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Project On Performance Appraisal 330
Project On Performance Appraisal 330
EXECUTIVE SUMMARY
Performance Appraisal is a crucial activity for organizations that are looking for growth and
profit maximization in this ever-increasing competitive environment. This project report is a
review based on theory as well as research and experience.
The research report starts with the background and explains its importance in the
Performance Management System and also its changed scenario in Chapter 1.
The essential components of an effective performance appraisal system consist of
understanding its Foundations and the essential steps that lay the foundation. It is also
necessary to recognize the Objectives and Benefits of this system. For benefit realization it
is necessary to Identify Key Result Areas (KRAs) i.e. Goal Setting and monitor resulting
Performance so that a meaningful relationship between performance, reward and
development of required skills, through counseling if required, can be established. Finally
lot of brainstorming is required to be done to devise a sound appraisal system by evaluating
available techniques and implementation processes. One must remember that performance
Appraisal is an inexact, human process and it is quite a challenge to actually implement it
successfully. All these aspects form subject matter for Chapters 2 through 8.
Performance appraisal system has gone through a sea change over a period of time. In the
beginning the process was non-transparent and the employee was kept in dark about his
performance. No systematic exercise was done and the entire process was arbitrary. These
earlier performance appraisal methods are discussed in Chapter 9.
The current processes of performance appraisal involve self-appraisal by the employee too.
Thus the system has gone through the phase of non-transparency to transparency. In
the transparent system of appraisals appraisee is taken into confidence and the whole
process is interactive. Review process with employees is designed in such a way that
employees become aware of what is expected from them, receive timely feedback and
recognition for their achievements. Some of these relatively transparent methods are
Appraisal Discussion-Dialogue Method of Appraisal, Competency Based Appraisal System,
Potential Appraisal, Performance and Development Planning. While new frontiers to
performance appraisal include Management by Objectives, 360 Feedback and Balanced
Scorecard. These methods are explained in depth in Chapters 10 and 11 respectively. In
this technology driven era appraisals too can be done electronically. eAppraisal system
with its salient features, benefits and process has been covered in Chapter 12.
Finally, the report is rounded up by presenting a case study on one of the top Indian
pharmaceutical companies as Chapter 13 and concluded in Chapter 14.
The report is made useful for readers by incorporating Suggestions and Recommendations
for all concerned on how to make a grand success of appraisal system followed by their
organizations.
Few blank formats of different appraisal methods and processes have been included as
Annexures (Annexure I to IX) in the report to show how todays successful organizations
are trying to assess and evaluate their employee performance.
In conclusion, this project report will enable one to understand the concept of
Performance Appraisal; its evolution from non-transparent to a transparent system.
The report will also help to understand benefits and drawbacks of past and present
appraisal systems. Most importantly, the report will assist the reader in implementing
appraisal system as effective management tool for realizing organizations as well as
individuals goals and objectives.
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RESEARCH METHODOLOGY
The study of the topic Performance Appraisal has been done through various
sources.
The primary source includes the personal experience, which has been added in this
project as the `Sample of Current Practice-Case Study in Chapter 13.
The secondary sources include:
Chapter 1
INTRODUCTION: CONCEPTUAL FRAMEWORK
I.
Background:
1. The concept of Performance Appraisal dates back to the First World War
and was then called Merit Rating Programme. Over a period of time, this
concept has been through an ocean of change. The areas of evaluation
have also changed.
2. Once an employee has been selected, trained and embarked on his
duties, it is time for performance appraisal. What is performance
appraisal? Why do companies need to take up this task?
3. According to Carl Heyel, author/editor on management, philosopher and
teacher, it is the process of evaluating the performance and qualifications
of the employees in terms of job requirements, for administrative purposes
such as placement, selection and promotion, to provide financial rewards
and other actions which require differential treatment among the members
of a group as distinguished from actions affecting all members equally.
II.
III.
The head of the key represents the uniqueness of the employee. No two
employees are alike.
The ring represents the managements requirement -the job content.
The shaft represents the communication between the employee and the
company, the transmission of the task and the response from the
performer.
IV.
Change:
1. A few decades ago, the employee used to be appraised by his department
head. The department head used to communicate his feedback and
comments only to the immediate superior of the employee. Thus the
feedback was kept confidential in nature. As time passed by, the immediate
superior started appraising his subordinates performance and sending his
confidential report to the department head. These were the periods when
the employee was not included in his appraisal process. The decisions
used to be taken by his superiors relating to his pay hike, promotion etc.
Thus the system was non-transparent.
2. The current process of performance appraisal is much more open and
gives some scope for self-appraisal by the employee. The self-appraisal is
followed by a joint discussion with superior and then a decision is taken by
the department head on his promotion, pay hike etc. The feedback relating
to his performance is directly given to the employee. Thus performance
appraisal process has gone through the phase of non-transparency
to transparency.
