pa ppt hrm

7/31/2019 pa ppt hrm

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Flow of Presentation

Introduction

Features of Performance Appraisal

Objective of Performance Appraisal

Performance Appraisal Process

Performance Appraisal Methods

360 degree Feedback

Prerequisites for solid Performance Appraisal

Pros & Cons of Performance Appraisal

4 types of bias in Performance Appraisal Contribution to firms competitive Advantages

Conclusion


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Introduction

Performance Appraisal is the systematic

evaluation of the performance of

employees and to understand the

abilities of a person for further growth

and development.


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Features of Performance Appraisal

It is a systematic process involving three step

Setting work standards

Assessing employee actual performance relative to these

standards Offering feedback to the employees to eliminate

deficiencies and improve performance in course of time.

Appraisal is carried out periodically according todefined plan of action.


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Performance appraisal is not apastoriented

activity

Performance appraisal is not job evaluation

Performance appraisal is not limited to callingthe fouls.

Performance appraisal may be formal or

informal.


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Objectives of Performance AppraisalPerformance appraisal could be taken either for evaluating the

performance of employee or developing them. Appraisal of employee serve several useful purposes

Compensation decisions: It can serve as a basis for pay raises

Promotion decisions: It can serve as useful basis for job

change or promotion

Training and Development Programmes: It can serve as a

guide for formulating suitable training and development

programmes

Feedback: Performance appraisal enables the employee to

know how well is doing on the job

Personal Development : Performance appraisal can help

reveal the causes of good and poor employee performance.


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The performance appraisal process1. Establish performance standards: this process serves as a benchmarks

against which performance is measured.

2. Communicate the standards: This process includes two parties

Appraiser: who does the appraisal

Appraisee: whose performance is to be evaluated.

3. Measure actual performance: It is done by

Personal observation

Statistical reports

Oral reports

Written Reports

4. Compare actual performance with standards and discuss the appraisals.

5. Taking corrective actions, if necessary: Corrective actions are of two types

Immediate action set things right and get things back.

Basic corrective actions gets the source of deviations and seeks to

adjust the differences permanently.


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Individual evaluation methods:

1. Graphic rating scale2. Behaviorally anchored rating

scales

3 . Critical incident Method

4. Checklists and observation

scales

5. Mixed standard rating scales

6. Management by objectives

(MBO):

Multiple person evaluation

methods:

1.Forced Ranking/ distribution2. Paired Comparison

3. Ranking Method

4. Field Review Method

PERFORMANCE APPRAISAL METHODS


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The graphic rating scale method gives employees a numerical score on job-relevant

traits and/or behaviors

Definition

One of the most popular forms of PA.

Lists desirable traits and managers rate

employees on each trait.

Scale typically involves scores that range from

unsatisfactory to outstanding.

Individual scores are aggregated into anoverall performance score.

Traditionally used for assessing traits (e.g.

reliable, hardworking), but is now commonly

used to assess job-related behaviors and

duties.


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Graphic rating scales: easy to develop, but are

light in detail and the results are not easy to explain

Pros

Cons

Easy to develop.

Easy to use.

Provides a numerical rating for each employee.

Easy to customize based on different job descriptions.

When todraw

from it

When used to assess traits, graphic rating scales focus on personal

characteristics rather than job-related behaviors.

Can be subjective and ambiguous without an explanation of the score

and, therefore, less legally defensible.

Can be subject to rater bias.

If there is not a lot of time to create a performance appraisal program.

If a quick and informal approach is required for easy start-up.

Ifnumericalratings are needed to rank or score employees to inform

salary, promotion, or termination decisions.


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Behaviorally anchored rating scales allow managers to rate employee

performance based on detailed descriptions

Definition (BARS)

Identifies a range of ineffective to excellent behaviors that can be displayed by employees. performing each

task.

Employees are rated on

each performance

dimension on a behavioral

scale ranging from

ineffective toexcellent performance.

Allows for a total profile

of job performance to

be created for each

employee, which covers

various dimensions of

work.

Greater validity is

ensured when jobholders

are involved in identifying

tasks and behaviors.


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BARS: provides in-depth descriptions of employee

performance, but is time consuming to develop

Pros

Cons

Evaluation criteria are clearly defined in behavioral terms .

