Performance Management

Performance Appraisal

Performance +
Appraisal

o Performance

degree of accomplishment by the individual in his

job.

o Appraisal
judgments of characteristics, trait and performance
of others.
2

Objective
o

Compensation decisions:

It can serve as a basis for pay raises.

This approach to compensation should be given for
merit rather than seniority.

Promotion decision:

It can serve as a useful basis for job change or

promotion.

Training and development programmes:

Feedback:

It serve as a guide for formulating a suitable training

and development progamme. It can tell employees
what skill they have to develop.

PA enables the employees to know how well he is

doing on the job. It helps him to go up the
organizational ladder.

Personal development:

PA helps to reveal the causes of good and poor

employee performance and help them to improve
their performance

 Processes used to identify, encourage,

measure, evaluate, improve, and reward
employee performance
Provide information to employees about their
performance.
Clarify organizational performance expectations.
Identify the development steps that are needed to
enhance employee performance.
Document performance for personnel actions.
Provide rewards for achieving performance
objectives

Question Arises???
o What do We Evaluate?
o Who will Appraise?
o When to appraise?

What is to be Appraised?
Individual task out comes
focus on the result of work behaviour
Behaviours
behaviors exhibited by employee while executing the job

Traits
Focus on the personal characteristic of employees such
as the ability to arrive at decision ,loyalty ,
communication skill
7

Who Performs the

Appraisal?
Immediate
Supervisor
Higher
Management
Self-Appraisals
Peers (Co-Workers)

Evaluation Teams
Customers
360 Appraisals

Who will Appraise?

The appraiser may be any person who has thorough

knowledge about the job content, contents to be
appraised, standards of contents and who observes
the employees while performing job.

He should prepare reports and make judgments

without bias.
Typical appraisers are:
Supervisors:Include superiors of the employees, other superiors
having knowledge about the work of the employees
and departmental head or managers.
9

 Peers :Peer appraisal may be reliable if the work group is

stable over a reasonably long period of time and
performs task that require interaction.
Subordinates:Superiors rated by subordinates is being used in
most organization today. This method can be useful if
the relationship between superiors and subordinates
are cordial. This method is useful in identifying
competent superiors.
Self appraisal:If individuals understand the objectives they are
expected to achieve and the standards by which they
are to be evaluated, they are in a best position10 to

Performance appraisal
Evaluating an employees current and/or past
performance relative to his or her performance
standard
Setting work standards
Assessing employees actual performance
Providing feed back to the employees

Why appraise Performance?

Promotional decisions
Correcting deficiencies /reinforce positives
Career planning purpose
Training and development needs.
Performance management process
PMS : Source of the current employee
information

Primary Uses of Performance

Appraisals
Small
Organizations

Large
Organizations

All
Organizations

Compensation

80.2%

66.7%

74.9%

Performance
improvement

46.3%

53.3%

48.4%

Feedback

40.3%

40.6%

40.4%

Documentation

29.0%

32.2%

30.2%

Promotion

26.1%

22.8%

24.8%

Training

5.1%

9.4%

7.3%

Transfer

8.1%

6.1%

7.3%

Discharge

4.9%

6.7%

5.6%

Layoff

2.1%

2.8%

2.4%

Personnel research

1.8%

2.8%

2.2%

Manpower planning

0.7%

2.8%

1.5%

Three parts of PMS

Model of PM in org
Individual attributes

Org
strategy
Long term
& short
term gals

Situational
constraints
Org culture
Economic
condition

Performance Appraisal
Process
Select performance factors (based on job description) to be
evaluated and set the standards to be achieved
Set the performance review period
Measure actual performance
Compare performance with set standards and rate it with
suitable scale
Communicate the rating to the appraise
Use the performance appraisal for the desired purpose

Performance Appraisal Process

External Environment
Internal Environment
Identify Specific
Performance Appraisal
Goals
Establish Performance
Criteria (Standards) and
Communicate Them To
Employees
Examine Work Performed
Appraise the Results
Discuss Appraisal with
Employee

