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To analyze current Performance Management System and recommend changes in order to improve its effectiveness

By Sneha Desai Roll. No - 09 PGDM BD 2012-14

Performance Management According o Society for Human Resources Management! "ndia! Per#or$ance $anage$en is a %rocess ha ena&les organi'ed %lanning and $oni oring o# res(l s o# )or* ac i+i ies! collec ing and e+al(a ing %er#or$ance da a o de er$ine achie+e$en o# goals! and (sing %er#or$ance in#or$a ion o $a*e decisions! alloca e reso(rces and co$$(nica e )he her o&,ec i+es are $e . " con ri&( es o he e##ec i+e $anage$en o# indi+id(als and ea$s o achie+e high le+els o# organi'a ional %er#or$ance. As s(ch i es a&lishes shared (nders anding a&o( )ha is o &e achie+ed! and an a%%roach o leading and de+elo%ing %eo%le ha )ill ens(re i is achie+ed.

Performance Management Linkage

Performance Process Overview

Performance Planning
-he %lanning %hase is he #o(nda ion o# he en ire %er#or$ance $anage$en sys e$. "n his %hase! indi+id(al %er#or$ance as )ell as de+elo%$en goals and o&,ec i+es are se #or he %er#or$ance %eriod. The power of goal setting -hey connec indi+id(al e$%loyee.s )or* o he (ni / de%ar $en / organi'a ion goals. Goals hel% (s clearly de#ine )ha )e are rying o achie+e and )hy i is i$%or an o do so. -hey hel% (s a%%ro%ria ely %lan and alloca e reso(rces 0e can $eas(re %rogress! e+al(a e he o( co$e! and %lan he #( (re &ased on he res(l s.

Types of goals Performance oals ! de#ine )ha is e1%ec ed o# yo( in yo(r c(rren %osi ion in rela ion o he de%ar $en . "areer #evelopment career gro) h. oals $ o( lines o%%or (ni ies #or %ro#essional de+elo%$en and oals

SM%RT $ & steps in setting S%eci#ic Meas(ra&le

Goals sho(ld #oc(s on res(l s 2e.g. red(ce c(s o$er )ai ing i$e 3ins ead o#. %ro+ide c(s o$er ser+ice4 5se a +er& o $a*e s(re %eo%le *no) ac ion is re6(ired 2e.g7 red(ce! de+elo%! $ain ain! nego ia e! %ro+ide4 8o( need o &e a&le o assess he res(l ei her 6(ali a i+ely or 6(an i a i+ely 2e.g. on i$e! on &(dge ! 6(ali y s andards! re6(ired 6(an i y4. 9$%loyees sho(ld ha+e o%%or (ni y o con ri&( e o he o&,ec i+es o# he &(siness (ni and %ar ici%a e in de+elo%ing heir indi+id(al )or* goals. Goals and heir $eas(res sho(ld &e agreed )i h &y &o h $anager and e$%loyee o ens(re co$$i $en Goals sho(ld &e designed o challenge &( $(s s ill &e realis ically )i hin reach! o her)ise yo(r e$%loyees )ill no &e $o i+a ed o achie+e he$ "n assessing realis$! yo( need o consider )ha is )i hin he con rol o# he %osi ion! and )ha is de%enden on o hers. A he sa$e i$e! se ing goals &elo) he ca%a&ili ies o# yo(r s a## )ill ha+e a si$ilar de-$o i+a ing e##ec . Se ing co$%le ion da es #or goals gi+es yo(r s a## he o%%or (ni y o %lan heir )or*. 0hen se ing $(l i%le deadlines! $a*e s(re ha he da es are s aggered.


Realis ic

-i$e &o(nd

Performance %ppraisal

Per#or$ance A%%raisal hel%s in iden i#ying 2 y%es o# a%%raisal ac ions7 a4 Ad$inis ra i+e Ac ions Dis$issal #ro$ )or* Disci%linary %roced(res :o$%ensa ion ad,(s $en s Pro$o ions/de$o ions -rans#ers &4 De+elo%$en Ac ions :areer Progression -raining ;%%or (ni ies :oaching Men oring "den i#ying s reng hs/)ea*nesses

Typical #ivision of HR Responsi'ilities for Performance %ppraisal is as follows(

HR UNIT Designs and maintains appraisal system Trains Raters Tracks timely receipt of appraisals Reviews completed appraisals for MANAGERS Typically rate performance of employees Prepare formal appraisal documents Review appraisals with employees

)ho should assess the performance*

Supervisor 0hen )e as* )ho sho(ld e+al(a e e$%loyees! he $os co$$on res%onse is heir i$$edia e s(%er+isor. 0hy sho(ld he s(%er+isor &e he &es %erson o e+al(a e an e$%loyee< 0ell! he s(%er+isor is s(%%osed o *no) )ha he e$%loyees are doing! righ < :er ainly! s(%er+isors are $os co$$only (sed o% ions o choose as e+al(a ors #or he e$%loyees (nder heir con rol. =o)e+er his is no al)ays he cased(e o %ro&le$s )i h s(%er+isor %er#or$ance assess$en s. Pro'lems with supervisor evaluations 1. S(%er+isors $ay &e in di##eren &(ilding or in di##eren ci y. 2. >ir (al ea$s! in erne lin*ed o##ices! eleco$$( ing and o her #ac ors ca(se s(%er+isors o no o &e in o(ch )i h heir e$%loyees. ?. So$e i$es! here $ay &e a %ersonal &ias &e )een s(%er+isors and e$%loyees.

