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Performance Appraisal

Performance is an objective assessment of an individual’s performance against well defined benchmarks. The performance of an employee has a direct and immediate impact on his customers, either internal or external. In service organizations like banks, hotels, customer feedback has become the most important tool in evaluating employee performance. In manufacturing organizations, the internal customer evaluate the performance of the employee.

How Performance Appraisal can Contribute to Firm’s Competitive Advantage

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Objectives of Appraisal
1. To effect promotions based on competence and performance. 2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. 3. To assess the training and development needs of employees. 4. To decide upon a pay raise where (as in the unorganised sector) regular pay scales have not been fixed.

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Objectives of Appraisal (Contd…)
5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. 6. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. 7. Finally, performance appraisal can be used to determine whether HR programmes such as selection, training, and transfers have been effective or not.

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The Performance Appraisal Process 5 .

ACTIVITY: What’s in your performance evaluation system? • WHY is performance measured? (use) • WHAT is measured? (criteria) • HOW is it measured? (performance appraisal formats) • WHO measures performance? (sources of information) • WHEN is it measured? (timing) In your company … .

Why Is Performance Measured? • • • • • Enhances motivation & productivity Assists in validation studies Detects problems Helps evaluate change efforts Provides basis for making decisions – Differentiates employees in job-related areas – Helps ensure legal compliance .

What Is Measured? • Criteria – Dimensions against which performance is evaluated – Job analysis is important! • • • • • Trait-based criteria Behavioral Criteria Results Criteria Multiple Criteria Assigning weights .

Who Measures Performance? • • • • • • • “Gadgets” – Electronic Supervisors Yourself Peers Subordinates (Upward) Customers Multiple (360) – Administrative versus developmental use .

Who Measures Performance? • • • • • • • “Gadgets” – Electronic Supervisors Yourself Peers Subordinates (Upward) Customers Multiple (360) – Administrative versus developmental use .

When Is Performance Measured? • Base timing on organization’s strategy • Typical times include: – Focal-point (everyone at same time) – Anniversary – Natural time span of job • How frequently? .

A well-laid out action providing for contingencies. Management by Objectives( MBO):. and action plan and finally. Continuous and constructive feedback and guidance.• The different appraisal methods used by the organizations in India and abroad are as:1. For successful implementation of MBO. PERFORMANCE APPRAISAL METHODS . These goals are set with the active participation of the employee and his supervisor. timely and constructive feedback. Employees who are suitably equipped and motivated to achieve these goals. Identification of areas for improvement and corrective action.The main aspects of MBO are clear and well-defined goals. Objective evaluation of the performance. a definite time-span to achieve the goals. the following are required:      Quantifiable and measurable goals that are neither too easy nor too difficult to achieve.

Common Goals Management by Objectives Subordinate Goals Department-Specific Goals Review Organizational Performance Supervisor Goals Joint Agreement New Input Interim Review Inappropriate Goals Eliminated Final Review .

important one may miss out and irrelevant might be get included B. Different people may interpret the written descriptions in different ways. Graphic Rating Scale Method:. This might lead to confusion and loss of reliability. dependability. . attendance etc. Disadvantages:A. Regarding the choice of employee behavior categories.2. punctuality .This method of appraisal requires the rater to rate the employees on factors like quantity and quality of work. job knowledge.

Graphic Rating Scale .

. the appraiser makes a note of all the critical incidents that reflect the behavior of the employee during the appraisal period. Questions or guidelines are provided to the appraiser. based on which he analyses and describes the employee’s performance. 4. These attributes are all seemingly positive. but have different weights which are unknown to appraiser. Critical Incident Method:. Work Standards Approach:. 5.In this method.In this method. The advantages of this approach is that the goals to be measured are very objective and also quantifiable.This method is more suitable in a manufacturing scenario. the appraiser is required to assign ranks to different attributes of the employee. the appraiser prepares a document describing the performance of the employee. where the goals are pre-determined work standards.3. Essay Appraisal:. Forced Choice Rating Method:.In this method. 6. The elements of subjectivity in this method is minimized as the appraiser has to assign a unique rank for each of the attributes.

