WELCOME TO THE CLASS OF HRMWELCOME TO THE CLASS OF HRM

Performance Management and Appraisal

Prof. Hiteshwari JadejaProf. Hiteshwari Jadeja

A process of goal-setting, communication, observation A process of goal-setting, communication, observation

and evaluation to support, retain and develop exceptional and evaluation to support, retain and develop exceptional

employees for organizational success.employees for organizational success.

Performance ManagementPerformance Management

CommunicateCommunicate

ObserveObserveEvaluateEvaluate

Set GoalsSet Goals

Why Performance Management?Why Performance Management?

Total Quality

Appraisal Issues

Strategic Focus

The Performance Management

Approach

Basic Concepts in PerformanceBasic Concepts in PerformanceManagement and AppraisalManagement and Appraisal

Performance Appraisal:Setting work standards, assessing

performance, and providing feedback to employees to motivate,

correct, and continue their performance.

Performance Management:An integrated approach to

ensuring that an employee’s performance supports and

contributes to the organization’s strategic aims.

ComparingPerformance Appraisal

and Performance Management

Performance Management and Performance Performance Management and Performance AppraisalAppraisal

• Performance management:Performance management: Dynamic, continuous process.Dynamic, continuous process. Improves organizational effectiveness.Improves organizational effectiveness. Strategic goals.Strategic goals.

• Performance appraisal:Performance appraisal: Periodic (usually annual) event.Periodic (usually annual) event. Formal review.Formal review. Last step in performance management process.Last step in performance management process.

Defining the Employee’s Goals Defining the Employee’s Goals and Work Standardsand Work Standards

Assign Specific Goals

Encourage Participation

Assign Measurable

Goals

Assign Challenging but Doable

Goals

Guidelines for Effective Goal Setting

Setting GoalsSetting Goals

• SMART Goals:SMART Goals:

SSpecific, and clearly state the desired results.pecific, and clearly state the desired results.

MMeasurable in answering “how much.”easurable in answering “how much.”

AAttainable, and not too tough or too easy.ttainable, and not too tough or too easy.

RRelevant to what’s to be achieved.elevant to what’s to be achieved.

TTimely in reflecting deadlines and milestones.imely in reflecting deadlines and milestones.

An Introduction to Appraising PerformanceAn Introduction to Appraising Performance

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

DefinitionsDefinitions

According to According to Edwin FlippoEdwin Flippo, "Performance Appraisal is the , "Performance Appraisal is the systematic, periodic and impartial rating of an employee's systematic, periodic and impartial rating of an employee's excellence, in matters pertaining to his present job and his excellence, in matters pertaining to his present job and his potential for a better job.“potential for a better job.“

According to According to Dale BeachDale Beach, "Performance Appraisal is the , "Performance Appraisal is the systematic evaluation of the individual with regards to his or her systematic evaluation of the individual with regards to his or her performance on the job and his potential for development."performance on the job and his potential for development."

An Introduction to Appraising PerformanceAn Introduction to Appraising Performance

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Is useful in career planning.

Plays an integral role in performance management.

Why Appraise Performance?

Is basis for pay and promotion decisions.

Helps in correcting deficiencies and reinforcing good performance.

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Objectives of AppraisalObjectives of Appraisal

• To effect promotions based on competence and To effect promotions based on competence and performance.performance.

• To confirm the services of probationary employees To confirm the services of probationary employees upon their completing the probationary period upon their completing the probationary period satisfactorily.satisfactorily.

• To assess the training and development needs of To assess the training and development needs of employees.employees.

• To decide upon a pay raise where (as in the To decide upon a pay raise where (as in the unorganised sector) regular pay scales have not been unorganised sector) regular pay scales have not been fixed.fixed.

• To let the employees know where they stand insofar as To let the employees know where they stand insofar as their performance is concerned and to assist them with their performance is concerned and to assist them with constructive criticism and guidance for the purpose of constructive criticism and guidance for the purpose of their development.their development.

• To improve communication. Performance appraisal To improve communication. Performance appraisal provides a format for dialogue between the superior and provides a format for dialogue between the superior and the subordinate, and improves understanding of the subordinate, and improves understanding of personal goals and concerns. personal goals and concerns.

