PERFORMANCE

APPRAISAL

Ms Ankita Sood
Dept. of MBA
Govt. P.G. College Dharamshala
 Performance Appraisal :
 Performance appraisal is the assessment of an individual’s
performance in a systematic way (against well defined
benchmarks). Assessment should not be confined to the past
alone, potentials of the employee for future performance must
also be assessed. The performance being measured by factors as
job knowledge, quality and quantity of output, initiative,
leadership abilities, supervision, dependability, co-operation,
versatility etc.
 •Performance Appraisal (PA) refers to all those procedures that
are used in a work activity to evaluate the personality
performance potential of its group members.
 •Performance Management System (PMS) is a process of
establishing performance standards and evaluating performance
in order to arrive at objective HR decisions and to provide
documentation to support personnel actions.
 Perspectives on Appraisal :
The Organization
 “If people know what they are supposed to do,
get feedback on how they are or are not doing it,
and get rewarded for doing what they are
supposed to be doing, companies will be more
likely to get the results they desire.”
 P.A aims to: making equitable reward decisions
 improving performance
 motivating employees
 succession planning and identifying potential
 promoting manager-subordinate dialogue
 formal assessment of unsatisfactory performance
 Perspectives on Appraisal :
The Appraisee (Employee)
 Want fair distribution of reward
 Want performance feedback
 Want constructive dialogue with ‘the organization’

BUT, conditional on the extent to which -

 the appraisal is perceived as fair
 has a good working (social?) relationship with the
appraiser
 impact of the assessment on their rewards and well-
being
 Perspectives on Appraisal :
The Appraiser (Immediate Superior)
Napier & Latham (1986)
 lack of agreement with target (appraisee)
 lack of confidence in own ability to appraise
 very high administrative workload
 office politics

all leads to...

bias in appraisal ratings
Relationship between job analysis and
performance appraisal:
Job analysis sets out requirements, which is translated into performance
standards, which in turn form the basis of performance appraisal

Job analysis performance performance

standards appraisal

Translate job
Describes work Into levels of Describes the
& Personnel acceptable Job relevant
Requirement Or unacceptable strengths and
performance weakness of
Of a particular
Each individual
job
 Objectives of Performance Appraisal
Enhance employees’ effectiveness by helping to identify
their strengths and weaknesses
Inform them about expected levels of performance and If
employees understand their roles well, they are likely to be
more effective on the job
Identifying training and development needs of employees
is necessary to prepare them for meeting challenges in
their current and future employment
Remove work alienation: Counseling Employees corrects
misconceptions which might result in work alienation
Determine the Salary & Wages of individuals and decide
pay about rise
 Objectives cont….:
 Provide feedback about employees
 PA can be used to determine whether HR
programmes such as selection, training and transfer
have been effective or not
 Provide coaching, counseling, career planning to
subordinates
 Develop positive relation and reduce grievance
 Facilitates research in personnel management
The different sources of appraisal
 Sources of Information
 1)Supervisors(most common)
 •Role Conflict (e.g., judge and trainer/teacher)
 •Motivation
 •Time availability
 •Friendship
 2)Co-Workers(Peers)
 •Friendship bias
 •Leniency
 • level of accuracy
 •Best used as a source of feedback
 3)Self
 •Lots of knowledge
 •Leniency effect
 •Good preparation for performance appraisal meeting (conducive for dialog)
 4)Subordinates
 •Biases (e.g., view of subordinates, type of job, expected evaluation from supervisor)
 5)Client
 •Good source of feedback
 •Negativity bias
Appraisal Benefits (cont.)
 Appraisals offer
employees:
 Direction
 Feedback
 Input
 Motivation
Appraisal Benefits
 Appraisals offer the company:
 Documentation
 Employee Development
 Feedback
 Motivation system
Characteristics
 It is a step by step process
 It examine the employee strengths and
weaknesses
 Scientific and objective study
 Ongoing and continuous process
 Secure information for making correct
decisions on employees
 PROCESS OF PERFORMANCE APPRAISAL

Establish Performance
Standards (benchmark)

Initiate
Corrective Communicate
Actions-if any Performance
Expectations

Compare Measurement
Actual Prf With Of Actual
Prf Stds Performance
Steps in performance appraisal
Objectives of P.A

Establishing job standards/expectations

Designing an appraisal programme

Appraise performance

Performance interview

Archive Performance Data

Use appraisal data

For appropriate purpose
 1. Objectives of Appraisal:
Already stated

2. Establish Job Expectations:

It includes informing the employee what is
expected of him or her on the job. Mostly done
with the help of supervisors
 3. Design Appraisal Programme:
It poses several questions which need answer.
Formal and informal appraisal

What methods? Whose performance?

