Review of Literature- Performance Appraisal

8/6/2019 Review of Literature- Performance Appraisal

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REVIEW OF LITERATURE

Performance Appraisal

INTRODUCTION:

Performance Appraisal is an objective system to judge the ability of an individual employee to

perform his tasks. A good performance appraisal system should focus on the individual and his

development, besides helping him to achieve the desired performance. This means that while the

results are important the organization should also examine and prepare its human capital to

achieve this result. This holds true even for new inductees. There is a strong linkage between

induction, training and appraisal. In a large number of firms worldwide, a new recruit is expected

to discuss his schedule of work in achieving his induction objectiveIt is a powerful tool to

calibrate, refine and reward the performance of the employee. It helps to analyze his

achievements and evaluate his contribution towards the achievements of the overall

organizational goals.

Meaning and Definition of Performance Appraisal

Performance appraisal is a formal system that evaluates the quality of a employees performance.

An appraisal should not be viewed as an end in itself, but rather as an important process within a

broader performance management system that links:

Organisational objectives Day-to-day performance Professional development Rewards and incentives

In simple terms, appraisal may be understood as the assessment of an individuals performance

in a systematic way, the performance being measured against such factors as job knowledge,

quality, and quantity of output, initiative, leadership abilities, supervision, dependability, co-

operation, judgment, versatility, health, and the like. Assessment should not be confined to past

performance alone. Potentials of the employee for future performance must also be assessed.


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According to Flippo, a prominent personality in the field of Human resources, performance

appraisal is the systematic, periodic and an impartial rating of an employees excellence in the

matters pertaining to his present job and his potential for a better job."

A formal definition of performance appraisal is:

It is the systematic evaluation of the individual with respect to his or her performance on the job

and his or her potential for development.

A more comprehensive definition is:

Performance appraisal is a formal, structured system of measuring and evaluating an

employees job related behaviors and outcomes to discover how and why the employee is

presently performing on the job and how the employee can perform more effectively in the

future so that the employee, organization, and society all benefit.

Objectives of Performance Appraisal

Salary Increase

Performance appraisal plays a role in making decision about salary increase. Normally salary

increase of an employee depends upon on how he is performing his job. There is continuous

evaluation of his performance either formally or informally. This may disclose how well an

employee is performing and how much he should be compensated by way of salary increase.

Promotion

Performance appraisal plays significant role where promotion is based on merit and seniority.

Performance appraisal discloses how an employee is working in his present job and what are

his strong and weak points. In the light of these, it can be decided whether he can be

promoted to the next higher position.

Training and Development

Performance appraisal tries to identify the strengths and weakness of an employee on his

present job. This information can be used for devising training and development programmes

appropriate for overcoming weaknesses of employees.


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Feedback

Performance appraisal provides feedback to employees about their performance. A person

works better when he knows how he is working. This works in two ways, firstly, the person

gets feedback about his performance. Secondly, when the person gets feedback about his

performance, he can relate his work to the orgaisational objectives.

Pressure on Employees

Performance appraisal puts a sort of pressure on employees for better performance. If the

employees are conscious that they are being appraised in respect of certain factors and their

future largely depends on such appraisal.

Survey On Performance Appraisal:

According to a recent survey, the percentage of organisations (out of the total organisations

surveyed i.e. 50) using performance appraisal for the various purposes are as shown in the

diagram .The most significant reasons of using Performance appraisal are:

y Making payroll and compensation decisions 80%y Training and development needs 71%


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y Identifying the gaps in desired and actual performance and its cause 76%y Deciding future goals and course of action 42%y Promotions, demotions and transfers 49%

Other purposes 6% (including job analysis and providing superior support, assistance and

counseling)

Key Dimensions of Performance

To ensure that the performance criteria are relevant to work practice and acceptable to appraisers

and employees:

i) Base the performance criteria on an up-to-date job description

ii) Develop criteria in consultation with appraisers and employees.

i) Base the performance criteria on an up-to-date job description:

Clear and explicit links between performance appraisal and a job description will ensure

the relevance of the appraisal. If a detailed job description is not available or is out-of-

date, it is strongly recommended that an accurate job description be developed prior to

conducting a performance appraisal.

