PERFORMANCE APPRAISAL

MANAGEMENT

BBAVI
2019-2022
Submitting to Prof. Lawrence Paul Menezes
subject: Performance Appraisal and Potential Evaluation
By: ABHISHEK RAJA
what is performance appraisal?
In every organization there is need to understand the abilities of the employees to
perform and grow, performance appraisal acts as a tool to check the development
opportunities for the employees. It is a systematic evaluation of the work
performed by the employees. 

The ways of performance appraisal include:

 The pay of employees is compared with the target given to them and the
plans on which they act during daily work routine.
 The factors which are responsible for the performance of employees is
analyzed by the supervisor.
 Further the better ways to improve the performance are suggested to the
employees.

Definition and meaning of performance appraisal.

Definition: Employee performance appraisal system is defined a process in which
a predefined standard of factors such as work knowledge, work performance,
work attitude, leadership quality, team player behavior, consistency, decision
making abilities and skills is created and then actual performance as well as
personality of employee is compared with this expected standard by the
organization.
Meaning: A performance appraisal used in the organization is a regular review of
employee’s performance to verify their contribution to the company. It is also
known as annual review or performance evaluation. It evaluates the skills,
growth, achievement or failure of the employees. The performance appraisal is
often used to justify the decisions related to promotions, pay hike, bonuses
and termination of employee.

Types of performance appraisal

In most of the organization supervisors are in-charge of performance appraisal.
However, there are different types of employee performance appraisal in HRM
based on the people who evaluate the performance of the employee.

The four major type of performance appraisal are as follows-

 Self-assessment: Here the employee themselves rate their job

performance and work behavior
 Peer assessment: Under this assessment the team members, co-workers
and work group are responsible for the performance rating of the
employee. 
 360-degree performance appraisal: In this type of appraisal the
performance rating is collected from employee, their immediate supervisor
and peers.
 Negotiated appraisal: In order to avoid the conflicts between employee and
their supervisors a new trend of appraisal is utilized. In this type of
performance appraisal, a mediator evaluates the performance of the
employee and put focus on the good side of performance rather than the
criticism.

Methods of performance appraisal

Traditional Methods of Employee Performance Appraisal
Here is a list of different traditional methods which can be used for employee
performance appraisal:

Rating Scales: In this scale the factors such as attitude, initiative, dependability
etc. is quantified. A range of excellent to poor is provided to the rater and based
on the rating the performance of the employee is calculated.
Checklist: A checklist form of performance appraisal consist of column of ‘Yes’
and ‘No’ for different employee traits. The rater has to put a tick mark based on if
the traits exist of does not exist in the employee.
Forced Choice Method: In this method different statements about the
performance of the employee are provided to the rater and he/she is forced to
answer the ready-made statements as true or false. Further evaluation of
performance is carried on by HR department based on the answers of the rater.
Forced Distribution Method: In this method it is assumed that performance of an
employee conforms a bell shaped curve. Thus, rater has to put employees on
provided point on the scale.
Critical Incidents Method: Here the critical behavior of the employee is
considered by the supervisor while evaluation of the performance.
Behaviorally Anchored Rating Scale: Different statements which are descriptive
in nature are prepared about behavior of the employee. These behaviors are put
on the scale points and rater has to indicate the points which explain the
employee behavior in more exact way.
Field Review Method: In this method the reviewer of the performance is
generally someone outside the department. The people from HR department or
corporate office do the performance evaluation of the employee based on the
records and interviews.
Performance Tests and Observations: This is kind of an oral test which is
conducted to test the skills and knowledge of the employees in their respective
field. The employees sometimes receive a situation and asked to demonstrate
their skills and then their performance is evaluated based on that presentation.
Confidential Reports: Often the government departments follow this method of
performance evaluation. The employees are evaluated based on the parameters
such as leadership quality, team work, integrity, technical ability, attendance etc.
The reviewer sends the confidential review to the concern authority about the
performance of the employee.
Essay Method: Under this method, the detailed description of the employee
performance is written by the rater. The performance of an employee, his
relations with other Co-workers, requirements of training and development
programs, strengths and weaknesses of the employee, etc. are some of the points
that are included in the essay. The efficiency of this traditional method of
performance appraisal depends on the writing skills of the rater.
Cost Accounting Method: It is a simple method in which the performance of the
employee is linked with the monetary benefits of the organization. The rater
checks about the cost to the company to keep the employee and the contribution
of the employee in terms of monetary business.
Comparative Evaluation Approaches: This approach includes comparison of the
performance of co-workers with each other. It is of two types namely ranking
method and paired comparison method. It is a quite popular method of employee
performance appraisal in the corporate world.
Modern Methods of Employee Performance Appraisal
Here is a list of different modern methods which can be used for employee
performance appraisal:

