Performance Appraisal

Introduction
Performance appraisal helps the employee & the
management to assess the level of employees
performance compared to the standard / pre-determined
levels.
Performance appraisal is a very essential element in any
organization to understand & improve the employees
performance.
Performance appraisal used as a basis to decide
promotions, increments, transfer etc.
Performance appraisal is used as the basis for employee
development.
Meaning & Definition
Performance appraisal is a method of evaluating the
behavior & performance of employees in the
workplace.
It includes both the qualitative & quantitative
aspects of performance.
It indicates how well the employee is fulfilling the
demands of the job.
Performance should not be confused with effort.
Performance is always measured in terms of results.
Performance appraisal is the systematic description
of an employees job-relevant strengths and
weaknesses.
Performance Appraisal
Meaning & Definition
The basic purpose is to find out how well the
employee is performing the job and establish a
plan of improvement.
Appraisals are arranged periodically according to a
definite plan
Performance appraisal is not job evaluation. It
refers to how well someone is doing the assigned
job. Job evaluation determines how much a job is
worth to the organization and , therefore, what
range of pay should be assigned to the job
Performance appraisal is a continuous process in
large scale organizations.
Performance Appraisal
Regularity of attendance
Ability to work with others
Leadership style & abilities
Initiative
Technical skill
Ability to grasp new things
Reasoning ability
Originality & resourcefulness
Integrity
capability to assume responsibility
Knowledge of systems & procedures
Quality of suggestions offered for improvement
Contents of Performance Appraisal
360 Performance Appraisal
The appraiser is any person who has knowledge
about job content, the contents to be appraised
and is capable of determining what is more
important & what is relatively less important. The
appraiser is connected to the appraisee in some
way and can observe the employee while
performing the job.
The typical appraisers in 360 Performance
Appraisal are employees themselves (self
appraisal), supervisors in the same department,
supervisors in other departments, subordinates,
peers, users of service & consultants.
Supervisors the supervisors include
superiors of the employee, other superiors
having knowledge about the work of the
employee and department head/manager.
The normal practice in most organizations
is that immediate superiors appraise the
performance which in turn is reviewed by
the department head / manager.
360 Performance Appraisal
Peers peer appraisal may be reliable if
the work group is stable over a reasonably
long period of time and performs tasks that
require interaction.
Subordinates in organization where the
relationships between superiors &
subordinates are cordial, the concept of
superiors rated by subordinates is
practiced.
360 Performance Appraisal
Self appraisal employees appraise their own
performance when they are able to understand
the objectives their expected to achieve &
standards by which they are to be evaluated.
Users / customers in service organizations,
employee performance relating to behavior,
promptness, speed, accuracy etc can be
evaluated by the users or customers.
360 Performance Appraisal
Consultants sometimes consultants may
be engaged for appraisal when employees
or employers do not trust supervisor
appraisal & the management does not trust
self appraisal & other form of appraisal.
The consultants are trained and they
observe the employees at work for a
sufficiently long period of time.
360 Performance Appraisal
Methods of Performance Appraisal
Traditional methods
1. Graphic rating scales
2. Ranking method
3. Paired comparison method
4. Forced distribution method
5. Checklist method
6. Critical incident method
7. Essay or free form appraisal
8. Group appraisal
9. Confidential reports
Modern methods
1. Behaviorally anchored rating scales
2. Assessment centre
3. Human resources accounting
4. Management by objectives
5. Psychological appraisals
Methods of Performance Appraisal
1. Graphic rating scales
Comparing individual performance to an absolute
standard. Judgments about performance are recorded
on a scale.
Oldest & widely used.
Also known as linear rating scale or simple rating scale.
Appraisers given printed forms which contain the
various objectives, the qualities to be rated like
analytical ability, creative ability, initiative, leadership
qualities, emotional stability etc in case of managerial
personnel.
Traditional Methods of Performance
Appraisal
Traditional Methods of Performance
Appraisal
1. Graphic rating scales
The qualities in respect of workmen could be quantity
and quality of work, job knowledge, attitude,
dependability, initiative etc.
The rating scale used could be continuous rating scale
or discontinuous rating scale. In continuous scale, the
points are in a particular order. For e.g 0 to 5 i.e.
0,1,2,3,4,5 where 5 is the highest.
In discontinuous scale, the appraiser assigns the points
against each quality or character. The points given by
the rater to each character are added up to find out the
overall performance. The employees are then ranked on
the basis of the total points assigned to them.
Graphic
Rating
Scale with
Space for
Comments
Portion of an Administrative Secretarys Sample Performance
Appraisal Form
Source: James Buford Jr., Bettye Burkhalter, and Grover Jacobs, Link Job Description to
Performance Appraisals, Personnel Journal, June 1988, pp. 135136.
Performance
Management
Outline
Source: www.cwru.edu.
Perform
ance
Manage
ment
Outline
(contd)
Source: www.cwru.edu.
Source: www.cwru.edu.
2. Ranking method (Alternation ranking
method)
The employees are ranked from best to worst on
some characteristics.
The rater first finds the employee with the
highest performance & employees with the
lowest performance.
The rater then selects the next highest and next
lowest and so on until all the employees in that
group are rated.
Relatively easy and inexpensive but reliability
and validity open to doubt.
Another limitation is the size of the difference
between the various ranks is not well defined.
Traditional Methods of Performance
Appraisal
Alternation Ranking Scale
3. Paired comparison method
The appraiser ranks the employees by comparing one
employee with all other employee in the group, one at a
time.
Each employee is assigned a capital letter like A,B,C,etc
& one separate sheet used for each employee.
For each plotted pair, write the letter of the employee
who has done a superior overall job and assign a
certain percentage of the total positive evaluation.
If a department has two outstanding employees and six
average employees and if this method is correctly used,
the two employees will get a much higher percentage of
positive comparison than the other six.
Number of comparisons = N (N-1) / 2. For large number
of employees, it is time consuming.
Traditional Methods of Performance
Appraisal
Ranking Employees by the
Paired Comparison Method
Note: + means better than. means worse than. For each chart, add up the
number of 1s in each column to get the highest-ranked employee.
4. Forced Distribution method
The rater after assigning the points to the performance
of each employee distributes his ratings in a pattern to
conform to normal frequency distribution.
This method is developed to prevent the raters from
rating too high or too low.
This method eliminates central tendency & leniency
biases.
Main drawback is the assumption that all groups of
employees will have the same distribution of excellent,
average & poor performers
Employees are placed in certain ranked categories but
not rank within the categories.
Traditional Methods of Performance
Appraisal
Forced distribution method