Criteria are based on feedback from employees which improvesacceptance levels from managers and employees.

Gives concrete examples of work that will improve performance.

Are legally defensible due to the detailed descriptions of behavior.

Usually well accepted by employees.

When to

draw

from it

Can be time-consuming to develop.

Hard to keep the information current as job expectations can change over

time.

Does not necessarily give more accurate ratings than graphic rating scales

that incorporate good behavioral descriptions.

Does not provide a numerical score, which makes comparisons difficult.

If clearly outlined job descriptions exist that can be turned into concretebehavioral anchors.

If there is time to develop specific behavioral descriptions that outline

different levels of performance.

If a numerical score is not important and the appraisal will be used for

ongoing feedback and coaching.

If job expectations dont tend to change frequently.


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The critical incident method requires that managers keep a log of job-

relevant behaviors to create performance appraisals

Definition

Manager keeps an ongoing log of events thatrepresent outstanding or poor behavior.

At the end of the rating period, the recorded

critical incidents are used to evaluate

performance.

Often used to supplement another methodsuch as graphic rating scale.

For example, if an employee is rated as

failing to meet expectations, specific

examples can be given as to why

performance was unsatisfactory.


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Critical incident: provides detailed examples of

employee behavior, but should not be used in isolation

Pros

Cons

Provides concrete examples to explain performance appraisal.

Avoids recency bias as it forces managers to compile an ongoing log of events, as

opposed to focusing solely on the most recent behavior.

When todraw

from it

Negative incidents may be more noticeable than positive incidents. May result in very close supervision which is difficult for some employees.

The recording of incidents may be seen as a chore by the manager, and if creating

the log is forgotten the recency bias will be apparent.

It is difficult to compare employees to each other because no numerical score is

given.

Use this approach to supplement other approaches (combine with graphic rating

scale to make a numerical score more concrete).

If managers have time to regularly log events.

This approach can be used on its own if the managers primary focus is to give

ongoing feedback and coaching as opposed to giving a numerical score.

It should not be used to compare employees for salary decisions.


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Checklists and observation scales: can also be used to incorporate

behavioral examples into the performance appraisal

Behavioral Checklist

Predefined behaviors are listedand checked

offas an employee demonstrates the

behavior.

Behavioral Observation Scale

Focus on descriptions of behavior and results.

Use absolute standards.

May meet with less resistance from employees.

A lot of time and money must be invested to

construct the checklist because they will be

different for each role.

Pros

Cons

Identifies key tasks and evaluates how

frequentlyan employee exhibits the behavior

required for high performance.

Gives employees a numerical score that is tied to

the frequency of the specific job-related

behaviors.

Frequency does not always equate to successful

(or unsuccessful) job performance.

Pros

Cons


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Mixed standard rating scales require managers to rate

employees as equal to, above, or below performance standards

Definition

Contain statements representing good, average and poor performance for each dimension the employee isbeing evaluated on.

The evaluator indicates

whether an employee

fits the statement (=),

is better than the

statement (+) or is

worse than the

statement (-).

The statements are

randomly mixed in an

attempt to make it

less obvious which

reflect good or badperformance.

There are many

algorithms that exist to

create numeric scores

for each dimension.


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Mixed standard rating scales: reduce bias,

but make it difficult to give constructive feedback

Pros

Cons

Uses specific behavioral examples to identify good, average and poor

performance.

Keeps raters relatively blind to which behaviors are reflective of which

level of performance, which helps to minimize potential biases.

When todraw

from it

The fact that the rater is unaware of which items reflect which levels of

performance makes it difficult for the rater to give constructive feedback.

For example, if an employee asks why he/she received a low score on a

particular dimension, the rater may not be able to tell them why.

If it is very important that raters are blind to which behaviors represent

which levels of performance.

If there is time to create good, average, and poor behavioral statements

for each dimension on which the employee is being evaluated.


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Management by objectives (MBO): links organizational

goals to employee performance targets

Definition (MBO)

Sets organization-wide goals, and links

these to employee specific goals.

Managers periodically discuss employee

progress towards departmental goals, as

well as how the employee is contributing

to organization-wide goals.

This process aims to serve as a basis for: Greater efficiency through systematic

procedures.