Should be rated

When to evaluate? Appraisal Design? Who are the raters?

What problems
What to evaluate? are encountered?

How to solve problems?

Formal and Informal Appraisal
 Formal appraisal usually occur at specified time
periods. Used for employee evaluation.
 Informal appraisal occurs whenever the
supervisor feels the need for communication.
Discussion must be held in private
Whose Performance should be rated
 Ratee May be individual, work group, division
or organization
 If we rate performance in group, it becomes
difficult to analyze individual efforts.
 Can not analyze group cohesiveness by
evaluating individual efforts
Who are Raters?
 Immediate Supervisor
 Subordinates
 Clients
 Rating Committees
 Self Appraisal
 Peers
Methods Of Performance Appraisal
 .
Traditional Methods
Modern Methods
1.Rating Scale
1.Written essay
2.Checklist
2.Cost accounting Method
3.ForcedChoice
3.Graphic rating scales
4.ForcedDistribution
4.Behaviourally Anchored Rating
5.ConfidentialReports
Scale
(ACRs)
5.Multi-person
6.CriticalIncident Method
6.360 Degree Application system
7.EssayMethod
7.Mgmt By Objectives
Individual vs. Team Appraisal
 Most of the performance appraisals are done on an
individual basis. However, modern day organizations
have brought the idea of team appraisals to evaluate the
performance of a team as a whole instead of appraising
performance of individual employees.
 •This development is due to the fact that organizations are
assigning work to teams rather than individuals.
 •Companies following TQM principles follow team
appraisals as TQM sets for the team assignment of the
work rather than individual assignments.
Performance Appraisal Methods
 Individual Evaluation Methods
 –Confidential report
 –Essay evaluation
 –Critical incidents
 –Checklists
 –Graphic rating scale
 –Behaviorally anchored rating scale
 –MBO
 Group Evaluation
 confidential report(ACR)
 •Evaluation of Characteristics e.g. loyalty, potential,
attendance
 •Traditional Method
 •Prepared without employee’s notice
 •Performance briefing in different criteria on a regular
basis
 •Characteristics should be easily understandable
 •Rating scale of report should be maintained as a
qualitative reporting

Individual
 Essay Method
 Employee is described in a number of broad
categories like:
 •Overall impression
 •Strengths and weakness

 The strength of this method lies in the writing

skills and analytical skills of the rater.

Ind
Graphic Rating Scale

Employee name_________ Deptt_______

Rater’s name ___________ Date________
------------------------------------------------------------------------
Exc. Good Acceptable Fair Poor
5 4 3 2 1 _
Dependability
Initiative
Overall output
Attendance
Attitude
Cooperation
Total score IND
Checklist method
•Simple checklist method
•Weighted checklist method
•Forced choice method

Simple checklist method:

Is employee regular Y/N
Is employee respected by subordinate Y/N
Is employee helpful Y/N
Does he follow instruction Y/N
Does he keep the equipment in order Y/N
Weighted checklist method

weights performance rating

Regularity 0.5
Loyalty 1.5
Willing to help 1.5
Quality of work 1.5
Relationship 2.0
 Forced choice method IND

Rater is given a series of statements about an employee

As 1. work is reliable
2. Learns fast
3. Absents often
Regularity on the job SCALE: Most to Least
•Always regular
•Inform in advance for delay
•Never regular
•Remain absent
•Neither regular nor irregular

In a checklist manner rater is simply expected to select statements and rate

the ratee.
It is called Forced Choice method as the rater is forced to select the
statements that are readymade.
Critical Incident method-
it focuses on certain critical behaviors of employee assessment that makes a
difference between effective and non effective performance

