potential appraisal

Concept of potential appraisal system
Need of a potential appraisal system
Process of evaluating employee potential
Methods of evaluating employee potential

1. Potential Appraisal

2. Concept of potential appraisal system Need of a potential appraisal system Process of evaluating employee potential Methods of evaluating employee potential

3. Concept The potential appraisal refers to the appraisal i.e. identification of the hidden talents and skills of a person. The person might or might not be aware of them. Potential appraisal is a future – oriented appraisal whose main objective is to identify and evaluate the potential of the employees to assume higher positions and responsibilities in the organizational hierarchy. Many organisations consider and use potential appraisal as a part of the performance appraisal processes.

4. The purposes of a potential review are: to inform employees of their future prospects; to enable the organisation to draft a management succession programme ; to update training and recruitment activities; to advise employees about the work to be done to enhance .their career opportunities . Potential appraisal helps to identify what can happen in future so that it can be guided and directed towards the achievement of individual and organizational growth and goals. Therefore, potential should be included as a part of the Performance appraisal in organisations . 

5. Techniques of potential appraisal:  Self – appraisals Peer appraisals Superior appraisals MBO Psychological and psychometric tests Management games like role playing  Leadership exercises etc.

6. The following are some of the requirements and steps to be followed when introducing a potential appraisal system : Role Description:  A good potential appraisal system would be based on clarity of roles and functions associated with the different roles in an organisation . This requires extensive job descriptions to be made available for each job. These job descriptions should spell out the various functions involved in performing the job.  2. Qualities Required:  Besides job descriptions, it is necessary to have a detailed list of qualities required to perform each of these functions. These qualities may be broadly divided into four categories -  (1) technical knowledge and skills,  (2)managerial capabilities and qualities,  (3) behavioural capabilities, and  (4)conceptual capabilities.

7. 3. Indicators of Qualities:  A good potential appraisal system besides listing down the functions and qualities would also have various mechanisms for judging these qualities in a given individual. Some of the mechanisms for judging these qualities are -  (a) rating by others,  (b) psychological tests,  (c) simulation games and exercises,  (d) performance appraisal records. 4. Organising the System:  Once the functions, the qualities required to perform these functions, indicators of these qualities, and mechanisms for generating these indicators are clear, the organisation is in a sound position to establish and operate the potential appraisal system. Such establishment requires clarity in organisational policies and systematisation of its efforts .

8. Comparison Chart 5. Feedback:  If the organisation believes in the development of human resources it should attempt to generate a climate of openness. Such a climate is required for helping the employees to understand their strengths and weaknesses and to create opportunities for development. A good potential appraisal system should provide an opportunity for every employee to know the results of assessment. He should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organisation to appraise his potential, and the results of such an appraisal.

9. BASIS FOR COMPARISON PERFORMANCE APPRAISAL PERFORMANCE MANAGEMENT Meaning Performance Appraisal, means the analysis of an employee's performance and their caliber for future growth and development. Performance Management is the management of human resources in an organization. What is it? It is a system. It is a process. Nature Rigid Supple Type of tool Operational Tool Strategic Tool Owned by Human Resource Department Managers Conducted Annually Continuously Approach Individualistic Holistic Focused on Quantitative Aspects Qualitative Aspects Corrections Retrospective Prospective

10. Potential Appraisal at Philips India: Philips India has combined performance and potential appraisal together. It is basically based on the conceptual background as used by Philips N. V. for potential appraisal. The various criteria used by Philips N.V. are divided into four types: 1. Conceptual Effectiveness: Vision, business orientation, entrepreneurial orientation and sense of reality. 2. Operational Effectiveness: Result orientation, individual effectiveness, risk taking and con­trol. 3. Interpersonal Effectiveness: Network directedness, negotiating power, personal influence and verbal behaviour . 4. Achievement Motivation: Drive, personal ambition, innovativeness, and stability.

11. Each of the criterions is then measured on five-point scale. The final grading is based on the appraisal by management development review team that consists of members from functional areas with whom the appraisees have close interaction in the normal course of their job. A 2 × 2 matrix is used to demonstrate the combination of performance and potential appraisal as shown in the figure 

12. Let us give a brief description of four classifications of appraises : 1. Low Potential – Low Performance: These employees are low on both dimensions. These can be advised to improve performance otherwise the result will be planned separation. 2. High Potential – Low Performance: In order to utilize their high potential, these employees are shifted either to new locations or new departments. If still they do not improve their performance, they are reclassified as question mark for planned separation. 3. Low Potential – High Performance: They are performers termed as solid citizens. They lack potential for higher job. Therefore, they are encouraged to do their present jobs better. 4. High Potential – High Performance: They are termed as stars. More developmental efforts are directed towards them.