Performance Appraisals Notes

Performance Appraisals

Meaning of Performance Appraisal

  • Performance Appraisal: A process of assessing an employee's performance and progress on a job, as well as their potential for future development.
  • According to Dale: Performance Appraisal is the systematic evaluation of individuals regarding their job performance and development potential.

Procedure of Conducting Performance Appraisal

The performance appraisal process involves:

  • Setting performance standards
  • Communicating standards
  • Measuring performance
  • Comparing performance
  • Discussing results
  • Taking corrective actions
1. Establishing Performance Standards
  • The process begins with setting standards to appraise employee performance.
  • These standards provide a basis for evaluating performance as good, average, or bad.
2. Communicating the Standards
  • The set standards should be communicated and explained to the employees.
  • This communication ensures that employees know what is expected of them.
3. Measurement of Actual Performance
  • Involves selecting the appropriate measurement technique.
  • Identifying internal and external factors that influence performance.
  • Collecting information on the results achieved.
4. Comparing Actual with Standards
  • Actual performance is compared to the predetermined standards.
  • This comparison reveals deviations, which can be positive or negative.
5. Discussing the Appraisal
  • The appraisal results are communicated and discussed with the employees.
  • The reasons behind any deviations are analyzed and discussed.
6. Taking Corrective Actions
  • Corrective actions include:
    • Training
    • Coaching
    • Counseling
    • Advice
    • Refresher courses
    • Delegation of authority
  • These actions aim to improve employee performance in the future.

