By Anish George Varghese 1st MBA, SMU (Batch1, 2010- 12


Topics covered y y y y y y y y y y y

What is Performance Appraisal? Need for Performance Appraisal Steps involved in Performance Appraisal Employee Review System What is Performance? Conditions for establishing effective PMS Types of Appraisal Methods Individual Evaluation Methods Multiple person Evaluation Methods 360° Appraisal Benefits of Performance Appraisal

What is Performance Appraisal?
Performance Appraisal is a systematic evaluation of an individual with respect to his/her performance on the job and his/her potential for development.

Why is there a need for PERFORMACE APPRAISALS?
y To systematically

evaluate employee performance and ensure its alignment to organizational goals. y To offer the employee rewards and incentives as motivation to start giving or to continue giving desired results.

1. 2.

3. 4. 5.

DEVELOP PMS (Performance Management System) by HR. PERFORM Standard & Expectations communicated to Employee and performance measured. ASSESS Evaluation of employee performance in lieu of expectations. REVIEW Evaluation results discussed with employee PLAN Next step of action for the employee


y It is a record of the

outcomes or results
produced on a specific job function or activity

during a specific time period without reference
to traits, personal characteristics or competencies of the performer.

Considerations for Establishing an Effective PMS
1. Validit f Framew rk 2. Reliability of Assessment
y Inter-Rater Reliability y Subjective Evaluation to y Should measure important

job characteristics y Should have a sound base for performance analysis

reduce different interpretations 4. Practicality ‡ Ease of use ‡ Should reduce paper work ‡ Time-efficient




i s

‡ Obj cti

ss ss t ‡ Open- nds ‡ Clearl defined criteria

Types of APPRAISAL Methods
y TRAIT-based Appraisal to assess personality or

personal characteristics, loyalty, communication skills, level of initiative & decision making. Used in Service Industry y BEHAVIOUR-based Appraisal to assess what an employee does on the job i.e. how he/she behaves and gets his/her work done. Used in Hospitality Industry. y RESULT-based Appraisal to assess the objective result of work i.e. measures the success at the job. Used in collaboration with the above methods.

Graphic Rating Scale Forced hoice Essay Evaluation Management By Objectives (MBO) y ritical Incident Technique y hecklists & Weighted hecklists y Behaviourally Anchored Rating Scales (BARS)
y y y y

Graphic Rating Scale
y A form is used to

evaluate employee performance. y Commonly used traits Quality & Quantity of Work y Easy to understand y Permits statistical tabulation of scores of the employee.

Forced Choice
y Uses several set of paired

phrases usually both +ve and -ve. y The rater has to indicate which choices are most & least indicative of an employee. y Favourable qualities plus credit Unfavourable ones negative credit

Essay Evaluation
y The rater is asked to give

strong as well as weak points of the employee s behaviour. y Rater considers following traits: 1. Job knowledge & potential 2. Understanding of company goals 3. Ability to plan, organize 4. Relation with co-workers & supervisors 5. Attitude and perception

Management By Objectives (MBO)
y MBO focuses on tangible, verifiable and measurable goals instead of methods. y Concentrates on Key Result Areas (KRA). y Systematic & rational, allows management to achieve maximum results from available resources by focussing on achievable goals.

MBO (contd.)
Key elements of MBO
‡ Arranging organizational goals in a means-ends
chain. ‡ Engaging in joint goal setting. ‡ The following steps are involved  Identifying KRAs  Defining expected results  Assigning specific responsibilities to employees  Define authority and responsibility relationship ‡ Conducting periodic progress review ‡ Conducting annual performance review

Critical Incident Technique
y Manager prepares lists of

statements in instances of very effective & ineffective behaviour of employee. y These critical incidents represent employee s outstanding or poor behaviour. y Periodic record of critical incidents is maintained.

Critical Incident Technique (contd.)
July 20

Sales clerk patiently attended to customers complaints. He is polite, prompt and enthusiastic to solve their problems. OR  July 20 Sales assistant stayed 45 minutes beyond his break during the busiest part of the day. He failed to answer store manager s calls thrice. He is lazy, negligent, stubborn and uninterested in work.

Checklists &
Weighted Checklists
‡Its is a set of

descriptive statements about the employee and his behaviour. ‡Under weighted checklists, value of each question is weighted.

Behaviourally Anchored Rating Scales (BARS)
y It is a combination of Rating Scale & Critical Incident techniques. y Steps 1. Collect critical incidents 2. Identify performance dimensions 3. Reclassifying incidents 4. Assigning scale values to incidents 5. Producing the final instrument

Multiple-Person Evaluation Methods
y Ranking y Paired Comparison y Forced Distribution o Group Appraisal o Field Review Appraisal

Ranking Method
y Evaluator rates the

employees from highest to lowest on some overall criteria. y Not recommended for groups of more than 20. y First the top and bottom performers are identified and then the rest are arranged towards the middle.

