UNIT - III

PERFORMANCE APPRAISAL

Performance Appraisal is the systematic evaluation of the performance of employees and

to understand the abilities of a person for further growth and development. Performance
appraisal is generally done in systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:
1. To maintain records in order to determine compensation packages, wage structure,
salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and
development.
4. To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.

Performance Appraisal Process

The figure shown above is a standard performance appraisal process that takes place in an
organization, wherein each step is important and arranged in a systematic manner. The process
is conducted periodically, usually twice a year, i.e. semi-annually and annually called as mid-
term review and annual review respectively.

IMPORTANCE

Performance appraisal provides important and useful information for the assessment of
employee's skill, knowledge, ability and overall job performance. The following are the points
which indicate the importance of performance appraisal in an organization:

1. Performance appraisal helps supervisors to assess the work performance of their subordinates.
2. Performance appraisal helps to assess the training and development needs of employees.
3. Performance appraisal provides grounds for employees to correct their mistakes, and it also
provides proper guidance and criticism for employee's development.
4. Performance appraisal provides reward for better performance.
5. Performance appraisal helps to improve the communication system of the organization
6. Performance appraisal evaluates whether human resource programs being implemented in the
organization have been effective.
7. Performance appraisal helps to prepare pay structure for each employee working in the
organization.
8. Performance appraisal helps to review the potentiality of employees so that their future
capability is anticipated.

METHODS

Methods of Performance Appraisal

In the process of designing performance appraisal process, it is important to identify the best
method for assessment. There are a number of methods introduced to gauge the quantity and
quality of work performed by an individual. These methods are broadly classified into two
categories:
Traditional Methods:

 Ranking Method: It is the oldest and simplest formal systematic method of performance
appraisal in which employee is compared with all others for the purpose of placing order of
worth. The employees are ranked from the highest to the lowest or from the best to the worst.
In doing this the employee who is the highest on the characteristic being measured and also
the one who is L lowest, are indicated. Then, the next highest and the next lowest between
next highest and lowest until all the employees to be rated have been ranked. Thus, if there
are ten employees to be appraised, there will be ten ranks from 1 to 10.

1 2 3 4 5 6 7 8 9 10
Extremely Excellent
poor

 Paired Comparison: In this method, each employee is compared with other employees on
one- on one basis, usually based on one trait only. The rater is provided with a bunch of slips
each coining pair of names, the rater puts a tick mark against the employee whom he insiders
the better of the two. The number of times this employee is compared as better with others
determines his or her final ranking.
 Grading Method: In this method, certain categories of worth are established in advance and
carefully defined. There can be three categories established for employees: outstanding,
satisfactory and unsatisfactory. There can be more than three grades. Employee performance
is compared with grade definitions. The employee is, then, allocated to the grade that best
describes his or her performance.
 Forced Distribution: This method was evolved by Tiffen to eliminate the central tendency of
rating most of the employees at a higher end of the scale. The method assumes that
employees’ performance level confirms to a normal statistical distribution i.e., 10,20,40,20
and 10 per cent. This is useful for rating a large number of employees’ job performance and
promo ability. It tends to eliminate or reduce bias.
 Forced Choice: The forced-choice method is developed by J. P. Guilford. It contains a series
of groups of statements, and rater rates how effectively a statement describes each individual
being evaluated. Common method of forced-choice method contains two statements, both
positive and negative.
 Checklists: The basic purpose of utilizing check-list method is to ease the evaluation burden
upon the rater. In this method, a series of statements, i.e., questions with their answers in
‘yes’ or ‘no’ are prepared by the HR department. The check-list is, then, presented to the
rater to tick appropriate answers relevant to the appraise. Each question carries a weight-age
in relationship to their importance.
 Critical Incident: In this method, the rater focuses his or her attention on those key or critical
behaviours that make the difference between performing a job in a noteworthy manner
 (effectively or ineffectively). There are three steps involved in appraising employees using
this method.
 Graphic Rating Scale Method: The graphic rating scale is one of the most popular and
simplest techniques for appraising performance. It is also known as linear rating scale. In this
method, the printed appraisal form is used to appraise each employee. The form lists traits
(such as quality and reliability) and a range of job performance characteristics (from
unsatisfactory to outstanding) for each trait. The rating is done on the basis of points on the
continuum. The common practice is to follow five points scale.
 Essay Method: Essay method is the simplest one among various appraisal methods available.
In this method, the rater writes a narrative description on an employee’s strengths,
weaknesses, past performance, potential and suggestions for improvement. Its positive point
is that it is simple in use. It does not require complex formats and extensive/specific training
to complete it. However, essay method, like other methods, is not free from drawbacks. In
the absence of any prescribed structure, the essays are likely to vary widely in terms of length
and content. And, of course, the quality of appraisal depends more upon rater’s writing skill
than the appraiser’s actual level of performance.
 Field Review Method: When there is a reason to suspect rater’s biasedness or his or her
rating appears to be quite higher than others, these are neutralized with the help of a review
process. The review process is usually conducted by the personnel officer in the HR
department.

