PERFORMANCE APPRAISAL or

PERFORMANCE REVIEW
Performance Appraisal/Review is a procedure that
involves:
•Setting work standards
•Assessing the employee’s actual performance relative to
these standards and
•Providing feedback to the employee with the aim of
motivating that person to eliminate performance deficiencies
or to continue to perform above par
OBJECTIVES OF PERFORMANCE APPRAISAL
• Making Development Decisions
– Motivate and guide the employees towards
purposeful personal development of skills and
competencies
– Providing feedback
• Making Administrative Decisions
– Support administrative decisions such as
promotions, transfers, demotions, terminations,
pay increases, etc.
PROCESS OF PERFORMANCE APPRAISAL

• Defining Objectives of Performance Appraisal

• Defining Performance Expectations
• Designing Performance Appraisal System
• Implementing Performance Appraisal System
• Performance Appraisal Interview
• Post Performance Appraisal Actions
 CHARACTERISTICS OF EFFECTIVE
APPRAISAL
Appraisal system to be effective should possess the following
characteristics:
1. Clear Objectives: The objectives of performance appraisal
should be clear, specific, timely and open. The appraisal
system should be fair and beneficial to both the individual
employee and the organization should be linked with other
subsystems of personnel management.
2. Reliable and Valid: Appraisal system should provide
consistent, reliable and valid information and date. Appraisals
should measure what they are supposed to measure. For
example, if the objective of appraisal is to show potential of
an employee for promotion, it should supply the date relating
to potentialities of the employee.
 CHARACTERISTICS OF EFFECTIVE
APPRAISAL
3. Standardization: The appraisal form, procedures and
rules should be standardized. There should be well-
defined performance criteria and standards. Employees
should be made fully aware of these standards as
appraisal decisions affect all employees of the group.
4. Training: Evaluators should be given training in
procedures and principles of appraisal. They should be
provided with knowledge and skills in designing
appraisals, conducting post appraisal interviews and
correcting rating errors.
 CHARACTERISTICS OF EFFECTIVE
APPRAISAL
5. Job Relatedness: The appraisal system should
focus attention on job-related behaviour and
performance. It should provide information on
job related activities and areas.
6. Mutual Trust: Before introducing the appraisal
system, a climate of mutual trust, cooperation
and confidence should be created in the
organisation. Under the system, the employees
should be treated in a supportive manner.
 CHARACTERISTICS OF EFFECTIVE
APPRAISAL
7. Feedback and Participation: The ratings should be
communicated to both the employees and the raters.
The appraisal system should be open and participative.
The employees should get information on their
performance. The system should involve employees in
the goal setting process.
8. Help Focus: Appraisal should not judgmental. It should
not be purely control- oriented. The evaluator should
also play the role of coach and counselor. He should-
help people reach their full potential. The overall
purpose of appraisals should be developmental.
 CHARACTERISTICS OF EFFECTIVE
APPRAISAL
9. Recognition of Differences: Organization differs in terms
of work, size, resources, needs and environment. Hence,
the appraisal system must be designed to meet the needs
of particular organization. It should be specific and tailor -
made for the particular company.
10. Post Appraisal Interview: An appraisal system is only as
effective as the manager is iii communications. Hence, an
interview with the employee should be arranged after
appraising his performance. It will help to know the
difficulties of work and training needs of employees. In
interview, problem solving approach should be adopted
and counseling should be provided for improving
performance.
METHODS OF PERFORMANCE APPRAISAL
• PAST ORIENTED APPRAISAL METHODS (TRADITIONAL
METHODS):
– Essay appraisal
– Graphic rating scale appraisal
– Field review appraisal
– Forced-choice rating appraisal
– Forced Distribution
– Critical incident appraisal
– Work-standards approach
– Ranking methods appraisal
– Paired Comparison
– Grading
– Checklist
– Confidential Report
METHODS OF PERFORMANCE APPRAISAL

• FUTURE ORIENTED APPRAISAL METHODS:

