 Performance Appraisal system is a part of

ongoing management process, the purposes of

which are to:
 Provide for systematic planning by allowing the
manager to identify critical job elements &
objectives.
 Conduct a systematic review of employees overall
performance & provide constructive feedback.
 Provide objective information to guide
management decisions on promotions etc.
 Establish an objective basis for determining
annual performance.
Performance Appraisal
Systematic assessment and descriptions of an
employee’s accomplishments in the assigned
tasks and assessment of job related strengths
and weaknesses.

Why Performance Appraisals are Important

 Performance appraisals help managers interact with

employees
 Employees learn what is expected from them, and
also what their strengths and weaknesses are.
 Having no performance evaluation reduces the
credibility of management.
What are performance appraisals?

 Performance appraisals are yearly or monthly

evaluations given to employees.

 They evaluate the needs of the employee and

supervisor.
Multiple Objectives
It provides inputs to

a. Administration – for pay & promotion

decision.
b. Employees on his strengths & weaknesses
c. Training, Counseling, Career Planning and
Succession Planning Systems
d. Organization restructuring issues
 Why Performance Appraisals are Bad

 Performance rating systems are not objective. One manager’s

idea of creativity can be different from another managers.
 Appraisals are supposed to show employees what they need
to change to be more productive. Rating systems simply
apply a number on a scale of 1(unsatisfactory) to
5(satisfactory). These systems do not tell the employee
specifically how they need to improve.
 If employees score bad on an appraisal, they are less likely to
listen to their boss, and they may argue that the boss does
not like them.
 Establishing Performance Standards
 Communicating Performance Standards to
employees
 Measuring Actual Performance
 Comparing Actual Performance with
Standards
 Discussing appraisal with the employees
 Taking Corrective Action
 Difference between Performance Appraisal and Job
Evaluation
Performance Appraisal Job Evaluation
1. Performance appraisal is 1. Job Evaluation is the analysis of
concerned with the differences various jobs to know the demands
among the employees in terms of which has normal performance of
their performance. It is also termed particular jobs make on average
as merit rating as it is concerned employees. It does not take into
with the comparative merit of account the individual abilities of the
individuals. job-holder
2. It considers the abilities and 2. It considers the requirements of
performance of individuals various jobs in terms of job
descriptions and job specifications.
3. The purpose of merit rating is to 3. The purpose of job evaluation is
appraise the performance of limited., i.e. to determine the worth
individuals to take decisions like of the job o the basis of demands
increase in pay, transfer, promotions made by a particular job on the
etc. it also serves as the guideline average worker. This facilities
for the management to consider the fixation of wages for various jobs.
type of training which should be
imparted to the employees.
4. Performance appraisal rates the 4. Job evaluation analyses the job to
men and not the job as it is determine their relative worth and
concerned with addressing of the fix their wage levels that are fair
abilities of the individuals. As a and equitable.
matter of fact, it measures the
worth of different employees to the
organization.
5. Performance appraisal is used as 5. Job evaluation is used to shape
a basis of personnel policies as the wage policies of the
regards transfers and promotions. organization.
The following criteria should be followed to make
the performance appraisal more effective:

 Make performance appraisal part of an ongoing

process
 Look at all aspects of an employee’s performance
 Make specific and constructive judgments
 Criticize work habits & behaviour, not the person
 Don’t let marginal employees slide
 Keep complete written records for all
performance appraisals.
STEPS FOR EFFECTIVE PERFORMANCE APPRAISAL
SYSTEM

 Developing Business Plans

 Establishing aspects of performance that need to be
measured
 Setting up Systems to Monitor & Evaluate
 Defining the General Performance Expectations of
Employees
 Agreements on Specific Performance Objectives
 Developing an Internal Communications System
 Ensuring that the performance Appraisal System is
well understood & is working effectively
 Supporting employees to help them perform well
 Seeking Performance improvement
 Recognizing & Rewarding good performance
 Capabilities
Jobs Technical Managerial Human Concept
ual
Skilled workers, Very much Not needed Some Not
operators, clerks, essential desirable Needed
typist, foreman, etc. Some
essential

First level supervisor, Very essential A few are Some Not

junior desirable desirable Needed
Some
essential

Junior & middle level Some important Important Some A few

manager many not essential are
essential useful
Junior & Some Important Some A few are
middle level important essential useful
manager many not
essential
Senior A few are Very Many are Desirable
managers, desirable essential needed
Head of Some are
Dept./Sec important
Unit Heads, A few are Very Many are Essential
GM etc. desirable essential essential &
important
Chief Not needed Important Very Most
Executives essential Essential
 Traditional Modern

• Unstructured appraisal •HR Scorecard

•Graphic Rating Scales
•Confidential Report
•Straight Ranking Method
•Paired Comparison Method
•Forced Distribution Method
•Grading System
•Checklist Method
•Critical Incident Method
•HR Accounting
•Competency Mapping
•Assessment & Development Centre
•360 degree Appraisal
•540 degree Appraisal
•Management by Objective (MBO)
•Behaviourally Anchored Rating
Scale (BARS)
Traditional Methods:

 Very old techniques of performance appraisals.

