UNIT-5 PERFORMANCE APPRAISAL SYSTEMS-MBO APPROACH, PERFORMANCE COUNSELLING & CAREER PLANNING

PERFORMANCE APPRAISAL

MEANING
Performance Appraisal is a method of evaluating the behavior of employees in the work spot , including both quantitative & qualitative aspects of job performance. Performance refers to the degree of accomplishment of the tasks that make an individuals job. It is how well an individual is fulfilling the job demands.

Performance appraisal is a process of judging the value , excellent qualities or status of a person. It is a process of collecting , analyzing and evaluating data relative to job behavior and results of individual.

DEFINITIONS
Performance Appraisal is an objective assessment of an individuals performance against well defined benchmarks. Performance Appraisal is the systematic evaluation of the individual with respect to his or her Performance on the job and his or her potential for development. Performance Appraisal is the systematic evaluation of present & potential capabilities of personnel and employees by the superiors, superiors superior or a professional from outside.

DEFINITIONS
Performance appraisal is a process of evaluating work performance of the personnel so as facilitate individual and organizational effectiveness. "Performance appraisal is the process of assessing quantitative and qualitative aspects of an employee's job performance."

Six criterion on which the value of Performance Appraisal is assessedQuality Quantity Timeliness Cost-Effectiveness Need for Supervision Interpersonal Impact

The other terms used for Performance Appraisal arePerformance Rating Employee Assessment Employee Performance Review Personnel Appraisal Performance Evaluation Employee Evaluation and Merit Rating

BENEFITS OF AppraisalPERFORMANCE provides information about the performance of APPRAISAL

individuals employed in an organization. Such information is useful for any purpose like administration, placement, financial rewards, and determination of grades, incentives, or compensation Performance Appraisal is the assessment of an individual's performance in a systematic way, the performance being measured against factors such as:-

JOB KNOWLEDGE
LEADERSHIP Copyright (c) 2005 Prentice Hall ABILITIES

QUALITY & QUANTITY OF OUTPUT

SUPERVISION & DEPENDABILITY

INITIATIVE

LEADERSHIP

Performance Appraisal is not done in isolation. It is linked to Job Analysis.

Job Analysis

Performance Standards

Performance Appraisal

Describes work and personnel Requirement of a particular job

Translates job requirements Into levels of acceptable or unacceptable performance.

Describe the job relevant Strengths and weaknesses Of each individual

OBJECTIVES OF PERFORMANCE APPRAISAL

To help the employees to overcome his weakness & improve his strengths so as to enable him to achieve the desired performance. To generate adequate feedback & guidance from the immediate superior. To effect promotions based on competence and performance. To assess the training and development needs of employees. To decide upon a pay scale where regular pay scales have not been fixed. To let the employees know where they stand in so far as their performance is concerned and assist them with constructive criticism and guidance for the purpose of their development.

OBJECTIVES OF PERFORMANCE APPRAISAL

To help in creating a desirable culture & tradition in the organization. To generate significant , relevant & valid information about employees. To facilitate fair & equitable compensation based on performance. To improve communication- Performance Appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goal and concerns. PA is used to determine whether HR programs such as selection, training and transfers have been effective or not .

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BENEFITS OF PERFORMANCE APPRAISAL

OBJECTIVES OF PERFORMANCE APPRAISAL

Copyright (c) 2005

Prentice Hall

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USES OF PERFORMANCE APPRAISAL

It serves as a basis for improving the quality and quantity of performance of the executives in their present work. It helps to identify the strengths and weaknesses and to introduce methods to make the best use of the strength and to overcome weaknesses. It enables to locate the problems which may stand on the way of performances so that corrective action can be taken to improve the performance. Appraisal provide the basis for promotion. Helps in compensating grade and incentives. 12

PERFORMANCE APPRAISAL : AS A MANAGEMENT TOOL

Essential for the Effective Management Evaluation of Staff Conducted annually Each individual's performance against objectives and standards for the trading year Career and Succession Planning Staff motivation, attitude and behavior development Vital for managing the performance of people and organizations.
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APPRAISAL PROCESS
Establish Performance Standard

Communicate Performance Expectations to Employees

Measure Actual Performance

Compare Actual Performance with Standards

Discuss the Appraisal with the Employees

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If Necessary ,Initiate Corrective Action

APPRAISAL OF POTENTIAL AT PHILIPS

Sandoz , Philips and P&G etc. today all the companies are using various Performance Appraisal methods. At Philips a two by two matrix is used to assess performance and potential of employees. The vertical axis measures potential while the horizontal axis measures the actual performance.
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High

POTENTIAL

Problem children ? Plan Separation

stars

Solid citizens

Low Low

PERFORMANCE

High

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Low potential-low performance- The employees are considered as question marks.