– Management-by-objectives appraisal
– Assessment centers
– Behaviourally Anchored Rating Scale
– 360–Degree appraisal
– Cost-Accounting Method
– Balanced Scorecard
 Traditional Methods
• RANKING METHOD: It is the oldest and simplest formal
systematic method of performance appraisal in which employee
is compared with all others for the purpose of placing order of
worth. The employees are ranked from the highest to the lowest
or from the best to the worst.
• However, the greatest limitations of this appraisal method are
that:
(i) It does not tell that how much better or worse one is than
another,
(ii) The task of ranking individuals is difficult when a large number
of employees are rated, and
(iii) It is very difficult to compare one individual with others having
varying behavioral traits. To remedy these defects, the paired
comparison method of perfor­mance appraisal has been evolved.
 Traditional Methods
• Paired Comparison: In this method, each employee is
compared with other employees on one- on one basis,
usually based on one trait only. The rater is provided with a
bunch of slips each coining pair of names, the rater puts a
tick mark against the employee whom he insiders the better
of the two. The number of times this employee is compared
as better with others determines his or her final ranking.
• The number of possible pairs for a given number of
employees is ascertained by the following formula:
N (N-1)/2
• One obvious disadvantage of this method is that the method
can become unwieldy when large numbers of employees are
being compared.
 Traditional Methods
• Grading Method: In this method, certain categories
of worth are established in advance and carefully
defined. There can be three categories established for
employees: outstanding, satisfactory and
unsatisfactory. There can be more than three grades.
Employee performance is compared with grade
definitions. The employee is, then, allocated to the
grade that best describes his or her perfor­mance.
• One of the major drawbacks of this method is that
the rater may rate most of the employees on the
higher side of their performance.
 Traditional Methods
• Forced Distribution Method: This method was
evolved by Tiffen to eliminate the central tendency of
rating most of the employees at a higher end of the
scale. The method assumes that employees’
performance level confirms to a normal statistical
distribution i.e., 10,20,40,20 and 10 per cent. This is
useful for rating a large number of employees’ job
performance and promo ability. It tends to eliminate
or reduce bias.
• It suffer from the drawback that improve similarly, no
single grade would rise in a ratings.
 Traditional Methods
• Forced-Choice Method: The forced-choice method is
developed by J. P. Guilford. It contains a series of groups
of statements, and rater rates how effectively a
statement describes each individual being evaluated.
Common method of forced-choice method contains two
statements, both positive and negative.
• Examples of positive statements are:
1. Gives good and clear instructions to the subordinates.
2. Can be depended upon to complete any job assigned.
• A pair of negative statements may be as follows:
1. Makes promises beyond his limit to keep these.
2. Inclines to favor some employees.
 Traditional Methods
• Each statement carries a score or weight, which is
not made known to the rater. The human
resource section does rating for all sets of
statements— both positive and negative. The final
rating is done on the basis of all sets of
statements. Thus, employee rating in this manner
makes the method more objective. The only
problem associated with this method is that the
actual constructing of several evaluative
statements also called ‘forced-choice scales’, takes
a lot of time and effort.
 Traditional Methods
• Check-List Method: The basic purpose of utilizing check-list
method is to ease the evaluation burden upon the rater. In this
method, a series of statements, i.e., questions with their answers
in ‘yes’ or ‘no’ are prepared by the HR department (see Figure 28-
2). The check-list is, then, presented to the rater to tick
appropriate answers relevant to the appraisee. Each question
carries a weight-age in relationship to their importance.
• When the check-list is completed, it is sent to the HR department
to prepare the final scores for all appraises based on all questions.
While preparing questions an attempt is made to determine the
degree of consistency of the rater by asking the same question
twice but in a different manner
Traditional Methods
 Traditional Methods
• However, one of the disadvantages of the
check-list method is that it is difficult to
assemble, analyze and weigh a number of
statements about employee characteristics and
contributions From a cost stand point also, this
method may be inefficient particularly if there
are a number of job categories in the
organization, because a check-list of questions
must be prepared for each category of job. It
will involve a lot of money, time and efforts.
 Traditional Methods
• Critical Incidents Method: In this method, the rater focuses
his or her attention on those key or critical behaviors that
make the difference between performing a job in a
noteworthy manner (effectively or ineffectively). There are
three steps involved in appraising employees using this
method.
• First, a list of noteworthy (good or bad) on-the-job behavior
of specific incidents is prepared. Second, a group of experts
then assigns weightage or score to these incidents,
depending upon their degree of desirability to perform a job.
Third, finally a check-list indicating incidents that describe
workers as “good” or “bad” is constructed. Then, the check-
list is given to the rater for evaluating the workers.
 Traditional Methods
• The basic idea behind this rating is to apprise the
workers who can perform their jobs effectively in critical
situations. This is so because most people work alike in
normal situation. The strength of critical incident method
is that it focuses on behaviors and, thus, judge’s
performance rather than personalities.
• Its drawbacks are to regularly write down the critical
incidents which become time-consuming and
burdensome for evaluators, i.e., managers. Generally,
negative incidents are positive ones. It is rater’s inference
that determines which incidents are critical to job
performance. Hence, the method is subject to all the
limitations relating to subjective judgments.
 Traditional Methods
• Graphic Rating Scale Method: The graphic rating scale is one
of the most popular and simplest techniques for appraising
performance. It is also known as linear rating scale. In this
method, the printed appraisal form is used to appraise each
employee.
• The form lists traits (such as quality and reliability) and a range
of job performance characteristics (from unsatisfactory to
outstanding) for each trait. The rating is done on the basis of
points on the continuum. The common practice is to follow
five points scale.
• The rater rates each appraisee by checking the score that best
describes his or her performance for each trait all assigned
values for the traits are then totaled.
Traditional Methods
 Traditional Methods
• This method is good for measuring various job
behaviors of an employee. However, it is also
subjected to rater’s bias while rating
employee’s behavior at job. Occurrence of
ambiguity in design- mg the graphic scale
results in bias in appraising employee’s
performance.
 Traditional Methods
• Essay Method: Essay method is the simplest one among
various appraisal methods available. In this method, the
rater writes a narrative description on an employee’s
strengths, weaknesses, past performance, potential and
suggestions for improvement. Its positive point is that it is
simple in use. It does not require complex formats and
extensive/specific training to complete it.
• However, essay method, like other methods, is not free
from drawbacks. In the absence of any prescribed
structure, the essays are likely to vary widely in terms of
length and content. And, of course, the quality of appraisal
depends more upon rater’s writing skill than the appraiser’s
actual level of performance.
 Traditional Methods
• Moreover, because the essays are descriptive,
the method provides only quali­tative
information about the employee. In the
absence of quantitative data, the evaluation
suffers from subjectivity problem.
Nonetheless, the essay method is a good start
and is beneficial also if used in conjunction
with other appraisal methods.
 Traditional Methods
• Field Review Method: When there is a reason to suspect
rater’s biasedness or his or her rating appears to be quite
higher than others, these are neutralized with the help of
a review process. The review process is usually conducted
by the personnel officer in the HR department.
• The review process involves the following activities:
(a) Identify areas of inter-rater disagreement.
(b) Help the group arrive at a consensus.
(c) Ensure that each rater conceives of the standard
similarity.
• However, the process is a time-consuming one. The
supervisors generally resent what they consider the staff
interference. Hence, the method is not widely used.
 Traditional Methods
• Confidential Report: It is the traditional way of
appraising employees mainly in the
Government Departments. Evaluation is made
by the immediate boss or supervisor for giving
effect to promotion and transfer. Usually a
structured format is devised to collect
information on employee’s strength weakness,
intelligence, attitude, character, attendance,
discipline, etc. report.
 Modern Methods