Performance measures
criteria

Performance measures criteria

Strategic congruence
Validity
Reliability
Acceptability
specificity

Strategic congruence
The extent to which PMS elicits job
performance that is congruent with the
organizations strategy
Eg: A drug company whose business
strategy is to penetrate in the N
.American market for Dermatology
compounds.
maximize
the
effectiveness of R& D ,

validity
The extent to which a performance measure
assesses all the relevant and only the
relevant aspect of performance
The performance measure is deficient if it
does not measure all aspects of performance
A
contaminated
measure
evaluates
irrelevant aspect of performance or aspects
that are not job related
Content validity
Contamination
Deficiency

Reliability
The degree to which performance
measure is free from random error

Refers to the consistency of a

performance measure
Inter rater reliability
Internal consistency reliability
Test-retest reliability

Acceptability
The extent to which a performance
measure is deemed to be satisfactory
or adequate by those who use it
Extent to which the employees
believe the PMS is fair
Perceived fairness
procedural
interpersonal
Outcome fairness

Specificity
The extent to which a performance measure
tells employees what is expected of them and
how they can meet these expectation

Approaches to measuring
Performance

Methods

PERFORMANCE
APPRAISAL
METHODS
Other Methods
Individual
Multiple-person
Evaluation Method
o Confidential
Report
o Essay Evaluation
o Critical Incidents
o Checklists
o Graphic Rating
Scale
o Behaviorally
Anchored Rating
Scales
o Forced Choice
Method

Evaluation Methods
o Ranking
o Paired
Comparison
o Forced
Distribution

o Group Appraisal
o HRA
o Assessment
Centre
o Field Review

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Approaches to measuring
Performance

The
The
The
The
The

comparative approach
attribute approach
behavioral approach
results approach
quality approach

Comparative approach
Ranking

1.Ranking Methods
Employees are ranked from the best
to worst
Ranking can be relatively easy and
inexpensive
It may be affected rater bias
There may be little difference b/w
employees ranked
Difficult to ranking individuals when a
large number of persons are rated

2.Paired comparison
Each employee is compared every
trait with all the other persons in
pairs one at a time
Quality of work
leadership
As
compa
red to

A B

As compared
to

A
B
C

+
-

+
+

3.Forced Distribution Methods

Uses ranking format, but employees
are ranked in groups
Distribute the ratings in to normal
frequency distribution
For example, the distribution
requested with 10 or 20 percent in the
top category, 70 or 80 percent in the
middle, and 10 percent in the bottom.

The

attribute approach

1.Graphic Rating Scale

2.Mixed standard scale
3.Check List
4.Essay/free form appraisal
5.Confidential Reports

1.Trait Methods

The extend to which employees

possess traits or characteristics
Measures various characteristics like
dependability, creativity, initiative,,
leadership

1.Trait Methods

1.Graphic Rating Scales/linear rating scale

most commonly used method
of the oldest methods of evaluation in use
a printed form, is used to evaluate
easy to understand, easy to use
and permits a statistical tabulation of
scores of employees
Permits many employees to be quickly
evaluated

Drawback
Subjectivity & low reliability
Descriptive words often used in scale
may have different meaning to
different raters
is that each characteristic is equally
important in evaluation of the
employees performance

5.Checklist Methods
Another simple type of individual
evaluation method is the checklist
a set of objectives or descriptive
statements about the employee and
his behavior
A rating score from the checklist
helps the manager in evaluation of
the performance of the employee

 assign biased weights to the questions.

expensive and time consuming.
difficult for the manager to assemble,
analyze and weigh a number of
statements about the employees
characteristics, contributions and
behaviors.

Check LIST
Name of the
employee.Design..
1.Is the employee punctual in attending the
office? Y/N
2.Is the employee sincere in doing his job ?
Y/N
3. Does he make mistakes frequently?
Yes/No
.

.

6.Essay/free form appraisal

Short essay describing each
employees performance during the
rating period

8.Confidential report
mostly used in government
organizations
It is a descriptive report prepared,
generally at the end of every year,
by the employees immediate
superior.
The report highlights the strengths
and weaknesses of the subordinate

The behavioral approach

Measures the employee behavioral
skills

1.Critical Incident Method

2.BARS/BES
Behaviorally anchored rating
3.BOS
scales (BARS)
Behavioral observation scales
4.OBM
(BOS)
Behavioral expectation scales
5.Assessment centers(BES)

1.Critical Incident Method

Continuous appraisal methods
Based on critical performance areas
of the job
the manager prepares lists of
statements of very effective and
ineffective behavior of an employee.
These critical incidents or events
represent the outstanding or poor
behavior of employees on the job.

