Unit-III

Performance Appraisal System

 Performance Appraisal: Meaning

• Performance appraisal may be understood as the assessment of

an individual’s performance in systematic way, the
performance being measured against such factors as job
knowledge, quality and quantity of output, initiative,
leadership abilities, supervision,dependability,co-
operation,judgement,versatility,health and the like.
• Performance appraisal should not be confined to past
performance alone. Potentials of the employee for future
performance must also assessed.
 Relationship of performance appraisal
and job analysis
Job analysis Performance standards Performance appraisal
Describe work and personnel Translate job requirements Describes the job-relevant
requirement of a particular Into levels of acceptable or strengths and weaknesses of
job unacceptable performance. each individual.
 The main purpose of Performance
Appraisal
• To effect promotions based on competence and performance.
• To confirm the services of probationary employees upon their completing the
probationary period satisfactorily.
• To assess the training and development needs of employees.
• To decide upon a pay rise where (as in the unorganized sector) regular pay
scales have not been fixed.
• To let the employee know where they stand insofar as their performance is
concerned and to assist them with constructive criticism and guidance for the
purpose of their development.
• To improve communication .Performance Appraisal provides a format for
dialogue between the superior and the subordinate ,and improves understanding
of personal goals and concerns. This can also have effect of increasing trust
between the rater and the ratee.
• Finally, Performance appraisal can be used to determine whether HR
programmers such as selection,trainning and transfers have been effective or
not.
 Objectives of Performance Appraisal
S.no. General Applications
1 Developmental Uses
2 Administrative Uses/Decisions
3 Organizational
Maintenance/objectives
4. Documentation
Specific Purpose
Identification of individual needs
Performance Feedback
Determining transfers and job assignments
Identification of individual strengths and developmental needs.
Salary
Promotion
Retention or termination
Recognition of individual performance
Lay-offs
Identification of poor performers
HR planning
Determining organization training needs
Evaluation of organizational goal achievement.
Information for goal identification
Evaluation of HR systems
Reinforcement of organizational development needs.
Criteria for validation research
Documentation for HR decisions
Helping to meet legal requirements.
Benefits of Performance Appraisal

Making correct
Decisions

Ensuring legal strategy &

compliance behavior

Advantage
Minimizing Values &
Dissatisfaction and behavior
turnover

Improving
performance
 Benefits of Performance Appraisal
• Improving Performance in two ways by directing employee
behavior towards organizational goals, and by monitoring that
behavior to ensure that the goals are met.
• Making correct Decisions: Appraisal is a critical input in
making decisions on such issues as pay raise, promotion,
transfer, training, discharges, and completion of probation
periods. Right decision on each of these can contribute to
competitive strength of a firm.
• Ensuring legal Compliance: Promotions made on factors other
than performance might land up a firm in a legal battle, thus
diverting its focus on non-productive areas.
 Benefits of Performance Appraisal

• Minimizing dissatisfaction & turnover: Employees tend to

become emotional and frustrated if they perceive that the
ratings they get are unfair and inaccurate. such employees feel
that the efforts they had put in became futile and obviously get
de-motivated. As a result they feel dissatisfied because of
which employee turnover increases. An organization having
satisfied and motivated employees will have an edge over its
competitors.
 Benefits of Performance Appraisal
• Consistency between organizational strategy & behavior:
In any organization employee wants to occupy themselves with
those activities which are emphasized by the organization. So
in a way if the organization focus is on service employees
focus is on service delivery. if the focus is on cost control,
employee will seek to control cost. It works as feedback also if
some negative consequence are their of strategy-behavior link.
For example :single –point –productivity-decreased quality and
co-operation.
Benefits of Performance Appraisal
• Organizational strategy and performance
appraisal:
• Defenders have a narrow and relatively stable
product market domain.
• Prospector strategy continuously search for
different product and market options.
• Analyzer Strategy: focuses on both skill
building and skill acquisition and employ
extensive training programmers.
 ADVANTAGES AND DISADVANTAGES
ADVANTAGES DISADVANTAGES
• In-depth review of employee’s • Length and content vary
performance
• lengthy process
• facilitates identification of areas that
need more focus and further •Depends on the evaluator’s ability.
development
 Features of Performance Appraisal:

• Systematic process of evaluation of an employee.

• Analysis of the strengths and weaknesses of an
employee.
• To find out how well an employee is performing the job.
• Appraisal is done periodically.
• It is based on a definite plan.
• Performance appraisal is different from job evaluation.
• Performance appraisal is a continuous process that is
accepted by every organization.
 Essentials of Good Appraisal System
• Documentation Effective- Continuous noting and
documenting of the performance.
• Practical and Simple Format- the P. A. should be
simple, clear, fair and objective.
• Communication Effective- the expected result
should be communicated.
• Feedback- should be developmental and not
judgmental
• Personal Bias- Interpersonal relationships can
influence the evaluation.
Appraisal process