A. and 10% in the non-performers group.7. B. is the best employee in the group. and ‘Bottom’ and placed under a forced-distribution curve. E. ‘standard’. Forced distribution method:. Ranking Methods:. Paired comparison method:. The employee who is rated better in each pair the maximum number of times.There are three commonly used methods of ranking namely Alternation. Paired comparison. . C. Every employee in the group is compared with every other employee in the group.the appraiser ranks the employees .g. based on their performance and contribution to the organization. GE has 20% of its employees in the top performers.In this method. Alternation:-The appraiser ranks all his employees from the most valuable to the least valuable. 70% in the standard. the employees are categorized as ‘top’. based on paired comparison. and Forced distribution method.

Paired Comparison Method • Trait: ____________ • • • • • • • • Employee C D + + + + 3 1 As Compared to: A A B C D B + 1 + 1 B ranks highest .

Forced Distribution Lowest Next Lowest Performers 10% 20% Middle 40% Next 20% Highest Performers 10% 5 employees 10 employees 20 employees 10 employees 5 employees .

Point Allocation Method:. Checklist:. the rater has to respond ‘Yes’ or ‘No’ to a set of questions which assess the employee’s performance and behavior.In this method. He has at his disposal.8. based on their performance during the appraisal period. weights are attached to each of these questions based on which the final appraisal score of the employee is calculated. a specific number of points which he has to distribute among his team members. the appraiser has to allocate points to different members in his team. . 9.In this method. Normally.

There are three steps in implementing a BARS system asDetermination of relevant job dimensions by the manager and the employee. based on consensus.10. . value. Determination of the scale values to be used and grouping of anchors for each scale. Identification of behavioral anchors by the manager and the employee for each job dimension. Behaviorally Anchored Rating Scale(BARS):BARS concentrates on the behavioral traits demonstrated by the employees instead of his actual performance.

Behaviorally Anchored Rating Scale 7 6 5 4 3 2 F Dimension: Transacting Loans (Corporate Loan Assistant) 1 .

consults fellow workers for their ideas on ways to solve specific problems 0 1 2 3 4 5 .Behavioral Observation Scale Job: Maintenance Mechanic Dimension: Teamwork •Exhibits rude behavior that coworkers complain about (Reverse scored) •Verbally shares technical knowledge with other technicians 0 0 Behavior Frequency 1 1 2 2 3 3 4 4 5 5 •As needed.

A 360 Degree appraisal system aims at a comprehensive and objective appraisal of employee performance. 12.Team Appraisal:. This helps in synergizing individual efforts and taking the group performance to higher levels. the individual team members evaluate their colleagues in the team and provide feedback. his peers. his internal/external suppliers and his subordinates. his internal/external customers. .In this method.11. the employee’s performance is evaluated by his supervisor. 360 Degree Performance Appraisal:. In a 360 degree appraisal system.

13.The balanced scorecard as a method of measuring performance channelizes the efforts of people to achieve organizational goals. Balance Scorecard:. . and deciding what each employee needs to do to achieve the objectives based on strategy. The implementation of balanced scorecard involves formulating a strategy .

Concerns with Measuring Performance What’s Measured Criterion Contamination Job Requirements Criterion Deficiency Criterion Relevance .

Methods of Performance Appraisal 27 .

Appraising Teams 28 .

Challenges of Appraisal 29 .

The appraisal procedure in most. The supervisor and the employee together discuss the appraisal. identify training and development needs of the employee and draw up and action plan. This will help him identify the areas that need training of development inputs.modern organizations starts with the employee himself . .The Appraisal Interview The appraisal interview plays a prominent role in the success of a performance appraisal system. He evaluates his own performance on the various factors mentioned in the appraisal form and assesses his strengths and weaknesses.

