Welcome

To

Discussion

Of

Performance Appraisal
 Performance Appraisal
Issues for Discussion:

►Meaning of Performance Appraisal.

►Several Common Uses of Performance
Appraisal.
►Meaning of Performance.
►Determinants of Performance.
 Issues for Discussion:

►Environmental Factors As Performance

Obstacles.
►Methods of Performance Appraisal.
►Errors in Performance Appraisal.
►Overcoming Errors in Performance
Appraisal.
 Performance Appraisal

Performance appraisal is the process of

determining and communicating to an
employee how he/she is performing on
the job and ,ideally, establishing a
plan of improvement.
 Several Common Uses of
Performance Appraisal
♦ One of the most common uses of
performance appraisal is for making
administrative decisions relating to
promotions , fringes , layoffs , and merit pay
increases .

♦ Performance appraisal information can also

provide needed input for determining both
individual and organizational training &
development needs.
 Several Common Uses of
Performance Appraisal
♦ Another important use of performance appraisal
is to encourage performance improvement. In this
regard, performance appraisals are used as a
means of communicating to employees how
they are doing and suggesting needed changes
in behavior, attitude, skills, or knowledge.

♦ Finally , two other important uses of information

generated through performance appraisals are
a) input to the validation of selection
procedures, and b) input to the human resource
planning .
Understanding Performance
Performance refers to the degree of
accomplishment of the tasks that make up an
employee’s job . It refers how well an
employee is fulfilling the requirements of a
job. Often confused with effort, which refers to
energy expended, performance is measured in
terms of results.

For example- a student may expert a great

deal of effort in preparing for an examination
and still make a poor grade. In such a case
the effort expended was high, yet the
performance was low.
Determinants of Performance
Effort:

Effort refers to the amount of energy (physical or mental) an

individual used in performing a task.

Abilities:

Abilities are personal characteristics used in performing a job.

Abilities usually , do not fluctuate widely
over short periods of time.

Role (task) Perceptions :

It refers to the directions in which individuals believe that they should

channel their efforts on their jobs.
 Environmental Factors As
Performance Obstacles
Some of the most common potential environmental factors
as performance obstacles are as follows:

 A lack or conflicting demands on the employee’s time.

 Inadequate work facilities and equipment.

 Restrictive policies that affect the job.

 Lack of cooperation among employees.

 Temperature
 Environmental Factors As
Performance Obstacles

 Lighting
 Noise
 Machine or equipment pacing
 Shifts
 Luck
 Performance Appraisal
Methods
The performance appraisal methods are as follows :

 Goal - Setting , or Management by Objective (MBO) ,

 Multi – Rater Assessment (or 360 – Degree Feedback ),
 Work Standards Approach,
 Essay Appraisal ,
 Critical – Incident Appraisal ,
 Graphic Rating Scale ,
 Checklist ,
 Behaviorally Anchored Rating Scale (BARS) ,
 Forced –Choice Rating , and
 Raking Method.
 Goal - Setting , or Management by
Objectives (MBO)
The goal –setting approach to performance appraisal , or management by objectives
as it is more frequently called , is more commonly used with professional and
managerial employees . Other names for MBO include management by results ,
performance management , results management , and work planning and review
program.

The MBO process typically consists of the following steps :

 Establishing clear and precisely defined statements of objectives for the work
to be done by an employee.

 Developing an action plan indicating how these objectives are to be achieved .

 Allowing the employee to implement the action plan .

 Measuring objectives achievement .

 Taking corrective action when necessary .

 Establishing new objectives for the future .

Goal - Setting , or Management by
Objectives (MBO)
For an MBO system to be successful, several requirements must
be met. These are :

First , objectives should be quantifiable and measurable ; objectives

whose attainment cannot be measured or at least verified
should be avoided where for possible .

Second , objectives should also be challenging yet achievable , and

they should be expressed in writing and in clear , concise ,
unambiguous language .