 Based on Trait – oriented appraisal.
 Evaluation of employees is done on the basis of standards of personal traits
or qualities such as attitudes, judgment, versatility, initiative, dependability,
leadership, loyalty, punctuality, knowledge of job etc.
 This approach did not consider the developmental aspects of the employee
performance i.e. his training and development needs or career
developmental possibilities.
 The primary concern of the traditional approach Is to judge the performance
of the organization as a whole by the past performances of its employees
Unstructured Appraisal:
 The Appraiser is required to write down his impression about the person being
appraised in an unstructured way such as quality of job performance, reasons for
specific job behaviors, personality traits and development needs etc.
 This system is highly subjective and has got its merit in its simplicity and is in
use especially in the small firms.

Ranking Method:
 It is a simple process of placing employees in a rank according to their
job performance.

 All workers are judged on the same factors and they are rated on the
overall basis with reference to their job performance instead of
individual assessment of traits.

 Here the best is placed first in the rank and the poorest occupies the
last rank.
Paired comparison method:
 It is an improvement over simple ranking.
 Every employee in a job family is compared with every other employee to
determine which is the better worker.
 The rater is provided with a booklet containing two names of the employees
on each page to compare.
 The number of ranks order would be [n(n-1)]/2, where n is the total
number of persons to be compared.
 In this way, every employee is compared with the every other
employee in the same family.
Forced Distribution Method:

 Some appraisers suffer from a constant error, i.e. they either rate all workers as
excellent, average or poor, they fail to evaluate the poor, average or excellent
clearly.
 Forced Distribution system is devised to force the appraiser to fit the
employees being appraised into predetermined range of scales.
 This system is based on the assumption that employees can be divided into
five point scale of outstanding, above average, average, below average and
poor.
 This method eliminates the room for subjective judgment on the part of
supervisor.
 The objective of this technique is to spread out the ratings in the form of a
normal distribution which is open to criticism.
Graphic Rating Scale:
 It is easy to understand and easy to use technique which permits the
statistical tabulation of scores in terms of measures of central tendencies,
skewness and dispersion.
 Performance appraisal that rates the degree to which the employee has
achieved various characteristics.

 It permits a ready comparison of scores among the employees.

 Under this method, scales are established for a number of specific factors
and qualities
 Five degrees are established for each factor and general definitions appear
at points along the scale.
 Various characteristics such as job knowledge or punctuality are rated by
the degree of achievement. The rate usually receives a score of 1 to 5, with
5 representing excellent performance.
Name of the Employees………………………………………………………………….. Date: ……………………………………………………………………

Department………………………………………………………………………………....

Instructions to Raters:

1.

2.

3.

PERFORMANCE RATING SCALES

I II III IV V

Performance Factors Does not meet job requirement Partially meets job requirement Meets job requirement Exceeds job requirement Far exceeds job requirement

Quality of Work Undue No. of errors Occasional errors Normal Accuracy Seldom inaccurate Exceptionally accurate

Quantity of work slow worker Works in spurts Consistent quantity Above average quantity Usually fast worker

Possesses adequate Exceptional under standing of all phases

Job knowledge Needs job learning More knowledge required Good working knowledge
knowledge of jobs

Ordinarily cab be depended

Dependability Requires constant supervision Needs occasional supervision Needs very little supervisions Completely trust worthy
upon

Generally associated with Very cooperative, inspires others to

Attitude Reluctant to co-operate Occasionally uncooperative A good team work
others work.

Comments Signature of the Rater

Check List:
It consists of two techniques:

(i) Weighted Check List:

