TOOLS FOR

MEASURING
PERFORMANCE
 TWO TYPES OF APPROACHES

n Traditional Approach
 - Primarily concerned with the overall
organization

and involved with past performance.
n Modern Approach
 - Viewed the employees as individuals and
forward
 looking through the use of goal setting.
 Traditional Methods
n Graphic Rating Scales Method
n Confidential Report
n Straight Ranking Method
n Paired Comparison Method
n Forced Comparison Method
n Grading System
n Checklist Method
n Critical Incident Method
 Modern Methods
n HR Scorecard
n HR Accounting
n Competency Mapping
n Assessment and
Development Centre
n 360 Degree Appraisal
n 540 Degree Appraisal
n Management by Objectives
(MBO)
n Behaviorally Anchored
Rating Scale (BARS)
 Purposes of Traditional
Performance Appraisal
n Promotion, separation, and transfer decisions
n Feedback to the employee regarding how the organization viewed
the employee's performance
n Criteria for evaluating the effectiveness of selection and
placement decisions
n Reward decisions, including merit increases, promotions, and
other rewards
n Ascertaining and diagnosing training and development decisions
n Criteria for evaluating the success of training and development
decisions
n Information upon which work scheduling plans, budgeting, and
human resources planning can be used
 GRAPHIC RATING SCALES
METHOD

n A form is used to evaluate the performance of

the employees

n A variety of traits may be used in this device,

the most common being quality and
quantity of work

n Easy to understand and use.

n Permits statistical tabulation of scores of

employees
 CONFIDENTIAL REPORTS

 Descriptive report
n Prepared at the end of the year
n Prepared by the employee’s immediate
supervisor
n The report highlights the strengths and
weaknesses of employees
n Prepared in Government organizations
n Does not offer any feedback to the
 STRAIGHT RANKING METHOD

n Rated all the employees doing a specific

job from best to poorest on a specific
criteria.
n Easy to select best and poor one, but it is
difficult identify moderate employee.

 PAIRED COMPARISONS METHOD

n Each worker is compared with all other

employees in a group
n For several traits paired comparisons are
made, tabulated and then rank is
assigned to each worker
n This method is not applicable when the
group is large

 For ce d D ist r ib u t ion M e t h od s

nThe rater is asked to appraise the employee according to

predetermined distribution scale.
nTwo criteria used for rating are: job performance and
promotability.
nA five point performance scale is also used without mentionin
any descriptive statements.
nThe worker is placed between two extremes of “good” and
“bad” performance.
 GRADING SYSTEM

n In this method, performance of employees

are determined in advance and defined
as categories. The categories can be
grade ‘A’ for an outsourcing
performance, grade ‘B’ for an excellent
performance, ‘C’ can be for average and
‘D’ for poor etc.
 Checklist Method

nA checklist is a set of object ives or descript ive

st at em ent s about t he em ployee and his behavior.

nUnder weight ed checklist , value of each quest ion
m ay be weight ed.
nExam ple:

nIst he em ployee really int erest ed in t he t ask

assigned?
Yes / No
Cr it ica l In cid e n t Te ch n iq u e

nManager prepares list s of st at em ent s of very

effect ive and ineffect ive behavior of an

em ployee

nThese crit ical incident s represent t he

out st anding or poor behavior of t he

em ployees
 Cr it ica l In cid e n t Te ch n iq u e

Example:
nJuly 20 - Sales clerk patiently attended to the customers
complaint. He is polite, prompt, enthusiastic in solving
the customers’ problem
nJuly 20 - The sales assistant stayed 45 minutes beyond
his break during the busiest part of the day. He failed to
answer store manager’s call thrice. He is lazy, negligent,
stubborn and uninterested in work
 Critical Incident Technique

n Limitation of this technique are:

nNegative incidents may be more noticeable than positive
incidents.
nSupervisors have a tendency to unload a series of complain
complai
about incidents.
nResults in very close supervision which may not be liked b

the employee.
nThe recording of incidents may be a chore for the manager

concerned who may be too busy or forget to do it.