A+oiding s(%er+isor re+ie) %ro&le$s a si$%le ans)er o o+erco$e hese %ro&le$s is o ha+e o hers! in addi ion o he s(%er+isor! assess %er#or$ance. Also! $(l i%le $eas(res can $a*e a %er#or$ance assess$en $ore acc(ra e. @or e1a$%le! (sing o her e+al(a ors can hel% o+erco$e %ersonal &ias and %ro+ide in#or$a ion ha s(%er+isors don. al)ays *no) a&o( .

Peers 0hen )o(ld i &e +al(a&le o (se %eer e+al(a ions in an organi'a ion< "# he s(%er+isor is a&sen or has in#re6(en con ac )i h e$%loyees! &( all e$%loyees ha+e $(l i%le co-)or*ers ha hey in erac )i h on a #re6(en &asis! %eer e+al(a ions $ay &e +al(a&le a ha i$e. Peers or co-)or*ers also o# en *no) he ,o& o# he indi+id(al e$%loyee &e er han he s(%er+isor does and hey are $ore direc ly a##ec ed &y he e$%loyee.s ac ions! ei her %osi i+e or nega i+e. "n addi ion! %eers can e+al(a e he a&ili y o# he indi+id(al o in erac )i h o hers s(ccess#(lly in a gro(% or ea$ se ing. -his $ay &e +ery di##ic(l #or s(%er+isors o see (nless hey are i$$edia ely in+ol+ed )i h he gro(%. Pro'lems with peer reviews 1. Personal con#lic s and %ersonal &iases can a##ec ho) indi+id(al e$%loyees ra e heir %eers. 2. "ndi+id(als )i hin a gro(% or ea$ $ay ,(s ha+e signi#ican ly di##eren %ersonali y y%es! and hese di##erences can ca(se #ric ion )i hin he )or* gro(% ha $ay s%ill o+er )hen i co$es i$e o e+al(a e hose )i h )ho$ hey are in con#lic . =o)e+er %ersonal &iases can a##ec )or*ing rela ionshi%s and $ay sho) (% in %eer e+al(a ions. %voiding peer review pro'lems As he %ro&le$s can occ(r )i hin a %eer e+al(a ion! he organi'a ion can a*e he iss(es in o acco(n and ad,(s ra ing +al(es as necessary. " is 6(i e li*ely )here a %ersonali y con#lic has occ(rred &e )een he )o $e$&ers! )hich ca(sed he$ o lo)er each o her.s grades. Ano)ing ha he o her 4 $e$&ers o# he gro(% e+al(a ed hese )o indi+id(als as +al(ed $e$&ers o# he ea$! yo( $ay )an o ad,(s he indi+id(al ra ings #ro$ he )o indi+id(als o $ore closely $a ch o+erall e+al(a ions #ro$ he ea$! no ing ha i a%%ears ha a %ersonali y con#lic $ay ha+e lo)ered heir indi+id(al grades o# each o her. 9+en )i h he %o en ial #or %ersonali y con#lic s and &ias! %eer e+al(a ions can gi+e (s good insigh in o he inner )or*ings o# a gro(% or ea$ )hen he s(%er+isor has in#re6(en con ac )i h he ea$.

Su'ordinate Reviews -y%ically s(&ordina e re+ie)s are done #or $anager-le+el e$%loyees. S(&ordina e e+al(a ions can gi+e (s good insigh in o he $anagerial %rac ices and %o en ial $iss e%s o#

%eo%le )ho con rol o her e$%loyees in o(r organi'a ion. As a res(l ! s(&ordina e e+al(a ions $ay gi+e (s +al(a&le in#or$a ion! )hich &y o her $eans )o(ld no ha+e &een %ossi&le. Pro'lems with su'ordinate reviews 1. S(&ordina es $ay ry o ge &ac* a heir s(%er+isors #or gi+ing he$ as*s ha hey did no )an o %er#or$! or #or disci%lining he$ #or #ail(re in heir ,o&s. 2. -here $ay &e a %ersonali y con#lic ! or so$e s(&ordina es cer ainly $ay &e &iased agains heir s(%er+isor or $anager. ?. -he s(&ordina es $ay in#la e he ca%a&ili ies o# he $anager! a leas %ar ly &eca(se o# a lac* o# (nders anding o# all as*s and d( ies re6(ired o# he $anager. "n #ac ! in a recen s(r+ey! a&o( )o- hirds o# e$%loyees ra ed heir $anagers higher han he $anagers. sel#-ra ings. %voiding su'ordinate review pro'lems "n $any cases! gro(% o# s(&ordina e e+al(a ions! )e )ill see one or )o o( liers %ro+iding ei her +ery high or lo) $ar*s #or he s(%er+isor. "n s(ch cases! )hile de er$ining he o+erall $ar*s o# he s(%er+isor! he o( liers are no considered.