Paired Comparison Method
y Each worker is compared with other employees in the group. y For several traits, paired comparisons are made, tabulated and then rank is assigned to each employee. y Not for large groups. y Used by superiors, peers, subordinates or combination of these groups.

Forced Distribution Method
‡ The rater is asked to rate the employee according to a predetermined distribution scale. ‡ 2 criteria used Job Performance & Promotability ‡ 5 point performance scale is used without mentioning descriptive statements. ‡ Worker is placed between extremes good or bad

360 ° Appraisal
y It is a systematic

collection of performance data about an individual or a group from a number of stakeholders. y The data gathered is fed back to the individual in a clear way designed to promote understanding, acceptance & ultimately behaviour.

y First-line manager is in the best position to

effectively carry out full performance review. y Superiors have the authority to redesign and reassign an employee s work based on their individual or team assessment.

Superiors (contd.)
Cautions to be addressed
y Appraisal systems solely relying on this form of

feedback are less reliable than other methods. y Superiors should make an evaluation only if they have a detailed knowledge of each employee s performance. y Managers should be trained on conducting appraisals

Self Assessment
y Improves communication between managers & y y y y

subordinates. Are useful if the employee carries out self assessment in the entire cycle of performance management. Focus can be placed on development of employee through trainings according to potential and needs. Value of self-ratings are widely accepted. Critically valuable in case managers can t readily observe work behaviours & work outcomes.

Self Assessment (contd.)
Cautions to be addressed
y Low correlations between self-rating & other sources

especially superior ratings. May cause alienation if feedback isn t provided skillfully. y Lower self-ratings may indicate low self-esteem & should be addressed to ensure proper growth of his/her personality. y Self-ratings should focus on appraisal of performance elements & not on summary level determination and rating of the employee s performance

y Influence of peer approval & peer pressure is often

y y y y

more effective than the traditional emphasis to please the boss. Peer ratings are proven predictors of future performance & are useful for employee development. Peer ratings have higher correlation with other accepted performance measuring methods. Multiple raters help average out biases. Proper feedback helps manager coach rather than just judge.

Peers (contd.)
Cautions to be addressed
y Emphasizing peer ratings for pay, promotions etc. is not prudent except at award ceremonies. y Unless the group is close knit and matured, the identity of the raters should be kept hidden to ensure honest feedback. y Peer evaluators should be familiar with team member s tasks and responsibilities to give proper feedback. y Peer rating should not be used for competitive ratings to avoid tensions at the workplace. y Employees need to be involved in every aspect of design in peer rating

y Formalized subordinate feedback gives managers a clearer picture of employee needs. y Employees feel they are represented better in organizational decision making. y Feedback of subordinates is effective in evaluating the manager s interpersonal skills but may not be valid for evaluating task-oriented skills. y Combined with other ratings, it adds validity and reliability to the feedback by averaging out biases from summary rating.

Subordinates (contd.)
Cautions to be addressed
y Need for anonymity is essential when using subordinate rating as a source of feedback data due to risk of biased/dishonest feedback or lack of participation. y Managers may feel threatened & perceive it as their authority being undermined. y Subordinates should have sufficient length of assignment under the manager and should only appraise elements of which they have knowledge to ensure accurate assessment. y Should be used carefully by organizations during downsizing.

Customers Setting Customer Service Standards
y Customer feedback should serve as an anchor for all other performance factors. y Are useful in rounding out performance feedback and focusing attention beyond the self-serving hierarchy of feedback limited to the chain of command. y Focus of performance feedback can be expanded by including a range of customers. y Critically valuable in cases where employees seek to satisfy the standards and expectations of only the first-line managers & reduce effectiveness of rating.

Customers Setting Customer Service Standards (contd.)
Cautions to be addressed
y With a few exceptions, eg:- front line jobs involved in serving

customer personally, customers should not be asked to assess the individual employee s or team performance for appraisal. y Customers are better at evaluating outputs rather than processes & working relationships & thus do not have knowledge on how to correctly rate employee. y Designing & validating customer reviews are expensive & time consuming. This time should be spent on developing better feedback systems focusing on organization as a while.

Benefits of Performance Appraisal
y Benefits of performance

appraisal are threepronged 1. Benefits for the appraisee. 2. Benefits for the appraiser. 3. Benefits for the organization.

Benefits for the Appraisee/Employee
y Increased motivation,

job-satisfaction & selfesteem. y Opportunity to discuss work problems & how to overcome them. y Opportunity to discuss aspirations & seeking trainings or guidance under supervisors. y Improving work relations.

Benefits for the Appraiser/Management
y Improves

communication between the employees & management. y Identification of training & development needs. y Generation of ideas. y Better identification of potential & developing employee career plans.

Benefits for the Organization
y Improved performance

throughout the organization. y Creation of culture of continuous improvement & success. y Conveying message that people are valued.


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