PERFORMANCE & POTENTIAL APPRAISAL

What is performance appraisal?

Employee Assessment the assessment of an employee's effectiveness, usually as undertaken at regular intervals Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor in which the work performance of the subordinate is examined and discussed

with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development

Why Have Performance Appraisal ?

Performance Appraisal offers several advantages at the level of the:

Individual

Recognition of past effort Developmental requirements can be uncovered Alignment of effort with objectives Motivation of team members Development of staff Achievement of key objectives Best and focused utilization of human resources

Team

Organization

Objectives

Compensation decisions Promotion decisions Training and development programmes Feedback to the employee Personal growth and development

The Performance Appraisal Process

Establish performance standards Communicate the standards Measure actual performance Compare actual performance with standards and

discuss the appraisal Take corrective action, if necessary

Characteristics of an Effective Appraisal System

Job-related criteria Performance expectations Standardization Trained appraisers Continuous open communication Performance reviews

360-Degree Feedback

Performance information is collected from supervisors, subordinates, peers, and internal/external customers Generally done for development rather than for pay raises

360-degree Feedback

Many organizations now use some form of 360-degree feedback program

Upward and peer feedback can have positive effects on behavior These effects are sustainable over time Introducing a 360-degree system into a culture not prepared for it can have disastrous effects

360-degree Feedback

Positive features of a 360-degree system:

Multiple perspectives of a persons performance Raters base evaluations on contact and observation Feedback is provided from multiple directions above, below, peer Anonymous upward feedback, which results in full participation Learning about weaknesses and strengths is motivational

360-degree Feedback

Negative features of a 360-degree system:

Feedback from all sources can be overwhelming Rater can hide in a group of raters and provide harsh evaluations Conflicting ratings can be confusing and frustrating Providing feedback that is constructive requires a plan and well-trained raters

Selected Evaluation Techniques

Ways of evaluating employees can generally be divided into two categories:

Methods that evaluate employees individually Multiple-person evaluations

In a multiple-person evaluation, the supervisor directly and intentionally compares the performance of one employee to that of others

Individual Evaluation Methods

Graphic rating scale

The rater is presented with a set of traits The employee is rated on the traits Ratings are assigned points, which are then computed Raters are often asked to explain each rating with a sentence or two

Individual Evaluation Methods

Forced choice:

Was developed because graphic rating scales allowed supervisors to rate everyone high The rater must choose from a set of descriptive statements about employee Supervisors check the statements that describe the employee, or they rank the statements from most to least descriptive Forced choice can be used by superiors, peers, subordinates, or a combination of these

Individual Evaluation Methods

Essay Evaluation

The rater is asked to describe the strong and weak aspects of the employees behavior It can be used by superiors, peers, or subordinates Essay evaluations are flexible; an evaluator can specifically address the ratees skill in any area Comparing essays is difficult

Skilled writers can paint a better picture

Individual Evaluation Methods

Critical Incident Technique

Raters maintain a log of behavioral incidents that represent effective and ineffective performance for each employee Two factors determine the success of this technique: The supervisor must have enough time to observe subordinates during the evaluation period The supervisor must record incidents as they are seen Logs can help avoid common rating errors and facilitate discussions about performance improvement

Individual Evaluation Methods

Behaviorally Anchored Rating Scales

Smith and Kendall developed the behaviorally anchored rating scale (BARS), or the behavioral expectation scale (BES) The BARS approach uses critical incidents to anchor statements on a scale The rater reads the anchors and places an X at some point on the scale for the ratee

Individual Evaluation Methods

A BARS usually contains these features:

Six to 10 performance dimensions identified and defined by raters and ratees The dimensions are anchored with positive and negative critical incidents Each ratee is then rated on the dimensions Ratings are fed back using the terms on the form

It takes two to four days to construct a BARS that is jargon free and closely related to the requirements of the job

Behaviorally Anchored Rating Scale

Uses specific descriptions of actual behaviors to rate various levels of actual performance

Multiple-Person Evaluation Methods

Ranking

A supervisor is asked to rank subordinates in order on some overall criterion

It is easier to rank the best and worst employees than average ones Pick the top employee first, then the bottom one The second best is chosen, then the second worst Follow this process until everyone has been ranked

Alternative rankings can help with this difficulty

Multiple-Person Evaluation Methods

Paired Comparison

The supervisor reviews a series of cards; each contains two subordinates names The higher performer in each pair is chosen Final ranking is made by counting how many times a given employee was chosen as the better performer A major limitation is the number of paired comparisons that must be made

With only 10 subordinates, a supervisor would have 45 pairs of names

Paired Comparison Method

Multiple-Person Evaluation Methods

Forced Distribution

Employees are rated on a pre-existing distribution of pre-determined categories The predetermined distribution must be followed, regardless of how well the employees performed A supervisor with all exceptional subordinates will be forced to rate some poorly

A supervisor with mediocre subordinates must rate some highly

This technique is similar to grading on a curve

Forced Distribution Method

At Sun Microsystems managers appraise employees in groups of about 30. There is a top 10%, a middle 70%, and a bottom 10%. The bottom 10% can either take a quick exit package or embark on a 90-day performance improvement action plan.

Multiple-Person Evaluation Methods

An MBO program follows a systematic process: Superior/subordinates define tasks and set objectives The superior, consulting with subordinates, sets criteria for assessing objective accomplishment Dates to review progress are agreed upon and used Superior and subordinates make any required modifications in the original objectives A final evaluation by the superior is made The superior meets with the subordinate in a counseling, encouraging session

Objectives for the next cycle are set

Performance Evaluation Problems

No technique is perfect; they all have limitations

Opposition to Evaluation

Most employees are wary of performance evaluation Subjective bias and favoritism are real problems

Opponents of formal evaluation argue that: They focus too much symptoms of poor performance rather than finding the underlying causes Managers and employees dislike the process Raters have trouble deciding performance levels Employees who are not placed in the top performance category experience a reverse motivation effect

System Design and Operating Problems

Performance evaluation systems break down because they are poorly designed

If the criteria focus solely on results, or on personality traits rather than performance, the evaluation may not be well received Some techniques take a long time to carry out or require extensive written analysis, both of which managers resist Some systems are not fully online

Rater Problems

Even if a system is well designed, problems can arise if raters are not cooperative and well trained Supervisors may not be comfortable playing God Inadequate training can lead to: Problems with standards of evaluation Halo effect Leniency or harshness Central tendency error Recency of events error Contracts effects Personal bias (stereotyping, similar to me)

Standards of Evaluation

Problems with evaluation standards arise because of perceptual differences in the meaning of words

Good, adequate, satisfactory, and excellent mean different things to different evaluators

If only one rater is used, evaluations can be distorted

This arises most often in graphic rating scales It may also appear with essays, critical incidents, and checklists

Potential appraisal
The objective of potential appraisal is to identify the

potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. It is required to: Inform employees about their future prospects Help the organization chalk out a suitable succession plan Update training efforts from time to time Advise employees about what they must do to improve their career prospects.

P O T E N T I A L

Problem Children

Stars

Planned separation

Solid citizens

PERFORMANCE