Performance appraisal

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Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality performance, potential of its group members

Performance Appraisal

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Performance appraisal is a method of evaluating the

behaviour of employees in the workspot, normally

including both the quantitative & qualitative aspects of

job performance.

PA is the systematic evaluation of the individual with

respect to his/her performance on the job & his/her

potential for development.

Definition

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It Provide a basis for promotion/ transfer/ termination: Identify those employees who deserve promotion Or those who Enhance employees’ effectiveness require lateral shift (transfer) or termination, PA is used for career planning .

by helping to identify their strengths and weaknesses and Inform them about expected levels of performance If employees understand their roles well, they are likely to be more effective on the job .

objectives

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Identifying training and development needs of employees is necessary to prepare them for meeting challenges in their current and future employment.

Aid in designing training and development programs: Identifying skills required to be developed would help in tailor- making training and development programs.

Con….

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Remove work alienation: Counseling Employees to correct misconceptions which might result in work alienation.

Remove discontent: Identifying and removing factors responsible for workers’ discontent would motivate them for better work performance.

Develop inter-personal relationships: Relations between superior - subordinate can be improved through realization that each is dependent on the other for better performance and success

Con…

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Aid wage administration: Performance appraisal can help in development of scientific basis for reward allocation, wage fixation, incentives.

Improve communication:Performance appraisal serves as a mechanism for communication between superiors and subordinates

Con…

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Provide information about the performance ranks basing on

which decision regarding salary fixation, confirmation,

transfer , promotion & demotion are taken.

Provide information to diagnose deficiency in employee

regarding skill, knowledge, determine training & development

needs & to set new standards of work, if necessary.

Provide information for correcting placement.

Need for Performance Appraisal

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Provide feedback information about the level

of achievement & behaviour of subordinate.

Provide information which helps to counsel

the subordinate.

To prevent grievances & indisciplinary

activities.

Con..

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1. Validity 2. Reliability 3. Freedom from bias a. Legal issues of fairness b. Freedom from rating errors4. Practicality

Essentials of Performance Appraisal

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Establish Performance Standards: Performance standards serve as benchmarks against which performance is measured Standards should relate to the desired results of each job.

Communicate the Standards : Performance appraisal involves at least two parties, the appraiser who does the appraisal and the appraisee whose performance is being evaluated.

Process of Performance Appraisal

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The appraiser should prepare job descriptions clearly; help appraisee set his goals and targets; analyse results objectively; offer coaching and guidance to appraisee whenever required and reward good results. The appraisee should be very clear about what he is doing and why.

Con..

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Performance measures may be objective or subjective .

Objective performance measures are indications of job performance that can be verified by others and are usually quantitative.

Subjective performance measures are ratings that are based on the personal standards or opinions of those doing the evaluation and are not verifiable by others.

Measure Actual Performance

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Compare Actual performance with Standards and Discuss the Appraisal,Actual performance may be better than expected and sometimes it may go off the track Whatever be the consequences, there is a way to communicate and discuss the final outcome

Con…

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Corrective action is of two types One puts out the fires immediately, Other strikes at the root of the problem permanently

Taking Corrective Action

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In order to be effective, the criteria for performance appraisal should be genuinely related to success / failure in the job and should be amenable to objective judgement MBO is an example of performance-based appraisal approach that involves setting objectives and comparing performance against those objectives.

Performance Criteria Objectives give greater freedom to both management and the employees in deciding how performance is to be measured.

Performance Criteria

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Benefits of Performance Appraisal For the appraisee Better understanding of his role in the organization—what is expected and what needs to be done to meet those expectations Clear understanding of his strengths and weaknesses to develop himself into a better performer in future.

Benefits of Performance Appraisal

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Increased motivation, job satisfaction, and self-esteem Opportunity to discuss work problems and how they can be overcome Opportunity to discuss aspirations and any guidance, support or training needed to fulfil those aspirations Improved working relationships with supervisors .

