PERFORMANCE

MANAGEMENT

Dr. Vaneeta
Aggarwal
 PERFORMANCE APPRAISAL-
MEANING
A Performance Appraisal is a
process of evaluating an
employee’s performance of a job
in terms of its requirements.
 Objectives

 Opportunity to Regularly Discuss

Results

 Supervisor Identifies Strengths and

Weaknesses

 Fair and Equitable Format

 Basis for Salary/Promotion

Recommendations
Methods of Performance Appraisal
Several methods and techniques are used for evaluating
employee performance. These may be classified into broad categories.

Performance Appraisal

Traditional Methods Modern Methods

1. Assessment Centre
1. Confidential Report
2. Human Resource
2. Free Form or Essay
Accounting
3. Straight Ranking
3. Behaviorally
4. Paired Comparisons Anchored rating
5. Forced Distribution Scales
6. Graphic rating Scales 4. Appraisal through
7. Checklist Method MBO
8. Critical Incidents
9. Group Appraisal
10. Field Review
 TRADITIONAL METHOD

1. Confidential Report
This is a traditional form of appraisal used in
most government organization. A confidential report
is a report prepared by the employee’s immediate
superior. It cover the strengths and weaknesses,
main achievements and failure, personality and
behavior of the employee’. It is descriptive appraisal
used for promotion and transfers of employees.

2. Free Form or essay Method

Under this method, the evaluator writes a short
essay on the employee’s performance on the basis of
overall impression. The description is expected to be
as factual and concrete as possible. An essay can
provide a good deal of information about the
employee especially if the evaluator is asked to give
examples of each one of his judgments.
3. Straight Ranking Method
In this method technique, the evaluator assigns
relative ranks to all the employees in the same work unit
doing the same job. Employees are ranked from the best
to the poorest on the basis of overall performance. The
‘wholeman is compared with the whole man’ without
analyzing performance. The relative position of an
employee is reflected in his numerical rank.

Employee Rank
A 2
B 1
C 5
D 4
E 3
Straight ranking is one of the oldest and simplest
methods. It is time saving and a comparative evaluation
technique of appraisal.
4. Paired Comparisons Method

This is a modified from of man to man ranking.

Herein, each employee is compared will all the others in
pairs one at a time. The number of times an employee is
judged better then the others determines his rank.
Comparison is made on the basis of overall performance.

5. Forced Distribution Method

In this technique, the rater is required to distribute

his rating in the form of a normal frequency distribution.
The purpose is to eliminate the rater’s basis of central
tendency. Here also ranking technique is used. This
method is highly simple to understand and easy to apply
 45

40

35

30
employee

25

20
No. of

15

10

0
Poor Below Average Good Excellent
Average
6. Graphic Rating Scales

It is a numerical scale indicating different degrees of a

particular trait. The rate is given a printed from for each
employee to be rated. The form contains several
characteristics relating to the personality and performance of
employees. Intelligence, quality of work , leadership skills,
judgment, etc. are some of these characteristics. The rater
records his judgment on the employee’s trait on the scale. The
numerical points given to an employee are added up to find
out his overall performance or standing in the group.
7. Checklist Method

A checklist is a list of statements that describe

characteristics and performance of employee on the job. The
ratter checks to indicate if the behavior of an employee is
positive or negative to each statement. The performance of an
employee is rated on the basis of number of positive checks.

There are three types of checklist.

1.Simple Checklist
2. Forced Choice Block
3. Weighted Checklist
 Simple Checklist
1. Is the employee regular on the job Yes/No

2. Is the employee respected by his subordinates Yes/No

3. Is the employee always willing to help his peers Yes/No

4. Does the employee follow instruction properly Yes/No

5. Dose the employee keep the equipment in order Yes/No

Forced Choice Block

1. Regularity on the job Most Least
(a) Always regular √
(b) Informs in advance for absence/delay √
(c) Never regular √
(d) Remains absent without prior notice √
(e) Neither regular nor irregular
 Weighted Checklist

