performance-appraisel-semester-ihrm-chapter-v.ppt

performance-appraisel-semester-ihrm-chapter-v.ppt

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C H A P T E RC H A P T E R55

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Introduction Introduction
It is the process of assessing the performance
and progress of an employee of a job and his
potential for future development
Definition
According to Flippo “performance appraisal is the
systematic, periodic and an impartial rating of an
employee’s excellence in matters pertaining to his
present job and his potential for a better job”
© N. B. Scott

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Concepts of Performance Management – Concepts of Performance Management –
PA is a process of obtaining,
analyzing and recording
information about the relative worth
of an employee. It has following
characteristics -
It is a systematic examination of an
employee’s strengths and
weakness in terms of the job
PA is a scientific and objective
process
It is continuous process
The main purpose of it is to secure
information necessary for making
objective and correct decisions on
employees
© N. B. Scott

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Objectives:-Objectives:-
1.To provide feedback to employees so that they come to know
where they stand and can improve their job performance
2.To provide a valid database for personnel decisions
concerning placements, pay, promotion, transfer etc.
[[[
3.To diagnose the strengths and weaknesses of individuals so
as to identify further training needs.
[
4.To provide coaching, counseling, career planning and
motivation to subordinates
5.To develop positive superior-subordinate relations and there
by reduce grievances
6.To facilitate research in personnel management
7.To test the effectiveness of recruitment, selection, placement
and induction programme

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Uses of performance Appraisal:-Uses of performance Appraisal:-
PA provides valuable information for personnel
decisions such as increase in pay, promotion,
training, termination etc.
It helps to judge the effectiveness of recruitment,
selection, placement and orientation system of
organization
It helps to improve performance through appropriate
feedback
It facilitates human resource planning, career
planning
It promotes competitive sprit to improve performance
Systematic appraisal of performance helps to
develop confidence among employees

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Need for performance appraisal:-
To provide information about the performance
ranks on which decision regarding salary,
confirmation, promotion, transfer and demotion
are taken
To provide feed back information about the level
of achievement and behavior of subordinate
To provide information which helps to counsel the
subordinate?
To provide information to diagnose deficiency in
employee regarding skill, knowledge, need of T&D
and prescribe the means for employees growth
To prevent grievance and in disciplinary activities

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Essentials of an effective performance Essentials of an effective performance
appraisal system:-appraisal system:-
Mutual trust
Clear objectives
Standardization – criteria, form, procedure,
techniques
Training to evaluator
Focus on job related behavior and performance
Documentation
Feedback and participation
Diagnose the individual difference
Post appraisal interview
Review and appeal

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Process of performance appraisal:Process of performance appraisal:
1.Establishing performance standards / goals
2.Communicating the standards
3.Measuring performance
4.Comparing the actual with the standards
5.Discussing the appraisal
6.Taking corrective action

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Different methods of Performance Different methods of Performance
Appraisal –Appraisal –
There are several methods and techniques used for evaluating / assessing
employees performance. These are classified as
A] Traditional methods
1.Confidential Report –
2.Free from or essay method –
3.Straight ranking -
4.Paired comparisons –
5.Forced Distribution
6.Graphic rating scale
7.Checklist method
8.Critical incidents
9.Group appraisal
10.Field review
B] Modern methods
1.Assessment centre
2.Human Resource
Accounting
3.Behaviorally Anchored
Rating Scale
4.Appraisal through MBO
5.360 Degree appraisal

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A] Traditional methodsA] Traditional methods : : 1. Confidential Report1. Confidential Report
Prepared by employee’s immediate boss,
covers strength and weakness, achievement
and failure, personality and behavior of the
employee
1.It is descriptive appraisal used for promotions
and transfer of employees
2.It involves subjectivity as is based on
impression rather than on data
3.It s credibility is very low therefore no feedback
is provided to the employee being appraisal.

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2. Free from or essay method – 2. Free from or essay method –
Under this method, the evaluator writes a short essay on
the employee’s performance on the basis of over all
impression.
The description is expected to be as factual and concrete
as possible.
This can provide a good deal of information about
employee and evaluator can explain with the help of
examples.
This method suffers from several drawbacks –
1.The appraisal may be loaded with flowery language
2.The quality of appraisal depends on the writing ability
of evaluator
3.It is very time consuming
4.Difficult to compare two essay appraisal

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3. Straight ranking - 3. Straight ranking -
Here evaluator assigns relative rank to the employees in
the same work unit doing the same job.
Employees are ranked from the best to the poorest on the
basis of performance.
The ‘whole person’ is compared with the other ‘whole
person’ without analyzing performance.
Employee - A B C D E
Rank - 2 1 5 4 3
It is one of the oldest and simple methods, it has several
weaknesses:
It involves bias and snap Judgement
Difficult to rank as having varying behavior pattern
it indicate only how a person stands in relation to
other in the group but not how much better or worse

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4. Paired comparisons – 4. Paired comparisons –
Here each employee is compared with all the others in
pairs one at a time.
The number of times an employee is judged better than
the others determines his rank.
Comparison is made on the basis of overall performance.
The number of comparisons to be made can be decided
on the basis of the formula - N ( N -1)
2
Where N – is number of person to be compared
This method is easier and simpler than ranking method but
it is subjective because appraisal is not based on specific
job related performance.
Secondly, it becomes very cumbersome when the number
of employees to be rated is large.

