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They are used to inventory the abilities and resources of employees and to let an employee know where he stands so that he will be stimulated to improve his performance. Employee motivation can be enhanced and performance improved with the monitoring of employees' performance level and the use of feedback to advise those employees about their effectiveness. Performance feedback exchanges can be ongoing and informal, on a day-to-day coaching basis or on a formal basis, annually or biannually. This chapter covers the fundamental concepts of performance appraisal. The practice of performance appraisal is described in this chapter and its process and its features along with the differences between performance management and appraisal. Introduction Performance appraisal is a universal phenomenon in which the organization is making judgment about one is working with and about oneself. It serves as a basic element of effective work performance. Performance appraisal is essential for the effective management and evaluation of staff. It aims to improve the organizational performance as well as individual development. The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago. Performance appraisals have been increasingly implemented by most modern organization as a tool for employee assess. The meaning of the word “appraisal” is “to fix a price or value for something”. This is used in finance in terms such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance appraisal is a process in which one values the employee contribution and worth to the organisation. Objectives Performance appraisals provide a means for informing employees of the quality of their work and identifying areas of performance that may need improvement. Performance appraisals consist of assessing the staff member's adequacy to perform tasks, to fulfill responsibilities, to meet behavioral and conduct standards, and to perform other job requirements at desired levels of
competence. Performance appraisals help supervisors maintain control of the work and make the most effective use of their staff resources. Further, performance appraisal documents provide a supportable basis for making personnel decisions including, but not limited to, training needs, merit pay adjustments, promotions, transfers, continued employment, or terminations.
The objectives of performance appraisal are: 1. 2. 3. 4. 5. To help better current performances To help in development of the employee. To determine training and development needs. To give employee feedback and counsel them To review performance for salary purposes.
Employees across the entire organisation are apprised of their performance. This could be done annually, twice a year, periodically depending on the need of the organization. Types of Appraisal Systems The various kinds of performance appraisal systems are: • Personality based performance appraisal system: Here the appraiser is supposed to rate the personality traits of the person being appraised. This is not in much in organisations as it very subjective and judgmental. It could also be biased and prejudiced. • Competence based performance appraisal system: Here the job analysis is used and the employee is appraised for the skills he exhibits. For e.g. if his job entails dealing with the clients then he is judged foe his effectiveness in dealing with them. This enables both the organisation and the employee as to what deficiencies are to be overcome and can be useful in providing training to the employee to better his performance.
Result based performance appraisal system: This system concentrates on the final results achieved by the employee irrespective of his personality or deficiencies. This is totally related to the job and concentrates on the end results that are more important to the organisation. The performance appraisal system has to be transparent and the employee should be taken into full confidence. In many cases employees themselves are given a chance to conduct a self-appraisal. Performance appraisal is a case of joint problem solving by the organisation and the employee. However
standards. Traditional Appraisal system Performance appraisal is developed as a simple method of income justification. Normally the immediate supervisor does the appraisal. and maturity. Elements in the Performance Appraisal Process At one stage performance appraisal relied mainly on assessment of personality characteristics. The managers must also be trained to look at the cases objectively outside of their personal opinion of the candidate. More recent thinking has resulted in an approach which says that there are two important aspects in performance appraisal namely inputs and outputs Inputs: What the individual brings to the job in terms of attributes. in which the work performance of the subordinate is examined and discussed . Types of Appraisal Systems Performance is an employee's accomplishment of assigned work as specified in the critical elements and as measured against standards of the employee's position. Appraisal used to decide whether the salary of an individual was justified or not. standards. The HR person must also ensure that line managers are properly trained for carrying out the appraisal including interviewing techniques and on how to give feedback. behavior. Modern Appraisal System Performance appraisal is defined as a structured formal interaction between a subordinate and a supervisor that usually takes the form of a periodic interview. The decrease or increase in pay depends upon employee’s performance. Managers were being put in the position of psychologists and required to make subjective ratings without any point of reference except their own opinion. Expectations are expressed in terms of objectives. skills and knowledge are inputs. willingness. targets or competence and appraisal is made on the basis of inputs and outputs. Subordinates were being appraised by their superiors on the extent to which they exhibited characteristics like tact. The term “Performance Appraisal” is concerned with the process of valuing a person’s worth to an organization with a view to increasing it.the organisation must also take care of future potential and not get bogged down by current performance. enthusiasm. Outputs: The results achieved in terms of outputs or outcomes are referred to as outputs. Some organisations also have a peer group performance appraisal where colleagues rate the performance.
It also help to adopt appropriate strategy based . Generally employees are appraised based on the structure of the company Annual performance appraisals evaluate the role of the employee in the organizational development and also monitoring the standard. A performance award does not increase basic pay. evaluating employee performance. monitoring employee performance. Performance Improvement Plans (PIP) are developed for employees at any point in the appraisal cycle when performance becomes Level 1 (unacceptable) in one or more critical elements. objectives. employee development. factors such as quality.with a view to identify weakness. Performance appraisal system describes how agency will identify performance standards and core competencies and communicate them to employees. Performance Award is a one-time cash payment to recognize the contributions of an employee and is based on the rating of record. Performance-Based Actions are the reduction in grade or removal of an employee based solely on performance at the unacceptable level. This plan affords an employee the opportunity to demonstrate acceptable performance and it is developed with specific guidance provided by a servicing human resources office. Periodical appraisal helps the company to compare employee’s performance and to take apt decisions for further improvement. efficiency in handling task and responsibilities in a period of time. and manner of performance. A performance standard may include. quantity. Performance Management consists of: performance planning. but is not limited to. The formal performance appraisal in a company is conducted annually for all staff and each staff member is appraised by their line manager. expectations. A structured business planning depends on the performance of the employee and it will be successful only when the employees are analyzing their work performance individually. and recognition. Performance Management is the integrated process by which an agency involves its employees in improving organizational effectiveness in the accomplishment of agency mission and strategic goals. Performance Standards are statements of the expectations or requirements established by management for a critical element at a particular rating level. Performance Plans are the documentation of performance expectations communicated to employees from supervisors. strength and opportunities for improvement and skills development. Appraisal also helps to analyze the individual training needs of the employee and planning of future job allocation. Plans define the critical elements and the performance standards by which an employee's performance will be evaluated. timeliness.
