Performance appraisal

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Performance Appraisal

DEFINITIONPerformance appraisal • According to Flippo, a prominent personality in

the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job."

Provide a review of past work performance.

Establish lines of communication. Create an opportunity to discuss

professional development goals and objectives.

NEED OF PERFORMANCE EVALUATIONS

– Document employee performance.– Document corrective action necessary to improve

work performance.– It is the supervisor’s and manager’s responsibility

to monitor, evaluate and coach employees.

PURPOSES OF PERFORMANCE APPRAISAL

• To review the performance of the employees.

• To judge the gap between the actual and the desired performance.

• To help the management in exercising organizational control.

• To diagnose the training and development needs of the future.

• Provide information to assist in the HR decisions like promotions, transfers etc.

• 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.

• To reduce the grievances of the employees.• Helps to strengthen the relationship and

communication between superior – subordinates and management – employees.

WORK RELATED OBJECTIVES

–To provide a control for work done

–To improve efficiency–To help in assigning work

and plan future work assignment; and

–To carry out job evaluation

CAREER DEVELOPMENT OBJECTIVES

– To identify strong and weak points and encourage finding remedies for weak points through training;

– To determine career potential;– To plan developmental( promotional or

lateral) assignments; and – To plan career goals

OBJECTIVES OF COMMUNICATION

• To provide adequate feedback on performance;

• To clearly establish goals, i.e what is expected of the staff members in terms of performance and future work assignments;

• To provide counseling and job satisfaction through open discussion on performance and

• To let employees assess where they stand within the organization in terms of their performance.

ADMINISTRATIVE OBJECTIVES

• To attend as a basis for promotion or demotion;

• To serve as a basis for allocating incentives;

• To serve as a basis for determining transfers ; and

• To serve as a basis for termination in case of reduction of staff.

AIMS OF PERFORMANCE APPRAISAL

• Give employee feedback.• Identify employee training need

• Document criteria.• Form a basis for personnel: salary increases,

promotions, disciplinary actions, bonuses, etc.

• Provide the opportunity for organizational diagnosis and development

• Facilitate communication• Validate selection techniques and human resource

policies.

USE OF PERFORMANCE APPRAISAL SYSTEM

Raises, Merit Pay, Bonuses

Personnel Decisions( e.g.

promotion, transfer,

dismissal)

Identification of training needs

Research purposes

ELEMENTS OF PERFORMANCE APPRAISAL

Setting performance goals and objectives

Determining key competencies

Measurement of performance

against the goals and objectives

Measurement of performance against key

competencies,

Feedback of results.

Amendment to goals and

objectives

CHARACTERISTICS OF EFFECTIVE PERFORMANCE APPRAISAL

• The philosophy, purpose, and objectives of the organization are clearly stated so that performance appraisal tools can be designed to reflect these.

• The purposes of performance appraisal are identified, communicated, and understood.

• Job descriptions are written in such a manner that standards of job performance can be identified for each job.

• The appraisal tool used is suited to the purposes for which it will be utilized and is accompanied by clear instructions for its use.

• Evaluators are trained in the use of the tool.• The performance appraisal procedure is

outlined, communicated and understood.• Plans for policing the appraisal procedure and

evaluating appraisal tools are developed and implemented. Performance appraisal has the full support of top management.

• Performance appraisal is considered to be fair and productive by all who participate in it.

RESISTANCE ON THE PART OF EVALUATOR BECAUSE:

• Performance appraisal demands too much of supervisors efforts in terms of time, paperwork, and periodic observation of subordinates’ performance.

• Supervisors do not fully understand the purposes and procedures of performance appraisal.

• Supervisors lack skills in appraisal techniques.

• Performance appraisal is not perceived as being productive.

• Evaluator biases and rating errors.• Lack of clear, objective standards of

performance.• Failure to communicate purposes and• Lack of suitable appraisal tool.• Failure to police the appraisal procedure

effectively.

