Performance Appraisal

Evaluating an employee’s current and/or past performance relative to performance standards

Steps to do Performance Appraisal

Assessing
Setting work employee Providing
standards actual feedback
performance

Rating Self
Committee Ratings
Peer Subordinat
Analysis es

Who should do appraising?

360
Feedback
Techniques for Performance Appraisal

• Graphic rating scale method – Lists several job dimensions or traits (like teamwork) and a range of
performance values (like at par, below par etc.) for each trait.

• Alternation ranking method – Ranking employees from best to worst on a particular trait. Choosing highest
then lowest until all employees are marked.

• Paired comparison method – For every trait you compare every employee with every other employee.

• Forced distribution method – Similar to grading on a curve. The manager places predetermined percentages
of ratees into performance categories. For ex – top 15% are 1’s, Next 75% are 2’s and Last 10% are 3’s. It
forces managers to just not rate every employee as satisfactory or high.

• Critical incident method – Supervisor keeps a log of positives and negative examples of a subordinates work
related behaviour. Every 6 months they meet to discuss performance based on examples.
Techniques for Performance Appraisal

• Behaviourally Anchored Ratings Scale (BARS) – Anchors a rating scale with specific illustrative examples of
good or poor performance.
It involves following steps –

Develop Develop a
Write Critical Reallocate Scale the
performance final
Incidents incidents incidents
dimensions instrument

• Management by Objectives (MBO) – Managers set SMART goals and periodically review them. These goals
align with company wide goal settings and targets. It has following steps -

Set the Define expected

Set department Discuss
organization’s results/individual Provide feedback
goals department goals
goals goals
Techniques for Performance Appraisal

• Electronic Performance Monitoring – Having supervisors electronically monitor the amount of computerized
data an employee is processing per day, and there by his or her performance.

Potential Ratings Problems

• Unclear Standards– When either the trait like quality of work or the rating scale like “good”, “fair” is open to subjective
interpretations. Different people may interpret meanings as per their convenience.

• Halo Effect – When a supervisor’s rating of a subordinate on one trait biases the rating of that person on other traits. BARS is a
better solution for this problem since the performance dimensions are more independent.

• Central Tendency – A tendency to rate all employees the same way, such as rating them all average or high. Ranking
employees or forced distribution helps to remove this problem.

• Strictness or Leniency – The problem that occurs when a supervisor has tendency to rate all subordinates either high or low.

• Recency Effect – Letting what employee has done recently blind you to his/her performance over the year. Critical incidents
method help to resolve this.

• Bias – The tendency to allow individual differences like age, race and sex to affect the appraisal ratings an employee receive.
Advantages and Disadvantages of Appraisal tools/techniques

TOOL ADVANTAGES DISADVANTAGES

Simple to use; provides a quantitative rating for Unclear standards, halo effect, central tendency,
Graphic rating scale
each employee leniency and bias may be problems

BARS Provides behavioral "anchors" Difficult to develop

Avoids central tendency and other rating scale Can cause disagreements and may be unfair if all
Alternation ranking
problems are excellent

End up with a predetermined number or % of Appraisal results depend on choice of cutoff

Forced Distribution Method
people in each group points

Helps specify what is "right" and what is "wrong"

Critical Incident Method about performance; forces evaluation on an Difficult to rate employees relative to one another
ongoing basis

MBO Tied to jointly agreed upon performance objectives Time-consuming

Steps to conduct appraisal interview

• Talk in terms of objective work data

• Don’t get personal

• Encourage the person to talk

• Get Agreement

Ongoing
Ongoing
Goal Performance
Feedback
Alignment Monitoring

Performance Management Coaching and

Direction
Continuous process of identifying, measuring and development
sharing developing the performance of individuals and teams support
and aligning their performance with organizational
goals

Recognition
and Rewards