Performance Appraisal

Definition

It is the systematic evaluation of

the individual with respect to his
or her performance on the job
and his or her potential for
development
Method of performance Appraisal

Traditional methods
1. Alternation Ranking Method
2. Paired Comparison Method
3. Critical Incident Method

Modern methods
6. 360 Degrees Feedback
7. Management By Objective
(MBO)
 Alternation Ranking Method
Ranking employees from best to worst on a particular trait,
choosing highest, then lowest, until all are ranked

Alternation ranking Method

1. ……………………….. Highest
2. ………………………..
3. ………………………..
4. ………………………..
5. ………………………..
6. ………………………..
7. ……………………….. Lowest
 Paired Comparison Method

Ranking employees by making a chart of all possible

employees for each trait and indicating which is better
employee of the pair.

By this technique, each employee is compared with every

trait with all the other persons in pairs once at a time.

The results of the comparisons are tabulated, and a rank is

assigned to each individual.

Not suitable for larger groups

 Paired Comparison Method

For the trait “Quality of Work” For the trait “Creativity”

Employee Rated Employee Rated

As A B C D E As A B C D E
Compared Compared
to to
A + + - - A - - - -
B - - - - B + - + +
C - + + - C + + - +
D + + - + D + - + -
E + + + - E + - - +
Highest Rank - B Highest Rank - A
 Critical Incident Method

Keeping a record of uncommonly good or

undesirable examples of an employee’s work relate
behavior and reviewing it with the employee at
predetermined times.

The supervisor keeps a written record of the events

(either good or bad) that can easily be recalled and
used in the periodical or formal appraisal. Feedback
is provided about the incidents during performance
interview session.
 Critical Incident Method

Limitations:

3. Negative incidents are more noticeable than the positive ones

4. Such close supervision may not be liked by the employee
5. Supervisor may forget recording of certain incidents.
6. The feedback may appear to be punishment
 Critical Incident Method
Critical Incidents of Purchase Officer which the
Logistics or Material Manager may look for

1. He treated a salesman in a discourteous fashion

2. He helped an assistant to prepare an unusually different
purchase order
3. He rejected a bid that was extremely overpriced
4. He persuaded a local vendor stock an important material
needed by the firm
5. He failed to return a very important phone call
6. He improved the design of the internal material requisition
form
Management By Objectives
Peter Drucker - 1954
 Management By Objectives
1. Described by Peter Drucker in 1954
2. It seeks to minimise external controls and
maximise internal motivation through joint goal
setting between the manager and the subordinates
and increasing the subordinates own control of his
work
3. It allows the subordinate to participate actively in
the decisions that affect him directly
4. Drucker never regarded this tool in a narrow way
rather he considered it as an approach to
management philosophy.
Definitions –
“The superior and the subordinates of an
organization jointly define its common
goals, define each individuals major
areas of responsibility in terms of the
results expected of him and use these
measures as guide for operating the unit
and assessing the contribution of each of
its members”.
Definition
“A system approach to managing an
organisation, where those accountable for
directing the organisation first determine
where they want to take the organisation; a
process requiring and encouraging all key
management personnel to contribute their
maximum to achieving the overall objectives;
an effort to blend and balance all the goals of
all key personnel; and an evaluation
mechanism.”
MBO PROCESSES

1. Formulating long range organizational goals

2. Develop strategic objectives
3. Develop departmental objectives
4. Define group and individual objectives
5. Formulate and implement action plan
6. Performance reviews
7. Provide feedback
 MBO PROCESSES - 1

Formulating long range organizational goals

Guided by the organizational mission statement

Senior manager define critical long term objectives
Determine how available resources will be used
The process then leads to strategic planning activities
It guides to cope with the changing environment.
 MBO PROCESSES - 2

Develop strategic objectives

Broad objectives are translated into specific measurable

outcomes with clearly stated timeframes.

Organizational objectives may include areas such as

profitability, market share, and quality

All objectives must be stated in clear terms.

MBO PROCESSES - 3

Develop departmental objectives

Each department must develop a set of specific

goals that will enable the organization to achieve its
objectives.

The departmental goals also must be stated in terms

of measurable outcomes.
 MBO PROCESSES - 4

Define group and individual objectives

Setting of individual and group goals has to be done in a

coordinated manner.
Individual must clarify their roles and take responsibility for
specific results.
Individual goal setting is done in a collaborative manner
Goal setting include both, personnel and professional
objectives.

(Research indicates that individual goals produce the most

positive results when they are challenging and specific.)
MBO PROCESSES - 5

Formulate and implement action plan

Action plan is needed to provide a way of attaining

goals
Action plan systematically identifies the
 methods
 activities &
 resources required to accomplish objectives.
 MBO PROCESSES - 6

Performance reviews

Mangers and subordinates discuss problem and difficulties

involved in completing the goals.
These meetings evaluate individual performance based on
degree to which targeted goals were actually achieved.
 The meeting may provide opportunity for review and modify
the goals in case they are outdated and unattainable.
Managers and subordinates mutually agree upon goals and
formulate strategy to achieve them.
 Conclusion
MBO Process in practice requires great analytical skill and
clarity of purpose on the part of management as it involves
people whose behavior is unpredictable.
360 Degrees Feedback
 360 Degrees Feedback

It is a systematic collection of performance data on an

individual or group.
It is derived from number of stakeholders
The stakeholders –
 the immediate superiors,
 the team members,
 the customers, and
 the peers, including
 the individual himself.

In fact, anyone who has useful information on ‘how an

employee does his job’ may be one of the appraisers.
 360 Degree feedback Model

MANAGER

PEERS INDIVIDUAL CUSTOMER

SUBORDINATE
 Definition
“ The systematic collection and
feedback of performance data on
individual or group derived from a
number of stakeholders on their
performance”

Ward (1997)
 Benefits of 360 Degree Feedback

1. It provides a broader perspective about an employees

performance
2. It facilitates greater self development of the employees
3. It enables an employee to compare his or her perception
about self with perceptions of others
4. It provides a formalised communication link between an
employee and his or her customers
5. It makes employee to feel much more accountable to his
or her internal or external customers
6. It is helpful in assessing soft skill of an employee
7. It identifies and measures interpersonal skills, customer
satisfaction, and team building skills