Management by Objectives: In this method the performance of the employee is

assessed based on the targets achieved by him/her. The management at the
beginning of the financial year conveys the set goals to the employees, at the end
of the year the performance of the employee is compared with the set goals and
evaluated for the appraisal. 
Psychological Appraisals: Psychologists are invited to the companies for the
performance appraisal of the employees. Here the performance is in the context
of the potential future performance. Psychological tests, in-depth interviews,
reviews and discussions with the managers are the methods used for the
evaluation of the performance.
Assessment Centers: A series of exercises are conducted at the assessment
center of the company to actually evaluate the performance of the employee. The
exercises include discussions, role playing, computer simulations and many more.
The employees are evaluated in terms of communication skills, mental alertness,
emotional intelligence, confidence and administrative abilities. The rater observes
the event and evaluates the performance of the employee at the end.
360-Degree Feedback: It is particularly a 360 degree feedback method in which
the information about the performance of the employee is collected from
supervisors, peers, group members and self-assessment. All the remarks are
considered to evaluate the overall work performance of the employee.

TATA MOTORS APPRAISAL SYSTEM

Tata Motors have a midterm review for all those who have been performers,
thereby creating an expectation amongst the employees of an increase in salary
twice a year if they perform well. They used to have annual appraisals earlier, but
then they felt that the incentives are not enough to motivation the sales
department, which generates major revenues or the organization. they do give
monetary increments and designation hikes, according to the performance. If the
employee deserves both, they give him/her both the advantages otherwise at
least one of them. Designation hikes are given annually. These are proportional to
effort of the individual, team and the department. Designation changes are given
keeping in mind the immense responsibility one has to shoulder in a high rank.
Monetary increments are primarily incentives that are given either in cash or kind
for example they give them travel package within India or outside. Also, they have
an accumulating incentive scheme in which employees can accumulate incentives
and get them annually with interest. To meet the new demands of the business
and to motivate the employees for higher performance, they have started linking
a part of the salary increase to individual performance measures as variable pay.
At present, between 6 to 8 percent of the compensation is variable pay, which
they are planning to increase over a period of time. Executives are categorized in
levels based on their performances in a relative ranking and based on outcome
performance-linked pay is awarded.
GOAL SETTING MODEL
A goal setting program in an organization requires careful planning. As shown in
the figure, the first three factors in goal setting process are establishing the goal,
achieving goal commitment, and overcoming resistance to goal acceptance. Goals
can be established in a variety of ways. Best way is to set by joint participation
between the employee and the supervisor. This method often leads to employee
commitment, a crucial ingredient in effective goal setting.
GOAL SETTING
S.M.A.R.T Goals.
Specific – precise and detailed
Measurable – with criteria for determining progress and success
Achievable – attainable and action-oriented
Realistic – relevant and aligned
Time-related – grounded within a time-frame

For this purpose, an online template is circulated in the organization. Superiors

fill out that form keeping in view the performance of their subordinate over the
year. This feedback becomes the basis of the promotion of the employees.
Superior is responsible for categorizing the employees in four categories, namely
– This categorization is done both on the basis of performance and the goals they
were given. This whole system is commonly known as 90-degree appraisal
system, also called 2 tiers

PERFORMANCE APPRAISAL IN TATA MOTORS

Tata Motors Ideologies

 VISION
“To be the world class corporate constantly furthering the interest of all
stakeholder”.
 HR VISION
Lead and Facilitate continuous change towards organizational excellence;
create a learning and vibrant organization with high sense of pride amongst
its members.

 APPRAISAL & REWARD APPRAISAL

New Appraisal System based on KRAs & Targets
 Review of Targets at regular Intervals·
People Development an important KRA

 REWARD
Promotions based on Performance·
Productivity & Profit-linked Incentive Schemes·
Training including Long-term Term

 CAREER DESIGN
Performance & Potential based Appraisals
Fast Track Option for High-performers
Promotions after Managers Vacancy based
Interviews for promotions above Managers
Selection of Supervisors: – Performance / Attendance / Discipline record–
Written Test & Interview Job Rotation – including Inter-functional