Third , MBO also requires that employees participate in the

objectives - setting process .

Final , a final requirement for the successful use of MBO is that

the objectives and action plan must serve as a basis for
regular discussion between the manager and the employee
concerning the employee’s performance .
 Multi- Rater Assessment

One currently popular method of performance

appraisal is called multi - rater assessment or
360 - degree feedback . With this method ,
managers , peers , customers , suppliers , or
colleagues are asked to complete questionnaires
on the employee being assessed .The person
assessed also completes a questionnaire. The
questionnaires are generally lengthy . Typical
questions are : Are you crisp ,clear and articulate ?
Abrasive ? Spreading yourself too thin ? The
human resources department provides the results
to the employees , who in turn gets to see
how his/ her opinion differs from those of the
group doing the assessment .
 Work Standards
The work standard approach to performance
appraisal is most frequently used for
production employees and is basically a form of
goal setting for these employee . It involves
setting a standard or an expected level of
output and then comparing each employee’s
performance to the standards . Generally , work
standards should reflect the average output of
a typical employee . Work standards attempt to
define a fair day’s output . An advantage of
the work standards approach is that the
performance review is based on highly
objective factors .The most serious criticism of
work standards is a lack of comparability of
standards for different job categories .
 Essay Appraisal
The essay appraisal method requires that
the evaluation describe an employee’s
performance in written narrative form .
Instructions are often provide as to the
topics to be covered . The primary
problem with essay appraisals is that
their length and content can vary
considerably , depending on the rater .
Thus , essay appraisals are difficult to
compare . The writing skill of the
appraiser can also affect the appraisal .
Critical –Incident Appraisal
The critical – incident appraisal method requires
that the evaluator to keep a written record of
incidents as they occur . The incidents
recorded should involve job behaviors that
illustrates both satisfactory and unsatisfactory
performance of the employee being rated. As
they are recorded over time , the incidents
provide a basis for evaluating performance and
providing feedback to the employee. The
main drawback to this approach is that the
rater is required to job down incidents
regularly , which can be burdensome and time –
consuming .
 Graphic Rating Scale
With the graphic rating scale method , the
rater assesses an employee on factors such
as quantity of work , dependability , job
knowledge , attendance , accuracy of work , and
cooperativeness . Graphic rating scales include
both numerical ranges and written descriptions
. The graphic rating scale method is subject to
some serious weaknesses . One potential
weakness is that evaluators are unlikely to
interpret written descriptions in the some
manner due to differences in background ,
experience , and personality .
 Checklist
In the checklist method , the rater makes yes-or – no
responses to a series of questions concerning the
employee’s behavior .

Normally the scoring key for the checklist method is

kept by the human resource department ; the evaluator
is generally not aware of the weights associated with
each question . But because raters can see the
positive or negative connotation of each question , bias
can be introduced . Additional drawbacks to the checklist
method are that it is time-consuming to assemble
the questions for each job category , a separate listing
of questions must be developed for each job
category , and the checklist questions can have different
meanings for different raters .
Behaviorally Anchored Rating Scale
The behaviorally anchored rating scale method of performance appraisal is
designed to assess behaviors required to successfully perform a job . BARSs
are normally developed through a series of meetings attended by both
managers and job incumbents. The steps are usually followed :

♦ Managers and job incumbents identify the relevant job dimensions for
the job .

♦ Managers and job incumbents write behavioral anchors for each job
dimensions . As many anchors as possible should be written for each
dimension .

♦ Managers and job incumbents reach a consensus concerning the scale

values to be used and grouping of anchor statements for each scale
value .

The use of BARS can result in several advantages . First , BARSs are developed
through the active participation of both managers and job incumbents . This
increases the likelihood that the method will be accepted .

Second , the anchors are developed from the observation and experience of
employees who actually perform the job . Finally , BARSs can be used to provide
specific feedback concerning an employee’s job performance .