performance review. Feedback reduces employee uncertainty and provides direction about how well an individual is performing and how he or she can improve. Document criteria used to allocate organizational rewards. Performance appraisal analyzes employee’s performance and which utilize to review the grades and modify the annual pay. When employees are uncertain about their work performance and job security. think how . Performance feedback to employees is one of the essential keys to making that elusive objective a reality. Most people are uncomfortable with uncertainty. It generally reviews each individual performance against the objectives and standard of the organization. Being motivated to do a “good job” is hard if you don’t know what “good” is or what the expectations are. knowledge and contribution. knowledge and contribution from the staff. Through performance management companies are hiring efficient people . etc. which increases self-sufficiency in performance consulting and improvement. Performance Feed Back The human resource objective of a dairy manager should be to maintain a productive. The tools like performance appraisal. Employees appreciate feedback on their performance and constructive criticism that helps them to gain success. they cannot be as satisfied and productive as possible. If coaches never offered any advice on how to hit the ball. and provide resultant training using internal staff. run faster. Provide the opportunity for organizational diagnosis and development. disciplinary actions. Identify employee-training needs. and committed workforce. Form a basis for personnel decisions-salary (merit) increases. stable. or jump higher. Formal management procedure used the evaluation of work performance.Then the company building up their skills and talents through employee development programmes. Performance appraisal tries to: Give feedback to employees to improve subsequent performance. Providing feed back about employee’s job performance and the contribution of reward for their work is very essential in the smooth functioning of an organization. Effective appraisal considers increase in staff productivity. These resources increase the ability to do performance consulting.on organizational training needs. Facilitate communication between employee and administrator. measure performance improvement. Effective appraisal helps the employer in providing increased productivity. Performance management creating a work environment and it is enabling the employees to perform best of their abilities. and appraisal forms create the process of nurturing employee developments.
Employers promote positive attitude. and separately whole-person development is a crucial advantage in the employment . Otherwise. Feed back of Performance provides an opportunity to discuss strength and resolution of performance deficiencies of an employee. Limiting feedback to formal reviews once or twice a year is not enough to help employees improve. especially. In other words. Six Characteristics of Useful Feedback ■ Specific Feedback should be specifically related to recognizable elements of performance or particular incidents that can be easily understood by both the employee and supervisor. but even experienced people need to hear it often enough to stay motivated and feel valued. and find roles that really fit well. Your employees feel the same way when they get little to no feedback about how they are performing. Feedback about a critical incident in particular needs to come almost immediately after the incident takes place. a milking supervisor who never visits the night crew cannot credibly provide them with feedback. Lessexperienced employees need feedback more frequently. ■ Frequent Feedback needs to be frequent enough to provide direction that helps employees shape their performance. Negative feedback.frustrated players would be in trying to improve their performance. and motivation to make the employee to understand their own special potential. Performance appraisal allows a person to grow in whatever the direction he wants to move. the meaning and importance of the incident for learning begins to decline rapidly. or plans for a change in the work system that limits performance. ■ Timely Feedback need to occur close enough in time to performance so that it has meaning. which also encouraged preparing ratings of their supervisors. ■ Relevant Feedback should focus on behaviors or attitudes that have a direct impact on performance. feedback should include objective information. The steps might be some specific recommendations (like from a coach). The source of feedback needs to be in a position to observe employee performance. Issues or opinions unrelated to job performance have no place in job feedback ■ Credible Feedback should come from a trusted source that has a developed rapport with the employee. One should never wait for a formal review to provide feedback on a critical incident —and should provide informal feedback right away. ■ Linked to a Source of Help Feedback should not end with the employee wondering what to do next. Developing the whole-person is also an important aspect of modern corporate responsibility. Whenever possible. advancement. direction toward a source of further training. should always conclude with a series of positive steps that the employee can take toward improvement.
it must be received on a regular and frequent basis. annual evaluation. Informal feedback might simply be a pat on the back when the supervisor notices that a job was particularly well done. and to retain the best staff. Informal feedback fills this need. informal feedback and coaching make up the largest and most important parts of that role.market. in which all employers compete to attract the best recruits. A yearly or twice-yearly performance review that may be linked to pay raises is a good way to provide formal feedback and help employees to develop but does not replace the daily . performance appraisal. Providing feedback. People need to know specifically what parts of the job they do well and what parts they need to improve. transfer and discharge decisions. but rather constructive feedback for improvement. Any communication about performance that is carried out in an informal setting is informal feedback. Good supervisors maintain open communication with their subordinates. Employees appreciate formal feedback on their performance and constructive criticism that helps them to succeed. When a dairy farm manager is carrying out the role of supervisor. The purpose of the performance review is to help employees improve their work and develop a plan for gaining new skills. and so forth. They listen closely to their ideas and concerns and are always offering feedback on their performances. Although the documentation needed to terminate an employee with chronic performance problems may start here. It stimulates the performance and making promotions. both positive and negative. the goal of the review process is not discipline or punishment. It’s usually carried out on an annual or twice-yearly basis and is often associated with pay adjustments. Formal Performance Feedback Periodic. Informal Feedback In order for feedback to help improve group or individual performance. is an important part of every manager’s responsibility. formal feedback about performance for individuals is known by many names: performance review. By offering ideas and direction toward improvement whenever feedback is negative. supervisors act as a coach to help their subordinates grow and improve. It might be a problem solving session for the herdsperson and breeder when the records indicate that reproductive efficiency is declining. Usually performance appraisal used for developmental purpose which also helps to identify the eligible person for reward.
