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Performance Appraisal

“A Performance Appraisal is a process of evaluating an employee’s performance of
a job in terms of its requirements.”
- Walter Dill Scot

“It is the process of evaluating the performance and qualifications of the employees
in terms of the requirements of the job for which he is employed, for purposes of
administration, including placement,… selection for promotions, providing
financial rewards and other actions which require differential treatment among the
members of a group as distinguished from actions affecting all members equally.”
- C.Heyel

“Performance appraisal may be defined as any procedure that involves
(1) setting work standards;
(2) assessing the employee’s actual performance relative to these standards; and
(3) providing feedback to the employee with the aim to motivating that person to
eliminate performance deficiencies or to continue to perform above par.”
– Gary Dessler

Important terms:
 Systematic
 Periodic
 Evaluation/ Assessment
 Performance
 Job requirements
 Distinguishing
 Motivating/ eliminating performance deficiencies
 Administrative functions

Performance Appraisal Inputs-Based on Tavistock School

Activity 1
Activity 2
Activity 3 Task I
Activity 4
Job
Task
JOB Analysis Performance

Activity 5
Activity 6 Yard
Activity 7 Task II Stick
Activity 8

Performance Appraisal Output • Remedial • Developmental • Innovative PA Process Stage I :Set up standards based on job description and job specification Stage II :Inform standards to all Stage III :Follow instructions for measurement Stage IV :Assess influences of internal and external factors on job and adjust measurements Stage V :Measurement of performance Stage VI :Comparison with standards/ others Stage VII :Communicating/ counseling Stage VIII :Suggestions Stage IX :Follow-up PA Steps Step I Establish performance standards Step II Communicate performance expectations to the employees Step III Measure actual performance Step IV Compare actual performance with standards Step V Discuss the appraisal with the employee Step VI Initiate corrective measures/ Recommend for rewards PA Components  Identification of key performance areas (KPA) and target setting through periodic discussions  Identification of qualities required for the present and future jobs  Self-appraisal by the appraisee  Performance analysis to identify the facilitating and hindering factors of the jobs  Performance counseling and discussion  Identification of training needs  Action-planning and goal setting for future  Final assessment PA Procedure  Performance Standards  Key areas of responsibility  Expressing standards  Performance Measurements  Performance Appraisal  The Final Appraisal Document .

Categories of PA According to Rock and Lewis. It advocates methods like . • Broad interpretation: This takes a holistic view of the individual performance.reduction (weightage 2) Activities: a> Working on company cost-reduction manual. preparing assessment parameters and tests etc…  Accounts Officer: Budget preparation. attending to customer complaints etc…  HR Executive: Finding out HR requirements. payment of bills. Some of the methods used for assessing the job performance and the characteristics of the individuals include traits rating scale.  Clarity about activities  Acknowledging importance of the activities  Commitment to solving problems related to activities  Understanding of expected performance level vis a vis the KPA ratings Examples:  Sales Officer: Contacting potential customers. · >Collect ten suggested cost-reduction ideas per month from each of six operating managers. • Narrow interpretation: This is the performance assessment of an individual after a specified period. employee comparison method. This is done with the help of certain predetermined measurement criteria. b> Working with operating managers for cost reduction Objective: Optimum utilization of the company operations Performance Targets: · >Complete write-up and acceptance of company cost-reduction manual and distribute to all managers by the year-end. market survey. Therefore it aims at the complete job management process. maintaining daily account records etc… Performance Targets  Qualitative  Quantitative  Time bound  Acceptable standards  Measurement of efforts Example: Role: Manager (Finance) KPA: Cost. the following are the categories of PA. scrutinizing purchase orders. ranking method. and performance standard method.KPAs The categories and functions need to be well defined so that assessment of the performance of any employee can be conducted meaningfully. Rating of the individual through various methods is a common phenomenon here. recommending recruitment inputs.

