BBNP4103

PERFORMANCE APPRAISAL
Topic 1
Introduction to Performance
Appraisal
BY VALERIE VICKY
 Performance Appraisal
• A process of determining how an employee is
performing on the job, communicating it to him
and, ideally, establishing an action plan for
improvement.
• A process of evaluating employees’ past
performance by the rater (s).
• When it is properly conducted, it not only lets
employees know how well they are performing,
but also influences their motivation, acceptance
and future level of effort and task direction.
• The task of the employees should be clarified
through the establishment of a plan for
improvement.
• Considered as a management tool which is
helpful in motivating and utilising human
resource capabilities effectively.
Importance of Performance Appraisal
• Considered one of the most important functions
of human resources because it is a prerequisite to
effectively establish other human resource
functions.
• Thus, performance appraisal is vital to improve
productivity of employees because it is through
an appraisal that each individual’s productivity
and performance is evaluated. It serves as the
basis for counseling and developing an individual
to maintain or increase productivity and for
management to make personnel decisisons.
 Formal Versus Informal Appraisal
• Informal and Ongoing • Formal and Systematic
Appraisal Appraisal
Strategic Importance of Performance
Appraisal
• How organisations diffuse their strategic
goals.
1. Design jobs and work systems to accomplish
organisational goals.
2. Hire individuals with the abilities and desire
to perform effectively.
3. Train, motivate and reward employees for
performance and productivity.
Basic Concepts Of Performance Appraisal and
Performance Management
A properly developed and implemented performance appraisal system can
help an organisation motivate its employees, improve their performance and
productivity, and enable the organisation to achieve its goals.
Definitions of Performance Appraisal
 Mondy and Noe (1996)
• A formal system of periodic review and
evaluation of an individual’s or team’s
performance.
 Dessler (2005)
• A procedure that involves setting work
standards, assessing employees’ actual
performance relative to the set standards and
providing feedback to the employees to
eliminate performance deficiency.
 Kozo Ochiai (1987)
• A process in which bosses evaluate and report
on the performance, attainments, abilities,
potential for future development and other
qualities of their subordinates.
 Topic 2

Performance Appraisal Process

 Ivancevich (1997)
• An activity used to determine the extent to
which an employee performs work effectively.
 Performance appraisal is as follows:
• A process of evaluating employees’ past
performance by appraisers.
• Employees overall past performance will be
measured against a certain set of job-related
standards and criteria
• Employees’ overall past performance will later
be used the organisation to determine their
level of effectiveness in performing the
assigned work.
 Understanding Performance
• Determinants of Performance
• Environmental Factors as Performance
Obstacles
Benefits of Performance Appraisal
• Organisation
• Supervisor
• Employee
 Important Uses of Appraisal
• Development
• Administration
• Communication
• Motivation
 Development
• Reinforcing and Sustaining Performance
• Improving Performance
• Determining Career Progression Goals
• Determining Training Needs
 Administration
• Linking rewards to performance
• Evaluation of HR policies and programmes
 Motivation
• Appraisal encourage :
-initiative and drive
-develop a sense of responsibility
-stimulate employees’ effort to perform at their
maximum with accurate assessment and fair rewards
as well as motivate employees to perform better.
 Communication
• Uses of performance appraisal is that it serves
as a basis for ongoing discussion between
subordinates and superiors about job-related
matters.
• Both parties would be able to establish good
understanding with regard to their needs and
expectations.
 Topic 2

Performance Appraisal Process

Preparation of Performance Appraisal
• Should create an accurate picture of an
individual’s job performance.
• To achieve this goal, appraisal systems should
be job-related and practical, follow certain
standards and use dependable measures.
• If the evaluation is not job-related, it is invalid.
• Without validity and reliability, the system
may be discriminatory, therefore violating
equal opportunity laws.
• Even if discrimination does not occur,
appraisals may be inaccurate and useless if
they are not job-related.
• Job-related approach must also be practical.
• A practical system is understood by evaluators
and employees.
• A complicated, impractical approach may
cause resentment, confusion and non-use.
• A standard system within an organisation is
helpful because it allows uniform practices to be
established by the personnel department.
• Employees are encouraged to participate in
developing performance standards based on the
critical elements of the jobs to be appraised.
• The method of identifying these elements would
most likely be through job analysis procedures.
• There must be a written record of the standards.
• The employee must also be advised of these
standards before the evaluation occurs, not
afterwards.
• The appraisal of each employee’s performance
must be based on the employee’s actual
performance of the critical elements.
• Before specific approaches to performance
appraisal can be examined, common elements of
most performance systems should be discussed.
• These include:
-performance standards
-performance measures
-rater biases
Michael and Yost (2000) Performance
Appraisal Model
• Organisational and Human Resource Philosophies
and Goals
• Intended Purposes (Uses)
• Job Structure
• Type of Performance Measurement
• Choice of Performance Appraisal Format or
Method.
• Other Factors Influencing the Choice of Appraisal
Format
• Determination of the Relevant Appraisal
Content
• Establishment of Performance Appraisal
Policies and Procedures
• Implementation and Evaluation of the
Performance Appraisal System
 Craig Et Al (1986) Performance
Appraisal Process Model
• Establishing Standards and Measures
• Communicate Job Expectations
• Performance Planning
• Monitoring Performance
• Appraising
• Feedback
• Decision Making
• Development Plan
 People Involved In The Performance
Appraisal System
• The Supervisor
• The Human Resource Department
• Employees ( Self-Evaluation)
• Subordinates
 Openness In Appraisal
• Closed Appraisal
• Open Appraisal
 2.6 Performance Appraisal Process
Itself Comprises 3 steps:
• Define the Job
• Appraise Performance
• Provide Feedback
 2.6.1 Organisational Considerations
• Leadership Style
• Organisational Climate
• Training in Appraisal Procedures
• 2.6.2 Appropriateness for Job
• 2.6.3 Choosing the Appraisal Process
• 2.6.4 Implications of the Appraisal Process
 TOPIC 3

