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PERFORMANCE AND
POTENTIAL
APPRAISAL
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ANNOTATED OUTLINE

INTRODUCTION
Performance appraisal is a systematic and objective way of
evaluating both work related behaviour and potential of employees.

Performance And Potential Appraisal

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Features of performance appraisal

 It is a systematic process, essentially involving three steps: set work

standards, assess employee's performance relative to these standards, and
offer feedback to the employee so that he or she can eliminate deficiencies
and improve performance
 The appraisal is carried out periodically according to a definite plan
 It is not a past oriented activity. The intention is not to put poor performers in a
spot. Instead, it shows employees where things have gone wrong, how to set
things in order and deliver superior performance using their potential fully
 The focus of appraisals is on employee growth and development. It
forces managers to be coaches rather than judges.

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Objectives

The performance appraisal process serves several important

purposes
 Compensation decisions
 Promotion decisions
 Training and development programmes
 Feedback to the employee
 Personal growth and development

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Benefits

Benefits of performance appraisal

Employer perspective [Administrative uses]
 Despite imperfect measurement techniques, individual differences in performance
can make a difference to company performance.
 Documentation of performance appraisal and feedback may be required for legal
defence.
 Appraisal offers a rational basis for constructing a bonus or merit system.
 Appraisal dimensions and standards can help to implement strategic goals and
clarify performance expectations.
Employee perspective [developmental purposes]
 Individual feedback helps people to rectify their mistakes and get ahead, focusing
more on their unique strengths.
 Assessment and reorganisation of performance levels can motivate employees to
improve their performance.

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What is to be appraised?

The content to be appraised is determined on the basis of job analysis.

Usually it comprises of:
 Behaviours, including observable physical actions, movements
 Objectives which measure job related results
 Traits which are measured in terms of personal characteristics

Who will appraise?

 Supervisors
 Peers
 Subordinates
 Users of services
 consultants
 Self appraisal

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When to appraise?

 Conducted informally
 Carried out systematically at regular intervals, sticking to a definite
plan

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The Performance Appraisal Process

Steps in the performance appraisal

process
 Establish performance standards
These are benchmarks against which performance is measured.
They should relate to the desired results of each job
They must be clear to both the appraiser and the appraisee.
Good performance goals should speak about
 What is the task to be accomplished?
 What will it look like when it is accomplished?
 When must it be completed?
 What are the cost considerations?
 What are the likely payoffs to the employee?

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The Performance Appraisal Process

 Communicate the standards

The Appraiser should prepare job descriptions clearly
 Help the appraisee set own goals and targets
 Analyse results objectively
 Offer coaching and guidance
The Appraisee should be clear about what he is doing and why he is doing

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The Performance Appraisal Process

 Measure actual performance

Use reliable and dependable performance measures

These must be easy to use and report on critical behaviours that determine
performance

These would generally include: personal observation, statistical reports, oral

reports and written reports

These may be objective or subjective

Objective measures are generally quantitative, and include quality of production,

degree of training needed, accidents in a given period, absenteeism, length of
service etc. Such measures are used for evaluating lower level jobs

Subjective measures are based on opinions of those doing evaluation and are not
verifiable by others; generally used for evaluating middle level positions.

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The Performance Appraisal Process

 Compare actual performance with standards and discuss the

appraisal

Not an easy job

Emotional factors to be taken into account
Affects the self esteem of the appraisee
Criteria likely to be questioned, if the appraisal turns out to be negative

 Take corrective action, if necessary

Put out the fires

Set things in order
Arrive at new goals for achieving superior performance.

