Appraising and Managing Performance

Process of Performance Appraisal

Objectives of performance

Adopted from: Aswathappa, Human Resource Management,

Text and Cases, 2008, p. 241
appraisal

Establish job expectations

Design appraisal program

Appraise performance

Performance interview
Performance |
Management

Archival appraisal data

Use appraisal data

 Performance Appraisal Process

3 Designing Appraisal Program

What methods? Formal vs informal When to evaluate?

Whom to evaluate? Appraisal How to solve?

Design

Who are the raters? What What to evaluate?

problems/errors?
 Designing Appraisal Program
1 Formal vs Informal

• Formal appraisal normally occur at specific time (six

month or one year)

• Informal regular when supervisor feels need

2 Whom to Evaluate

• Individual or team performance

3 Who Should be the rater?

a) Immediate supervisor

b) Subordinates

c) Peers

d) Clients

e) Self appraisal
4 Performance Appraisal Errors
S. Performance Appraisal
No. Error
1 Leniency Error
2 Similarity Error
3 Recency Error
4 Contrast Error
5 Central Tendency Error
6 Spill-Over Effect
7 Hallo Error
8 Perceptual Error
Description
Extreme rating either on high or
low side
Bias appraisal because of personal
affiliation
Recent behavior evaluation instead
of entire performance appraisal
period
Rating in comparison to other
members
Average rating for all employees
Past performance or standing
dominate recent evaluation
One characteristic or aspect of
performance dominate entire
performance appraisal rating
The previous held believe of
perception influence appraisal
 Designing Appraisal Program
5 Solving Rater’s Error

Training and Practice

6 What to evaluate

a) Traits
b) Behaviors
c) Results/Goals

Other dimensions
a) Quality
b) Quantity
c) Timeliness
d) Cost effectiveness
e) Independent working
f) Interpersonal and cohesiveness effect
 Designing Appraisal Program
7 When to Evaluate?

To decide the appraisal period (three months, six months or

year)

8) Methods of Performance Appraisal

No. Appraisal Method Description

1 Rating Scale
•Typical numerical rating ranging
from poor to excellent of job
related performance criteria such
as initiative, honesty, attendance,
cooperation etc.
•The rater rate each statement and
then sum up numbers.

2 Check List •The rater has to tick Yes or No

against the statements defining
personality characteristics. Then
HR department calculate the
numbers of only Yes statement
 Performance Appraisal Methods
No. Appraisal Method Description
3 Forced Distribution •Compel raters to evaluate performance and
Method distribute ratees on all points given in rating
scale
•For example: Excellent 20 %, Good 20 %,
Average 15 Below average 25 % and
Unsatisfactory performance 20 %

4 Critical Incident •All critical behaviors that contributed to job

Technique success are recorded by supervisor. These
behaviors actually differentiate between effective
an ineffective employee
Behaviorally Anchored •Also called behavioral expectation scale. It
Rating contains descriptive statements of behavior from
least to most effective
Performance Test •With few jobs for evaluation performance test to
check the knowledge and skills of employee can
be conducted
Cost Accounting Method •Performance is evaluated on monetary benefits
employee has given to organization. Cost
benefit analysis of employee
Ranked Method •Supervisor rate his subordinates on ranking
 Performance Appraisal Methods

No. Appraisal Method Description

Comparative •Supervisor rate his subordinates on
Evaluation Method ranking from best to worst
a) Ranking Method: The rater rank
employees from best to worst
b) Paired Comparison: Each employee is
compared and ranked with every employee
in a group or team
N (N-1)/2
MBO •The goals/outcomes are established for
each employee and then performance is
evaluated based on attainment of these
goals
 Performance Appraisal Methods
Appraisal Method Advantages Disadvantages
Rating Scale •Easy to use, time effective, •Biases of raters
and low cost
•All types of job can evaluated
•No training required to raters
Check List •Easy to administer •Use of personality indicators
•No specific training required to •Less flexibility to assign
raters relative ratings

Forced Distribution •Avoid leniency error •What if organization is

Method performing well and all
employees contributing
outstandingly
Critical Incident •Evaluation is based on •In general negative incidents
Technique behaviors that actually are more highlighted
contribute to effective job
performance
•Recency error can be
overcome
•Chance of learning for
subordinate is greater

Behaviorally •Actual observable job behavior •Problems of rating scale

Anchored Rating •BARS is tailor made
 Performance Appraisal Methods
Appraisal Method Advantages
Performance Test •Test can be validated
Cost Accounting •Useful to make
Method training/investment decision
on employee
Comparative •Comparative ranking based
Evaluation Method on performance
•Can be used to decide
merit based pay and
promotion
MBO •Not fit for assembly line
workers
•Good for management jobs
•Increase employee
involvement and motivation
Disadvantages
•Test potential instead of
actual performance
•Difficult to establish profit
contribution
•Recency, Hallo or
perceptual biases
•Employee may not set
challenging and high goals if
achievement of goals is
basis for reward
•Set short term goals
 GOAL-BASED APPRAISAL SYSTEM

Supervisor sets
Organizational goals for
goals subordinate

Agreed goals
and objectives

Department or
Unit goals
Subordinate
proposes goals and
Objectives

Mid Term Review

(Readjustment in
Annual goals if internal
Review or external factor
changes)

Adopted from: Snell, Bohlander & Vohra: Human Resource Management. A South Asian
Perspective, (2010, p.337)
360 Degree Performance Appraisal

Supervisor

Client
Peers
360 Degree
Performance
Team
Appraisal
Self Members

Subordinate
 360 Degree Performance Appraisal
Advantages Disadvantages
   
1 More comprehensive 1 More Complex
   
2 Quality of information is better 2 Conflicting opinion
   
3 Compliments TQM perspective 3 Requires extensive training to
by soliciting external and internal implement
customers  
  4 Grouping may make it ineffective
4 Less bias/prejudice
 
5 increase employee self
development

Source: Snell, Bohlander & Vohra: Human Resource Management. A South

Asian Perspective, (2010, p. 324)
 Process of Performance Appraisal

4 Appraise the Performance

• Measure the performance what he does or what he
does not do

• It should also include potential of employee in addition

to his actual performance

• From different job different performance criteria

should be used

5 Performance Management
Feedback on performance must be used purposefully

1) Performance Interview
• Performance appraisal outcome should be discussed
and shared with employee
• Three goals of performance interview
a) change behavior of poor performers b) maintain
behavior of employee who perform well c) appreciate
superior performers
 Designing Appraisal Program

6 Archiving Performance Data

Keep record of performance data for future

7 Use of Performance Data

Use performance data to streamline HR activities and
make employee related decisions

Key Message: Performance Appraisal System should be

designed with care and organizational goals must linked with
personal goals

Performance appraisal must be shared with employees to

identify their strength and weaknesses and tell them where
they need improvement and how to improve the performance

HR decisions must consider performance appraisal

information
 Summary
• Performance Appraisal

• Relationship between Performance Appraisal and Job

Evaluation

• Objectives of Performance Appraisal

• Multi Purposes of Performance Appraisal

• Performance Appraisal and Competitive Advantage

• Process of Performance Appraisal

• Performance Appraisal Methods

• Goal Based Performance Appraisal

• 360 Degree Performance Appraisal