3. In this transparency phase, a performance appraisal can be defined
as a structured formal interaction between a subordinate and
supervisor, that usually takes the form of a periodic interview (annual
or bi-annual), 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.
Chapter 2
FOUNDATIONS OF PERFORMANCE APPRAISAL
Performance Appraisal assesses how well people have been doing their jobs and
what they must do to be better in their jobs. It deals with the content of the job and
what they are expected to achieve in each aspect of their work. Following are the
foundations in Performance Appraisal process:
I.
Job Profile:
Job description concentrates more on the definition of tasks the jobholder has
to accomplish. It includes details of reporting relationship and normally covers
the overall purpose of the job. It indicates how an individuals job will
contribute to the achievement of objectives of a team or a department and,
ultimately the mission of the organization.
II.
Objectives:
An objective describes something, which has to be accomplished. Objectives
define what organizations, functions, departments, teams and individuals are
expected to achieve.
There are two types of objectives:
i.
ii.
Developmental objectives:
It is concerned with what individual should do and learn to improve their
performance and/or their knowledge, skills and competencies (training
and personal development plans).
III.
Competencies:
Competencies refer to the behavioral dimensions of a role. It is the behavior
required of people to carry out their work satisfactorily. Competencies are
what people bring to a job in the form of different types and levels of behavior.
They govern the process aspects of job performance.
IV.
Values:
Increasingly, organizations are setting out the core values that they think
should govern the behavior of all their employees. Value statements may be
prepared which define core values in areas such as care for customers,
concern for people, competitiveness, excellence, growth, innovation.
What are the essential steps that set the foundation for an effective
Performance Appraisal? These steps have been covered in Chapter 3.
Chapter 3
THREE ESSENTIAL STEPS FOR EFFECTIVE PERFORMANCE
APPRAISAL
The process of getting to know the people who work for the organization involves
three essential steps viz. training, evaluation and review.
I.
Training:
Successful training is the implementation of a system in which everyone in
the workplace is geared towards improvement. It involves a hands on
approach in which the employee is encouraged to evaluate himself or herself
under the guidance of the appraiser.
How it works?
First, the appraiser includes the employee in the appraisal process. When an
employee knows that his or her opinion of other workers is taken into account,
he or she also realizes that everyone elses opinion matters just as much. This
not only empowers the employee and improves relations in the workplace, but
it encourages higher productivity as well. This interactive approach is made
complete with the leadership of the appraiser. Carefully administering praise
coupled with constructive criticism keeps the workforce on its toes.
II.
Evaluation:
The best methods for employee evaluation are based on results and
behavior. While conducting performance appraisal based on employees
characteristic traits is quite common, the results are often subjective and
unsatisfactory. A results-based approach to performance appraisal is by far the
cleanest, most objective method of tackling the complex task of evaluation. It
uses a rating system to measure productivity within a given timescale. If an
employee makes a certain number of sales in a certain week, he or she can
be rated by sheer worth as well as ranked against other employees. The study
of behavior is closely tied to productivity. The pace of work, willingness to put
in overtime and ability to work with others all contribute to overall productivity.
III.
Review:
The review process should, again, employ the techniques of interactivity.
Before sitting down together, the appraiser should give the employee a chance
to review himself or herself. This not only empowers the employee, but also
saves a lot of time and possible contention during the actual discussion.
Initially the appraiser should walk the employee through the process. The
successful supervisor starts out with an overview of why the review session is
needed. Then the supervisor takes the employee down a point-by-point list of
every aspect of the job. In each case, the employee should be given a chance
to describe his or her achievements and shortcomings. The supervisor should
always supplement this with added insight. While praising and applying
criticism, the supervisor maintains authority throughout the review and indeed,
the entire appraisal process.
How this entire interaction and review process is beneficial to the organization as a
whole and what are the objectives of performance appraisal? These have been
jotted down in the succeeding Chapter 4.
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Chapter 4
OBJECTIVES AND BENEFITS
The objectives and benefits of Performance Appraisal system can be summarized as
under:
I.
Objectives:
Data relating to Performance Appraisal of employees are recorded, stored and
used for several purposes like:
II.
Let the employees know where they stand in so far as their performance is
concerned and to assist them with constructive criticism and guidance for
the purpose of their development.
Benefits:
The following are the benefits of a successful appraisal system:
1. For the Organization:
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Chapter 5
EFFECTIVE APPRAISAL PROCESS
When it comes to performance appraisal, managers and employees agree about one
thing: They hate going through them. Employees, managers and HR experts agree
that fear, guilt, responsibility and resentment are the real reasons why most
employees dread the appraisal process. Besides some think that it is a ritual that is
mandatory to follow.
An effective review process helps organizations in three areas:
1. evaluation and improving personnel selection and training systems;
2. preventing wrongful termination; and
3. increasing real employee diversity
I.
Good appraisals start with information from multiple sources, and they
evaluate employees at all levels from top to bottom.
