Performance Appraisal

Defining Performance
Employees are performing well when they are
productive.
Productivity implies concern for effectiveness and
efficiency.
Effectiveness refers to goal accomplishment
- carryout a work within the time frame
- it does not speak of the costs incurred in attaining
the goal.
Defining Performance – contd.
Efficiency evaluates the ratio of inputs consumed to
outputs achieved.

Performance includes personnel data such as

measures of accidents, turnover, absences, and
tardiness.
Performance appraisal is defined as a structured
formal interaction between a subordinate and
supervisor, that usually takes the form of a periodic
interview (annual or semi-annual), in which the
work performance of the subordinate is examined
and discussed, with a view to identifying
weaknesses and strengths as well as opportunities
for improvement and skills development.
Appraisal Process
1. Establish performance standards
2. Communicate performance expectations to
employees
3. Measure actual performance
4. Compare actual performance with standards
5. Discuss the appraisal with the employees
6. If necessary, initiate corrective action
Appraisal Process
Measurement of Performance
Acquire information on how we measure and what
we measure
Performance may be measured by
1. personal observation
2, statistical reports
3. oral reports
4. written reports
What we measure is more critical to the evaluation
process than how we measure
Appraisal Methods

Employees can be appraised against:

1. Absolute Standards
2. Relative Standards
3. Objectives
Appraisal Methods – contd.
1. Absolute Standards
In this the subjects are not compared with any other
person
Methods employed are:
a. the essay appraisal
b. the critical incident appraisal
c. the checklist
d. the graphic rating scale
e. forced choice
f. behaviourally anchored rating scales (BARS)
Appraisal Methods
1. Absolute Standards – contd.
(a) Essay Appraisal
- rater write a narrative describing am employee’s
strengths, weaknesses, past performance, potential,
and suggestions for improvement
- this appraisal is very simple
- it provides only qualitative data, but HRM decisions
require quantitative data also.
Appraisal Methods
1. Absolute Standards – contd.

(b) Critical Incident Appraisal

- focuses the rater’s attention on critical or key
behaviours that make the difference between doing a
job effectively and doing it ineffectively
- appraiser writes down little anecdotes that describe
the employee’s work as effective or ineffective
Appraisal Methods
1. Absolute Standards – contd.
(c) Checklist
- evaluator uses a list of behavioural descriptions and
checks off those behaviours that apply to the
employee
- eg. Are supervisors orders usually followed?
- Does the individual approach customers properly?
- Does the individual suggest additional merchandise
to customers?
Appraisal Methods
1. Absolute Standards – contd.
(d) Graphic Rating Scale
- used to assess factors like
quantity and quality of work,
job knowledge,
cooperation,
loyalty,
dependability,
honesty, integrity, attitudes, and initiative
- assessor uses a five or ten point scale
Appraisal Methods
1. Absolute Standards – contd.

(e) Forced Choice

- this is a special type of checklist
- rater has to choose between two or more
statements, all of which may be favourable or
unfavourable
- appraiser to identify the statement which describe
the individual most
Appraisal Methods
1. Absolute Standards – contd.
(e) Forced Choice – contd.
- example, Students evaluating the staff have to
choose between
a. Patient with slow learners
b. Lectures with confidence
c. Keeps interest and attention of the class
d. Acquaints classes in advance with objectives for
each class
Appraisal Methods
1. Absolute Standards – contd.
(f) Behaviourally Anchored Rating Scales
- this is a combination of major elements from the
critical incident and graphic rating scale approaches
- employee is rated along a continuum
- the basic belief of the rating is:
“use of specific behaviours, derived from each job,
should produce relatively error-free and reliable
ratings”
Appraisal Methods
1. Absolute Standards – contd.

(f) Behaviourally Anchored Rating Scales – contd.

- these scales specify definite, observable, and
measurable job behaviour
Appraisal Methods
2. Relative Standards

The more popular of the relative methods are:

a. Group Order Ranking
b. Individual Ranking
c. Paired comparison
Appraisal Methods
2. Relative Standards – contd.
(a) Group Order Ranking
- evaluator places employees into particular
classification, such as “top one-fifth” or “second
one-fifth”

(b) Individual Ranking

- evaluator lists the employees in an order from
highest to lowest. Only one can be the “best”
Appraisal Methods
2. Relative Standards – contd.
(c) Paired Comparison
- calculated by taking the total of [ n (n-1) ] / 2
comparisons
- a score is obtained for each employee by simply
counting the number of pairs in which is the
preferred number
- it ranks each individual in relation to all others on a
one-to-one basis
Appraisal Methods
3. Objectives
Management by Objectives (MBO)
- employees are evaluated by how well they
accomplish a specific set of objectives that have been
determined to be critical in the successful completion
of their jobs
- MBO is a process that converts organizational
objectives into individual objectives
- This has FOUR steps: Goal setting, Action
planning, Self-control, and Periodic reviews
Uses of Performance Appraisal
 Apart from evaluating an employee’s performance, it has
the following uses and their percentages:
1. Compensation (86%)
2. Counseling (65%)
3. Training and development ( 64%)
4. Promotion (45%)
5. Planning (43%)
6. Retention and discharge (30%)
7. Validation (17%)
Factors that can distort Appraisals
Leniency Error
Halo Error
Similarity Error
Low Appraiser Motivation
Central Tendency
Forcing information to match performance criteria
Inflationary pressures
Inappropriate substitute for performance
Attribution theory
More effective appraisals can be achieved
with:
1. Behaviourally based measures
2. Combination of absolute and relative ratings
3. Ongoing feedback
4. Multiple raters
5. Selective rating
6. Trained appraisers
7. Peer assessment
8. Post appraisal review
9. Rewards to accurate appraisers
 Taylor's pioneering Time and Motion studies.
 It is a very ancient art.
 Dulewicz (1989)
 Simple methods of income justification .
 Tool for motivation and development
 Help to determine reward outcomes .
 Identify the better performing employees .
 Identify the poorer performers.
 Assignment and justification of rewards and
penalties.