Performance Appraisal

Compiled by
Dr. M.Venkatesan

Performance Appraisal
Systematic assessment and descriptions of an
employees accomplishments in the assigned
tasks and assessment of job related strengths
and weaknesses.
Why appraisal?
Organization needs to know how an employee
has performed just as an employee needs to
know how his performance has been viewed by
the organization.

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

Appraisal Methods
APPRIASAL METHODS

Absolute Method

Relative Standards

Objectives

Absolute Methods

Essay type
Critical Incident Appraisal
Checklist
Graphic Rating Scale
Forced Choice
Behaviourally Anchored Rating Scales
(BARS)

Relative Standards

Group Order Ranking

Top one fifth

Second one fifth

Individual Ranking
Paired Comparison
by taking total of [n(n-1)]/2

Objectives

MBO

Expression of expectations before beginning of

appraisal year
Periodic reviews and feedback
Year end data collection, final appraisal &
feedback
Self Appraisal
Appraisal discussion and final appraisals

Objectives

360 Appraisal

Inputs from appraisers, peers, subordinates and

customers outside organizations.

Problems in Performance
Appraisal
1.

a.

b.
c.

d.

Relating to SystemHow to evolve measure to assess managerial

tasks.
Generate data on performance
Understanding of system at the top management
level.
Reliable technique for measuring comparative
merit and performance.

Problems in Performance
Appraisal
2. Relating to Appraisera.
b.
c.
d.
e.
f.

Playing God creates anxiety.

Evaluation of personality traits.
Bias and halo effect
Recency of incidents
Central Tendency
Too harsh too easy

Problems in Performance
Appraisal
3. Relating to AppraiseeHis perspective on system depends on how he
earns recognition vis--vis others. His criteria are
rarely explicit.

Some Persistent issues

1.

Linkage with

a.
b.

Development plans
Reward Decisions

2.

What gets evaluated: Performance or Person

3.

Ethical issues in evaluation Power Carries

obligation

4.

Subjectivity Objectivity

Performance Appraisal :
Performance Appraisal (PA) refers to
all those procedures that are used to
evaluate the personality,
performance, potential, of its group
members

Relationship between jab

analysis and performance
Job
analysis
performance
performance
appraisal:
standards

Describes work
& Personnel
Requirement
Of a particular
job

appraisal

Translate job
Into levels of
To acceptable
Or unacceptable
performance

Describes the
Job relevant
strengths and
weakness of
Each individual

Question arises?

Why do we measure performance?

Effective performance appraisal
systems
How do we measure performance?

Characteristics

It is a step by step process

It examine the employee strengths and
weaknesses
Scientific and objective study
Ongoing and continuous process
Secure information for making correct
decisions on employees

Needs and Objectives:

Provide feedback about employees

Provide database
Diagnose the S & W of individuals
Provide coaching, counseling, career planning
to subordinates
Develop positive relation and reduce grievance
Facilitates research in personnel management

Appraisal Benefits
(cont.)

Appraisals offer
employees:
Direction
Feedback
Input
Motivation

Appraisal Benefits

Appraisals offer the

company:
Documentation
Employee Development
Feedback
Legal protection
Motivation system

Why Appraisals Are

Important

Recognize

accomplishments
Guide progress
Improve performance

Why Important
(cont.)
Review performance
Set goals
Identify problems
Discuss career advancement

Steps in performance
Establishing job standards
appraisal
Designing an appraisal programme
Appraise performance
Performance interview
Use appraisal data
For appropriate purpose

Process of
PA
Taking corrective
standards

Setting
performance
standards

Discussing
results

Communicating
standards

Measuring
standards
Comparing
standards

Issues in appraisal
system
Formal and informal
What methods?

Whose performance?

When to evaluate? Appraisal Design?

Who are the raters?

What problems?

What to evaluate?
How to solve?

