REVIEW OF LITERATURE Performance Appraisal INTRODUCTION: Performance Appraisal is an objective system to judge the ability of an individual employee to perform

his tasks. A good performance appraisal system should focus on the individual and his development, besides helping him to achieve the desired performance. This means that while the results are important the organization should also examine and prepare its human capital to achieve this result. This holds true even for new inductees. There is a strong linkage between induction, training and appraisal. In a large number of firms worldwide, a new recruit is expected to discuss his schedule of work in achieving his induction objectiveIt is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. Meaning and Definition of Performance Appraisal Performance appraisal is a formal system that evaluates the quality of a employees performance. An appraisal should not be viewed as an end in itself, but rather as an important process within a broader performance management system that links: Organisational objectives Day-to-day performance Professional development Rewards and incentives

In simple terms, appraisal may be understood as the assessment of an individuals performance in a systematic way, the performance being measured against such factors as job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision, dependability, cooperation, judgment, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.

According to Flippo, a prominent personality in the field of Human resources, performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job." A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.

A more comprehensive definition is: Performance appraisal is a formal, structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefit. Objectives of Performance Appraisal Salary Increase Performance appraisal plays a role in making decision about salary increase. Normally salary increase of an employee depends upon on how he is performing his job. There is continuous evaluation of his performance either formally or informally. This may disclose how well an employee is performing and how much he should be compensated by way of salary increase. Promotion Performance appraisal plays significant role where promotion is based on merit and seniority. Performance appraisal discloses how an employee is working in his present job and what are his strong and weak points. In the light of these, it can be decided whether he can be promoted to the next higher position. Training and Development Performance appraisal tries to identify the strengths and weakness of an employee on his present job. This information can be used for devising training and development programmes appropriate for overcoming weaknesses of employees.

Feedback Performance appraisal provides feedback to employees about their performance. A person works better when he knows how he is working. This works in two ways, firstly, the person gets feedback about his performance. Secondly, when the person gets feedback about his performance, he can relate his work to the orgaisational objectives.

Pressure on Employees Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal.

Survey On Performance Appraisal:

According to a recent survey, the percentage of organisations (out of the total organisations surveyed i.e. 50) using performance appraisal for the various purposes are as shown in the diagram .The most significant reasons of using Performance appraisal are:
y y

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

y y y

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

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

Key Dimensions of Performance Competencies Behaviours Results / outcomes Knowledge, skills, and abilities relevant to performance Specific actions conducted and / or tasks performed Outputs, quantifiable results, measurable outcomes and achievements, objectives attained

Organisational citizenship behaviours

Actions that are over and above usual job responsibilities

To ensure that the performance criteria are relevant to work practice and acceptable to appraisers and employees: i) Base the performance criteria on an up-to-date job description ii) Develop criteria in consultation with appraisers and employees.

i) Base the performance criteria on an up-to-date job description: Clear and explicit links between performance appraisal and a job description will ensure the relevance of the appraisal. If a detailed job description is not available or is out-ofdate, it is strongly recommended that an accurate job description be developed prior to conducting a performance appraisal.

ii) Develop criteria in consultation with appraisers and employee: Linking performance appraisals with job descriptions can help to focus the appraisal process on the key competencies, behaviours and outcomes associated with a particular role or position. It can also be useful to consult with employees to: y y y y Ensure that key aspects of a role / position are represented in the job description Develop a clear understanding of the relative importance of various competencies, Behaviours and outcomes Identify how these key competencies, behaviours and outcomes can be fairly and accurately assessed.

Strategies for facilitating employees participation include: y Engagement in formal meetings or informal discussions with supervisors to seek input and / or feedback on appraisal measures and criteria y y y y Representation on groups / committees involved in the design and implementation of performance appraisals Inclusion of self appraisals in the appraisal process Providing opportunities for employees to contribute to the performance appraisal of coworkers and managers / supervisors.

TYPES OF APPRAISALS:

 Manager / supervisor appraisals: Managers / supervisors play a central role in the appraisal process, and should always be included as one of the main appraisers. In essence, managers and supervisors have two roles in performance appraisal: 1. Judge: assessing performance 2. Coach: providing constructive feedback and identifying areas for improvement.

 Self-appraisals: The process of evaluating ones own performance can help to increase employees commitment to the appraisal process, perceptions of appraisal fairness, and satisfaction

with the appraisal process. Self-appraisal can also be useful for identifying areas for development. Not surprisingly, self-appraisals are usually biased towards leniency. Strategies to increase the accuracy of self appraisals include: y Using clear definitions of performance criteria linked to specific, observable behaviours y Informing employees that their ratings will be checked and compared to other sources of appraisal (i.e., for accuracy) y Ensuring employees receive regular feedback on their performance.