• Finally, performance appraisal can be used to Finally, performance appraisal can be used to determine whether HR programmes such as selection, determine whether HR programmes such as selection, training, and transfers have been effective or not.training, and transfers have been effective or not.

Objectives of Appraisal (contd..)Objectives of Appraisal (contd..)

Classroom TeachingAppraisal byStudents

FIGURE 9-1 (Continued)

The Performance Appraisal ProcessThe Performance Appraisal Process

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purposes

Design an Appraisal ProgrammeDesign an Appraisal Programme

Performance Appraisal MethodsPerformance Appraisal Methods

Traditional Methods (Past-Traditional Methods (Past-Oriented)Oriented)

1.1. Graphic Rating Scale MethodGraphic Rating Scale Method

2.2. Alternation Ranking MethodAlternation Ranking Method

3.3. Paired Comparison MethodPaired Comparison Method

4.4. Forced Distribution MethodForced Distribution Method

5.5. Critical Incident MethodCritical Incident Method

6.6. Narrative FormsNarrative Forms

7.7. Annual Confidential Report Annual Confidential Report (ACR) (ACR)

Modern Methods ( Future- Modern Methods ( Future- Oriented)Oriented)

1.1. Behaviorally Anchored Rating Behaviorally Anchored Rating Scales (BARS)Scales (BARS)

2.2. Management by Objectives Management by Objectives (MBO)(MBO)

3.3. Computerized and Web-Computerized and Web-Based Performance AppraisalBased Performance Appraisal

4.4. Merged MethodsMerged Methods

5.5. Assessment CentresAssessment Centres

6.6. 360- Degree Feedback360- Degree Feedback

Graphic Rating Scale MethodGraphic Rating Scale Method

• A scale that lists a number of traits and a range A scale that lists a number of traits and a range of performance for each. The employee is then of performance for each. The employee is then rated by identifying the score that best rated by identifying the score that best describes his or her level of performance for describes his or her level of performance for each trait.each trait.

Sample Graphic Rating Performance Rating Form

Sample Performance Rating Form (continued)

Alternation ranking MethodAlternation ranking Method

• Ranking employees from best to worst on a Ranking employees from best to worst on a particular trait, choosing the highest, then particular trait, choosing the highest, then lowest, until all are ranked.lowest, until all are ranked.

Scale for alternate ranking of AppraiserScale for alternate ranking of Appraiser

Paired Comparison Method :Paired Comparison Method :In this method, each employee is compared with the other on one-In this method, each employee is compared with the other on one-to-one basis. This method makes judgement easier as compared to to-one basis. This method makes judgement easier as compared to ranking method.. The total number of comparison can be ranking method.. The total number of comparison can be ascertained by the following formula : ascertained by the following formula :

Maximum no. of pairs = [n(n-1)]/2Maximum no. of pairs = [n(n-1)]/2• where N stands for number of employees to be evaluated.where N stands for number of employees to be evaluated.

Example:Example:If the following five students Ashok (A), Bina (B), Chitra (C), Dinesh If the following five students Ashok (A), Bina (B), Chitra (C), Dinesh (D), Eillen (E) have to be evaluated for the best student award, the (D), Eillen (E) have to be evaluated for the best student award, the total number of comparison would be = 10total number of comparison would be = 10

• A with BA with B• A with CA with C B with CB with C• A with DA with D B with DB with D C with DC with D• A with EA with E B with EB with E C with EC with E D with ED with E• The number of times a student gets a better score, would be the The number of times a student gets a better score, would be the

basis for selecting the Best Student. This method is not appropriate basis for selecting the Best Student. This method is not appropriate if a large number of students are required to be evaluated.if a large number of students are required to be evaluated.

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FIGURE 9–6 Ranking Employees by the Paired Comparison Method

Note: + means “better than.” – means “worse than.” For each chart, add up the number of +’s in each column to get the highest-ranked employee.

Forced Distribution MethodForced Distribution Method

Similar to grading on a curve; predetermined Similar to grading on a curve; predetermined percentages of ratees are placed in various percentages of ratees are placed in various performance categories.performance categories.