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5. Forced Distribution - 5. Forced Distribution -
In this method, the rater is required to distribute his rating
in the form of a normal frequency distribution as in fig.
The purpose is to eliminate the rater’s bias or central
tendency.
Here also ranking technique is used.
This method is highly simple to understand and easy to
apply.
Secondly it helps to reduce bias involved in straight
ranking and paired compared.
But in this method employees are placed in a certain
category and not ranked within a category.
The method is based on same distribution of good and
poor performance.
The rater does not explain why an employee is placed in a
particular category. Specific job related criteria is not used
in rating

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6. Graphic rating scale6. Graphic rating scale
It is numerical scale indicate different degree of a
particular trait.
The rater distributes a printed forms for each employee to
be rated.
The form contains several characteristics relating to the
personality and performance of employees - Intelligence,
quality of work, leadership skills, Judgement etc.
The rater records his Judgement about employees traits
on the scale.
The numerical points given to an employee are added up
to find out his overall performance.
Rating scale is of two types – continuous and
discontinuous.
In continuous scale the degree of traits are measured in
number ranging from 0 to 5 where as in a discontinuous
scale appropriate boxes are used.

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Continuous scale
0 1 2 3 4 5
Discontinuous scale
Poor Average good Excellent
It is easy to understand and use
It is economical to design and administer and rating scale
Drawbacks:
It is arbitrary and subjective – specific job related
performance criteria are not considered
It is assumed that each trait is equally important for all job
Descriptive word are used in rating scale
It imposes heavy burden on rater

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7. Checklist method7. Checklist method
It is list of statement that describes the characteristics and
performance of employees on the job.
The rater checks to indicate if the behavior of an employee is
positive or negative to each statement.
The performance of employee is rated on the basis of
number of positive checks.
There are simple, forced choice and weighted checklists
This method is descriptive technique and provides
concrete examples of evaluation
Drawbacks:
Time consuming and expensive
Difficult to assemble, analyze and weigh several statement
properly

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8. Critical incidents8. Critical incidents
In this method the supervisor keeps a written record of
critical events (good/ bad) and how different employee
depends upon on his positive / negative behaviors during
these events.
These critical incidents are identified after thorough study
of the job and discussion with the staff e.g. a fire, a sudden
breakdown of machinery, a serious accidents etc. may be
identified as critical incidents for the working of a factory
This method helps to avoid vague impression and general
remark as the rating is based on actual records of behavior
performance. The feedback from actual events can be
discussed with the employee to allow improvements.

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worker Reactions Score
A Informed the supervisor
immediately
5
B Became anxious of loss of out
put
4
C Tried to repair the machine 3
D Complained of poor
maintenance
2
E Was happy to get forced rest 1

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Drawbacks:
It is very time consuming and cumbersome for the
supervisor to maintain a written records of each
employee
Quoting incident after considerable time lapse may
evoke negative emotion from employee.
Subjective Judgement of supervisor is involved in
deciding critical problem
The superior may commit errors in recording behavior of
different employee during short duration

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9. Group appraisal - 9. Group appraisal -
Under this method a group of evaluators assess
employees.
This group consists of the immediate supervisor of the
employee, other supervisors having close contact with the
employees work, head of the department and personnel
expert.
The group determines the standard of performance for the
job, measures actual performance of an employee,
analyzes the cause of poor performance and offers
suggestion for improvement in future.
The advantage of this method is that it is simple yet more
thorough.
Due to multiple evaluators personal bias is minimise but it
is very time consuming process.

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10. Field review -10. Field review -
In this method, a training officer from the personnel
department interviews line supervisor to evaluate their
subordinates.
The supervisors prepares questionnaire in advance to be
asked.
By answering these questions a supervisor give his
opinions about the level of performance of his
subordinates, the subordinates work process, his strengths
and weaknesses, promotional potential etc.
These are then placed in the employees personal service
file.
The supervisor’s personal bias is reduced due to active
involvement of the personnel officer.
The ratings are usually classified in to three categories-
outstanding, satisfactory, and unsatisfactory.
This is time consuming method and success depends
upon the competence and sincerity of interviewer.

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B] Modern methodsB] Modern methods
The traditional methods all focus more on the traits of an employee
than his performance.
In absence of pre-decided performance criteria or standards, the
personal bias or subjectivity or the evaluator affects on ratings.
In order to overcome these weaknesses some new techniques of
performance appraisal have been developed-
1. Assessment centre-
An assessment centre is group of employee drawn from different work
unites.
These employees work together on an assignment similar to the one
they would be handling when promoted.
Evaluators observe and rank the performance of all the participants.
Experienced manager with proven ability serve as evaluator.