II.
This system requires both the appraisee and appraiser to jointly assess the
employees ability to complete the duties and achieve the goals set forth in the
previous appraisal.
III.
HR professionals should consider the following steps and make the appraisal
process simple yet effective:
The performance Appraisal form should reflect the strategic objectives of
the company. Many organizations use a form that contains several
sections.
The results and impact section should address accomplishments related
to job responsibilities, goals and projects. It is a review of past
performance.
A skills and abilities section should discuss the ways those results were
accomplished. By listing the core competencies for each job classification
and for the entire organization this section can address the kinds of
behavior that are critical for success.
IV.
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13
Chapter 6
IDENTIFICATION OF KEY RESULT AREAS (KRAS)
GOAL SETTING
Setting of Key Result Areas i.e. goals is one of the various parameters of
performance evaluation. These are also known as the Targets or Performance
Indicators (PI). Target setting is the first step in the appraisal process, based on
which the employee is appraised.
I.
II.
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SMART Performance
Goals
Achievable
A realistic expectation, given
time and resources
Realistic
There is a clear tie to goals
of the department, division
etc.
Time Bound
There is a time limit or
deadline by which the
objective must be achieved
and there may be a time
frame to track phases of
completion in an action plan.
III.
Criteria Checklist
Are resources, authority level, and requisite
skills in place?
Does it require a stretch of effort?
Will it matter when it is done?
Does the objective support relevant goals?
Does it deal with a key aspect of the job?
When are the goals to be completed?
Is there a timetable for milestones or
checkpoints?
Type of Goals:
One may have to set multiple goals combining goals at different levels viz. the
long-term goal, the short-tem goal and the minimum or standard goal.
1. The long-term goal:
The long-term goals are the level of performance sought over a period of
one to two years. Usually this level is significantly better than current
performance. In some cases, the long-term goals are the ultimate level of
performance, such as zero defects or zero absenteeism. Unlike the other
two goals (described below), the long-term goals can be dictated by
management without regard to past performance or to whether the long-term
goals is currently perceived as attainable.
2. The short-term goal:
The short-term goals is the level of performance desired and perceived as
being attainable with some effort within a period ranging from three months
to one year. At the end of that time, short-term goals are re-evaluated based
upon performance. The expectation is that when the short-term goal is
consistently being met, it will be moved closer to the long-term goal.
It must be less than or equal to the long-term goal
It cannot be better than the best performance ever achieved; and
It must be better than the current average or typical performance. Shortterm goals are negotiated. Usually employees and lower level managers
recommend and develop short-term goals subject to approval by
management.
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V.
16
17
Chapter 7
PERFORMANCE, PAY AND DEVELOPMENT
The outcome of the appraisal is either in the form of reward by way of increase in
pay, additional bonus or incentive and/or promotion, or by way of not effecting any
increase in pay, denying promotion etc. This gives emergence to the concept of
Performance Related Pay (PRP).
I.
2.
3.
4.
Flexibility:
PRP arrangements should allow for some flexibility in the criteria for
reward and the method of payment.
5.
Teamwork:
Poor PRP schemes can produce a lot of single-minded individuals. The
importance of teamwork should be recognized in structuring the scheme
and in defining critical success factors and performance indicators.
Individuals should be aware that achieving their targets at the expense of
others is not considered competent performance.
6.
Avoiding Short-termism:
To avoid the danger of PRP focusing attention on short-term results at the
expense of more important longer-term objectives, long-term as well as
short-term goals should be set wherever appropriate and short-term
objectives should be discussed in their overall context.
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7.
8.
b.
c.
d.
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20
e.
Design scheme
How are we going to ensure that ratings are fair and consistent?
Does the organization want to make provision for performancerelated lump sum bonuses for special achievement or sustained
high-level performance at the top of a range?
f.
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9.
g.
Implement
How the process should be started? Even after due care some
unforeseeable problem will arise. It is often advisable to start
with a pilot scheme, probably at management level so that they
understand the principles, benefits and problem before applying
PRP to the people for whom they are responsible.
h.
Evaluate
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23
Empowering
Resourcing
the
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Of the three approaches discussed above, the problem solving approach is the
best approach. The below comparison justifies how:
The Tell and Sell
Approach
Requires
considerable skill to
get people to accept
criticism
Is more of a oneway communication
process, indicating
authoritarianism
The
Tell
and
Listen Approach
Requires skills on
the
part
of
appraiser
in
listening
Better than the
`tell
and
sell
approach since it
involves
appraisee
Such approach may Appraiser
does
not motivate the not play a very
appraisee or even active role
may turn counterproductive
IV. Counseling is an art and requires skills, which are difficult to acquire in the
normal course of work. It is, therefore, suggested that appraisers should be
provided with special training by experts in counseling skills.
