 Performance Appraisal

● Performance Appraisal is defined as an assessment of employees by the

manager, in which he/she evaluates the overall contribution made by the
employee to the organization. It is a systematic and logical review, conducted
by the organization annually to judge his potential in performing a task. It
helps to analyse the skills and abilities of an employee for their future growth
that increases the productivity of employees. It helps to identify, the employee
who performs their task well and those who are not, along with the reasons
for the same.
● Performance Appraisal is an organized way of evaluating employee
performance, for which a comparison is made between actual performance
and the present standards.
● The results of the performance appraisal are documented. After that reviews
are given to the employee about their performance during the year, to tell
them where they require improvements. Employees also wish to know their
position in the organization after a particular period of time.
Key Differences Between Performance Appraisal and Performance Management

● An organized way of evaluating the performance and potential of employees for their future growth
and development is known as Performance  Appraisal. The complete process of managing the
human resources of the organization is known as Performance Management.
● Performance Appraisal is a system while Performance Management is a process.
● Performance appraisal is inflexible, but performance management is flexible.
● Performance Appraisal is an operational tool to improve the efficiency of employees. However,
performance management is a strategic tool.
● Performance Appraisal is conducted by a human resource department of the organization, whereas
managers are held responsible for performance management.
● In performance appraisal, corrections are made retrospectively. In contrast to performance
management is forward looking.
● Performance Appraisal has an individualistic approach which is just opposite in the case of
Performance Management.
● Performance Appraisal is carried on eventually, but Performance
Management is an ongoing process.
 Performance Management Performance Appraisal

Performance management, on the other hand, Performance appraisal evaluates previous

focuses on expending time and resources on performances and effectively communicates how
employees for the growth of the company. an employee has worked in a current task. It
does not provide a strategy for future growth.

Performance management ensures that the Performance appraisal only evaluated

employee has accomplished the set goals or not. It employee’s performance objectively for the year
also guides them with blockers on the way.  and gave final feedback.

Performance management, on the contrary, guides Performance appraisal evaluates an employee's

employees so that they can perform better in the mistakes and communicates how an employee
future. could have given better efforts. 

Performance management contrastingly is a Performance appraisal takes place not more than
continuous process that might be a part of day-to- twice a year. 
day conversations between managers and
employees.
Performance management, however, uses a mix of Performance appraisal typically uses a
both qualitative and quantitative approaches to quantitative approach.
enhance employee performance.
 Performance Management Performance Appraisal
Performance management, on the other hand, is Performance appraisal is usually undertaken by
conducted by managers and supervisors, and the HR department. 
multiple other stakeholders involved in the ongoing
process.

Performance management is flexible. Performance appraisal is inflexible. 

Performance management is considered a strategic Performance appraisal is an operational tool for

tool. increasing employee efficiency. 
 What is Performance?
● Doing something successfully by using skills, knowledge and motivation
●“Outcomes, results or accomplishments”

 Performance Management
● a process to establish a shared understanding about what is to be achieved,
and an approach to managing and developing people in order to achieve it
● Getting better results for the organization via the measurement of individual
performance
 Nature of Performance Management
 Performance Management
• Processes used to identify, encourage, measure, evaluate, improve, and reward employee
performance
• Provide information to employees about their performance.
• Clarify organizational performance expectations.
• Identify the development steps that are needed to enhance employee performance.
• Document performance for personnel actions.
• Informing and getting agreement on individual performance
• Facilitate them to achieve better results
• Provide rewards for achieving performance objectives.
 Performance Management is A Part of HRM Cycle

Reward

Performance Appraisal
Recruitment &
Selection

8
Training and
Development
 Performance Management Linkage
 Types of Performance Information
 Performance Standards

 Performance Standards
 Expected levels of performance
 Benchmarks, goals, and targets
 Characteristics of well-defined standards
 Realistic
 Measurable
 Clearly understood
 Challenging
 Performance Appraisal

● “The systematic description of an employee’s strengths and weaknesses”

● The process of evaluation how well employees perform their jobs when
compared to a set of standards, and then communicating the information to
employees.
 Performance Appraisal

● Informal appraisals : ongoing basic within the organization

● Formal appraisals : occurrence at certain intervals throughout that
person’s history of employment
 Uses of Performance Appraisal

Performance
Appraisal

To provide To Providing To Provide

Rewards Training Potential
Benefits of Performance Appraisal
 Individual

• Objectives can be established in relation the whole organization

• Key results and timescale can be established
• Can compare past performance and future activities against standards
• Can be known pay on the basis of performance
 Organization

• Suitable promotion candidates can be identified

• Areas of improvement can be seen
• Communication is improved
• Basis for medium to long term HR planning
 The Process of Performance Appraisal

• Step 1- Identification of criteria

• Step 2- Appraise for a period of time
• Step 3- Prepare an appraisal report by manager
• Step 4- Appraisal interview
• Step 5- Modify the report if necessary as a result of interview
• Step 6- Review of the assessment
• Step 7- Prepare the action plan for improvement
• Step 8- Implement the action plan
• Step 9- Follow up the result
 Where to Appraise?

Common
Performance
Measures

Quantity of Quality of Timeliness of Presence at

Output Output Output Work
 Appraisal Techniques

• Graphic Rating Scales

• Check List
• Essay
• Behavioural Rating Scales
• Management by Objectives (MBO)
 Traditional Performance Appraisal Process
 Types of Appraisals

• Downward Appraisal
• Upward Appraisal
• Peer Appraisal
• Self Appraisal
• Customer Appraisal
• Multi-source or 360 degree Appraisal
 Who Conducts Appraisals?

Supervisors rating
their employees

Employees rating
Multi-source
Sources of their superiors
Performance
Appraisals

Outside sources Team members

rating employees rating each other

Employees rating
themselves
 Multi-source Appraisal
 Appraisal Interview

• Interview between Manger (may be one of the appraiser) and subordinate

(appraise)
• The purpose is to encourage collaborative problem solving and improvement
planning
• Three styles of manager that can be adopted
– Tell and sell
– Tell and listen
– Problem solving
 Appraisal Errors

• Halo error: A situation in which a supervisor generalizes from one dimension

of a person’s job performance to all dimensions of performance.
• Error of central tendency: An error that occurs when a manager rates all
employees average, even when their performances vary.
• Leniency error: A situation occurs when manager rates all employees in a
group higher than they deserve.
 Reasons to Fail Performance Appraise

● Manager not honest

● Unclear Language
● Manager not taking PA seriously
● Insuff. Rewards
● Lacks Information
● Lack of Appraisal skill
● Ineffective discussion
● No On-Going Feedback
 You
a n k
Th