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Perform ance Appraisal

The TraditionalApproach
BY
ISHITA BEDI
JATIN PATIL
KANIKA GOYAL
KUASHAL MAHALE

D efi
n ition
Performance Appraisal (PA) refers to all those
procedures that are used to evaluate the

personality
performance
potential of its group members

O bjectives
Opportunity to Regularly Discuss Results
Supervisor Identifies Strengths and Weaknesses
Fair and Equitable Format
Basis for Salary/Promotion Recommendations

Job Analysis and Perform ance Appraisal


Job Analysis

Describes work
and personnel
requirement for a
particular job

Performance
Standards
Translate jobs
into levels of
acceptable and
unacceptable
performance

Performance
Appraisal
Describes the job
relevant
strengths and
weaknesses for
each individual

Purposes of Perform ance M anagem ent


Individual Rewards (Base and Incentive)
Feedback for Sub-Ordinate (Plus and Minus)
Recognition of Superior Performance
Documentation of Weak Performance
Personnel Decision-Making
Future Goal Commitments (Planned Achievements)

Reasons for Appraisals


Compensation "Pay for Performance"
Job Performance Improvements
Feedback to Subordinates
Documentation for Decisions
Goal Setting - Later Evaluation
Promotion Decisions
Identify Training Needs
HR Planning

Prim ary U ses of Perform ance Appraisals


Small Organizations

Large Organizations

All Organizations

Compensation
Performance improvement

80.2%

66.7%

74.9%

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%

Com petitive Advantage

Strategy
and
behavior

Improving
performance

Making correct
decisions

Competitive advantage

Values and
behavior

Minimizing
dissatisfaction
and turnover

Ensuring legal
compliance

Principles of PM
Translation of Corporate goals
Transparency
Simple
Involvement of all directly involved entities
Full coverage
Continuous Feedback

Trends in M anaging Perform ance


Appraising/Evaluating

Managing Performance
Superior Performance leads to Superior Rewards
Issue: How to objectively measure specific goals!

Appraisal Process
Objectives of
Performance
Appraisal

Every step is crucial and


logically arranged
Organizations tries to
approximate the ideal
process

Design an
Appraisal
Programme

Feedback

Appraise
Performance
Performance
Interview
Archive Appraisal
Data
Use Appraisal data
for Appropriate
Purposes

Feedback

Many other
organizations fail to
consider one or more of
steps, so they have lesseffective appraisal

Establish Job
Expectations

Objectives of Performance Appraisa


Facilitating promotion
decisions
Assessing training
needs
Awarding pay
increases
Get insight from
employee
Assess organizations
growth

Design Appraisal Programme


Formal vs Informal
Formal Specific time period, required for
employee evaluation
Informal Whenever supervisor feels
needed, required for communication
Many organizations encourage a mixture of
both formal and informal appraisals.
Whose performance should be rated?
Who are raters?
Immediate supervisor
Most Fit candidate to appraise
Subordinates
Peers
Customers
Self appraisal

When appraisal is
made by superiors,
peers and
subordinates, It is
called as 360 degree
method
First developed by GE
in 1992.
System followed by
Reliance, Crompton
greaves, Godrej
soaps, Wipro, Infosys

Problems of Ratings
Errors occur in raters observation, judgement and information
General problems are
Leniency or Severity
Central tendency Play safe
Halo error
Rater effect Favouritism, stereotyping and hostility
Primacy and recency effects
Perceptual set previously held beliefs
Spillover effect

Solving raters Problem Provide training to the raters

Potential focused appraisal


The Philips Model

Star performers, Kept engaged with


complex assignments
Constitutes 70-75% of employees,
Have skills but lack of potential

High
Low

Shifted to new locations for work, If


not improved reclassified as
question mark

Potential

Improve Performance, Failure


results into separation

Problem
children

Stars

? Planned
Separation

Solid citizens

Low

High

Performance

Timing of evaluation
Once in quarter or half year or year
After probation period
According to survey conducted by Arthur Anderson, 70%
organizations conducts appraisal once a year
Frequent assessment is better than phased evaluation
CPA (Continuous performance appraisal) is being followed in
organizations now a days

RATIN G SCALES M ETH O D


Job related performance criterion like attitude, initiative,
dependability are rated on a scale .
Scale ranges from excellent to poor.
Raters computes employees total numerical score
Performance Trait

Excellent

Good

Average

Fair

Poor

Attitude

Knowledge of Work

Managerial Skills

Team Work

ADVANTAGES
Simple , easy to understand and use.
Nearly every job cab be evaluated by this method.
It saves time and cost.
Rater does not need any training to use scale.