For the appraisee

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Identification of performers and non-performers and their development towards better performance Opportunity to prepare employees for assuming higher responsibilities.

Opportunity to improve communication between the employees and management Identification of training and development needs Generation of ideas for improvements Better identification of potential and formulation of career plans

For the Management

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Improved performance through out the organization Creation of a culture of continuous improvement and success Conveying the message that people are valued.

For the Organization

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Methods of AppraisalTRADITIONAL

Graphic rating scale

Ranking method

Paired comparison method

Forced distribution method

Checklist method

Essay or free form appraisal

Group appraisal

Confidential reports

MODERN

Behaviorally anchored

rating scales

Assessment center

Human resource accounting

Management by objectives

Psychological appraisals

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Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale Forced choice method MBO.

Individual Evaluation Methods

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Ranking , Paired comparison, Forced distribution, Other methods, Performance tests, Field review technique.

Multiple Person Evaluation Methods

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Confidential Report Descriptive report Prepared at the end of the year 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.

Confidential Report

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Essay Evaluation 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

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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

Used in the companies like BPL, Bata, Wheels India, Birla &

others. .

Essay Evaluation

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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 .

Critical Incident Technique

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Critical Incident Technique Example: July 20 - Sales clerk patiently attended to the customers complaint. He is polite, prompt, enthusiastic in solving the customers’ problem July 20 - 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.

Critical Incident Technique

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Negative incidents may be more noticeable than positive incidents.

Supervisors have a tendency to unload a series of complaints about incidents.

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

The recording of incidents may be a chore for the manager concerned who may be too busy or forget to do it

Limitation of this technique are:

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A checklist is a set of objectives or descriptive statements about the employee and his behavior. If the rater believes that the employee

possesses a listed trait, the item is checked

A rating score equals the number of checks

Checklist

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Simple checklist method

Weighted checklist method

Forced choice method

Simple checklist method:

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

types

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weights performance rating (scale 1 to 5 )

Regularity 0.5 Loyalty 1.5 Willing to help 1.5 Quality of work 1.5 Relationship 2.0

Weighted checklist method

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Was developed because graphic rating scales

allowed supervisors to rate everyone high

The rater must choose from a set of descriptive

statements about employee

Supervisors check the statements that describe the

employee, or they rank the statements from most to

least descriptive

Forced choice can be used by superiors, peers,

subordinates, or a combination of these

FORCED CHOICE METHOD:

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Criteria Rating

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

Used in the companies like WIDIA, CEAT, Modern threads & others.

FORCED CHOICE METHOD

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The rater may rate his employees at the higher or lower end of the scale earlier.

The normal distribution curve is used. Used in the companies like Usha, SPL, JCT &

others.

Forced Choice Method

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This is the simplest and most popular technique for appraising employee

performance .

The typical rating scale system consist of several numerical scales, each

representing a job related performance criterion such as dependability,

Initiative, out put attendance , attitude, co-operation, and the like. Each

scale ranges from excellent to poor. The rater checks the appropriate

performance level on each criterion, then computes the employees total

numerical score. Graphic Rating Scale form is used to evaluate the performance

of the employees A variety of traits may be used in this device, the most common being quality and quantity of work.

Graphic Rating Scale

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Employee name_________ Dept_______ Rater’s name ___________ Date________ ------------------------------------------------------------------------ Exc. GoodAcceptable Fair Poor 5 4 3 2 1 _ Dependability Initiative Overall output Attendance Attitude Cooperation Total score

Graphic Rating Scale

Behaviorally Anchored Rating Scale Combination of rating scale and critical incidence Steps

Collect critical incidents Identify performance dimensions.