 Co-worker appraisals: Coworkers can provide valuable feedback on performance, particularly where teamwork occurs. Coworkers are often aware of different aspects of a employees performance that managers /supervisors may not have the opportunity to observe. In addition, as there is usually more than one coworker who rates a workers performance, their evaluations tend to be more reliable. Coworker evaluations, however, may be biased towards those individuals most well liked in an organisation (i.e., friendship bias). Furthermore, coworker appraisals may have a negative impact on teamwork and cooperation if employees are competing with one another for organizational incentives and rewards. It is recommended that coworker appraisals are used for professional development rather than administrative decisions.

 Subordinate appraisals: Subordinates are a valuable source of information regarding particular aspects of a supervisor or leaders performance such as communication, team building or delegation. Subordinates can provide feedback to help managers / supervisors develop their skills in these areas. The focus should be on aspects of managerial performance that subordinates are able to comment upon. This source of appraisal may only be appropriate in larger organisations where there are sufficient subordinates to allow anonymity.

 Client appraisals: Clients may also offer a different perspective on a employees performance, particularly for jobs that require a high degree of interaction with people. For example, client appraisals can be a valuable source of feedback regarding the quality of service provision (e.g., the quality of interaction, degree of empathy, level of support, degree of professionalism). Organisations often have performance contracts that specify goals and deliverables for client outcomes. Whilst it is important that organisational goals and deliverables are reflected in the appraisal criteria for individuals and teams, it is recommended that particular care be taken if incorporating client outcomes.

Methods of Performance Appraisal

PAST-ORIENTED METHODS

1) Rating Scales: The rating scale method offers a high degree of structure for appraisals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from poor to excellent (or some similar arrangement). The traits assessed on these scales include employee attributes such as cooperation, communications ability, initiative, punctuality and technical (work skills) competence. The nature and scope of the traits selected for inclusion is limited only by the imagination of the scales designer, or by the organizations need to know. The one major provision in selecting traits is that they should be in some way relevant to the appraisees job.

Advantages Rating scale methods are easy to use and understand. The concept of the rating scale makes obvious sense; both appraisers and appraisees have an intuitive appreciation for the simple and efficient logic of the bipolar scale. The result is widespread acceptance

Disadvantages

Trait Relevance Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is inevitable that with a standardised and fixed system of appraisal that certain traits will have a greater relevance in some jobs than in others. For example, the trait initiative might not be very important in a job that is tightly defined and rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities to use and display that particular trait. The relevance of rating scales is therefore said to be context-sensitive. Job and workplace circumstances must be taken into account.

Systemic Disadvantage Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the relevant indicators of employee performance. There is an assumption that all the true and best indicators of performance are included, and all false and irrelevant indicators are excluded. This is an assumption very difficult to prove in practice. It is possible that an employees performance may depend on factors that have not been included in the selected traits. Such employees may end up with ratings that do not truly or fairly reflect their effort or value to the organization. Employees in this class are systemically disadvantaged by the rating scale method. Perceptual Errors This includes various well-known problems of selective perception (such as the horns and halos effect) as well as problems of perceived meaning. Selective perception is the human tendency to make private and highly subjective assessments of what a person is really like, and then seek evidence to support that view (while ignoring or downplaying evidence that might contradict it). This is a common and normal psychological phenomenon. All human beings are affected by it. In other words, we see in others what we want to see in them. An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee, the supervisor covers for them and may even offer excuses for their declining performance.

On the other hand, a supervisor may have formed the impression that an employee is bad (horns effect). The supervisor becomes unreasonably harsh in their assessment of the employee, and always ready to criticize and undermine them. The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more subtle manifestations, it can be a significant threat to the effectiveness and credibility of performance appraisal.

Perceived Meaning Problems of perceived meaning occur when appraisers do not share the same opinion about the meaning of the selected traits and the language used on the rating scales. For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting work problems to a supervisor. To another appraiser, this might suggest an excessive dependence on supervisory assistance - and thus a lack of initiative. As well, the language and terms used to construct a scale - such as Performance exceeds expectations or Below average skill - may mean different things to different appraisers.