An incentive program can be a useful tool for motivating and rewarding key employees. Performance appraisal schemes existed in isolation. It has been perceived by many commentators such as Townley as solely a means of exercising managerial control. In contrast. Performance appraisal has been discredited because too often it has been operated as a top-down and largely bureaucratic system owned by the Human Resource department rather than by line managers. concentrating on what had gone wrong. tend to be biased and are simply going through the motions. Performance Appraisal and Performance Management It is sometimes assumed that performance appraisal is the same thing as performance management. but it should be used in combination with both informal and formal feedback for the best overall outcome. usually. emphasizes the support role of managers who are expected to act as coaches rather than judges. There was little or no link between them and the needs of the business. performance management is a continuous and much wider.communication about work performance. As Armstrong and Murlis assert. Performance appraisal tended to be backward looking. But there are significant differences. rather than looking forward to future development needs. more comprehensive and more natural process of management that clarifies mutual expectations. Employees have resented the superficial nature with which appraisals have been conducted by managers who lack the skills required. an annual review meeting. performance appraisal too often degenerated into ‘a dishonest annual ritual’. Line managers have frequently rejected performance appraisal schemes as being time-consuming and irrelevant. Performance appraisal can be defined as the formal assessment and rating of individuals by their managers at. The differences between them as summed up by Armstrong and Baron are set out in the following table: Performance Appraisal Top down assessment Annual appraisal meeting Use of ratings Monolithic system Focus on quantified objectives Often linked to pay Bureaucratic – complex paperwork Owned by HR managers Performance Management Joint process through dialogue Continuous review with one or two formal reviews Ratings less common Flexible process Focus on values and behaviours as well as objectives Less likely to be a direct link to pay Documentation kept to minimum Owned by line managers . and focuses on the future.
and by improving job efficiency rather than focusing on human performance systems that determine productivity. and local . to measure equitable treatment of different groups of employees. and to promote or terminate employees. In the absence of a valid system for assessing the performance of all employees.Performance management systems. trying to close the performance gap by investing in advanced technology. Some organisations overspend. by redesigning the workplace. Organisations lacking performance appraisal systems risk costly litigation when they are unable to support decisions to terminate or lay off employees. and local government is insufficient funding for such systems. including performance appraisals or evaluations are critical linchpins for human resources management. federal. based on appraisal ratings. managers risk suboptimum promotion decisions and they may promote one employee and increase his or her pay when another employee's performance would be superior and give a higher return on the salary investment. state. will give employees incentives to improve productivity. This type of feedback is essential to improve performance of employees at all levels and to assess the accomplishments of the organisation overall. to increase employees' pay. If a smaller number of employees will be expected to accomplish more. resulting in recruitment costs for the employer. a successful pay-for-performance system must be . Even when appropriations are adequate. engage in strategic planning and try to meet accountability standards of statutes like the Government Performance and Results Act. Appraisal ratings may be criteria in decisions to retain employees during layoffs. The costs of failing to develop adequate performance appraisal systems. Many elected officials believe pay-for-performance. Effective performance management systems are among the tools for measuring and improving productivity. Appraisals may help poor performers improve performance by giving specific feedback about needs for development and appraisals may help employees who excel continue to excel by giving positive reinforcement. then it is critical to use all available tools and techniques for maximizing each employee's productivity. to assess the quality of training programs. Governments at all levels are trying to verify that their agencies and departments are doing more with less. though difficult to measure. One problem in federal. Employee performance and productivity data are becoming more important as more government agencies. The performance gap that is the gap between desired performance and actual performance also increases costs. state. would surely exceed the benefits of developing and implementing an effective system. Employees who excel and who do not receive positive feedback may become frustrated and leave.
For example. but they were not the only element that had an impact on employee performance.carefully designed and implemented by well-trained managers in an organisation with sound management practices and policies. yes. The process was firmly linked to material outcomes. Sometimes this basic system succeeded in getting the results that were intended. Job Analysis is a process where judgments are made about data collected on a job. That is. Without a structured appraisal system. as it is known today. early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. tools and equipments. Environment. there is little chance of ensuring that the judgments made will be lawful. the traditional emphasis on reward outcomes was progressively rejected. As a result. On the other hand. . such as morale and selfesteem. defensible and accurate. a cut in pay would follow. Modern Appraisal The human inclination to judge can create serious motivational. should provide the only required impetus for an employee to either improve or continue to perform well. Pay rates were important. fair. it failed. was given to the developmental possibilities of appraisal. ethical and legal problems in the workplace. began from that time. If was felt that a cut in pay. Aspects of Job Analysis Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. external and internal relationships and the minimum requirements to perform the job are considered under job analysis. Performance appraisal systems began as simple methods of income justification. a pay rise was in order. could also have a major influence. The general model of performance appraisal. In the 1950s in the United States. If an employee's performance was found to be less than ideal. if their performance was better than the supervisor expected. Little consideration. or a rise. These observations were confirmed in empirical studies. appraisal was used to decide whether or not the salary or wage of an individual employee was justified. if any. Information regarding duties and tasks. but more often than not. the potential usefulness of appraisal as tool for motivation and development was gradually recognized. It was found that other issues.
