Performance Appraisal

Performance Appraisal AIMS

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What is Performance Management Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves the organization.


Performance Management System (PMS) A • • • • • • • • •

Performance Management System (PMS) includes the following actions: Develop clear job descriptions (JDs). Select appropriate people with an appropriate selection process. Negotiate requirements and accomplishment-based performance standards, outcomes, and measures. Provide effective orientation, education, and training. Provide on-going coaching and feedback. Conduct quarterly performance development discussions. Design effective compensation and recognition systems that reward people for their contributions. Provide promotional/career development opportunities for staff. Assist with exit interviews to understand WHY valued employees leave the organization.


Defining Performance Appraisal Performance appraisal is the formal, structured system of measuring & evaluating an employee’s job related behaviors & outcomes to discover how & why the employee is presently performing on the job & how the employee can perform more effectively in the future so that the employee as well as the organization can mutually benefit.


Features of Performance Appraisal 

It is a systematic process, which aims to evaluate performance of the employees.  It provides a description of an employee’s job’s relevant strengths & weaknesses.  It aims to find out how well the employee is performing the job & tries to establish a plan for further improvement.  The appraisal period is carried out periodically according to a definite plan.


Objectives of Performance Appraisal      

To effect promotions based on competence & performance To confirm services of probationary employees upon their completing the probationary period satisfactorily To assess the training & development needs of employees. To generate adequate feedback & guidance from the immediate superior to an employee working under him. To decide upon a pay raise where regular pay scales have not been fixed. To provide inputs to system of rewards (comprising salary increments, transfers, promotions, demotions or terminations) & salary administration.


Objectives of Performance Appraisal 

To let the employees know where they stand insofar as their performance is concerned & to assist them with constructive criticism & guidance for the purpose of their development.  To improve communication by providing a format for dialogue between the superior & the subordinate, and improves understanding of personal goals & concerns.  It can be used to determine whether HR programs such as selection, training and transfers have been effective or not.  To generate significant, relevant, free & valid information about the employees.


Multiple purposes of Performance Assessment General Applications

Specific Purpose

Developmental uses

Identification of individual needs Performance feedback Determining transfer & job assignments Identification of individual strengths & developmental needs

Administrative Uses/Decisions

Salary Promotion Retention or termination Recognition of individual performance Lay-offs Identification of poor performance


Multiple purposes of Performance Assessment General Applications

Specific Purpose

Organizational Maintenance/Objectives

HR planning Determining organization training needs Evaluation of organizational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organizational development needs

Documentation

Documentation for HR decisions


Planning the Appraisal A meaningful performance appraisal is a two-way process that benefits both the employees & the organization as a whole. The planning appraisal strategy has to be done: a. Before the appraisal:  Establish key task areas & performance goals  Set performance goals  Get the facts  Schedule each appraisal interview well in advance b. During the appraisal:  Encourage two-way communication  Discuss & agree on performance goals for the future  To think about how one can assist the employee to achieve more at work.  Record notes of the interview  End the interview on an upbeat note c. After the appraisal:  Prepare a formal record of the interview  Monitor performance


Performance Appraisal Process ObjectivesofofPerformance Performance Objectives Appraisal Appraisal EstablishJob JobExpectations Expectations Establish Designthe theappraisal appraisalprogram program Design AppraisePerformances Performances Appraise PerformanceInterviews Interviews Performance Useappraisal appraisaldata datafor for Use appropriate purposes appropriate purposes


Performance feedback

Performance Appraisal Methods Performanceappraisal appraisal Performance methods methods

PastOriented OrientedMethods: Methods: Past Checklists Checklists Ratingscales scales Rating Forcedchoice choiceMethod Method Forced CriticalIncident IncidentMethod Method Critical Behaviorallyanchored anchoredScales Scales(BARS) (BARS) Behaviorally FieldReview Reviewmethod method Field PerformanceTests Tests&&Observations Observations Performance AnnualConfidential Confidentialreports reports Annual EssayMethod Method Essay Costaccounting accountingapproach approach Cost ComparativeEvaluation EvaluationApproach Approach Comparative


FutureOriented OrientedMethods: Methods: Future ManagementBy ByObjectives Objectives Management (MBO) (MBO) 360-dgreeappraisal appraisal 360-dgree Psychologicalappraisals appraisals Psychological Assessment centers Assessment centers

Past-Oriented Methods

Checklist Method: Under this method a checklist of statements on the traits of the employee & his or her job is prepared in two columns namely; “yes” column and a “no” column. When points are allotted to the checklist, the technique is known as a Weighted Checklist. Rating Scales: This is the simplest & the most popular technique for appraising employee performance. The typical rating scale system consists of several numerical scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude, cooperation & so on. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, then computes the employee’s total score.


