Chapter-6

TOOLS FOR MEASURING PERFORMANCE

Objectives of the Chapter

Tools for Appraising Performance Traditional Performance Appraisal Methods Purposes of Traditional Performance Appraisals Modern and Developmental Performance Appraisal Methods

Tools for Appraising Performance

There are two prevalent approaches to Performance Management Traditional Approach Modern Approach

Traditional Performance Appraisal Methods

It is based on the evaluation of character of an employee. The system may list some personal traits such as ability to get along with people, judgments, initiative, leadership etc.

Purposes of Traditional Performance Appraisals

Performance appraisal for evaluation using the traditional approach has served the following purposes: To make promotion, separation, and transfer decisions. To provide feedback to the employee regarding how the organization viewed the employees performance. To conduct evaluations of relative contributions made by individuals and entire departments in achieving higher level organization goals.

Purposes of Traditional Performance Appraisals contd

To develop criteria for evaluating the effectiveness of selection and placement decisions, including the relevance of the information used in the decisions within the organization. To make reward decisions, including merit increases, promotions, and other rewards .

Purposes of Traditional Performance Appraisals contd

To ascertain and diagnose training and development decisions. To develop criteria for evaluating the success of training and development decisions. To collect information upon work scheduling plans, budgeting and human resources planning.

Traditional Methods
Graphic Rating Scales Confidential Reports Straight Ranking Method Paired Comparison Method Force Distribution Methods Grading System Check List Method Critical Incident Method

Graphic Rating Scales Method

The graphic rating scale is the simplest and most popular method for appraising employees performance. A rating scale lists traits and a range of performance values for each trait. Two types of rating scales a. Continuous b. Discontinuous

Confidential Reports
It differs from department to department. The report is written for a unit of one year and relates to the performance, ability and character of the employee during the particular year.

Straight Ranking Method

Every employee is judged as a whole without distinguishing the rates from the employees performance. A list is then prepared for ranking the workers in order of their performance on the job so that excellent employees will be highly rewarded and the poor performers will be counseled.

Paired Comparisons Method

Every employee is compared trait wise and with other persons, one at a time. The number of times a person is compared with others is scored on a paper. These numbers help in yielding rank order of employees.

Forced Distribution Method

The employees are divided into 5 categories i.e. Outstanding, above average, average, below average and poor. The main idea in this system is to spread rating in the number of grades.

Grading System
It contain features like analytical ability, cooperativeness, dependability, job knowledge, etc. are selected for evaluation. The grades may be rated as :A-Outstanding; B-Very Good; C-Satisfactory; D-Average; EBelow Average, etc.

Checklist Method
A list of statement that describes the characteristics and performance of employees on the job. Simple Checklist Weighted Checklist Forced Choice Checklist

Critical Incident Method

To measure employees performance in terms of certain events and incidents that occur in the course of employment. The assumption in this method is that the performance of the employee on the happening of critical incidents determines his failure or success. The supervisor keeps a record of critical incidents at different times and then rates him on this basis.

Advantages of Critical Incident Method

Critical incident method provides an objective basis for conducting a thorough discussion of an employees performance. The evaluation, under this method, is based on actual job behavior. This method also avoids recency bias, as raters record ratings throughout the rating period. This method can increase the chances that the subordinates will improve because they learn precisely what is expected of them.

Disadvantages of Critical Incident Method

Negative incidents are, generally, more noticeable than the positive ones. The supervisor may not record an incident immediately and forget it later on. It may also be very difficult for a supervisor to decide whether an incident is critical or not. Very close supervision may result, which may not be to the liking of the employees.

Free Essay Appraisal Methods

Under free essay method, the supervisor writes a report about the employee which is based on his assessment. The supervisor continuously observes the subordinates and writes his assessment in the report.

Free Essay Appraisal Methods contd

While preparing an essay on the employee, the rater generally considers the following factors: Employees job knowledge and potential, Employees relations with co-workers and supervisors, Employees traits and attitudes, and Employee understands the companys programs, policies, objectives etc

Group Appraisals
Employees are rated by an appraisal group,consisting of their supervisor, and three or four other persons who have some knowledge of their performance. The supervisor explains to the group the nature of his subordinates duties. The group then discusses the standards of performance for that job, the actual performance of the employee and the causes of their particular level of performance and offers suggestions for future improvements, if any.

Flaws in the Traditional Approach to Performance Appraisal

The flaws are: Organizational performance appraisal is typically primarily concerned with the past rather than being forward looking through the use of setting objectives or goals. Performance appraisal is usually tied to the employees salary review. Dealing with salary generally overwhelms and blocks creative, meaningful, or comprehensive consideration of performance goals.

Modern and Developmental Performance Appraisal Methods

It is concerned with the use of performance appraisal as a contributor to employee motivation, development, and human resource planning.