Self Sel# assess$en is also an o% ion in he %er#or$ance a%%raisal %rocess or is i < >ir (ally all e$%loyees do a sel#- assess$en )he her hey are ac (ally #or$ally as*ed o do so as a %ar o# he assess$en or no . " is re6(ired )i h MB;. 9+en )hen no as*ed o do a sel#assess$en ha hey co$%are o he s(%er+isor.s ra ing. B( are sel#-e+al(a ions +al(a&le! or )ill he e$%loyees o+eres i$a e heir indi+id(al ca%a&ili ies and ell (s ha %er#ec < Pro'lems with self$assessments Mos o# he research e+idence sho)s ha sel#- assess$en s end o o+eres i$a e he indi+id(al.s a&ili y o do a ,o&. =o)e+er! so$e o# he research says ha e$%loyees ei her (nderes i$a e or acc(ra ely es i$a e heir ,o& %er#or$ance o+er i$e. A signi#ican %or ion o# he e+idence see$s o sho) ha indi+id(als )i h lo)er le+els o# *no)ledge and s*ills )i hin heir #ield end o in#la e heir sel#-assess$en o# heir a&ili ies. :on+ersely! as indi+id(als &eco$e $ore *no)ledgea&le and $ore s*illed! he e+idence ends o sho) ha hey )ill ei her acc(ra ely es i$a e or e+en (nderes i$a e heir ca%a&ili ies in heir ,o&s. %voiding self assessment and pro'lems -he $eas(res $ay ha+e +alidi y concerns! i# sel# e+al(a ions end o &e s*e)ed! $os li*ely ad,(s #or his #ac or. "n addi ion recei+ing in#or$a ion #ro$ indi+id(als concerning heir %erce% ion o# s*ill se is e1 re$ely +al(a&le in a n($&er o# $anage$en %rocesses! incl(ding %lans #or raining and de+elo%$en o%%or (ni ies! %ro+iding )or* assign$en s! and

co(nselling and disci%linary $eas(res! a$ong o hers. A &ig s e% in o+erco$ing sel#assess$en %ro&le$s! as )ell as o her assess$en %ro&le$s! is he Blanchard es do he e$%loyees (nders and )hy hey are assessed a a s%eci#ic le+el and )ha i a*es o ge a higher ra ing.

"ustomers :(s o$ers in a &road sense incl(de %eo%le o( side he organi'a ion! incl(ding c(s o$ers #or o(r %rod(c s and ser+ices and s(%%liers o he #ir$. :(s o$ers can also &e in ernal incl(ding %eo%le in o her de%ar $en s o# he #ir$. ;rgani'a ions $ay )an o (se c(s o$ers as e+al(a ors )hen he indi+id(al &eing e+al(a ed has #re6(en con ac )i h organi'a ional c(s o$ers! ei her in ernal or e1 ernal o he #ir$. "# e$%loyees in erac ro( inely )i h in ernal or e1 ernal c(s o$ers! i is i$%or an o *no) ho) he c(s o$ers #eel a&o( heir in erac ions )i h he e$%loyees &eca(se e1 ernal c(s o$ers are he ones )ho (l i$a ely %ay &ills. 9.g. i# he e1 ernal c(s o$ers are (%se a&o( heir &(siness. 9+en in ernal c(s o$ers can crea e signi#ican %ro&le$s )i hin #ir$ d(e o con#lic &e )een de%ar $en s or di+isions. Pro'lems with customer assessments ;ne %ro&le$ is ha c(s o$er assess$en s co$$only (se si$%le ra ing scales! )hich )o(ld &e s(&,ec i+e. Also! c(s o$ers are (s(ally no rained o do an acc(ra e assess$en . So &ias is a %ro&le$. @or hese and o her reasons! he %o%(lar o%inion is ha c(s o$er e+al(a ions are al$os al)ays s*e)ed o he nega i+e. %voiding customer assessment pro'lems Regardless o# )he her or no c(s o$ers )ill ell (s )hen ) doing an e1ce% ional or acce% a&le ,o&! c(s o$ers e+al(a ions %ro+ide (s )i h +al(a&le in#or$a ion concerning o(r e$%loyees )ho ha+e direc c(s o$er con ac . "# his is he case! can )e ad,(s he e+al(a ion %rocess *no)ing ha c(s o$er e+al(a ions are #re6(en ly s*e)ed ei her %osi i+ely or nega i+ely< ;&+io(sly! )e o# he &asic $e hods o# ad,(s ing he c(s o$er e+al(a ion %rocess is o co$%are he indi+id(als &eing e+al(a ed and iden i#y he ra ios o# nega i+e and %osi i+e co$$en s o allo) (s o iden i#y $ore s(ccess#(l and less s(ccess#(l e$%loyees. Al ho(gh his is an i$%er#ec $eas(re! i s ill %ro+ides +al(e o he #ir$ in he #ac ha c(s o$ers. %erce% ion is cri ical o o(r rela ionshi% )i h he$. -here#ore! i is i$%or an o $eas(re.