Traits Weights Performance Ratings

1. Attendance 0.5

1. Knowledge of the job 1.0

1. Quantity of work 1.0

1. Quality of work 1.5

1. Dependability 1.5

1. Interpersonal relation 2.0

1. Organization loyalty 1.5

1. Leadership potential 1.5

8. Critical Incidents Method

In this method the supervisor keeps a written record

of critical events and how different employee behaved
during such events. The rating of an employee depends
on his positive/negative behavior during these events.
Worker Reaction Score

A Informed the supervisor immediately 5

B Became anxious of loss of output 4

C Tried to repair the machine 3

D Complained of poor maintenance 2

E Was happy to get forced rest 1

9. Group Appraisal Method
Under this method, a group of evaluators assess
employees. This group consists of the immediate
supervisor of the employee, other supervisor having close
contact with employee’s work, head of the department and
a personnel expert. The group determines the standards of
performance for the job , measures actual performance of
an employee, analyses the causes of poor performance and
offers suggestions for improvement in future.
10. Field Review Method
In this method, a training officer from the
personal department interviews line supervisors to
evaluate their respective subordinates. The
interviewer prepares in advance the questions to be
asked. By answering these questions a supervisor
gives his opinions about the level of performance of
his subordinate, the subordinate’s work progress, his
strengths and weaknesses, promotion potential, etc.
 Modern Methods

1. Assessment Centre
MethodAn assessment centre is a group of employees
drawn from different work units. These employees work
together on an assignment similar to the one they
would be handling when promoted. Evaluates observe
and rank the performance of all the participants.
Experienced managers with proven ability serve as
evaluators. This group evaluaters all employees both
individually and collectively by using simulation
techniques like role playing, business games and in
basket exercises. Employees are evaluated on job
related characteristics considered important for job
success. The evaluators observe and evaluate
employees as they perform jobs.
3600 Performance
Appraisal
 720 Degree Appraisal

Itis also one of the new methods of

performance appraisal wherein the
assessment is not only done by the
stakeholders within the organization
but also by the groups outside the
organizations including the
customers, suppliers, investors, etc.
This is one of the methods which is
used to determine the success of the
organization as whole.
 Psychological Appraisal Method of
Performance Appraisal

 It is one of the new methods of performance

appraisal which is widely used by the
organizations to assess the employee’s potential for
the future performance instead of the past
performance, by a psychologist.
 The psychologist conducts various psychological
tests, in-depth interviews, discussions with the
supervisors and considers reviews of other
evaluations.
 This appraisal technique is used to determine the
emotional, intellectual, motivational and other
concerned characteristics of an employee which are
mandatory to predict his/her potential for the future
performance.
2.Human Resource Accounting Method

Human resources are a valuable asset of

any organisation. This asset can be valued in terms of money.
When competent, and well-trained employees leave an
organisation the human asset is decreased and vice versa.
Under this method performance is judged in terms of costs and
contribution of employees. Costs of human resources consist of
expenditure on human resource planning, recruitment,
selection, induction, training, compensation, etc. Contribution
of human resources is the money value of labour productivity
or value added by human resources is the money value of
labour productivity or value added by human resources.
 3. Behavioral Anchored Rating Scales

Performance Point Behavior

Extremely 7 Can expect trainee to make valuable

good suggestions for increased sales and to have
positive relationships with customers all
over the country.
Good 6 Can expect to initiate creative ideas for
improved sales.
Above 5 Can expect to keep in touch with the
average customers throughout the year.
Average 4 Can manage, with difficulty, to deliver the
goods in time.
Below 3 Can expect to unload the trucks when
average asked by the supervisor.
Poor 2 Can expect to inform only a part of the
customers.
Extremely 1 Can expect to take extended coffee breaks &
poor roam around purposelessly.
4.Appraisal by Results or MBO