Example:Example: 15% high performers15% high performers 20% high-average performers20% high-average performers 30% average performers30% average performers 20% low-average performers20% low-average performers 15% low performers15% low performers

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Critical Incident Method Critical Incident Method

• This method evaluates an employee on the basis of This method evaluates an employee on the basis of certain `events' or `episodes' known as critical incident.certain `events' or `episodes' known as critical incident.

• The underlying principle of this method is "there are The underlying principle of this method is "there are certain significant acts in each employee's behavior and certain significant acts in each employee's behavior and performance, which can make all the difference performance, which can make all the difference between success and failure on the job.“between success and failure on the job.“

• Thus, in this method the rater focuses his attention on Thus, in this method the rater focuses his attention on all those factors, that can make a difference between all those factors, that can make a difference between performing a job in a noteworthy manner.performing a job in a noteworthy manner.

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Examples of Critical Incidents for Examples of Critical Incidents for an Assistant Plant Manageran Assistant Plant Manager

Narrative FormsNarrative Forms

• All or part of the written appraisal may be in All or part of the written appraisal may be in narrative form.narrative form.

• Here, the person’s supervisor is responsible for Here, the person’s supervisor is responsible for providing an assessment of the employee’s providing an assessment of the employee’s past performance and required areas of past performance and required areas of improvement.improvement.

Appraisal-Appraisal-Coaching Coaching

WorksheetWorksheet

Annual Confidential Report (ACR)Annual Confidential Report (ACR)

• This is a traditional method of evaluating an employee's This is a traditional method of evaluating an employee's performance. It is normally used in Government performance. It is normally used in Government departments and small business units. Here, the departments and small business units. Here, the evaluation is done by the immediate boss or supervisor.evaluation is done by the immediate boss or supervisor.

• The main limitation of this method is the ratings are The main limitation of this method is the ratings are generally not discussed with the ratee (only in case of generally not discussed with the ratee (only in case of adverse remark).adverse remark).

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BARS (Behaviourally Anchored Rating BARS (Behaviourally Anchored Rating Scale)Scale)

• In order to overcome the problem of judgmental evaluation, this In order to overcome the problem of judgmental evaluation, this

method was conceived by some organisations. This method combines method was conceived by some organisations. This method combines

the benefits of Essay Method, Critical Incident and Rating scales.the benefits of Essay Method, Critical Incident and Rating scales.

• In this method the employee's behaviour and performance dimensions In this method the employee's behaviour and performance dimensions

are analysed and used for evaluating the performance of the are analysed and used for evaluating the performance of the

employee. The HR department is involved in the process of preparing employee. The HR department is involved in the process of preparing

the BARS. Based on the Employee's performance and behaviour, the BARS. Based on the Employee's performance and behaviour,

employees are anchored in different slots of good, average and poor. employees are anchored in different slots of good, average and poor.

The rater is required to give corresponding ratings to the employee.The rater is required to give corresponding ratings to the employee.

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Behaviorally Anchored Rating Scale (BARS)Behaviorally Anchored Rating Scale (BARS)

Developing a BARSDeveloping a BARS

1.1. Generate critical Generate critical incidentsincidents

2.2. Develop performance Develop performance dimensionsdimensions

3.3. Reallocate incidentsReallocate incidents

4.4. Scale the incidentsScale the incidents

5.5. Develop a final Develop a final instrumentinstrument

Advantages of BARSAdvantages of BARS A more accurate A more accurate

gaugegauge

Clearer standardsClearer standards

FeedbackFeedback

Independent Independent dimensionsdimensions

ConsistencyConsistency

Example of aBehaviorallyAnchored RatingScale for theDimensionSalesmanship Skills

Management by Objectives (MBO)Management by Objectives (MBO)

• A comprehensive and formal organizationwide A comprehensive and formal organizationwide goal-setting and appraisal program requiring:goal-setting and appraisal program requiring:

