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Performance Appraisal
1. Introduction
2. Performance Management system
3. Performance Appraisal Methods
4. Factors that can distort Appraisal
5. Creating more effective Performance Management
6. International Performance Appraisal

1. Introduction
 Once the employee has put in around one year of
service, performance appraisal is conducted i.e. the HR
department checks the performance of the employee.
 Based on these appraisal future promotions, incentives,
increments in salary are decided.
 Employees generally see performance evaluations as
having a direct effect on their work lives.
 The performance management systems need to include:
 Decisions about who should evaluate performance;
 What format should be used; and
 How the results should be utilized.

.  Documentation: to meet legal requirements.1 Purposes of a Performance Management System  Feedback: let employees know how well they have done and allow for employee input. 2. appraisers may be poorly trained.  Additionally.  Focus on the process: company policies and procedures may present barriers to a properly functioning appraisal process.2 Difficulties of Performance Management System  Focus on the individual: discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree.2. Performance Management System 2.  Development: identify areas in which employees have deficiencies or weaknesses.

3 Performance Appraisal Process  HRM practices must be bias free.  Valid performance appraisals are conducted at established intervals and are done by trained appraisers.2. objective and job- related. . Performance Management System 2.

 Communication of performance standards to employee.2. and  Basic corrective action deals with causes.  Discussion of appraisal with employee.3 Performance Appraisal Process  Establishment of performance standards:  Derived from company’s strategic goals.  Identification of corrective action where necessary:  Immediate action deals with symptoms. . Performance Management System 2. and  Based on job analysis and job description.

and  Objectives. .3.  Relative standards. Performance Appraisal Methods Three approaches:  Absolute standards.

1 Evaluating Absolute Standards  An employee’s performance is measured against established standards. . Performance Appraisal Methods 3.  Evaluation is independent of any other employee.3.

3. Performance Appraisal Methods 3.  Critical Incident Appraisal: based on key behavior anecdotes illustrating effective or ineffective job performance.1 Evaluating Absolute Standards  Essay Appraisal: appraiser writes narrative describing employee performance and suggestions. .  Checklist Appraisal: appraiser checks off behaviors that apply to the employee.  Adjective Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors.

the statement which best describes the employee.1 Evaluating Absolute Standards  Forced-Choice Appraisal: appraisers choose from sets of statements which appear to be equally favorable.3. .  Behaviorally Anchored Rating Scales (BARS): appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale. Performance Appraisal Methods 3.

Performance Appraisal Methods 3. .  Group Order Ranking: employees are placed in a classification reflecting their relative performance.”  Individual Ranking: employees are ranked from highest to lowest.3.  Final ranking is based on number of times the individual is preferred member in a pair.2 Relative Standards  Employees are evaluated by comparing their performance to the performance of other employees.  Paired Comparison:  Each individual is compared to every other. such as “top one-fifth.

 Effectively increases employee performance and organizational productivity.3 Using Achieved Outcomes to Evaluate Employees Management by Objectives (MBO)  Includes mutual objective setting and evaluation based on the attainment of the specific objectives.  Participative decision making. Performance Appraisal Methods 3.  Explicit time period. and  Performance feedback. .  Common elements in MBO program are:  Goal specificity.3.

4. Factors that can Distort Appraisal 4.1 Distortions .

low (negative leniency). Factors that can Distort Appraisal 4. .  Halo error: evaluator lets an assessment of an individual on one trait influence evaluation on all traits.  Similarity error: evaluator rates others in the same way that the evaluator perceives him or herself.4.1 Distortions  Leniency error:  Each evaluator has his/her own value system.  Low appraiser motivation: evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.  Some evaluate high (positive leniency) and others.

are less relevant for some jobs than others.4. .  Inflationary pressures: pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees. enthusiasm. Factors that can Distort Appraisal 4. appearance.  Inappropriate substitutes for performance: effort. etc.1 Distortions  Central tendency: the reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated.

4. . 4.3 Impression management  If employee positively influences the relationship with the supervisor.2 Attribution Theory  Evaluations are affected based on whether someone’s performance is due to:  Internal factors they can control. s/he is likely to receive a higher rating.  If poor performance is attributed to internal control. or  External factors which they cannot. Factors that can Distort Appraisal 4. the judgment is harsher than when it is attributed to external control.

5.1 Use Behavior-Based Measures  Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits. 5. Creating More Effective PMS 5.2 Combine Absolute and Relative Standards  Absolute standards tend to be positively lenient.3 Provide Ongoing Feedback  Expectations and disappointments should be shared with employees on a frequent basis. such as “loyalty” or “friendliness”. . 5.  Combining the standards tends to offset the weaknesses of each. relative standards suffer when there is little variability.

employees. team members. peers. . customers and others with relevant information evaluate the employee.  360-Degree appraisals: supervisors. Creating More Effective PMS 5.5.  Upward appraisals: allow employees to give their managers feedback.4 Use Multiple Raters  Increasing the number of raters leads to more reliable and valid ratings.  Use peer evaluations: co-workers offer constructive insights and more specific evaluations.

5 Rate Selectively  Appraisers only evaluate in those areas about which they have sufficient knowledge.  More effective raters are asked to do the appraisals. 5.6 Train Appraisers  Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.  Appraisers should be organizationally as close as possible to the individual being evaluated.5. . Creating More Effective PMS 5.

Creating More Effective PMS .5.

International Performance Appraisal 6.  Include a current expatriate’s insights as part of the evaluation.  Performance criteria for a particular position should be modified to fit the overseas position and site. 6.  Quantitative measures may be misleading. .2 Evaluation Formats  May make sense to use different forms for parent- country nationals and host-country nationals.  Evaluation forms may not be translated accurately.1 Who performs the evaluation?  Different cultural perspectives and expectations between the parent and local country may make evaluation difficult.6.