Unit V

Performance Appraisal
“Performance appraisal is the systematic, periodic and
an impartial rating of an employee’s excellence in the
matters pertaining to his present job and his potential
for a better job.“
- Flippo

Performance appraisal is the systematic description of

an employees job relevant strengths and weakness.
The basic purpose is to find out how well the employee
is performing the job and establish a plan of
improvement.
Purpose/Objectives
To maintain records in order to determine compensation
packages, wage structure, salary raises, etc.
To identify the strengths and weaknesses of employees to place
right men on right job.
To maintain and assess the potential present in a person for
further growth and development.
To provide a feedback to employees regarding their
performance and related status.
It serves as a basis for influencing working habits of the
employees.
To review and retain the promotional and other training
programmes.
Need
Provide information about the performance ranks.
Provide feedback information about the level of
achievement and behaviour of the subordinate.
Provide information which helps to counsel the
subordinate.
Provide information to diagnose deficiency in the
employee skills.
Appraisal Process
Establish performance standards with employee

Mutually set measurable goals

Measure actual performance

Compare actual with standards

Discuss the appraisal with employee

If necessary initiative corrective actions

Methods of Performance Appraisal
 Traditional Methods
* Graphic Rating Scales
* Ranking Method
* Paired Comparison method
* Forced distribution method
* Checklist Method
- Simple check list method
- Weighted checklist
- Forced choice method
* Critical Incident Method
- Essay or free form Appraisal
- Group Appraisal
- Confidential Reports
Methods of Performance Appraisal

Modern Methods
* Behaviorally anchored Rating Scales(BARS)
* Human Resource Accounting
* Management by Objectives (MBO)
* Behaviour Observation Scales
* Psychological Appraisal
* Results Method
* Productivity Measures
* Balance Scorecard
* 360o Performance Appraisal
oSupervisors

oPeers

oSubordinates

oSelfAppraisal
oUser of service/Customers

oConsultants
Problems of Performance Appraisal
Rating Biases.
* Halo Effect
* Error of Central tendency
* The leniency and strictness
* Personal Prejudice
* The Recency effect
Appraisal is based on subjectivity.
Less reliability and validity of the Performance Appraisal
techniques.
Some ratings particularly about the potential appraisal
are purely based on guess work.
Promotion
“ The upward reassignment of a individual in an
organization's hierarchy, accompanied by increased
responsibilities, enhanced status and usually with
increased income though not always so”
- Arun Monappa and Mirza s.Saiyadain
Types of Promotions
Vertical
Up gradation
Dry promotion
Bases of Promotion
Merit
Seniority
Merit cum Seniority

Problems
Promotion disappoints some employees
Some employees refuse promotion.
Transfer
“A lateral shift causing movement of individuals from
one position to other usually without involving any
marked change in duties, responsibilities, skills
needed for compensation”
Reasons for Transfer
To meet the organizational requirement
To satisfy the employee needs
To utilize employees skill, Knowledge etc
To punish the employees
To minimize fraud, bribe etc
Types of Transfer
Production transfer
Replacement transfer
Rotation transfer
Shift transfer
Remedial transfer
Penal transfer
Problems of Transfer
Adjustment problems to the new employee to the new
job, place, environment, superiors and colleagues.
Transfers from one place to another place it make
inconvenience.
Company initiated transfers, result in reduction in
employee contribution.
Discriminatory transfer affect employee morale, job
satisfaction, commitment and contribution.
Demotions
Meaning
A demotion occurs when a classified employee is
reassigned to a position with a salary range,
responsibilities and authority that is lower than
the former position.
Organisations use demotions less frequently as it
affects the employees career prospects and
morale. 
Reasons for Demotions
Unsuitability of the employee to higher level jobs
Adverse business conditions
New technology and new methods of operations
Employees are demoted on disciplinary grounds.
Separation (Pravin durai)
An employee leaves the organisation after several years of
service. An employee may be separated as consequence of
resignation, removal, death, permanent incapacity, discharge
or retirement. It is just staying away from the job.