Counseling skills required by a good appraiser are:
Probing
Listening
Sensitivity
Reflecting
Empathy
Impartiality
Sincerity
Belief
: probing
by
open-ended,
non-directing
questions to make the appraisee more
comfortable.
: ability to listen attentively by probing,
evaluating, interpreting and supporting.
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26
27
Chapter 8
DESIGNING AN APPRAISAL PROCESS
Before understanding the process of appraisal, the following terms are revised:
1.
2.
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3.
4.
When to appraise/rate?
The most frequent rating schedules are semi-annual and annual. New
employees are rated more frequently than older ones. Some practices call for
ratings:
5.
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Halo Error:
Under this type of error, one marked characteristic or latest achievement
or failure of the appraisee (either favourable or unfavourable) may be
allowed to dominate the appraisal for the entire year.
c.
Logical Error:
This is a dangerous pitfall for the inexperienced appraiser. He is very
often inclined to arrive at similar assessments in respect of qualities that
seem logically related.
d.
Constant Error:
When two appraisers rate an appraisee their ratings may be different.
One may show consistent leniency by giving him high scores, the other my
consistently rate him by giving low scores.
e.
Central Tendency:
It is also called as Average Ratings. Here, the appraiser tends to avoid
giving frank views to the question asked or the appraiser is in doubt or he
has inadequate information or he simply wants to play safe and dont
displease anyone.
f.
g.
Contrast Error:
This error occurs in the sequencing of ratings. If superior performers are
rated first, average performers are rated down, if poorer performers come
first, the average performers will be rated more highly.
h.
i.
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6.
b.
7.
The appraiser
contemplated.
The appraiser has to rate employees on factors that are poorly defined.
rates
only
when
administrative
actions
are
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Chapter 9
TRADITIONAL METHODS OF APPRAISAL
As explained in Chapter 1 Performance Appraisal is an exercise of observation and
judgment, a feedback process, and an organizational intervention. It is a
measurement process as well as an intensely emotional process. Above all, it is an
inexact, human process. While it is fairly easy to prescribe how the process should
work, descriptions of how it actually works in practice are rather discouraging.
Some of the traditional methods of appraisal are explained below:
1.
Ranking
In this, the superior ranks his/her subordinates in order of their merit, from best
to worst.
-
2.
Person-to-Person/Paired Comparison
Under this method the appraiser compares each employee with every other
employee, one at a time.
-
3.
Grading
-
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4.
Graphic Scales
-
5.
Checklist
-
6.
Confidential Reporting
-
8.
Essay
-
7.
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- This method helps in identifying the key areas where the employees are weak
or strong.
- It emphasizes rating on objective evidence and helps in counseling.
9.
The above methods are non-transparent in nature, as the appraisee or the employee
is not involved in the process of his appraisal. The rating is done entirely by his
superiors.
The other methods wherein employee is appraised not only by his superiors
but also by the appraisee himself, and in some cases with involvement of third
parties are newer methods and detailed in Chapters 10 and 11.
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Chapter 10
RELATIVELY TRANSPARENT METHODS OF APPRAISAL
As time has progressed, there have been advancements in the appraisal system. As
against the earlier traditional methods, the newer methods include self-appraisal by
the appraisee. After having discussed the appraisal with the appraisee, the appraiser
forwards his recommendation to the management for further decision on reward
giving.
Some of the relatively transparent methods have been detailed below:
I.
2.
The appraisal discussion provides the means through which the five key
elements of Performance Appraisal can be achieved. These are:
a. Measurement: It assesses results against agreed targets and
standards.
b. Feedback: It gives the appraisee information on how he or she has
been doing.
c. Positive reinforcement: It emphasizes what has been done so that it
will be done even better in the future. A constructive criticism is done
i.e. points that help in improving performance are given.
d. Exchange of views: It ensures that the discussion involves a full, free
and frank exchange of views about what has been achieved, what
needs to be done to achieve more, what appraisees think about their
work, the way they are guided and managed and their aspirations.
e. Agreement: Both parties jointly arrive at an understanding about what
has to be done in order to improve performance and overcome any
work problems raised during the discussion.
3.
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General Guidelines
There are a number of general guidelines on how the appraisal discussion
may be conducted. Each of them should be applied according to the
circumstances in which the discussion is taking place and the personalities
of those involved there is no one right way to conduct an appraisal
discussion.
a. Let the appraisee do most of the talking.
b. Encourage self-appraisal
c. Keep the whole period under review
d. No surprises i.e. discuss issues at the time they take place.
e. Recognize achievements and reinforce strengths
f. Criticize constructively
g. Adopt a joint problem-solving approach
h. Asking the right questions
5.
36
Listen carefully
An appraisal discussion is a dialogue. Both parties are communicating
information and ideas to one another to achieve the purpose of the
meeting.
Good listeners concentrate on the speaker. They respond quickly to
points made by the speaker, ask questions frequently to elucidate
meaning, give the speaker an opportunity to rephrase or underline a point,
comment on the points made by the speaker without interrupting the flow
of conversation.
