You are on page 1of 77


Performance Appraisal Performance Evaluation Performance Measure Performance Management

1.Traditional Performance Appraisal 2. BSC : Balanced Scorecard 3. EFQM : European Foundation for Quality Management 4. Individual Scorecard 5. HR Scorecard

Chapter Objectives
Define performance appraisal. Identify the uses of performance appraisal. Describe the performance appraisal process. Explain performance appraisal environmental factors.

Chapter Objectives (Continued)

Identify the aspects of a persons performance that an organization should evaluate. Identify who may be responsible for performance appraisal and the performance period. Identify the various performance appraisal methods used.

Chapter Objectives (Continued)

List the problems associated with performance appraisal. Explain the characteristics of an effective appraisal system. Describe the legal implications of performance appraisal. Explain how the appraisal interview should be conducted. Describe assessment centers.

Performance Appraisal Defined

System of review and evaluation of job performance Assesses accomplishments and evolves plans for development Performance management is important

Uses of Performance Appraisal

Human resource planning Recruitment and selection Training and development Career planning and development Compensation programs Internal employee relations Assessment of employee potential

he Performance Appraisal Process

Identify specific performance appraisal goals Establish job expectations (job analysis) Examine work performed Appraise performance Discuss appraisal with employee

What to Evaluate

Traits Behaviors Task Outcomes Improvement Potential

Responsibility for Appraisal

Immediate supervisor Subordinates Peers Self-appraisal Customer appraisal Committee

The supervisor is usually in the best position to observe and evaluate subordinates performance and is also responsible for that persons performance

Sole reliance on supervisors ratings is not always advisable

An immediate supervisor may be biased for or against the employee

Problem with self-ratings is that employees usually rate themselves higher than their supervisors or peers would rate them

Peer Appraisals has a positive impact on improving perception of:

open communication task motivation social loafing group viability Cohesion Satisfaction

Rating committee
Usually composed of the employees immediate supervisor and three or four other supervisors 3-4 Can help cancel out problems such as bias on the part of individual raters.

Rating committee
It can also provide a way to include the different facets of an employees performance observed by different appraisers

Appraisal by Subordinates
Upward feedback Can help top managers diagnose management styles, identify potential people problems, and take corrective action with individual managers

360-Degree Evaluation
Multi-rater evaluation Input from multiple levels with firm and external sources Focuses on skills needed across organizational boundaries

More objective measure of performance

360-Degree Feedback
Performance information is collected from supervisors, subordinates, peers, and internal/external customers With multiple ratees and multiple raters, can be paperwork nightmares

The Appraisal Period

Prepared at specific intervals Usually annually or semi-annually Period may begin with employees date of hire All employees may be evaluated at same time

Performance Appraisal Methods

360-Degree Evaluation Rating Scales Critical Incidents Essay Work Standards Ranking

Performance Appraisal Methods (Continued)

Behaviorally Anchored Rating Scales (BARS) Result-Based Systems Assessment Centers

1. Casual , Unsystematic , Haphazard 2. Traditional , Systematic 3. Mutual Goal Setting

Casual , Unsystematic , Haphazard

Traditional , Systematic
Ranking Person-to-person Comparison Grading Graphic Scale Checklist Force-choice Description BARS (Behaviorally Anchored Rating Scale) Essay Work standard Critical Incidents

(Validity) (Reliability) (Objectivity) (Discrimination Power)

Ranking Method
Ranking employees from best to worst on a trait Alternates between highest and lowest until all employees to be rated have been addressed

All employees from group ranked in order of overall performance Paired comparison is a variation Comparison is based on single criterion, such as overall performance

Rating Scales
Rates according to defined factors Judgments are recorded on a scale Many employees are evaluated quickly



Forced-choice Description

Forced-choice Description

Critical Incidents
Written records of highly favorable and unfavorable work actions

Appraisal more likely to cover entire evaluation period Does not focus on last few weeks or months

Recent error

Behaviorally Anchored Rating Scales (BARS)

Combines traditional rating scales and critical incidents methods Job behaviors derived from critical incidents described more objectively

Behaviorally Anchored Rating Scale

1: Critical Incidents 2: 5-10 3: 7-9 scale

Brief narrative describing performance Tends to focus on extreme behavior Depends heavily on evaluator's writing ability Comparing essay evaluations might be difficult

Work Standards
Compares performance to predetermined standard Standards - normal output of average worker operating at normal pace Time study and work sampling used Objective Workers need to know how standards were set