The concept of management by

objectives(MBO) was developed by Peter
Drucker in 1954. He called it
management by objectives and self
control’. Since then MBO has became an
effective and operational technique of
performance appraisal and a powerful
philosophy of managing. It is also known
as Work Planning and Review or Goal
setting approach to appraisal.
MBO is a system in which specific
performance objectives are jointly
determined by subordinates and their
superiors, progress toward objectives is
periodically reviewed, and rewards are
allocated on the basis of this progress.
MBO Principles
Cascading of organizational goals and
objectives
Specific objectives for each member
Participative decision making
Explicit time period
Performance evaluation and feedback
Objectives should be specific, attainable, yet
challenging.
Is the objective appropriate for the business at this
time?
Does it take the organization in the direction it wants
to go?
Does it support the overall mission of the business?
Is it compatible and complementary with the other
objectives?
Is it acceptable and understandable to the majority
who will be charged with implementing it?
Is it affordable for the organization?
Is it measurable and achievable?
Is it ambitious enough to be challenging?
MBO substitutes for good intentions a process that
requires rather precise written description of
objectives (for the period ahead) and time-lines
for their monitoring and achievement. The
process requires that the manager and the
employee agree to what the employee will
attempt to achieve in the period ahead, and (very
important) that the employee accept and buy
into the objectives (otherwise commitment will
be lacking).
SMART
Management by Objectives introduced the
SMART method for checking the validity of
Objectives,
'SMART':
Specific
Measurable
Achievable
Realistic, and
Time-related.
Common Appraisal Problems
 Inadequate  Inconsistency in
preparation on the ratings among
part of the manager. supervisors or other
 Employee is not given raters.
clear objectives at  Performance
the beginning of standards may not
performance period. be clear.
 Manager may not be  Rating personality
able to observe rather than
performance or have performance.
all the information.

30
Common Appraisal Problems
(Ctd.)
 Inappropriate time  Organizational
span (either too short politics or personal
or too long). relationships cloud
 Overemphasis on judgments.
uncharacteristic  No thorough
performance. discussion of causes
 Subjective or vague of performance
language in written problems.
appraisals.  Manager may not be
trained at evaluation
or giving feedback.
 No follow-up and
coaching after the 31
Common Rating Errors
 Halo/horn
◦ Overly focusing on specific performance
ratings or stereotyping employee by a
single personal characteristic.
 Leniency
◦ Rating all employees higher than they
should be.
 Strictness
◦ Rating all employees lower that they
should be.
 Central tendency
◦ Rating all employees as average when
individual employee performance actually 32
 Common Rating Errors
(Ctd.)
 Primacy
◦ Using initial information that supports the
rating decision while ignoring later information
that does not.
 Recency
◦ Basing the rating decision primarily on the
most recent performance information while
placing much less emphasis on past
performance.
 Contrast effects
◦ Comparing one employee to another rather
than applying a common standard to all 33
Quick Quiz
 Billrates all of his employees very
low except for Jan. Jan gets above
average ratings because she
consistently comes to work on time.
The rating errors Bill makes are
_______ and _______, respectively.
a. Leniency; Horn
b. Strictness; Halo
c. Similar-to-me; Central Tendency
d. Horn; Strictness 34
Quick Comic

35
Quick Comic

36
 POTENTIAL APPRAISAL
The potential appraisal refers to
the identification of the hidden
talents and skills of a person. The
person might or might not be
aware of them.
Potential appraisal may be
defined as a process of
determining an employee’s
strengths and weaknesses with a
view to use this as a predictor of
his future performance.
 Performance
Management: Uses
Performance improvement Identify deficiencies in
staffing process
Compensation adjustments
Detect informational
Placement decisions inaccuracies
Training & Development Diagnose job design errors
needs
Avoidance of discrimination
Career planning &
development
 The Performance Cycle
» Major Areas of
Responsibility
» Individual Priorities
» Knowledge, Skills and
Behaviors
» Development plan
» End-of- » Reaching agreement
cycle
review
» Continuous
progress » Ongoing
and Feedback
developme » Coaching
nt » Interim
reviews
What Is “Good Performance”?
 More than just activities, effort, good intentions, or
results
• Working hard and staying busy are not
necessarily high performance
• Attending training sessions and studying hard
does not necessarily lead to good performance
• Strong commitment may not lead to good
performance
• Even accomplishing some goals may not be high
performance
Performance Management –

Broader Than
Performance Appraisal

Begins with a look at goals &

strategies of the organization
Performance Management and
Performance Appraisals
Performance Performance
management appraisal
definition definition
◦ Processes used ◦ The process of
to identify, evaluating how
encourage, well
measure, employees
evaluate, perform their
improve, and jobs and then
reward communicatin
employee g that
performance. information to 46
 Performance management
Definition:
Employee performance management is the process of
involving employees in accomplishing your agency’s
mission and goals.