Competencies Knowledge, skills, and abilities relevant to performance

Behaviours Specific actions conducted and / or tasks performed

Results / outcomes Outputs, quantifiable results, measurable outcomes and

achievements, objectives attained

Organisational

citizenship

behaviours

Actions that are over and above usual job responsibilities


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ii) Develop criteria in consultation with appraisers and employee:

Linking performance appraisals with job descriptions can help to focus the appraisal

process on the key competencies, behaviours and outcomes associated with a particular

role or position. It can also be useful to consult with employees to:

y Ensure that key aspects of a role / position are represented in the job descriptiony Develop a clear understanding of the relative importance of various competencies,y Behaviours and outcomesy Identify how these key competencies, behaviours and outcomes can be fairly and

accurately assessed.

Strategies for facilitating employees participation include:

y Engagement in formal meetings or informal discussions with supervisors to seekinput and / or feedback on appraisal measures and criteria

y Representation on groups / committees involved in the design and implementation ofy performance appraisalsy Inclusion of self appraisals in the appraisal processy Providing opportunities for employees to contribute to the performance appraisal of

coworkers and managers / supervisors.

TYPES OF APPRAISALS:

Manager / supervisor appraisals:Managers / supervisors play a central role in the appraisal process, and should always be

included as one of the main appraisers. In essence, managers and supervisors have two

roles in performance appraisal:

1. Judge: assessing performance

2. Coach: providing constructive feedback and identifying areas for improvement.

Self-appraisals:The process of evaluating ones own performance can help to increase employees

commitment to the appraisal process, perceptions of appraisal fairness, and satisfaction


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with the appraisal process. Self-appraisal can also be useful for identifying areas for

development. Not surprisingly, self-appraisals are usually biased towards leniency.

Strategies to increase the accuracy of self appraisals include:

y Using clear definitions of performance criteria linked to specific, observablebehaviours

y Informing employees that their ratings will be checked and compared to othersources of appraisal (i.e., for accuracy)

y Ensuring employees receive regular feedback on their performance.

Co-worker appraisals:Coworkers can provide valuable feedback on performance, particularly where teamwork

occurs. Coworkers are often aware of different aspects of a employees performance that

managers /supervisors may not have the opportunity to observe. In addition, as there is

usually more than one coworker who rates a workers performance, their evaluations tend

to be more reliable. Coworker evaluations, however, may be biased towards those

individuals most well liked in an organisation (i.e., friendship bias). Furthermore,

coworker appraisals may have a negative impact on teamwork and cooperation if

employees are competing with one another for organizational incentives and rewards. It

is recommended that coworker appraisals are used for professional development ratherthan administrative decisions.

Subordinate appraisals:Subordinates are a valuable source of information regarding particular aspects of a

supervisor or leaders performance such as communication, team building or delegation.

Subordinates can provide feedback to help managers / supervisors develop their skills in

these areas. The focus should be on aspects of managerial performance that subordinates

are able to comment upon. This source of appraisal may only be appropriate in larger

organisations where there are sufficient subordinates to allow anonymity.


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Client appraisals:Clients may also offer a different perspective on a employees performance, particularly

for jobs that require a high degree of interaction with people. For example, client

appraisals can be a valuable source of feedback regarding the quality of service provision

(e.g., the quality of interaction, degree of empathy, level of support, degree of

professionalism).

Organisations often have performance contracts that specify goals and deliverables for

client outcomes. Whilst it is important that organisational goals and deliverables are

reflected in the appraisal criteria for individuals and teams, it is recommended that

particular care be taken if incorporating client outcomes.

Methods of Performance Appraisal

PAST-ORIENTED METHODS

1)Rating Scales:

The rating scale method offers a high degree of structure for appraisals. Each employee trait or

characteristic is rated on a bipolar scale that usually has several points ranging from poor toexcellent (or some similar arrangement).

The traits assessed on these scales include employee attributes such as cooperation,

communications ability, initiative, punctuality and technical (work skills) competence. The

nature and scope of the traits selected for inclusion is limited only by the imagination of the

scales designer, or by the organizations need to know.

The one major provision in selecting traits is that they should be in some way relevant to the

appraisees job.

