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Definition

Process by which a manager or consultant (1) examines and evaluates an employee's

work behavior by comparing it with preset standards, (2) documents the results of the

comparison, and (3) uses the results to provide feedback to the employee to show where

improvements are needed and why. Performance appraisals are employed to determine

who needs what training, and who will be promoted, demoted, retained, or fired.

Performance Appraisal

The history of performance appraisal is quite brief. Its roots in the early 20th century can

be traced back 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.

Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things

historical, it might well lay claim to being the world’s second oldest profession!

There is, says Dulewicz (1989), ’’…. a basic human tendency to make judgments about

those one is working with as well as about oneself.’’ Appraisal, it seems, is both

inevitable and universal. In the absence of a carefully structured system of appraisal,

people will tend to judge the work performance of others, including subordinates

naturally, informally and arbitrarily.


The human inclination to judge can create serious motivational, ethical and legal

problems in the workplace. Without a structured appraisal system, there is little chance of

ensuring that the judgments made will be lawful, fair, defensible and accurate.

Performance appraisal systems began as simple methods of income justification. That is

appraisal was used to decide whether or not the salary or wage of an individual employee

was justified.

The process was firmly linked to material outcomes. If an employee’s performance was

found to be less than ideal, a cut in pay would follow. On the other hand, if their

performance was better than the supervisor expected, a pay rise was in order.

Little consideration, if any, was given to the developmental possibilities of appraisal. If

was felt that a cut in pay, or a rise, should provide the only required impetus for an

employee to either improve or continue to reform well.

Sometimes this basic system succeeded in getting the results that were intended; but more

often than not, it failed.

For example, 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.

These observations were confirmed in empirical studies. Pay rates were important, yes;

but they were not the only element that had an impact on employee performance. It was

found that other issues, such as morale and self- esteem, could also have a major

influence.
As a result, the traditional emphasis on reward outcomes was progressively rejected. In

the 1950s in the United States, the potential usefulness of appraisal as tool for motivation

and development was gradually recognized. The general model of performance appraisal,

as it is known today, began from that time.

PERFORMANCE APPRAISALS ARE A REGULAR REVIEW OF

EMPLOYEE PERFORMANCE WITH IN ORGANIZATIONS.

Generally, the aims of a scheme are;

• Give feedback on performance to employees.

• Identify employee training needs.

• Document criteria used to allocate organizational rewards.

• Form a basis for personnel decisions: salary increases, promotions Disciplinary

actions, etc.

• Provide the opportunity for organizational diagnosis and development.

• Facilitate communication between employee and administrator.

• Validate selection techniques and human resource policies to meet federal Equal

Employment opportunity requirements.

A common approach to assessing performance is to use a numerical or scalar rating

system whereby managers are asked to score an individual against a number of

objectives/attributes. In some companies, employees receive assessments from their

manager, peers, subordinates and customers while also performing a self assessment.

This is known as 360 appraisals.


The most popular methods that are being used as performance appraisal process are:

• Management by objectives (MBO)

• 360 degree appraisal

• Behavioral Observation Scale (Bos)

• Behaviorally anchored Rating Scale (BARS)

Trait based systems, which rely on factors such as integrity and conscientiousness. Are

also commonly used by businesses. The scientific literature on the subject provides

evidence that assessing employees on factors such as these should be avoided. The

reasons for this are two-fold:

1) Because trait based systems are by definition based on personality traits. They make it

difficult for a manager to provide feedback that can cause positive change in employee

performance. This is caused by the fact that personality dimensions are for the most part

static, and while an employee can change a specific behaviour they cannot change their

personality. For example, a person who lacks integrity may stop lying to a manager

because they have been caught, but they still have low integrity and are likely to again

when the threat of being caught is gone

2) Trait based systems, because they are vague, are more easily influenced by office politics.