+,-. /valuation ?B0C e+al(a ion analy'es indi+id(als. %er#or$ance #ro$ all sides #ro$ heir s(%er+isor.s +ie)%oin ! #ro$ heir s(&ordina es. +ie)%oin ! #ro$ c(s o$ers. +ie)%oin 2i# a%%lica&le4! #ro$ heir %eers. +ie)%oin ! and (sing heir o)n sel# e+al(a ion. ?B0C e+al(a ion )o(ld

gi+e (s he $os acc(ra e! &es %ossi&le analysis o# indi+id(als and heir %er#or$ance )i hin co$%any. Pro'lems with +,-. /valuation 1. Signi#ican a$o(n o# i$e #or a gro(% o# indi+id(als o e+al(a e one %erson i# )e (se a ?B0C #or$a . 2. By (sing (% so $(ch o# i$e! i o&+io(sly also cos s signi#ican a$o(n o# $oney. %voiding pro'lems with +,-. evaluations 5n#or (na ely! here really is no si$%le )ay o a+oid s(ch %ro&le$s! &esides )ha is a co$$only done no (sing ?B0 C e+al(a ion. 0hen (sed! he ?B0C e+al(a ion #or$a ends o &e $os +al(a&le i# i is (sed #or %(r%oses o# indi+id(al de+elo%$en ! ra her han #or $a*ing ad$inis ra i+e e+al(a i+e decisions. A good ?B0C #eed&ac* sys e$ can %ro+ide s%eci#ic s(gges ions a&o( ho) o i$%ro+e indi+id(al co$%e encies

Performance %ppraisal Measurement Methods

Ranking Method

raphic Rating Scale

0%RS 1orm

2arrative Method

M0O Method

"ritical 3ncidents Method

"ritical 3ncidents Method -he cri ical inciden $e hod is a %er#or$ance a%%raisal $e hod in )hich a $anager *ee%s a )ri en record o# %osi i+e and nega i+e %er#or$ance o# e$%loyees hro(gho( he %er#or$ance %eriod. Managers $ain ain a #ile #older #or each e$%loyee! )hich can &e a hard co%y or elec ronic. 9+ery i$e e$%loyees do so$e hing +ery )ell! s(ch as &ea a o(gh deadline or sa+e angry c(s o$ers #ro$ er$ina ing heir &(siness rela ionshi% )i h he #ir$! a no e goes in he e$%loyee.s #ile. No es also go in o he #ile e+ery i$e he e$%loyees. &eha+io(r h(r s %er#or$ance! s(ch as co$ing o )or* la e o he 6(ali y o# )or* no $ee ing he s andards %dvantages =el%s in doing good assess$en o# he en ire re+ie) %eriod and coach accordingly d(ring he re+ie) %eriod.

0i h clear s andards and coaching! one can $ini$i'e disagree$en s o+er %er#or$ance d(ring #or$al a%%raisal %rocess.

#isadvantages Many $anagers don. *ee% a record o# cri ical inciden s! )hich leads o %ro&le$s o# acc(ra e $eas(res d(ring he #or$al re+ie) $ee ing.

Management 'y O'4ectives 5M0O6 Method The MBO method is a process in which managers and employees jointly set objectives for the employees, periodically evaluate performance, and reward accordingly to the results . MB; is also re#erred o as )or* %lanning and re+ie)! goals $anage$en ! goals and con rols! and $anage$en &y res(l s. MB; is a ? s e% %rocess7 Step7 ! set individual o'4ectives and plans -he $anager se s o&,ec i+es ,oin ly )i h each indi+id(al e$%loyee. -he o&,ec i+es are he hear o# he MB; %rocess and sho(ld &e acc(ra e $eas(res o# %er#or$ance res(l s. Step 8 $ give feed'ack and evaluate the performance :o$$(nica ion is he *ey #ac or in de er$ining MB;.s s(ccess or #ail(re! and e$%loyees sho(ld con in(ally cri i6(e heir o)n %er#or$ance. -h(s! he $anager and e$%loyee $(s co$$(nica e o# en o re+ie) %rogress. -he #re6(ency o# e+al(a ions de%ends on he indi+id(al and he ,o& %er#or$ed. =o)e+er! $os $anagers do no cond(c eno(gh re+ie) sessions. Step+ ! reward according to performance 9$%loyee.s %er#or$ance sho(ld &e $eas(red agains heir o&,ec i+es. 9$%loyees )ho $ee heir o&,ec i+es sho(ld &e re)arded hro(gh recogni ion! %raise! %ay raises! %ro$o ions and so on. 9$%loyees! )ho do no $ee heir goals! so long as he reason is no o( heir con rol! (s(ally ha+e re)ards )i hheld and e+en %(nish$en )hen necessary.

Ad+an age is ha e$%loyees ge ongoing #eed&ac* on ho) hey are doing! (s(ally a sched(led in er+al $ee ings. Disad+an age is ha e$%loyees )ill ha+e di##eren goals! $a*ing MB; $ore di##ic(l and i$e-cons($ing han (sing a s andard assess$en #or$.

raphic Rating Scale

-he gra%hic ra ing scale is a %er#or$ance a%%raisal chec*lis on )hich a $anager ra es %er#or$ance on a con in(($ s(ch as e1cellen ! good! a+erage! #air and %oor. -he con in(($ o# en incl(des a n($erical scale! #or e1a$%le! #ro$ 1 2lo)es %er#or$ance le+el4 o D 2highes %er#or$ance le+el4. " is (sed co$$only in he organi'a ions. %dvantage is ha i can &e (sed #or $any di##eren y%es o# ,o&sE hey are a *ind o# Fone #or$ #i s allG #or$ ha re6(ires $ini$al i$e! e##or ! cos ! and raining. Ma,or disadvantage is ha i isno +ery acc(ra e $eas(re o# %er#or$ance &eca(se he selec ion o# one ra ing o+er ano her! s(ch as e1cellen +ers(s good ra ing.