• Management by Objectives (MBO): Most of the traditional

methods of performance appraisal are subject to the
antagonistic judgments of the raters. It was to overcome this
problem; Peter F. Drucker propounded a new concept, namely,
management by objectives (MBO) way back in 1954 in his book.
• The Practice of management. The concept of MBO as was
conceived by Drucker, can be described as a “process whereby
the superior and subordinate managers of an organization
jointly identify its common goals, define each individual’s major
areas of responsibility in terms of results expected of him and
use these measures as guides for operating the unit and
assessing the contribution of each its members”.
 Modern Methods
• In other words, stripped to its essentials, MBO requires the
manager to goals with each employee and then periodically
discuss his or her progress toward these goals.
• In fact, MBO is not only a method of performance
evaluation. It is viewed by the Practicing managers and
pedagogues as a philosophy of managerial practice because
it is a method by which managers and subordinates plan,
organize, communicate, control and debate.
• An MBO programme consists of four main steps:
1. Goal Setting,
2. Performance Standard,
3. Comparison
4. Periodic Review.
 Modern Methods
• In goal-setting, goals are set which each individual,
is to attain. The superior and subordinate jointly
establish these goals. The goals refer to the desired
outcome to be achieved by each individual
employee.
• In performance standards, the standards are set
for the employees as per the previously arranged
time period. When the employees start performing
their jobs, they come to know what is to be done,
what has been done, and what remains to be done.
 Modern Methods
• In the third step the actual level of goals attained are
compared with the goals agreed upon. This enables the
evaluator to find out the reasons variation between the actual
and standard performance of the employees. Such a
comparison helps devise training needs for increasing
employees’ performance it can also explore the conditions
having their bearings on employees’ performance but over
which the employees have no control.
• Finally, in the periodic review step, corrective measure is
initiated when actual performance deviates from the slandered
established in the first step-goal-setting stage. Consistent with
the MBO philosophy periodic progress reviews are conducted
in a constructive rather than punitive manner.
Modern Methods
Modern Methods
 Modern Methods
• Limitation of MBO: MBO is not a panacea, cure for all organisational problems.
As with other methods, it also suffers from some limitations as catalogued below:
(i) Setting Un-measurable Objectives:
One of the problems MBO suffers from is unclear and un-measurable objectives set
for attainment. An objective such as “will do a better job of training” is useless as
it is un-measurable. Instead, “well have four subordinates promoted during the
year” is a clear and measurable objective.
(ii) Time-consuming:
The activities involved in an MBO programme such as setting goals, measuring
progress, and providing feedback can take a great deal of time.
(iii) Tug of War:
Setting objectives with the subordinates sometimes turns into a tug of war in the
sense that the manager pushes for higher quotas and the subordinates push for
lower ones. As such, goals so set are likely to be unrealistic.
(iv) Lack of Trust:
MBO is likely to be ineffective in an environment where management has little trust in
its employees. Or say, management makes decisions autocratically and relies
heavily on external controls.
 Modern Methods
• Behaviourally Anchored Rating Scales (BARS): The problem of
judgmental performance evalu­ation inherent in the traditional
methods of performance evaluation led to some organisations
to go for objective evaluation by developing a technique
known as “Behaviourally Anchored Rating Scales (BARS)”
around 1960s. BARS are descriptions of various degrees of
behaviour with regard to a specific performance dimension.
• It combines the benefits of narratives, critical incidents, and
quan­tified ratings by anchoring a quantified scale with specific
behavioural examples of good or poor performance. The
proponents of BARS claim that it offers better and more
equitable appraisals than do the other techniques of
performance appraisal we discussed so far.
 Modern Methods
• Developing BARS typically involves five steps:
1. Generating Critical Incidents:
Critical incidents (or say, behaviours) are those which are
essential for the performance of the job effectively Persons
who are knowledgeable of the job in question (jobholders
and/or supervisors) are asked to describe specific critical
incidents of effective and ineffective performance. These
critical incidents may be described in a few short sentences or
phrases using the terminology.
2. Developing Performance Dimensions:
The critical incidents are then clustered into a smaller set of
performance dimensions, usually five to ten. Each cluster, or
say, dimension is then defined.
 Modern Methods
3. Reallocating Incidents:
Various critical incidents are reallocated dimensions by another
group of people who also know the job in question. Various critical
incidents so reallocated to original dimensions are clustered into
various categories, with each cluster showing similar critical
incidents. Those critical incidents are retained which meet 50 to
80% of agreement with the cluster as classified in step 2.
4. Scaling Incidents:
The same second group as in step 3 rates the behaviour described in
each incident in terms of effectiveness or ineffectiveness on the
appropriate dimension by using seven to nine points scale. Then,
average effectiveness ratings for each incident are determined to
decide which incidents will be included in the final anchored
scales.
 Modern Methods
5. Developing Final BARS Instrument:
A subset of the incidents (usually six or seven per cluster) is used as a
behavioral anchor for the final performance dimensions. Finally, a BARS
instru­ment with vertical scales is drawn to be used for performance
appraisal. How BARS is developed can be exemplified with an example of
grocery checkout clerks working in a large grocery chain.
A number of critical incidents involved in checking out of grocery can be
clustered into seven performance dimensions:
1. Knowledge and Judgment
2. Conscientiousness
3. Skill in Human Relations
4. Skill in Operation of Register
5. Skill in Bagging
6. Organizational Ability of Check stand Work
7. Skill in Monetary Transactions
8. Observational Ability
Modern Methods
 Modern Methods
• BARS method of performance appraisal is
considered better than the traditional ones
because it provides advantages like a more
accurate gauge, clearer standards, better
feedback, and consistency in evaluation.
 Modern Methods
• Assessment Centres: The concept of assessment centre
is, of course, of a recent origin in India. In India, Crompton
Greaves, Eicher, Hindustan Lever and Modi Xerox have
adopted this technique of performance evaluation.
• In business field, assessment centres are mainly used for
evaluating executive or supervisory potential. By
definition, an assessment centre is a central location
where managers come together to participate in well-
designed simulated exercises. They are assessed by senior
managers supple­mented by the psychologists and the HR
specialists for 2-3 days.
 Modern Methods
• Assesse is asked to participate in various in-basket exercises, work
groups, simulations, and role playing which are essential for