1)Rating Errors The problem here is not so much errors in perception as errors in appraiser judgement and motive. Unlike perceptual errors, these errors may be (at times) deliberate. The most common rating error is central tendency. Busy appraisers, or those wary of confrontations and repercussions, may be tempted to dole out too many passive, middle-of-theroad ratings (e.g., satisfactory or adequate), regardless of the actual performance of a subordinate. Thus the spread of ratings tends to clump excessively around the middle of the scale. This problem is worsened in organizations where the appraisal process does not enjoy strong management support, or where the appraisers do not feel confident with the task of appraisal.

2) Check-list Method: Under this method, checklist of Statements of Traits of employee in the form of Yes or No based questions is prepared. Here, the rater only does the reporting or checking and HR department does the actual evaluation. The rater concerned has to tick appropriate answers

relevant to the appraisees. When the check-list is completed, it is sent to HR department for further processing. Various questions in the check list may have either equal weightage or more weightage may be given to those questions which are more important. The HR department then calculates the total scores which show the appraisal result of an employee. Advantages economy, ease of administration, limited training required, standardization. Disadvantages Raters biases, use of improper weights by HR Dept, does not allow rater to give relative ratings.

3) Force Choice Method: A series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment. Advantages Absence of personal biases because of forced choice. Disadvantages Statements may not be correctly framed.

4) Force Distribution Method: One of the problems faced in large organizations is relative assessment tendencies of raters. Some are too lenient and others too severe. This method overcomes that problem. It forces every one to do a comparative rating of all the employees on a predetermined distribution pattern of good to bad. Say 10% employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade, 20% in Below Average Grade and 10% in Unsatisfied grade. The real problem of this method occurs in organizations where there is a tendency to pack certain key departments with all good employees and some other departments with discards and laggards. Relatively good employees of key departments get poor rating and relatively poor employees of laggards departments get good rating.

5) Critical Incident Method: In this method, only critical incidents and behavior associated with these incidents are taken for evaluation. This method involves three steps. A test of noteworthy on the job behavior is prepared. A group of experts then assigns scale values to them depending on the degree of

desirability for the job. Finally, a checklist of incidents which define good and bad employees is prepared. Advantages ---This method is very useful for discovering potential of employees who can be useful in critical situation. Disadvantages --- a) Negative incidents are, generally, more noticeable than positive ones. b) The recording of incidents is a core to the superior and may be put off and easily forgotten. c) Overly close supervision may result. 6) Essay Method: In the essay method approach, the appraiser prepares a written statement about the employee being appraised. The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas. The statement may be written and edited by the appraiser alone, or it be composed in collaboration with the appraisee. 7) Grading: In this method, certain categories of abilities of performance are defined well in advance and person are put in particular category depending on their traits and characteristics. Such categories may be definitional like outstanding, good, average, poor, very poor or may be in terms of letter like A, B, C, D etc with A indicating the best and D indicating the worst. This method, however, suffers from one basic limitation that the rater may rate most of the employees at higher grades.

8) Performance Tests & Observations: This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful. Advantage Tests only measure potential and not attitude. Actual performance is more a function of attitude of person than potential. Disadvantages Some times costs of test development or administration are high.

9) Confidential Reports: Though popular with government departments, its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR). The system is highly secretive and confidential. Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it is highly prone to biases and recency effect and

ratings can be manipulated because the evaluations are linked to future rewards like promotions, good postings, etc.

10) Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.

Ranking Method:

Superior ranks his worker based on merit, from best to worst.

However how best and why best are not elaborated in this method. It is easy to administer. y Paired Comparison Method: In this method each employee is paired with every other employee in the same cadre and then comparative rating done in pairs so formed. The number of comparisons may be calculated with the help of a formula N x (N-1) / 2. The method is too tedious for large departments and often such exact details are not available with rater.

Future-Oriented Methods:

1) MBO (Appraisal By Results) : The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress.

Advantages The MBO approach overcomes some of the problems that arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured. Instead of assuming traits, the MBO method concentrates on actual outcomesThe guiding principle of the

MBO approach is that direct results can be observed, whereas the traits and attributes of employees (which may or may not contribute to performance) must be guessed at or inferred. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to make up employee performance. MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts - as one might take apart an engine to study it. Disadvantages MBO methods of performance appraisal can give employees a satisfying sense of autonomy and achievement. But on the downside, they can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good reality checking skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring. Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills needed to do their own reality checking. Nor are these skills easily conveyed by training.. Objectives, by their very nature, tend to impose a certain rigidity. Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance.

