CHAPTER 5

PERFROMANCE REVIEW AND

APPRAISAL

One of the most important activities of an HR manager is maintaining and enhancing the
workforce. After all the effort and costs involved in the recruiting and selection process, it is
important to develop employees so that they are using fullest capabilities, review is the ongoing
process of evaluating and improving employee’s performance.

It also entails determining and communicating to an employee how he is performing on the

ideally, establishing a plan of improvement. Performance is often confused with effort which
refers to energy expended. Performance management is an ongoing communication process,
undertaken in partnership, between an employee and his immediate supervisor that involves
establishing clear expectations and understanding about the following:
a. The essential job function the employee is expected to do
b. How the employee’s job contributes to the goals of the organization
c. What “doing the job well” means in concrete terms
d. How employee and supervisor will work together to sustain, improve or build on
existing employee performance
e. How job performance will be measured
f. Identifying the barriers to performance and removing them
g. Refer to the total system of gathering information, the review and feedback to the
individual and storing information to improve organization effectiveness

The primary goal of performance management is to improve organizational performance. But

one must take note that performance appraisal is not a performance management. Evaluating
performance is just one part of performance management system.

WHY MEASURE PERFORMANCE?

1. Managers cannot change and define what is expected, give feedback and recognition without
defining the basis or performance measures.
2. On the part of the employee, he cannot improve on what he is supposed to do without the
necessary data before and after to see if performance is actually improving.
3. Creating high performance requires a definition or clear goals so you will know it when you
see it. In addition, all high performers get there because they have a clear picture of where they
are going.
4. Pay for performance requires metrics. If the organization will be giving pay based on
performance, there is need to have some way of knowing when the pay-out has been earned.

OBJECTIVES OF PERFORMANCE APPRAISAL

1. Provides information upon which promotion, transfer, demotion, lay off, discharge and salary
decisions can be made. It could justify reward decisions including merit increases, promotions
and other forms of rewards.
2. Provides an opportunity for the supervisor and his subordinates to review and identify the
subordinates’ strengths and weaknesses or work-related behaviour.
3. Basis in identifying the training need of employees as well as evaluating the success of
training and development initiatives are not based on opinions but rather on results.
4. Helps in the firms’ career planning process because it provides a good opportunity to review
the person’s career plans in light of his exhibited strengths and weaknesses.
5. For easy monitoring and supervision.
6. Helps to evaluate the relative individual or team contributions in achieving the organization’s
goals.
7. Provide information to evaluate effectiveness of selection and placement decisions.

PERFORMANCE CRITERIA
 Deciding what to evaluate reflects the personal values of the individuals who design the
evaluation system.
1. Relevance- relevant performance dimensions are determined by the duties and
responsibilities contained in the job description.
2. Reliability – should produce consistent and repeatable evaluation.
3. Freedom from contamination – should measure each employee’s performance
without being contaminated by factors that an employee cannot control such as
economic conditions, material shortages or poor equipment.

SOURCES OF DATA IN APPRAISAL

1. Production Data - evaluate the degree of dependable task accomplishment by
measuring quantity and quality of performance.
2. Personnel Data – type of information found in an individual’s personnel files.
3. Judgement – Many of the spontaneous and innovative behaviours so important to
organizational effectiveness.

PERFORMANCE APPRAISAL METHODS

A. Multiple Person Evaluation Methods

1. Ranking Method – ranking employee from the most efficient to the least capable on each
traitor quality to be used in judging the employee’s performance.
2. Paired Comparison – consists of asking an evaluator to consider only two individuals to one
time and to decide which of the two is better.
3. Forced Distribution – this is similar to grading on a curve. The rater is asked to rate
employees in some fixed distribution of categories such as the supervisor, above average,
average, below average and poor.

B. 10 Individual Evaluation Methods

1. Graphic Rating Scale – Using this technique, the rater is presented with a set of traits. The
rater is asked to rate employees on each of the characteristic listed.
2. Critical Incident Method – This technique requires raters to maintain a log of behavioural
incidents that represent either effective or ineffective performance for each employee being
rated.
3. Checklists and Weighted Checklists – Checklists is a set of objectives or descriptive
statements. If the rater believes that the employee possesses a trait listed, the rater checks the
item, if not, the rater leaves it blank.
4. Behaviorally Anchored Rating Scales (BARS) – This approach relies on the use of critical
incidents to serve as an anchor statement on a scale BARS usually contain the ff. features:
a. 6-10 performance dimensions are identified and defined by raters and
rates.
b. Dimensions are anchored with + and – critical incidents.
c. Each rate is then rated on the dimensions.
5. Management by Objectives (MBO) – is a method by which managers and subordinates plan,
organize, control, communicate, and debate to jointly establish specific measurable goals and
periodically provide feedback.
6. Narrative Essay – This appraisal method permits commenting on the employee’s unique
characteristics. It is more effective when specific examples of employee behaviour are cited,
along with objective facts supported by any quantitative information.
7. Multi-rater assessment or 360 Degree Feedback –this is currently popular method of
performance appraisal where managers, peers, customers or suppliers are asked to complete
questioner on the employee being evaluated.
8. Visual 360 – A computer software program that automates multi-rater assessment from the
360 degree feedback process.