Causing them to be less reliable as a source of information on an employee’s true

performance. The vagueness of these instruments allows managers to fill them out based

on who they want to/feel should get a raise, rather than basing scores on specific

behaviors employees should/should not be engaging in. These systems are also more

likely to leave a company open to discrimination claims because a manager can make
biased decisions without having to back them up with specific behavioural information.

PERFORMANCE APPRAISAL AS A HRM FUNTION

HRM is considered as a process of increasing knowledge, skills and capacities of

people It is important not only for an enterprise but also for a nation to develop its human

resources. At the enterprise level, employees training and executive development are the

main areas of human resource development.

The quality of manpower required varies from job to job. Therefore, the quality of

employees required for a job can be determined only after determining the job

requirements. JOB ANALYSIS is the process of knowing the requirements of a particular

job. It is the process of analyzing a job so as to collect all pertinent facts about the job in

terms of duties and responsibilities involved in it and the qualifications needed for the

successful performance of the job.

With the help of information obtained through job analysis, two statements

namely JOB DESCRIPTION and JOB SPECIFICATION can be prepared.

JOB DESCRIPTION contains details about the contents of a job whereas job

specification or man specification reveals the physical and other qualification and
experience required in an individual to perform the job satisfactorily.

1) JOB DESCRIPTION Plays a major role while the recruitment is done by the

organizations. It helps the employees to match the qualification which they have

with those which are needed to perform a particular job. Once the shortcomings

are identified the next step is to overcome them. The deficits are then met through

especially designed training plans.

Realistic plans for the procurement or for the training of the employees or for their

development should be made after considering the macro and micro environment which

affect the manpower objectives of the organization.

A plan for Training and Development generally includes following points:

1) Number of employees to be trained.

2) Existing employees to be retrained.

3) Skill areas for training.

4) Availability of trainers.

5) Training period.

6) New courses to be developed and changes to be made in existing courses.


BASIC PHILOSOPHY OF PP & A:
‘‘LEADERSHIP THROUGH QUALITY’’
RECOGNISATION AND

REWARD

• Individual Reorganisation
PERFORMANCE

IMPROVEMENT

• Building on Successes
• Skill Development
• Regular Counselling & Feedback
CAREER PLANING

Mapping towards skills and experience

MANAGEMENT
RESOURCE PLANING
• Input to Succession plans
• Company Resource
PP & A

PERSONAL DEVELOPMENT

• Individual development action plans


PERFORMANCE APPRAISAL METHODS

Performance appraisal methods include 11 methods / types as follows:

1. Critical incident method

The critical incidents for performance appraisal is a method in which the manager writes

down positive and negative performance behavior of employees throughout the

performance period

2. Weighted checklist

This method describe a performance appraisal method where rater familiar with the jobs

being evaluated prepared a large list of descriptive statements about effective and

ineffective behavior on jobs

3. Paired comparison analysis

Paired comparison analysis is a good way of weighing up the relative importance of

options.

A range of plausible options is listed. Each option is compared against each of the other

options. The results are tallied and the option with the highest score is the preferred
option.

4. Graphic rating scales

The Rating Scale is a form on which the manager simply checks off the employee’s level

of performance.

This is the oldest and most widely method used for performance appraisal.

5. Essay Evaluation

This method asked managers / supervisors to describe strengths and weaknesses of an

employee’s behavior. Essay evaluation is a non-quantitative technique

This method usually use with the graphic rating scale method.

6. Behaviorally anchored rating scales

This method used to describe a performance rating that focused on specific behaviors or

sets as indicators of effective or ineffective performance.

It is a combination of the rating scale and critical incident techniques of employee

performance evaluation.

7. Performance ranking method

Ranking is a performance appraisal method that is used to evaluate employee

performance from best to worst.

Manager will compare an employee to another employee, rather than comparing each one

to a standard measurement.
8. Management By Objectives (MBO)

MBO is a process in which managers / employees set objectives for the employee,

periodically evaluate the performance, and reward according to the result.

MBO focuses attention on what must be accomplished (goals) rather than how it is to be

accomplished (methods)

9. 360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive confidential,

anonymous feedback from the people who work around them.