2) Assessment Center Method: This technique was first developed in USA and UK in 1943. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviours across a series of select exercises or work samples. Assesses are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. Advantages Well-conducted assessment centre can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in Assessment Centres. The tests also make sure that the wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and promotion.

 Disadvantages Concentrates on future performance potential. No assessment of past performance. Costs of employees travelling and lodging, psychologists. Ratings strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in simulated situations. 3) 360o Appraisal: It is a technique in which performance data/feedback/rating is collected from all sections of people employee interacts in the course of his job like immediate supervisors, team members, customers, peers, subordinates and self with different weightage to each group of raters. This technique has been found to be extremely useful and effective. It is especially useful to measure inter-personal skills, customer satisfaction and team building skills. One of the biggest advantages of this system is that assesssees cannot afford to neglect any constituency and has to show all-round performance. However, on the negative side, receiving feedback from multiple sources can be intimidating, threatening, expensive and time consuming.

4) Psychological Appraisals: These appraisals are more directed to assess employees potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depends upon the skills of psychologists who perform the evaluation.

How do these companies define Performance Appraisal?

1) 4004 Incorporated: This company considers appraisal just a regular activity to rate an employee and to control the behavior through a carrot and stick approach. 2) HPCL: Appraisal in this company is based in the premise that it is an activity carried out periodically to rate an employee coupled with the fact that it is also a system where in employees need to make an introspection to find out their strengths and weakness. Performance appraisal also facilitates in making various personnel decisions like identifying the areas for training

3) Titan and 4) Godrej 7) Nicholas Piramal: They see performance appraisal as that of HPCL but it also includes regular activity to keep a check on the performance of the employees and to facilitate communication between the supervisor and subordinates. 4) UTI Mutual Funds: For them appraisal is an periodic activity to identify the development need of the employees and to facilitate communication between the supervisors and subordinates. 6) Reliance BPO : They consider appraisal as a regular activity to check on the

performance of the employees and to facilitate communication between the supervisors and subordinates. Techniques in performance appraisal Encourage Discussion Research studies show that employees are likely to feel more satisfied with their appraisal result if they have the chance to talk freely and discuss their performance. It is also more likely that such employees will be better able to meet future performance goals. Employees are also more likely to feel that the appraisal process is fair if they are given a chance to talk about their performance. This is especially so when they are permitted to challenge and appeal against their evaluation.

Constructive Intention It is very important that employees recognize that negative appraisal feedback is provided with a constructive intention, i.e., to help them overcome present difficulties and to improve their future performance. Employees will be less anxious about criticism, and more likely to find it useful, when the believe that the appraiser's intentions are helpful and constructive. In contrast, other studies have reported that "destructive criticism" - which is vague, illinformed, unfair or harshly presented - will lead to problems such as anger, resentment, tension and workplace conflict, as well as increased resistance to improvement, denial of problems, and poorer performance.

Set Performance Goals It has been shown in numerous studies that goal-setting is an important element in employee motivation. Goals can stimulate employee effort, focus attention, increase persistence, and encourage employees to find new and better ways to work. The useful of goals as a stimulus to human motivation is one of the best supported theories in management. It is also quite clear that goals which are "...specific, difficult and accepted by employees will lead to higher levels of performance than easy, vague goals (such as do your best) or no goals at all." Appraiser Credibility It is important that the appraiser (usually the employee's supervisor) be well-informed and credible. Appraisers should feel comfortable with the techniques of appraisal, and should be knowledgeable about the employee's job and performance. When these conditions exist, employees are more likely to view the appraisal process as accurate and fair. They also express more acceptances of the appraiser's feedback and a greater willingness to change.

Methods of Performance Appraisal In order to achieve the objectives, a variety of performance appraisal methods have been developed. The choice of method depends on organizational ethos, its objectives, size, product and technology. There are two type of performance appraisal method 1. Traditional method 2. Modern method

TRADITIONAL METHODS : Essay Method

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

The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas.

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

Advantages The essay method is far less structured and confining than the rating scale method. It permits the appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply with methods where the appraisal criteria are rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they feel appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an appraisal system the limits expression or assumes that employee traits can be neatly dissected and scaled. Disadvantages Essay methods are time-consuming and difficult to administer. Appraisers often find the essay technique more demanding than methods such as rating scales.