0ehaviourally %nchored Rating Scale 50%RS6 BARS is a %er#or$ance a%%raisal ha %ro+ides a descri% ion o# each assess$en along a con in(($. :on in(($ o# en incl(des a n($erical scale #ro$ lo) o high. Ad+an age BARS o+erco$e he %ro&le$ o# s(&,ec i+i y &y ro+iding an ac (al descri% ion o# he %er#or$ance #or each ra ing along he con in(($! ra her han one si$%le )ord 2e1cellen ! good! e c4 li*e gra%hic ra ing scales. A descri% ion o# each le+el o# %er#or$ance $a*es he assess$en a $ore acc(ra e $eas(re. BARS #or$s ha+e o &e c(s o$i'ed o e+ery di##eren y%e o# ,o&.

Disad+an age As BARS #or$s are c(s o$i'ed o e+ery di##eren ,o&! and de+elo%ing h(ndreds o# he$ a*e a lo o# i$e and e1%er ise.

Ranking Method -he ran*ing $e hod is a %er#or$ance a%%raisal $e hod ha is (sed o e+al(a e e$%loyee %er#or$ance #ro$ &es o )ors . Managers ha+e o $a*e e+al(a i+e decisions s(ch as )ho are e$%loyee o# he $on h! )ho ge s a raiser or %ro$o ion! and )ho ge s laid o##. Ran*ing $e hod is nor$ally (sed o $a*e e+al(a i+e decisions. Ran*ing can &e (sed #or de+elo%$en al %(r%oses &y le ing e$%loyees *no) )here hey s and in co$%arison o heir %eers hey can &e $o i+a ed o i$%ro+e %er#or$ance. 5nder he ran*ing $e hod! he $anager co$%ares an e$%loyee o o her si$ilar e$%loyees! ra her han o a s andard $eas(re$en . An o##shoo o# ran*ing is he #orced dis ri&( ion $e hod! )hich is si$ilar o a grading on a c(r+e. Prede er$ined %ercen ages o# e$%loyees are %laced in +ario(s %er#or$ance ca egories! #or e1a$%le! e1cellen DH! a&o+e a+erage 1DH! a+erage B0H! &elo) a+erage 1DH and %oor DH. -he e$%loyees ran*ed

in he o% gro(% (s(ally ge he re)ards 2raise! &on(s! %ro$o ion4! hose on he o% end o ha+e he re)ard )i hheld! and hose a he &o o$ so$e i$es ge %(nished.

-he s(ccess o# he %er#or$ance a%%raisal %rocess does no lie in he #or$al $e hod or #or$ (sed once or )ice a year. " de%ends on he $anager.s h($an rela ions s*ills in ongoing cri ical inciden s coaching! and on e##ec i+e $eas(res o# %er#or$ance ha are acc(ra e so ha e+eryone *no)s )hy hey are ra ed a a gi+en le+el! as )ell as ho) o i$%ro+e #or he ne1 assess$en .

"ommon Pro'lems with the Performance appraisal process9

1. 0ias is si$%ly a personality-based tendency, either toward or against something. "n he case o# %er#or$ance assess$en ! &ias is o)ard or agains an indi+id(al e$%loyee. All h($an &eings ha+e &iases! &( s(%er+isors es%ecially canno a##ord o allo) heir &iases o en er in o heir e+al(a ion o# s(&ordina es in he #ir$. -his is +ery easy o say! &( +ery di##ic(l o do. Biases $a*e he e+al(a ion %rocess s(&,ec i+e ra her han o&,ec i+e! and cer ainly %ro+ide he o%%or (ni y #or a lac* o# consis ency in e##ec on di##eren gro(%s o# e$%loyees. So o o+erco$e he &ias %ro&le$! i is i$%or an o &e o&,ec i+e and no le #eelings o# li*ing or disli*ing in#l(ence he assess$en %rocess 2. Stereotyping is mentally classifying a person into an affinity group, and then identifying the person as having the same assumed characteristics as the group. -ho(gh s ereo y%ing is al$os al)ays ass($ed o &e nega i+e! here are $any inciden s o# %osi i+e s ereo y%es. =o)e+er! regardless o# )he her he s ereo y%e is %osi i+e or nega i+e! $a*ing &ershi% in a gro(%! ra her han e1%lici ly iden i#ying he charac eris ics o# he indi+id(als! crea es he %o en ial #or signi#ican error in e+al(a ions. So s ereo y%ing can &e a+oided &y rying o *no) each e$%loyee as an indi+id(al and o&,ec i+ely e+al(a e an indi+id(al e$%loyees &ased on heir ac (al %er#or$ance. ?. Halo /rror is the error that occurs when the evaluator has a generally positive or negative (negative halo error is sometimes called horns error!" impression of an individual! and he e+al(a or hen ar i#icially e1 ends ha general i$%ression o $any indi+id(al ca egories o# %er#or$ance o crea e an o+erall e+al(a ion o# he indi+id(al ha is ei her %osi i+e or nega i+e. "n o her )ords! i# e$%loyees are ,(dged &y heir s(%er+isor o &e generally FgoodG e$%loyees! and he s(%er+isor hen e+al(a es each o# he areas o# heir %er#or$ance as good! regardless o# any &eha+io(rs or res(l s o he con rary! he s(%er+isor is g(il y o# halo error. =alo error can &e a+oided &y re$e$&ering ha e$%loyees are o# en s rong in so$e areas and )ea*er in o hers! and