Ex: A fire, sudden breakdown, accident

Workers reaction scale

A informed the supervisor immediately 5

B Become anxious on loss of output 4
C tried to repair the machine 3
D Complained for poor maintenance 2
E was not affected much 1

One advantage of CIM is that it is based on actual job behavior but has
limitations as negative incidents are noticed more than positives etc
Another example of CIM: IND

Continuing Critical
Targets
duties incidents
Instituted new
Full utilization Production
Schedule
of personnel Scheduling system
Production
And e.g. increased
In plant
machinery Machine utilization
by 20%
BARS( Behaviorally Anchored Rating scale)
Called BEHAVIOURAL EXPECTATION SCALE
Is the scale that represents a range of descriptive statements of behavior
varying from the least to the most effective. A rater is expected to indicate
which behavior on each scale best describes an employees performance

6.5 7 Extremely good performance

6
5
4 Neither poor nor good

3
2
1 Extremely poor performance
 BARS( Behaviorally Anchored
rating scale)
 Step 1. Identify critical incidents
 Step 2. Select performance dimension
 Step 3. Retranslate the incidents
 Step 4. Assign scales to incidents
 Step 5. Develop final instrument

ind
 MBO- peter drucker, 1954, book: practice of mgt
 •“Management by Objectives (MBO) is a process of agreeing
upon objectives within an organization so that management and
employees agree to the objectives, understand what they are, and
work hand-to-hand towards the achievement of the set
objectives.”
 •Setting goal is difficult in MBO.
 Set organizational goals- goals and targets of every individual
should be properly decided
 Defining performance target- setting targets for the
performance and goals set
 Performance review- actual goal attained is compared to the
goals agreed on. This also establishes training needs
 Establishing new goals and new strategies for goals not
previously attained
 individual
Group Appraisal
 Ranking
 –Paired comparison
 –Forced distribution
 –Performance tests field review technique
 –360º performance appraisal
Ranking method
 Employee Rank
 A 2
 B 1
 C 3
 D 5
 E 4
Forced Distribution method- it is to overcome the
issues of leniency and severity. It compels the rater to distribute the ratee on all
points on the rating scale. It confirms to a bell shaped curve.
It operates under the assumption that employee performance level confirms to the
normal statistical distribution

No.
of
employees
10% 20% 40% 20% 10%
poor Below average good Excellent
average

Force distribution curve

Field review method- appraisal by someone outside one’s own
department. The outsider reviews the employees record and holds interview with
the ratee and his supervisor-Generally used for promotional decisions in the
organization.

Performance subordinate peers superior customer

Dimension

Leadership ^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^
Paired comparison method- each employee is
compared with other employee, one at a time

A B C D E Final Rank
A - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - + 4

E - - - - - 5
360º PERFORMANCE
APPRAISAL
 A developmental and/or performance appraisal
tool which utilizes multiple-source feedback from
people who work most closely with the
employee.
 It is also known as multi-rate feedback, multi-
source feedback & multi-source assessment.
 It is done either by interview method or
questionnaire.
Who Does360º PA?
Why to use 360º PA?
 It provides the individual with an opportunity to learn
how different colleagues perceive them, leading to
increase self-awareness.
 It encourages self-development.
 It increases understanding of the behaviours required to
improve personal and organisational effectiveness.
 It promotes a more open culture where giving and
receiving feedback is an accepted norm.
 It increases communication within the organisation.
 It can be a powerful trigger for change.
 Performance Appraisal Methods
S.N Method Advantage Disadvantage
o
1 Written essay Simple to use More a measure of evaluator’s
writing ability than of
employee’s actual performance
2 Critical incidents behaviorally based Time consuming; lack
quantification
3 Graphic rating Provide quantitative data; less Do not provide depth of job
scales time-consuming than others behavior assessed

4 BARS Focus on specific n Time consuming; diff to dev

measurable job behaviors measures
5 Multi-person compares employees with one Unwieldy with large no. of
another employees
6 MBO Focuses on end goals; results Time consuming
oriented
7 360°appraisal More thorough Time consuming
What to evaluate?
 Quality- Perfection in performing the activity
 Quantity- Total amount in monetary terms, no.
of units, activity cycles
 Timeliness- earliest time in which an activity
can be completed
 Cost effectiveness- How to use resources in
order to maximize gain or minimize loss
 Need of Supervision- how well job can be
performed without supervisory assistance and
intervention
What to evaluate?
 Interpersonal Impact- self esteem, goodwill
and cooperation are promote by employees to
what level
 Community service- employees involvement in
social activities
 What to evaluate? (Philip Model)

