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Contents

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

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