10.Forced ranking (forced distribution)

Forced ranking is a method of performance appraisal to rank employee but in order of

forced distribution.

For example, the distribution requested with 10 or 20 percent in the top category, 70 or

80 percent in the middle, and 10 percent in the bottom.

11. Behavioral Observation Scales

Behavioral Observation Scales is frequency rating of critical incidents that worker has

performed.
360- DEGREE PERFORMANCE APPRAISAL

360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive

appraisal where the feedback about the employees’ performance comes from all the

sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior),

subordinates, team members, customers, suppliers/ vendors - anyone who comes into

contact with the employee and can provide valuable insights and information or feedback

regarding the "on-the-job" performance of the employee.

360 degree appraisal has four integral components:

1. Self appraisal

2. Superior’s appraisal

3. Subordinate’s appraisal

4. Peer appraisal.
Self appraisal gives a chance to the employee to look at his/her strengths and

weaknesses, his achievements, and judge his own performance. Superior’s appraisal

forms the traditional part of the 360 degree performance appraisal where the

employees’ responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like

communication and motivating abilities, superior’s ability to delegate the work,

leadership qualities etc. Also known as internal customers, the correct feedback given by

peers can help to find employees’ abilities to work in a team, co-operation and sensitivity

towards others.

Self assessment is an indispensable part of 360 degree appraisals and therefore 360

degree Performance appraisal have high employee involvement and also have the

strongest impact on behavior and performance. It provides a "360-degree review" of the

employees’ performance and is considered to be one of the most credible performance


appraisal methods.

360 degree performance appraisal is also a powerful developmental tool because when

conducted at regular intervals (say yearly) it helps to keep a track of the changes others’

perceptions about the employees. A 360 degree appraisal is generally found more suitable

for the managers as it helps to assess their leadership and managing styles.

ADVANTAGE & DISADVANTAGE OF 360- DEGREEE


PERFORMANCE APRAISALS

Advantages
1. It provides a more comprehensive view of employee performance than other appraisal

method.

2. It increases the credibility of the appraisal result.

3. The feedback from the peers can help to enhance the staff’s self-development.

4. A chance to complain their manager without following the normal complaint

procedures.

Disadvantages
1. Time consuming and more complex on administration
2. May generate the environment of suspicion and cynicism
3. Risk of confidentiality.
PROCESS OF PERFORMANCE APPRAISAL

ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up of the standards

which will be used to as the base to compare the actual performance of the employees.
This step requires setting the criteria to judge the performance of the employees as

successful or unsuccessful and the degrees of their contribution to the organizational

goals and objectives. The standards set should be clear, easily understandable and in

measurable terms. In case the performance of the employee cannot be measured, great

care should be taken to describe the standards.

COMMUNICATING THE STANDARDS

Once set, it is the responsibility of the management to communicate the standards to all

the employees of the organization. The employees should be informed and the standards

should be clearly explained to the. This will help them to understand their roles and to

know what exactly is expected from them. The standards should also be communicated to

the appraisers or the evaluators and if required, the standards can also be modified at this

stage itself according to the relevant feedback from the employees or the evaluators.

MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the performance appraisal process is measuring the actual

performance of the employees that is the work done by the employees during the

specified period of time. It is a continuous process which involves monitoring the

performance throughout the year. This stage requires the careful selection of the

appropriate techniques of measurement, taking care that personal bias does not affect the

outcome of the process and providing assistance rather than interfering in an employees

work.
COMPARING THE ACTUAL WITH THE DESIRED
PERFORMANCE

The actual performance is compared with the desired or the standard performance. The

comparison tells the deviations in the performance of the employees from the standards

set. The result can show the actual performance being more than the desired performance

or, the actual performance being less than the desired performance depicting a negative

deviation in the organizational performance. It includes recalling, evaluating and analysis

of data related to the employees’ performance.