Eg..
July 20 The sales clerk patiently attended to
the customers complaint. He is polite, prompt,
enthusiastic in solving the customers problem.

On the other hand the bad critical incident may
appear as under:
July 20 The sales assistant stayed 45 minutes
over on his break during the busiest part of the
day. He failed to answer the store managers
call thrice. He is lazy, negligent, stubborn and
uninterested in work

2.BARS
Behaviorally Anchored Rating Scale

Consists of a series of scales created by:

Identifying important job dimensions
Creating statements describing a
range of desired and undesirable
behaviors (anchors)
Also known as the behavioral expectations scale,
Builds on the critical incidents approach

How to construct BARS?

Step 1: Collect critical incidents:
Step 2: Identify performance
dimensions.

technical competence, relationships with customers,

handling of paper work and meeting day-to-day deadlines

Step 3: Reclassification of
incidents
Step 4: Assigning scale values to
the incidents:
Step 5: Producing the final

4.Behavior Observation
Scale
Appraiser plays the role of observer rather than a
judge
Rather than discarding a large number of the bhvrs
that exemplify effective or ineffective performance
Rather than assessing which behaviour best
reflects an individuals performance ,BOS requires
managers to rate the frequency with which the
employee has exhibited each behavior during the
rating period

5.Organizational behaviour modification

Managing the bhvr of employees through a formal
system of behavioral feedback and reinforcement
6.Assessment centers
The process in which multiple raters evaluate
employees performance on a number of exercises
Leaderless group discussion, role plays in basket
exercises

Result approach
1.MBO
2.Productivity measurement
&evaluation system (ProMES)

Result
Evaluate employee performance based
on accomplishments they achieve
Sales turnover
Number of units produced
No of customers served
Subjectivity can be eliminated from the
measurement process
Closest indicator of ones contribution to
organizational effectiveness

Management By Objective (MBO)

Philosophy of management
that rates performance on
the basis of employee
achievement of goals set
by mutual agreement of
employee and manager.

Management By Objective (MBO)

Douglas Mc Gregor
top mgt team first defines the
companys strategic goals for the
coming year
These goals are passed on to the
next layer of management , these
managers define the goals they must
achieve for the company to reach its
goals

MBO
MBO represents a modern method of
evaluating the performance of
personnel
Processes where by the superior and
subordinate managers of an org
jointly identify its common goal,
define each individual s major areas
of responsibility in terms of results
expected of him

Productivity measures [ProMES]

Based on the ratio of output they
turned out to the input they used
Number of clients served per year
Measurement of all kinds of output
as well as all kinds of input would be
difficult

The quality approach

Emphasize an assessment of both person and
system factors in the measurement system
Emphasis that managers and employees work
together to solve performance problem
Involve both internal and external customers in
setting standards and measuring performance
Use multiple source to evaluate person and
system factors

360 Degree Performance Appraisal

360 Degree Performance. Combination of
self, peer, supervisor, and subordinate
performance evaluation
360 refers to the
circle

360 degrees in a

Comes from all sources around the

employee
.

The 360 Appraisal

Interview
Supervisor

Other Superiors

Other Superiors

Individual
Staff

Peers

Customers

Self-Assessment

Teams

Teams

Sub-Ordinates

Characteristics of a good system

1.Anonymity/confidential
2.Observation of employee performance
3.feed back interpretation
4.Follow-up
5.Used for developmental purpose only

Error of Central Tendency

Performance-rating
error in which all
employees are rated
about average.

Leniency or Strictness Error

Performance-rating error in
which the appraiser tends
to give employees either
unusually high or
unusually low ratings.

Recency Error
Performance-rating
error in which the
appraisal is based
largely on the
employees most
recent behavior rather
than on behavior
throughout the
appraisal period.

Similar-To-Me Error
Performance-rating
error in which an
appraiser inflates the
evaluation of an
employee because of
a mutual personal
connection.

Performance

appraisal is not
merely for appraisal but is for
accomplishment & improvement of
performance

Discuss the role of Performance

Appraisal in human resource
Development