Objectives of performance Appraisal

Establish job expectations

Design an appraisal programme

Feedback
Appraise Performance

Performance Interview

Archive Appraisal Data

Uses Appraisal Data for Appropriate Purposes

 Objectives of performance Appraisal

• Objectives of appraisal as sated above, include effecting

promotions and transfers , assessing training needs, awarding
pay increases, and the like. Of late appraisal data have been
used to lay off low performers. In the name of performance
improvement plan, WIPRO,IBM,HCL & TCS in all these
removal are linked to non-performance.
• The emphasis is in all these is to correct the problems. These
objectives are appropriate as long as it is individual. Appraisal
,in future ,would assume systems orientation. In the system
approach the objectives of appraisal stretch beyond the
traditional ones.
 Objectives of performance Appraisal

• System Approach: Appraisal at improving performance

instead of merely assessing it. Towards this end, appraisal
system seeks to evaluate opportunity factors. opportunity
factors includes the physical environment such as noise,
ventilation and lightings , available resources such as human
computer assistance, and social processes such as leadership
effectiveness. These opportunity variables are more important
than individual abilities in determining work performance.
 Objectives of performance Appraisal

• System Approach: In system approach the

emphasis is on how the work system affect an
individual performance. If the system
approach works individual will work toward
shared goals and they believe that everyone
get benefit from it. The identification of
systems obstacles should be used to facilitate
development and motivation not an excuse to
poor performance.
 Performance Appraisal system
Traditional systems
Guiding value Attribution to individual Attribution to system
Primary goals Control, documentation Development, problem
solving
Leadership practices Directional, evaluative Facilitative, Coaching
Appraisal frequency Occasional Frequent
Degree of formality high Low
Reward Practices Individual orientation Group orientation
 Establishing job expectations
• This is the second step in appraisal process.
This includes informing the employee what is
expected of him or her on the job. Normally
there is a discussion with the superior about
what is expected from his or her. individuals is
not expected to begin the job until they
understand what is expected of them.
 Design appraisal Programme
• Design appraisal Programme poses several questions
which need answers. They are, i)Formal vs informal
appraisal; ii)whose performance is to be assessed?
iii)Who are the raters? iv)What problems are
encountered)How to solve the problem vi)what
should be evaluated? Vii) when to evaluate? viii)what
methods of appraisal are used?
Issues in Appraisal design
Formal
Vs
What informal
What
method Problems?
s?

When to
Appraisal Whose
evaluate performance?
?
Design

Who are
What to the raters?
evaluate?

How to
solve?
 Issues in Appraisal design
• Formal vs informal:
• Formal appraisal usually occurs at specific
time periods once or twice a year. Formal
appraisal are most often require by the
organization for the purpose of employee
evaluation. primary evaluation.
• Informal: whenever supervisor feels the need
for communication. Generally use as
feedback.
 Issues in Appraisal design
• Whose Performance Should be rated?
• Employee performance should be evaluated ;
now whether it is individual or teams?
• Some time ratee has to rate the individual at
multiple levels for example work-group level for
merit pay increases and at the individual level to
assess training needs. Group cohesiveness is
important but the point to be remembered that
individual performance of all employees must be
rated.
 Issues in Appraisal design
• Who are the Raters?
• Immediate supervisor: three reason why
immediate supervisor is the best person to rate
the employee
• 1)no one is more familiar with subordinate
performance than his or her superior.
• 2)superior has the responsibility to manage the
particular unit.
• 3)finally training & development of subordinate is
an important element in every manager’s job.
 Issues in Appraisal design
• Who are the Raters?
• Subordinates can assess the performance of
their superiors. But the problem with
subordinate evaluation is that boss became
famous not because of his/her performance
but because of flattery.
• Peers are in a better position to evaluate
certain facts of job performance which the
subordinates or supervisor cannot do.
 Issues in Appraisal design
• Who are the Raters?
• clients are seldom used for rating employee
performance, nothing prevent an organization for
using this source. Client may be members within
the organization who have direct contact with the
ratee and make use of output(good or
service)this employee provides. Interest,
courtesy, dependability, and innovativeness are
few of the qualities on which client can offer
ratings.
 Issues in Appraisal design
• Who are the Raters?
• Rating committees; These committees includes immediate
supervisor or three or four other supervisor who come in
contact with the employees. There are multiple benefits of
multiple raters first there may be objectivity in rating when
there are more than one rater involved in assessment.
• Furthermore where there are differences in the raters ratings
they usually stem from the fact that the raters at different
levels in the organization observe different facets of an
employee performance the appraisal ought to reflect this
differences. Disadvantage the role of immediate supervisor in
the process of training and development get weakens.
 Who are the Raters?

• Who are the Raters?

• Self-appraisal;The employee herself or himself
evaluate his or her own performance. HP and Texas
Instruments ask their employees to prepare their own
appraisals. On the positive side it may be said that in
self- appraisal there is an opportunity to participate in
the evaluation, particularly if it is combined with goal
setting and this should improve managers motivation.
Problems of Rating
Leniency
Or severity
central
Status effect
tendency

Spiltover Primacy
or
effect recency
Raters
error
Performan
ce Rater
Dimension effect
behaviour

Hallo
others effect

Perceptual
set
 What should be rated?
• Quality
• Quantity
• Timelines
• Cost –effectiveness
• Need for supervision
• Interpersonal impact
• Community service