DISADVANTAGES
Raters biases are likely to influence evaluation.
Horn and halo effect.
Selected rating-scale traits may not be relevant to the jobs of all appraises.

CH ECKLIST
A checklist of statements on the traits of the employees
and his job is prepared in two columns-yes or no
Rater ticks off against each item
Actual assessment is done by HR department

Simple checklist method:


Is employee regular
Y/N
Is employee respected by subordinate Y/N
Is employee helpful
Y/N
Does he follow instruction
Y/N
Does he keep the equipment in order
Y/N

W EIG H TED C H EC K LIS T M ETH O D


weights performance rating
(scale 1 to 5 )
Regularity
0.5
2
Loyalty
1.5
4
Willing to help 1.5
1
Quality of work 1.5
5
Relationship
2.0
2

AD VAN TAG ES
Limited training of rater
Standardization
Economy
Ease of administration

DISADVANTAGES
Use of personality criteria instead of performance criteria
Misinterpretation of items of checklists
Susceptible to raters bias especially halo effect

FIELD REVIEW M ETH O D


This appraisal done by someone outside employees
own department
Outsider reviews employee records and hold an
interview with his/her supervisor.
Used for making promotional decisions at managerial
level.
Advantages

Disadvantages

apt to measure potential more


than actual performance

Practicality of test may suffer


if cost of administration is high

Forced ch oice m eth od


This method uses several sets of paired phrases, two of which may
be positive and two negative
The rater is asked to indicate which of the four phrases is the most
and least descriptive of a particular worker
Criteria qualities earn plus
Rating
Favorable
credit and unfavorable ones earn the
reverse
Regularity on the job
Most
Least
Always regular
Inform in advance for delay
Never regular
Remain absent
Neither regular nor irregular

FO R C ED D IS TR IB U TIO N M ETH O D
The distribution requires 10 or 20 percent of employees
in the top category, 70 or 80 percent in the middle, and
10 percent in the bottom.
The top-ranked employees are considered highpotential employees and low-ranked as low potential
employees.
Managers cannot rate employees freely they have to
meet forced distribution .

Forced D istribution Curve

Advantages
They force reluctant managers to make difficult decisions and
identify the most and least talented members of the work group.
They create and sustain a high performance culture in which the
workforce continuously improves.

Disadvantages
They increase unhealthy cut-throat competitiveness.
They discourage collaboration and teamwork.
They harm morale.

W hy com panies hang on to bellcurve-based perform ance appraisalsystem ?

C R ITIC A L IN C ID EN T M ETH O D
Critical incidents technique of evaluation is applied to
evaluate the performance of superiors .
Manager prepares lists of statements of very effective
and ineffective behavior of an employee
The manager periodically records critical incidents of
employees behavior

C R ITIC A L IN C ID EN T M ETH O D
Ex: A fire, sudden breakdown, accident
Workers
A
B
C
D
E

reaction

scale

informed the supervisor immediately


Become anxious on loss of output
tried to repair the machine
3
Complained for poor maintenance
was happy to forced test
1

5
4
2

ADVANTAGES
It reduces recency bias.
Does not force the respondents into any given framework.
Flexible method.
Inexpensive and provides rich information.

DISADVANTAGES
Negative incidents may be more noticeable than positive incidents.
It results in very close supervision which may not be liked by the employee.
The recording of incidents may be a chore for the manager concerned, who may
be too busy or forget to do it.
The supervisors have a tendency to unload a series of complaints about incidents
during an annual performance.