The review process involves the following activities:

(a) Identify areas of inter-rater disagreement.
(b) Help the group arrive at a consensus.
(c) Ensure that each rater conceives of the standard similarity.

 Confidential Report: It is the traditional way of appraising employees mainly in the

Government Departments. Evaluation is made by the immediate boss or supervisor for giving
effect to promotion and transfer. Usually a structured format is devised to collect information
on employee’s strength weakness, intelligence, attitude, character, attendance, discipline, etc.
report.

Modern Methods:

 Management by Objectives (MBO): Most of the traditional methods of performance

appraisal are subject to the antagonistic judgments of the raters. It was to overcome this
problem; Peter F. Drucker propounded a new concept, namely, management by objectives
(MBO) way back in 1954 in his book. The Practice of management. The concept of MBO as
was conceived by Drucker, can be described 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
 measures as guides for operating the unit and assessing the contribution of each its
members”.
 Behaviorally Anchored Rating Scales (BARS): The problem of judgmental performance
evaluation inherent in the traditional methods of performance evaluation led to some
organizations to go for objective evaluation by developing a technique known as
“Behaviourally Anchored Rating Scales (BARS)” around 1960s. BARS are descriptions of
various degrees of behaviour with regard to a specific performance dimension. It combines
the benefits of narratives, critical incidents, and quantified ratings by anchoring a quantified
scale with specific behavioural examples of good or poor performance. The proponents of
BARS claim that it offers better and more equitable appraisals than do the other techniques
of performance appraisal we discussed so far.
 Assessment Centers: The introduction of the concept of assessment centres as a method of
performance method is traced back in 1930s in the Germany used to appraise its army
officers. The concept gradually spread to the US and the UK in 1940s and to the Britain in
1960s. The concept, then, traversed from the army to business arena during 1960s. The
concept of assessment centre is, of course, of a recent origin in India. In India, Crompton
Greaves, Eicher, Hindustan Lever and Modi Xerox have adopted this technique of
performance evaluation.
 360 – Degree Appraisal: Yet another method used to appraise the employee’s performance is
360 – degree appraisal. This method was first developed and formally used by General
Electric Company of USA in 1992. Then, it travelled to other countries including India. In
India, companies like Reliance Industries, Wipro Corporation, Infosys Technologies,
Thermax, Thomas Cook etc., have been using this method for appraising the performance of
their employees. This feedback based method is generally used for ascertaining training and
development requirements, rather than for pay increases. Under 360 – degree appraisal,
performance information such as employee’s skills, abilities and behaviours, is collected “all
around” an employee, i.e., from his/her supervisors, subordinates, peers and even customers
and clients.
 Cost Accounting Method: This method evaluates an employee’s performance from the
monetary benefits the employee yields to his/her organization. This is ascertained by
establishing a relationship between the costs involved in retaining the employee, and the
benefits an organisation derives from Him/her.
 720 Appraisal: As the name itself suggests, in this method, the 360 appraisal method is
practiced twice. First the 360 appraisal is done, where the performance of the employee is
analyzed and having a good feedback mechanism, the boss sits down with the employee
again a second time and gives him feedback and tips on achieving the set targets
 LATEST TRENDS IN PERFORMANCE APPRAISAL
 Day-to-day feedback and bi-monthly feedback sessions.
 Manager as a coach instead of appraiser.
 Performance management as a function of training & development.
 Corporate social networks
 Greater generational diversity
 Employee experience
 Linking HR data with non-HR data
 Employee Wellbeing Will Become Part of Performance Discussions
 Feedback will Need to Be Supported By Regular Coaching Conversations
 Performance Management will become “Meaningful” and “Human”
 Performance Management Will Focus on How to Make Employees and Managers More
Effective
 Artificial Intelligence (AI) will Arrive in Performance Management