successful performance of actual job. Having recorded the assessee’s
behavior the raters meet to discuss their pooled information and
observations and, based on it, they give their assessment about the
assese. At the end of the process, feedback in terms of strengths and
weaknesses is also provided to the assese.
• The distinct advantages the assessment centers provide include
more accurate evaluation, minimum biasedness, right selection and
promotion of executives, and so on. Nonetheless, the technique of
assessment centers is also plagued by certain limitations and
problems. The technique is relatively costly and time consuming,
causes suffocation to the solid performers, discourages to the poor
performers (rejected), breeds unhealthy competition among the
assesse, and bears adverse effects on those not selected for
assessment.
 Modern Methods
• 360 – Degree Appraisal: Yet another method used to appraise
the employee’s performance is 360 – degree appraisal. This
method was first developed and formally used by General
Electric Company of USA in 1992. Then, it travelled to other
countries including India. In India, companies like Reliance
Industries, Wipro Corporation, Infosys Technologies, Thermax,
Thomas Cook etc., have been using this method for appraising
the performance of their employees. This feedback based
method is generally used for ascertaining training and
development requirements, rather than for pay increases.
• Under 360 – degree appraisal, performance information such
as employee’s skills, abilities and behaviours, is collected “all
around” an employee, i.e., from his/her supervisors,
subordinates, peers and even customers and clients.
 Modern Methods
• In other words, in 360-degree feedback appraisal system, an
employee is appraised by his supervisor, subordinates, peers,
and customers with whom he interacts in the course of his
job performance. All these appraisers provide information or
feedback on an employee by completing survey
questionnaires designed for this purpose.
• All information so gathered is then compiled through the
computerized system to prepare individualized reports. These
reports are presented to me employees being rated. They
then meet me appraiser—be it one’s superior, subordinates
or peers—and share the information they feel as pertinent
and useful for developing a self-improvement plan.
 Modern Methods
• In 360 – degree feedback, performance appraisal
being based on feedback “all around”, an em­
ployee is likely to be more correct and realistic.
Nonetheless, like other traditional methods, this
method is also subject to suffer from the
subjectivity on the part of the appraiser. For
example, while supervisor may penalise the
employee by providing negative feedback, a peer,
being influenced by ‘give and take feeling’ may give
a rave review on his/her colleague.
 Modern Methods
• Cost Accounting Method: This method evaluates an employee’s
performance from the monetary benefits the employee yields to
his/her organisation. This is ascertained by establishing a
relationship between the costs involved in retaining the employee,
and the benefits an organisation derives from Him/her.
While evaluating an employee’s performance under this method, the
following factors are also taken into consideration:
1. Unit wise average value of production or service.
2. Quality of product produced or service rendered.
3. Overhead cost incurred.
4. Accidents, damages, errors, spoilage, wastage caused through
unusual wear and tear.
5. Human relationship with others.
6. Cost of the time supervisor spent in appraising the employee.
 Modern Methods
• Balanced Scorecard: the BSC is a management system
that enables organisations to enhance the clarity of their
vision and strategy and enable them to translate the
same into action.
• it is a management methodology that uses a range of
performance measures to define business goals and
monitor performance drivers to achieve strategic
objectives.
• these measures give top managers a fast but
comprehensive view of the organization's performance
and include both process and results measures.
 Modern Methods
• The BSC is a conceptual framework for translating an
organisations vision into a set of performance indicators
distributed aming four perspectives:
• Financial
• Customer
• Internal Business Processes
• Learning and Growth
• Through the BSC, an organisation monitor’s both its current
performance and its efforts to improve processes, motivate
and educate employees, and enhance information systems,
its ability to learn and improve.
Modern Methods
 Modern Methods
• Balanced Scorecard Defined: the BSC is a way of measuring
organizational, business unit, or department success, balancing long term
and short term actions and balancing different measures of success from
Financial, Customer, Internal Operations and Learning and Growth point
of view.
• These measures typically include the following categories of
performance:
1. Financial Performance: revenues, earnings, return on capital, cash flow.
2. Customer Value Performance: market share, customer satisfaction
measures, customer loyalty.
3. Internal Business Process Performance: productivity rates, quality
measures, timeliness
4. Innovation Performance: percent of revenue from new products,
employee suggestions, rate of improvement index.
5. Employee Performance: morale, knowledge, turnover, use of best
demonstrated practices.
 Modern Methods
• A BSC is used to:
• Clarify or update a business’s strategy
• Link strategic objectives to long term targets and annual
budgets
• Track the key elements of the business strategy
• Incorporate strategic objectives into resource allocation
processes
• Facilitate organizational change
• Compare performance of geographically diverse business units
• Increase organization-wide understanding of the vision and
strategy
 COMMON RATING ERRORS
• Halo Effect
• Horn Effect
• Central Tendency
• Strict Rating
• Lenient Rating
• Status Effect
• Spillover Effect
• Initial Impression
• Latest Behaviour
• Same as Me
• Different from Me
• Performance Factor Order
• Contrast Effect
• Sympathy Effect
 COMMON RATING ERRORS
• Central tendency. Clustering everyone in the middle
performance categories to avoid extremes of good or bad
performance; it’s easy, but it’s wrong. This isn’t fair to employees
who are really making an effort, and it can be demoralizing.
• Favoritism. Overlooking the flaws of favored or "nice"
employees, especially those whom everyone likes.
• Grouping. Excusing below-standard performance because it is
widespread; "everyone does it."
• Guilt by association. Rating someone on the basis of the
company they keep, rather than on the work they do.
• The halo effect. Letting one positive work factor you like affect
your overall assessment of performance.
 COMMON RATING ERRORS
• Holding a grudge. A dangerous luxury that may result in your ending
up in court. Never try to make employees pay for past behavior.
• The horns effect. The opposite of the halo effect – letting one
negative work factor or behavior you dislike color your opinion of
other factors.
• Bias. Allowing your bias to influence the rating. Bias can come from
attitudes and opinions about race, national origin, sex, religion, age,
veterans’ status, disability, hair color, weight, height, intelligence, etc.
• Recency. Rating only recent performance, good or bad. Data should
be representative of the entire review period. If you’re not keeping
good notes, you may not remember the whole period. Armstrong
noted that "you want to make sure, again, that you’re keeping records
