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Published by: THOUFEEK on Sep 09, 2010
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Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Performance appraisal is a systematic & objective way of judging the relative worth of ability of an employ in performing his task.

A process of evaluating an employee¶s current and past performance relative to performance standards An appraisal involves: 

Setting work expectations/standards Assessing actual performance vs. these standards Providing feedback to the employee Help improve his performance

Compensating for performance Training and development programmes Feedback & Personal development

Common Performance System Dimensions of Performance
quality cost Impact as in change management quantity

Delivery/timeliness Helping/hindering factors

Shift from control oriented performance appraisal system to behavioral oriented system. Isolated Appraisal System to the business ± linked one. From closed (Confidential types) to open dialogue and discussion based system. From elaborate to Simple System. From rigid System to flexible and growth ±growth oriented one. From Personnel owned system to Line owned system.

From result oriented system to process oriented system From Individual to Team performance. From complacency to experimentation through continuous change. From boss oriented feedback to 360 feedback involving customers (internal and external), peers, team members, subordinates etc. in addition to supervisors.

PA processes
Establish performance standards (objectives/target/majoring standards/competency Communicate, communicate discuss & agree monitor the performance± periodic review Measure actual performance (annual stock taking Feedback, counseling& corrective actions Methods of performance appraisal

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Confidential report Essay evaluation Critical incidence Check list Graphic rating scale Behavioral anchored rating scale Forced choice method MBO Ranking Paired comparison Forced distribution Group Appraisal Human resource accounting Assessment centre Field review 360 degree appraisal

Appraisal Process (MBO): Sequential steps 

1st.Establish performance standards(Jointly? Too many?)  (Cascading goals)  2nd.Communicate performance expectations to employees.  (Received and understood)  3rd. Measure actual performance.  4th.Compare actual performance with standards  5th.Employee Counseling(Enhance capability/performance)  6th.Action plan\ Implement \Review- Support

1. 2. 3. 4.

Components of performance appraisal Key performance area (KPAs)/Key Result Areas (KRAs) Tasks/targets/objectives; attributes/quality/traits Self appraisal Performance analysis

5. Performance Ratings 6. Performance review, discussion or counseling. 7. Identification of training /development needs 8. Ratings/assessment by appraiser 9. Assessment /review by reviewing authority 10. Potential appraisal.

1. 2. 3. 4. 5. 6.

Potential Appraisal (Latent but unrealized ability) Ability to see future consistency Ability to take risk Attributes like analytical power, creativity, leadership skill, initiative etc Level headedness IQ, EQ, SQ (value)

Tapping potentiality at work


Work Horses


deadwood potential

Problem children

Stars are the people with high potential and high performance therefore they lead the organisations. Work Horses perform highly but normally it is due to threat or pressure since their potential is limited. Problem Children are those people who have immense potential but this is not properly channelised into performance for better development. Dead Wood is that kind of people who neither have potential nor are able to perform therefore need to be eliminated at the earlist.

Task is not defined clearly. Accountability / Responsibility not defined clearly. Too many tasks and objectives.

Level of performance not discussed. Employee perform without any standard. Output influenced by factors e.g. Working conditions/ superior¶s efforts and guidance; group characteristics; etc.

Lack of Supporting Data
Difficult to remember and correlate with past record during appraisal exercise. Creates vagueness.

Lack of Regular review
Keeps both the appraiser and the appraisees in dark Leads to surprises at the end.

Addresses following Issues Tell me clearly what you expect from me. Give me the wherewithal to perform. How am I doing? Guide me when I need it. How can I grow? Reward fairly. (Cash,1993)

Manager should
Walk the job. Regular meetings and reviews. Preset dates. Ask right questions. Listen actively. Summaries.

Look not only for negative variance, but also for positive variance. Build on success. ³We expect people to succeed and if they don¶t, we help them succeed.´ Give people the control information to monitor their own performance

Some problems with performance appraisal 1.Judgment errors First impressions (primacy effect) Halo Horn effect Leniency Central tendency Stereotyping Spill-over effect

2. Poor appraisal forms 3. Lack of rater preparedness 4. Ineffective organizational policies & practices Effective appraisal system Linked with organisational objective Open & transparent Job-relatedness\ Developmental & correctiveness suggesting compensation for performance Emphasis on potential appraisal

Performance appraisal In India National panasonic± this japanese whitegoods major has developed a performance-assessment system driven by key result areas(KRAs). KRAs describe performance goals-business, functional, and behavioural ones- with defined timeframes and are decided jointly by the employee and the manager at the beginning of the year.

Larsen & Toubro± Engineering major Larsen & Toubro has developed a competency matrix which lists 73 competencies± that vary across managerial levels± to measure performance and gauges development needs of its employees. Each listed competency has associated knowledge, skills, and attributes. The company appraises individual employees in the listed competencies, and zeroes in on the functional, managerial and behavioural skills gaps.

Pepsi Co. India± Beverage giant Pepsi Co. (India) employs an annual appraisal process that is (numerical) target driven. As a large part of Pepsi¶s compensation package comprises performance pay in the form of bonuses- varying from 15 percent at junior levels to 60 plus per cent at senior rungs- the manager¶s performance is determined on three key parameters: volume growth, market share , and net operating profit, to compute the variable component to compensation.

The challenges in Performance management Create a culture of excellence that motivates employees at all levels. Match organisational objectives with individual aspirations. Equip people with requisite skills to discharge their duties well. Clear growth paths for talented employees Empower employees to take decisions without fear of failing Encourage teamwork and team spirit and open communication.

The performance appraisal system should be practice to serve following purposes: They can help each employee to understand more and more about his role and become clear about his functions. They can be instruments in helping each employee to understand. They can help in identifying the developmental needs of each employee with respect to his role and function They can increase mutuality between each employee and his supervising officer. They can be mechanisms of increasing communication between the employee and his supervising officer so that each employee gets to know the expectations of his boss from him and each boss also gets to know the difficulties.

They can be instruments to provide an opptunity for the employee for self-reflection and individual goal-setting so that individually planned and monitored development takes place. They can play a role in helping every employee internalize the culture norms and values of the organisation so that an organisation identity and commitment is developed through out the organisation. They can be instrument in the creation of a positive and healthy climate in the organisation In addition they can assist in a variety of personnel decisions by generating data about each employee periodically.

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