Advantages

Rating scale methods are easy to use and understand. The concept of the rating scale makes

obvious sense; both appraisers and appraisees have an intuitive appreciation for the simple and

efficient logic of the bipolar scale. The result is widespread acceptance


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Disadvantages

Trait Relevance

Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is

inevitable that with a standardised and fixed system of appraisal that certain traits will have a

greater relevance in some jobs than in others.

For example, the trait initiative might not be very important in a job that is tightly defined and

rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an

employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities

to use and display that particular trait. The relevance of rating scales is therefore said to be

context-sensitive. Job and workplace circumstances must be taken into account.

Systemic Disadvantage

Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the

relevant indicators of employee performance. There is an assumption that all the true and best

indicators of performance are included, and all false and irrelevant indicators are excluded.

This is an assumption very difficult to prove in practice. It is possible that an employees

performance may depend on factors that have not been included in the selected traits. Such

employees may end up with ratings that do not truly or fairly reflect their effort or value to the

organization. Employees in this class are systemically disadvantaged by the rat ing scale method.

Perceptual Errors

This includes various well-known problems of selective perception (such as the horns and halos

effect) as well as problems of perceived meaning.

Selective perception is the human tendency to make private and highly subjective assessments of

what a person is really like, and then seek evidence to support that view (while ignoring or

downplaying evidence that might contradict it).

This is a common and normal psychological phenomenon. All human beings are affected by it.

In other words, we see in others what we want to see in them.

An example is the supervisor who believes that an employee is inherently good (halo effect) and

so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee,

the supervisor covers for them and may even offer excuses for their declining performance.


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On the other hand, a supervisor may have formed the impression that an employee is bad (horns

effect). The supervisor becomes unreasonably harsh in their assessment of the employee, and

always ready to criticize and undermine them.

The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more subtle

manifestations, it can be a significant threat to the effectiveness and credibility of performance

appraisal.

Perceived Meaning

Problems of perceived meaning occur when appraisers do not share the same opinion about the

meaning of the selected traits and the language used on the rating scales.

For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting

work problems to a supervisor. To another appraiser, this might suggest an excessive dependence

on supervisory assistance - and thus a lack of initiative.

As well, the language and terms used to construct a scale - such as Performance exceeds

expectations or Below average skill - may mean different things to different appraisers.

1)Rating Errors

The problem here is not so much errors in perception as errors in appraiser judgement and

motive. Unlike perceptual errors, these errors may be (at times) deliberate.

The most common rating error is central tendency. Busy appraisers, or those wary of

confrontations and repercussions, may be tempted to dole out too many passive, middle-of-the-

road ratings (e.g., satisfactory or adequate), regardless of the actual performance of a

subordinate. Thus the spread of ratings tends to clump excessively around the middle of the

scale.

This problem is worsened in organizations where the appraisal process does not enjoy strong

management support, or where the appraisers do not feel confident with the task of appraisal.

2) Check-list Method:

Under this method, checklist of Statements of Traits of employee in the form of Yes or

No based questions is prepared. Here, the rater only does the reporting or checking and HR

department does the actual evaluation. The rater concerned has to tick appropriate answers


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relevant to the appraisees. When the check-list is completed, it is sent to HR department for

further processing. Various questions in the check list may have either equal weightage or more

weightage may be given to those questions which are more important. The HR department then

calculates the total scores which show the appraisal result of an employee.

Advantages economy, ease of administration, limited training required, standardization.

Disadvantages Raters biases, use of improper weights by HR Dept, does not allow rater to

give relative ratings.

3)Force Choice Method:

A series of statements arranged in the blocks of two or more are given and the rater

indicates which statement is true or false. The rater is forced to make a choice. HR department

does actual assessment.

Advantages Absence of personal biases because of forced choice.

Disadvantages Statements may not be correctly framed.