The techniques greatest advantage - freedom of expression - is also its greatest handicap. The varying writing skills of appraisers can upset and distort the whole process. The process is subjective and, in consequence, it is difficult to compare and contrast the results of individuals or to draw any broad conclusions about organizational needs. Straight ranking method It is the oldest and the simplest method of performance appraisal, by which the man and his performance are considered as an entity by the rater. That is the ranking of a man in a work group is done against that of another. The relative position of each man is tested in terms of his numerical rank. It may also be done by ranking a person on his job performance against that of another member of a competitive group by placing him as number one or two or three in total group i.e. persons are tested in order of merit and placed in a simple grouping. This is the simplest method of separating the most efficient from the least efficient: and relatively easy to develop and use. But there are also some limitations to it:

In practice it is very difficult to compare a single individual with human beings having varying behavior. The method only tells us how a man stands in relation to the others in the group but odes not indicate how much better or worse he is than another.

Paired Comparison A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. This is an improvement over the straight ranking method. By this technique, each employee is compared with all other persons in pairs one at a time. With this technique, judgment is easier and simpler than with the ordinary ranking method. The number of times each individual is compared with another is tallied on a piece of paper. These numbers yield the rank order of the entire group. For example, if there are five persons to be compared, then As performance is compared to Bs and decision is arrived at as to whose performance is better. Then A is compared to C, D, E in that order. Next B is compared with all the others individually. Since he has already been compared with A, he is compared only with C, D, and E. A similar comparison is made in respect of other personnel. Thus, by this method, we arrive at ten decisions, and only two are involved in each decision. The number of decisions is determined by the formula N (N-2), where N represents the number of persons to be compared.

Critical Incidents Method In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behavior as and when they occur this method was developed following research conducted by the armed forces in the United States during World War II. The essence of this system is that it attempts to measure workers performance in terms of certain events or episodes that occur in the performances of the rates job. These events are known as Critical incidents. The basis of this method is the principle that there are certain significant acts in each employees behavior and performance which make all the difference between success

and failure on the job. The supervisor keeps a written record of the events (either good or bad) that can easily be recalled and used in the course of a periodical or formal appraisal. Feedback is provided about the incidents during performance review session. Various behaviors are recorded under such categories as the type of job, requirements for employees, judgment, learning ability, productivity, and precision in work, responsibility and initiative. Say for example, a sales manager may be trained to look for and recognize the following critical incidents in a sales agent's performance: He treated a customer in a markedly impolite fashion; He helped a buyer to prepare an unusually difficult purchase order He rejected a customer who was asking for a discount for bulk purchase He failed to return an important phone call; and These critical incidents are discovered after a thorough study of the personnel working on a job. The collected incidents are than ranked in order of frequency and importance.

Field Review In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors personal bias.

Checklist Method The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.

Graphic Rating Scale In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

Forced Distribution To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion. broad conclusions about organizational needs. MODERN METHOD The modern approach to performance development has made the performance appraisal process more formal and structured. Now, the performance appraisal is taken as a tool to identify better performing employees from others, employees training needs, career development paths, rewards and bonuses and their promotions to the next levels.

Appraisals have become a continuous and periodic activity in the organizations. The results of performance appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and development, reward outcomes. The modern approach to performance appraisals includes a feedback process that helps to strengthen the relationships between superiors and subordinates and improve communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is developmental in nature. This recognizes employees as individuals and focuses on their development. Management by Objectives (MBO)

The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker.MBO is a process in which managers and their employees jointly set objectives for the employee, periodically evaluate the performance, and reward according to the results.MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met.Usually the objectives are established

jointly by the supervisor and subordinate. An example of an objective for a sales manager might be: Increase the gross monthly sales volume to $250,000 by 30 June.Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress.

Assessment Center Method: This technique was first developed in USA and UK in 1943. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviours across a series of select exercises or work samples. Assesses are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. Advantages Well-conducted assessment centre can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in Assessment Centres. The tests also make sure that the wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and promotion. Disadvantages Concentrates on future performance potential. No assessment of past performance. Costs of employees travelling and lodging, psychologists. Ratings strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in simulated situations. 360o Appraisal: It is a technique in which performance data/feedback/rating is collected from all sections of people employee interacts in the course of his job like immediate supervisors, team members, customers, peers, subordinates and self with different weightage to each group of raters. This technique has been found to be extremely useful and effective. It is especially useful to measure inter-personal skills, customer satisfaction and team building skills. One of the biggest advantages of this system is that assesssees cannot afford to neglect any constituency and has to show all-round performance. However, on the negative side, receiving feedback from multiple sources can be intimidating, threatening, expensive and time consuming.

Psychological Appraisals: These appraisals are more directed to assess employees potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depends upon the skills of psychologists who perform the evaluation.

Bibliography
y y y y y y y y

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