High potential-low performance- These are problem children High potential-high performance- These are the star performers. Low potential-high performance- These are called the solid citizens.

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Appraisal Methods- The Journey

How management can actually establish performance standards and devise instruments that can be used to measure and appraise an employees performance?

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TRADITIONAL PERFORMANCE RATING

Completion of a form by the immediate superior/ committee of supervisors of the individual who is being evaluated. Criticism: Traditional Performance Rating emphasis on personality traits instead of job performance.

There is a divergence of opinion among raters as what is meant by standards such as (unsatisfactory, good)
There may be divergent perceptions and accordingly different standard of judgment among raters.

The raters may be susceptive to excessive lienency/ strictness error/central tendency/halo error

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NEWER RATING METHODS

Three different approaches exists for doing appraisals. Employee can be appraised against:

Absolute Standards
Relative Standards

Objectives
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Absolute Standards
Essay Appraisal
Critical Incident Appraisal Checklist Graphic Rating Scale Behaviorally Anchored Rating System (BARS)
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ESSAY APPRAISAL

Rater write a narrative describing an employees strength, weakness, past performance, potential and suggestion for improvement.

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CRITICAL INCIDENT APPRAISAL

Raters give attention on those critical or key behaviors that make the difference between doing a job effectively or ineffectively. Drawbacks: Appraisers are required to regularly write these incidents (daily/weekly)---- Time Consuming/ Boring. Suffer from same comparison problem which is their in Essay Appraisal.

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CHECKLIST
Evaluator uses a list of behavioral description and checks off these behaviors that apply to the employee. In this method Rater (Manager) & Scorer (Staff Personnel Dept.) are different Reduces biasness If job categories are more, than this method is insufficient.

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GRAPHIC RATING SCALE

This is the oldest and widely used techniques. This method is also known as linear rating scale or simple rating scale. In this method there is Performance factors and a scale to evaluate performance. The appraisers are supplied with printed forms, one for each employee. These forms contain a number of objectives, behavior and trait-based qualities and characters to be rated like quality of work, quantity of work, dependability, initiative, attitude etc. in the case of workers and analytical ability, creative ability, initiative, leadership qualities, emotional stability in the case of managerial personnel. Comparability with other individuals in diverse job categories is possible.

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BEHAVIORALLY ANCHORED RATING SYSTEM (BARS)

These scales combine major elements from the Critical Incident & Graphic Rating Scale approaches. The appraiser rates the employees based on items along a continuum, but the points are examples of actual behavior on the job rather than general description or traits. BARS specify definite, observable, & measurable job behavior.

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BARS
Individuals/Participants

give specific illustrations

of effective/ineffective particular dimension behavior regarding each
These Performance Dimensions are translated into

Appropriate Performance Dimensions

Anchors

Evaluatio n

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Relative Standards
Group Order Ranking
Individual Ranking

Paired Comparison

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RELATIVE STANDARDS
Individuals are compared against other individuals.

Group Order Ranking: Evaluators are asked to rank the participants in the top 5 % , the next 5 %, the next 15 % and so forth.

Individual Ranking: Evaluator list the employees in an order from highest to lowest.

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PAIRED COMPARISON
The paired comparison method is calculated by taking the total of [n(n-1)]/2 comparisons. A score is obtained for each employee by simply counting the number of pairs in which the individual is the preferred member. It ranks each individual in relationship to all others on a one-on one basis. If ten people are being evaluated, the first person is compared, one by one , with each of the other nine pairs is tabulated. Each of the remaining nine persons, in turn, is compared in the same way, and a ranking is evolved by the greatest number of preferred victories. This method ensures that each employee is compared against every other, but the method can become unwieldy when large numbers of employees are being compared.

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RESULT ORIENTED APPRAISAL OR

MANAGEMENT BY OBJECTIVES (MBO)

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RESULT ORIENTED APPRAISAL/MBO

Result Oriented Appraisal are based on the concrete performance targets which are established by superior and subordinates jointly. MBO is a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individuals major area of responsibility in term of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.

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MBO
The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims.

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MBOS FOUR STAGES

Jointly determine the goals and the objectives to be achieved in the KRA ( Key Result Area) Jointly formulate the action plan

Jointly implement the plan

Jointly evaluate or reviews their performance

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STEPS OF MBO
MBO consists of four steps: Goal Setting, Action Planning, Self-Control and Periodic Reviews 1. Goal Setting : Organizations overall objectives are used as guidelines from which departmental and individual objectives are set.

