Performance Appraisal and Job Evaluation

Course: MBA SEM 2 Subject: Human Resource

ManagementUnit 3

Definition

Performance Appraisal is an objective assessment of an individual’s performance against well defined benchmarks.

Objectives• To effect promotions based on competence

and performance.• To asses the training and development

needs of employees.• To decide upon a pay raise• To let the employees know where they

stand.• To improve communication• To determine the effectiveness of HR

programes

Performance appraisal and Competitive Advantage

• Improving Performance• Making Correct Decisions• Ensuring Legal Compliance• Minimizing Job Dissatisfaction and Turnover• Consistency Between Organisational

Strategy and Behaviour.• Organisational Strategy and Performance

Appraisal

Methods of Appraisal

• Past oriented• Future oriented

Past oriented

• Rating Scales• Checklist• Forced Choice Method• Forced Distribution Method• Critical Incidents Method• Behaviorally Anchored Rating

Scales

• Field Review Method• Performance Tests and

Observations• Confidential Records• Essay Method• Cost Accounting Method• Comparative Evaluation

Approaches

Ranking Method

Paired-Comparison Method

• 360 Degree Appraisal• Psychological appraisals• Assessment Centres• MBO

Future Oriented

360 Degree Feedback• Multiple raters are involved• Raters are supervisors, team members,

customers, peers and self.• The technique is particularly helpful in

assessing soft skills.• Measuring interpersonal skills, customer

satisfaction and team-building skills.• Employees feel their customers more

accountable

Disadvantages:

• Receiving feedback on performance from multiple sources can be intimidating.

• Time consuming for making questionnaires for different group

• Multiple Raters are less adept to provide balanced and objective feedback than the supervisors.

• Biasness and Honesty can be the problem

Psychological Appraisals• Focus on future potential and not actual

performance. Industrial psychologists are employed for conducting the appraisal.

• In-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations.

• Evaluation of employee’s intellectual, emotional, motivational and other related characteristics that suggest individual potential and may predict future performance.

Disadvantages:• This approach is slow and costly.• Appraisal largely depends on the skills of the

psychologists.

Assessment Centers• Evaluate managers over a period of time, say

one to three days.• Assesses are requested to participate in in-

basket exercises, work groups( without leader), computer simulations, role playing, etc

• The decision regarding the performance of each assessee is based upon this discussion observations.

• Typical assessment centre include assertiveness, persuasive ability, communicating ability, planning and organizational ability, self-confidence, resistance to stress, energy level, decision-making, sensitivity to the feelings of others, administrative ability, creativity, and mental alertness.

Disadvantages:• The problem with the assessment centres is their

cost.• Influence by the interpersonal skills.• Suffocation in the simulated environment.• Employees may behave negatively due to the poor

reports.• Strong and the unhealthy sense of competition

among the assesses, difficulty of conducting the test frequently and the possibility of overemphasizing the test performance.

Management by Objectives• Peter F. Drucker who first gave the concept of

MBO to the world way back in 1954 when his ‘The Practice of Management’ was first published.

• Four Steps in the MBO process

a) Establishing the goals

b) Setting the performance standard

c) Comparison of actual with desired

d) New goals and new strategies for goals not previously attained.

Disadvantages:• It is not applicable to all the jobs.• Jobs with little or no flexibility, such as

assembly-line work, are not compatible with MBO.

Errors in Performance Appraisal• Spill over Effect• Leniency• Halo effect• Primacy and Recency Effects• Central tendency• Status effect

Job Evaluation• Job Evaluation seeks to determine the

relative worth of each job so that salary differentials can be established. In job evaluation only jobs are rated unlike in performance appraisal where only job holders are rated.

Importance of job evaluation• Job evaluation assesses both the content

the value of a job. Job content refers to the type of work performed and the skills and knowledge necessary to perform the work.

• Work value refers to the job's degree of contribution in meeting your organization's goals and the degree of difficulty in filling the job.

• Job evaluation can help remove anomalies or inequalities in the payment system. It helps in providing a more structured basis for providing grading levels.

• Evaluations can be used to - Clarify job descriptions so that employees understand the expectations of their roles and the relationship of their roles to other jobs within the organization. - Attract desirable job candidates. - Retain high-potential employees.

• Evaluators assess jobs based on factors such as Training level or qualifications requirements, Knowledge and skills requirements, Complexity of tasks, Interaction with various levels of the organization, Decision-making authority, Degree of supervision required, Cross-training requirements, Working conditions, Degree of difficulty in filling job.

Job Evaluation

• The job is rated, keeping in view such factors as responsibility, qualification, experience, working conditions, etc. required for performance of the job.

• A job is rated before the employee is appointed to occupy it.

• The purpose is to establish satisfactory wage differentials.

Performance Appraisal

• Employee is rated on the basis of his or her performance.

• Evaluation takes place after the employee has been hired and placed on a job.

• The purpose is to effect promotions, offer reward, award punishments, assess training needs, resort to lay-offs, transfers, etc

Job Evaluation

• It is not compulsory. Many organizations carry on without it. Where it is followed, it is mainly for lower level jobs.

• Job evaluation committee (comprising internal and external experts) is constituted for the purpose of evaluation.

Performance Appraisal

• Compulsory. It is done regularly for all jobs.

• Appraisal is done by employees themselves, peer, superiors, group of people, or combination of these.

Bibliography

http://www.whatishumanresource.comhttp://www.mbaofficial.comHuman Resource and Personnel Management- K. Aswathappa, Tata McGraw Hill