9. Interactix 360 performance appraisal computer system – This is an advanced performance

appraisal assessment computer system for members.
10. Work Standards Approach – Usually used for production employees. It involves setting a
standard or an expected level of output and comparing each employee’s performance to the
standard.

WHO SHOULD EVALUATE PERFORMANCE?

1. Supervisor – Hierarchical arrangement of formal authority in most organizations
gives the supervisor legitimate authority to evaluate subordinates.
2. Subordinates – Upward or subordinates appraisals provide unique information
because they know better than anyone else whether leadership is good or bad.
3. Peers – Research on peer evaluations has found them to be predictive of success.
4. Self-assessment – Very valuable for personal development and the identification of
training needs, but not for evaluative purposes.
5. The customer/vendor – Whether internal or external, can be potential evaluators.
This kind of appraisal would be more relevant for service organization.

SEVEN TIPS FOR CREATING AN APPRAISAL SYSTEM THAT IS WORLD CLASS

(www.zigonperf.com)

1. Design the form first: The appraisal form is a lightning rod that will attract everyone’s
attention. Design the form early and get a lot of feedback on it.
2. Build your company’s values into your form: Performance appraisal is a means not an end.
Values become real only when people are held accountable for living up to them.
3. Assure ongoing communications during development: Circulate drafts and invite users to
make recommendations. Keep the development process visible through announcements and
house-organ bulletins.

4. Train all appraisers: Performance appraisal requires a multitude of a skills-behavioral

observation and discrimination, goal setting, developing people, confronting unacceptable
performance.
5. Orient all appraisers: The program’s purposes and procedures must be explained in advance
to all who will be affected by it.
6. Use the results: If the results of the performance appraisal are not visibly used in making
promotion, salary, development, transfer training and termination decisions.
7. Monitor and revise the program: Audit the quality of appraisals, the extent to which the
system is being used, and the extent to which the original objectives have been met.

PERFORMANCE APPRAISAL PROBLEMS AND SOLUTIONS

1. Unclear Standards – Happens when the traits and degrees of merit are open to
interpretation.
2. Halo affect – means rating of a subordinate on one trait biases the way supervisor
rate that person on other traits.
3. Central Tendency – occurs when a rater avoids using high or low ratings and assigns
average ratings, thus, failing to discriminate between employees.
4. Leniency/Harshness/Strictness – Some meters tend to give mostly favourable
ratings to each employee while others tend to evaluate the same performance levels
more unfavourably.
5. Bias – Individual differences among ratees in terms of characteristics like age, race,
sex, religious and political affiliations can affect their ratings.
6. Recency effect – Recent events tend to have an unusually strong influence on
performance evaluation.

Factors for Evaluation

1 .Accountability: Accepts responsibility for actions and/or accomplishments during the
performance of job/duties.
 2. Decision-Making: Demonstrates effective decision-making skills. Review all facts
objectively before decisions are made, Proposes creative solutions when needed.
3. Time Management: Manages time and efforts effectively , meet commitments and
completes assignments within established deadlines. Organizes work and works area to uses time
effectively and efficiently.
4. Dependability: The employee is consistently available for work, arrives on time is
fully prepared for customers without delay and works his assigned hours. Also, displays
flexibility in work schedules.
5. Administrative Requirements: Accurately and promptly completes administrative
requirements (order forms, activity reports, expense reports and the like) and other documents as
necessary.
6. Dealing with Stress: Demonstrates ability to take control of work situation is a tactful
manner. Exercises good judgement, neutralizes potentially hazardous conditions, and functions
effectively in emergency situations.
7. Productivity: Produces a volume of work consistent with job’s responsibility and
requirements.
8. Completion and quality of work: Completes work assignments within established
deadlines.
9. Relationship with other team members: Works cooperatively with team members in
order to accomplish work effectively and efficiently, helps create and maintain good working
relationships, provides assistance and back-up.
10. Customer Relations: Demonstrates knowledge of customer needs and effectively
deals with customer’s problems and complaints.
11. Communication: Write concise, organized and easy-to-read reports, letters, and/or
memos.
12. Knowledge of software programs: Demonstrates knowledge or required software
programs used in the performance of job/duties. Accurately inputs and retrieves data.
13. Planning: Demonstrates ability to effectively use methods and arrange priorities as
necessary to complete assigned tasks. Request or obtains information needed to complete
assigned tasks.
 14. In-service training: Participates in in-service training programs and takes advantages
of other continuing education opportunities.
15. Communication (Oral): Maintains discretion and confidentiality in communicating
with employees and management.
16. Communication and Management Feedback: Informs management of relevant
problems, issues or changes in a timely and consistent manner.
17. Coordination: Orchestrates several functions and/or resources to accomplish an
objective. Also, Identifies resources which can contribute to solving a problem.
18. Problem Resolution: Analyzes problems and needs, takes action as appropriate in
timely manner based on objective data and keeps appropriate personnel informed of actions.
19. Crisis Action: Recognizes when a problem is critical enough to require immediate
attention and provides effective solutions.