4) Force Distribution Method:

One of the problems faced in large organizations is relative assessment tendencies of

raters. Some are too lenient and others too severe. This method overcomes that problem. It forces

every one to do a comparative rating of all the employees on a predetermined distribution pattern

of good to bad. Say 10% employees in Excellent Grade, 20% in Good Grade, 40% in Average

Grade, 20% in Below Average Grade and 10% in Unsatisfied grade. The real problem of this

method occurs in organizations where there is a tendency to pack certain key departments with

all good employees and someother departments with discards and laggards. Relatively good

employees of key departments get poor rating and relatively poor employees of laggards

departments get good rating.

5) Critical Incident Method:

In this method, only critical incidents and behavior associated with these incidents are taken for

evaluation. This method involves three steps. A test of noteworthy on the job behavior is

prepared. A group of experts then assigns scale values to them depending on the degree of


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desirability for the job. Finally, a checklist of incidents which define good and bad employees is

prepared.

Advantages ---This method is very useful for discovering potential of employees who can be

useful in critical situation.

Disadvantages --- a) Negative incidents are, generally, more noticeable than positive ones.

b) The recording of incidents is a core to the superior and may be put off and

easily forgotten.

c) Overly close supervision may result.

6) Essay Method: In the essay method approach, the appraiser prepares a written statement

about the employee being appraised. The statement usually concentrates on describing specific

strengths and weaknesses in job performance. It also suggests courses of action to remedy the

identified problem areas. The statement may be written and edited by the appraiser alone, or it be

composed in collaboration with the appraisee.

7) Grading: In this method, certain categories of abilities of performance are defined well in

advance and person are put in particular category depending on their traits and characteristics.

Such categories may be definitional like outstanding, good, average, poor, very poor or may be in

terms of letter like A, B, C, D etc with A indicating the best and D indicating the worst. This

method, however, suffers from one basic limitation that the rater may rate most of the employees

at higher grades.

8) Performance Tests & Observations: This is based on the test of knowledge or skills. The

tests may be written or an actual presentation of skills. Tests must be reliable and validated to be

useful.

Advantage Tests only measure potential and not attitude. Actual performance is more a

function of attitude of person than potential.

Disadvantages Some times costs of test development or administration are high.

9)Confidential Reports: Though popular with government departments, its application in

industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report

(ACR). The system is highly secretive and confidential. Feedback to the assessee is given only in

case of an adverse entry. Disadvantage is that it is highly prone to biases and recency effect and


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ratings can be manipulated because the evaluations are linked to future rewards like promotions,

good postings, etc.

10)Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection

of different methods that compare performance with that of other co-workers. The usual

techniques used may be ranking methods and paired comparison method.

y Ranking Method: Superior ranks his worker based on merit, from best to worst.However how best and why best are not elaborated in this method. It is easy to

administer.

y Paired ComparisonMethod: In this method each employee is paired with everyother employee in the same cadre and then comparative rating done in pairs so

formed. The number of comparisons may be calculated with the help of a formula N

x (N-1) / 2. The method is too tedious for large departments and often such exact

details are not available with rater.

Future-Oriented Methods:

1) MBO (Appraisal By Results) : The use of management objectives was first widely advocatedin the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives)

methods of performance appraisal are results-oriented. That is, they seek to measure employee

performance by examining the extent to which predetermined work objectives have been met.

Usually the objectives are established jointly by the supervisor and subordinate. Once an

objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills

needed to achieve the objective. Typically they do not rely on others to locate and specify their

strengths and weaknesses. They are expected to monitor their own development and progress.

Advantages

TheMBO approach overcomes some of the problems that arise as a result of assuming that the

employee traits needed for job success can be reliably identified and measured. Instead of

assuming traits, the MBO method concentrates on actual outcomesThe guiding principle of the


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MBO approach is that direct results can be observed, whereas the traits and attributes of

employees (which may or may not contribute to performance) must be guessed at or inferred.

TheMBO method recognizes the fact that it is difficult to neatly dissect all the complex and

varied elements that go to make up employee performance. MBO advocates claim that the

performance of employees cannot be broken up into so many constituent parts - as one might

take apart an engine to study it.

Disadvantages

MBO methods of performance appraisal can give employees a satisfying sense of autonomy and

achievement. But on the downside, they can lead to unrealistic expectations about what can and

cannot be reasonably accomplished. Supervisors and subordinates must have very good reality

checking skills to useMBO appraisal methods. They will need these skills during the initial

stage of objective setting, and for the purposes of self-auditing and self-monitoring.

Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills

needed to do their own reality checking. Nor are these skills easily conveyed by training..

Objectives, by their very nature, tend to impose a certain rigidity. Of course, the obvious answer

is to make the objectives more fluid and yielding. But the penalty for fluidity is loss of clarity.

Variable objectives may cause employee confusion. It is also possible that fluid objectives may

be distorted to disguise or justify failures in performance.

2) Assessment Center Method: This technique was first developed in USA and UK in 1943. An

assessment centre is a central location where managers may come together to have their

participation in job related exercises evaluated by trained observers. It is more focused on

observation of behaviours across a series of select exercises or work samples. Assesses are

requested to participate in in-basket exercises, work groups, computer simulations, role playing

and other similar activities which require same attributes for successful performance in actual

job.

Advantages Well-conducted assessment centre can achieve better forecasts of future

performance and progress than other methods of appraisals. Also reliability, content validity and

predictive ability are said to be high in Assessment Centres. The tests also make sure that the

wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and

promotion.


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Disadvantages Concentrates on future performance potential. No assessment of past

performance. Costs of employees travelling and lodging, psychologists. Ratings strongly

influenced by assessees inter-personal skills. Solid performers may feel suffocated in simulated

situations.

3) 360o

Appraisal: It is a technique in which performance data/feedback/rating is collected from

all sections of people employee interacts in the course of his job like immediate supervisors,

team members, customers, peers, subordinates and self with different weightage to each group of

raters. This technique has been found to be extremely useful and effective. It is especially useful

to measure inter-personal skills, customer satisfaction and team building skills. One of the

biggest advantages of this system is that assesssees cannot afford to neglect any constituency and

has to show all-round performance. However, on the negative side, receiving feedback from

multiple sources can be intimidating, threatening, expensive and time consuming.

4) Psychological Appraisals: These appraisals are more directed to assess employees potential

for future performance rather than the past one. It is done in the form of in-depth interviews,

psychological tests, and discussion with supervisors and review of other evaluations. It is more

focused on employees emotional, intellectual, and motivational and other personal characteristics

affecting his performance. This approach is slow and costly and may be useful for bright young

members who may have considerable potential. However quality of these appraisals largely

depends upon the skills of psychologists who perform the evaluation.

How do these companies define Performance Appraisal?

1) 4004 Incorporated: This company considers appraisal just a regular activity to rate anemployee and to control the behavior through a carrot and stick approach.

2) HPCL: Appraisal in this company is based in the premise that it is an activity carried outperiodically to rate an employee coupled with the fact that it is also a system where in

employees need to make an introspection to find out their strengths and weakness.

Performance appraisal also facilitates in making various personnel decisions like

identifying the areas for training


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3) Titan and 4) Godrej 7) Nicholas Piramal: They see performance appraisal as that ofHPCL but it also includes regular activity to keep a check on the performance of the

employees and to facilitate communication between the supervisor and subordinates.

4) UTI Mutual Funds: For them appraisal is an periodic activity to identify thedevelopment need of the employees and to facilitate communication between the

supervisors and subordinates.

6) Reliance BPO : They consider appraisal as a regular activity to check on theperformance of the employees and to facilitate communication between the supervisors

and subordinates.

Techniques in performance appraisal

Encourage DiscussionResearch studies show that employees are likely to feel more satisfied with their appraisal result

if they have the chance to talk freely and discuss their performance. It is also more likely that

such employees will be better able to meet future performance goals.

Employees are also more likely to feel that the appraisal process is fair if they are given a chance

to talk about their performance. This is especially so when they are permitted to challenge and

appeal against their evaluation.

Constructive Intention

It is very important that employees recognize that negative appraisal feedback is provided with a

constructive intention, i.e., to help them overcome present difficulties and to improve their future

performance. Employees will be less anxious about criticism, and more likely to find it useful,

when the believe that the appraiser's intentions are helpful and constructive.

In contrast, other studies have reported that "destructive criticism" - which is vague, ill-

informed, unfair or harshly presented - will lead to problems such as anger, resentment, tension

and workplace conflict, as well as increased resistance to improvement, denial of problems, and

poorer performance.


