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ME 303

Anchit Gaurav
Dept of Mechanical Engineering
IIT Gandhiangar

Abstract

A performance appraisal is a method by which the job performance of an employee is


evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding
manager or supervisor. A performance appraisal is a part of guiding and managing career
development. It is the process of obtaining, analyzing, and recording information about the
relative worth of an employee to the organization. Performance appraisal is an analysis of an
employee's recent successes and failures, personal strengths and weaknesses, and suitability for
promotion or further training. It is also the judgement of an employee's performance in a job
based on considerations other than productivity alone. In this report I have tried to outlay the
performance appraisal basics and the controversies associated with it. I have contained myself to
the outlines and not discussed a particular method in detail.

Correspondence
For any suggestions or queries contact me on anchitgaurav@iitgn.ac.in
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Executive Summary
Performance appraisal is a systematic way of reviewing and assessing the performance of
an employee during a given period of time and planning for his future.
It is a powerful tool to calibrate, refine and reward the performance of the employee. It
helps to analyze his achievements and evaluate his contribution towards the achievements of the
overall organizational goals. By focusing the attention on performance, performance appraisal
goes to the heart of personnel management and reflects the management's interest in the progress
of the employees. A Performance Appraisal has the following beneficiary factors:

To review the performance of the employees over a given period of time.


To judge the gap between the actual and the desired performance.
To help the management in exercising organizational control.
Helps to strengthen the relationship and communication between superior subordinates

and management employees.


To diagnose the strengths and weaknesses of the individuals so as to identify the training

and development needs of the future.


To provide feedback to the employees regarding their past performance.
Provide information to assist in the other personal decisions in the organization.
Provide clarity of the expectations and responsibilities of the functions to be performed

by the employees.
To judge the effectiveness of the other human resource functions of the organization such

as recruitment, selection, training and development.


To reduce the grievances of the employees.

Content

1. Introduction

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2.
3.
4.
5.
6.
7.

History of PA .
Modern PA
Why Conduct PA ..6
When onduct PA
.
Who Conducts PA
.
Objectives of PA
.
7.1.
Employee Work Efficiency
7.2.
Employee Professional Qualification

7.3.
Potential Performance

7.4.
Working Motive

8. Measuring Performance
.
9. Traditional Methods of Performance .
9.1.
Graphic Rating Scales

9.2.
Paired Comparison Method
9.3.
Ranking Method

9.4.
Forced Distribution Method
9.5.
Checklist Method

9.6.
Critical Incidence Method

9.7.
Essay Method
.
9.8.
Confidential Report
10. Modern Methods of PA
.
10.1. MBO ..
10.2. Psychological Appraisal
..
10.3. 360 Degree Feedback Approach
..
11. Analysis and Review of PA _ Most Important Aspect
..
12. Mistakes in PA
...
12.1. Unclear Standards
...
12.2. Prejudice

12.3. Pass Tendency


...
12.4. Extreme Tendency

12.5. Preconception

13. Controversy over PA

14. Post Modern PA _ Self Appraisal

15. Conclusion
16. Appendix

16.1. Construction of a Sample PA Form


17. References
...
1. Introduction _ What is PA

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PA (Performance Appraisal) is the method of evaluating the behavior of the employees in


the workplace, normally including both quantitative and qualitative aspect of the job.

How the employee is performing


How the employee can develop
What the superior can do to make it happen
How the job is going
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It is the process of evaluating the performance of employees, sharing that information with
them and searching for ways to improve their performance.
(Newstrom)
2. History of PA
The history of performance appraisal is quite brief. Its roots in the early 20th century can
be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the
same may be said about almost everything in the field of modern human resources management.
As a distinct and formal management procedure used in the evaluation of work
performance, appraisal really dates from the time of the Second World War - not more than 60
years ago.
Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things
historical, it might well lay claim to being the world's second oldest profession!
Appraisal, it seems, is both inevitable and universal. In the absence of a carefully
structured system of appraisal, people will tend to judge the work performance of others,
including subordinates, naturally, informally and arbitrarily.
The human inclination to judge can create serious motivational, ethical and legal
problems in the workplace. Without a structured appraisal system, there is little chance of
ensuring that the judgments made will be lawful, fair, defensible and accurate.
Performance appraisal systems began as simple methods of income justification. That is,
appraisal was used to decide whether or not the salary or wage of an individual employee was
justified.
The process was firmly linked to material outcomes. If an employee's performance was
found to be less than ideal, a cut in pay would follow. On the other hand, if their performance
was better than the supervisor expected, a pay rise was in order.
These observations were confirmed in empirical studies. Pay rates were important, but
they were not the only element that had an impact on employee performance. It was found that
other issues, such as morale and self-esteem, could also have a major influence.
As a result, the traditional emphasis on reward outcomes was progressively rejected. In
the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and
development was gradually recognized. The general model of performance appraisal, as it is
known today, began from that time.
"Performance, and performance alone, dictates the predator in any food chain."
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(SEAL Team)