2. Action Planning: The means are determined for achieving the ends establishing in goal setting.(The realistic plans are developed.)

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STEPS OF MBO
3.Self-Control: It refers to systematic monitoring and measuring performance.(Individual review their own performance)

4.Periodic Review: Corrective actions are initiated when behavior deviates from the standards established in the goal setting phase.

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MBO OFFERS
Subordinates are motivated Better relationship between managers and subordinates Focuses in the results and not on means Minimize unnecessary formalities and procedures. Focuses on KRA helps to analyze the role of the managers and the subordinates
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ADVANTAGES OF MBO
Promote objectivity : Provides a way for measuring objectively the performance of subordinates Improved superior-subordinate relationship Stimulate Self-Motivation /Self-Discipline/Self-Control Adds in overall Effective Planning Fosters increased competence , personal growth and opportunity for career growth.

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LIMITATIONS
MBO is unlikely to effective in an environment where management has little trust in its employees (Autocratically decisions are preferred) The amount Time needed to implement, maintain an MBO process cause problems.

Involves lot of paper work, meetings and discussions

Not useful for arriving at emergency decisions

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360 APPRAISAL

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360 APPRAISAL
Which is the most effective appraisal method ? If performance appraisal is conducted properly and clearly explained to all the employees it becomes effective 360 degree appraisal involve the appraise receiving feedback from various people Respondents can be the up-line managers/executives, subordinate staff, team members, other staff, customers, suppliers anyone
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FEATURES OF EFFECTIVE 360 APPRAISAL

Do not restrict feedback to peers and managers Feedback system can be developed by running a half-day or full day workshop depending on extent and complexity It is advisable that no aspects of 360 feedback should ever be mandatory

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360 APPRAISAL
Appraisals help develop individuals, improve organizational performance, and feed into business planning. When designing or planning and conducting appraisals, the objective should be to help the 'whole-person' to grow 360 degree appraisals are a powerful developmental method.
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FACTORS THAT CAN DISTORT APPRAISAL

COMPLETELY ERROR FREE PERFORMANCE APPRAISAL IS AN IDEALIZED MODEL WITH ALL ACTUAL APPRAISALS BEING SOMETHING LESS THAN THIS OPTIMUM LEVEL THE NUMBER OF FACTORS THAT SIGNIFICANTLY IMPEDE OBJECTIVE EVALUATION ARE THE FACTORS THAT DISTORT APPRAISAL.

DISTORT PERFORMANCE APPRAISAL

Leniency Error Halo Error Similarity Error Central Tendency
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LENIENCY ERROR
WHEN THE EVALUATORS ARE POSITIVELY LENIENT IN THEIR APPRAISAL, AN INDIVIDUALS PERFORMANCE BECOME OVER STATED.
NEGATIVE LENIENCY ERROR UNDER STATE PERFORMANCE, GIVING THE INDIVIDUAL A LOWER APPRAISAL .

HALO ERROR
THE HALO EFFECT OR ERROR IS A TENDENCY TO RATE HIGH OR LOW ON ALL FACTORS DUE TO IMPRESSION OF HIGH OR LOW RATING ON SOME SPECIFIC FACTOR

SIMILARITY ERROR
WHEN THE EVALUATORS RATE OTHER PEOPLE IN THE SAME WAY THAT THE EVALUATORS PERCEIVE THEMSELVES, THEY ARE MAKING A SIMILARITY ERROR. BASED ON THE PERCEPTION THAT EVALUATOR HAVE THEMSELVES.

CENTRAL TENDENCY
CENTRAL TENDENCY IS THE RELUCTANCE TO MAKE EXTREME RATING (IN EITHER DIRECTION) THE IN ABILITY TO DISTINGUISH BETWEEN AND AMONG RATES; A FORM OF RANGE RESTRICTION.

CAREER PLANNING

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CAREER PLANNING
Career planning is the process by which one selects career goals and the path to these goals. Career management is the process of designing & implementing goals, plans & strategies to enable the organization to satisfy employee needs while allowing individuals to achieve their career goals.
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NEED FOR CAREER PLANNING

To attract competent persons and to retain them in the organization. To provide suitable promotional opportunities. To enable the employees to develop & make them ready to meet the future challenges. To correct employee placement. To reduce employee dissatisfaction & turnover.

To improve motivation & morale.

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ADVANTAGES OF CAREER PLANNING

For Individuals:The process of career planning helps the individual to have the knowledge of various career opportunities, his priorities etc. This knowledge helps him select the career which is suitable to his life styles, preferences, family environment, scope for self-development etc.
Internal promotions, upgradation & transfers motivate the employees, boost up their morale & also result in increased job satisfaction.
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FOR ORGANIZATIONS
Efficient career planning & development ensures the availability of human resources with required skill, knowledge & talent. The efficient policies & practices improve the organization's ability to attract & retain highly skilled & talent employees. Protecting employees interest results in promoting organizational goodwill.