so that you can adequately describe performance over an entire
performance period."
• The sunflower effect. Rating everyone high, regardless of
performance, to make yourself look good or to be able to give more
 COMMON RATING ERRORS
• Using the evaluation as a corrective action tool:
• a. Ratings should never be used to replace a meaningful and detailed performance
discussion.
• b. The appraisal meeting should not be a disciplinary session. Inappropriate
behavior must be dealt with when first observed.
• c. Discipline and discussion of performance goals/responsibilities don’t work well
together. Corrective action should have been addressed earlier.
• d. The evaluation is a time to discuss strengths and weaknesses, perhaps assessing
how an employee has done in correcting past behavior. However, it isn’t the place
to raise new disciplinary actions...
• 2. Excessive leniency a. giving a good evaluation hoping a poorly performing
employee will “grow into” it b. “easy” - giving all employees higher ratings than
warranted 3. Excessive severity: “tough” - giving all employees lower ratings than
warranted 4. Opportunity bias”: the employee is given credit or faulted for factors
beyond his/her control employee did not meet goals because there was a budget
shortfall that caused resources to be unavailable employee happened to be in the
right place at the right time and had an opportunity to look really good
 COMMON RATING ERRORS
• 5. Halo” effect: letting a single strength of an employee determine
the overall rating“Pitchfork” effect: letting a single weakness of an
employee determine the overall rating 7. Recency bias”: Basing the
evaluation on the last few weeks rather than the entire evaluation
period 8. Rating the job rather than the individual: Some jobs seem
to be more critical to the operation than others. For instance, a
researcher who brings in millions of dollars might be critical to the
operation. However, that does not mean that the researcher’s
performance is automatically Model 9. Length of service bias: Length
of service is not a factor in evaluating performance. A person may
have lots of institutional knowledge but that fact in and of itself does
not equate with Model performance. Employees neither get “credit”
for longevity nor are employees penalized for being relatively new to
William & Mary.
 COMMON PITFALLS OF PERFORMANCE
APPRAISAL
• Time and resource constraint of managers
• Wide variation in standards and ratings
• Personal values and bias
• Lack of communication
• Limitation of performance appraisal technique
• Managerial resistance
• Negative feedback
 ELEMENTS OF A GOOD PERFORMANCE
APPRAISAL SYSTEM
• Aligning individual performance expectations
with the organization’s vision and values
• Measuring key results and competencies
• Appraising against clearly defined
performance expectations
• Working together to develop performance
expectations
• Providing frequent and timely feedback
 ELEMENTS OF A GOOD PERFORMANCE
APPRAISAL SYSTEM
• Conducting performance appraisals as
scheduled
• Encouraging employees to conduct a self–
appraisal
• Evaluating employee performance against
established performance standards
• Scheduling training on the appraisal process
• Demonstrating organizational commitment
 ADVANTAGES AND DISADVANTAGES OF
PERFORMANCE APPRAISAL
Advantages:-
• Increased motivation to perform effectively
• Increased self-esteem
• Better defined and clarified job
• Better communication
• Clarified and acceptable organizational
• Fair and credible rewards distribution and
• Valuable appraisal information can allow the
organization to do better human resource
planning, test validation, and development of
training programmes
 ADVANTAGES AND DISADVANTAGES OF
PERFORMANCE APPRAISAL
Disadvantages:-
• Damage to self-esteem appraiser and
appraisee
• Time may be wasted
• The relationship among individuals may be
permanently worsened thereby creating
organizational conflicts
• Performance motivation may be lowered and
• Money may be wasted on forms, training, and
a host of support services
 DEVELOPMENT OF PERFORMANCE
APPRAISAL/REVIEW SYSTEM
• Identify strategic objectives, derived from the
mission and vision of the organization
• Identify Key Performance Areas
• Define high level metrics related to key
performance areas and targets
• Deploy performance metrics and targets to
other levels
• Design communication system for metrics
• Plan the system operation ensuring proper
planning and with stakeholders involvement in
the implementation
 Performance Monitoring
• Performance management is a process by which
managers and employees work together to plan,
monitor and review an employee’s work
objectives and overall contribution to the
organization. More than just an annual
performance review, performance management
is the continuous process of setting objectives,
assessing progress and providing on-going
coaching and feedback to ensure that employees
are meeting their objectives and career goals.
 Performance Monitoring
• Performance monitoring is the process of
making accurate and objective performance
observations based on the outcomes and
expectation contained in an employee’s
performance plan, and duly reflected in the
performance appraisal for the purpose of
developing the performance of employees.
• Definition: performance monitoring males a
contribution in the evaluation of work methods
and employee performance. (Haynes 1984)
 Performance Monitoring
• In order to ensure that your team are working
to the Operational Plan you need to monitor
performance and the use of resources.
The following can affect performance:
• Environmental changes
• Resource usage
 Performance Monitoring
Environmental Changes
• As your environment changes you may need to
alter your Operational Plan. Both external and
internal influences may be the cause of change.
For example, an increase in customer calls (an
external change) may affect your plan. A budget
cut (internal change) may also affect your plan.
• When changes occur you may need to alter
your plan to deal effectively with the change.
 Performance Monitoring
Resource Usage
• How resources are used may affect your
team's performance. For example, call
operators may spend too long on each call
(human resource usage) or team members
may be using more stationary items than is
necessary to achieve satisfactory levels of
performance (physical resource usage).
 Performance Monitoring
• Performance monitoring may also be defined as a process of promoting
a climate of continuous learning and development, helping to sustain
employee performance at planned level, enhancing individual
competencies and making employee competitive within the organization
for productive contributions.
• Performance monitoring provides:
1. A description of specific step to be taken for continuous improvement
of the employees on conclusion of performance appraisal.
2. The names of those personnel who will assist the employee
3. A record document of various correction steps taken and result
attained
4. The effect of the determination on workload and other employees.
5. Effective utilization of resources of the organization and its work units.
6. Value creation by the employees.
 Performance Monitoring
• Monitoring of performance entails the analysis
of the following five areas:
• Results successful achievement of job tasks
• Effectiveness accuracy of performed job tasks
• Progress towards improvement areas
• Methods and procedures use of improved work
methods and better procedures
• Work habits cultivation of right work ethics and
attitude
Characteristics of Performance Monitoring