3. Modern PA
Modern Performance appraisal may be defined as a structured formal interaction between
a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semiannual), in which the work performance of the subordinate is examined and discussed, with a
view to identifying weaknesses and strengths as well as opportunities for improvement and skills
development.
In many organizations - but not all - appraisal results are used, either directly or
indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify
the better performing employees who should get the majority of available merit pay increases,
bonuses, and promotions.
By the same token, appraisal results are used to identify the poorer performers who may
require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay.
(Organizations need to be aware of laws in their country that might restrict their capacity to
dismiss employees or decrease pay.)
Whether this is an appropriate use of performance appraisal - the assignment and
justification of rewards and penalties - is a very uncertain and contentious matter.

Fig 1. Performance Appraisal System (Courtesy: hrsmart.com)


4. Why Conduct a PA

Provide information about the performance ranks. Decision regarding salary revision,
confirmation, promotion and demotions.

Provide feedback about level of achievement and behaviour of the subordinate.

Provide information which helps to counsel the employees.


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Provide information to diagnose the deficiency of the employees.

Provide training and development needs of the employees.

5. When to Conduct PA

The performance review must occur at least once in a year. Some companies review
twice in a year.

However, as a part of Performance Management, the performance review is a continuing,


ongoing activity.

6. Who Conducts PA
The Appraisee

The Appraiser

HR Department

7. Objectives of PA
The question why appraisal? is followed by what to appraise? because there will not
be effective appraisal if the appraiser does not know what to appraise in an employee or a group
of employees.
Four objects of human resources appraisal are distinguished, equivalent to various
activities as followed:
7.1.

Appraisal of employee work efficiency

Appraisal of employee work efficiency, i.e. his or her working results, means analyzing
of production of his/her activities in compared to set target or results of other employees carrying
out the same activities in the same scenario to specify his/her efficiency level.
7.2.

Appraisal of employee professional qualification.

Professional qualification denotes required professional capacity of presenting best


performance in the long run. Performance appraisal is impossible to be carried out if there is not
a defined standard capacity frame for a call or related job. Hence, performance appraisal refers
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to: first, a recording knowledge, skills and behaviors of an individual based on the standard
capacity frame; next, evaluating the professional mastery to define:
An individuals skills;
Required skills an individual lacks;
Skills an individual possesses, but does not master as required by the call or job.
7.3.

Potential performance

An individuals potential addresses the ability to pick up new skills required in the future
so that he/she knows another job or carry out a job of higher responsibility through training or
self-training. Potential appraisal does not mean appraising capacity, but appraising potential for
learning new skills in association with perception and personality structure.
7.4.

Employee working motive appraisal

Working motive appraisal refers to appraising employees involvement in organizations


work and activities. It is important to not confuse between involvement and result, because
motive itself cannot guarantee good results.
Motive is necessary but not sufficient condition for an individual to produce high
efficiency in work. Involvement appraisal is relatively simple, easy to measure through daily
work. However, it is not the case for motive. The origin of working motive (or lack of motive) is
difficult to measure because this is a highly personal aspect.
"A total commitment is paramount to reaching the ultimate in performance."
(Tim Flores - NFL coach )

8. Measuring Performance
The most difficult part of the performance appraisal process is to accurately and
objectively measure the employee performance. Measuring the performance covers the
evaluation of the main tasks completed and the accomplishments of the employee in a given time
period in comparison with the goals set at the beginning of the period. Measuring also
encompasses the quality of the accomplishments, the compliance with the desired standards, the
costs involved and the time taken in achieving the results.
Measuring employee performance is the basis of the PA processes and performance
management. Accurate and efficient performance measurement not only forms the basis of an
accurate performance review but also gives way to judging and measuring employee potential.

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For the purpose of measuring employee performance, different input forms can be used
for taking the feedback from the various sources like the superior, peers, customers, vendors and
the employee himself. All the perspectives thus received should be combined in the appropriate
manner and to get an overall, complete view of the employees performance. Observation can
also be exercised by the superior to obtain information.
"To aim is not enough, you must hit!
(German Proverb)

9. Traditional Methods of PA
A common approach to assessing performance is to use a numerical or scalar rating
system whereby managers are asked to score an individual against a number of
objectives/attributes

9.1.