the numerical and graphic rating scale etc… For instance. 10 x = 7 DISCIPLINE AND WORK HABITS ( w = 5 ) Is regular and punctual at work and can meet deadlines. Some of the common methods are checklist method. 5 x = • Single-trait. 15 x = 3 COMMITMENT TO WORK & INITIATIVE ( w = 15 ) Level of sincerity. accountability management. multiple-subject: The subjects or the employees are compared to each other for a single trait/ quality. and there is no comparison as such with anybody else on the appraisal format. The method used for rating is forced choice rating scale. the categorizations are: • Single-trait. management by end-results etc… This helps improving the entire managing process and the individual managers throughout the year. 15 x = 4 INNOVATION AT WORK ( w = 10 ) Ability to bring in new ideas/new dimensions on a continuing basis. 15 x = 2 QUANTITY OF WORK ( w = 15 ) Ability to meet targets and complete all assigned work. individual ranking. and paired comparison method. Here members of a group/ department are rated through methods like group order ranking. single-subject: The subject is evaluated on the basis of the best-suited trait against multiple traits present in the format. . Weighted Score w x S2 = t Remarks} PART A. motivation and initiative. 10 x = 5 TEAMWORK ( w = 10 ) Has the ability to work in a team. management by objectives. and each trait is measured alone. Here the evaluator has to tick the option that suits the subject best. According to Robbins. 10 x = 6 POTENTIAL ( w = 10 ) Demonstrates potential for future growth in the organisation. • Multiple-trait. in the following appraisal of a Journalist. the individual is to be assessed against the set parameters.GENERAL PARAMETERS 1 QUALITY OF WORK ( w = 15 ) Ability to deliver high quality work. Example: Company: The Times of India Performance Appraisal of Name:_____________ Designation:____________________ Payroll id:____________________ Scores to be used for appraising performance based on the parameters listed below *HIGH FLIER/ OUTSTANDING (5) *REGULARLY EXCEEDS (4) *MEETS REQUIREMENTS OCCASIONALLY (3) *MEETS (2) *FAILS TO MEET (1) {Appraiser’s Scores (S2). single-subject: Here the individual is not compared to anyone.

The whole person is compared to the whole person. For example a trait like Job Knowledge may be judged on the range of average. The results derived out of the comparison of all the possible pairs in a group are then tabulated.Poor -. enthusiasm to begin and complete new tasks. and ranks assigned. employee effort.Satisfactory -. Attributes are not fractionalized. Topics may be related to targets achieved. outstanding or unsatisfactory. • Man-to-Man Comparison: a yardstick is created using the best of qualities of a performer and the performances of individuals are compared to the yardstick. the position provided to each individual is relative. It is basically a method of comparing people in a group and judging them. • Grading: In this a list of categories are to be assessed.Very Good -. an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait.Methods Traditional Methods • Straight Ranking: Individuals are ranked in order of merit and are placed in a simple grouping. This system may ask for a simple form of grading such as: -. Ranking 1st _____ 2nd_____ 3rd _____ • Paired comparison method: Individuals are compared to each other in pairs against certain predetermined traits. This is done by selecting a grade which matches the employee's performance.Excellent -. the ability to work with others and qualities of leadership. 1----------2---------3----------4----------5----------6----------7 Poor Exceptional Needs Outstanding Improvement 1--------------2--------------3--------------4--------------5 Inadequate Below Average Above Superior Average Average . Thus. above average.Very poor • Graphic Rating Scale: In this method. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees.

• Free form essay: Statements are given about the performer based on the facts of the performance. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees. . • Critical Incident: In this method of Performance appraisal. This compels the rater to distinguish between the excellent. It is a process where the superior and subordinate managers of an organisation jointly identify its common goals.Set organizational goals: The objectives of the organization. It is result oriented and targets only the performance.Joint goal setting: The superior and the subordinate should sit together to decide upon the performance targets. the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. and its strategies should be clearly mentioned. . This description should best suit the performer. • Forced distribution: The ratings are distributed along the normal distribution curve. • Check lists: The rater is given a checklist of the descriptions of the behaviour of the employees on job. • Field Review Method: The performance is reviewed by getting information about the performer who is posted in the field. define each individual’s major areas of responsibility in terms of results expected of the subordinate. • Group Appraisal: Appraisal is done by a group. The advantage of this appraisal method is that the targets for achievement are set by mutual agreement of the superior and the subordinate. It includes both negative and positive points. One out of the pair is to be selected. good and the poor. • Forced choice description: Attributes related to the performance are given in the form of statements or description. This done by collecting information from the supervisor or the clients. Following is the procedure involved in the MBO process: . Mixed and Computerized PA  Software Packages  On-line  EMP (Electronically Monitored Performance) Other Modern Methods • MBO: Management by objectives or appraisal by results was initiated by Peter Drucker. Sometimes teams are also appraised using this method. and use these measures as standards to perform. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur.