PERFORMANCE APPRAISAL
PLANNING
 Main Objectives Of Performance
Appraisal
• Assess training needs
• Review past performance
• Audit the skills within an organisation
• Develop communication and work
relationship
• Identify potential for promotion
• Set target for future performance
• Help to develop employees
 Performance Appraisal Planning And Its
Relationship With Organisational Objectives
• Consistency between Organisational Strategy
and Job Behaviour
• Consistency between Organisational Values
and Job Behaviour
 Setting Performance Objectives
• What is a Good Performance Objective
• Defining Work Objectives
• Agreeing on Main Tasks
• Defining Targets
• Defining Performance Standards
 What is a Good Performance
Objective?
• Challenging
• Agreed
• Teamwork-oriented
• Time-related
• Achievable
• Measurable
• Consistent
• Precise
Identifying Performance Measures
• Direct observation
• Indirect observation
 Another dimension of performance measures is
whether they are objective or subjective

• Objective performance measures

• Subjective performance measures
 TOPIC 4

DESIGNING AND IMPLEMENTING A

PERFORMANCE APPRAISAL SYSTEM
• The process of designing an appraisal system
should be carefully done and involve
managers, supervisors, employees and HR
professionals.
 Designing An Appraisal System
Organisation should design one that is congruent with its departmental and
institutional context.

• Are organisational and departmental goals

integrated into the appraisal plan?
• Are staff members involved in the planning an
implementation of the appraisal process?
• Is the appraisal process congruent with the
organisational climate and culture?
• Have adequate job descriptions based on job
analysis been written?
• Is the purpose of the performance appraisal
system clearly articulated and congruent with
staff and management needs and
expectations?
• Have weight or priorities been assigned to job
expectations?
• Has a process been worked out to monitor
and evaluate the system?
 Most performance appraisal forms
should contain the following:
• Basic personal details such as name,
department, post and length of service
• Job title
• Job description
• Detailed review of the individual’s
performance against a set of job-related
criteria
• Overall performance rating
• General comments by a more senior manager.
• Comments by the employee.
• Plan for development and action.
Determining Performance Criteria
Most effective systems of appraising performance:
Pragmatic

Helps to ensure that the system will be easily understood by

employees and effectively put into action by managers.

Relevant

Systems that are not specifically relevant to the job may result
in wasted time and resources.

Uniform
Is vital because it ensures that all employees will be evaluated
on a standardised scale and allows a company to systematically
compare the appraisals of different employees.
 3 keys traits of effective performance appraisal
systems, companies make 4 decisions in structuring
their appraisal systems
• What should be assesses?
• Who should make the appraisal?
• Which procedures should be utilised?
• How will the results be communicated?
 Since performance appraisal is aimed at measuring employee workplace behaviours, the
criteria chosen must fulfill the following requirement:

• The description should accurately describe major significant behaviours required in the
successful performance of the job.
• The description should consider the capabilities of the employee, the tasks to be performed
and what is under the employee’s control.
• The description must not be so general that it does not allow for objective assessment of
accomplishments.
• There must be no ambiguity and overlap in the selection and definition of criteria.
• The criteria must be amenable to weighting, since some criteria are more important than
others for a particular job.
 What specific factors to appraise?
(According to Lazer and Wikstrom (1977))
• Knowledge
• Leadership
• Initiative
• Quality of work
• Quantity of work
• Cooperation
• Judgement
• Creativity
• Dependability
• Planning
• Communication
• Problem Solving
• Attitude
• Motivation and Effort
 Need for Job Description
• The main objectives and duties of a job should be featured at
the beginning of an employee appraisal form.
• The job description should be agreed upon between the
manager and the employee and should be estimate the
percentage of time taken to perform each of the duties.
• Help appraisers to focus their attention on the employee’s
performance at work and to avoid assessing character.
 Potential Performance Criteria
Problems
• Performance measures that leave out some
important job duties are considered deficient.
• Performance measures can be objective or
subjective. Objective measures can be directly
measured or counted.

(Refer MS 54 for detail explanation)

 Factors Affecting Reliability and Validity Of
Performance Measurement Criteria
• Validity
• Reliability
 Validity
• The extent to which a performance measure
assesses all the relevant-and only the
relevant-aspects of performance. This is often
referred to as ‘’content validity”.
 Reliability
• Refers to the consistency of the performance
measure. One important type of reliability is
interrater reliability-the consistency among
the individuals who evaluate the employee’s
performance.
 Methods of Performance Appraisal
• Subjective methods
• Interpersonal methods
• Objective methods