H Problem stars
children
Potential ? Planned Solid
separation citizen
L

L Actual H
Performance
What to evaluate? (Philip Model)
 Low Potential, Low Performance- Question Mark.
Such employees must improve performance, failing
which organization go for planned separation
 High Potential, Low Performance- Problem children.
Employees are shifted to new location and monitored to
improve performance. If performance does not improve
they are reclassified as question mark
 High Potential, high Performance- Star Performers.
Must be groomed to take top positions, complex
assignments must be given or they leave organization
 Low Potential, High Performance- Solid citizen. (70-
75% of employees) they have skill but don’t have
potential to grow beyond current job profile.
Organization must take care of their needs
Problems in performance appraisal
1. Errors In rating
 Halo effects
 Horn Effect
 Stereotyping/ Personal bias
 Central tendency
 Spill over effect
 Leniency or strictness
 Rater effect
 Primacy and Recency Effect
 Perceptual set
 Performance Dimension Order
 Status Effect
2. Incompetence
3. Multiple objectives
4. Resistance
5. Lack of knowledge
6. Appraiser Discomfort
7. Lack of objectivity
 Halo / Horn Error
 Halo error- Occurs when manager generalizes one
positive performance feature or incident to all aspects of
employee performance resulting in higher rating
( eg- employee stay late we assume him/her to be hard
worker)

 •Horn error- Evaluation error occurs when manager

generalizes one negative performance feature or incident
to all aspects of employee performance resulting in lower
rating (eg – exam)
Personal Bias (Stereotyping):
 A conventional, and oversimplified conception,
opinion, or image.
 •Managers allow individual differences such as
gender, race or age to affect ratings they give
 •Effects of cultural bias, or stereotyping, can
influence appraisals
 •Other factors –Example: mild-mannered employees
may be appraised more harshly simply because they
do not seriously object to results
Central Tendency
 •Error occurs when employees are incorrectly
rated near average or middle of scale.
 •May be encouraged by some rating scale
systems requiring evaluator to justify in writing
extremely high or extremely low ratings
 Sometimes rating is influenced by relation
between rater and ratee, pressure from peer group
and supervisors,
SPILLOVER EFFECT
 Allowing past performance appraisal ratings to
unjustifiably influence current ratings.
 Past ratings, good or bad, result in similar rating
for the current period although the behaviour and
performance may have changed over the past
period
 Leniency or Severity
 Value system for evaluators acts as the standard
for evaluation. Some evaluator may be lenient and
give high rating to everyone (positive leniency
error), some may be strict and give low rating to
everyone (negative leniency error).
 •Worst situation is when firm has both lenient and
strict managers and does nothing to level
inequities
 To avoid this raters should be trained for
evaluation purpose
Rater Effect
 This includes favouritism, stereotyping, and
hostility.
 Excessive high or low scores are given only to
certain individuals or groups based on raters
attitude towards ratee, not on performance.
 (age, gender, race, friendship biases)
Primacy and Recency Effect
 Primacy- rater’s rating are influenced by
behaviour exhibited by ratee, during early phases
of review period
 Recency- rater’s rating are influenced by
behaviour exhibited by ratee, during end of
review period
Perceptual set
 Assessment is influenced by previously
held beliefs.
 Eg- employee from a particular region are
intelligent / hard working
Performance Dimension Order
 Two or more dimensions of performance follow
each other and both describe a similar quality
 Rater rates first dimension accurately and then
second one similar to the first because of
proximity
Status Effect
 Overrating of employees in higher level job
or jobs held in high esteem
 Underrating of employees in lower level
job or jobs held in low esteem
2. Incompetence
 Incompetence on part of rater can be
biggest flaw

3. Multiple Objectives-
Rater and ratee have multiple objectives for
carrying out appraisal
4. Resistance
 Employee resist appraisals because they feel its
results may be harmful for future.

