PERFORMANCEAPPRAISAL People differ in their abilities and their aptitudes.

There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employees abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance.

Performance appraisals are widely used in the society. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement. What is Performance Appraisal? A performance appraisal is a review and discussion of an employee's performance of assigned duties and responsibilities. The appraisal is based on results obtained by the employee in his/her job, not on the employee's personality characteristics. The appraisal measures skills and accomplishments with reasonable accuracy and uniformity. It provides a way to help identify areas for performance enhancement and to help promote professional growth. It should not, however, be considered the supervisor's only communication tool. Open lines of communication throughout the year help to make effective working relationships. Each employee is entitled to a thoughtful and careful appraisal. The success of the process depends on the supervisor's willingness to complete a constructive and

objective appraisal and on the employee's willingness to respond to constructive suggestions and to work with the supervisor to reach future goals. Why Appraise Performance? Periodic reviews help supervisors gain a better understanding of each employee's abilities. The goal of the review process is to recognize achievement, to evaluate job progress, and then to design training for the further development of skills and strengths. A careful review will stimulate employee's interest and improve job performance. The review provides the employee, the supervisor, the Vice President, and Human Resources a critical, formal feedback mechanism on an annual basis, however these discussions should not be restricted solely to a formal annual review.

Objectives of the Performance Appraisals

1. To maintain or improve employee job satisfaction and morale.

2. To serve as a systematic guide in planning each employees further training.

3. To assure a factual evaluation of an employees performance.

4. To assist in planning personnel moves and placements.

5. To assist in determining and recording special talents, skills and capabilities.

6. To provide an opportunity for each employee to discuss job problems and interests.

7. To accumulate substantiating data for use as a guide for wage adjustments, promotions, disciplinary action, and/or re-assignments. Things to Avoid

1. Halo Effect. The tendency to rate an employee high in everything.

2. Bias. The emotional tendency to reward our friends or those we like by giving them good ratings and conversely, a poor rating to those we dislike.

3. Undue Credit for Length of Service. The tendency to overrate long-service employees and to underrate short-service employees based on the assumption that the longer an employee performs a job, the more proficient the job is done.

4. Personal Projection and Self-Identification. The tendency to vie for those who resemble them in some way, e.g., personality, physical appearance or work habits, as, opposed to those who are different.

5. Loose Ratings. The result when one is threatened by fear of hurting anyones feelings. Such ratings are not fair to anyone and can create discord in the work environment.

6. Judgment of Recent Behavior. The tendency to evaluate performance consistent with the most recently observed work behavior. This may cause more dated performance that is essential to the evaluation to be omitted and to lose behavioral trends that are important to the rating. Performance appraisal methods Performance appraisal methods include 11 appraisal methods / types as follows: 1. Critical incident method The critical incidents for performance appraisal is a method in which the manager writes down positive and negative performance behavior of employees throughout the performance period 2. Weighted checklist method This method describe a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs 3. Paired comparison analysis Paired comparison analysis is a good way of weighing up the relative importance of options. A range of plausible options is listed. Each option is compared against each of the other options. The results are tallied and the option with the highest

score is the preferred option.

4. Graphic rating scales The Rating Scale is a form on which the manager simply checks off the employees level of performance. This is the oldest and most widely method used for performance appraisal. 5. Essay Evaluation method This method asked managers / supervisors to describe strengths and weaknesses of an employees behavior. Essay evaluation is a non-quantitative technique This method usually use with the graphic rating scale method. 6. Behaviorally anchored rating scales This method used to describe a performance rating that focused on specific behaviors or sets as indicators of effective or ineffective performance. It is a combination of the rating scale and critical incident techniques of employee performance evaluation. 7. Performance ranking method Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee, rather than comparing each one to a standard measurement. 8. Management By Objectives (MBO) method MBO is a process in which managers / employees set objectives for the employee, periodically evaluate the performance, and reward according to the result. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods) 9. 360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them. This post also include information related to appraisal methods such as 720, 540, 180 10.Forced ranking (forced distribution) Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom.

11. Behavioral Observation Scales Behavioral Observation Scales is frequency rating of critical incidents that worker has performed. Individual Evaluation Methods Under the individual evaluation methods of merit rating, employees are evaluated one at a time without comparing them with other employees in the organization. (a) Confidential report: It is mostly used in government organizations. It is a descriptive report prepared, generally at the end of every year, by the employees immediate superior. The report highlights the strengths and weaknesses of the subordinate. The report is not databased. The impressions of the superior about the subordinate are merely recorded there. It does not offer any feedback to the appraisee. The appraisee is not very sure about why his ratings have fallen despite his best efforts, why others are rated high when compared to him, how to rectify his mistakes, if any; on what