CAREER DEVELOPMENT

Career development is the lifelong process of managing learning, work, leisure, and
transitions in order to move toward a personally determined and evolving preferred future.
Career development is the process that forms a person's work identity. It is a significant part of
human development and spans over the individual's entire lifetime, beginning when the
individual first becomes aware of how people make a living.

5 Tips for Career Growth and Development

Dr. Tracey Wilen-Daugenti, vice president and managing director of Apollo Research Institute
and visiting scholar in Stanford University's Media X program, recommends five additional
career management strategies.
1. Set goals and create a plan to achieve them: Could your career development and
management use help to gain momentum? People who are the most successful and satisfied
in their careers have proactively determined what they want from work.
2. Develop a timeline, including milestones: Bringing your boss and his or her sponsorship and
mentoring into the picture will ensure that you have an internal mentor who will help you
manage your career.
3. Utilize company programs: Some companies have formal programs to help employees
develop their careers. In others, you will need to informally pursue your career development.
Companies with programs generally focus energy on helping employees develop and follow
a career path.
4. Own your career path: A career path can be discussed at several bi-annual meetings with
your boss. Some companies demonstrate a deep commitment to their employees by assisting
where possible with resources of time and dollars. However, remember that it is your career
path.
5. Write it down: Career paths are recommended for the same reason that goals are
recommended. They are the written plan that can help each employee take charge of what is
most important to his or her fulfillment and success. Without a plan, you can feel rudderless
and you have no benchmark against which you can measure your progress.

Factors and Barriers That Influence Career Development

Several factors and the interactions between them influence career development. Others may be
barriers to it. Let's look at several of them:
 Personal Characteristics: Personality type, interests, aptitudes, and work-
related values make all of us who we are. These personal characteristics play a significant
role in career development since they influence which occupations we find satisfying, as
well as the types of work environments in which we will succeed. That is why, when you
are in the process of choosing a career, it is so important to do a self-assessment that will
help you learn all about yourself.
 Financial Resources: Pursuing certain career options can be costly. If you choose an
occupation, for example, that requires you to attend college, you may be limited by your
ability to pay for it. You could end up altering your plans. Fortunately, there are ways of
overcoming barriers such as limited financial resources, namely student loans, financial
aid, and scholarships. When you are seeking employment, financial limitations can also
hinder you. For example, you may not have the money to purchase interview attire.
Several organizations collect donations of professional clothing and distribute it to job
seekers in need.
 Financial Obligations: You may find yourself working in a job or occupation just for the
paycheck. It lets you keep up with your bills but doesn't satisfy you in any other
way. You would like to go after other opportunities but feel inhibited by your financial
obligations such as a mortgage, rent, student loans, or even your children's college
tuition. You can try to put away money for a future career change or even change your
way of life by downsizing to a smaller home.
 Physical, Mental, and Emotional Impairments: Some of us are better suited to some
careers than we are to others due to our physical and mental abilities, and limitations. For
example, you may want to become a doctor but don't have the intellectual ability to get
into medical school. You should, if possible, find a related occupation that makes the best
use your strengths while accommodating your limitations.
 Lack of Support from Family: Going after a hard-to-achieve goal is even more difficult
if your loved ones aren't behind you. You have a greater chance of succeeding if you can
convince them to become your cheerleaders but if that is unlikely to happen, you may
have to find motivation from other people in your life.
 Age: Our age, or our perception of it, can hinder us in our career development. During a
large part of our lives, we may worry about being too young to pursue a particular path,
advance in our careers, or make a career change, and for another lengthy stretch, we fret
 about being too old to do those things. Instead of focusing on your age, concentrate on
your abilities and how motivated you are.
 Family Obligations: An individual's career development may stall if he or she takes time
off from work to take care of children or elderly parents. He or she has several options
including getting outside help to provide childcare or eldercare if the individual desires it.