Reclassification of incidents. Assigning scale values to incidents

Producing the final instrument

Behaviorally Anchored Rating Scale

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MBO emphasizes collectively set goals that are tangible, verifiable, and measurable Focuses attention on goals rather than on methods Concentrates on Key Result Areas (KRA) Systematic and rational technique that allows management to attain maximum results from available resources by focusing on achievable goals

Management by Objectives (MBO) :

Arranging organizational goals in a means-ends chain Engaging in joint goal setting This process has the following steps:

Identify KRAs Define expected results Assign specific responsibilities to employees. Define authority and responsibility

relationship Conducting periodic progress review Conducting annual performance review

Key Elements Of MBO

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Ranking method: The evaluator rates the employee from highest to lowest on some overall criteria.

Ex :if there are 30 workers in a work group the most efficient employee may be ranked as number one and the least efficient employee as number thirty.

Advantages:

Easy and inexpensive

Disadvantages:

Not well defined

Raters bias

Multiple Person Evaluation Methods

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Employee Rank

A 2

B 1

C 3

D 5

E 4

Ranking Method

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Paired comparison method : Each worker is compared with all other employees in a group For several traits paired comparisons are made, tabulated and then rank is assigned to each worker This method is not applicable when the group is large.

This method results in each employee being given a

positive comparison total and a certain percentage of

the total positive evaluation.

Paired comparison method

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A B C D E Final Rank A - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - + 4

E - - - - - 5 No of Positive evaluation Total no. of evaluation * 100 = employee

superior evaluation

Con..

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The rater is asked to appraise the employee according to predetermined distribution scale. Two criteria used for rating are:

job performance and promotability. A five point performance scale is also used without mentioning any descriptive statements. The worker is placed between two extremes of “good” and “bad” performance.

Forced Distribution Methods

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Group Appraisal Employee is appraised by a group of appraisers. The group consists of Immediate supervisor of the employee Other supervisors who have close contact with the employee’s work. Manager or head of the departments. Consultants or Clients.

Used in the companies like Kinetic Honda, Blue star, Birla VXL & others.

Group Appraisal

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Field Review Technique 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

Field Review Technique

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Conducted to assess employees’ potential.

Psychological Appraisals consists of:◦ In-depth interviews◦ Psychological tests◦ Consultations and discussions with the employees◦ Discussions with superiors, subordinates and

peers, etc.

Psychological Appraisal

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Evaluation is conducted in the areas of:◦ Employees intellectual abilities◦ Emotional stability◦ Motivational responses◦ Reasoning and analytical abilities◦ Interpretation and judgement skills◦ Sociability◦ Ability to foresee the future, etc.

Con..

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Let the Employee Know Where He Stands

To help employees do a better job by clarifying what is expected of them.

To plan opportunities for development and growth To strengthen the superior-subordinate working relationship by developing mutual agreement of goals.

To provide an opportunity for employees to express themselves on performance related issues.

Appraisal Interview and Feedback

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360 Degree Appraisal360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. Organisations are increasingly using feedback from various sources such as peer input, customer feedback, and input from superiors. Different forms with different formats are being used to obtain the information regarding the employee performance.

GLOBAL TRENDS IN PA

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360o Appraisal System It is a systematic collection and feedback of performance data on an individual or group, derived from a number of stakeholders Data is gathered and feed back to the individual participant in a clear way designed to promote understanding, acceptance and ultimately behavior .

Con..

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According to a wall street journal headline, “Teams have become commonplace in U.S. Companies”.

Most of the performance appraisal techniques are formulated with individuals in mind i.e. to measure and rate the performance of the individual employee. Therefore, with the number of teams increasing in the organisations, it becomes difficult to measure and appraise the performance of the team.

The question is how to separate the performance of the team from the performance of the employees.

A solution to this problem that is being adopted by the companies is to measure both the individual and the team performance. Sometimes, team based objectives are also included in the individual performance plans.

Team Performance Appraisal

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Also known as the “Up or out policy”, the rank and yank strategy refers to the performance appraisal model in which best-to-worst ranking methods are used to identify and separate the poor performers from the good performers.

Then the action plans and the improvement opportunities of the poor performers are discussed and they are given to improve their performance in a given time period, after which the appropriate HR decisions are taken. Some of the organisations following this strategy are Ford, Microsoft and Sun Microsystems.