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II.
b.
c.
38
39
Features:
The use of situational exercise (such as in-basket exercise, business
game, a role-playing incident and leaderless group discussion);
Evaluators are drawn from experienced managers with proven ability at
different levels of management;
They evaluate all employees, both individually and collectively.
A summary report is prepared by the members, and a feedback on a
face-to-face basis is administered to all the candidates who ask for it.
2.
Purpose:
a. It is used to:
Determine individual
employees.
training
and
development
needs
of
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or three days or longer if used for developmental and not for selection
purposes.
3.
Problems:
The ratings are generally influenced by the participants interpersonal
skills; judges tend to evaluate the quality of the individuals social skills
rather than quality of the decisions themselves. Further, the organizing
and decision-making abilities are measured by in-basket exercises,
verbal ability and personal traits.
Solid performers in day-to-day operations suddenly choke in simulated
environment.
Unreasonably high cost of assessing an individual in a particular job
level.
There are potential bad effects on those not selected to participate in
the exercise.
Usually immediate supervisors nominate participants. Employees who
are curious, independent, aggressive and intelligent may never be
selected because such traits, though important at higher levels, are not
accepted by lower level supervisors.
Poorly rated appraisee may react in negative ways and might get
demoralized.
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2.
PDP Process:
The PDP process has been explained with the help of a chart as
Annexure I. A sample format of PDP form is attached as Annexure II and
the PDP form overview is explained in brief as Annexure II (a). All these
Annexures have been included at the end of the report.
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Chapter 11
NEW FRONTIERS TO PERFORMANCE APPRAISAL
In recent years the system of performance appraisal is becoming more and more
transparent wherein the employee, who is being appraised, is involved in the
process. The objectives or targets are set with mutual understanding between the
appraisee and his immediate superior. The feedback regarding his performance is
given to the appraisee with areas of improvement by disclosing his strengths and
weakness and the opportunities available. I will take you into details of these new
frontiers to Performance Appraisal viz:
I.
I.
II.
Balanced Scorecard
III.
360 Feedback
MANAGEMENT BY OBJECTIVES
1.
2.
44
3.
5.
46
47
II.
360 FEEDBACK
With the movement in the eighties to find new strengths and productivity
through employee empowerment came the idea of performance appraisals from
subordinates, their superiors, their peers and themselves 360 feedback.
1. The 360 Feedback process is called multi-source assessment, taps the
collective wisdom of those who work most closely with the employee,
superiors, colleagues (peers), direct reports and possibly internal and often
external customers. The collective intelligence these people provide on
critical competencies or specific behaviours and skills gives the employee a
clear understanding of personal strengths and areas ripe for development.
Employees also view this performance information from multiple
perspectives as fair, accurate, credible, and motivating. Employees are
often more strongly motivated to change their work behaviours to attain the
esteem of their coworkers than to win the respect of their supervisor alone.
2. As the 360 Feedback process better serves the needs of employees, it
serves the changing needs of their organizations too. Organizations are
reducing hierarchy by removing layers of management and putting more
emphasis on empowerment, teamwork, continuous learning, individual
development, and self-responsibility. The 360 Feedback Model aligns with
these organizational goals to create opportunities for personal and career
development and for aligning individual performance expectations with
corporate values.
3. Diagram showing the key stakeholders in a 360 Feedback Process
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b.
c.
Team members: The only option for identifying team and individual
members effectiveness is 360 Feedback. Failing feedback from
multiple sources, team members lack the information necessary for
effective individual development and teamwork.
With no team
evaluation, accountability may evaporate, and performance may falter
(weaken).
d.
e.
f.
Organizations:
Organizations can gain access to credible,
quantitative information to understand organizational strengths and
weaknesses, leadership gaps, and training needs more fully. This
information is much more useful than relying on intuitive judgment or
responding to those who are making the most noise.
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6. Structure changes
Organizational structures have changed substantially since the mid-1980s.
The 360 Feedback process offers support for these structural changes,
such as growth in supervisors span of control, the increased use of
technical or knowledge workers, and introduction of matrix and project
management organization design, and the move to working in teams.
a.
b.
c.
d.
b.
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c.
d.
e.
f.
g.
h.
8. Employee Relations
No other information has more impact on an employees career than
information on his or her performance. Hence, the accuracy, fairness and
usefulness of performance measures are critical factors to employees.
a.
b.
c.
d.
e.
f.
g.
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While this approach has its merits, its major deficiency is that a few
individuals are changed, the overwhelming mass of management is
not, and the systems and processes that encourage old behaviors are
still in place.
b.
c.