1. It is an aftermath activity of performance appraisal.

2. It is a tool to keep employee performance focuses as required
by the objectives and goals set in the performance plans.
3. It provides opportunities to employees to correct
performance regularly by making use of feedback from
managers.
4. It provides training and development opportunities to
employees.
5. It facilitates career development of employees.
6. It strengthen relationship between management and
employees.
Objectives of Performance Monitoring
1. To provide learning, training and development
opportunities to employees.
2. To improvise individual job performance as well as methods
and techniques of measuring performance.
3. To review the ways of defining and agreeing of
performance criteria of teams and individual employees at
the performance planning level.
4. To assess commitment and motivational level to accept and
realize performance feedback in positive perspectives.
5. To incorporate change necessitated by external
environment and affect overall-performance improvement
of the organisation.
 Importance of Performance Monitoring
• Performance monitoring is important because
1. It provides scope for modification, change and/or
alteration of the existing performance management
system, paving way for new or improved system.
2. It helps in reviewing and correcting performance
objectives as linked to mission and objectives of the
organization.
3. It identifies areas for competency improvement.
4. It continually enhances performance of employees.
5. It helps in realising the full potential of employees and
organisation for excellence in performance.
 Process of Performance Monitoring
• To know when to alter your plans or when to improve the use of
resources you need to monitor your results against the performance
indicators set in your original plan.

The following steps are involved in the monitoring process:

• Compare actual performance against planned performance

• Document the differences between actual and planned performance

• Identify the reasons for any differences

• Implement action strategies to adapt performance or alter the

Operational Plan
 Process of Performance Monitoring
• Step1: Performance Appraisal
• Step 2: Performance Monitoring
• Step 3: Identify Gaps in Planned Performance
and Actual Performance
• Step 4: Discuss, Provide Feedback and Develop
Improvement Plan
• Step 5: Seek Employee Commitment and
Verify Adherence
 Process of Performance Monitoring
• Operational Plans should be monitored and
adapted on an ongoing basis. The Operational
Plan should be a working document that can be
used to provide direction and which can be used
to evaluate performance at regular intervals.
• It is important to ensure that you keep a note of
the changes as they occur in your Operational
Plan. This information can then be used to help
you improve your planning process.
 Process of Performance Monitoring
• The SAMIE model is a simple tool which can be used to monitor and evaluate
your operational performance.

• SAMIE stands for:

• Select

• Analyse

• Measure

• Improve

• Evaluate
 When Should Monitoring Occur?
There are three distinct times when monitoring
can occur:
• Before an event
• During an event
• After an event
 When Should Monitoring Occur?
Before an event
• The best time to deal with a problem or to take advantage of an
opportunity is before it happens. By monitoring performance on an
ongoing basis it is easier to identify potential problems or
opportunities before they occur.
During an event
• As events unfold it is possible to identify that problems are arising. In
some instances corrective action can take place to prevent the
problem escalating.
After an event
• Most monitoring occurs after an event has occurred. Even though
problems may not have been avoided or opportunities have been lost
it is important that monitoring after the event occurs as analysis can
provide valuable information for future plans.
 What Should be Monitored?
The monitoring processes you establish can be
used to monitor the use of:
• Employee's time
• Physical resources
 Improving Resource Usage
• The monitoring process should highlight
whether resources are being used efficiently.
If resources are not being used efficiently you
should:
• Investigate the causes
• Rectify the situation
Performance Management Documentation

• Performance management is an ongoing, organization wide

and day to day activity which seeks to achieve organizational
objectives and strategy through continuous and consistent
improvement in individual, team and corporate performance.
• Performance management documentation refers to the
systematic process of recording agreed performance targets,
support, tools and resources needed, measuring actual
performance against targets and finally providing feedback
and agreeing on a performance improvement plan.
• It also makes the performance management a formal and
transparent process so that it is not only successful in
attaining its objectives, but is also ethically and legally
defensible.
Performance Management Documentation
• Performance management documentation takes place right
from the performance planning stage to the performance
monitoring stage. The nature of documentation varies at each
stage:
1. Performance Planning: the performance planning
documentation involves the following:
• enlisting the key performance indicators of the work unit i.e.
department
• Determining and enlisting the KPAs for teams
• Identifying, enlisting and agreeing on KRAs for individual
employees
• Enlisting equipment's, tools and support required
Performance Management Documentation