Employee performance management includes: planning

work and setting goals, monitoring performance,
developing capacity, reviewing performance, and
rewarding good work.
Purposes of Performance
Management
 Two purposes
◦ Development
al
◦ Administrative

48
Developmental and
Administrative

49
 Designing the performance management
system
What will be the purpose?
What will be the sequential stages?
What performance will be measured?
Who will assess employee performance?
What will be on the form?
Will a rating scheme be used?
What support systems need to be in place?
Managing performance for …

Accountability

Performance target
setting and
outcome/results
review

AND / OR
Managing performance for …

Employee
Development

Competence assessment
and development
Stages of performance management

Monitor

Develop
Plan

Reward Review
 Stage 1 – Individual Performance Planning

Stage 1 – Planning
•Work goals
•Competencies Plan
•Learning

Performance planning at the start of the year and then

periodically is the core of the performance
management process. The performance plan should
be a written document.
Performance planning
How is what I do on a
daily basis tied to the
success of this
organization?
What are my
performance goals for
the next time period?
How are my goals
aligned with the
organizational goals?
 Performance Planning
Performance results – the what
◦ Performance outcomes or standards – from job
description
◦ Performance objectives for the next time period
Performance behavior – the how
◦ Competencies, performance factors, or behavior
expectations
Development objectives
 Stage 2/3 – Monitor and Develop
Monitor

Daily performance
management! Develop

Monitoring includes
measuring performance
and giving feedback. Two
way communication
between the manager and Stage 2/3 – Monitor and
employee throughout the Develop
performance period is •Feedback
critical to the performance •Coach
management process. •Adjust goals
 Daily performance management
 Feedback and coaching –
informal
 Monitoring and tracking
performance against standards
and progress toward goals.
 Quarterly performance
planning and performance
discussions
 Development through
coaching, training, challenging
or visible assignments,
improving work processes
 What performance will be measured?

Behaviors – how the work is done

◦ Performance factors / competencies
◦ Required behaviors
◦ Behaviors supporting desired organizational
culture
Results – what is achieved
◦ Performance outcomes
◦ Performance compared to job standards
◦ Performance goals and/or objectives
Stage 4 – Performance Review

The formal process of

documenting results the
employee has achieved
and behaviors and /or
Review
competencies displayed
should occur at least
Stage 4 – Review once a year.
•At least annually
•Discuss
•Document
Performance Review
Summary of performance
over a period of time
Evaluate performance
results and behaviors
Conducted face-to-face
with a written record.
While rating and ranking
has both pros and cons, a
summary rating of each
employee may be useful.
If a rating scheme will be used

Number of levels: three, four, five, or six

Rating labels
◦ Numerical: e. g. 1, 2, 3, 4, 5
◦ Behavioral frequency: e. g. always, usually,
frequently, sometimes, rarely
◦ Evaluation: e. g. distinguished, superior,
competent, fair, marginal
◦ Performance against a standard: e. g. exceeds,
meets, does not meet
Who will assess performance?

Choices include: Immediate supervisor

only
In addition to the
immediate supervisor
◦ Employee (self)
◦ Peers and coworkers
◦ Internal and external
customers
◦ Subordinates
What will be on the form?