The third approach involves all of the second approach, and also deals
with "systems issues." Where 360 feedback alone can only deal with
problems caused by individual behavior, it by itself does nothing for the
systemic causes of problems, such as organizational structure,
inappropriate and distorted measurement systems, company-wide lack
of skills, or performance appraisal and pay problems. 360 Feedback
can serve both as a catalyst to help management realize the systemic
causes of organizational problems, and can be part of the solution, so
that management style becomes in harmony with other organizational
changes senior management is trying to make.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
12. The flow diagram attached as Annexure V explains the 360 feedback
process and Annexure VI is a blank sample of 360 feedback form (for the
Head of Support Unit of an University).
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III.
Balanced Scorecard
1.
2.
3.
and performance and service and then translate these goals into
specific measures." Overall, this is a measure of how the company
provides value to the customer. Changes made to a business
process output that lowers the customers cost or allows the customer
to achieve his or her objective, have value for the customer. For
example, its not enough to simply bring down the cost of an item. The
delivery time and manner in which the customer is dealt during times of
sales and support are important as well. It is a measure of that value
that should be captured by the metrics (e.g. market share, customer
satisfaction, customer loyalty, customer acquisition) representing this
perspective.
In this perspective, managers must first determine core measures that
will describe the successful outcomes of a well-formulated and
implemented strategy. They have to also identify what are the
attributes that the customers value and choose the value proposition
that they want to deliver to the targeted customers. Today, many
companies have a corporate mission that focuses on the customer.
c. Internal Business Process Perspective
The internal business process perspective provides a view of what the
company must excel at to be competitive. Kaplan and Norton
recommend that, "companies also attempt to identify and measure their
company's core competencies, the critical technologies needed to
ensure continued market leadership."
In this perspective, the managers must identify the internal processes
that are crucial to their organization and develop the best possible
measures with which to track the organizations progress. These
processes should help them deliver superior value to their customers
and achieve financial targets. The Balanced Scorecard go beyond
the simple assessment of existing processes, and usually
identifies new processes that the organization should implement
in order to be successful. By incorporating innovation processes
measures, the Balanced Scorecard provides managers with a set of
tools that does not only reflect the short term, but also gives insight
about the longer-term.
d. Innovation and Learning Perspective
Kaplan and Norton underscore the importance of innovation and
learning in their statement that, "a company's ability to innovate,
improve, and learn ties directly to the company's value." While the
financial perspective deals with the projected value of the company, the
innovation and learning perspective sets measures that help the
company compete in a changing business environment. This is of
principal interest to the CEO and the architects of the long-range
business plan. Their focus for this innovation is in the formation of new
or the improvement of existing products and processes. This
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57
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Finally, there is always a chance that too many measures will be selected.
This is a problem because it is very difficult to track a large number of
measures. Furthermore, some of the measures selected may be objective,
such as employee turnover rates, and other measures may be subjective
measures, such as employee morale or quality time spent with customers.
The subjective measures, by definition, involve somebodys judgment and,
therefore, are more prone to error. Consequently, there is a question whether
subjective measures should be used and if so how can they be made more
reliable.
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Chapter 12
ELECTRONIC APPRAISAL SYSTEM (eAPPRAISAL)
eAppraisal is a recently introduced method of performance appraisal that eliminates
paper work. eAppraisal simplifies and enhances the employee performance
appraisal process. It has features that make its use easy and helps both HR
administrators and line managers produce better results more quickly. It provides an
organization with a powerful tool to help develop organizations critical talent all year
round. It is easier to conduct eAppraisals by automating the time-consuming
process of administrating employee performance reviews. It is flexible and can be
customized to suit an organizations needs. The comprehensive workflow makes it
easy for human resource professionals to manage the process by approving
appraisal forms, monitoring the status and sending automatic email notifications to
managers. eAppraisal templates and robust content options, help appraisees to
create appraisals quickly and professionally.
I.
II.
Features:
intranet-based
Ease of use
Sophisticated workflow
Centralized repository
User customizable performance appraisal forms
Automated email notification and reminder notice
Comprehensive status and action view for HR manager
Competency-based text answers and/or range scale
Self-rating capabilities
Continuous performance journal entries throughout the year
Import employee data from the HRIS system of the organization
Scoring and weighting capabilities
Benefits:
III.
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How?
IV.
The appraisee and his manager decide on the individual targets with are in
line with organizational targets.
With periodic reviews the targets can even be modified. The targets can be
decided keeping in mind the 4 perspectives of Balanced Scorecard viz
financial, customer, internal business processes, and innovation & learning.
The programming of eAppraisal can be customized accordingly.
The weightage and scores can be divided not only on these perspectives but
also on the personal strengths and weaknesses of an individual as well as
the training and developmental needs.
Process:
The eAppraisal process chart is attached as Annexure VIII. The process has been
detailed below:
The appraisee creates an eAppraisal and fills up Key Performance Areas (KPAs) &
achievements with their weightages. In short he does self-appraisal. The system
aggregates the rating as per the formula and calculates total score as well as
overall rating.
Appraisee submits the eAppraisal request to his reporting manager (Main Appraiser).