here is a need o o&,ec i+ely e+al(a e indi+id(al e$%loyees &ased on heir ac (al %er#or$ance #or each and e+ery i e$ o# assess$en 4. #istri'utional error is the error that occurs in three forms# severity or strictness, central tendency, and leniency. -hey are &ased on a s andard nor$al dis ri&( ion! or he &ell c(r+e ha e+ery&ody is #a$iliar )i h. "n se+eri y or s ric ness error! he ra er e+al(a es e+eryone! or nearly e+eryone! as &elo) a+erage. :en ral endency error occ(rs )hen ra ers e+al(a e e+eryone (nder heir con rol as a+erageIno&ody is ei her really good or really &ad. @inally! leniency error occ(r )hen he ra er e+al(a es all o hers as a&o+e a+erage. Jeniency error! here#ore! is &asically a #or$ o# grade in#la ion. 0e can a+oid dis ri&( ional errors &y gi+ing a range o# e+al(a ions. -he dis ri&( ion is o# en &ased on he ran*ing $e hod o# e+al(a ion and #orced dis ri&( ion. D. Similarity /rror is the error that occurs when raters evaluate subordinates that they consider more similar to themselves as better employees, and subordinates that they consider different from themselves as poorer employees . 0e all ha+e a endency o #eel $ore co$#or a&le )i h %eo%le )ho )e #eel are $ore si$ilar o o(rsel+es! and i# )e are no care#(l! )e can allo) his #eeling o# co$#or )i h si$ilar indi+id(als o &e re#lec ed in he %er#or$ance a%%raisal %rocess. 0e can a+oid si$ilari y error &y e$&racing di+ersi y and o&,ec i+ely e+al(a ing indi+id(al e$%loyees &ased on heir ac (al %er#or$ance! e+en i# hey are di##eren #ro$ (s and don. do hings he sa$e )ay ha )e do. B. Pro:imity /rror is he error )hich s a es ha si$ilar $ar*s $ay &e gi+en o i e$s ha are near 2%ro1i$a e o4 each o her on he %er#or$ance a%%raisal #or$! regardless o# di##erences in %er#or$ance on hose $eas(res. 0e can a+oid %ro1i$i y error &y o&,ec i+ely e+al(a ing e$%loyees. ac (al %er#or$ance on each and e+ery i e$ on he assess$en #or$. K. Recency error is s-his error occ(rs )hen ra ers (se only he las #e) )ee*s or $on h o# a ra ing %eriod as e+idence o# heir ra ings o# o hers. @or ins ance! i# a )areho(se )or*er has &een a s rong %er#or$er #or $os o# he a%%raisal %eriod! &( righ &e#ore his ann(al e+al(a ion he *noc*s o+er a s ac* o# high-cos elec ronic e6(i%$en )hile dri+ing a #or*li# ! he $ay &e ra ed %oorly d(e o recency error. 0e can a+oid he recency error &y e+al(a ing he e$%loyee &ased on he en ire assess$en %eriod! co$$only B12 $on hs. 5sing he cri ical inciden s $e hod really hel%s o(r recall and assess$en o# he en ire %eriod $ore o&,ec i+ely. L. "n "ontrast /rror; he ra er co$%ares and con ras s %er#or$ance &e )een )o e$%loyees! ra her han (sing a&sol( e $eas(res o# %er#or$ance o $eas(re each e$%loyee. @or e1a$%le! he ra er $ay con ras a good %er#or$er )i h an o( s anding %er#or$er! and as a res(l o# he signi#ican con ras ! he good %er#or$er $ay see$ o &e F&elo) a+erage.G -his )o(ld &e a con ras error. :on rac error can &e e+al(a ed &y o&,ec i+ely e+al(a ing indi+id(al e$%loyees &ased on heir ac (al %er#or$ance.

Ra er $(s (se he ran*ing $e hod correc lyE #irs )e assess each indi+id(al &ased on he i e$s on he assess$en #or$I hen )e ran* he indi+id(als &ased on heir assess$en s9 9. %ttri'ution /rror $ a ri&( ion is a %rocess )here an indi+id(al assumes reasons or $o i+a ions 2s(ch as a i (des! +al(es! or &elie#s4 #or an o&ser+ed &eha+io(r. So! a ri&( ion error in %er#or$ance a%%raisal $igh occ(r )hen he ra er o&ser+es an e$%loyee ac ionIs(ch as an arg($en a i+e ans)er o a 6(es ionIand ass($es ha he indi+id(al has a nega i+e a i (de o)ard he ,o& and is a %oor %er#or$er. -his $ay no &e r(e! and in s(ch a case he ra er )o(ld &e g(il y o# an a ri&( ion error. 0e need o a+oid a ri&( ion error &eca(se i is &ased on o(r s(&,ec i+e concl(sion. 0hen in do(& ! )e sho(ldn. ass($e )e *no) )hy he e$%loyee did or didn. do so$e hing. 0e sho(ld al* o e$%loyees o #ind o( so ha )e can o&,ec i+ely e+al(a e e$%loyees &ased on heir ac (al %er#or$ance.

