
Rating Scale •Easy to use, time •Biases of raters
effective, and low cost
•All types of job can
evaluated
•No training required to
raters
Check List •Easy to administer •Use of personality
•No specific training indicators
required to raters •Less flexibility to assign
relative ratings
Forced Distribution •Avoid leniency error •What if organization is
Method performing well and all
employees contributing
outstandingly
Critical Incident •Evaluation is based on •In general negative
Technique behaviors that actually incidents are more
contribute to effective job highlighted
performance
•Recency error can be
overcome
•Chance of learning for
 Performance Appraisal Methods
Appraisal Advantages Disadvantages
Method
Performance Test •Test can be validated •Test potential instead
of actual performance
Cost Accounting •Useful to make •Difficult to establish
Method training/investment profit contribution
decision on employee
Comparative •Comparative ranking •Recency, Hallo or
Evaluation based on performance perceptual biases
Method •Can be used to
decide merit based
pay and promotion

MBO •Not fit for assembly line •Employee may not set
workers challenging and high
•Good for goals if achievement of
management jobs goals is basis for reward
•Increase employee •Set short term goals
involvement and
motivation
 GOAL-BASED APPRAISAL SYSTEM

Supervisor sets
Organizational goals for
goals subordinate

Agreed goals
and objectives

Department or
Unit goals
Subordinate
proposes goals and
Objectives

Mid Term Review

(Readjustment in
Annual goals if internal
Review or external factor
changes)

Adopted from: Snell, Bohlander & Vohra: Human Resource Management. A South Asian
Perspective, (2010, p.337)
360 Degree Performance Appraisal

Supervisor

Client
Peers
360 Degree
Performance
Team
Appraisal
Self Members

Subordinate
 360 Degree Performance Appraisal
Advantages Disadvantages

1 More comprehensive 1 More Complex

2 Quality of information is better 2 Conflicting opinion

3 Compliments TQM 3 Requires extensive training to

perspective by soliciting implement
external and internal customers
4 Grouping may make it
4 Less bias/prejudice ineffective

5 increase employee self

development

Source: Snell, Bohlander & Vohra: Human Resource Management. A South

Asian Perspective, (2010, p. 324)
 Process of Performance Appraisal

4 Appraise the Performance

• Measure the performance what he does or what he does
not do

• It should also include potential of employee in addition to

his actual performance

• From different job different performance criteria should

be used

5 Performance Management
Feedback on performance must be used purposefully

1) Performance Interview
• Performance appraisal outcome should be discussed and
shared with employee
• Three goals of performance interview
a) change behavior of poor performers b) maintain
behavior of employee who perform well c) appreciate
superior performers
 Designing Appraisal Program

6 Archiving Performance Data

Keep record of performance data for future

7 Use of Performance Data

Use performance data to streamline HR activities and
make employee related decisions

Key Message: Performance Appraisal System should be

designed with care and organizational goals must linked with
personal goals

Performance appraisal must be shared with employees to

identify their strength and weaknesses and tell them where
they need improvement and how to improve the performance

HR decisions must consider performance appraisal

information
 Summary
• Performance Appraisal

• Relationship between Performance Appraisal and Job

Evaluation

• Objectives of Performance Appraisal

• Multi Purposes of Performance Appraisal

• Performance Appraisal and Competitive Advantage

• Process of Performance Appraisal

• Performance Appraisal Methods

• Goal Based Performance Appraisal

• 360 Degree Performance Appraisal