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Set Performance Goals

It has been shown in numerous studies that goal-setting is an important element in employee

motivation. Goals can stimulate employee effort, focus attention, increase persistence, and

encourage employees to find new and better ways to work.

The useful of goals as a stimulus to human motivation is one of the best supported theories in

management. It is also quite clear that goals which are "...specific, difficult and accepted by

employees will lead to higher levels of performance than easy, vague goals (such as do your

best) or no goals at all."

Appraiser Credibility

It is important that the appraiser (usually the employee's supervisor) be well-informed and

credible. Appraisers should feel comfortable with the techniques of appraisal, and should be

knowledgeable about the employee's job and performance.

When these conditions exist, employees are more likely to view the appraisal process as accurate

and fair. They also express more acceptances of the appraiser's feedback and a greater

willingness to change.


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Methods of Performance Appraisal

In order to achieve the objectives, a variety of performance appraisal methods have been

developed. The choice of method depends on organizational ethos, its objectives, size, product

and technology.

There are two type of performance appraisal method

1. Traditional method2. Modern method

TRADITIONAL METHODS :

Essay Method

In the essay method approach, the appraiser prepares a written statement about the employee

being appraised.

The statement usually concentrates on describing specific strengths and weaknesses in job

performance. It also suggests courses of action to remedy the identified problem areas.


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The statement may be written and edited by the appraiser alone, or it be composed in

collaboration with the appraisee.

Advantages

The essay method is far less structured and confining than the rating scale method. It permits the

appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply

with methods where the appraisal criteria are rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they feel

appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an

appraisal system the limits expression or assumes that employee traits can be neat ly dissected

and scaled.

Disadvantages

Essay methods are time-consuming and difficult to administer. Appraisers often find the essay

technique more demanding than methods such as rating scales.

The techniques greatest advantage - freedom of expression - is also its greatest handicap. The

varying writing skills of appraisers can upset and distort the whole process. The process is

subjective and, in consequence, it is difficult to compare and contrast the results of individuals or

to draw any broad conclusions about organizational needs.

Straight ranking method

It is the oldest and the simplest method of performance appraisal, by which the man and his

performance are considered as an entity by the rater. That is the ranking of a man in a work

group is done against that of another. The relative position of each man is tested in terms of his

numerical rank. It may also be done by ranking a person on his job performance against that of

another member of a competitive group by placing him as number one or two or three in total

group i.e. persons are tested in order of merit and placed in a simple grouping.

This is the simplest method of separating the most efficient from the least efficient: and

relatively easy to develop and use. But there are also some limitations to it:


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In practice it is very difficult to compare a single individual with human beings having varying

behavior.

The method only tells us how a man stands in relation to the others in the group but odes not

indicate how much better or worse he is than another.

Paired Comparison

A better technique of comparison than the straight ranking method, this method compares each

employee with all others in the group, one at a time. After all the comparisons on the basis of the

overall comparisons, the employees are given the final rankings.

This is an improvement over the straight ranking method. By this technique, each employee is

compared with all other persons in pairs one at a time. With this technique, judgment is easier

and simpler than with the ordinary ranking method. The number of times each individual is

compared with another is tallied on a piece of paper. These numbers yield the rank order of the

entire group. For example, if there are five persons to be compared, then As performance is

compared to Bs and decision is arrived at as to whose performance is better. Then A is

compared to C, D, E in that order. Next B is compared with all the others individually. Since

he has already been compared with A, he is compared only with C, D, and E. A similar

comparison is made in respect of other personnel. Thus, by this method, we arrive at ten

decisions, and only two are involved in each decision. The number of decisions is determined by

the formula N (N-2), where N represents the number of persons to be compared.

Critical Incidents Method

In this method of Performance appraisal, the evaluator rates the employee on the basis of critical

events and how the employee behaved during those incidents. It includes both negative and

positive points. The drawback of this method is that the supervisor has to note down the critical

incidents and the employee behavior as and when they occur this method was developed

following research conducted by the armed forces in the United States during World War II. The

essence of this system is that it attempts to measure workers performance in terms of certain

events or episodes that occur in the performances of the rates job. These events are known as

Critical incidents. The basis of this method is the principle that there are certain significant acts

in each employees behavior and performance which make all the difference between success


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Forced Distribution

To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the

employees in some fixed categories of ratings like on a normal distribution curve. The rater

chooses the appropriate fit for the categories on his own discretion. broad conclusions about

organizational needs.