Methods of Performance Appraisal

Traditional Methods:
  1. Confidential Report
  2. Essay Method
  3. Straight Ranking Method
  4. Paired Comparison Method
  5. Forced Distribution Method
  6. Graphic Rating Scales
  7. Checklist Method
  8. Critical Incident Method
  9. Group Appraisal Method
  10. Field Review Method
1. Confidential Report
  • Prepared by the employee's immediate supervisor.
  • Covers strengths, weaknesses, main achievements, failures, personality, and behavior.
2. Essay Method
  • The evaluator writes a short essay on the employee's performance based on overall impression.
3. Straight Ranking Method
  • Evaluators assign relative ranks to employees in the same work area.
  • Employees are ranked from best to poorest based on overall performance.
4. Paired Comparison Method
  • Each employee is compared with all other employees in pairs.
  • The number of times an employee is judged better determines their rank.
5. Forced-Choice Method
  • The rater is required to distribute ratings.
  • Aims to eliminate rater bias of central tendency.
6. Graphic Rating Scale
  • Uses a numerical scale to indicate different degrees of a trait.
  • Raters are given a printed form with characteristics related to employee personality and performance.
7. Checklist Method
  • A list of statements describing employee characteristics and performance.
  • Rater checks whether the behavior is positive or negative.
8. Critical Incident Method
  • Supervisor keeps a written record of critical events and how employees behaved during these events.
9. Group Appraisal Method
  • A group of evaluators assesses employees.
  • The group includes immediate supervisors, determines job performance standards, measures actual performance, analyzes causes of poor performance, and offers suggestions for improvement.
10. Field Review Method
  • A training officer from HR interviews supervisors to evaluate subordinates.
  • Supervisors provide opinions on performance level, work progress, strengths, weaknesses, and promotional potential.
Modern Methods:
  1. Assessment Centre
  2. Human Resource Accounting Method
  3. Behaviorally Anchored Rating Scales (BARS)
  4. MBO
  5. 360 Degree Appraisal
1. Assessment Centre
  • A technique for evaluation, selection, development, and training of personnel.
  • Objectives:
    • Measure potential for supervision and management positions.
    • Determine training and development needs.
    • Provide accurate human resource planning information.
    • Assist in implementing goals.
  • Process:
    1. Establishing program objectives.
    2. Conducting detailed job analysis.
    3. Defining dimensions to be assessed.
    4. Designing physical facilities.
    5. Selecting exercises.
    6. Training assessors.
    7. Conducting programs.
    8. Evaluating participants.
    9. Feedback and follow-up action.
  • Advantages:
    • Better forecast of future performance.
    • High reliability and content validity.
    • Ensures suitable hiring and promotion decisions.
    • Clearly defines the criteria for selection and promotion.
  • Limitations:
    • Cost
    • Subjectivity
    • Negative reactions
    • Other problems
2. Human Resource Accounting Method
  • Performance is judged in terms of costs and contributions.
  • Costs include expenditure on:
    • Human resource planning
    • Recruitment
    • Selection
    • Induction
    • Training
    • Compensation
  • Contribution is the monetary value of labor productivity.
  • The difference between cost and contribution reflects employee performance.
3. Behaviorally Anchored Rating Scale (BARS)
  • Rating scales whose scale points are determined by statements of effective and ineffective behaviors.
  • Scales represent a range of descriptive behavior statements.
4. Management by Objectives (MBO)
  • Developed by Peter Drucker in 1954.
  • A process where superior and subordinate managers:
    • Jointly identify common goals.
    • Define individual responsibilities in terms of expected results.
    • Use these measures as guides for operating the unit and assessing contributions.
  • Steps in Performance Appraisal:
    1. Setting organizational goals.
    2. Defining performance targets.
    3. Communicating feedback.
5. 360 Degree Appraisal
  • Involves evaluation by everyone above, alongside, and below the individual.
  • Structured questionnaires collect responses from bosses, peers, and subordinates.
  • Advantages:
    • Broader perspective of how individuals are perceived.
    • Provides a more rounded view of performance.
    • Enhanced awareness and relevance of competencies.
    • Awareness for senior management of development needs.
    • Feedback is perceived as more valid and objective.
  • Disadvantages:
    • Frank and honest opinions may not be received.
    • Stress on individuals giving feedback.
    • Lack of action following feedback.
    • Linking rewards to findings can be unfair.
  • Steps:
    1. Top management communicates goals and needs.
    2. Employees and managers are involved in developing criteria and process.
    3. Employees are trained in giving and receiving feedback.
    4. Employees are informed about the instruments and process.
    5. The system undergoes pilot testing.
    6. Management reinforces goals and is ready to change the process.
  • Integral Components:
    1. Self-appraisal
    2. Superior's appraisal
    3. Subordinate appraisal
    4. Peer appraisal
    5. Client's appraisal
Self-Appraisal
  • Allows employees to assess their strengths and development areas, along with an opportunity to evaluate their performance.
Superior's Appraisal
  • Superior appraises the employee on various job dimensions.
  • The immediate superior is best suited to appraise the subordinate's performance.
Subordinate Appraisal
  • Gathers firsthand assessment of how subordinates perceive their superior.
  • Focuses on styles of functioning, conflict resolution, delegation, and work allocation.
Peer Appraisal
  • Performance appraisal done by fellow employees.
  • Forms are compiled into a single profile for use in a performance interview conducted by the employee’s manager.
Team Appraisal
  • Based on TQM concepts.
  • Recognizes team accomplishment rather than individual performance.

Performance Appraisal Problems

  • Popularity Contest
  • Punitive Implications
  • Control Relinquishment
  • Stereotypes
  • Poor Training of Raters

Peer Appraisal Concerns

  • Advantages and Disadvantages

Rating Errors Issues

  • Carefully Developed Behavior Descriptions
  • Fair Evaluation Scales
  • Factor Relatedness to the Job

Management By Objective (MBO)

  • Philosophy of management that rates performance based on employee achievement of goals.
  • Goals are set by mutual agreement of employee and manager.
  • Integrates performance and goal setting.
  • Involves frequent intervals, record maintenance, and objective review jointly.
  • Requires mutual buy-in.
Advantages of MBO
  • Employees can measure performance.
  • Quantifiable Goals
  • Joint Effort
  • Employee Satisfaction in Participation
Disadvantages of MBO
  • Success not Validated by Research Studies
  • Easy to Set Unrealistic Goals
  • Hard to Get Full Commitment to Process
  • Difficult to Define Some Goals

Performance Appraisal Interview Needs

  • Trained Interview Techniques
  • Honesty in Appraisal
  • Well Planned Structure
  • Carefully Conducted
  • Feedback Openness
  • Adequate Time (more than one session occasionally)