5. Lack of knowledge
Lack of proper knowledge about what methods
are to be used, what techniques, who would be
rater etc. leads to wrong type of appraisal
program
6 Appraiser Discomfort
 Performance appraisal process cuts into manager’s
time
 •Experience can be unpleasant when employee has
not performed well
7 Lack of Objectivity
 •In rating scales method, commonly used factors such
as attitude, appearance, and personality are difficult
to measure
 •Factors may have little to do with employee’s job
performance
 •Employee appraisal based primarily on personal
characteristics may place evaluator and company in
untenable positions
 Process cont…
4. Appraise the performance
 To measure the performance on the basis of decided
criterion- to be based on certain benchmarks varying from
job to job. Following elements of performance are
monitored  quantity, Quality, timeliness of output,
Presence at work, Cooperativeness etc.
5. Performance Management-
Only feedback is not sufficient- Performance Interview,
archiving/store/recording performance data and using
appraisal data is important and it forms the core of
performance management
 5a) Performance Interview
 Feedback is required for improvement in
performance. Should discuss the review of
performance with ratee.
 Performance interview has three goals:
-to change behavior of employees whose performance does
not meet organizational requirements
- to maintain behavior of employees who perform in an
acceptable manner
- to recognize superior performance behaviors so that they
can be continued
Feedback is given through these Methods
 Raters Tell and Sell by Directive
interviews (tells the performance and sells
merits of improvement), Tell and Listen
(tell raters perception & let them respond,
Problem Solving (open dialogue &
perceptions are Shared to get solutions),
Mixed Interview(tell and Sell + Problem
Solving)
5 b. Archive Performance data
 Organizations store Appraisal data so that
information can be retrieved or used in future.
 5c. Use of Appraisal Data
 Data can be used by HR Department.
 It can be used for offering rewards, remuneration
administration, validation of selection
programmes, training and development
programmes, promotion transfer and layoff
decisions, Hr Planning, grievance and discipline
programmes

Current Global Trends in
•Trend towards a 360-Degree feedback system
PA
 •Problems in implementation are anticipated and efforts are being
made to overcome them
 •Team Performance Appraisal
 •Rank and Yank (to remove abruptly) Strategy: A growing number
of organizations, including the likes of Ford, Microsoft and Conoco,
have adopted performance appraisal models in which best-to-worst
ranking methods are used to identify poor performers, who are then
given a period of time to improve. If they fail, they must leave. The
departure is often sweetened with a severance package, but if the poor
performer refuses to exit gracefully, they face the possibility of
termination without compensation. The strategy is known as "rank and
yank".
 •TQM as a Performance Appraisal
Essentials of an effective appraisal system
 Mutual trust
 Clear objectives
 Standardizations
 Training
 Job relatedness
 Documentation
 Feedback and participation
 Individual differences
 Post appraisal review
 Review and appeal
Measure Performance
 Measurement systems need to be:
 Specific
 Fair
 Consistent
 Clear
 Useful
Measure Performance (cont.)
Systems can be:
 Numerical
 Textual
 Management by Objective (MBO)
 Behavior oriented
Set Goals….
 Based on job requirements
 Realistic
 Measurable
 Observable
 Challenging
 Prioritized
 Key Points to Remember
 You must conduct objective appraisals on a
scheduled basis.

 Appraisals tell employees how they’re doing and

how they can improve.