Purpose of Performance Appraisal

To provide employees the opportunity to formally indicate the direction and level of the employees ambition. To show organizational interest in employees development, which was cited to help the enterprise retain ambitious, capable employees instead of losing the employees to competitors.

Purpose of Performance Appraisal contd..

To provide a structure for communication between employees and management to help clarify expectations of the employee by management and the employee. To provide satisfaction and encouragement to the employee who has been trying to perform well.

HR Scorecard
It allots the four dimension rating to assess

the progress level of human resources in an organization. HR system maturity, HR competencies of the organization, HR culture of the organization, and HR linkage to business goals.

HR Systems Maturity
The HR systems maturity assesses the extent to which various HR subsystems and tools are well designed and are being implemented. There are seven factors that need to be taken into account The system should be appropriate and relevant to business goals. They should focus on current and future needs of the corporation.

HR systems maturity contd.

The HRD strategies and systems should flow from the corporate strategies. The systems should be well designed and should have structural maturity. They should be implemented well The subsystem should have internal synergy They should be adequate and take care of the HRD requirements of the organizations.

HR Competencies of the Organization

The competencies include knowledge, attitudes, values and skills. The nature of competencies are listed on the basis of HRD audit.

HR Culture of the Organization

Openness Collaboration Trust and

trustworthiness Authenticity Proaction

Autonomy Confrontation Experimentation Learning culture Listening

HR Linkage to Goals
The HRD efforts like tools, processes, culture are driven to achieve business goals. The goals are Profitability, Internal operational efficiencies, Internal customer satisfaction, External customer satisfaction,

HR Linkage to Goals contd..

Employee motivation and commitment, Cost-effectiveness and costconsciousness among employees, Quality orientation , and Technology adoption

HR Accounting
Under this method, performance is judged in terms of cost and contributions of employees. Cost consists of expenditure on human resource planning, recruitment, selection, induction, training, compensation etc. Contribution consists of money value of labour productivity.

Competency Mapping
It involves the determination of the extent to which the various competencies related to a job are possessed by the person.

Assessment and Development Centers

It can be used as a tool for competence development. It is for powerful tool for assessing the potential of employees. It is aimed at selecting individuals based on set criteria and makes use of situational exercises and simulations.

360 Degree Performance Appraisal

Systematic collection of performance data on an individual or group derived from a number of stake holders on their performance. -WARD It is also known as multi-source assessment or multirater feedback.

Model of 360 Degree Feedback

Manager

Colleagues

EMPLOYEE

Customers

Subordinates

Development and Implementation

According to T V Rao, the following steps should be followed to develop and implement to define objectives. To decide on recipients To decide the giver of feedback To decide the areas of work and behavior To decide the method of data collection

Development and Implementation contd

To decide the data analysis and presentation To plan an initial implementation program. To analyze the outcome of the pilot scheme. To plan and implement full program. To monitor and evaluate the program.

540 Degree Feedbacks

The range of feedback on the performance of an employee generated from the stakeholders, superiors, subordinates, peers, internal and external customers, clients or suppliers is known as 540 degree feedback or appraisal.

Management by Objectives
It needs the managers to set a specific measurable goal for each employee and then periodically discuss the progress towards these goals.

Process of MBO
1. 2. 3. 4. 5. 6. Set the organizations goals Set departmental goals Discuss departmental goals Define expected results Performance reviews Provide feedback

Advantages of MBO
It leads to greater satisfaction, greater agreement, greater comfort and less tension. This approach is considerably superior to the traditional approach of performance appraisal. It emphasize training and development of individuals. It also has a built in device of self-appraisal by the subordinates.

Limitations of MBO
This method can be used only when goal setting is possible by the subordinates. It involves considerable time, energy and expenditure. This approach mainly emphasizes counseling, training and development. This approach is appropriates for the appraisal of executives and supervisory personnel who can understand it. Setting objectives with the subordinates sometimes turns to a tug of war.

Behaviorally Anchored Rating Scales

Behaviorally Anchored Rating Scales mingles the benefit of critical incidents and graphical rating scale by anchoring a scale with specific behavioral examples of good or poor performance.

Stages of BARS
Create Critical Incidents, Develop Performance Dimensions, Renovation of Incidents, Measure the Incidents, Develop final mechanism.

Advantages of BARS
It help to clarify what is meant by extremely good performance, average performance and so forth. It is more useful in providing feedback to appraise than simply informing them of their performance rating. The technique is not biased by the experience and evaluation of the rater.

Disadvantages of BARS
It is a time consuming and expensive method. It is more activity oriented than result oriented. Several appraisal forms are required to accommodate different types of job in the organization.

Summary of the Chapter

Tools for Appraising Performance Traditional Performance Appraisal Methods Purposes of Traditional Performance Appraisals Modern and Developmental Performance Appraisal Methods