2. Performance Managing: the performance managing

documentation involves the following:
• Tracking performance plans of the individuals, teams and
the department
• Documenting deviations or failures in performance plans
• Enlisting reasons and corrective action plans with the
accountability of individuals clearly recorded
• Writing results achieved as enunciated in corrective action
plans
• Enlisting failures in some targets for reasons beyond the
control of individual employees or managers.
Performance Management Documentation
3. Performance Appraisal: the performance appraisal documentation
involves the following:
• Reviewing performance of employees through a formal appraisal
instrument
• Measuring actual performance against targets and recording in the
appraisal instruments
• Assigning score to individual employees in writing to differentiate
between excellent performers and marginal performers
• Providing feedback to the employees on actual performance assessed
against performance expectations and obtaining the agreements of the
individual employees in the appraisal instruments by way of signature
• Recommending in writing reward in consonance with performance
evaluated
Performance Management Documentation
4. Performance Monitoring: the performance monitoring documentation involves
• Providing feedback on performance concerns to employees
• Agreeing on a joint action plan for performance improvement and documenting the same
for reference
• Comparing the progress achieved by employees and noting down progress report
• Sharing the report with the employees. If the employee does not show the desired
improvement, then performance counselling is given to the employee and the proceeding
and commitment noted in a counselling form with the employee’s comments and
signature
• If the employee does not still improve, the defaulting employee may be given warning
either in verbally or in writing, specifying the performance concerns and consistent failure
of the employee to improve in spite of counselling and support rendered by managers.
These warning are inserted in the personal file of the employee by HR heads
• The final step is the initiation of disciplinary action for terminating the service of the
employee for non-performance.
Therefore, performance management documentation provides greater transparency, clarity
and accountability of the stakeholders which helps in building fairness, credibility and legal
defensibility of the system as a whole.
 Annual Stock Taking
• Annual stock-taking of performance is basically a
performance audit function which apart from usual
employee evaluations emphasize on measuring the
proper alignment of performance results with the
organizations’ and employees’ growth. For
organization, stock-taking of performance helps in
achieving the goals by optimizing staff performance,
duly identifying the strengths and weaknesses. For
employees, on the other hand it helps in providing
guidance to perform their jobs and also help in
defining their career path.
 Annual Stock Taking
• Performance management plays a pivotal role
in integrating people with their organisation
through joint goal setting for improved
corporate performance.
• It is critical for the organisations to assess the
utility of their performance management
process on a periodic basis to identify and
rectify various inhibiting factors. One such
approach is annual stock taking.
 Annual Stock Taking
• Annual stock taking is a periodical and annual attempt to
continuously assess the extent of work as well as the learning
opportunity that have been optimally availed by the employee.
Performance plans, performance monitoring and mentoring
records provide the basis for the annual stock taking programme.
It also provides several inputs to improve performance plans in
future. Review in task assignment, task systems and tools are
also possible through annual stock taking. An assessment of an
employee’s development needs of future tasks and
responsibilities is done more realistically during stocktaking.
• Therefore, annual stock taking is essentially a review of
performance management process with the object of fine
tuning/improving it further, so that the objectives and strategies
of the organization can be achieved more effectively, efficiently
and economically.
 Performance Management Audit
• Performance audit is an independent
assessment or examination of the extent to
which an organization, programme or scheme
operates
• Economically,
• Efficiently and
• Effectively.”
 Performance Management Audit
Economy: Minimizing the cost of inputs used or
required (consistent with quality)(spending
less)
Performance Audit - Economy
Audit of administrative activities in accordance
with sound administrative principles and
practices and management policies.
 Performance Management Audit
• Efficiency: The relationship between the output
from goods or services and the inputs to produce
them (spending well)
Performance Audit- Efficiency
Audit of the efficiency of utilisation of human,
financial, and other resources, including examination
of information systems, performance measures and
monitoring arrangements and procedures followed
by audited entities for remedying identified
deficiencies
 Performance Management Audit
• Effectiveness: The relationship between the
intended and actual results of public spending
(spending wisely)
Performance Audit - Effectiveness
Audit of the effectiveness of performance in
relation to the achievement of the objectives of
the audited entity and audit of the actual impact
of activities compared with the intended impact.
 Objectives of Performance Audit
• Performance auditing has the objective of
improving public sector administration and
accountability by adding value through an
effective programme of performance audits.
• The performance audits may examine and
report on:
• the quality of information and advice available
to Government for the formulation of policy;
 Objectives of Performance Audit
• the existence and effectiveness of administrative machinery to
inform the Government whether programme objectives and targets
have been determined with a view to fulfilling policy objectives;
• whether and to what extent, stated programmed objectives have
been met;
 the economy, efficiency, effectiveness, equity and ethics of the means
used to implement a programme/ activity;
 the intended and unintended, direct and indirect other impacts of
programmes/ activities; for example, the environmental impact of
Government activity, etc.; and
 compliance to applicable laws, and regulations in the context of the
performance audit objectives.
 Objectives of Performance Audit
• Performance audits should not confine the
objectives to ‘what has been done’ but should
also examine ‘what has not been done’ to meet
the policy objectives.

• In practice there can be an overlap between

regularity and performance auditing and in such
cases classification of a particular audit will
depend on the primary purpose of that audit.
 Performance Management Audit
• Since the basis of performance management is an agreement
between the managers and employees about managing
performance expectations, therefore employee morale,
motivation, commitment, involvement, teamwork and top
management support assume critical importance. This implies that
periodically at least once in a year the performance management
needs to be assessed by HR professionals, managers, the top
leadership and other stakeholders of the organisation with the
assistance of a consultant/consultancy agency,, so as to evaluate
whether it is serving its intended or stated purpose. This technique
is called performance management audit.
• Performance management audit is an objective and systematic
process of the examination of performance management system
of an organisation in its pursuit of successful attainment of
predetermined goals and strategy.
Performance Management Audit Process
1. General surveys and updating of potential areas in order to
gain insight and understanding of the organization concerned.
2. Planning and preparation of a performance management
audit strategy and decisions on the areas to be examined,
taking account of improvement areas.
3. Preliminary studies and planning departmental and individual
performance management audit.
4. Conducting the full performance management audit involving
detailed fact finding and analysis of the areas under review.
5. Preparation of report.
6. Discussing report with top management.
7. Review and follow-up.
 Performance Management Audit at
Different Stages
Performance Planning:
• Ways of determining objectives and strategy of the
organization.
• Ways of linking organizational priorities with departmental
performance goals.
• Availability of written-down job descriptions and job
specifications.
• Use of competency mapping for identifying development areas.
• Ways and means of defining and agreeing performance criteria.
• Availability of written records.
 Performance Management Audit at
Different Stages
Performance Managing:
• Ways of evaluating progress with respect to
performance plans.
• Nature of resources and support provided, as
budgeted.
• Extent of managerial commitment to develop
performance of employees.
• Managerial time spent on providing feedback and
support to employees.
• Availability of written records.
 Performance Management Audit at
Different Stages
Performance Appraisal:
• Methods employed to assess the performance of employees.
• Technique employed to review performance.
• Degree of participation and involvement of employees.
• Timely completion of appraisals.
• Appropriateness of performance counseling provided to the
employees.
• Extent of linkage of rewards and compensation to
performance.
• Training and development system in operation in relation to
performance management.
• Availability of written records.
 Performance Management Audit at
Different Stages
Performance Monitoring:
• Effectiveness of supervision of employees by
managers.
• Managerial readressal of performance
concerns and timely rectifications.
• Employee satisfaction for resourcefulness and
guidance of managers.
• Availability of written records.
 Designing Appraisal Forms
The performance appraisal is used for various
purposes:
• Probationary appraisal
• Quarterly or mid-year review
• Annual appraisal
 Parts of a Performance Appraisal Form