MODERN METHOD

The modern approach to performance development has made the performance appraisal process

more formal and structured. Now, the performance appraisal is taken as a tool to identify better

performing employees from others, employees training needs, career development paths,

rewards and bonuses and their promotions to the next levels.

Appraisals have become a continuous and periodic activity in the organizations. The results of

performance appraisals are used to take various other HR decisions like promotions, demotions,

transfers, training and development, reward outcomes. The modern approach to performance

appraisals includes a feedback process that helps to strengthen the relationships between

superiors and subordinates and improve communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is

developmental in nature. This recognizes employees as individuals and focuses on their

development.

Management by Objectives (MBO)

The use of management objectives was first widely advocated in the 1950s by the noted

management theorist Peter Drucker.MBO is a process in which managers and their employees

jointly set objectives for the employee, periodically evaluate the performance, and reward

according to the results.MBO (management by objectives) methods of performance appraisal are

results-oriented. That is, they seek to measure employee performance by examining the extent to

which predetermined work objectives have been met.Usually the objectives are established


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jointly by the supervisor and subordinate. An example of an objective for a sales manager might

be: Increase the gross monthly sales volume to $250,000 by 30 June.Once an objective is agreed,

the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the

objective. Typically they do not rely on others to locate and specify their strengths and

weaknesses. They are expected to monitor their own development and progress.

Assessment Center Method:

This technique was first developed in USA and UK in 1943. An assessment centre is a central

location where managers may come together to have their participation in job related exercises

evaluated by trained observers. It is more focused on observation of behaviours across a series of

select exercises or work samples. Assesses are requested to participate in in-basket exercises,

work groups, computer simulations, role playing and other similar activities which require same

attributes for successful performance in actual job.

Advantages Well-conducted assessment centre can achieve better forecasts of future

performance and progress than other methods of appraisals. Also reliability, content validity

and predictive ability are said to be high in Assessment Centres. The tests also make sure that

the wrong people are not hired or promoted. Finally, it clearly defines the criteria for

selection and promotion.

Disadvantages Concentrates on future performance potential. No assessment of past

performance. Costs of employees travelling and lodging, psychologists. Ratings strongly

influenced by assessees inter-personal skills. Solid performers may feel suffocated in

simulated situations.

360o

Appraisal:

It is a technique in which performance data/feedback/rating is collected from all sections of

people employee interacts in the course of his job like immediate supervisors, team members,

customers, peers, subordinates and self with different weightage to each group of raters. Thistechnique has been found to be extremely useful and effective. It is especially useful to

measure inter-personal skills, customer satisfaction and team building skills. One of the

biggest advantages of this system is that assesssees cannot afford to neglect any constituency

and has to show all-round performance. However, on the negative side, receiving feedback

from multiple sources can be intimidating, threatening, expensive and t ime consuming.


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Psychological Appraisals:

These appraisals are more directed to assess employees potential for future performance

rather than the past one. It is done in the form of in-depth interviews, psychological tests, and

discussion with supervisors and review of other evaluations. It is more focused on employees

emotional, intellectual, and motivational and other personal characteristics affecting his

performance. This approach is slow and costly and may be useful for bright young members

who may have considerable potential. However quality of these appraisals largely depends

upon the skills of psychologists who perform the evaluation.

Bibliography

y Thomas F. Patterson (1987) RefiningPerformance Appraisal.http://www.joe.org/joe/1987winter/a5.html. Retrieved on 2007-01-18.

y JoyceMargulies Performance Appraisals.y http://www.bnabooks.com.y 1998, Archer North & Associatiates, Introduction to Performance Appraisal,

http://www.performance-appraisal.comy http://appraisals.naukrihub.com/y www.performance-appraisaly www.wikipedia.comy www.wikianswers.com

Review of Literature- Performance Appraisal

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