Performance Appraisal

Performance Appraisal

 Performance Appraisal (PA) refers to all those

procedures that are used to evaluate the

 personality

 performance

 potential of its group members

Objectives of Performance Appraisal

Provide a basis for promotion/ transfer/ termination:

 Identify those employees who deserve promotion

 Or those who require lateral shift (transfer) or

termination

 PA is used for career planning

Objectives of Performance Appraisal

Enhance employees’ effectiveness by helping to

identify their strengths and weaknesses and

Inform them about expected levels of performance

 If employees understand their roles well, they are

likely to be more effective on the job

Objectives of Performance Appraisal

Identify training and development needs:

Identifying training and development needs of

employees is necessary to prepare them for meeting

challenges in their current and future employment

Objectives of Performance Appraisal

Aid in designing training and development programs:

Identifying skills required to be developed would help

in tailor- making training and development programs

 Objectives of Performance Appraisal

Remove work alienation: Counseling Employees

corrects misconceptions which might result in work

alienation
Objectives of Performance Appraisal

Remove discontent: Identifying and removing

factors responsible for workers’ discontent would

motivate them for better work performance

Objectives of Performance Appraisal

Develop inter-personal relationships: Relations

between superior - subordinate can be improved through

realization that each is dependent on the other for better

performance and success

Objectives of Performance Appraisal

Aid wage administration: Performance appraisal can help

in development of scientific basis for reward allocation,

wage fixation, incentives

Improve communication: Performance appraisal serves

as a mechanism for communication

between superiors and subordinates

 Process of Performance Appraisal

Establish Performance Standards

Performance standards serve as benchmarks against

which performance is measured

Standards should relate to the desired results of each

job
 Process of Performance Appraisal

Communicate the Standards

 Performance appraisal involves at least two parties,

the appraiser who does the appraisal and the

appraisee whose performance is being evaluated

 Process of Performance Appraisal

Communicate the Standards

 The appraiser should prepare job descriptions clearly; help

appraisee set his goals and targets; analyse results objectively;

offer coaching and guidance to appraisee whenever required and

reward good results

 The appraisee should be very clear about what he is doing and

why
Process of Performance Appraisal

Measure Actual Performance

 Performance measures, to be helpful must be easy

to use, reliable and must report on the critical

behaviors that determine performance

 Measure Actual Performance

 Performance measures may be objective or

subjective

 Objective performance measures are indications of

job performance that can be verified by others and

are usually quantitative

 Measure Actual Performance

 Subjective performance measures are ratings that are

based on the personal standards or opinions of those

doing the evaluation and are not verifiable by others

 Compare Actual performance with
Standards and Discuss the Appraisal

 Actual performance may be better than expected

and sometimes it may go off the track

 Whatever be the consequences, there is a way to

communicate and discuss the final outcome

 Taking Corrective Action

 Corrective action is of two types

 One puts out the fires immediately

 Other strikes at the root of the problem permanently

 Performance Criteria

 In order to be effective, the criteria for performance

appraisal should be genuinely related to success / failure in

the job and should be amenable to objective judgement

 MBO is an example of performance-based appraisal

approach that involves setting objectives and comparing

performance against those objectives

 Performance Criteria

 Objectives give greater freedom to both

management and the employees in deciding

how performance is to be measured

 Benefits of Performance Appraisal

For the appraisee

 Better understanding of his role in the organization—

what is expected and what needs to be done to meet

those expectations

 Clear understanding of his strengths and weaknesses

to develop himself into a better performer in future

 For the appraisee

 Increased motivation, job satisfaction, and self-

esteem
 Opportunity to discuss work problems and how they
can be overcome
 Opportunity to discuss aspirations and any guidance,
support or training needed to fulfil those aspirations
 Improved working relationships with supervisors
 Benefits of Performance Appraisal

For the Management

 Identification of performers and non-performers and

their development towards better performance

 Opportunity to prepare employees for assuming

higher responsibilities
 For the Management

 Opportunity to improve communication between the

employees and management
 Identification of training and development needs
 Generation of ideas for improvements
 Better identification of potential and formulation of
career plans
 Benefits of Performance Appraisal

For the Organization

 Improved performance throughout the organization

 Creation of a culture of continuous improvement and

success

 Conveying the message that people are valued

Performance Appraisal - Individual
Evaluation Methods

 Confidential report
 Essay evaluation
 Critical incidents
 Checklists
 Graphic rating scale
 Behaviorally anchored rating scale
 Forced choice method
 MBO
Performance Appraisal - Multiple Person
Evaluation Methods