Rank and Yank Strategy

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BPO sector offers handsome initial salary, good growth and many other benefits to its employees.

Keeping in relatively a new sector in the Indian industry, but has established itself well and is growing at a rapid rate.

mind the attrition rates in the sector, the performance measurement and appraisal processes are of extreme importance in BPO’s. It is often used as one of the tools to retain the employees.

Business Process Outsourcing (BPO)

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BPO employees have the advantage of getting performance based incentives.

In most of the BPO organisations, there are well designed schemes for awarding the performance based incentives to the individuals and/or the teams as a whole.

An incentive on the completion of the defined targets is a common practice in BPO’s.

Con…

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The general parameters for the measurement of employees’ performance are:

Speed i.e. process performance,

Accuracy and

Productivity of each process,

CON..

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HRA : Deals with cost of and contribution of

human resources to the organization.

Positive employee performance:contribution ↑ cost ↓

Negative employee performance:contribution ↓ cost ↑

Other methods of PA

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Getting PA from the computers based upon the data stored in the computer about the employee.

Assessment Centre: Individuals from various departments are

brought together to spend 2 or 3 days. Observers rank the performance of each

and every participant in order of merit.

Computerised PA:

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Since assessment centers are basically meant for evaluating the potential of candidates to be considered for promotion.

Con..

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I. Judgment errors: 1. First impressions(primacy effect) 2. Halo errors 3. Horn effect (down grades other aspects of employee’s

performance because of a single performance dimension ) 4. Leniency 5. Central tendency 6. Contrast error (Compare people against one another instead of

against an objective ) 7. Recency effect

Problems of PA

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II. Poor appraisal forms: 1. Vague & unclear rating scale 2. Ignore important aspects of job

performance 3. Additional & irrelevant performance 4. Too long and complex

III. Lack of rater preparednessIV. Ineffective organizational policies &

practices

Con..

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Trait based system Behaviour based system Result based system

What type of performance to measure

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1.Loyalty to Company– v.low low avg H V.H

2.Communication ability –3.Co-operativeness --

Trait based system

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Greets customer in a pleasant and friendly manner.

Is unable to explain technical aspects of a product to a customer.

Getting approval from the supervisor1=never 4=frequently2=rarely 5=almost always3=sometimes

Behaviour based system

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No.of units produced this month ------ No.of units produced that were rejected &

scrapped by quality control-------- No.of units produced that were rejected &

returned for repair -------- No.of days absent in this month without

certified medical cause-------

Results based system

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Frank Henderson is the manager of General Electric’s Appliance Division. Each April, he must evaluate all his subordinates to decide who is to receive a merit increase for the upcoming fiscal year. But each year these employees complain about how they are evaluated, how merit money is dispersed and what criteria are used for the evaluations.

CASE STUDYYOU GET WHAT YOU PAY FOR

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However, during the past two years there has been a tremendous emphasis on quality of production. A review of the merit recipients reveals that these people were the ones who had the best quality records. But many of the employees felt that quality should not be the determining factor. At an employee forum, one of the senior members remarked: “How can Frank now reward quality? What happened to production numbers?”

CON..

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Another employee agreed and stated: “This quality game is okay for some, but what about overall production? It seems to me that if I will only be rewarded for quality, then I should produce a few items but make them perfect.”

After hearing such criticism, Frank was quite upset. He wasn’t trying to cause chaos in his evaluations, nor was he attempting to hurt anyone. Unfortunately, what was originally intended to be an appraisal system had just become a nuisance.

CON..

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1. What is the major problem with Frank’s appraisal system?

2. Describe a performance appraisal system that you could recommend to Frank for evaluating a worker on the production line.

3. If no changes are made in the current system that Frank is using, what do you expect will occur regarding future production performance of the employees?

4. What does this case tell us about the impact of performance appraisals on employee motivation?

QUESTIONS

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THANK YOU