DISCUSSING RESULTS

The result of the appraisal is communicated and discussed with the employees on one-to-

one basis. The focus of this discussion is on communication and listening. The results,

the problems and the possible solutions are discussed with the aim of problem solving

and reaching consensus. The feedback should be given with a positive attitude as this can

have an effect on the employees’ future performance. The purpose of the meeting should

be to solve the problems faced and motivate the employees to perform better.

DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the

performance of the employees, take the required corrective actions, or the related HR

decisions like rewards, promotions, demotions, transfers etc.

CHALLENGES OF PERFORMANCE APPRAISAL


In order to make a performance appraisal system effective and successful, an
organization comes across various challenges and problems. The main challenges

involved in the performance appraisal process are:

 Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top

management. The performance data to be considered for evaluation should be

carefully selected. For the purpose of evaluation, the criteria selected should be in

quantifiable or measurable terms

 Create a rating instrument

The purpose of the performance appraisal process is to judge the performance of the

employees rather than the employee. The focus of the system should be on the

development of the employees of the organization.

 Lack of competence

Top management should choose the rates or the evaluators carefully. They should

have the required expertise and the knowledge to decide the criteria accurately. They

should have the experience and the necessary training to carry out the appraisal

process objectively.

 Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait
influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal

process. Therefore the ratter should exercise objectivity and fairness in evaluating and

rating the performance of the employees

 Resistance

The appraisal process may face resistance from the employees and the trade

unions for the fear of negative ratings. Therefore, the employees should be

communicated and clearly explained the purpose as well the process of appraisal.

The standards should be clearly communicated and every employee should be

made aware that what exactly is expected from him/her.

PURPOSE OF PERFORMANCE APPRAISAL


Performance Appraisal is being practiced in 90% of the organizations worldwide. Self-

appraisal and potential appraisal also form a part of the performance appraisal processes.

Typically, Performance Appraisal is aimed at:

 To review the performance of the employees over a given period of time.

 To judge the gap between the actual and the desired performance.

 To help the management in exercising organizational control.

 To diagnose the training and development needs of the future.

 Provide information to assist in the HR decisions like promotions, transfers etc.


 Provide clarity of the expectations and responsibilities of the functions to be

performed by the employees.

 To judge the effectiveness of the other human resource functions of the

organization such as recruitment, selection, training and development.

 To reduce the grievances of the employees.

 Helps to strengthen the relationship and communication between superior –

subordinates and management – employees.

PERFORMANCE APPRAISAL & DEVELOPMENT PLAN

PURPOSE:

The purpose of conducting a Performance Appraisal is to review and evaluate the

performance of an executive/journalist on contract.

OBJECTIVE:

 To inform the appraisee of his/her relative performance in terms of targets and Key

Result Areas(KRA)

 To encourage meaningful and transparent communication between the appraiser and

appraisee.
 To identify the training need for development.

GUIDELINES:

 The date and time for the appraisal interview has to be fixed well in advance by

mutual consent between the appraiser and the appraisee to allow for adequate

preparation.

 A separate self-evaluation form has to be filled by every executive/journalist on

contract prior to the appraisal interview and submitted to the appraiser. After the form

is filled, the appraiser should then proceed with the appraisal interview.

 During the appraisal interview the appraisee first do a Target based review for the

appraise and he should appraise the appraisee on the important parameters that have

been identified.

 The appraiser should explain to the appraisee why he/she has been given a particular

score against a particular parameter and point out the appraiser’s strength’s and

weaknesses.

 The targets for the next year should be retained by the Department Head for mid-term

review.

 The completed self-evaluation forms/performance appraisal forms of every

executive/journalist on contract in Mumbai and Delhi should be sent to the respective

HRD departments at Mumbai & Delhi.

 The appraiser should keep a copy of his/her self-evaluation and performance

appraisal form and note the areas for improvement


DEFINITION OF SCORES:

Scores/ Rating Definition


High Flier/Outstanding (5) Employee who truly achieves outstanding success

in the given targets and accomplishes much more

than the expected tasks with efficiency and

effectiveness. Research indicates that only 1% of

the total employee population belongs to this

category.