Graphic Rating Scales

This is the oldest and most widely method used for performance appraisal. The scales
may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed
about work duties) to 5 (has complete mastery of all phases of the job).

(Table 1 : On next page)


Table 1. Typical Graphic Rating Scale
Employee Name...................
Job title .................

Department .........................

Rate ...............

Data ..................................
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Quantity of work: Volume of


work under normal working
conditions

Unsatisfactory

Fair

(1)

(2)

Satisfactory
(3)

Good

Out Standing

(4)

(5)

Quality of work: Neatness,


thoroughness and accuracy of
work Knowledge of job
A clear understanding of the
factors connected with the job
Attitude: Exhibits enthusiasm
and cooperativeness on the
job

9.2.

Paired Comparison Method

A better technique of comparison than the straight ranking method, this method compares
each employee with all others in the group, one at a time. After all the comparisons on the basis
of the overall comparisons, the employees are given the final rankings.
9.3.

Ranking Method

This is one of the oldest and simplest techniques of performance appraisal. In this
method, the appraiser ranks the employees from the best to the poorest on the basis of their
overall performance. It is quite useful for a comparative evaluation.

(Table 2: On next page)


Table 2. Typical Ranking Scale

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Performance

Points

Behavior

Extremely good

Can expect trainee to make valuable suggestions for increased sales and to
have positive relationships with customers all over the country.

Good

Can expect to initiate creative ideas for improved sales.

Above average

Can expect to keep in touch with the customers throughout the year.

Average

Can manage, with difficulty, to deliver the goods in time.

Below average

Can expect to unload the trucks when asked by the supervisor.

Poor

Can expect to inform only a part of the customers.

Extremely poor

Can expect to take extended coffee breaks and roam around purposelessly.

9.4.

Forced Distribution Method

Forced ranking is a method of performance appraisal to rank employee but in order of forced
distribution.

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Fig 2. Forced Distribution Method (Courtesy: Performance Evaluation by R K Mishra)


9.5.

Checklist Method
Another simple type of individual evaluation method is the checklist.

Fig 3. Checklist
Method (Courtesy: webperformancemanagement.com)

Is the employee really interested in the task assigned?


Is he respected by his colleagues (co-workers)

Yes/No
Yes/No

Does he give respect to his superiors?

Yes/No

Does he follow instructions properly?

Yes/No

Does he make mistakes frequently?

Yes/No

9.6.

Critical Incidence Method

Under this method, the manager prepares lists of statements of very effective and
ineffective behavior of an employee. These critical incidents or events represent the
outstanding or poor behavior of employees on the job.

July 20 Mr. Paul patiently attended to the major customers complaint. He is polite,
prompt, enthusiastic in solving the customers problem.

On the other hand the bad critical incident may appear as under:

September 28 Mr. Paul stayed 45 minutes over on his break during the busiest part of
the day. He failed to answer the store managers call thrice.
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9.7.

Essay Method

This method asks managers/ supervisors to describe strengths and weaknesses of an


employees behavior.
9.8.

Confidential Report

It is mostly used in government organizations. It is a descriptive report prepared,


generally at the end of every year, by the employees immediate superior. The report highlights
the strengths and weaknesses of the subordinate.

10. Modern Methods of PA


10.1.

Management By Objectives (MBO)

A process whereby the superior and subordinates of the organization jointly identify its common
objectives, define each individuals major areas of responsibility.
1. Establishment of Goals
2. Setting the performance standard
3. Actual level of job attainment is compared with the goals agreed upon.
4. Establishing new goals and new strategies for goals not previously attained.

10.2.

Psychological Appraisals

When psychologists are used for evaluations, they asses an individuals potential. The
appraisal consists of in-depth interviews, psychological tests, discussions with supervisors and a
review of other evaluations.

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Fig 4. Psychological Appraisal (Courtesy: fitzpatrik-wilkes.co.uk)


10.3.

360 Degree Feedback Approach

360 Degree Feedback is a multi - rater feedback system where an individual is assessed
by a number of assessors including his boss, direct reports, colleagues, internal customers and
external customers.