and promotions. in which the work performance of the subordinate is examined and discussed. the information flow is not exclusively one way. The main aim of the evaluation system is to identify the performance gap (if any). demotion. Organizational Viewpoint the organization. Basic Purposes of Appraisal Effective performance appraisal systems contain two basic systems operating in conjunction: an evaluation system and a feedback system.but not all .the assignment and justification of rewards and penalties . bonuses. (However. In many organizations .) One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and Employee Viewpoint From the employee viewpoint. This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable.) Whether this is an appropriate use of performance appraisal .appraisal results are used. that usually takes the form of a periodic interview (annual or semi-annual). etc. or in extreme cases.Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor. the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases. to help determine reward outcomes. That is. either directly or indirectly. the purpose of performance appraisal is four-fold: Tell me what you want me to do Tell me how well I have done it. The main aim of the feedback system is to inform the employee about the quality of his or her performance. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay. appraisal results are used to identify the poorer performers who may require some form of counseling. Help me improve my performance Reward me for doing well. The appraisers also receive feedback from the employee about job problems. with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.is a very uncertain and contentious matter. dismissal or decreases in pay. . By the same token.
no one is accountable for anything.indeed actively encourages . and more likely to find it useful. but it will be sluggish." Non-alignment occurs where employees are given responsibilities and duties. in the severely non-aligned system. For decades it has been known to researchers that one of the chief causes of organizational failure is "non-alignment of responsibility and accountability.oriented or MBO methods (13%). The overlap allows . the non-aligned organization may run. and some have been found to yield better results than others. It is also more likely that such employees will be better able to meet future performance goals. Like a poorly made or badly tuned engine. essay methods (25%) and results. In this event. Locher & Teel found that the three most common appraisal methods in general use are rating scales (56%).From the organization's viewpoint. follow the button links on the left. In contrast. Organizational failure is the only possible outcome. What typically happens is that several individuals or work units appear to have overlapping roles. ill-informed. other studies have reported that "destructive criticism" . This especially so when they are permitted to challenge and appeal against their evaluation. the principle of accountability breaks down completely. to help them overcome present difficulties and to improve their future performance. when they believe that the appraiser's intentions are helpful and constructive. Ultimately. Encourage Discussion: Research studies show that employees are likely to feel more satisfied with their appraisal result if they have the chance to talk freely and discuss their performance.. The objective is to align responsibility and accountability at every organizational level. costly and unreliable.will lead . For a description of each. In cases where the non-alignment is not so severe. Appraisal Methods In a landmark study.each individual or business unit to "pass the buck" to the others. but are not held accountable for the way in which those responsibilities and duties are performed. i. One of the principal aims of performance appraisal is to make people accountable. the organization may continue to function. Employees are also more likely to feel that the appraisal process is fair if they are given a chance to talk about their performance.e. albeit inefficiently. Employees will be less anxious about criticism. unfair or harshly presented . Certain techniques in performance appraisal have been thoroughly investigated. one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability.which is vague. Constructive Intention: It is very important that employees recognize that negative appraisal feedback is provided with a constructive intention.
as well as increased resistance to improvement.. communications ability. increase persistence. with the same range of responses. Advantages The greatest advantage of rating scales is that they are structured and standardised. both appraisers and appraisees have an intuitive . The useful of goals as a stimulus to human motivation is one of the best supported theories in management. The nature and scope of the traits selected for inclusion is limited only by the imagination of the scale's designer. focus attention. Rating Methods The rating scale method offers a high degree of structure for appraisals. Set Performance Goals: It has been shown in numerous studies that goalsetting is an important element in employee motivation. The concept of the rating scale makes obvious sense.to problems such as anger." Appraiser Credibility: It is important that the appraiser (usually the employee's supervisor) be well-informed and credible. difficult and accepted by employees will lead to higher levels of performance than easy. or by the organization's need to know. and poorer performance. When these conditions exist. employees are more likely to view the appraisal process as accurate and fair. This encourages equality in treatment for all appraisees and imposes standard measures of performance across all parts of the organization. The traits selected by some organizations have been unwise and have resulted in legal action on the grounds of discrimination. resentment. Goals can stimulate employee effort. and should be knowledgeable about the employee's job and performance.even for entire workforces. The one major provision in selecting traits is that they should be in some way relevant to the appraisee's job. denial of problems. Each employee is subjected to the same basic appraisal process and rating criteria. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from "poor" to "excellent" (or some similar arrangement). punctuality and technical (work skills) competence. They also express more acceptances of the appraiser's feedback and a greater willingness to change. The traits assessed on these scales include employee attributes such as cooperation. This allows ratings to be easily compared and contrasted . and encourage employees to find new and better ways to work.. It is also quite clear that goals which are ". initiative. vague goals (such as do your best) or no goals at all. tension and workplace conflict.specific. Appraisers should feel comfortable with the techniques of appraisal. Rating scale methods are easy to use and understand.