Reasons for separation

Voluntary separation
- Professional reasons
- Personal reasons
Involuntary separation
- Health problems
- Behavioural problems
- Organizational problems
Types of separation
Retirement
Resignation
Removal (including Dismissal or Discharge)
Retrenchment
Layoff (temporary seperation)
Control (Pravin Durai – 362 -366)
Definition

Controlling is concerned with monitoring how the

work is proceeding, checking the results against
objectives and taking corrective action when required.

- William J . Byrne
 Importance
Controlling ensures that the organization progress in
the right direction.
It help the manager in the timely detection of
performance shortages at different levels of
organization.
It enables the management to avoid the recurrence of
past mistakes by identifying the reasons for such faults.
Control can minimize waste, fraud and
mismanagement in asset utilization.
Proper control system can facilitate effective
decentralization and delegation of authority at different
levels.
Steps in Controlling Process
Establishment of standard performance
Measuring actual performance
Comparison of actual performance with standards
Initiating corrective actions
Methods of Controlling
Financial controls
Financial ratio
Financial budgets
Financial audits
Process control
Information control
Benchmarking of best practices
 Requirement of effective control systems
 Each controlling system must be tailor made.
 Controlling technique should facilitate the accomplishment of organizational goals
and objectives.
 The standard adopted by the manager for measuring the work performance should be
accurate, objectives and attainable.
 Controlling system must follow the principle of exception.
 Controlling system must be adequately flexible to absorb the unforeseen
developments quickly and effectively.
 Controlling must be cost effective.
 Controlling system must be able to detect the performance deviations promptly and
facilitate corrective actions immediately.
 Controlling should have provisions for periodic review of the performance goals and
standard and to make necessary changes.
 Controlling method adopted by the managers and the changes in such methods
should be communicated to employees promptly and comprehensively.
Grievance
Definition
‘Any dissatisfaction or feeling of injustice in
connection with one’s employment situation that is
brought to the notice of the management’
Features (Vikas Arora)
A grievance refers to any form of discontent or
dissatisfaction with any aspect of the organisation.
 The dissatisfaction must arise out of employment not
due to personal or family problem.
The discontent can arise out of real or imaginary
reasons.
The discontent may be voiced or unvoiced.
A grievance is tranceable to perceived non fulfillment
of ones expectations from the organisation.
Forms/Types of grievance
(Vikas Arora)
Factual
Imaginary
Disguised
Causes of Grievances
(Subba Rao)
Demand for individual wage adjustments
Complaints about the incentive system
Complaints about the job classifications
Complaints concerning disciplinary measures and procedures
Objections to the general methods of supervision
Promotion
Disciplinary discharge or lay- off
Transfer for another department or another shift
Inadequacy of safety and health services/devices
Improper job assignment
Causes and Effect of grievance
(Vikas Arora)
A Survey of practices in industries in India
* Economic
* Work Environment
* Supervision
* Work group
* Miscellaneous
Grievance (Identifying) Methods
Observation
Grievance procedure
Gripe boxes
Open door policy
Exit interview
Opinion surveys
 Grievance procedure in Indian Industry
Aggrieved
Employee

Departmental
Representative (48
hours)

Head of Department (3
days)

Grievance
Committee – (7 days
– 3 days)
Chief Executive (7
days)

Voluntary
Arbitration

SETTLEMENT OF GRIEVANCE
 Guidelines for Handling Grievances
Treat each case as important and get the grievance in writing.
Talk to the employee directly. Encourage him to speak the truth. Give him a
patient hearing.
Discuss in a private place. Ensure confidentially, if necessary.
Handle each case within a time frame.
Examine company provisions in each case. Identify violations, if any. Do not
hold back the remedy if the company is wrong. Inform your superior about all
grievances.
Get all relevant facts about the grievance. Examine the personal record of the
aggrieved worker. See whether any witness are available. Visit the work area.
The idea is to find where things have gone wrong and who is at fault.
Gather information from the union representative, What he has to say, what
he wants etc. Give short replies and treat him properly.
Control your emotions, your remarks and behaviour.
Maintain proper records and follow up the action taken in each case.
Be proactive, if possible.
Grievance Redressal Methods
Collective bargaining
Mediation
Conciliation
Arbitration
Adjudication