basis he is going to be evaluated next year, etc. Since the report is generally not made public and hence no feedback is available, the subjective analysis of the superior is likely to be hotly contested. In recent years, due to pressure from courts and trade unions, the details of a negative confidential report are given to the appraisee. (b) Essay evaluation: Under this method, the rater is asked to express the strong as well as weak points of the employees behavior. This technique is normally used with a combination of the graphic rating scale because the rater can elaborately present the scale by substantiating an explanation for his rating. While preparing the essay on the employee, the rater considers the following factors: (i) Job knowledge and potential of the employee; (ii) Employees understanding of the companys programmes, policies, objectives, etc.; (iii) The employees relations with co-workers and superiors; (iv) The employees general planning, organizing and controlling ability; (v) The attitudes and perceptions of the employee, in general. Essay evaluation is a non-quantitative technique. This method is advantageous in at least one sense, i.e., the essay provides a good deal of information about the employee and also reveals more about the evaluator. The essay evaluation method however, suffers from the following limitations: It is highly subjective; the supervisor may write a biased essay. The employees who are sycophants will be evaluated more favorably then other employees. Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee. It is very difficult to find effective writers nowadays. The appraiser is required to find time to prepare the essay. A busy appraiser may write the essay hurriedly without properly assessing the actual performance of the worker. On the other hand, appraiser takes a long time, this becomes uneconomical from the view point of the firm, because the time of the evaluator (supervisor) is costly. Input of information sources Job knowledge and potential of the employee;

 Employees understanding of the companys programs, policies, objectives, etc.; The employees relations with co-workers and superiors; The employees general planning, organizing and controlling ability; The attitudes and perceptions of the employee, in general. (c) Critical incident technique: Under this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior. At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers performance. An example of a good critical incident of a sales assistant is the following: July 20 The sales clerk patiently attended to the customers complaint. He is polite, prompt, enthusiastic in solving the customers problem. On the other hand the bad critical incident may appear as under: July 20 The sales assistant stayed 45 minutes over on his break during the busiest part of the day. He failed to answer the store managers call thrice. He is lazy, negligent, stubborn and uninterested in work. This method provides an objective basis for

conducting a thorough discussion of an employees performance. This method avoids recency bias (most recent incidents get too much emphasis). This method suffers however from the following limitations: Negative incidents may be more noticeable than positive incidents. The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session. It 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. Most frequently, the critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates. (d) Checklists and weighted checklists: Another simple type of individual evaluation method is the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive statements about the employee and his behavior. If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank. A more recent variation of the checklist method is the weighted list. Under this, the value of each question may be weighted equally or certain questions may be weighted more heavily than others. The following are some of the sample questions in the checklist. l Is the

employee really interested in the task assigned? Yes/No l Is he

respected by his colleagues (co-workers) Yes/No l Does he give

respect to his superiors? Yes/No l Does he follow

instructions properly? Yes/No l Does he make

mistakes frequently? Yes/No A rating score from the checklist helps the manager in evaluation of the performance of the employee. The checklist method has a serious limitation. The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions. Another limitation could be that this method is expensive and time consuming. Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employees characteristics, contributions and behaviors. In spite of these limitations, the checklist method is most frequently used in the employees performance evaluation. (e) Graphic rating scale: Perhaps the most commonly used method of performance evaluation is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use. Under this method, a printed form, as shown below, is used to evaluate the performance of an employee. A variety of traits may be used in these types of rating devices, the most common being the quantity and quality of work. The rating scales can also be adapted by including traits that the company considers important for effectiveness on the job. A model of a graphic rating scale is given below.

Content of appraisal Quantity of work. Volume of work under normal working conditions Quality of work. Neatness, thoroughness and accuracy of work Knowledge of job. Dependability. Conscientious, thorough, reliable, accurate, with respect to attendance, relief, lunch breaks, etc. Judgment attitude. Exhibits enthusiasm and cooperativeness on the job Cooperation . Willingness and ability to work with others to produce desired goals. Initiative. Table: Typical Graphic Rating Scale Employee Name................... ................. Department ......................... Rate ............... Data .................................. Quantity of work: Volume of work under normal working conditions Unsatisfactory Fair Job title

Satisfactory Good Outstanding Quality of work: Neatness, thoroughness and accuracy of work Knowledge of job

A clear understanding of the factors connected with the job

Attitude: Exhibits enthusiasm and cooperativeness on the job

Dependability: Conscientious, thorough, reliable, accurate, with respect to attendance, reliefs, lunch breaks, etc.

Cooperation: Willingness and ability to work with others to produce desired goals.

From the graphic rating scales, excerpts can be obtained about the performance standards of employees. For instance, if the employee has serious gaps in technical-professional knowledge (knows only rudimentary phases of job); lacks the knowledge to bring about an increase in productivity; is reluctant to make decisions on his own (on even when he makes decisions they are unreliable and substandard); declines to accept responsibility; fails to plan ahead effectively; wastes and misuses resources; etc., then it can safely be inferred that the standards of the performance of the employee are dismal and disappointing. (f) Rating scale The rating scale is the most common method of evaluation of an employees performance today. One positive point in favor of the rating scale is that it is easy to understand, easy to use and permits a statistical tabulation of scores of employees. When ratings are objective in nature they can be effectively used as evaluators. The graphic rating scale may however suffer from a long standing disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall is that each characteristic is equally important in evaluation of the employees performance and so on. (g) Behaviorally anchored rating scales: Also known as the behavioral expectations scale, this method represents the latest innovation in performance appraisal. It is a combination of the rating scale and critical incident techniques of employee performance evaluation. The critical incidents serve as anchor statements on a scale and the rating form usually contains six to eight specifically defined performance dimensions. The following chart represents an example of a sales trainees competence and a behaviorally anchored rating scale. Table: An Example of Behaviorally Anchored Rating Scale (BARS)