Appraisee can also intimate other appraisers, if any, through the system before
submitting his request to the Reporting Manager. The reporting manager receives
an email with the document-link of submitted request.
Reporting Manager enters his rating and can change the weights of each KPA
achieved by the employee and the system recalculates the totals and overall rating.
However, the ratings/weights entered by appraisee cannot be changed. Appraiser
has to also complete the section on Overall Assessment, Strengths & Training
Needs.
After completing the evaluation, Appraiser submits the eAppraisal to the reviewer,
who is reporting head of reporting manager. System will intimate the request by an
email to reviewer to the document link.
If necessary, appraiser has option to return the appraisal back to the appraisee and
request for suitable modifications and re-submission.
Other appraisers, if any, enter their aggregate rating and comments in appraisal
summary & review section.
Reviewer sees the scores & comments entered by the appraisee, the Appraiser and
other appraisers. Reviewer enters his overall rating & comments on the same.
Then the reviewer forwards the same to the Human Resource (HR) department.
Reviewer has an option to send it back to appraiser if necessary.
HR accesses to various summary views to help them analyze the appraisers. They
also identify activities behind schedule and intervene as necessary to expedite. The
data is then presented to the Management Committee.
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At the above stage final discussions between main appraiser and appraisee take
place and the appraisee confirms this by adding the date of discussions and his
own comments.
Thus this process is fully transparent as appraisee can view the rating and
comments entered at different levels.
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Chapter 13
SAMPLE OF CURRENT PRACTICE CASE STUDY
I.
Profile of Organization:
Company ABC is 40 years old company started in 1968. It is one of the top 6
pharmaceutical companies in India having turnover of more than 1700 crores
annually. The company has communicated its vision and goals to its
employees across the organization at all levels and is in the process of
adopting best practices in every sphere of its business.
II.
III.
Past Practice:
1.
2.
3.
During 1990s, the process changed for better as the employees were
asked to give their key result areas and target achievement. Appraiser
used to discuss with the appraisee his performance and started giving
feedback with his strengths and weaknesses and also the areas of
improvement. Based on their discussion, training needs used to be
identified. However, the involvement of the appraisee was only till this
stage. The results were still not disclosed to him and kept confidential.
Through the letter of reward i.e. pay hike, incentive or promotion;
employee was able to know the results of his performance appraisal. In
case of poor performance, letter of `no increment was given to the
employees. The company had its budget allotted for this purpose the
employees rewards had to fitted in this budget. Hence there were different
ratings based on their grades viz Superior, Good, Average and Poor.
Current Practice:
1. By the year 2000 companys appraisal system has become quite
transparent. The employee is communicated his rating based on his
performance and target achievement. The company introduced 6 levels of
rating viz O, E, FA, MA, PA, NA i.e. Outstanding, Exceeded, Fully
Achieved, Mostly Achieved, Partly Achieved and Not Achieved. For each
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KRA i.e. key result area, the appraisee was appraised. The appraisal
consists of 100 marks of which 85 marks are based on professional
competence and 15 marks on behavioural traits or soft skills.
2. Each rating has been allotted the scale of 1 to 6 as under :
OS-6, E-5, FA-4, MA-3, PA-2, NA-1
3. The rating of each KRA is multiplied by the weightage given to it and the
total is arrived at by adding up the product for each KRA. Similarly
weightage is given to each behavioural trait specified for the appraisee
and the rating scored by him is multiplied by the weightage. The product
for each trait is then summed up. Then the total of professional
competence and the total scored on behavioural traits are added up.
Based on the aggregate total the employee is awarded a relevant rating
and based on his grade the reward in the form of pay hike and/or
promotion.
4. The total aggregate marks that an employee can get are 600 because the
total weightage is 100 and the highest rating is 6. By multiplying
weightage by highest rating i.e. 6, the total comes to 600. The rating
structure is as under:
Rating
1
2
3
4
5
6
Range
551-600
451-500
351-450
251-350
151-250
Less than 151
(FA)
(E/OS)
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Potential
HIGH
LH
MH
HH
MEDIUM
LM
MM
HM
LOW
LL
ML
HL
LOW
MEDIUM
HIGH
Performance
The above grid clearly explains that LL rated person has low performance
with low potential, HM rated person shows high performance but medium
potential, while HH rated person is high performer with high potential.
The company gives special allowance to these HH employees and training
to develop them as future leaders of the company and of course try to
retain them as talent pool.
Employees with technical qualification and post degree professional
certificate holders too are given special allowance as part of their salary
structure.
8. The company has thus introduced an appraisal system which combines
the new systems viz. management by objectives and Balanced Scorecard
and also potential appraisal and competency based appraisal However, it
is not free from forced rating in the form of bell curve which is used to
rationalize the overall rating system and maintain the budgeted figure for
this purpose.
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9. The entire appraisal process right from target setting till the final rating is
done electronically.