Feedback Form

Using a specially designed Tool

Anonymously

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Fig 5. 360 Degree Feedback Appraisal (Courtesy: tribbit.com)

11. Analysis and Review of PA _ Most Important Aspect


Any performance review process is incomplete without the feedback to the employees.
The feedback could be given in the review discussion. Review discussions are semi formal,
scheduled, periodic interactions usually bimonthly or quarterly between a manager and his
employee. The basic purpose of the review discussion is to analyze the performance of the
employee in the past to improve the performance of the employee in future.
The manager encourages his/her employees to critically reflect over progress made on the
Performance appraisal plan and to develop creative, yet feasible alternatives for problem areas.

Review the performance of the each employee individually.


Discuss the problems faced by the employees during the course of action.

The solutions tried, and the degree of success achieved in solving the problems faced.

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Revisit with the employee, his/ her annual plan for the remaining time period and develop
revised action plans, if necessary.

Review discussions reassure the employees that each one of them has structured
opportunities for one to one interaction with the manager once every two or three months during
the year. These opportunities are important as they provide an important chance for performance
monitoring or development mentoring.
The aim of the performance review discussions is to share perceptions, solve the problem
faced during the course of the action, decide on the new goals jointly and provide a feedback to
the employee for the past performance i.e. to look at his strengths and weaknesses and also help
to chart out a career plan for the employee.

Fig 6. Review Sessions (Courtesy: easiconsult.com)

The focus of these performance review discussions should not bet or judge the
employees past performance; rather it should be to motivate the employee to improve his future
performance and reinforce his good behavior.
"I like to be against the odds. I'm not afraid to be lonely at the top. With me, it's just the
satisfaction of the game. Just performance."

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(Barry Bonds)

12. Mistakes in PA
12.1.

Unclear standards

Requirements of each level should be distinguished: What is excellent, good, pass and
poor standard? What should be done and what are specific skills to be excellent? Different
people may have different understandings and applications of excellent, good, pass and poor
standard.
If there is not any specific direction of classification, under unclear standards, one
employee may be evaluated in different levels. This will reduce the accuracy of job performance
evaluation of employees.
12.2.

Prejudice

When generally evaluating job performance of employees, the administrator only bases
on one certain standard or main point.
12.3.

Pass tendency

Evaluating employees in pass level, no one excellent as well as too poor.


12.4.

Extreme tendency

The administrator tends to evaluate employees too highly or too lowly. All employees are
considered good or poor.
12.5.

Preconception

The tendency that allows different personal factors such as age, skin color, gender
affecting the evaluation of job performance.
If anything is worth trying at all, its worth trying at least 10 times.
(Art Linkletter)

13. Controversy over PA


There are many reputable sources - researchers, management commentators,
psychometricians - who have expressed doubts about the validity and reliability of the
performance appraisal process. Some have even suggested that the process is so inherently
flawed that it may be impossible to perfect it.
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This group believes that the linkage to reward outcomes reduces or eliminates the
developmental value of appraisals. Rather than an opportunity for constructive review and
encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing.
For example, how many people would gladly admit their work problems if, at the same
time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal
result? Very likely, in that situation, many people would deny or downplay their weaknesses.

Fig 7. Disadvantages of PA (Courtesy: svcgroup.co.uk)


Nor is the desire to distort or deny the truth confined to the person being appraised. Many
appraisers feel uncomfortable with the combined role of judge and executioner.
The result can be resentment and serious morale damage, leading to workplace
disruption, soured relationships and productivity declines.
It has also been claimed that appraisees themselves are inclined to believe that appraisal
results should be linked directly to reward outcomes - and are suspicious and disappointed when
told this is not the case. Rather than feeling relieved, appraisees may suspect that they are not
being told the whole truth, or that the appraisal process is a sham and waste of time.

14. Post-Modern PA _ Self Appraisal


Self appraisal is an important part of the Performance appraisal process where the
employee himself gives the feedback or his views and points regarding his performance. Usually
this is done with the help of a self appraisal form where the employee rates himself on various
parameters, tells about his training needs, if any, talks about his accomplishments, strengths,
weaknesses, problems faced etc.

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Fig 8. Self Appraisal (Courtesy: hrworkbench.co.uk)

14.1.

Honest

Always be truthful and honest while telling your accomplishments or failures. Dont
exaggerate your strengths and dont hide your weaknesses. Dont make personal judgments for
anybody.
14.2.

Preparation

Its always better to prepare yourself before the meeting. Get all the lists in place, prepare
all the evidences and references.
14.3.

Objective

Objectivity is important in self appraisal. Dont exaggerate or downplay your


achievements or failures. Be specific and concise in your statements and if possible support them
with examples or references or evidences with dates. For example: "I responded to all queries
within 48 hours" is better than just saying "My customer service was good."
14.4.