All human beings are affected by it. The result is widespread acceptance and popularity for this approach. the supervisor covers for them and may even offer excuses for their declining performance. An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. we see in others what we want to see in them. It is possible that an employee's performance may depend on factors that have not been included in the selected traits. a low appraisal rating for initiative may not mean that an employee lacks initiative. Job and workplace circumstances must be taken into account. For example. and the traits they purport to measure. This is a common and normal psychological phenomenon.appreciation for the simple and efficient logic of the bipolar scale. In other words. generally attempt to encapsulate all the relevant indicators of employee performance. Systemic Disadvantage Rating scales. Rather. In such cases. There is an assumption that all the true and best indicators of performance are included. and then seek evidence to support that view (while ignoring or downplaying evidence that might contradict it). Such employees may end up with ratings that do not truly or fairly reflect their effort or value to the organization. . Instead of correcting the slackening employee. the trait "initiative" might not be very important in a job that is tightly defined and rigidly structured. Perceptual Errors This includes various well-known problems of selective perception (such as the horns and halos effect) as well as problems of perceived meaning. Selective perception is the human tendency to make private and highly subjective assessments of what a person is "really like". This is an assumption very difficult to prove in practice. The relevance of rating scales is therefore said to be contextsensitive. and all false and irrelevant indicators are excluded. Employees in this class are systemically disadvantaged by the rating scale method. Disadvantages Trait Relevance Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is inevitable that with a standardised and fixed system of appraisal that certain traits will have a greater relevance in some jobs than in others. it may reflect that fact that an employee has few opportunities to use and display that particular trait.
a supervisor may have formed the impression that an employee is bad (horns effect). these errors may be (at times) deliberate. Advantages . To another appraiser. an employee may demonstrate the trait of initiative by reporting work problems to a supervisor. The horns and halo effect is rarely seen in its extreme and obvious forms..g. or it be composed in collaboration with the appraisee. "satisfactory" or "adequate"). the language and terms used to construct a scale such as "Performance exceeds expectations" or "Below average skill" . regardless of the actual performance of a subordinate. The statement may be written and edited by the appraiser alone. middle-of-the-road ratings (e. the appraiser prepares a written statement about the employee being appraised. This problem is worsened in organizations where the appraisal process does not enjoy strong management support. Rating Errors The problem here is not so much errors in perception as errors in appraiser judgement and motive. Busy appraisers. or where the appraisers do not feel confident with the task of appraisal. and always ready to criticize and undermine them. may be tempted to dole out too many passive.and thus a lack of initiative. But in its more subtle manifestations. It also suggests courses of action to remedy the identified problem areas. to one appraiser. As well. The statement usually concentrates on describing specific strengths and weaknesses in job performance. Unlike perceptual errors.On the other hand. Thus the spread of ratings tends to clump excessively around the middle of the scale. Essay Method In the essay method approach. The most common rating error is central tendency. Perceived Meaning Problems of perceived meaning occur when appraisers do not share the same opinion about the meaning of the selected traits and the language used on the rating scales. or those wary of confrontations and repercussions. For example. it can be a significant threat to the effectiveness and credibility of performance appraisal. this might suggest an excessive dependence on supervisory assistance . The supervisor becomes unreasonably harsh in their assessment of the employee.may mean different things to different appraisers.
The process is subjective and. Usually the objectives are established jointly by the supervisor and subordinate. Result Method – Management By Objectives (MBO) The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. If the employee meets or exceeds the set objectives. Appraisers may place whatever degree of emphasis on issues or attributes that they feel appropriate. That is. it is difficult to compare and contrast the results of individuals or to draw any broad conclusions about organizational needs. the employee is usually expected to self-audit.is also its greatest handicap. The techniques greatest advantage .freedom of expression . the MBO method concentrates on actual outcomes. Instead of assuming traits. The appraiser is not locked into an appraisal system the limits expression or assumes that employee traits can be neatly dissected and scaled. Once an objective is agreed. An example of an objective for a sales manager might be: Increase the gross monthly sales volume to $250.000 by 30 June. Employees are judged . in consequence. Advantages The MBO approach overcomes some of the problems that arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured. They are expected to monitor their own development and progress. to identify the skills needed to achieve the objective. MBO (management by objectives) methods of performance appraisal are results-oriented.The essay method is far less structured and confining than the rating scale method. Thus the process is open-ended and very flexible. It permits the appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply with methods where the appraisal criteria are rigidly defined. that is. Typically they do not rely on others to locate and specify their strengths and weaknesses. they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Appraisers often find the essay technique more demanding than methods such as rating scales. then he or she has demonstrated an acceptable level of job performance. Disadvantages Essay methods are time-consuming and difficult to administer. The varying writing skills of appraisers can upset and distort the whole process.
upward appraisal. Supervisors and subordinates must have very good "reality checking" skills to use MBO appraisal methods. But the penalty for fluidity is loss of clarity. multi-level feedback. They will need these skills during the initial stage of objective setting. Disadvantages MBO methods of performance appraisal can give employees a satisfying sense of autonomy and achievement. Objectives. But put all the parts together and the performance may be directly observed and measured.involving behavioral feedback from a variety of sources such as Peers. Customers . 360-degree feedback appraisals are 'multi-source' . MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts . and peer review. It has become very apparent that the modern organization must be flexible to survive. Of course. Variable objectives may cause employee confusion. multirater feedback. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance. tend to impose certain rigidity. Unfortunately.as one might take apart an engine to study it. One of the strengths of the MBO method is the clarity of purpose that flows from a set of well-articulated objectives. they can lead to unrealistic expectations about what can and cannot be reasonably accomplished.e. and not on their potential for success. or on someone's subjective opinion of their abilities. Direct Reports ('subordinates'). research studies have shown repeatedly that human beings tend to lack the skills needed to do their own "reality checking". Nor are these skills easily conveyed by training. But on the downside. Reality itself is an intensely personal experience. by their very nature. whereas the traits and attributes of employees (which may or may not contribute to performance) must be guessed at or inferred. prone to all forms of perceptual bias. the obvious answer is to make the objectives more fluid and yielding. Where 'regular' performance appraisals provide 'single-source' (top-down) feedback.according to real outcomes. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to make up employee performance. But this can be a source of weakness also. normally from an employee's direct line manager only. 360 DEGREE FEEDBACK 360-Degree Feedback is also known as full-circle feedback. The guiding principle of the MBO approach is that direct results can be observed. and for the purposes of self-auditing and self-monitoring. i.