What to evaluate? (Philip

Model)

H
Potential
L
L

Problem
children

stars

Planned
separation

Social
citizen

Performance

How PA contribute to firms

competitive advantages
Improving
performance
Making correct
decision

Values and behavior

Competitive
advantage
Minimizing dissatisfaction
And turnover

Ensuring legal
competence

Problems in performance
appraisal
1.
Errors In rating

Halo effects
Stereotyping
Central tendency
Constant error
Personal bias
Spill over effect

Problems in performance
appraisal (Contd)
2.
3.
4.
5.
6.

Incompetence
Negative approach
Multiple objectives
Resistance
Lack of knowledge

Essentials of an effective
Mutual trust
appraisal
system

Clear objectives
Standardizations
Training
Job relatedness
Documentation
Feedback and participation
Individual differences
Post appraisal review
Review and appeal

Appraisals and
Discrimination
Title VII
ADA
Other fair employment
Laws

Discrimination (cont.)
Failure to communicate standards
Failure to give timely feedback
Failure to allow employees to
correct performance
Inconsistency in measuring
performance
Failure to document performance
objectively

Appraisal Forms
Define performance expectations
Describe measurement tools
Use a rating system
Cover specific examples
Set measurable goals

Measure Performance
Measurement systems need to be:
Specific
Fair
Consistent
Clear
Useful

Measure Performance
(cont.)
Systems can be:
Numerical
Textual
Management by Objective (MBO)
Behavior oriented

Document Performance
Make sure documentation is objective
Document performance of all
employees
Provide complete and accurate
information
Document performance on a regular
basis

Set Goals.

Based on job requirements

Realistic
Measurable
Observable
Challenging
Prioritized

Employee
Input

Employees take an active role:

Setting goals
Designing action plans
Identifying strengths and
weaknesses
Employees participate in the PA
meeting

Preparatio
n
Employees:
Review performance
Think about new goals

Preparation
(cont.)
Supervisors:

Review performance
Complete written appraisal
Think about new goals
Schedule time and place

Start the
Meeting

Lay out agenda

Talk about money
Encourage input
Give good news
first

During the Meeting

Review performance:
Based on previous goals
Noting strengths and
accomplishments
Identifying areas for improvement

Presentation
Focus on the professional
Tips
Give objective examples
Invite response
Listen actively
Create we mentality

During the Meeting

Set
(cont.)
goals: Based on company goals

Building on areas that need

improvement

End the Meeting

Encourage good performance
Lay out action plan
Communicate outcome of goals not
met
Confirm understanding

Continuous Feedback
Formal appraisals
Informal appraisals
Open
communication

Recognize Good
Verbal
Performance
Public
Tangible
Monetary

Identify Poor
Performance

Act early
Take the right approach
Deal with employee reaction
Handle continued poor
performance

Discipline Poor
Performance

Recognize problems
Talk with employee
Follow company policy

Handle Hard Cases

Reviewing highly emotional
employees
Rating former peers

Key Points to Remember

You must conduct objective appraisals on a

scheduled basis.

Appraisals tell employees how theyre doing and

how they can improve.

Appraisals help create a system of motivation

and rewards based on performance.

Performance Appraisal
Methods
Individual Evaluation Methods
Confidential report
Essay evaluation
Critical incidents
Checklists
Graphic rating scale
Behaviorally anchored rating scale
MBO

Critical Incident method

Ex: A fire, sudden breakdown, accident
Workers

reaction

A
B
C
D
E

informed the supervisor immediately

Become anxious on loss of output
tried to repair the machine
Complained for poor maintenance
was happy to forced test

scale
5
4
3
2
1

Checklist method
Simple checklist method
Weighted checklist method
Forced choice method

Simple checklist method:

Is employee regular
Is employee respected by subordinate
Is employee helpful
Does he follow instruction
Does he keep the equipment in order

Y/N
Y/N
Y/N
Y/N
Y/N

Weighted checklist
method
weights

Regularity
Loyalty
Willing to help
Quality of work
Relationship

0.5
1.5
1.5
1.5
2.0

performance rating
(scale 1 to 5 )