 Appraisals help create a system of motivation

and rewards based on performance.
Performance criteria for executives
 For top managers
 Return on capital employed
 Contribution to community development
 Degree of upward communication from
middle-level executives
 Degree of growth and expansion of
enterprise.
For middle level managers
 Departmental performance
 Coordination among employees
 Degree of upward communication from
supervisors
 Degree of clarity about corporate goals and
policies
For supervisors
 Quality and quantity of output in a given period
 Labor cost per unit of output in a given period
 Material cost per unit in a given period
 Rate of absenteeism and turnover of employees
 No of accidents in a given period
Implementing Meaningful
Performance Appraisals
 I.Gather documentation
 II.Develop the written appraisal
 III.Conduct the appraisal interview session
Implementing Meaningful Performance
Appraisals (cont’d)
 I.Gather Documentation
 a)Personal observation Observe actual performance and judge
results
 b)Feedback documentation Use performance notes made
throughout the year
 c)Personnel File Examine past performance reviews, discipline
records, and awards
 d)Measurement tools Check documents that support
performance rating. Examples: Time clock reports for attendance
and tardiness, etc.
 e)Others’ observations Review supervisor, manager, co-worker
comments
Implementing Meaningful
Performance Appraisals (cont’d)
 II.Develop Appraisal Guidelines for writing appraisals
 a)Set aside dedicated timeGather performance documentation and
eliminate interruptions
 b)Evaluate performance based on expectationsReview established
expectations, job description, performance goals
 c)Rate how well expectations were met
 d)Give honest ratingsAcknowledge strengths and address ongoing
problems
 e)Provide specific examplesAvoid generalities, note specific
contributions and accomplishments
 f)Avoid personal and subjective statementsNo exaggerations, no
character attacks
Implementing Meaningful
Performance Appraisals (cont’d)
 III.Conducting the Appraisal Interview session
–Common Mistakes
 a)Manager is ill-prepared
 b)Employee is not given adequate notice
 c)Discussion is rushed or interrupted
 d)Employee is not given the opportunity to
comment
 e)Manager’s tone is punitive or condescending
Implementing Meaningful
Performance Appraisals (cont’d)
 III.Conducting the Appraisal Interview session-Maximizing the review
 1)Be prepared
 Determine discussion direction
 Anticipate objectives
 Gather supportive documentation
 2)Set the right tone
 Establish a supportive environment
 Private location –Maintain confidentiality
 Quiet and undisturbed –eliminate distractions
 Level playing field –Avoid superiority
 Timing –choose a quiet time
 Demonstrate Respect
 Timeliness –Conduct reviews by due date
 Appointments –Don’t act like the employee’s time is less valuable
 Advance notice –Allow the employee to be prepared
 Icebreaker –Start on a friendly and relaxed note
Implementing Meaningful
Performance Appraisals (cont’d)
 III.Conducting the Appraisal Interview session-Maximizing the
review
 Have the best mindset
 Tone –Professional and supportive
 Focus –Future goals and objectives
 Open-mindedness –Seek explanations
 Emotions –Calm and centered
 3)Communicate Effectively
 –Avoid communication roadblocks –Vague, evasive, derisive or
derogatory language, poor listening skills, strong emotions, one-way
conversation
 –Improve communication skills –be clear and concise, be honest, not
brutal, be an active listener and natural
Appraisal Interviews
 Following points are to be noted while conducting
appraisal interviews:
 1.Place the employee at ease with small talk.
 2.Allow the employee to share his/ her perspectives
before you share yours.
 3.Be positive and use action oriented behavioral terms.
 4.Use specific and measurable expressions.
 5.Avoid comparing the employee to yourself or others.
 6.Balance negatives with positives; start with a
positive.
 7.Spend time planning for improvement.
Reasons Appraisal Programs
Sometimes Fail
 Lack of top-management information and support
 Unclear performance standards
 Rater bias
 Too many forms to complete
 Inadequate preparation on the part of the manager
 Employee is not given clear objectives at the beginning of
performance period
 Overemphasis on uncharacteristic performance
 Organizational politics or personal relationships judgments
 Manager may not be trained at evaluation or giving feedback
 No follow-up and coaching after the evaluation
Strategies to Better Understand and Measure
Job Performance

Improve Appraisal
Formats

Select the Right Raters

Understand Why Raters

Make Mistakes
 Training Raters to Rate More
Accurately
 Rater-error training to reduce psychometric
errors
 Performance dimension training
 Performance-standard training
 Prescriptions for Legally Defensible
Appraisal Systems
 1) Ensure that procedures for personnel decisions do not
differ as a function of the race, sex, national origin, religion,
or age of those affected by such decisions.
 2) Use objective and uncontaminated data whenever they are
available.
 3) Provide a formal system of review or appeal to resolve
disagreements regarding appraisals.
 4) Use more than one independent evaluator of performance.
 5) Use a formal, standardized system for personnel decisions.
 6) Ensure that evaluators have ample opportunity to observe
and rate performance if ratings must be made.
 7) Avoid ratings on traits such as dependability, drive,
aptitude, or attitude.
 8) Provide documented performance counseling prior to
performance,-based termination decisions.
 THANK YOU