%voiding Performance %ppraisal Process Pro'lems

-here are signi#ican n($&er o# )ays ha %er#or$ance a%%raisals can #ail o %ro+ide an acc(ra e assess$en o# he ca%a&ili ies and he &eha+io(rs o# indi+id(al e$%loyees. -here are cer ain si$%le hings ha can &e done o o+erco$e hese %ro&le$s as indi+id(als. -here are a n($&er o# #airly si$%le s e%s ha can &e a*en )i hin he organi'a ion o $ini$i'e he nega i+e iss(es ha occ(r in he %er#or$ance a%%raisal %rocess. #evelop %ccurate Performance Measures "# he a%%raisal $e hods and #or$s are no acc(ra e $eas(res! he en ire %er#or$ance a%%raisal %rocess )ill ha+e %ro&le$s. -here#ore! organi'a ion n sho(ld ha+e i s o)n =R S%ecialis or hire cons(l an s o de+elo% he assess$en %rocess and $eas(res. <se Multiple "riteria ;ne $e hod o# o+erco$ing so$e o# he %ro&le$s )i h he a%%raisal %rocess is o ens(re ha )e (se $ore han one or )o cri eria o e+al(a e an indi+id(al.s %er#or$ance o+er i$e. 0e sho(ld generally ha+e a leas one e+al(a ion cri erion #or each $a,or #(nc ion )i hin an indi+id(al ,o&. Beha+io(rs and res(l s ha occ(r o+er he en ire co(rse o# he e+al(a ion %eriod are y%ically he &es cri eria o (se in he %rocess o# e+al(a ing an indi+id(al.s %er#or$ance! &( e$%loyees &eha+e in $any di##eren )ays in di##eren circ($s ances hro(gho( he co(rse o# a year! so )e sho(ldn. li$i he a%%raisal %rocess o one or )o ac ions on he %ar o# ha indi+id(al e$%loyee. By e+al(a ing $(l i%le cri eria! )e ha+e he a&ili y o lo)er he incidence o# halo! recency! con ras ! and a ri&( ion errors! and $ay e+en &e a&le o a##ec &ias and s ereo y%ing! &eca(se $any cri eria! no ,(s one or )o! are &eing analy'ed. Minimize the use of trait ! 'ased evaluations ;(r ne1 $e hod o# o+erco$ing %ro&le$s )i hin he a%%raisal %rocess is o $ini$i'e he e+al(a ion o# indi+id(al rai s. Nor$ally! rai &ased e+al(a ions end o &e $ore s(&,ec i+e

han &eha+io(r or res(l s &ased e+al(a ions and as a res(l sho(ld generally no &e (sed (nless here is a s%eci#ic reason )hy %ar ic(lar rai $(s &e e1hi&i ed in order o &e a s(ccess#(l in a ,o&. ;nly )hen )e ha+e s%eci#ic reason #or rai -&ased e+al(a ions sho(ld hose rai s &e $eas(red and e+al(a ed in he a%%raisal %rocess. "n addi ion! &eca(se o# heir s(&,ec i+i y! rai &ased e+al(a ions are $(ch $ore di##ic(l o de#end in cases )here he organi'a ion (sed he e+al(a ion %rocess #or la er disci%linary ac ion )i h an indi+id(al e$%loyee. By $ini$i'ing he e+al(a ion o# rai s! )e lo)er he incidence o# &ias! s ereo y%ing! si$ilari y error! and %o en ially a ri&( ion error. So! $ini$i'ing rai e+al(a ions lo)ers he a&ili y o# he ra er o $a*e so$e o# he $os signi#ican $is a*es ha can occ(r in he a%%raisal %rocess.

Train /valuators
;nce )e ha+e acc(ra e $eas(re$en $e hods and #or$s! he ne1 hing ha )e sho(ld do o hel% o+erco$e so$e o# he iss(es )i h he a%%raisal %rocess is o rain o(r e+al(a ors concerning he co$$on errors and %ro&le$s ha occ(r and ho) o (se he $e hods and #or$s Train evaluators to overcome the common pro'lems of assessment9 Si$%ly hro(gh he %rocess o# raining! $any o# he co$$on %ro&le$s are $i iga ed! i# no eli$ina ed. ;nce e+al(a ors &eco$e a)are ha he co$$on errors occ(r )i h so$e reg(lari y! hey al$os i$$edia ely &egin o e+al(a e s(ch errors and g(ard agains he$. 9+en he &ias and s ereoy%ing errors may &e $i iga ed hro(gh he ra er raining %rocess. ;nce he e$%loyees *no) ha an error is &eing co$$i ed! hey )ill $a*e a e$% s o correc ha error. So! ra er raining %ro+ides he$ )i h *no)ledge o# hese errors and allo)s he$ he o%%or (ni y o correc he$. Train evaluators to use the measurement methods and forms . 9+al(a ors sho(ld also &e rained o (se he +ario(s %er#or$ance assess$en $e hods and #or$s. Beca(se he cri ical inciden s $e hod is no co$$only (sed as a #or$al assess$en $e hod! e+al(a ors sho(ld &e a(gh o (se i o hel% o+erco$e recency error. 9+al(a ors need raining o e##ec i+ely (se MB; and o )ri e a good narra i+e. 0hen a ra ing scale is (sed! so$e raining sho(ld &e gi+en o &e er (nders and he di##erences &e )een he )ord descri% ors along he con in(($ 2e$cellent, good, e c.4. BARS and ran*ing #or$s are #airly s raigh #or)ard! &( )hen hey are (sed! so$e raining can hel% o+erco$e %ro&le$s.