Greater employee motivation and

commitment through participation in the

planning process.

Planning for results instead of planning

just for work. Specific objectives being determined

jointly by managers and employees and

end results attributed to rewards.

1. Arranged in order of importance.

2. Expressed quantitatively where

possible.3. Realistic.

4. Consistent with policy.

5. Compatible with one another.

The objectives

must meet fivecriteria. They

must be:


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Formal

Methods

GraphicRating

Scale

Mixed

StandardRating Scale

BARS

Critical

Incident

Management

by Objectives

Appropriate for use when:

The organization requires a quick and easy solution

that results in a numerical rating.

The organization places importance on behavioral

examples, and clear job descriptions allow for a

description of detailed behavioral objectives.

Numerical scores are not necessary and managers are

diligent with recording both positive and negative

events.

Detailed descriptions of excellent, average, and poor

behavior would be easy to develop, and the organizationplaces importance on avoiding bias.

The organization has clear goals that are appropriately

delegated to departments, and actionable objectives

that are clearly described.

In summary:


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Multiple person evaluation methods

1. Forced ranking (forced distribution)

In this style of performance appraisal, employees are ranked in

terms of forced allocations. For instance, it is vital that the

proportions be shared in the way that 10 or 20 % will be the

highest levels of performances, while 70 or 80% will be in themiddle level and the rest will be in the lowest one.

2. Paired comparison method

This form of performance appraisal is a good way to make full use

of the methods of options. There will be a list of relevant options.Each option is in comparison with the others in the list. The

results will be calculated and then such option with highest score

will be mostly chosen.


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Employee Rank

A 2

B 1

C 3

D 5

E 4

3. Ranking method


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Forced Distribution method

10% 20% 40% 20% 10%

poor Below

average

average good ExcellentN

o.

ofemploy

ees

Force distribution curve


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Forced ranking should be used to enhance friendly competition, but not when all employees are star performers

Force rank when the culture permits it:

If employees compete individually.

If criteria to be measured is subjective.

If employees perform at various levels (average, vital and star).

A hybrid approach of forced ranking and forced distribution is a great way to identifystar performers, assign bonuses, or determine layoffs.

Force ranking can be used at any time if an appropriate level of privacy is applied:

Full disclosure of rank if the criteria is objective and there are not teams.

Discussion of rank between manager and employee if areas for improvement

are identified. Keep rank between managers if bonuses, salaries or dismissals are determined

by rank.

In summary:


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Get data from all around an employee to identify skill gaps

360-degree

Feedback is also

known as Multi-

Source, Multi-Rater (MSMR)

Feedback

360-degree feedback is bestused to assess training and development needs

and to provide competence-related information for succession planning. It isalso sometimes inappropriatelyused to inform promotion or pay decisions.

Internal Customers

Supervisors

Peers

Subordinates

External Clients

Self

360

Feedback

Watch Info-

Techs Video:

360-DegreeFeedback.
http://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedback


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360 d f db k h ld b d h l


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360-degree feedback should be used when employees

work in teams but should not influence monetary decisions

360-degree feedback involves gathering evaluations from those who work closely

with an employee.

This is a great method for managers to create a holistic view of an employees

performance, especially if monitoring daily activities is not possible.

When 360-degree feedback is used for development purposes, employees respond

in drastic and positive ways.

360-degree feedback should never inform salary, promotion or disciplinary decisions.

Attaching the evaluations to these decisions will garner dishonest and inaccurate

feedback.

In summary:

Every solid PA program needs a method of tracking


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Every solid PA program needs a method of tracking

progress and a mix of formal and informal feedback

Buildon the foundation

Tracking method: a living document

or file that houses all the information

about an employees performance.

Informal feedback: interactions with

employees that generate short

feedback sessions that do not result

in a score.

Formal appraisal: deliberately

scheduled evaluation sessions wheregoals, performance and development

is discussed and scored.

These three elements are needed to

support the components that will make

up the remainder of the PA program.

Tracking

Method

Formal

Appraisal

Informal

Feedback

Unique mix of

PA methods

Wh d ll f i l l id i ifi t


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When done well, performance appraisals also provide significant

benefits to executives, managers, employees, and HR

Executives

Managers

Improve employee performance.

Measure departmental

performance.