DEVELOP THE STANDARDS FOR EVALUATION

Performance standards are:• Based on the position, not the individual• Observable, specific indicators of success• Meaningful, reasonable and attainable• Describe “fully satisfactory” performance

once trained• Expressed in terms of quantity, quality,

timeliness, cost, safety or outcomes

SETTING OBJECTIVES

• Specific • Performance oriented• Realistic• Observable

DATA COLLECTION

• Sources of performance information– Personal observation– Reports, documentation, correspondence. Etc.– Feedback (internal and external)– Periodic discussions with employee

Step by step Guide to Performance AppraisalsDevelop performance standards

Setting goals and objectives

Data collection

Performance appraisal interview

Future goals and objectives

Follow upRewarding performance

Benefits of Performance AppraisalOrganization• Recognize and manage staff performance• Planning and decision making• Improve staff retention

Appraiser• Framework for sharing feedback• Promote career planning for staff (Chandra & Frank, 2004)• Feedback on own management style and leadership skills (Parkin &

McKimm, 2009)

Benefits of Performance AppraisalAppraisee• Reflection on areas of weakness and strengths (Finlay &

Mclaren, 2009)• Opportunity to raise issues / complications• Focus on developing individual performance• Better understanding of goals and requirements• Identify action plan for future development• Indication for Salary increment / incentives (Parkin & McKimm,

2009)

Types of appraisalManagement By Objectives (MBO)• A method in which managers or employers set a list

of objectives and make assessments on their performance on a regular basis, and finally make rewards based on the results achieved (Nandy, 2011)

• This method mostly cares about the results achieved (goals) but not to the way how employees can fulfill them.

360 Degree Performance Appraisal• A method that employees will give confidential and

unidentified assessments on their colleagues. A method that employees will give confidential and anonymous assessments on their colleagues. It’s also known as multi-rater feedback, multi source feedback, or multi source assessment

Types of appraisalPerformance Ranking Method• Used to assess the working performance of employees from the highest to lowest

levels• Managers will make comparisons of an employee with the others, instead of making

comparison of each employee with some certain standards (Dhami, 2010)

Peer Review Appraisal• A way to more effectively gauge the performance of employees by establishing

relevant evaluation criteria, using those best equipped to speak about individual’s work to grade him / her accordingly

• Peer review can take the form of disciplinary panels or ongoing feedback between co-workers (Lovering, 2006)

• This method helps to enhance employee trust and communication

Disadvantages of Performance Appraisal• If not done right, they can create a NEGATIVE EXPERIENCE. • Performance appraisals are very time consuming and can be

crushing to managers with many employees. • They are based on human assessment and are subject to rater

errors and biases. • They can create a very stressful environment for everyone

involved.

Assign to appraise

Higher Management

Performance Appraisal

Change in rating

Existing state of affairs

Approach in re-appraisalKnow your organization appraisal tools well Analyze the objective and subjective data. To substantiate rating, get ready the subordinate’s reference records such as incident reports, anecdotal entries, etc. (Dessler, 2003).

Objective Data Subjective DataManagement by objectives (MBO) Key Results Area (KRA)

Interview staff & previous appraiser in order to find out the reason for their grievances1) Personality clash with previous appraiser2) Possible error in rating3) Provide listening ear

Unreliable entries

Peer review - more accurate appraisal(Nankervis, Compton & Baird, 2002)(Raymond, 2009)

Review Employee’s PerformanceIs there a problem?

NoGive feedbackas appropriateYes

Root causes

Skill Related• Provide education• Coach• Simplify task• Reassign

Motivation related• Clarify expectation• Determine obstacle and remove them• Remove punishment• Determine subordinate value regarding

rewards

(Sullivan & Decker, 2005)

Performance Appraisal : past-oriented methods

Rating scale Confidential reportEssay evaluationCritical incident methodChecklistsForced choice methodBehaviorally anchored rating scaleRankingPaired comparison methodForced distribution method Field review technique

Rating scale

The rating scale consist of several numerical scales, each representing a job

related performance criterion such as dependability, initiative, output,

attendance, attitude, co-operation

Example:

Employee name_________ Dept_______Rater’s name ___________ Date_____________________________________________________________________________