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This group of evaluators evaluates all employees both individually
and collectively by using simulations technique like role playing,
business games and basket exercises.
The evaluators observe and evaluate employee as they perform jobs.
Assessments are done generally to determine employee potential for
promotion.
The evaluators prepare a summery report and feedback is
administered on a face to face basis to the employees.
This method measures generally – inter personal skill, communication
ability, ability to plan and organize etc.
This method helps – to determine training and development need of
employee and provides data for HRP. It helps to select students for
entry level position. All of them get equal opportunity to prove their
merit. They are evaluated by a team of trained assessors
This method is – a time consuming and expensive. Candidates who
receive a negative report may feel demoralized.

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2. Human Resource Accounting2. Human Resource Accounting
H R is a valuable asset of any organization.
This asset can be valued in terms of money.
When competent and well trained employee
leaves an organization, the human asset of the
organization get decreased.
Under this method performance is judged in terms
of costs and contributions of employees.
Costs of human resources consists of expenditure
on HRP, recruitment, selection, induction, training,
compensation etc. contribution of HR is the money
value of labour productivity or value added by HR.
Difference between cost and contribution will be
the performance of employee

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3. Behaviorally Anchored Rating Scale3. Behaviorally Anchored Rating Scale
This method combines graphic rating scales with critical incidents
method.
BARS are descriptions of various degree of behavior relating to specific
performance dimensions.
Critical areas of job performance are determined in advance.
The rater records the observable job behavior of an employee and
compares these observations with BARS.
In this way employee’s actual performance is judged against the desired
behavior.
The steps involved in constructing BARS are-
01.dentifying critical incidents:
A person to be appraised, describes with specific examples of both
effective and ineffective job behavior
02. Select performance dimensions:
Cluster the behavior incident into a smaller set of performance
dimensions
03. Retranslate the incidents
Another group of experts assign each incident to the dimension that it
best describes if there is 75% agreement with the first group

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04. Assign scale to incidents
The second group rates each incident on a seven or nine point scale. Rating is
done on the basis of how well the behavior described in the incident represents
performance on the appropriate dimensions. Means and standard deviations
are then calculated for the scale value assigned to each incident. Incidents that
have standard deviations of 1.5 or less (on seven point scale) are included in
the final anchored scale
05.Develop final instrument
A subset of the incidents that meets both the retranslation and standard
deviation criteria is used as a behavioral anchor for the final performance
dimensions. A final BARS instruments typically comprises a series of vertical
scale that are endorsed by the included incidents. Each incident is positioned on the
scale according to its mean value
Advantages:
The rating likely to be accurate because these are done by experts
The method is more reliable and valid as it is job specific and identifies
observable and measurable behavior. The rater’s bias is reduced.
Ratings are likely to be more acceptable due to employee participation
The use of critical incidents is useful in providing feedback to the employee being rated.
Weakness:
It is very time consuming and expensive to develop BARS for every job
Behaviors used are more activity oriented than result oriented. Several appraisal
forms are required to accommodate different types of job in an organization [HRM
– CB Gupta p. 5.20]

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05. Appraisal through MBO05. Appraisal through MBO
This concept of management by objective MBO was developed by
Peter Drucker in 1954.
He called it ‘management by Objective and self control’.
It is also known as “work planning and review” or “goal setting
approach” to appraisal.
It has been defined as “ a process whereby the superior
and subordinate managers of an organization jointly
identify its common goals, define each individual’s major
areas of responsibility in terms of results expected of
him and use these measure as guides for operating the
unit and assessing the contributions of each of its
members”
MBO Process:
1.The main steps involved in MBO are as-
2.Set organizational goals
3.Define performance targets
4.Performance reviews
5.feedbacks

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360 Degree appraisal360 Degree appraisal
Appraisal by
colleague,
superior,
subordinate, and
friends

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Problems in performance appraisal or limitationsProblems in performance appraisal or limitations
A] Errors in rating A] Errors in rating
Halo effect -
It is the tendency to rate an employee consistently high or low on the basis of overall impression. One
trait of the employee influences the rater’s appraisal on all other traits.
stereotyping –
This implies forming a mental picture of a person on the basis of his age, sex, cast or religion
central tendency –
it means assigning average rating to all the employees in order to avoid commitment or involvement. The
ratings are clustered around the mid-point.
constant error-
Some evaluators tend to be lenient while other are strict in assessing performance
personal bias –
Occurs because of the rater’s likes and dislikes about an employee; religious beliefs and habits, regional,
conflicts etc.

b] Lack of reliability

c] Incompetence of rater

d] Negative approach - to punish

e] Multiple objectives

f] Resistance from T.U.

g] Lack of knowledge about how to rate, inexperienced rater

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Case Study

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