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CAREER STAGES
Exploration Establishment Mid-Career Late Career

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CAREER STAGES
Exploration:- Exploration is a career stage that usually ends in ones mid twenties as one makes the transition from college to work. This stage has the least relevance from the organizational point of view as it happens prior to employment. Establishment:- It is a career stage in which one begins to search for work. It includes getting ones first job. Search for a right job is a difficult task. The problems of this stage include making mistakes, learning from those mistakes & assuming increased responsibilities.
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CAREER STAGES
Mid-career stage:- This stage is marked by a continuous improvement in performance, leveling off in performance or the start of deterioration in performance.

Late career:- A career stage in which one is no longer learning about his or her job. He is also not expected to trying to do out his/her levels of performance from previous years. This stage is usually a pleasant stage.

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LIMITATIONS OF CAREER PLANNING

Dual Career Families:- With the increase in career orientation among women, number of female employees is on increase. At times it affects employee turnover. Low Ceiling Careers:- Some careers do not have scope for much advancement. Employees cannot get promotions despite their career plans & development in such jobs. Declining career opportunities:- Career opportunities for certain categories reach the declining stage due to the influence of the technological or economic factors. e.g. career opportunities for Statisticians declined due to computerization. 58

PERFORMANCE COUNSELLING

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COUNSELLING
Counseling is discussion of a problem that usually has emotional content with an employee in order to help the employee cope with it better. It seeks to improve employees mental health.

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CHARACTERISTICS
Counseling is an exchange of ideas and feelings between two people. It tries to improve organizational performance by helping the employees to cope with the problems. It involves both job and personal problems.

It is usually confidential in order to have free talk and discussions.

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NEED FOR COUNSELLING

Need for employee counseling arises due to various causes-( Job complexity) negative-emotions, conflicts, over-work load, and health problems

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FUNCTIONS OF COUNSELLING
Advice: One of important functions is to offer advice to the counselee by understanding the problem of the counselee and suggesting a course of action.

Communication: Counseling will improve both upward and downward communication abilities of the counselee.
Release of Emotional Tension: People feel emotional release from their frustration after counseling.

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TYPES OF COUNSELLING
Directive Counseling: It is full counseling. It is the process of listening to an employees problem, deciding with employee what should be done and telling and motivating the employee to do it. For e.g. advice, reassurance. Non Directive Counseling: It is the process of skillfully listening and encouraging a counselee to explain troublesome problems, understand them and determine appropriate solutions. Participative Counseling: Participative is a counselorcounselee relationship that establishes a cooperative exchange of ideas to help solve an employees problems. They both mutually apply their different knowledge, perceptions, and skills to problems and find solutions.

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CASE STUDY

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YOU GET WHAT YOU PAY FOR

FRANK HENDERSON IS THE MANAGER OF GENERAL ELECTRICS APPLIANCE DIVISION. EACH APRIL, HE MUST EVALUATE ALL OF 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. 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

CASE STUDY
How can frank now reward quality? What has happened to production numbers? 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 was not trying to cause chaos in his evaluations, nor was he attempting to hurt anyone. Unfortunately, what was originally intended to be an evaluation system had just become a nuisance.
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What is the major problem with Franks evaluation system?

Describe a performance evaluation system that you could recommend to Frank for evaluating a worker on the production line?

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CHALLENGES OF PERFORMANCE APPRAISAL

Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed. Align organizational objectives to individual aspirations. Clear growth plans for talented individuals. Provide new challenges to rejuvenate careers that have reached the plateau stage.
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Empower employees to make decisions without the fear of failing.

Embed teamwork in all operational processes.

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LEGAL ISSUES ASSOCIATED WITH PERFORMANCE APPRAISAL

Performance Appraisal data are used to make many important HR decisions. The Appraisal system is a common target of legal disputes by employees involving charges of unfairness and bias. There are several recommendations to assist employees in conducting fair Performance Appraisal and avoiding legal suits.

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Legally defensible Appraisal procedure- All personnel decisions should be based on a formal standardized Performance Appraisal system.

Legally defensible Appraisal content- Any Performance Appraisal content should be based on job analysis and Appraisals based on traits should be avoided.

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Legally defensible documentation of Appraisal results- A thoroughly written record of evidence leading to termination decisions should be maintained.
Legally defensible raters- The raters should be trained how to use an Appraisal system.

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THE END
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