Highlight top performers.

Improve employee morale and work

quality.

Catch performance issues early.

Make well-informed decisions.

Enable the achievement ofdepartmental objectives.

Better organizational performance

and increased revenue.

Apparent opportunities for training

and improvement.

Identification of future leaders.

Reduced turnover and absenteeism

within a department.

Manager awareness of progress.

Develop a department through

training, promotion, bonuses and

terminations.

Benefits Impact on Organization


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Human

Resources

Reduce turnover and absenteeism.

Provide a written record of

performance.

Identify training needs at a

departmental level.

Prepare for the future.

Focus on internal employee development

as opposed to constant recruitment.

Defend promotion and termination

decisions.

Deliver training.

Succession planning.

Employees

Satisfy employees desire to know how

they are performing.

Connect employees to organizational

objectives.

Clarify performance expectations.

Increase engagement.

Opportunities to improve performance

are identified.

There is a desire to achieve goals.

Established sense of fairness and clarity

when performance is appraised.

Increased productivity.


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Pros & Conss

Think performance appraisals will:

Take too much time.

Be an artificial process with no real

benefits.

Be counterproductive.

Likely backfire.

Hinder creativity, innovation, and

positive risk taking.

Think performance appraisals will:

Solve all performance issues.

Increase employee satisfaction.

Foster good relationships between Line-

of-Business managers and subordinates.

Encourage, motivate, and develop

employees.

Achieve financial improvements

Middle

Ground

Most opinions fall

between theextremes of love

and hate when it

comes to

performance

appraisals.

Formal performance evaluations are

unnecessary and also often actively

harmful to motivation and happiness at

work.

- Director, Small

manufacturing firm

Employee performance feedback is very

important as it contributes directly to

the success of the employee.

- Manager, Large property

management firm


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Next Steps

Look for areas of improvement

within the current PA program

you use, and be aware of its

limitations.

Communicate with Line-of-

Business managers that are not

currently on-board.

Be realistic about the issuesthat a PA can help with, and

identify ones that it cannot.

Next Steps

Be open to the benefits of

performance appraisals when

they are done well.

Talk to your employees to

understand their professional

development needs.

Reach out to peers who

administer effective performanceappraisals and look for tips to

make yours work.

Lovers Haters

No matter where a

employee stand,

understand how

performanceappraisals can

enhance your

organization and

make you a betterleader.

4 types of bias that can infiltrate even the most well


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4 types of bias that can infiltrate even the most well-

intentioned performance appraisal

Halo

Effect Occurs when an

employeeperformsparticularlywell (or poorly)in one area andis then ratedcorrespondingly

high or low inall other areas.

LackofD

ifferentiation Occurs when a

manager tendsto score allemployeessimilarly by, forexample, givingeveryone high

scores, lowscores, oraverage scores.

PersonalBias

The morecharacteristics amanager shareswith anemployee, suchas age, race,gender, work

values, workexperience, andpersonality, themore favorablythe manager willtend to rate thatemployeesperformance.

Occurs when amanager weighs anemployees recentperformance tooheavily, as opposedto assessing theemployeesaverageperformance overthe entireevaluation period.

Re

cencyEffect

Tip to Overcome

Tip to Overcome

Tip to Overcome

Tip to Overcome

Having anawareness of this

type of bias is the

most effective

step toward

overcoming it.

Ranking

employees from

best to worst(even as a private

exercise) can help

managers

differentiate

between

employees.

Awareness of this

bias is an

important step

towards

overcoming it.

Engaging in ongoing

coaching and havingemployees send

regular e-mail

updates can serve to

remind managers

what employees are

up to.


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How PA contribute to firms competitive

advantages

Improving

performance

Making correctdecision

Ensuring legal

competenceMinimizing dissatisfaction

And turnover

Values and behavior

Competitive

Advantage


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49%Return on Assets

27%Return on Equity

22% Profit Margins

15%Earnings

Including performance appraisal processes in

management systems result in significant

financial gains.

Increases

PAActiv

ity


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Conclusion

Performance appraisals are a fact of life for

most managers and HR departments. Instead of

thinking of them as an administrative burden,

understand the benefits of an effectiveperformance appraisal program and how to get

the most out of them with the least amount of

effort:

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