Performance Points Behavior Extremely good 7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country. Good 6 Can expect to initiate creative ideas for improved sales. Above average 5 Can expect to keep in touch with the customers throughout the year. Average 4 Can manage, with difficulty, to deliver the goods in time. Below average 3 Can expect to unload the trucks when asked by the supervisor. Poor 2 Can expect to inform only a part of the customers.

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

(h) Forced choice method: This method was developed to eliminate bias and the preponderance of high ratings that might occur in some organizations. The primary purpose of the forced choice method is to correct the tendency of a rater to give consistently high or low ratings to all the employees. This method makes use of several sets of pair phrases, two of which may be positive and two negative and the rater is asked to indicate which of the four phrases is the most and least descriptive of a particular worker. Actually, the statement items are grounded in such a way that the rater cannot easily judge which statements apply to the most effective employee. The following box is a classic illustration of the forced choice items in organizations. Table: Forced Choice Items 1. Least Most

A A

Does not anticipate

difficulties

Grasps explanations easily and B

quickly

C time C

Does not waste

D to D 2. Least Most

Very easy to talk

A leader A

Can be a

B things

Wastes time on unproductive B

C calm C

At all times, cool and

Smart

worker

D The favorable qualities earn a plus credit and the unfavorable ones earn the reverse. The worker gets over plus when the positive factors override the negative ones or when one of the negative phrases is checked as being insignificantly rated. (i) Management by Objectives (MBO): MBO represents a modern method of evaluating the performance of personnel. Thoughtful managers have become increasingly aware that the traditional performance evaluation systems are characterized by somewhat antagonistic judgments on the part of the rater. There is a growing feeling nowadays that it is better to make the superior work with subordinates in fixing goals. This would inevitably enable subordinates to exercise self-control over their performance behaviors. The concept of management by objectives is actually the outcome of the pioneering works of Drucker, McGregor and Odiorne in management science. Management by objectives can be described as a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individuals major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contributions of each of its members. MBO thus represents more than an evaluation programme and process. Practicing management scientists and pedagogues view it as a philosophy of managerial practice; it is a method by which managers and subordinates plan, organize, control, communicate and debate. Classification of Objectives Corporate objectives Functional objectives Individual objectives Conditions of Management By Objectives An objective must be satisfied SMART conditions:

 Specific, Measurable, Achievable, Relevant, and Time-Specific. Features MBO emphasizes participatively set goals that are tangible, verifiable and measurable. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods). MBO, by concentrating on key result areas translates the abstract philosophy of management into concrete phraseology. The technique can be put to general use (non-specialist technique). Further it is a dynamic system which seeks to integrate the companys need to clarify and achieve its profit and growth targets with the managers need to contribute and develop himself. MBO is a systematic and rational technique that allows management to attain maximum results from available resources by focusing on achievable goals. It allows the subordinate plenty of room to make creative decisions on his own. (j) Assessment Centres

Assessment centre refers to a method to objectively observe and assess the people in action by experts or HR professionals with the help of various assessment tools and instruments. Assessment centers simulate the employees on the job environment and facilitate the assessment of their on the job performance. An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies and on the job behaviour and potential to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be

expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. An assessment centre for Performance appraisal of an employee typically includes: Social/Informal Events An assessment centre has a group of participants and also a few assessors which gives a chance to the employees to socialize with a variety of people and also to share information and know more about the organisation. Information Sessions information sessions are also a part of the assessment centres. They provide information to the employees about the organisation, their roles and responsibilities, the activities and the procedures etc. Assignments- assignments in assessment centres include various tests and exercises which are specially designed to assess the competencies and the potential of the employees. These include various interviews, psychometric tests, management games etc. all these assignments are focused at the target job. The following are the common features of all assessment centres: The final results is based on the pass/fail criteria All the activities are carried out to fill the targeted job. Each session lasts from 1 to 5 days. The results are based on the assessment of the assessors with less emphasis on self-assessment Immediate review or feedbacks are not provided to the employees.

An organizations human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc.

Conclusion: Organizations need some means of ensuring performance standards are being achieved and objectives are being met. They also need to plan for the future by setting organizational objectives. These should be achieved through personal objectives agreed at the

appraisal. This is vital for all employees in order to maintain a competitive position, and it is important that the method for doing this is successful. All the material in the Skills of Appraisal and Performance Review resource is dedicated to that end. However, underlying the methods, practices and techniques there must be crucial managerial thoughts, attitudes and activities. A well-designed performance appraisal system supports an integrated human resource strategy which enables the attainment of organizational and business goals. Performance appraisals are important. Do them effectively and it will maximize their value.