The appraiser might be biased in favor of or against the appraisee for various reasons. Inexperience:. A wary appraiser:. The maturity level of the individuals:An apprehensive employee:. .If they share a cordial and friendly relationship. 4.An appraiser might not be very comfortable with the idea of judging and commenting on his colleague’s performance. 7.Absence of the right kind of organizational culture can lead to an ineffective process of performance appraisal.An apprehensive employee can change the mood of the interview by being very limpid and uncooperative. The organizational culture:. The relationship between the employee and his boss:. 3.Challenges of Appraisal Interview 1. A biased appraiser:. 6. the interview is more likely to proceed smoothly. 5.Inexperience of lack of any previous exposure to the process of performance appraisal can result in an ineffective and cursory exercise which might not benefit the individual or the organization. 2.

would be useful for those employee who are unfamiliar with the process. .  The apprisee and the appraiser should both give each other a chance to reflect and respond on every debatable aspect. has to develop the culture wherein the process of appraisal is viewed as a productive and constructive contributor to the growth of the org as well as the individual employee. which are interlinked.How do we face the challenge  The org. measurable goals at the beginning of the appraisal period helps.  Appraisal should of two types-competency and performance appraisal.  Training on how to conduct an appraisal interview.  Setting specific.

Appraisal Interviews Follow Up Day by Day Ask for SelfAssessment Invite Participation Establish Goals Express Appreciation Be Supportive Focus on Problem Solving Change the Behavior. not the Person Minimize Criticism .

Don’t Forget the Feedback! • Do it immediately or soon after behavior • Focus on behavior. not person • Don’t overload • Schedule feedback & plan roles & responsibilities • Give feedback privately • Be a good listener • Don’t blame – be a problemsolver • Set goals & follow up • Reward improvement .

Describe rather than evaluate performance problems.How to deliver effective feedback •Diagnose the cause of performance problem. Consider opening/closing on a positive note. Show that you understand by re-stating employees’ concerns in your own words. Pay attention to situational constraints. State your intent to help improve performance. •Seek employee’s opinions and participation about situational constraints. •“Sandwich” performance problems between positive results. •Deliver behavioral feedback. Listen actively. •Open the evaluation on a positive tone. .

diagnose the source of the problem by answering the questions in the table included next: . •Using the example of poor performance that you described in the critical incident earlier.Diagnose performance problems •Be aware of the “fundamental attribution error:” •We tend to attribute our failures to external factors (“I just didn’t have the support of my boss”). •We tend to attribute others’ failures to their personal characteristics (“he is lazy”).

” Problem solving orientation: conveys trust in the employee’s ability to solve the problem. “the amount of raw material waste that you produced was above average.” Conclusion: evaluate performance. and Z. “Have you thought about what can be done to Control orientation: emphasizes the supervisor’s power over the employee. “I can’t tolerate your laziness.Delivering effective feedback Do Don’t Behavior: describe performance. Y.” . “I have decided that you should do X.

but why don’t you e-mail me your suggestions by Friday?” Superiority “I get paid to make decisions around here. not you.” Equality “I have to make a decision pretty soon. let me sure I understand…” Don’t Neutrality: lack of interest. “I wasn’t aware of that. but we all have our own problems. “Too bad.” .Delivering effective feedback Do Empathy: shows interest in the problem and in the employee.

The Appraisal Interview How to Conduct an Appraisal Interview • • • • be direct and specific don’t get personal encourage the person to talk develop an action plan .

• • HELLO Effect WHEN ONE ASPECT OF THE SUBORIDINATE PERFORMANCE EFFECTS THE RATESR EVALUATION OF OTHER PERFORMANCE DIMENSIONS.EVALUATION IS DONE KEEPING IN MIND THAT NEGATIVE FACTOR .PROBLEMS WITH PERFORMANCE APPRAISEL JUDGEMENT ERRORS BECAUSE OF BIASES AND INACCURATE EVALUTION. IT MAY INCLUDE: • FIRST IMPRESSIONS (PRIMACY EFFECT) THE APPRAISERS’S FIRST IMPRESSION MAY FORM AN ALL TIME POSITIVE OR ALL TIME NEGATIVE IMAGE OF EMPLOYES. MISTAKES MAY BE COMMITED IN JUDGING PEOPLE. HORN EFFECT WHEN ONE NEGATIVE QUALITY OF THE EMPLOYEE IS BEING RATED HARSHLY AND THAT LEADS TO OVERALL EVALUATIO.