Example:
15% high performers
20% high-average performers
30% average performers
20% low-average performers
15% low performers
5.Checklist method
Three types simple checklist, weighted checklist, forced choice
method.
Simple checklist - The checklist consists of a large number of
statements concerning employee behavior.
Weighted checklist it involves weighting different items in
the checklist to indicate that some statements are more
important than others.
Forced choice method large number of statements in
groups are prepared. Each group consists of four descriptive
statements out of which two are most descriptive i.e. favorable
and two are least descriptive i.e. unfavorable.
Traditional Methods of Performance
Appraisal
6. Critical incident method
The supervisor continuously records the critical incidents
of the employee performance or behavior relating to all
characteristics, both positive & negative in a specially
designed notebook.
The supervisor rates the performance on the basis of
notes taken.
This method is more objective than subjective & hence
helps in reducing the bias in evaluation.
One drawback is the critical incident may not be defined in
the same manner by all raters.
Sometimes the employee might have done something
critically good and excellent but the supervisor may not
have been present and hence not recorded.
Traditional Methods of Performance
Appraisal
Examples of Critical Incidents for
an Assistant Plant Manager
7. Essay or free form appraisal
The manager writes a short essay describing the
employees performance during the rating period.
Emphasis is on evaluation of overall performance based
on the strengths & weaknesses of the employees.
Time involved is more. Not amenable for evaluation and
analysis.
The writing skills different for different evaluators.
Traditional Methods of Performance
Appraisal
8. Group appraisal
Employee appraised by a group consisting of the
immediate supervisor, supervisors in other departments
having close contact with the employees work, the HOD
and consultants.
The group may use one or more of the earlier methods.
The group compares the actual performance with
standards, finds out the deviations, discusses the
reasons for the same, suggests ways for improvement,
prepares action plans.
The group also studies the need for change in the job
analysis and standards and recommends necessary
changes.
Traditional Methods of Performance
Appraisal
9. Confidential reports
A traditional method is to assess the
performance confidentially.
The superior appraises the performance based
on observations, judgement & intuitions.
The employee is not informed about the report.
Not in use these days.
Traditional Methods of Performance
Appraisal
Modern Methods of Performance
Appraisal
Behaviorally anchored rating scale (BARS)
An appraisal method that uses quantified scale with
specific narrative examples of good and poor
performance.
Developing a BARS:
Generate critical incidents
Develop performance dimensions
Reallocate incidents
Scale the incidents
Develop a final instrument
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skill
2.Assessment Centre
The assessment of several individuals is done by various
experts by using various techniques like in basket, role
plays, case studies, simulation etc.
3.Human Resources Accounting
It deals with the cost vs contribution of human resources
to the organization. The cost includes the cost of hiring,
training & development & the wages & benefits given. The
contribution is the money value of employee service
measured by labor productivity, value addition etc. The
performance is positive if the contribution exceeds the
cost and can be measured in terms of percentage excess.
Modern Methods of Performance
Appraisal
Appraisal-
Coaching
Worksheet
4.Management by objectives
MBO is a process where by the superior & subordinate jointly identify
common goals, define each individuals areas of responsibility in terms of
results expected and then use this measure for assessing the contribution.
1. Set the organizations goals.
2. Set departmental goals.
3. Discuss departmental goals.
4. Define expected results (set individual goals).
5. Performance reviews.
6. Provide feedback.