Only Raters having worked with the Appraisee for a period of minimum three months should be asked to provide behavioral feedback to the Appraisee. The employee receiving the feedback (called 'Appraisee'). When managers are new to the organization. Need It is harder to discount the views of several of your colleagues or customers than the views of just one person. non-defensive spirit.(internal and/or external) as well as Managers. To identify and build upon the strengths that you are currently exhibiting. It informs employees of their actions that create problems for others. and increased individual ownership for self-development. open-minded. as there may just not be anybody else to do it. by understanding how your behavior is perceived by others. The 360 process also provides a much more complete and richer picture of an employee's performance. 360-feedback can play a major role in employees' personal and professional growth. it will normally take a while to get to know them well. performance outputs and customer service. team synergy. Some of the benefits of receiving 360-degree feedback from others are: Increased self-awareness. To identify priority areas where you might change your behavior in order to improve your work performance and organizational effectiveness. Feedback is essential in facilitating performance improvement. In addition. and what behavioral changes may be necessary to improve working relationships. Received in a positive. gets rated by 360 Raters (also called 'Multiraters'). These are called Rater Groups. The Appraisee also fills out a self-rating that includes the same questions that Rater Groups receive in their questionnaires. and comparing this perception with your own self-assessment of your own work behavior. and job satisfaction. 360 . More focused learning and development activities. and especially if they have many direct reports. consisting of three or more Raters per Rater Group (except for the Rater Group 'Manager/s' where an employee may only have one line manager). It can serve as a strong spur for personal development and behavior change. it gives people an opportunity to provide anonymous feedback to a colleague. which they might otherwise be uncomfortable to give face-to-face. 360 feedback from peers and direct reports is frequently the only way that senior executives can get feedback on their performance.
The data gathered from 360-degree feedback throughout the organization can be very useful in providing insight into organization-wide behaviors and competency (or the lack thereof). and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally. . honesty. NOTE: Because of its very power as a behavior modification tool. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. the roots of the this type of approach are deep. government. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. improve internal and external communications. a " dashboard" of performance measures) in the early part of the 20th century. 360-degree feedback . and what development and other interventions may be necessary to address weaknesses. Balance Scorecard The balanced scorecard is a strategic planning and management system that is used extensively in business and industry.if not implemented sensitively and professionally . It was originated by Drs. While the phrase balanced scorecard was coined in the early 1990s. For it to be successful there must be a mature organizational culture of openness. and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization. and mutual trust. and monitor organization performance against strategic goals.can do a lot of harm to both individuals and the organization.feedback could be the ideal process to use to gather behavioral information on them very fast and effectively.
employees. but helps planners identify what should be done and measured. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action." . and innovation. These financial measures are inadequate. processes. Recognizing some of the weaknesses and vagueness of previous management approaches. But financial measures tell the story of past events. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. It enables executives to truly execute their strategies. the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. This new approach to strategic management was first detailed in a series of articles and books by Drs. an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. however. Kaplan and Norton. suppliers. technology. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures.The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements. for guiding and evaluating the journey that information age companies must make to create future value through investment in customers. When fully deployed.
the only repository of knowledge -. Kaplan and Norton emphasize that 'learning' is more than 'training'. learning and growth constitute the essential foundation for success of any knowledge-worker organization. Metrics can be put into place to guide managers in focusing training funds where they can help the most.are the main resource. people -.Adapted from The Balanced Scorecard by Kaplan & Norton Perspective The balanced scorecard suggests that we view the organization from four perspectives." . collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. and to develop metrics. In a knowledgeworker organization. it also includes things like mentors and tutors within the organization. In any case. It also includes technological tools. what the Baldrige criteria call "high performance work systems. In the current climate of rapid technological change. it is becoming necessary for knowledge workers to be in a continuous learning mode.
Metrics based on this perspective allow the managers to know how well their business is running. customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. Timely and accurate funding data will always be a priority. Generally speaking. With the implementation of a corporate database. step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a causeand-effect chain. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. In fact. even though the current financial picture may look good. Performance Appraisal Preparation . they will eventually find other suppliers that will meet their needs. They show a logical. These metrics have to be carefully designed by those who know these processes most intimately. which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows). Strategy Mapping Strategy maps are communication tools used to tell a story of how value is created for the organization. it is hoped that more of the processing can be centralized and automated. often there is more than enough handling and processing of financial data.The Business Process Perspective This perspective refers to internal business processes. There is perhaps a need to include additional financial-related data. The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. such as risk assessment and cost-benefit data. In developing metrics for satisfaction. with our unique missions these are not something that can be developed by outside consultants. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up). These are leading indicators: if customers are not satisfied. and managers will do whatever necessary to provide it. Poor performance from this perspective is thus a leading indicator of future decline. and whether its products and services conform to customer requirements (the mission). in this category.