Performance appraisal forms vary widely in design. A

comprehensive traditional performance appraisal will have the
following components:
• Personal particulars
• Goals or Deliverables or Key Result Areas or Responsibilities
• Skills or Competencies or Performance Factors or Performance
Categories
• Professional Development Plan or Development Goals
• Supervisor and Employee Comments
• Overall Ratings
• Acknowledgement
• Moderation
 COMPONENTS OF THE APPRAISAL FORMAT

• Identification of key performance areas

• Identification of qualities for job performance

• Self-appraisal

• Analysis

• Discussion

• Identification of training needs

• Action plan and goal settings for the future

• Final assessment
 Key elements of appraisal form
• 1. Rating scale
• 2. Objectives and Performance Dimensions
• 3. Weight assigned
• 4. Associate and Reviewers comments and
rating
• 5. Personal goals/Organisation goals
• 6. Additional comments and signatures
Model of Performance appraisal process
PROCESS OF PERFORMANCE APPRAISAL
• Defining Objectives of Performance Appraisal
• Defining Performance Expectations
• Designing Performance Appraisal System
• Implementing Performance Appraisal System
• Performance Appraisal Interview
• Post Performance Appraisal Actions
 Performance appraisal process
• Performance appraisal involves an evaluation of actual against desired
performance. It also helps in reviewing various factors which influence
performance. Managers should plan performance development strategies in a
structured manner for each employee. In doing so, they should keep the goals of
the organization in mind and aim at optimal utilization of all available resources,
including financial. Performance appraisal is a multistage process in which
communication plays an important role.
Step 1: Establishing standards and measures
The first step is to identify and establish measures which would differentiate between
successful and unsuccessful performances. These measures should be under the
control of the employees being appraised. The methods for assessing performance
should be decided next. Basically, management wants to:
· know the behaviour and personal characteristics of each employee; and
· assess their performance and achievement in the job.
There are various methods available for assessing results, behaviour and personal
characteristics of an employee. These methods can be used according to the
particular circumstances and requirements.
 Performance appraisal process
Step 2: Communicating job expectations
The second step in the appraisal process is communicating to employees the
measures and standards which will be used in the appraisal process. Such
communication should clarify expectations and create a feeling of involvement.
Step 3: Planning
In this stage, the manager plans for the realization of performance
expectations, arranging for the resources to be available which are required for
attaining the goals set. This is an enabling role.
Step 4: Monitoring performance
Performance appraisal is a continuous process, involving ongoing feedback.
Even though performance is appraised annually, it has to be managed 'each
day, all year long.' Monitoring is a key part of the performance appraisal
process. It should involve providing assistance as necessary and removing
obstacles rather than interfering. The best way to effectively monitor is to walk
around, thus creating continuous contacts, providing first-hand information,
and identifying problems, which can then be solved promptly.
 Performance appraisal process
Step 5: Appraising
This stage involves documenting performance through observing, recalling, evaluating, written
communication, judgment and analysis of data. This is like putting together an appraisal record.
Step 6: Feedback
After the formal appraisal stage, a feedback session is desirable. This session should involve
verbal communication, listening, problem solving, negotiating, compromising, conflict
resolution and reaching consensus.
Step 7: Decision making
On the basis of appraisal and feedback results, various decisions can be made about giving
rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demotion). The outcome of
an appraisal system should also be used for career development.
Step 8: Development of performance
The last stage of performance appraisal is 'development of performance,' or professional
development, by providing opportunities for upgrading skills and professional interactions. This
can be done by supporting participation in professional conferences or by providing
opportunities for further study. Such opportunities can also act as incentives or rewards to
employees.
 STANDARDS AND INDICATORS OF
PERFORMANCE APPRAISAL
• Mutual goal
· Reliable and consistent
· Accurate and equitable
· Practical and simple format
· Regular and routine
· Participatory and open
· Rewards
· Timely feedback
· Impersonal feedback
· Noticeable feedback
· Relevance and responsiveness
· Commitment
 HOW CAN THE PERFORMANCE APPRAISAL
SYSTEM HELP?
• Promote better understanding of an employee's role and clarity about his
or her functions
• Give a better understanding of personal strengths and weaknesses in
relation to expected roles and functions
• Identify development needs of an employee
• Establish common ground between the employee and the supervisor
• Increase communication
• Provide an employee with the opportunity for self-reflection and individual
goal setting
• Help an employee internalize the culture, norms and values of the
organization. This helps develop an identity with and commitment to the
organization and prepares an employee for higher-level positions in the
hierarchy
• Assist in a variety of personnel decisions
APPROACHES IN PERFORMANCE APPRAISAL

Intuitive: In this approach, a supervisor or manager judges the

employee based on their perception of the employee's behaviour.
Self-appraisal: Employees evaluate their own performance using a
common format.
Group: The employee is evaluated by a group of persons.
Trait: This is the conventional approach. The manager or supervisor
evaluates the employee on the basis of observable dimensions of
personality, such as integrity, honesty, dependability, punctuality, etc.
Achievement of results: In this type of approach, appraisal is based on
concrete, measurable, work achievements judged against fixed targets
or goals set mutually by the subject and the assessor.
Behaviourial method This method focuses on observed behaviour and
observable critical incidents.