Identifying information
Instructions
Performance outcomes and/or results
achieved (or not achieved) on objectives
Performance factors / competencies / work
behaviors
Employee signature and approvals
 Other information
Employee comments
Summary of one to three major
achievements
Strengths / areas for development
Overall rating
Plan for development (if not elsewhere)
Performance plan for next period (if not
elsewhere)
 Stage 5 – Reward

Good performance should be

rewarded. Recognition and
non-monetary rewards are an
important part of the reward
structure. These include job-
Reward
related rewards such as visible
project assignments. Even
thank you and recognition for a
Stage 5 – Reward
job well done are rewards!!
•Monetary
•Non-monetary
•Recognition
Rewards, recognition, and compensation

 Recognizing employees for

performance
◦ Non-monetary rewards
◦ Informal and ongoing
acknowledgements of good work
 Compensation
◦ Merit increases?
◦ Pay to market?
◦ Increases added to base pay or lump
sum?
Separate conversation about pay from conversation about performance!!!!!
 What support systems need to be in
place?

Senior management support

Management accountability
Communication about the process
Training
Process for new employees
Process for dealing with poor performance
Monitoring and evaluating the process (HR)
Appeals process (HR)
 Providing Feedback (Ctd.)

Differing perspectives
◦ Combining evaluative and
developmental goals
 Need to be candid and protect employee’s
self-esteem
Self-serving employee attributions
that interfere with performance
improvement
◦ Discounting role of external
forces in good performance
69
Providing Feedback
Issues to consider when
providing feedback
◦ Differing perspectives
◦ Timing
◦ Preparation
◦ Content of the discussion
◦ Follow-up

70
Providing Feedback (Ctd.)
Timing
◦ Providing immediate feedback is
most useful
◦ Giving only as much information as
the receiver can use
Preparation
◦ Scheduling feedback sessions in
advance
◦ Clarifying purpose and content of
meeting
◦ Giving both participants time to 71
 Providing Feedback (Ctd.)
 Content
of the discussion: The problem-solving
approach
◦ Diagnosis: Seek to understand the factors that
affect performance.
◦ Roadblocks: Seek agreement with the employee
on an action plan to address issues such as:
 Lack of resources
 Need for additional information and training
 Improving ongoing communications and
feedback
◦ Mutual goal setting: Employee participation
increases employee acceptance of goals. 72
 Providing Feedback (Ctd.)

 Diagnosing the causes of performance

deficiencies
◦ Does the employee have the competencies
and the interest to perform as desired?
◦ Have specific, difficult but attainable goals
been communicated?
◦ Is the employee certain about desired
performance, the consequences of
performance, his/her power (level of
authority)?

73
Sample Checklist for Diagnosing the Causes
of Performance

74
 Follow-Up to the Feedback
Session
 Positive reinforcement
◦ Use of positive rewards to increase occurrence of
desired performance
 People perform in ways that they find most rewarding
 By providing proper rewards, it is possible to improve

performance
 Punishment
◦ Decreases frequency of undesired behavior
◦ Gets immediate results and has vicarious power
◦ Can have undesirable side effects—employee anger
and contingent bad behavior

75
Take-Home Points
Understand purpose of
performance management
Aware of the various methods for
assessing performance
Knowledge of difficulties of
performance management and
ways to improve it
Knowledge of best way to provide
feedback when you are managing
someone 76
E-PERFORMANCE MANAGEMENT
The use of technology in performance
management so as to
Increase productivity
Enhance competitiveness
Motivate employees
How is this achieved?
Measuring an individual’s performance
via computer monitoring activities.
Facilitate performance feedback.
Supervisors or team members
generate online as well as
appraisal software so it is used
for evaluation for the managers.
This mainly occurs in context of
jobs that invovles personal
judgement and high discretion.
Objective of e-performance
management
 An effective e- performance management system
can play a very crucial role in managing the
performance in an organization by:
 Ensuring that the employees understand the importance
of their contributions to the organizational goals and
objectives.
 Ensuring each employee understands what is expected
from them and equally ascertaining whether the
employees possess the required skills and support for
fulfilling such expectations.
 Ensuring proper aligning or linking of objectives and
facilitating effective communication throughout the
organization.
 Facilitating a cordial and a harmonious relationship
between an individual
THANK
YOU