Forced choice
method

Criteria

1.Regularity on the job

Always regular
Inform in advance for delay
Never regular
Remain absent
Neither regular nor irregular

Rating
Most

Least

Graphic Rating Scale

Continuous Rating Scale

Discontinuous Rating Scale

Employee name_________
Deptt_______
Raters name ___________
Date________
-----------------------------------------------------------------------Exc. Good Acceptable Fair Poor
5
4
3
2
1 _
Dependability
Initiative
Overall output
Attendance
Attitude
Cooperation
Total score
Continuous Rating Scale

Indifferent

Enthusiastic

Attitude

No
Interest

Interested

Discontinuous Rating Scale

Very
enthusiastic

BARS( behaviorally Anchored

rating scale)
Step 1.

Identify critical incidents

Step 2.

Select performance dimension

Step 3.

Retranslate the incidents

Step 4.

Assign scales to incidents

Step 5.

Develop final instrument

MBO Process

Set organizational goals

Defining performance target
Performance review
feedback

Performance Appraisal
Group Appraisal
Methods
Ranking
Paired comparison
Forced distribution
Performance tests Field review
technique

Ranking method
Employee

Rank

Paired comparison
method
A
B
C
D
E
A

Final Rank
+
3

No of Positive evaluation
Total no. of evaluation * 100 = employee superior evaluation

Forced Distribution method

No.
of
employees
10% 20%
poor

40%

20%

Below average good

average
Force distribution curve

10%
Excellent

Field review method

Performance
Dimension

subordinate

peers

Leadership

Communication

Interpersonal skills

superior

customer

Decision making

Technical skills

Motivation

Performance criteria for

executives

For top managers

Return on capital employed

Contribution to community development
Degree of upward communication from middlelevel executives
Degree of growth and expansion of enterprise.

For middle level managers

Departmental performance
Coordination among employees
Degree of upward communication from
supervisors
Degree of clarity about corporate goals and
policies

For supervisors

Quality and quantity of output in a given period

Labor cost per unit of output in a given period
Material cost per unit in a given period
Rate of absenteeism and turnover of employees
No of accidents in a given period

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.

Establishing Performance Standards

Communicating Performance Standards to
employees
Measuring Actual Performance
Comparing Actual Performance with
Standards
Discussing appraisal with the employees
Taking Corrective Action

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 employees
performance
Make specific and constructive judgments
Criticize work habits & behavior, not the person
Dont let marginal employees slide
Keep complete written records for all
performance appraisals.

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
operators, clerks,
essential
typist, foreman, etc.

Not needed Some

desirable
Some
essential

Not
Needed

First level
supervisor, junior

Very essential

A few are
desirable

Some
desirable
Some
essential

Not
Needed

Junior & middle

level manager

Some
important
many not
essential

Important

Some
essential

A few
are
useful

Junior &
middle
level
manager

Some
important
many not
essential

Important

Some
essential

A few are
useful

Senior
managers,
Head of
Dept./Sec

A few are
desirable

Very
essential

Many are
needed
Some are
important

Desirable

Unit Heads,
GM etc.

A few are
desirable

Very
essential

Many are
essential &
important

Essential

Chief
Executives

Not needed

Important

Very
essential

Most
Essential

Traditional

Modern

Graphic Rating Scales

Confidential Report
Straight Ranking Method
Paired Comparison Method
Forced Distribution Method
Grading System
Checklist Method
Critical Incident Method

HR Scorecard
HR Accounting
Competency Mapping
Assessment & Development
Centre
360 degree Appraisal
540 degree Appraisal
Management by Objective (MOB)
Behaviorally Anchored Rating
Scale (BARS)

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
Strategy

Reward
Strategy

Pay
Structures

Pay Levels
& relativities

Total
remuneration

Improved
performance

Job Evaluation
Performance Pay
Perfomance
Mangement

Employee
development