Positive attitude

Have a positive attitude towards the whole appraisal process. Be co-operative. Dont
hesitate from taking the responsibility of your failures as well as the achievements. Demonstrate
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enthusiasm to improve in future and take all his suggestions calmly. Dont complain or
demonstrate a negative attitude.
14.5.

Cover all the aspects

Apart from your strengths, weaknesses, accomplishments and failures, express the
opportunities you would like have for your development and improvement. Suggest ways to
overcome the problems faced. Assess your capabilities, behaviors and skills and competence.
14.6.

Future responsibilities

Self appraisal should ideally include the accomplishments, the goals achieved, the failures, and
the personal growth (i.e. new skills acquired, preparation for the future etc.), the obstacles faced
during the period, the efforts for removing them, the suggestions, and the areas of training and
development felt by the employee.

"... a basic human tendency to make judgments about those one is working with, as well as
about oneself."
( Dulewicz 1989)
15. Conclusion
People differ in their abilities and their aptitudes. There is always some difference
between the quality and quantity of the same work on the same job being done by two different
people. Performance appraisals of Employees are necessary to understand each employees
abilities, competencies and relative merit and worth for the organization. Performance
appraisal rates the employees in terms of their performance.
Performance appraisals are widely used in the society. The history of performance
appraisal can be dated back to the 20th century and then to the second world war when the merit
rating was used for the first time. An employer evaluating their employees is a very old concept.
Performance appraisals are an indispensable part of performance measurement.
Performance appraisal is necessary to measure the performance of the employees and
the organization to check the progress towards the desired goals and aims.
The latest mantra being followed by organizations across the world being "get paid
according to what you contribute" the focus of the organizations is turning to performance
management and specifically to individual performance. Performance appraisal helps to rate the
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performance of the employees and evaluate their contribution towards the organizational goals. If
the process of performance appraisals is formal and properly structured, it helps the employees to
clearly understand their roles and responsibilities and give direction to the individuals
performance. It helps to align the individual performances with the organizational goals and also
review their performance.

16. Appendix
16.1.

Sample PA Form
(adapted from Performance Appraisal Management by Mufeed S. Ahmed)

A. General Requirements
Appraisal time: Weekly, at weekends. At the end of month, carry our general appraisal to give
points to each employee.
Appraisal method: Perform on basis of form as described herein this Code. Appraisal shall be
performed by the head of relevant department.
B. Employees Details
Name of Employee:
Position:
Department:
Appraiser:
Title:
C. Appraisal Rank
1 3 points: Poor
3 5 points: Weak
5 6.5 points: Average
6.5 8: Fair
8 10: Good
D. Appraisal Criteria
D.a. Quality of Work
Not meet the requirements for more than 3 times/month or 1 2 times but cause material
impact on the Company
Not meet the requirements for 1 2 times/month
Meet the requirements
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Ensure the good quality of work; receive high appraisal by customers and colleagues
Perform the work excellently; create high value for the Company.
D.b. Completion time
Not complete the work within the time limits for more than 3 times/month or Not complete the
work within the time limits for 1 2 times/month but cause material impact on the Company
Not complete the work within the time limits for 1 2 times/month
Complete the work on time
Complete the work before due date
Complete the work before due date and this creates high value for the company
D.c. Innovation
(Not count)
(Not count)
5 points if have minor innovation
Have innovation which can be measured in value to be 1million VND or more
Innovation with in-value measure to be more than 5 million VND
D.d. Regulation Abidance
Serious violation, 2 times a month
Serious violation, 1 time a month. Or non-serious violation for more than 2 times
Non-serious violation for 1 time a month
No violation
Not violation + discovery of violation

17. REFERENCES
A. Text References
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1. Performance Evolution of Public Enterprises: An Annotated


Bibliography
(By R. K. Mishra)
2. Performance Appraisal Management
(By Mufees S. Ahmed)
B. Web References
1. MIT Sloan, Human Resources
(http://mitsloan.mit.edu/)
(http://sloanreview.mit.edu/executive-adviser/articles/category/human-resources/)
2. University of Georgia, Human Resources
(http://www.hr.uga.edu/)
3. Wikipedia Recommended Reference
(http://www.performanceappraisal.com/intro.htm)
C. Reference For Figures
1. Mentioned alongside the Figures
D. Refrences For Phrases
1. http://performanceappraisal.biz/go/PhrasesForPerformanceAppraisals/

E. Others
1. http://www.citehr.com
2. http://performanceappraisal.biz
3. http://www.citeops.com

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