Stages of career development

Stage 1 – Assessment Stage: In this stage, you are just getting ready to find what’s out there for
you. You are still unaware of what opportunities are out there, and you don’t know what your
strengths, weaknesses and values are. You are also curious to know about yourself particularly
what you can do.
Stage 2 – Investigation Stage: In this stage, you will be researching about what careers are out
there in the world. You will also be confused as to what you want to do, and you will feel
overwhelmed by all the many options you’ve got. You must have a positive mindset for you to
choose the career path to pursue.
Stage 3 – Preparation Stage: In this stage, you are making all the necessary preparations to
finally join the workforce. You are excited about the possibilities, and you are thrilled to finally
do something meaningful. However, you know there is still much to be done, so you’re getting
yourself ready.
Stage 4 – Commitment Stage: You now have the confidence that you know what you want to
do. Unlike in the past, you not only know what you want, you are also committed to it. There
will be a lot of distractions around you, so you have to focus on the task at hand and the target
itself.
Stage 5 – Retention Stage: In this stage, you feel more confident about your chosen career. You
know how things work in such field, and you believe that you can overcome whatever career
challenges you may face. You will also be making an effort to update your skills so that you may
remain current with the industry standards.
Stage 6 – Transition Stage: It is in this stage that you will be feeling some sort of discomfort
because you aren’t sure what direction your career is taking. You may even find yourself
unhappy with your career, and the thought of switching careers is just appealing to you. This is
when you should decide what career direction to take.

COUNSELING

Counseling is the service offered to the individual who is under going a problem and
needs professional help to overcome it. The problem keeps him disturbed high strung and under
tension and unless solved his development is hampered or stunted. Counseling therefore is a
more specialized service requiring training in personality development and handling exceptional
groups of individuals.
Who can counsel?

People who are in a position to counsel in the work place could be co-workers who would
function as peer counselors, supervisors and managers who would counsel their own staff and
staff members like the human resources manager and the training manager who could counsel
any staff member because of the uniqueness of their positions. In addition, directors or senior
managers are well placed to counsel members of the management staff.

When to counsel?

There are many situations in the workplace when counseling might be called for: Some of
these problems arise outside the work place. They can be personal problems such as sexual
behaviour that might pose a high risk for, or addiction to drugs or alcohol. They may be related
to family issues: money problems, sickness and death in the family causing grief or
trauma. They may also be issues related specifically to the work place, such as matters like
career development, discipline, performance, relating to customers or clients, promotion,
redeployment, transfers, redundancies, retirement, etc. There might be problems individuals have
in relating to others in the work place, either as individuals or as part of a team. Other problems
may lie in relating to customers, to bosses or to those in authority in general. Bosses might also
have problems in relating to their juniors.

Need of counseling
1. To help in the total development of the student
2. To help in the proper choices of courses
3. To help in the proper choices of carvers
4. To help in the students in vocational development
5. To develop readiness for choices and changes to face new challenges.
6. To minimize the mismatching between education and employment and help in the efficient
use of manpower.
7. To motivate the youth for self employment.
8. To help fresher’s establish proper identity Guidance and counseling service is needed to help
students deal effectively with the normal developmental tasks of adolescence and face life
situations boldly.
9. To identify and motivate the students form weaker sections of society.
10. To help the students in their period of turmoil and confusion.

COMPENSATION
Concepts and Principles- Influencing Factors- Current Trends in Compensation- Methods of
Payments - compensation mechanisms at international level.