Past-Oriented Methods Forced Choice Method: In this method, the rater is given a series of statements about the employees. These statements are arranged in blocks of two or more, and the rater indicates which statement is most or least descriptive of the employee. This approach is known as forced choice method because the rater is forced to select statements which are readymade. The advantage of this method is the absence of personal bias in rating. The disadvantage is that the statements may not be properly framed & may not also precisely be the descriptive of the ratee’s traits.


Past-Oriented Methods Critical Incident Method: This approach focuses on certain critical behaviors of an employee that makes the difference between effective and non-effective performance of a job. These events are generally noted or recorded by the superiors. One of the major advantages of this method is that the evaluation is based on actual job behavior. Field review Method: This is an appraisal by someone outside the assessee’s own department, usually someone from the corporate office or the HR department. The outsider reviews employee records & holds interviews with the ratee his or her superior. Performance Tests & Observations: With a limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may be of the paper & pencil variety or an actual demonstration of skill.


• Annual Confidential Report: It is mostly used in Govt. organizations. It is a descriptive report prepared, generally at the end of every year, by the employee’s immediate superior.


Behaviorally Anchored Rating Scales (BARS): Behaviorally Anchored rating Scales are also known as Behavioral Expectations Scale. These are rating scales whose scale points are determined by statements of effective & ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a range of descriptive statements of behaviors varying from the least to the most effective.


Past-Oriented Methods Essay Method: In this method, the rater must describer the employee within a number of broad categories, such as a) the rater’s overall impression of the employee performance, b) the promotability of the employee c) the jobs that the employee is now able or qualified to perform, d) the strengths & weaknesses of the employee & e) the training & development assistance required by the employee. Cost Accounting Method: This method evaluates performance from the monetary returns the employee yields to his or her organization. A relationship is established between the cost included in keeping the employee & the benefit the organization derives from him or her. Comparative Evaluation Approaches: These are a collection of different methods that compare one worker’s performance with that of his/her coworkers. Comparative appraisals are usually conducted by supervisors. The usual comparative forms used in this kind of evaluation are the Ranking Method & the Paired Comparison Method.


Comparative Evaluation Approaches Ranking Method: In this method the superior ranks his or her subordinates in the order of their merit, starting from the best to the worst. This method is subject to the halo & recency effects, although rankings by two or more raters can be averaged to help reduce bias. 

Paired-Comparison Method: Here the appraiser compares each employee with every other employee, one at a time. For example, there are five employees namely, A, B, C, D, E. the performance of A is 1st compared with that of B & a decision is made about whose performance is better. Then A is compared with C, D & E in that order. The same procedure is repeated for other employees. The number of comparisons can be calculated with the help of a formula, namely: N(N-1)/2, where N stands for the number of employees to be compared. If there are 10 employees, the comparisons will be 10(10-1)/2=45.


Future-Oriented Appraisal Methods • • • •

Management By Objectives (MBO) 360 Degree Feedback Appraisal Systems Psychological appraisals Assessment Centers


Management By Objectives (MBO) What is MBO: Management by Objectives is 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 & use these measures as guides for operating the unit and assessing the contributions of each of its members.


360 Degree Feedback Appraisal Systems The 360 degree Feedback Appraisal process is the systematic collection of performance data on an individual or group, derived from a number of stakeholders-the stakeholder being the immediate supervisors, team members, customers, peers & the self (self appraisal).

Client Appraisal / Appraisal by Client Appraisal / Appraisal by Suppliers, Distributors, and Suppliers, Distributors, and Direct Customers Direct Customers

Peer Peer Appraisal Appraisal

Grand Parent Appraisal / Grand Parent Appraisal / Super Boss Appraisal Super Boss Appraisal

Parent Appraisal / Parent Appraisal / Boss Appraisal Boss Appraisal

Self Self Appraisal Appraisal

Son / Daughter Appraisal Son / Daughter Appraisal (Subordinate Appraisal) (Subordinate Appraisal)


Uncle-Aunt Appraisal / Uncle-Aunt Appraisal / Appraisal by other Appraisal by other Departmental heads Departmental heads

Peer Peer Appraisal Appraisal

Future-Oriented Appraisal Methods Psychological Appraisals: The appraisal normally consists of in-depth interviews, psychological tests, discussions with supervisors & a review of other evaluations. The psychologist then writes an evaluation of the employee’s intellectual, emotional, motivational & other-related characteristics that suggest individual potential & may predict future performance. Assessment Centers: Assessment center is a mechanism used to identify the potential for growth of individuals. It is a procedure specifically used, designed to evaluate an employee’s managerial potential. Its objective is to reinforce strengths, overcome weaknesses & exploit potential of the employees through training & development efforts. The assessors observe the behavior & make independent evaluation of what they have observed, which results in identifying strengths & weaknesses of the attributes being studied.