1.1. Setting of organization’s goals.Setting of organization’s goals.

2.2. Setting of departmental goals.Setting of departmental goals.

3.3. Discussion of departmental goals.Discussion of departmental goals.

4.4. Defining expected results (setting individual Defining expected results (setting individual goals).goals).

5.5. Conducting periodic performance reviews.Conducting periodic performance reviews.

6.6. Providing performance feedback.Providing performance feedback.

Using MBOUsing MBO

Problems with MBO

Setting unclear objectives

Conflict with subordinates over

objectives

Time-consuming appraisal process

Computerized and Web-Based Computerized and Web-Based Performance AppraisalPerformance Appraisal

• Performance appraisal software programsPerformance appraisal software programs Keep notes on subordinates during the year.Keep notes on subordinates during the year. Electronically rate employees on a series of Electronically rate employees on a series of

performance traits.performance traits. Generate written text to support each part of the Generate written text to support each part of the

appraisal.appraisal.

• Electronic performance monitoring (EPM)Electronic performance monitoring (EPM) Having supervisors electronically monitor the Having supervisors electronically monitor the

amount of computerized data an employee is amount of computerized data an employee is processing per day, and thereby his or her processing per day, and thereby his or her performance.performance.

Assessment Centres :Assessment Centres :

• This method was used to appraise army officers in Germany This method was used to appraise army officers in Germany way back in 1930s. The concept was adapted from army to way back in 1930s. The concept was adapted from army to business arena in 1960s. In India, the concept has been business arena in 1960s. In India, the concept has been adopted by organisations such as Crompton Greaves, adopted by organisations such as Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox recently.Eicher, Hindustan Lever and Modi Xerox recently.

• This method is mainly used to evaluate executive and This method is mainly used to evaluate executive and supervisory potential. Here employees are taken to a place supervisory potential. Here employees are taken to a place away from work and a series of tests and exercises are away from work and a series of tests and exercises are administered. For example, assesses are asked to administered. For example, assesses are asked to participate in; in-basket exercise, simulations, group exercise participate in; in-basket exercise, simulations, group exercise and role plays. Performance of the employee is evaluated in and role plays. Performance of the employee is evaluated in each of these tests and feedback is provided to the ratee, in each of these tests and feedback is provided to the ratee, in terms of strengths and weaknesses.terms of strengths and weaknesses.

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360o Appraisal Method :360o Appraisal Method :

• Where multiple raters are involved in evaluating performance, the Where multiple raters are involved in evaluating performance, the technique is called 360-degree appraisal. technique is called 360-degree appraisal.

• The 360-degree technique is understood as systematic collection The 360-degree technique is understood as systematic collection of performance data on an individual or a, group derived from a of performance data on an individual or a, group derived from a number of stakeholders—the stakeholders being the immediate, number of stakeholders—the stakeholders being the immediate, team members customers peers and self. team members customers peers and self.

• In this method an employee's performance is evaluated by his In this method an employee's performance is evaluated by his supervisor, subordinates, peers and customers (or an outside supervisor, subordinates, peers and customers (or an outside expert). expert).

• All these appraisers provide information or feedback by completing All these appraisers provide information or feedback by completing a questionnaire designed for this purpose.a questionnaire designed for this purpose.

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• The 360-degree degree appraisal provides a broader The 360-degree degree appraisal provides a broader perspective about an employee’s performance. perspective about an employee’s performance.

• In addition, the technique facilitates greater self-In addition, the technique facilitates greater self-development of the employee. development of the employee.

• It enables an employee to compare his evaluation about It enables an employee to compare his evaluation about self with perceptions of othersself with perceptions of others

• Though this method was developed to bring about a Though this method was developed to bring about a degree of objectivity, it still suffers from subjectivity.degree of objectivity, it still suffers from subjectivity.

Appraising Performance: Appraising Performance: Problems and SolutionsProblems and Solutions

Unclear Standards

Leniency or Strictness

Halo Effect

Potential Rating Scale Appraisal

Problems

Central Tendency

Bias

TABLE 9–2 A Graphic Rating Scale with Unclear Standards

Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?

Excellent Good Fair Poor

Quality of work

Quantity of work

Creativity

Integrity

Appraising Performance: Appraising Performance: Problems and Solutions (continued)Problems and Solutions (continued)

Know Problems

Control Outside

Influences

Use the Right Tool

How to Avoid Appraisal Problems

Train Supervisors

Keep a Diary

TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools

Tool Advantages Disadvantages

Graphic rating scale

Simple to use; provides a quantitative rating for each employee.