_________ Exc. Good Acceptable Fair Poor

______________________5_______4________3__________2______1___________________

Dependability Initiative Overall output Attendance Attitude Cooperation

___________________________________________________________________________

Total score

Confidential Report

Descriptive report

Prepared by the employee’s immediate supervisor

The report highlights the strengths and weaknesses of employees

Prepared in Government organizations

Does not offer any feedback to the employee

Essay Evaluation Method

The rater is asked to express the strong as well as weak points of employee’s behavior

The rater considers the employee’s : Job knowledge and potential

Understanding of company’s programs, policies, objectives etc

Relation with co-workers and supervisors

Planning, organizing and controlling ability

Attitude and perception

Essay Evaluation

This method has the following limitations: Highly subjective Supervisor may write biased essay Difficult to find effective writers A busy appraiser may write the essay hurriedly without

assessing properly the actual performance of the worker If the appraiser takes a long time it becomes uneconomical

from the view point of the firm

Critical Incident Technique

Manager prepares lists of statements of very effective and

ineffective behavior of an employee

These critical incidents represent the outstanding or poor

behavior of the employees

The manager periodically records critical incidents of employee’s

behavior


Example:

June 21 - Sales clerk patiently attended to the customers complaint.

He

is polite, prompt, enthusiastic in solving the customers’ problem

June 21 - The sales assistant stayed 45 minutes beyond his break

during

the busiest part of the day. He failed to answer store manager’s call

thrice. He is lazy, negligent, stubborn and uninterested in work

Ex: A fire, sudden breakdown, accident

Workers reaction scale

A informed the supervisor immediately 4B Become anxious on loss of output 3C tried to repair the machine 2 D Complained for poor maintenance 1


Limitation of this technique are:

Negative incidents may be more noticeable than positive incidents.

Results in very close supervision which may not be liked by the employee.

The recording of incidents is a routine for the supervisor concerned who may be too busy or forget to do it.

Checklist

Checklist contains a list of statements on the basis of which the rater describes the on job performance of the employees

Example: Is employee regular Y/N Is employee respected by subordinate Y/N Is employee helpful Y/N Does he follow instruction Y/N Does he keep the equipment in order Y/N

Behaviorally Anchored Rating Scale

BARS represent a range of descriptive statements of behavior varying from the least to the most effective

In this a rater is expected to indicate which behavior on each scale best describes an employee’s performance

Example:

Performance Points Behavior

Extremely good 7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country.

Good 6 Can expect to initiate creative ideas for improved sales.

Above average 5 Can expect to keep in touch with the customers throughout the year.

Average 4 Can manage, with difficulty, to deliver the goods in time.

Below average 3 Can expect to unload the trucks when asked by the supervisor.

Poor 2 Can expect to inform only a part of the customers.

Extremely poor 1 Can expect to take extended coffee breaks and roam around purposelessly.

Forced Choice Method In the forced choice method the rater is forced to select

statements which are readymade

The rater is asked to indicate which of the phrases is the

most and least descriptive of a particular worker

Favorable qualities earn plus credit and

unfavorable ones earn the reverse

Example:

Criteria Rating

1.Regularity on the job Most Least Always regular Inform in advance for delay Never regular Remain absent Neither regular nor irregular

Forced Distribution method

Example:

10% 20% 40% 20% 10%

poor Belowaverage

average good Excellent

No. of employees

Force distribution curve

Paired comparison method

For several traits paired comparisons are made, tabulated and then rank is assigned to each worker

No. of comparisons is calculated by the formula: N(N-1)/2

This method is not applicable when the group is large

Ranking method

The evaluator rates the employee from highest to lowest on some overall criteria. In this “how” and “why” are not questioned nor answered

Employee Rank

A 2

B 1

C 3

D 5

E 4

Field Review Method

The appraiser goes to the field and obtains the information

about work performance of the employee by way of

questioning the said individual, his peer group, and his

superiors

Conclusion• There is NO ONE PERFECT appraisal tool• Compilation record of positive or negative incidents are useful in

justifying PPA rating• Appropriate communication skills used are REALLY essential • Constant evaluation and feedback should be given to subordinate to

enhance expectation on performance and progress and to avoid surprises during PPA.

Performance appraisal

Education

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