Performance And Potential Appraisal

 Confidential Report: It is a descriptive report prepared,
generally at the end of the year, by the employee’s
immediate supervisor. It is most popular in Government
services. The report highlights the strengths and
weaknesses of an employee.
 Essay Evaluation: under this method the rater is asked to
express the strong as well as weak points of the employee’s
behavior. The rater has to consider the following points:
 Job Knowledge and potential of the employee.
 Employee’s understanding of the company’s programmes, policies
and objectives etc.
 The employees relation with co workers and supervisors.
 The attitude and perception of employees in general.
 The employees functional abilities.
 Critical Incident Technique: under this method the
manager prepares lists of statements of every effective
and ineffective behavior of an employee. These critical
incidents or events represent the outstanding or poor
behavior of employees on the job.
 Checklists and Weighted Checklists: A checklist
represents a set of objectives or descriptive statements
about the employees and his behavior. If the rater
believes strongly about the item he checks the item
otherwise he leaves the item blank.
 Graphic Rating Scale: under this method a
printed form is used to evaluate the performance
of the employee. A variety of traits may be used
in these types of rating scales, the most common
being the quantity and quality of work.
 Behaviorally Anchored Rating Scales:
(BARS): it is a combination of the rating
scale and critical incident method of
performance evaluation. The critical
incidents serve as anchor statements on
the scale and the rating form usually
contains 6 to 8 specially defined
performance dimensions.
 Forced Choice Method: this method was
developed to eliminate bias and
preponderance of high ratings that might
occur in some organizations. The primary
purpose of the forced choice method is to
correct the tendency of a rater to give
consistently high or low ratings to all the
employees.
 Management by Objectives (MBO): MBO
requires the management to set specific,
measurable goals with each employee and
then periodically discuss the latter’s progress
towards these goals.
 Set the organizational goals
 Set the departmental goals
 Discuss departmental goals
 Performance reviews
 Provide feedback.
 Ranking Method: Under this method the
ranking of the employee in a work group
is done against that of another employee.
The relative position of each employee is
expressed in terms of his numerical rank.
 Paired Comparison Method: Ranking becomes
more reliable and easier under the paired
comparison method. Each worker is
compared with all the other employees in
the group and for every trait, the worker is
compared to all the other employees.
 Forced Distribution Method: Under this
method the rater is asked to appraise the
employee according to a predetermined
distribution scale. The rater’s bias is sought
to be eliminated here because the rater is
forced to categorize the employee in the
distribution that is provided to him.
 360 degree Feedback: 360-degree feedback,
also known as multi-rater feedback, multi source
feedback, or multi source assessment, is
feedback that comes from members of an
employee's immediate work circle. Most often,
360-degree feedback will include direct
feedback from an employee's subordinates,
peers, and supervisor(s), as well as a self-
evaluation. It can also include, in some cases,
feedback from external sources, such as
customers and suppliers or other interested
stakeholders.
Merits Demerits

Evaluates methods applied to Ignores performance in terms of

achieve targets reaching goals

Reveals strengths and Colleagues responses tend to be

weaknesses in management biased
style.
Forces inflexible managers to Assessees deny the truth of
initiate self change negative feedback

Creates an atmosphere of The system can be used to

teamwork and improvement humiliate people

Unearths truths about Linking findings to rewards can

organizational culture and prove to be unfair.
ambience
 Judgment errors
 Primacy effect
 Halo error
 Horn effect
 Leniency
 Central Tendency
 Stereotyping
 Recency effect
 Poor Appraisal forms
 Lack of rater’s preparedness
 Ineffective organizational policies and
practice
 Objectives:
 To let the employees know where they stand
 To help employees do a better job by clarifying
what is expected from them
 To plan opportunities for development and
growth
 To strengthen the supervisor subordinate working
relationship by a mutual agreement of goals.
 To provide an opportunity for employees to
express themselves on performance related
issues.
 Reliability and Validity
 Job relatedness
 Standardization
 Practical viability
 Legal sanction
 Training to appraisers
 Open communication
 Employee access to results
 Due process
 The potential appraisal refers to the
appraisal i.e. identification of the hidden
talents and skills of a person. The person
might or might not be aware of them.
Potential appraisal is a future – oriented
appraisal whose main objective is to identify
and evaluate the potential of the employees
to assume higher positions and
responsibilities in the organizational
hierarchy.