ESSAY M ETH O D
Rater is asked to express strong and weak points about
employee.
Rater considers employee job knowledge, relation with other
workers, planning, attitude, perception.
Highly subjective.
Rater may write a biased essay.
Difficult to find effective writers.
Busy writer may write essay hurriedly without assessing
properly performance of employee.

BARS - Behaviorally Anchored Rating


Scale
Consists of a series of vertical scales, one for each dimension of job
performance; typically developed by a committee that includes
both subordinates and managers.
BARS differ from other rating scales in that scale points are
specifically defined behaviours
Four steps in the bars construction process:
Listing of all
the
important
dimensions
of
performance
for a job or
jobs

Collection of
critical
incidents of
effective
and
ineffective
behaviour

Classification
of effective
and
ineffective
behaviours
to
appropriate
performance
dimensions

Assignment
of
numerical
values to
each
behaviour
within each
dimension

BARS For Arm y com bat leaders

Disadvanta
ges

Advantages

Perform ance Tests and O bservation


Based upon a test of knowledge or skills
Types :
A) Written
B) Practical
Advantages

Disadvantages

apt to measure potential more


than actual performance

Practicality of test may suffer


if cost of administration is high

Confi
d entialRecords
ACRs mostly maintained in government organisation
Highly secretive and confidential
An ACR has 14 Items :
Attendance

Self
expression

Technical
ability

Ability to
understand
new material

Judgement

Ability to
work with
others

leadership

Initiative

Ability to
reason

Originality
and
resourcefuln
ess

Areas of
work that
best suit the
person

Integrity

Responsibilit
y

Indebtedness
and memo
served

Twelve of the above are graded as :


- Excellent
- Good
- Fair
- Poor
Disadvantages are :
- Feedback is given only in case of adverse entry
- Highly subjective and ratings can be manipulated

W hat an ACR looks like ?

Cost Accounting M ethod


performance is evaluated from the monetary returns
yields to his or her organization
Dependent upon cost and benefit analysis
Cost to keep employee, and benefit the organization
derives is ascertained

COST

BENEFITS

Com parative evaluation approaches


Collection of different methods
Conducted by supervisors
Result in ranking from best to worst

Comparative
Evaluation
Methods
Ranking
Method

Paired
Comparison
Method

Ranking M ethod
The evaluator rates the employee from highest to lowest on some
overall criteria

Employee Rank
A

4
Rank the positions, with one being the position of most worth, based on
the characteristics you consider most important to your company
Determine the characteristics you consider most important to your
company.
Write a short job description for each position to help you keep in mind
the primary duties of each position.
Make a list that includes each position you have at your company. Keep in
mind you are ranking positions, not employees. I

M ethod

Advantages and D isadvantages


The how and why are not questioned
No attempt is made to fractionalise what is
being appraised
Subject to halo and recency effects
It is easy to administer and explain

Paired com parison m ethod


Each worker is compared with all other employees in a
group
For several traits paired comparisons are made,
tabulated and then rank is assigned to each worker
This method is not applicable when the group is large

Final
Rank

No of evaluation : N ( N-1)
----------2

Rank your positions. The position with the highest total is the top-ranked
position. In case of ties, the position that received the 1 in the head-tohead ranking should be ranked higher.
Add up the row

Draw a chart or create one using a spreadsheet software program. You will
need an equal number of rows and columns.

Fill in the headers for each column, starting with the space to the right of
the blank cell. In each cell, write or type a position in your company,
working from left to right.

Compare the first position, the one listed immediately below the blank
space, to each position to its right. Dont compare a position to itself; put
an X in that space

M ethod

Advantages
useful where priorities are not clear.
useful where you do not have objective data to base
this on.
It helps you to set priorities where there are conflicting
demands on your resources
This makes it easy to choose the most important
problem to solve, or select the solution that will give
you the greatest advantage.

W hy past oriented m ethods w ere scrapped


traditional appraisal systems were often closed
The period of evaluation has occured with no scope of
change
Feedback is not result oriented
appraisal process has become increasingly integrated
into complementary organizational initiatives, such as
training and mentoring.

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