Thus this company has moved from the traditional confidential reporting
to a totally transparent system by way of eAppraisal.
IV.
These changes in the appraisal system have benefited all concerned right
from appraisee to the organization as a whole in the following ways:
1. Automated the system:
Eliminated paper forms and processes and enabled anytime/anywhere
access for managers through Web technology.
2. Reduced Time:
Reduced the time necessary for managers to prepare and conduct annual
reviews.
3. Ease for Appraisee:
Appraisee can continue to fill the form over several sessions as per his
convenience.
4. Tracking:
The bottlenecks in the process are tracked and can be expedited.
5. Manage KPAs:
Made it easier to manage, track and evaluate KPAs throughout the year.
6. Standardized the System:
Organization-wide all employees follow the standard process of appraisal.
7. Centralized Administration:
Data and processes are centrally administered and driven by HR.
Managers are able to review the appraisals in an efficient manner.
8. Flexibility:
This system is flexible enough to be customized, as and when need
arises.
9. Increased organization efficiencies:
It has improved appraisal quality, accuracy, and privacy with intuitive
interfaces, authoring aids, and centralized storage. It has also provided the
ability to track and modify objectives/standards and performance notes
throughout the performance year.
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Chapter 14
CONCLUSION
The automated systems call for higher investment in terms of money though
reduced time and increased overall effectiveness.
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SUGGESTIONS/RECOMMENDATIONS
In any performance appraisal, due consideration must be given to the ethics of
appraisal, failing which many organizational problems may crop up and the very
purpose of appraisal may be defeated. The following are some suggestions and
recommendations for appraisees, appraisers and reviewers.
I.
For Appraisees:
Following are five keys to help employees to overcome a bad appraisal:
1.
2.
They should go into the review assuming there will be some negatives,
and think of the meeting as a way to learn what specific issues they have
to work on to get to that next step. Its the boss job to let the employees
know about areas where they can improve, so the employee should try not
to be offended. The employees goal is to convince the supervisor, in a
positive manner, that they are willing to make that commitment.
3.
Before going into a review, employees should carry a page with two
columns, the first headed Specific Areas of Strength and the second,
Specific Areas of Improvement. Its very important that they hear both
the good and the bad comments, because they will never improve, to their
boss satisfaction, if they deny, in their anger, that there are any areas
needing improvement.
4.
Employees should ask for clarification and specific examples if they hear
generalizations or dont understand what the problem is. But they should
try hard not to be too argumentative.
5.
Employees should find out how their boss might solve these issues, and
ask for another review in 30 days to address these specific issues, to see
if headway is being made.
For Appraisers:
Appraising manager should prepare for the appraisal in following ways:
1.
He must be well trained and he should know why the appraisal is needed.
2.
3.
4.
5.
6.
7.
8.
9.
2.
To cross verify Final Ratings and Promotion relating to all team members.
3.
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4.
5.
6.
7.
8.
2.
3.
4.
5.
Review all potential talent identified and lay a strategic intent towards their
development.
V. Human resources:
The human resources department has to:
1.
2.
3.
4.
5.
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BIBLIOGRAPHY
1. Findings (reasonable portion):
www.lrconsultants.com
2. Definition by Carl Heyel:
http://www.rcw.raifoundation.org/management/bba/hrm/lecture-notes/lecture-24.pdf
3. Performance Management:
a. HR > K Mailer: Performance Management, 06.11.2004
http://lupinho/Knet/tmm/kma/hr/perfm/hr_perfm_061104.htm
b. HR > K Mailer: Performance Management, 13.11.2004
http://lupinho/Knet/tmm/kma/hr/perfm/hr_perfm_131104.htm
c. HR > K Mailer: Performance Management, 30.10.2004
http://lupinho/Knet/tmm/kma/hr/perfm/hr_perfm_301004.htm
4. Management By Objectives:
a. TheManageMentor-Human Resources Performance Appraisal
Management by Objectives
http://lupinho/Knet/tmm/kzone/EnlightenmentorAreas/hr/PerfMgmt/pamgmtbyobj.htm
b. http://service.govdelivery.com/service/document.html? code=HRDOC_205
(MBO form)
5. Effective Appraisal Process:
TheManageMentor-Human Resources Effective appraisal process
http://lupinho/Knet/tmm/kzone/EnlightenmentorAreas/hr/PerfMgmt/effappraisal.htm
6. Guidelines for appraisee:
TheManageMentor-Human Resources Performance Appraisal Blues
http://lupinho/Knet/tmm/kzone/EnlightenmentorAreas/hr/PerfMgmt/PerfAppBlues.htm
7. Managing work place performance:
www.performance-management.us/
8. 360 Feedback :
http://www.wits.ac.za/depts/cult/360GeneralInfo.doc
9. Counseling process:
http://usace-ccm-guide.com/counseling/counseling_1.htm
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