 Under this technique, various statements are prepared in such a manner that
they describe various types and levels of behaviors for a particular job.
 Each statement is attached with a scale value.
 The supervisor collects and checks all the statements, At the time of rating the
employees.
 weights are attached to the individual traits, the rating is done on the rating
sheet and averaged and employees are evaluated.
 under this method, the supervisor is not allowed to accumulate vague
impressions as a basis for rating, as it compels the supervisor to think in terms of a
very specific kinds of behaviour.
Management by Objectives
(MBO)
 In organizations where MBO is used to
set goals and objectives for employees,
the supervisor will use this approach for
performance appraisal also.
◦ The appraisal is based on whether or not the
employee has met his or her objectives.
◦ The advantage is that employees know what to
expect.
◦ The supervisor focuses on results rather than
more subjective criteria.
Agents by Someone Other than
the Supervisor
 360-degree Feedback: Performance appraisal
that combines assessment from several sources.
 Because the supervisor cannot know all of an
employee’s behaviors and their impact on
others in the organization, the supervisor may
combine his or her appraisal with self-
assessments by the employee or with appraisals
by peers or subordinates.
◦ Combining several sources of appraisals is called 360-
degree feedback.
◦ The self-assessment may be done before the interview.
◦ Then the supervisor and employee can compare the
employee’s appraisal with his or her own evaluation.
 Peer Reviews: Performance appraisals
conducted by an employee’s co-workers.
 Peer appraisals are less common.
 In organizations that use teams, the members
may appraise the performance of their team
members.
 There are many techniques for appraising
performance.
◦ Usually the human resources department or
higher-level management dictates which
type(s) the supervisor will use.
◦ All supervisors will likely use the same
approach because it is easier to keep records
showing performance over time.
◦ The supervisor may be able to supplement the
appraisal format with other techniques if they
seem helpful by using the “Comment” section
of the form or an attached addition.
MODERN METHODS:
 The modern approach to performance development has made the
performance appraisal process more formal and structured.

 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.

 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.
 Background
Contemporary 360-degree methods have roots as early as the 1940s, however,
there is some disagreement regarding the exact genesis of the technique.

Despite these disagreements, one point that most scholars can agree on is 360-
degree performance appraisal has historical roots within a military context.

During the 1950s and 1960s this trend continued in the United States within
the Military service academies.

At the United States Naval Academy at Annapolis, the midshipmen used a

multi-source process called “peer grease” to evaluate the leadership skills of their
classmates.

In the corporate world during the 1960s and 1970s, organizations like Bank of
America, United Airlines, Bell Labs, Disney, Federal Express, Nestle, and RCA
experimented with multi-source feedback in a variety of measurement situations.
 The Concept

For example, subordinate assessments of a supervisor’s performance can provide valuable developmental
guidance, peer feedback can be the heart of excellence in teamwork, and customer service feedback focuses on
the quality of the team’s or agency’s results.
The Process
Bias in Appraising Performance
 Performance appraisals should be free of
bias, but this is impossible.
◦ There are several identifiable biases in the
performance appraisals by supervisors.
 Harshness Bias: Rating employees more severely than
their performance merits.
 Leniency Bias: Rating employees more favorably than
their performance merits.
 Harshness bias tends to frustrate and
discourage workers who resent the unfair
assessments of their performance.
 At the other extreme is the leniency bias,
where supervisors rate their employees
more favorably than the performance
merits.
◦ Employees who receive favorable ratings may see
it as an advantage.
 However, it cheats them and the department of the
benefits of truly developing and coaching employees.
 There are also supervisors who tend to select
ratings that are related to the structuring of
answers on the questionnaire.
◦ A tendency may be to select ratings in the middle of
the scale, which is called central tendency.
 This type of bias misses important opportunities to
praise or correct employees.
 Proximity bias, or assigning similar scores
to items that are near each other on a
questionnaire, can result in misleading
appraisals.
◦ If the supervisor is uncertain about specific
questions or wants to adjust a low score, he or
she may resort to making random choices.
◦ This should be avoided by trying to apply
objective criteria.
 Personal preferences of the supervisor will
bias performance appraisals also.
◦ There is a tendency to judge others more
positively when they are like oneself.
◦ There is also a tendency to place most weight on
the events that have occurred most recently.
 This is called recency syndrome.
 The supervisor should be careful to consider events and
behaviors that occurred throughout the entire period
covered by the review.
 Similarity Bias: The tendency to judge
others more positively when they are like
oneself.
 The halo effect refers to the tendency to
generalize one positive or negative aspect
of a person to the person’s entire
performance, resulting in either a higher or
lower rating than the employee deserves.
 Finally, the supervisor’s prejudices about
various types of people can unfairly
influence a performance appraisal.
◦ The supervisor must remember that each
employee is an individual, not just a
representative of a group.
◦ This is especially important in light of the EEOC
guidelines discussed earlier in the chapter.
 Identifying Job Families
 Identifying Competencies
 Defining Competencies
 Strategizing Competencies
 Defining Measurement Scale
 Position Profiling
 Person Profiling
 Development of Reward
Strategy
Business Strategy

Satisfy need and expectations of stake holders

Provide added value to customers

HR Stratery
.

Obtain, develop and retain the skilled, motivated & committed people the organization needs

Reward Strategy

Define what the organization wants & is prepared to pay for encourage & support desired behavior
Develop & maintain competitve pay policies which will attract & retain high quality people.
Adopt a total rewards approach which includes a mix of rewards the best meets & individuals needs.
Reward Management Process
Non Financial
Rewards

Employee
Benefits

Market
Surveys

Business Reward Pay Pay Levels Total Improved

Strategy Strategy Structures & relativities remuneration performance

Job Evaluation

Performance Pay

Perfomance Employee
Mangement development
THANK YOU