 RETENTION & EMPLOYEE WELFARE

Residential Colonies for Employees
Hospitalization Reimbursement – on actual without Ceiling
Vehicle Loans
Household Equipment Loans
House Building Advance
Annual Advance·
PF Trust – for better Mgt., Service & speedy redress· Proposed MUL Pension
Scheme

 SUGGESTION SCHEME & QUALITY CIRCLES

For better quality and productivity
Through involvement of all employees and teamwork
 Criteria
Idea
Efforts
Result: Cost reduction / Q Improvement / Productivity Improvement

 HR INITIATIVES
  REALIGNING ORGANISATION CULTURE BASED ONNEW VISION &
VALUES OBJECTIVE
 PERFORMANCE MANAGEMENT & DEVELOPMENT SYSTEM

 PERFORMANCE LINKED REWARD AND RECOGNITION SYSTEM

 CAREER PLANNING & PROMOTION POLICY

 REVISED RECRUITMENT POLICY

 COMPETENCY MAPPING

 STRONG FUCUS ON TRAINING INITIATIVES- BUILD A LEARNNG

ORGANISATION CONTINUOUS VALUE ADDITION TO PROFESSIONAL
SKILL- CUSTOMISED TRAINING- TRAINING TO THE PERSONNEL OF
BUSINESS PARTNERS

 INTERNAL COMMUNICATION.

Methods of Appraisal in Apollo Gleneagles Hospital

• Apollo follows appraisal on mid-term & annual basis.
• Apollo still follows old methods (i.e., by circulating Appraisal booklets) to
evaluate employee performance.
• Also, KRA is an important strategic area for an employee’s job profile. It consists
of 3 areas, performance, competencies, personal development plan.
Appraisals are divided into four categories depending on the designation of the
employees:
 WORKMAN Level – RANKING method
 STAFF Level –FACTOR RATING method
 SUPERVISIOR Level – FACTOR RATING method
 EXECUTIVE & ABOVE Level – 360 DEGREE

WORKMAN Level – RANKING method

• A fixed percentage of employees are kept in different performance categories
like outstanding, commendable, adequate, inadequate.
• The department heads make the decision as to which person is the best worker
for a given period, who has to be promoted, or which employee is being laid off.
• Workman appraisal report is based on parameters such as; job knowledge,
competence at work, initiative, social conduct, interpersonal relation & co-
operation, discipline.
• Workman category mainly consist of staff of food & beverages dept, security
dept, house cleaning dept etc. and mostly their designations are attendant.
• In Apollo Workman category follows ranking method, & the rating scale is:
 Rank I – Outstanding (81%-100%)
 Rank II – Commendable (61%-80%)
 Rank III – Adequate (41%-60%)
 Rank IV – Inadequate (0%-40%)

STAFF & SUPERVISORY Level – FACTOR RATING method

• In Apollo the Staff Level & Supervisory Level are evaluated under this method
where a scale is created from 1 to 20 and the all the heads are calculated and
total score is generated:
 Outstanding - (145-180) i.e., (81%-100%)
 Commendable - (109-144) i.e., (61%-80%)
 Adequate - (73-108) i.e., (41%-60%)
 Inadequate - (0-72) i.e., (0%-40%)
• If the total score is above 150, the employee overall performance is marked
Outstanding (OS). If they score 110 to 144, employee is marked Commendable
(C). On the basis of the total score and their overall performance, their employees
get Increment of Rs. 2000 to 4000 or Promotion, like from ‘staff nurse’ to ‘senior
executive nurse’ or ‘junior technician’ to ‘senior technician’ grade.
• The components of this method for staff level are traits like punctuality/ time
keeping, attendance, commitment, communication, job knowledge, work output,
quality of work, readiness to accept new ideas & suggestions, relationship with
colleagues & superiors. And for supervisory level three more traits are marked;
planning & organizing, leadership, capacity for handling people.

EXECUTIVE & ABOVE Level – 360 DEGREE

• It is a system in which employees get feedback from all the people they work
with
• The contents of the form vary from broad range competencies to work
environment on the basis of personality, performance & potential. (For e.g.,
appearance & bearing, knowledge, skills, attitude, loyalty, dependability,
adaptability, communications, leadership qlty. etc.)
• The employee who receives the feedback is also required to fill out a self-
assessment form, which again consist of the same components. There are 37
questions for executive level.
• This system is used to get an improved understanding of every one’s strength
and weakness
• Ratings are given on a 9 points scale, where:
 9 - Outstanding
 7-8 – Above Average
 5-6 – Average
 3-4 – Below Average
 1-2 – Poor