One major drawback to the use of BARSs is that they take considerable
time and commitment to develop. Furthermore , separate forms must be
developed for different jobs .
 Forced-Choice Rating
Many variations of the forced- choice rating
method exist. The most common practice
requires the evaluator to rank a set of
statements describing how an employee
carries out the duties and responsibilities of
the job .

This method attempts to eliminate evaluator

bias by forcing the rater to rank statements
that are seemingly indistinguishable or
unrelated . However , the forced – choice method has
been reported about irritate raters, who feel
they are not being trusted. Furthermore , the
results of the forced –choice appraisal can be
difficult to communicate to employees .
 Ranking Method
Ranking Method of performance appraisal
in which the performance of an
employee is ranked relative to the
performance of others . When it becomes
necessary to compare the performance
of two or more employees , ranking
method can be used . Three of the
more commonly used ranking methods
are alternation , paired comparison , and
forced distribution .
(a) Alternation Ranking
The alternation ranking method lists
the names of the employees to
be rated on the left side of a
sheet of paper . The rater chooses
the most valuable employee on the
list , crosses the name of the left-
hand list , and puts it at the top of
the column on the right-hand
side of the paper .
The appraiser then selects and
crosses of the name of the
least valuable employee from the
left-hand column and makes it to
the bottom of the right-hand
column
(b) Paired Comparison Ranking

Paired comparison ranking is best illustrated with

an example . Suppose a rater is to evaluate six
employees . The names of these individuals are listed
on the lift side of a select of paper .The
evaluator then compares the first employee with
the second employee on a chosen performance
criterion , such as quantity of work. If he / she
believes the first employee has produced more
work than the second employee , a check make is
placed by the first employee’s name . The rater
then compares the first employee to the third ,
fourth , fifth , and sixth employee on the same
performance criterion , placing a check make by the
name of the employee who produced the most
work in each paired comparison . The process is
repeated until each employee has been compared to
every other employee on all of the chosen
performance criteria . The employee with the most
check marks is considered to be the best
performer. Likewise , the employee with the fewest
checkmarks is the lowest performer . One major
problem with the paired comparison method is that
it becomes unwieldy when comparing more than
five or six employees .
(c) Forced-Distribution :

The forced-distribution method

requires that the rater should
compare the performance of the
employees and place a certain
percentage of employees at
various performance level. It
assumes that the performance level
in a group of employees will be
distributed according to a bell –
shaped , or normal curve .
In the above figure has been illustrated how
the forced-distribution method works . The rater is
required to rate 60% of the employee as meeting
expectation , 20% as exceeding expectations ,
and 20% as not meeting expectations .

One problem with the forced- distribution method

is that in small group of employees , a bell-
shaped distribution of performance may not be
applicable .
 Errors in Performance Appraisal
Several common errors have
been identified in performance
appraisal . These are as follows :

1. Leniency Error ,
2. Central Tendency Error ,
3. Recency Error, and
4. Halo Effect .
1. Leniency Error :

Leniency error occurs in performance appraisals when

a manager’s ratings are grouped at the positive end
instead of being spread throughout the
performance scale .

2. Central Tendency :

Central tendency occurs when appraisals statistics indicate

that most employees are appraised as being near of
the middle of the performance scale .

3. Recency Error :

Recency occurs when evaluations are based on

work performed most recently –generally work performed
one - to - two months prior to evaluation .

4. Halo Effect : Halo effect occurs when a rater

allows a single prominent characteristic of an
employee to influence his or her judgment on each
separate item in the performance appraisal .
Overcoming Errors in Performance Appraisal

As the preceding discussion indicates ,

the potential for errors in performance
appraisals is great . One approach to
overcoming these errors is to make
refinements in the design of
appraisal methods .

A more promising approach to

overcoming errors in performance
appraisals is to improve the skills
of raters .
Thank You

For

Attending

This Session