RELIGION ETC. . THEN SYSTEM IS OF NO IMPORTANCE. BY GENERALISING BEHAIVIOUR ON THE BASIS OF SUCH BLURRED IMAGES.AGE.PERFORMANCE IS OVERESTIMATED OR UNDERESTIMATED.• LINIENCY WHEN APPRAISEL IS DONE DEPENDING ON RATERS ON MENTAL MAKEUP. • STEREOTYPING STEREOTYPING IS A MENTAL PICTURE THAT AN INDIVIDUAL HOLDS ABOUT A PERSON BECAUSE OF THAT PERSONS SEX. WOMEN ARE UNDERESTIMATED FOR PHYSICAL JOBS. • CENTRAL TENDENCY WHEN APPRAISERS RATE ALL EMPLOYEES AS AVERAGE PERFORMERS UNBOUTHERD ABOUT SOME OF THE EXCELLENT SUBORDINATES. EG. IF HIS MENTAL MAKEUP IS THE DECIDING FORCE.

Rating form may carry irrelevant dimensions.incompetence and lack of functional knowledge may defense an unprepared rater .Insufficient time . Forms may be too long and complex c) lack of rater preparedness The rater may not be adequately trained to carry out performance management activities .b) Poor appraisal form Performance may also be influenced by the following factors: Rating scales may be vague &nuclear. d)Ineffective organizational policies & practices When the sincere efforts of the raters are not adequately motivated & rewarded them zeal to do work is lost ! .

Improving performance • • • • • Identify & agree to the problem Establish reasons for shortfall Decide on action required Create resource for action Monitor & provide feedback .

Managing underperformers (checklist) • Were expectations reasonable.inlight of caliber/ ed • Did the person get adequate support? • Is it lack of skill. effort or attitude? • Were the objectives clear? .

provide encouragement Training .Some indicative solutions • • • • • Re-examining the composition of team Clarifying objectives Redesigning the job Improving support.

Legal Issues • Legally Defensible Appraisal Procedures • Legally Defensible Appraisal Content • Legally Defensible Documentation of Appraisal Results • Legally Defensible Raters 46 .

watch out for traits or attitudes Evaluate employees on specific dimensions rather than on single global or overall measure Evaluators should observe performance in advance Use more than 1 rater when possible (reliability) Document extreme ratings (behavioral) Give employees opportunity to review appraisals Establish appeal system for disagreements Train raters to avoid discrimination & to evaluate performance consistently Appraise frequently (minimum: annually) .Concerns of Measuring Performance – Legal Defensibility • • • • • • • • • • • • • Use job analysis Use standardized & formal appraisal system Communicate performance standards in advance Use objective & uncontaminated data when possible “Behavioralize” as much as possible.

reliable and valid information and data which can be used to defend the organization. 5) Legal sanction Appraisal must meet the laws of the land . 3) Standardisation Appraisal forms .ESSENTIAL CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SINCE a no of crucial decisions are made on the basis of rating given by the appraiser.rating etc. should be standardized.possible to implement and economical to undertake continuously.procedures . . 4) Practical viability The techniques should be practically viable to administer . 6) TRAINING TO APPRAISERS Appraisers must be provided training of rating & document appraisal to conduct ratings more confidently. thus it must possess following features: 1) RELIABLITY & VALIDITY Appraisal system should provide consistent . 2) Job relatedness It must measure the performance and provide information in the job related areas .

habitual absenteeism. and low productivity that can’t be corrected . substance abuse.Last Recourses in Performance Management • Transfer – When employee and job are not well matched • Neutralize – Assign noncritical tasks to minimize the impact of deficiencies • Terminate – For dishonesty. insubordination.