Standards may be unclear; halo effect, central tendency, leniency, bias can also be problems.

BARS Provides behavioral “anchors.”BARS is very accurate.

Difficult to develop.

Alternation ranking Simple to use (but not as simple as graphic rating scales). Avoids central tendency and other problems of rating scales.

Can cause disagreements among employees and may be unfair if all employees are, in fact, excellent.

Forced distribution method

End up with a predetermined number or % of people in each group.

Employees’ appraisal results depend on your choice of cutoff points.

Critical incident method

Helps specify what is “right” and “wrong” about the employee’s performance; forces supervisor to evaluate subordinates on an ongoing basis.

Difficult to rate or rank employees relative to one another.

MBO Tied to jointly agreed-upon performance objectives.

Time-consuming.

Who Should Do the Appraising?Who Should Do the Appraising?

Self-Rating

Subordinates

360-Degree Feedback

Potential Appraisers

Immediate Supervisor

Peers

Rating Committee

The Appraisal InterviewThe Appraisal Interview

Satisfactory—Promotable

Satisfactory—Not Promotable

Unsatisfactory—Correctable

Unsatisfactory—Uncorrectable

Types of Appraisal Interviews

The Appraisal Interview (continued)The Appraisal Interview (continued)

Talk in terms of objective work data.

Don’t tiptoe around.

Don’t get personal.

Encourage the person to

talk.

Guidelines for Conducting an Interview

The Appraisal Interview (continued)The Appraisal Interview (continued)

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Recognize your own limitations.

Never attack a person’s defenses.

How to Handle a Defensive Subordinate

Recognize that defensive behavior is normal.

Postpone action.

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The Appraisal Interview (continued)The Appraisal Interview (continued)

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How to Criticize a Subordinate

Criticize in private, and do it constructively.

Do it in a manner that lets the person maintain his or her dignity and sense of worth.

Give daily feedback so that the review has no surprises.

Never say the person is “always” wrong.

Criticism should be objective and free of biases.

Checklist During theAppraisal Interview

Formal Written WarningsFormal Written Warnings

• Purposes of a Written WarningPurposes of a Written Warning To shake your employee out of bad habits.To shake your employee out of bad habits. To help you defend your rating, both to your own To help you defend your rating, both to your own

boss and (if needed) to the courts.boss and (if needed) to the courts.

• A Written Warning Should:A Written Warning Should: Identify standards by which employee is judged.Identify standards by which employee is judged. Make clear that employee was aware of the Make clear that employee was aware of the

standard.standard. Specify deficiencies relative to the standard.Specify deficiencies relative to the standard. Indicate employee’s prior opportunity for correction.Indicate employee’s prior opportunity for correction.

Creating the Total PerformanceCreating the Total PerformanceManagement ProcessManagement Process

• ““What is our strategy and what are our goals?”What is our strategy and what are our goals?”

• ““What does this mean for the goals we set for What does this mean for the goals we set for our employees, and for how we train, appraise, our employees, and for how we train, appraise, promote, and reward them?”promote, and reward them?”

PMS in IndiaPMS in India

Performance evaluation has reached high maturity levels in Indian Performance evaluation has reached high maturity levels in Indian organizations.organizations.

Successful practices like goal setting, balanced scorecard, Successful practices like goal setting, balanced scorecard, development orientation etc., are being introduced and it mostly development orientation etc., are being introduced and it mostly covers managerial employees and employees who are not part of covers managerial employees and employees who are not part of any union.any union.

ACR system of government is being changed to PMS.ACR system of government is being changed to PMS.

Online appraisal systems are also used.Online appraisal systems are also used.

Initiatives like training, appraisals, multiple levels appraisers, Initiatives like training, appraisals, multiple levels appraisers, reviews, etc. are undertaken to improve the quality of PMS.reviews, etc. are undertaken to improve the quality of PMS.

Let’s Practice Your Performance Appraisal Let’s Practice Your Performance Appraisal SkillsSkills

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