Employees whose Average Weighted score-

(A) range from 4.7 to 5 are

Highfliers/Outstanding.
Regularly Exceeds (4) Employee who exceeds the requirements of the

job. It gives an indication that the person is

prepared sufficiently for a higher classified job.

Research indicates that only about 15% of the

total employee population belongs to this

category.

Employees whose Average Weighted Score–

(A) range from 4.2 to 4.69 are Regularly

Exceeding.

Meets Requirement (3) This rating is to be given to the employee who

has the requisite qualities to perform the present


job with efficiency. Research indicates that 73%

of the total employee population belongs to this

category.

Employees whose Average Weighted Score-

(A) range from 3.6 to 4.19 are Meeting

requirements.
Occasionally Meets (2) Employee whose performance is adversely

affected due to the lack of qualities required to

perform in his current job. This is an indication

that the person needs to be trained and developed

sufficiently to orient him towards good

performance.Employees whose Average

Weighted Score – (A) range from 3 to 3.59 are

Meeting occasionally.
Fails To Meet (1) This rating means totally unacceptable

performance over a period of time. In spite of all

efforts in training and development the employee

continues to demonstrate lack of qualities to

perform the job.

Employees whose Average Weighted Score –

(A) range from 0 to 2.99 are Failing to meet.


TRAINING NEED IDENTIFICATION & TRAINING CODES
In order to facilitate the process we have listed down few steps which are to be followed

while collating the training data:

STEP 1: As a continuing process of Performance Management Process, the training

needs have to be identified from the Performance Appraisal forms. The data has to be

collated by the Department Heads of the respective branch and given to the Branch Head

in the format “Training need identification chart”.

STEP 2: We have classified the training needs into 4 categories, title code and title type

is mentioned below:

1001 Information Technology

2001 Managerial Effectiveness Programme

3001 Function Specific Programme

4001 Training by Experts

Training needs identified should match with the job profile mentioned in the PA form. In

view of the above, please analyse whether the training needs identified are actually

required to increase the competence & skill of the individual and would continue towards

effective performance of the assigned task.

STEP 3: The Department Head to eliminate the training programmes which are not of

very important nature and prioritise the identified training needs as per the requirement of

the department and branch.

STEP 4: Also classify the identified training programmes which can be conducted
internally and externally.

STEP 5: The training codes and sub-codes have to be identified after analysing the

descriptions mentioned in the “Training code chart”. For example: The training type

identified is ‘Information Technology’ and the training title name is ‘MS Office’.

Therefore, in training need identification under the column training code and sub-code

the entry will be 1001 and 1001 respectively.

STEP 6: ‘Training calendar’ will be designed and implemented by the Branch

HR/Personnel Head in consultation with the Branch Head. Kindly note that under the

(Training Code-2001) - “Managerial Effectiveness Programme” we are having the

following training titles:

(Sub Code-2001) Managing Self includes (Sub Code-2002) Managing People

the following module for the rank of includes the following module for the

Executives to Asst. Manager: rank of Dy. Manager to Chief Manager:

• Goal Setting & Career Planning • Principle Centred Leadership

• Lateral Thinking • Listening Skills

• Communication Skills • Performance Management Skills

• Presentation Skills • Coaching & Mentoring

• Time Management • Team Building & Conflict

• Assertiveness Management

• Transactional Analysis • Interviewing Skills

• Counselling Skills • Counselling Skills


• Seven Habits of Highly Effective • Abnormal & Normal Psychology

People • Emotional Intelligence

• Art of Living & Stress

Management
(Sub Code-2003) Managing Business &

Strategy includes the following module

for the rank above Chief Manager:

• Business Policy Planning

• Strategic Management

• Marketing Management

• Operations Research

• Finance for Non-Finance

• HR for Non-HR

• TQM & BPR

PERFORMANCE ASSESSMENT GUIDELINES

1) Self-Assessment

All Appraises will make a Self-Assessment of their own performance and fill in the
following information in the Performance Assessment Worksheet:

Sl. No. Term Description

1. Key Result Area (KRA) These are critical functions of a job.

Performance with respect to defined KRAs

lead to distinct contributions/ outcomes

towards organizational objectives.