 FREE ESSAY APPRAISAL METHODS

n The supervisor continuously observes and

writes a report about employees
assessment.
n Essay evaluation is a non-quantitative
technique of appraisal.
n The essay method may suffer from
personal and human bias.
 Essa y Eva lu a t ion
n

nThe r a t e r is a sk e d t o e xp r e ss t he st r ong a s
w e ll a s w e a k p oint s of e m p loye e ’ s b e ha vior
nThe r a t e r con sid e r s t he e m p loye e ’ s :
nJob k n ow le d g e a n d p ot e n t ia l
nUn d e r st a n d in g of com p a n y’ s p r og r a m s, p olicie s,
ob je ct ive s e t c
nRe la t ion w it h co-w or k e r s a n d su p e r visor s
nPla n n in g , or g a n izin g a n d con t r ollin g a b ilit y
nAt t it u d e a nd p e r ce p t ion
n
 Essa y Eva lu a t ion

nThis method has the following limitations:

nHighly subjective
nSupervisor may write biased essay
nDifficult to find effective writers
nA busy appraiser may write the essay hurriedly without
assessing properly the actual performance of the
worker
nIfthe appraiser takes a long time it becomes
uneconomical from the view point of the firm
 Group Appraisal

nEmployee is appraised by a group of appraisers.

nThe group consists of
nImmediate supervisor of the employee
nOther supervisors who have close contact with the
employee’s work.
nManager or head of the departments.
nConsultants or Clients
 Modern Approach - HR Scorecard

n The balance scorecard provides a list of measures that

balance the organizations internal and process
measures with results, achievements and financial
measures.
 HR Accounting

n HR accounting method attaches money value of a firms

internal Human Resources and external customer’s
goodwill.
n Performance is judged in terms of costs and
contributions of employees.
n Ideally the contribution of the employees should be
greater than the cost incurred on them.
n When competent and well trained employees leave an
organisation, the human asset is decreased.
 Competency Mapping

n First popularized by Boyatzis (1982) with research result

on clusters of competencies:
 “A capacity that exists in a personal that leads to
behaviour that meets the job demands within parameters
of organizational environment, and that, in turn brings
about desired results”
 Assessment and Development Centre

n An assessment center can be used as a tool for

competence development.
n The major competencies that are judged in assessment
centers are interpersonal skills, intellectual capability,
planning and organizing capabilities, motivation,
career orientation etc. assessment centers also an
effective way to determine the training and
development needs of the targeted employees.
 360o Appraisal System

nIt is a systematic collection and feedback of performanc

data on an individual or group, derived from a number
of stakeholders
nData is gathered and fed back to the individual
participant in a clear way designed to promote
understanding, acceptance and ultimately behavior
n
 540 Degree Appraisal

n General Electric Company, USA was the first to try

out this concept in early 1990s.
n Feedback from stakeholders – superiors,
subordinators, peers, internal and external
customers and suppliers
n In 540 degree feedback method customers and
suppliers also evaluate the performance to
differentiate from the 360 degree performance
appraisal.
Management by Objectives (MBO)

n MBO emphasizes collectively set goals that

are tangible, verifiable, and measurable

n Focuses attention on goals rather than on

methods

n Concentrates on Key Result Areas (KRA)

n Systematic and rational technique that

allows management to attain maximum
results from available resources by
 Ke y Ele m e n t s Of M BO

nArranging organizational goals in a means-ends chain

nEngaging in joint goal setting
nThis process has the following steps:
nIdentify KRAs
nDefine expected results
nAssign specific responsibilities to
employees
nDefine authority and responsibility
relationship
nConducting periodic progress review
nConducting annual performance review
Behaviorally Anchored Rating
Scale (BARS)
 Combination of rating scale and critical

incidence

n Steps:
n Collect critical incidents

n Identify performance dimensions

n Reclassification of incidents

n Assigning scale values to incidents

n Producing the final instrument