<se Multiple Raters

-he ne1 ool o $ini$i'e errors in he e+al(a ion %rocess! a leas in so$e cases! is o (se $(l i%le ra ers o e+al(a e an indi+id(al. As )e no ed earlier! his &eco$es e1%ensi+e +ery 6(ic*ly! so )e $(s decide )he her or no he +al(e inheren in (sing $(l i%le e+al(a ors o+erco$es he cos o# he %rocess. "# i does! (sing $(l i%le e+al(a ors can con6(er so$e signi#ican %ro&le$s in he a%%raisal %rocess. 0ha )ill he %rocess o# (sing $(l i%le e+al(a ors do o i$%ro+e he a%%raisal %rocess< M(l i%le e+al(a ors li$i he a&ili y o# one indi+id(al a%%raiser o %ro+ide a &iased o%inion concerning an e$%loyee.s %er#or$ance! as )ell as li$i ing he a&ili y #or s ereo y%ing in he a%%raisal %rocess. "n addi ion! halo! si$ilari y!

con ras ! and a ri&( ion errors &eco$e less li*ely! and dis ri&( ional errors end o e+en o( a$ong $(l i%le ra ers. " is #or hese reasons ha ?B0M e+al(a ions ha+e gained #a+o(r in $any organi'a ions o+er he %as 20 years.

#e'riefing The %ppraisal( -he de&rie#ing %rocess is )here )e co$$(nica e he

analysis o# each indi+id(al.s %er#or$ance )i h ha %erson. here are )o $a,or reasons #or assessing %er#or$ance7 #or e+al(a i+e decisions and #or de+elo%$en . 0e also s(gges ed &rea*ing he #or$al %er#or$ance a%%raisal de&rie#ing in o )o se%ara e in er+ie)s. "n #ollo)ing sec ion! )e descri&e ho) o cond(c &o h re+ie)s. The /valuative Performance %ppraisal 3nterview 0hen %re%aring an e+al(a i+e in er+ie)! #ollo)ing s e%s are o( lined in he &elo) $odel. Preparation for the %ppraisal 3nterview Step 7 Make an %ppointment Step 8 Have the employee perform a self$ assessment Step + %ssess the employee=s performance Step > 3dentify strengths and areas for improvement Step & Predict the employee=s reactions and plan how to handle them

"onducting the %ppraisal 3nterview Step 7 Open the 3nterview Step 8 o Over the %ssessment Step + %gree on strengths and areas for improvement Step > "onclude the interview

The #evelopment Performance %ppraisal 3nterview

Again! %lanning ahead is cri ical )hen i co$es o %er#or$ance a%%raisal in er+ie)s. -here#ore! his sec ion is also se%ara ed in o %re%aring #or and cond(c ing he in er+ie). Preparation for the %ppraisal 3nterview Step 7 Make an appointment Step 8 Have the employee develop o'4ectives and plans for improving performance Step + #evelop o'4ectives and plans for improving performance

"onducting the %ppraisal 3nterview Step 7 Open the interview Step 8 %gree on o'4ectives Step + #evelop plans for meeting the o'4ectives Step > Make a follow$ up appointment Step & "onclude the interview

"ompetency ! 0ased Performance Management

-he %er#or$ance a%%raisal %rocess e+al(a es s%eci#ic e$%loyee s*ills and he e$%loyee.s s(ccess in (sing hose s*ills o %rod(ce %rod(c s or ser+ices #or he organi'a ion. :o$%e ency-&ased %er#or$ance! on he o her hand! e+al(a es large se s o# ca%a&ili ies and *no)ledge )hich! i# %( o good (se! can signi#ican ly i$%ro+e organi'a ional %rod(c i+i y o a $(ch grea er e1 en han ,(s doing a ,o& (sing an e1is ing s*ill se . :o$%e ency-&ased %er#or$ance $anage$en is &eco$ing a $ore (se#(l #or$ #or %er#or$ance a%%raisal han he his orical s*ill-&ased! ransac ional %rocess. =o) are ,o&s changing< According o he Socie y #or =($an Reso(rce Manage$en 2S=RM4! he na (re o# )or* is changing #ro$ single-s*illed ,o&s o $(l is*illed ,o&s! #ro$ re%e i i+e as*s o %ro&le$-sol+ing as*s! #ro$ indi+id(al )or* o ea$)or*! and #ro$ #(nc ional s%eciali'a ion o colla&ora ion. -a*ing a loo* a he )ays in )hich )or* is changing! )e can (nders and )hy i $ay &e necessary #or he organi'a ion o $o+e #ro$ s*ill-&ased %er#or$ance a%%raisal o e+al(a ions &ased on larger-scale co$%e encies. Beca(se co$%e encies are &eco$ing so signi#ican in organi'a ions! he %er#or$ance $anage$en sys e$s need o &e redesigned so ha )e e+al(a e he s*ills and ca%a&ili ies ha are $os i$%or an o he &(siness. =o)e+er! hese y%es o# %er#or$ance $anage$en sys e$s can %resen signi#ican design challenges o he organi'a ion. -o s(ccess#(lly (se co$%e ency-&ased %er#or$ance $anage$en ! he organi'a ion has o $o+e #ro$ an analysis and $eas(re$en o# he individual activities )i hin a %rocess o a $ore holis ic e+al(a ion o# he ability to combine and improve activities o crea e he $os s(ccess#(l organi'a ional o( co$es. :o$%e ency-&ased e+al(a ions are necessary in order o align %er#or$ance )i h re)ards i# he organi'a ion is going o (se a co$%e ency-&ased %ay and incen i+es %rogra$.