Performance Appraisal

PERFORMANCE APPRAISAL (PA)

• Central to an organization’s HR management
activities.

• Helps both the manager and subordinate

maintain the ‘organization-job- employee
characteristic match’.

“the process of systematically evaluating

performance of an individual in comparison to
others or against a set of standards and providing
feedback on which performance adjustments can
 PURPOSE

PA’s are intended to: -

 Define the specific job criteria against

which performance will be measured.

 Measure past job performance accurately.

 Justify the rewards given to individuals

and/or groups, thereby discriminating
between high and low performance.
 PA let people know where they stand relative
to objectives and standards.

 PA decisions are concerned with issues such

as promotions, transfers, terminations, and
salary increments.

 PA’s can be used to inform employees about

where they stand in terms of the
organization’s expectations and performance
 Feedback can help employees better
understand-

 what kind of rewards they will receive if

they perform well, and;

 what actions they need to take to reach

that level of performance.
 PERFORMANCE APPRAISAL: WHO DOES
IT?

• Traditionally, immediate supervisor/boss

conducts PA.

• Reason why immediate supervisor/boss conducts

PA
 the employee reports to his supervisor for every
day work and seek instructions/ guidance,
therefore the supervisor can provide maximum
information about subordinate’s performance.
 PERFORMANCE APPRAISAL: WHO DOES
IT?
• To obtain as much information as possible, more
than one third of US organizations are now using a
relatively new way of performance appraisal known
as 360° appraisal.

• This is a comprehensive approach which uses

evaluations from: -
 Bosses
 Peer groups members in any organization
 Subordinates
 Self-ratings
 PERFORMANCE APPRAISAL:
METHODS

• The methods of performance appraisal can be

divided into two general categories: -

 Comparative Methods

 Absolute Methods
 COMPARATIVE METHODS

• Intend to identify one’s relative standing

in comparison to others in a group of
people being evaluated.

• Can establish whether employee A is

better than employee B or who is better
than employee C.

• While they can indicate that one person is

better than another but they fail to indicate
• They fail to indicate whether a person
receiving good evaluation is really good
enough.

• Three comparative performance appraisal

methods are : -

 Ranking

 Paired Comparison
 COMPARATIVE METHODS: RANKING

• Simplest of all the comparative techniques.

• Involves merely rank ordering each

individual from best to worst on a given
dimension.

• Relatively simple to use.

• Can become burdensome when there are

many people to consider.
 COMPARATIVE METHODS: PAIRED
COMPARISON

• Each person in a group is directly compared

with every other person in that group.

• The frequency of endorsement across all

pairs determine one’s final ranking.

• Every possible paired comparison within a

group of individuals is considered.
 COMPARATIVE METHODS: FORCED
DISTRIBUTION

• A fixed number of performance categories,

such as “very good”, “good”, “adequate”,
“poor”, “very poor” are used.

• Evaluator is asked to rate a specific

proportion of employees in each of these
categories.

• This method forces the evaluator to use all

 ABSOLUTE METHODS

• These methods specify precise

measurement standards.

• Four of the most common absolute

methods are: -

 Graphic Rating Scales

 Critical Incident Diaries
 Behaviorally Anchored Rating Scales
 Management by Objectives
ABSOLUTE METHODS: GRAPHIC RATING
SCALES

• Various dimensions/qualities related to high

performance in a given job are identified.

• Evaluators are supposed to assign marks to

employees on each dimension out of given
marks.

• The primary appeal of graphic rating scales is

their ease of use.
 ABSOLUTE METHODS: CRITICAL
INCIDENT DIARY

• Good for employee development and feedback

but not useful in making evaluative decisions.

• Diary type log books are maintained and filled

up either daily or weekly.

• Evaluators are supposed to record incidents of

each subordinate’s behavior on pre decided
dimensions that led to either unusual success or
failure in a given performance aspect.
 ABSOLUTE METHODS: BEHAVIORALLY
ANCHORED RATING SCALES

• Developing BARS is a complex and challenging task

because it requires lots of time and effort.

• But once developed, BARS is quite useful in making

evaluative decisions.

• BARS describes observable job behaviors, each of

which is evaluated to determine good versus bad
performance.

• It is sort of Do’s and Don’ts about a job. Employees

having more Do’s in their everyday behavior are rated
 ABSOLUTE METHODS: MANAGEMENT
BY OBJECTIVE

• Subordinates work with their supervisors to

establish specific task related objectives that
fall within their domains and serve as means to
help accomplish the supervisor’s higher level
objectives.

• Each set of objectives is worked out between a