Errors in Performance Appraisal: Error Type

Hallmarks/Features

Halo effect

This is a tendency to allow one positive trait of the employee to color the entire appraisal. This results in an overall higher rating than may be warranted.

Horn Effect

This is a tendency to allow one negative trait of the employee to color the entire appraisal. This results in an overall lower rating than may be warranted.



Leniency or Strict Error

Hallmarks/Features Some appraisers consistently assign high values to all employees, regardless of merit. This is a leniency error. The strictness tendency is a reverse situation, where all individuals are rated too severely and performance is understated.

Central Tendency

This is the most common error that occurs when a rater assigns mainly middle range scores or values to all individuals under appraisal. Extremely high or extremely low evaluations are avoided by assigning “average ratings” to all.

Spill-over Effect

This refers to allowing past performance to influence the evaluation of present performance.



Hallmarks/Features

Personal Bias

Perhaps the most important error of all rises from the fact that very few people are capable of objective judgments entirely independent of their values & prejudices.

Recency Effect

In this case the rater gives greater weightage to recent occurrences than earlier performances.

Stereotyping

It is a mental picture that an individual holds about a person because of the person’s age, religion, state, caste etc.


Challenges of Performance Appraisal        

To create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed. Align organizational objectives to individual aspirations Clear growth paths for talented individuals Provide newer challenges to rejuvenate careers that have reached the plateau stage Forge a partnership with people for managing their careers Empower employees to make decisions without the fear of failing Embed teamwork in all operational processes. Debureaucratise the organization structure for ease of flow of information.


Performance Appraisals: Legal Issues Legal Issues Associated with Performance Appraisal: Performance appraisal data are used to make vital HR decisions as those of pay, promotion, training, transfer & termination etc. the appraisal system is a common target of legal disputes by employees involving charges of unfairness & bias. Legally defensible appraisal procedures:  All personal decisions should be based on a formal standardized performance appraisal system.  Any performance appraisal process should be uniform for all employees within a job group, and decisions based on that, the performance appraisal should be monitored for differences according to race, sex, national origin, religion etc criteria of the employees.  All specific performance standards should be formally communicated to the employees.


Legally defensible appraisal procedures Legally defensible appraisal procedures (Contd):  

All employees should be able to review their appraisal results. There should be a formal appeal process for the ratee to rebut rater judgments.  All raters should be provided with written instructions & training on how to conduct appraisals properly to facilitate systematic, unbiased appraisals.  All personnel decision-makers should be well-informed of antidiscrimination laws.


Legally defensible appraisal contents 

Any performance appraisal content should be based on a Job Analysis  Constraints on an employee’s performance that are beyond the employee’s control should be prevented from influencing the appraisal so as to ensure that the employee has an equal opportunity to achieve any given performance level.  Specific job-related performance dimensions should be used  The performance dimensions should be assigned weights so as to reflect their relative importance in calculating the composite performance scores.


Legally defensible documentation of appraisal results

A thoroughly written record of evidence leading to termination decisions should be maintained  Written documentation for extreme ratings should be required & they must be consistent with the numerical ratings.  Documentation requirements should be consistent among the raters 


Legally defensible raters The Raters should be trained in “how to use an appraisal system.”  The raters must have the opportunity to observe the ratee firsthand or to review important ratee performance products. 

Use of more than one rater is desirable in order to lessen the amount of influence of any one rater & to reduce the effects of biases. Peers, subordinates, customers & clients are possible such sources.


Essential Characteristics of an effective Performance Appraisal system

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Reliability & validity: Appraisal system should provide consistent, reliable & valid information & data, which can be used to defend the organization to appraise the employees even in case of legal challenges. Job Relatedness: The appraisal technique should measure the performance and provide information in job related areas. Standardization: appraisal forms, procedures, administration of techniques, ratings etc should be standardized as appraisal decisions affect all employees of the group. Practical Applicability: The techniques should be practically viable to administer, possible to implement & economical to undertake continuously. Legal Sanction: Appraisals must meet the legal statutory norms & regulations. Training to appraisers: As appraisal is important & sometimes difficult, it would be useful to provide training to appraisers viz some insights & ideas on the rating, documenting appraisals & conducting appraisal interviews.


Essential Characteristics of an effective Performance Appraisal system 

Open communication: Most employees want to know how well they are performing the job. The appraisal interviews should permit both parties to learn about the gaps & prepare themselves for the future.  Employee access to results: Employees should receive adequate feedback on their performances. If performance appraisals are meant for improving employee performance, then withholding appraisal results would not serve any fruitful purpose. Due Process: It follows then that formal procedures should be developed to enable employees who disagree with appraisal results. They must have the means for pursuing their grievances & having them addressed objectively.


Performance Appraisal

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