 Ranking

 Paired comparison

 Forced distribution

 Other methods

 Performance tests

 Field review technique

 Confidential Report

Descriptive report
 Prepared at the end of the year
 Prepared by the employee’s immediate supervisor
 The report highlights the strengths and weaknesses of
employees
 Prepared in Government organizations
 Does not offer any feedback to the employee
 Essay Evaluation

 The rater is asked to express the strong as well as

weak points of employee’s behavior
 The rater considers the employee’s :
 Job knowledge and potential
 Understanding of company’s programs, policies, objectives
etc
 Relation with co-workers and supervisors
 Planning, organizing and controlling ability
 Attitude and perception
 Essay Evaluation

 This method has the following limitations:

 Highly subjective
 Supervisor may write biased essay
 Difficult to find effective writers
 A busy appraiser may write the essay hurriedly without
assessing properly the actual performance of the worker
 If the appraiser takes a long time it becomes uneconomical
from the view point of the firm
 Critical Incident Technique

 Manager prepares lists of statements of very effective

and ineffective behavior of an employee

 These critical incidents represent the outstanding or

poor behavior of the employees

 The manager periodically records critical incidents of

employee’s behavior
 Critical Incident Technique
Example:
 July 20 - Sales clerk patiently attended to the customers
complaint. He is polite, prompt, enthusiastic in solving the
customers’ problem
 July 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

 Limitation of this technique are:

 Negative incidents may be more noticeable than positive incidents.
 Supervisors have a tendency to unload a series of complaints about
incidents.
 Results in very close supervision which may not be liked by the
employee.
 The recording of incidents may be a chore for the manager
concerned who may be too busy or forget to do it.
 Checklist

 A checklist is a set of objectives or descriptive statements

about the employee and his behavior.

 Under weighted checklist, value of each question may be
weighted.
 Example:
 Is the employee really interested in the task assigned?
Yes / No
 Is he respected by his colleagues? Yes / No
 Graphic Rating Scale

 A form is used to evaluate the performance of the

employees

 A variety of traits may be used in this device, the most

common being quality and quantity of work

 Easy to understand and use.

 Permits statistical tabulation of scores of employees

Behaviorally Anchored Rating Scale

Combination of rating scale and critical incidence

 Steps:
 Collect critical incidents

 Identify performance dimensions

 Reclassification of incidents

 Assigning scale values to incidents

 Producing the final instrument

 Forced Choice Method

 This method uses several sets of paired phrases, two of

which may be positive and two negative

 The rater is asked to indicate which of the four phrases is

the most and least descriptive of a particular worker

 Favorable qualities earn plus credit and unfavorable ones

earn the reverse

Management by Objectives (MBO)

 MBO emphasizes collectively set goals that are tangible,

verifiable, and measurable

 Focuses attention on goals rather than on methods

 Concentrates on Key Result Areas (KRA)

 Systematic and rational technique that allows

management to attain maximum results from available

resources by focusing on achievable goals

 Key Elements Of MBO

 Arranging organizational goals in a means-ends chain

 Engaging in joint goal setting
 This process has the following steps:
 Identify KRAs
 Define expected results
 Assign specific responsibilities to employees
 Define authority and responsibility relationship
 Conducting periodic progress review
 Conducting annual performance review
 Multiple Person Evaluation Methods

Ranking method
 The evaluator rates the employee from highest to lowest on
some overall criteria

Paired comparison method

 Each worker is compared with all other employees in a group
 For several traits paired comparisons are made, tabulated and
then rank is assigned to each worker
 This method is not applicable when the group is large
 Forced Distribution Methods

 The rater is asked to appraise the employee according to

predetermined distribution scale.
 Two criteria used for rating are: job performance and
promotability.
 A five point performance scale is also used without mentioning
any descriptive statements.
 The worker is placed between two extremes of “good” and “bad”
performance.
 Group Appraisal

 Employee is appraised by a group of appraisers.

 The group consists of
 Immediate supervisor of the employee
 Other supervisors who have close contact with the
employee’s work.
 Manager or head of the departments.
 Consultants or Clients
 Field Review Technique

 The appraiser goes to the field and obtains the information

about work performance of the employee by way of

questioning the said individual, his peer group, and his

superiors
 360o Appraisal System

 It is a systematic collection and feedback of

performance data on an individual or group, derived

from a number of stakeholders

 Data is gathered and fed back to the individual

participant in a clear way designed to promote

understanding, acceptance and ultimately behavior

Appraisal Interview and Feedback - Let the
Employee Know Where He Stands

 To help employees do a better job by clarifying what is

expected of them
 To plan opportunities for development and growth
 To strengthen the superior-subordinate working relationship
by developing mutual agreement of goals
 To provide an opportunity for employees to express
themselves on performance related issues