Appraisal systems should be job-related. be practical. (b) The error of Central Tendency: Some raters follow play safe policy in rating by rating all the employees around the middle point of the rating scale and they avoid rating the people at both the extremes of the scale. Considering that progression along pay scales might be effected by appraisal outcomes. have standards.training provided where necessary Be simple and not take appraisers nor appraisees unduly away from their core tasks Be sophisticated enough to ensure appraisees' perceptions of fairness Measuring clear competencies only Provides a feedback mechanism with a link to training and development Problems in Performance Appraisal The problem with subjective measure is the rating which is not verifiable by others and has the opportunity for bias. (c) the leniency and strictness biases (d) personal prejudice. he may rate them at the lower end. which may distort the rating purpose and affect the career of these employees. (c) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently. any such system must be perceived to be (and actually be) fair and objective. and use dependable measures. and (e) the recent performance effect (a) Halo Effect: It is the tendency of the raters to depend excessively on the rating of one trait or behavioral consideration in rating all others traits or behavioral considerations. (d) Personal Prejudice: If the rater dislikes any employee or any group. One way of minimizing the halo effect is appraising all the employees by one trait before going to rate on the basis of another trait. They follow play safe policy because of answerability to management or lack of knowledge about the job and person he is rating or least interest in his job. Equally damaging one is assigning consistently low rates. Some characteristics to look for in an appraisal process are: Objectivity / measurability Work relatedness of measures Measures are within the appraisee's control Measures are attainable Contains an appeal mechanism Management commitment to the entire process -. . The rate biases include: (a) halo effect (b) the error of central tendency. Such ratings do not serve any purpose.
system. Similarly. Performance Appraisal – A Case Study Carter Cleaning Company After spending several weeks on the job. also from Jack. factors. Negative ratings affect interpersonal relations and industrial relations Influence of external environmental factors and uncontrollable internal Feedback and post appraisal interview may have a setback on production. employee in performance appraisal. manual workers such as those doing the pressing and the cleaning did periodically get positive feedback in terms of praise from Jack for a job well done. . Management emphasizes on punishment rather than development of an Some ratings particularly about the potential appraisal are purely based performance appraisal interview. Superiors lack that tact of offering the suggestions constructively to Supervisors were often confused due to too many objectives of was not significant. many employees didn’t stick around long enough to be appraisable any way. Less reliability and validity of the performance appraisal techniques. Jack’s position was that he had “hundred higher-priority things to attend to. if things did not look right during one of his swings through the stores. of the employee at the time of rating and rate on the basis of these recent actions favorable or unfavorable than on the whole activities.(e) The Recent performance Effect: The raters generally remember the recent actions. Other factors that are considered as problems are: Failure of the superiors in conducting performance appraisal and post Most part of the appraisal is based on subjectivity. Absence of inter-rater reliability. contended jack. performance appraisal. on guess work. in any case. The other problems of performance appraisal reported by various studies are: Relationship between appraisal rates and performances after promotions Some superiors completed appraisal reports within a few minutes.” such as boosting sales and lowering costs. Furthermore. subordinates. The situation was unpleasant in feedback interview. Jennifer was surprised to discover that her father had not formally evaluated any employee’s performance for all the years that he had owned the business. or criticism. and.
and punctuality that should be evaluated periodically even if a worker is paid on piece rate. in effect. The Vice President’s memo met widespread resistance immediately – from administrators. she feels quite strongly that the managers need to have a list of quality standards for matters such as store cleanliness. Apparently. told Rob that one of his first tasks was to improve the appraisal systems used to evaluate secretarial and clerical performance at Sweetwater U. Rob sent a memo to all administrators telling them that in the future no more than half the secretaries reporting to any particular administrator could be appraised as “excellent”. faced a tough problem shortly after his university career began. In fact. Jennifer believes that a more formal appraisal approach is required. who were afraid that many met widespread resistance immediately – from administrators. efficiency. attendance. and . the main difficulty was that the performance appraisal was traditionally tied directly to salary increases given at the end of the year. Sweetwater’s president. Furthermore. Is Jennifer right about the need to evaluate the workers formally? The managers? Why or why not? 2. This informal feedback notwithstanding. most administrators were less than accurate when they used the graphic rating forms that wee the basis of the clerical staff evaluation. so he had asked the new vice president to revise the system. who were afraid that many of their secretaries would begin leaving for more lucrative jobs in private industry. got some feed-back on where they stood. Rob’s boss. Appraising the Secretaries At Sweetwater U Rob Winchester.Jack was never shy about telling his managers about store problems so that they. newly appointed vice president for administrative affairs at sweet water State University. In October. safety and adherence to budget on which they know they are to be formally evaluated. what usually happened was that each administrator simply rated his or her clerk or secretary as “excellent”. too. So. forced each supervisor to begin ranking his or her secretaries for quality of performance. Sweetwater’s president felt that the custom of providing invalid feedback to each secretary on his or her year’s performance was not productive. But the current university budget simply did not include enough money to fund another “maximum” annual increase for every staffer. This cleared the way for all support staff to receive a maximum pay increase every year. quantity. Questions 1. Develop a performance appraisal method for the workers and managers in each store. Three weeks after he came on board in September. She believes that there are criteria such as quality. Furthermore. This move.