Mastery Much More Surpassed expectations. scrutinize the incidents. Meets all major / essential / core criteria or acceptable equivalents and met three or more additional criteria. . Fully meets competency requirement. They are the subset of incidents on a point rating scale. These dimensions are then defined. Develop Final Instruments: Finally the “behaviour anchors” are determined. It involves the following steps: 1. Significant evidence that skill is present. Outstanding. relevant and timely feedback so that the subordinate can perform as per expectation. Reallocate Incidents: Another group of experts who know the job well. numerical rating and critical incident method. Feedback: The superior should give the subordinate specific. • BARS: Behaviourally Anchored rating Scale is a combination of the narrative form. (Pass) Exceptional Significantly above criteria for successful job performance. than Reserved for the exemplary set of skills that yield a Acceptable particularly sophisticated approach to handling the situation. . Performance reviews: There should be frequent review of the performance jointly by the superior and the subordinate. Truly excellent. This is done by a group of experts who know the job well. Scale the Incidents: The group rates the characteristics defined on a scale (7 to 9 point or sometimes 5 to 10 point scale) to suit the predetermine dimensions. Generate Critical Incidents: The important or critical tasks in a job are listed. or have done the job (or are doing it). (Sometimes this done by another group of experts. Set checkposts: To measure the performance and to keep a track of the performance. . Sample 3 Point Rating Scale Scale Rating Sample Definitions (Choose and/or Modify as Appropriate) 3 Points Excellent Should ensure extremely effective performance. Develop Performance Dimensions: They develop performance dimensions (or category) by clustering the incidents. used for defining performance dimensions. Proactive 2 Points Good Should be adequate for effective performance. checkposts should be established. 5. They describe outstanding performances and extremely poor performances. the definitions and redesign them (wherever required). . the dimensions. 2. 4.) 3.

acceptable Describes / demonstrates insufficient range of skills appropriate for handling of situation. Describes / demonstrates plausible but inappropriate behaviours for handling the situation and/or the outcome if not obtained. in- basket. using specifically developed simulations. Much less A major problem exists. Competent – solid and steady in essential aspects but could be improved. . planning. while those candidates are performing a variety of situational exercises. Average Meets several of the major / essential / core criteria and one or two of the minor / additional criteria or acceptable equivalents. sensitivity. Trained assessors observe and evaluate candidates on their relevant managerial qualities. Poor Many deficiencies. Assessment centre exercises (e. Some of the major and minor criteria were met. Meets enough of the competency requirement to adequately perform the task. some deficiencies exist in the areas assessed but none of major concern. intend to measure dimensions such as leadership. role-play. Describes / demonstrates a sufficient range of skills for handling the situation and/or the desired outcome is obtained.g. problem solving. Compared to normal interviews. Data is pooled by the assessors or by a statistical integration process. Not Active • Assessment centre: An assessment centre has a standardised process for evaluation of behaviour using multiple inputs.(Pass) Acceptable Meets criteria relative to quality and quantity of behaviour Satisfactory required for successful job performance.. Reactive 0-1 Points Unacceptable Insufficient or significantly below criteria required for (Fail) Weak successful job performance. and many others. than No answer or inappropriate answer. Describes / demonstrates counter-productive behaviours that have negative outcomes or consequences (make the situation worse) No evidence that skills is present OR evidence that the skill is not present Not competent. at assessment centres. judgements about behaviours are made by not one but many. fact-finding and group discussions). These centres use well-trained process observers and robust techniques. Satisfactory evidence that skill is present.

g. behaviour.. It involves accounting for investment in people and their replacement costs. as well as accounting for economic value of people to an organization.Assessment centres serve three main human resources functions: • Selection and promotion • Diagnosis (e. Assessment Centre Procedure Step I • Establish goals • Obtain Top management commitment • Do detailed Job Analysis • Define dimensions to be assessed Step II • Develop policies for feedback data • Design physical facilities • Select exercises and participants • Design assessor training programme Step III • Train assessors Step IV • Conduct programme Step V • Provide feedback Step VI • Evaluate participants and centre against job success criteria Human asset accounting: Human assets accounting or human resource accounting may be defined as the measurement and reporting of the cost and value of people as organizational resources. skill enhancement through simulations). identification of training and development needs) • Development (i.structure.e. Variables used to assess the value of human organisation in a company • Key Causal.. management policies and decisions. strategies and skills etc… . leadership. The following dimensions are normally assessed in assessment centres: • Planning and organising • Leadership n Analytical • Problem solving • Sensitivity • Decision-making • Creativity • Sociability • Management control and delegating.

motivation. collaboration. team spirit etc… Problems Measurement and accuracy  Halo Effect  Leniency or Strictness  Central Tendency  Similarity  Others. • Intervening variables.loyalty. politics and structure related issues  Social Differentiation . attitude. communication.organizational dynamics.