Modern Methods of Performance
Appraisal
5.Psychological Appraisal
It consists of in-depth interviews, psychological tests,
discussions with the employee, discussions with the
superiors, subordinates & peers and reviews of other
evaluation.

Evaluation is conducted in the areas of intellectual
abilities, emotional stability, motivational responses,
reasoning & analytical abilities, interpretation & judgment
skills, sociability, ability to foresee the future.

Modern Methods of Performance
Appraisal
Computerized and Web-Based Performance Appraisal
Performance appraisal software programs
Keep notes on subordinates during the year.
Electronically rate employees on a series of
performance traits.
Generate written text to support each part of the
appraisal.
Electronic performance monitoring (EPM)
Having supervisors electronically monitor the amount
of computerized data an employee is processing per
day, and thereby his or her performance.
Advantages and Disadvantages of Appraisal
Tools
Enables management to make effective decisions
and / or correct the earlier decisions relating to the HRM
issues like HR planning, fixation of salary & benefits,
placement/placement adjustment decisions, identification of
training needs, career planning & development etc.

HR planning - Helps to evaluate the existing plans, job
analysis, information system etc.
Performance improvement Performance feedback helps
the employee to improve the performance & for self
development.
Human relations - It improves superior subordinate
relations through close interaction.
Uses of Performance Appraisal
4. Compensation adjustments Many
organizations base their pay increases &
bonuses upon merit which is determine through
performance appraisals
5. Placement decisions Promotions, transfers,
demotions are based on performance.
6. Training & development needs Poor
performance may indicate the need for
retraining. Good performance may indicate
untapped potential that should be developed.
Uses of Performance Appraisal
Uses of Performance Appraisal
7. Career planning & development
Performance feedback guides career decisions
about specific career paths.
8. Staffing process deficiencies Good or bad
performance may indicate the strengths or
weaknesses in the HR departments staffing
procedures.
9. Job design errors Sometimes, poor
performance may be an indication of ill
conceived job designs and may need immediate
diagnosis.
Uses of Performance Appraisal
10. EEO Accurate performance appraisals takes
care that internal placement decisions are not
discriminatory
11. Employee counseling Sometime, the
performance may be influenced by the external
environment such as family, health, finance etc.
When uncovered through performance
appraisals, the HR department can provide
assistance in the form of counseling the
employee and find solutions to the problems.
Limitations & Problems of Performance
Appraisal
1. Rating biases: Includes the following.
a. Halo effect tendency to depend excessively on the
rating of one trait.
b. Error of central tendency some raters play safe by
rating around the middle point of the rating scale.
c. Leniency and strictness some raters may be liberal
& assign higher rates consistently. Some raters the
opposite.
d. Personal prejudice if a rater dislikes any employee,
the rating may be at the lower end.
e. The recency effect the rater may remember the
recent actions of the employee at the time of rating &
rate on that basis.
2. Failure of the superiors in conducting
performance appraisal & post performance
appraisal interviews.
3. Negative rating affect interpersonal relations &
industrial relations.
4. Feedback & post appraisal interview may have a
setback on production.
5. Supervisors often confused due to many
objectives of performance appraisal.
6. Absence of inter-rater reliability
Limitations & Problems of Performance
Appraisal
A Graphic Rating Scale with Unclear
Standards
Note: For example, what exactly is meant by
good, quantity of work, and so forth?
How to minimize the problems of performance
Appraisal?
By convening an open meeting with the appraisees to discuss the
performance of all employees before, during and after performance
review discussions.
By encouraging everyone to comment on each others achievements
and areas requiring improvement.
The appraiser should tell the truth & reality behind the curtains to his
subordinates.
By conducting counselling meetings with the appraisees to appraise
them of the reasons for their performance & its consequences.
Limitations & Problems of Performance
Appraisal