The experts said that the way to get all the administrators to take the appraisal process more seriously was to stop trying it . since it was apparent from the start that administrators varied widely in their interpretations of job standards. some secretaries left in a huff that first year. caustic remarks by disgruntled administrators and rumors of an impending slowdown by the secretaries (there were about 250 on campus) made Rob Winchester wonder whether he had made the right decision by setting up forced ranking. that there were a few performance appraisal experts in the school of business. Under that system. In the process.from secretaries. The two consultants pointed out that this was. an unfair procedure since it was quite possible that any particular administrator might have staffers who were all or virtually all excellent . This once a year appraisal (in March) had run into problems almost immediately. Moreover. those rated “excellent” received the maximum increases. and those given rather rating received only the standard across the – board past – of –living increase. who felt that the new system was unfair and reduced each secretary’s chance of receiving a maximum salary increase. It was unclear what “Excellent” or “Quality of work” meant. The picketing. for example. From that time on. they recommend that the vice president rescind his earlier memo and no longer attempt to force university administrators to arbitrarily rate at least half the secretaries as something less than excellent. Since university in general – and Sweetwater in particular – have paid secretaries somewhat lower salaries than those prevailing in private industry. He knew. they also avoided the hard feeling aroused by the significant performances differences otherwise highlighted by the administrators. the form used to rate the secretaries was grossly insufficient. For example. To Sweetwater experts agreed to consider the problem and in two weeks they came back to the Vice president with the following recommendations. those rated “good” received smaller increases. as well as in ho conscientiously they filled out the forms and supervised their secretaries. In addition. all below standard. and the appraisal form had been developed primarily by a committee of secretaries.or conceivable. more administrators simply waited all secretaries excellent in order to reduce staff turnover. Sweetwater’s administrators filled out forms of appraisal. although less likely. however. A handful of secretaries had begun quietly picketing outside the president’s home on the university campus. They recommended instead a form of sample graphic rating method. First. at the end of the first year it became obvious to everyone that each secretary’s salary increase was tied directly to the March appraisal. He met with them the next morning. in fact. so he decided to set up an appointment with them to discuss the matter. thus ensuring each a maximum increase. He explained the situation as he had found it: The present appraisal system had been set up when the university first opened 10 years earlier.
particularly if he were to decide in favour of his original forced ranking salary increases – made sense but raised at least one very practical problem: If salary increases were not to be based on performance appraisals. Rob thanked the two experts and went back to his office to ponder their recommendations. such as a ranking method? Why? What performance appraisal system would you develop for the secretaries if you were Rob Winchester? Defend your answer. Key Terms Performance Appraisal: This means evaluating an employee’s current Performance Management: This is a process that consolidates goal setting. substituting instead one of the other techniques we discussed in this chapter. he still had serious doubts as to the efficacy of any graphic rating form. Salary increases would have to be made on some basis other than the performance appraisal. Questions Do you think that the expert’s recommendations will be sufficient to get most of the administrators to fill out the rating form properly? Why? Why not? What additional actions (if any) do you think will be necessary? Do you think that Vice president Winchester would be better off dropping graphic rating forms. they recommended that every administrator fill out a form of sample graphic rating method for each secretary at least once a year and then use this form as the basis of a counseling session. . on what were they to be based? He began wondering whether the expert’s recommendations weren’t simply based on ivory tower theorizing. Nevertheless.to salary increases. method more precise. and/or past performance relative to his or her performance standards. method you place pre-determined percentages of rates into several performance categories. so that administrators would no longer hesitate to fill out the rating forms honestly. the aim of which is to ensure that the employee’s performance is supporting the company’s strategic aims. Some of the recommendations such as substituting the new rating form for the old) seemed to make sense. In other words. Graphic Rating Scale Method: This is the simplest and most popular Paired Comparison Method: This method helps in making the ranking Forced Distribution Method: This is similar to grading on a curve. With this method for appraising performance. performance appraisal and development into a single common system.
and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization. appraisal and make plans to remedy deficiencies and reinforce strengths. government. IPD. IES Report 406. A. (1998) Performance Management: Perspectives on Employee Performance. from supervisors. (1998) Kogan Page. T. Hartle. improve internal and external communications. the appraiser prepares a written statement about the employee being appraised. R. (2005) appraisal is given in Gillen. o o o o A more detailed discussion on the major issues around performance Managing Performance. For a detailed discussion of the role of competencies in performance management and a large number of examples. and Baron. and monitor organization performance against strategic goals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from "poor" to "excellent" (or some similar arrangement). Essay Methods: In the essay method approach. Further Reading o o Strebler. Halo Effect: It is the influence of a rater’s general impression on ratings of Appraisal Interview: Here. 360 degree Feedback: Here ratings are collected “all around” an employee. This method is used for development rather than for pay increases. see Chapter 5 of Williams. subordinates. management system that is used extensively in business and industry. (1997) Appraising Your Staff.(1997) Transforming the Performance Management Process. The statement usually concentrates on describing specific strengths and weaknesses in job performance. A practical guide to carrying out the The Appraisal Discussion. M. (2004) Tackling Poor Performance. A variety of approaches to performance management systems is given in management is set out in Chapter 3 of Armstrong. Thomson Business Press. F. . supervisor and sub-ordinates review the Rating Methods: The rating scale method offers a high degree of structure specific qualities. M. P. CIPD. Kogan Page. Moon. MBO: Management set specific measurable goals with each employee and Balance Score Card: The balanced scorecard is a strategic planning and then periodically discuss the latter’s progress toward these goals. peers and internal or external customers. for appraisals.
49–60.html http://www.net/index. WorldatWork Journal. (2003) ‘Current Performance Management Practices’. Spring. and M.com/links. McDermott.o For a summary and discussion of American PM systems.pmassoc. E. Websites A http://www.html list of performance management links compiled by Performance The website of the Performance Management network. Management Associates Inc.pmn. see Lawler. .