Result-Based Systems
Manager and subordinate agree on objectives for next appraisal Evaluation based on how well objectives are accomplished May not be too helpful in employee development

Management by Objectives

MBO. control

(Low Reliability)


Management by Objectives

Self control Periodic appraisal Joint Evaluation Link to intensive

Management by Objectives
Specificity Challenge Acceptance Quantitative Innovative Time frame Participative

Management by Objectives

Volume Cost Frequency Ratio Percent Degree Phases Calendar dates

Management by Objectives
Position Director of Finance 3 2549 Marketing Manager 31 Personnel Manager 1 100 % 2549 31 . 20 2549 Objective 5

Management by Objectives

Personal objective Group objective apply Non managerial positions

Assessment Centers
Identify and select employment for higher level positions Part of a management system that focuses on employee development Predict employee potential for advancement

Problems in Performance Appraisal

Lack of objectivity Halo error Leniency/strictness Central tendency Recent behavior bias Personal Bias Manipulating the evaluation

Setting Performance Goals

Goal Setting 1) Know what to accomplish and what is expected

2) Allow employees to monitor their progress

3) Performance appraisal becomes much easier anxiety 4) Helping to proactive identify barriers to performance Early warning system Proactive

Goal setting process

Preparation and prework

The meeting Job description Action planning and follow-up Indicators , Progress indicators, Timeline Action steps

10 Tips for setting performance Goals

1. Performance Goals must be individualized for each employee 2. Process is probably more important than the goals created 3. It is important to write goals that are measurable and meaningful to organization 4. Its more important that the employee and the managers share the same understanding of what each goal means 5. Communication about those goals throughout the year

10 Tips for setting performance Goals

6. 7. Individual performance goals should take place after the employees work goals Performance goals should specify the results the employee is expected to achieve rather than how the results are to be achieved Goals Evaluate Goals aim and guide Goals 10 Goals 80

8. 9.

10. Goals

Performance goal for any position

Readiness for work goals Team contribution goals Work habit goals Work output and productivity goals Personal and skill development goals Communication Goals

Readiness for work goals

98 98

Attendance and absenteeism



Team contribution goals

Contributions to team productivity

Handling customer conflicts

24 .

Handling internal conflicts

(Zero incidences)

Self Management and Work Habits

Appearance and Clothing
(Zero complaints)

Ethic/ Personal Conduct

(Zero complaints)

Organization and Use of Time

/ Project milestones 50 1 5 90

Willingness to Help / Volunteer

Work Output and Productivity

Own Work
2549 (Free of defects) 10

Contributing to Work of Others


Contributing to Overall Productivity

(Suggestion system) 1 6

Personal and Skill Development


Formal Learning

Informal Learning

Interpersonal / Team



Media Relations

Performance Dimensions
Output or Result Dimension Input Dimension Time Dimension Focus Dimension Quality Dimension Cost Dimension

Output or Result
KRA : Key Result Area Most acceptable Visible Consequence Inputs Final or Semi-final Product Financial Target / Customer Number / Production Target / Completion of Task

Deal with activities or task to be accomplished Quantity of Inputs , Ability or competence to perform task , Motivation , Effort , Organization Support

Time period Day , Week , Month , Quarter , Year , 2-3 Years Short term / Long Term Performance Work Standard

Sale Executive Focus Market Share , Profit New Area Cover

Defected Articles / Reject / QC. Passed / Customer Complaint / Customer Satisfaction

Relationship Input-Output Cost/ Benefit Input

Performance Planning
First step of performance management Simple way of ensuring that the employee gives quality inputs that will ensure the output expected from him

Performance Planning
A systematic outlining of activities

Individuals performance Organizations performance Organizational plans

Organizational Plan
Organization goals Corporate plans Mission statements Annual operating plans Budget statements Performance guideline

How did we perform last year? What influenced our performance ? How can we improve ? What new challenges can we undertake ? How do we intend to improve our quality and quality of outputs ? What new process, technology and systems do we want to introduce this year ?

Organization goals / strategies Departments and sub-system plans Individual plan

Planning individual performance

Task analysis KPA. (Key Performance Areas) KRA. (Key Result Areas) Task and target identification Activities plans Action plans

Important or critical categories of functions to be performed by any role incumbent , over a given period of time

Example of KPA.
Sales Officers
Contacting potential customers Market survey for new products Attending to customer complaints

Example of KPA.
R&D Manager
Identifying product improvements Development of new products Testing samples

Characteristics of an Effective Appraisal System

Job-related criteria Performance expectations Standardization Trained appraisers Continuous open communication Performance reviews Due process