2. Measure(s) These are yardsticks for evaluating the extent

of performance with respect to a KRA. A

particular KRA may have more than one

Measure.
3. Performance Standard This is a specific goal corresponding to the

Measure of a KRA and should preferably be

realistic, achievable and time-bound.


4. Weight age (%) This demonstrates the relative importance of

the KRA in terms of the priority and effort

and should add up to 100%. The minimum

Weight age is 10%


5. Extent of Over-/ Under- To what extent the Performance Standards

achievement (with were met and description about the causes

elaboration) of /factors responsible for Over/ Under-

Achievement.

2) Performance Assessment Discussion


This candid discussion between the Appraiser and the Appraisee on the latter’s

performance during the year should focus on the following aspects:

• Demonstration of the extent of performance by the employee in the objective

terms.

• Identifying the key drivers and facilitators for performance.

• Reviewing and discussing performance bottlenecks and making plans to

overcome them.

• Planning of KRAs, Measures and Performance Standards for the next year.

3) Assessment by Appraiser

Post discussion with the employees, the Appraiser will fill in the following

information:

4) Performance Review

The Appraiser will forward the Worksheet duly assessed and completed by him/her to

the Reviewer (the immediate supervisor of the Appraiser) for his/her review and

validation. Based on discussion with the Reviewer, the Assessed Level of Overall

Performance for the employee will be documented in the Worksheet (based on the

guidelines in the above table).

The reviewer and the appraiser shall document their overall comments relating to the

assessment of employee and sign off at respective places in the worksheet.

5) Performance Calibration Process

After the completion of performance review, the Overall Performance as assessed


will be taken through the Performance Calibration Process by the Functional

Directors. This process would aim at reviewing performance levels across the

functional area and apply necessary changes in line with structured guidelines, if any.

6) Feedback to Appraisee

Post calibration process, the Assessed Level of Overall Performance will be

communicated to the Appraisee by the Appraiser. The Appraisee writes down his

impressions and views (including those regarding the objectivity of the process),

signs off the worksheet and hands it over back to the Appraiser. The Appraiser then

forwards the Worksheet to the Functional Head.

EMPLOYEE DEVELOPMENT GUIDELINES

(A) Identifying Key Behavior Areas and their Desired Level

The Appraisee should fill in the following information in consultation with the Appraiser
and HR Managers.

Sl.No. Term Description


1 Key Behavior Area These are the behaviors that are required by an

individual

To perform his/her job effectively.

2 Desired Level of Behavior This is the proficiency with which the Key Behavior is

Required to be demonstrated by the job-holder for

performing his/her job effectively.

(B) Demonstration of Key Behaviors by Appraisee

Appraisee provides Examples of Demonstration of Key Behavior (with reference to the

Desired Level of Behavior) for each of the Key Behavior Areas. These Examples (may

be Critical Incident) would always have to be work-related and would be determinants of

their Proficiency Level (explained below) on the applicable Key Behavior Areas.

(C) Development Review

Post filling in the Examples of Demonstrated Behavior, the Appraisee and the

Appraiser candidly discusses the following:


1. The Frequency of demonstration of a Behavior by the Appraisee, as well as the

Proficiency with which it is demonstrated over a defined period of time.

2. Development Support required by the Appraisee to take on higher/ wider roles

within the next year.

3. Training Needs of the Appraisee that need to be addressed within the next year.

Post discussion with the Appraisee, the Appraiser will fill in the following information in

the Worksheet:

The Appraiser signs off and forwards the documents to the Appraisee for his/her

comments and sign-off. Post this; the Appraisee forwards the Worksheet to the concerned

HR Manager. The Proficiency Level is communicated the Functional Director. This data

will form an important parameter for Progression / Re-designation decisions.