Performance Appraisal

Every morning, a gazelle wakes up knowing it

must run faster than the fastest lion or be killed.
Every morning a lion awakens knowing it must
outrun the slowest gazelle or starve to death. It
doesn’t matter if you are a lion or gazelle. When
the sun comes up, you’d better be running.

- African parable
Performance Appraisal
• It is a process of estimating or judging the value,
excellence, qualities, or status of some object, person or
thing.
• A tool to calibrate, refine and reward performance of the
employees.
• “Performance appraisal is the process of evaluating how
well employees perform their jobs when compared to a set
of standards and then communicating that information to
those employees”(Mathis and Jackson).
• “Performance appraisal is the ongoing process of
evaluating and managing both the behaviour and human
outcomes in workplace”(Carrell, Elbert and Hatfield).
Performance Appraisal

Set goals and

expectations

Provide Feedback
Provide rewards and Measure
and recognition Coaching performance

Reinforce goals
and
expectations
Objectives of performance appraisal
• Provide clarity of the expectations and
responsibilities
• To review the performance of employees
• To judge the gap between actual and the desired
performance
• Help the management in exercising control
• Assess future potential and career planning decision
• Help to develop counseling systems
• To diagnose the strengths and weaknesses of the
individuals so as to identify the training and
development needs of the future.
Cont….
My main job was developing talent. I was a
gardener providing water and other nourishment
to our top 750 people. Of course, I had to pull
out some weeds, too.
- Jack Welch
Process of Performance Appraisal

 Determine appraisal objectives (SMART)

 Choose appraisal techniques
 Determine appraisers
 Train managers and employees
 Distribute forms
 Finalize ratings
 Communicate ratings
 Prepare MIS
 Setting Goals

SMART Goals:
 Specific, and clearly state the desired results.
 Measurable in answering “how much.”
 Attainable, and not too tough or too easy.
 Relevant to what’s to be achieved.
 Timely in reflecting deadlines and milestones.
Methods of performance appraisal
Ranking
Simple ranking:
Employees overall performance is compared with
other employees based on identified performance
traits
A list of employees in order moves from best
performer to marginal performer

Alternation ranking:
Best employee is put at the head of the list and
marginal goes to the bottom
This goes on from the remaining employees and
continue till all the employees are ranked
Paired comparison method
Subjectively decide which employee is better
• Example:
• Bob > Carol; Bob > Ted; Bob > Alice
• Carol > Ted; Carol > Alice
• Ted > Alice
• Note that you are comparing one employee to
another
• Problem: inconsistent subjective comparisons: Bob >
Carol; Carol > Ted; Ted > Bob (see the inconsistency
here?)
Essay method
Appraiser rates the employee in an open ended manner
and puts down his impressions about the employee on
a regular basis.
These impressions relate to strong and weak points of
the employee’s behavior.
Critical incident method
Appraiser keeps a diary to record critical incidents
involving effective and ineffective job behaviors.
Pay attention to employee’s exceptional behaviors in
some performance areas at different times.
These critical incidents are later used as criteria for
evaluating employee’s performance
Critical Incident Method
Ex: A fire, sudden breakdown, accident
Workers Reaction Scale

A Informed the supervisor immediately 5

B Become anxious on loss of output 4
C Tried to repair the machine 3
D Complained for poor maintenance 2
Graphic rating scale Method
• Subjectively rate the employee’s job performance on
a labeled numeric measuring scale
• Rating scales are perhaps the most commonly used
method of subjectively evaluating an employee’s job
performance
• Before we use a rating scale to subjectively rate an
employee’s job performance, we need to:
• Identify the aspects of job performance (results &
behaviors) that are to be evaluated (rated) using the
rating scale
• Develop the rating scale itself (design a rating scale
for academic course evaluation)
• Subjectively rate the employee’s job performance on
a labeled numeric measuring scale
• Rating scales are perhaps the most commonly used
method of subjectively evaluating an employee’s job
performance
• Before we use a rating scale to subjectively rate an
employee’s job performance, we need to:
• Identify the aspects of job performance (results &
behaviors) that are to be evaluated (rated) using the
rating scale
• Develop the rating scale itself (design a rating scale
for academic course evaluation)
Examples of Rating
Scales
Examples…………
Rating Scale Examples
• Examples of a 5-point scale:
– 5 = Excellent
4 = Very satisfactory
3 = Satisfactory
2 = Unsatisfactory
1 = Very unsatisfactory
– 5 = Greatly exceeds standards
4 = Exceeds standards
3 = Meets standards
2 = Below standards
1 = Far below standards
Rating Scale Examples
• Example of a 7-point scale:
– 7 = Truly exceptional
6 = Excellent
5 = Very good
4 = Good
3 = Satisfactory
2 = Unsatisfactory
1 = Very unsatisfactory
MBO (L&T, TCS, Lintas India ltd etc)
Commonly used for managers and professionals
At the beginning of the review period, the employee and
the supervisor meet and they agree on a set of goals to be
achieved by the employee during the review period
Review period is typically one year, but could be more
often
Apply the goal setting principles:
Involve the employee in setting objectives
Make the objectives pecific, concrete, & measurable
Make the objectives difficult but achievable, challenging
but realistic
Empower employees to achieve their objectives
Behaviorally Anchored Rating Scale (BARS)
Behaviorally Anchored Rating Scale (BARS): replace the vague
descriptors in a rating scale with specific examples of
performance. A different scale will be needed for each aspect of
job performance
Example: Customer Assistance
5 = Could be expected to volunteer to help customer and to walk
with customer to location of desired product
4 = Could be expected to walk with customer to location of
desired product when asked for help by customer
3 = Could be expected to tell and point customer to where the
desired product is located when asked for help by customer
2 = Could be expected to shrug shoulders and walk away when
asked for assistance by customer
1 = Could be expected to hide from customers in the employee
break-room
 Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for
increased sales and to have positive relationships with
customers all over the country.

Good 6 Can expect to initiate creative ideas for improved sales.

Above average 5 Can expect to keep in touch with the customers

throughout the year.
Average 4 Can manage, with difficulty, to deliver the goods in time.

Below average 3 Can expect to unload the trucks when asked by the
supervisor.
Poor 2 Can expect to inform only a part of the customers.

Extremely poor 1 Can expect to take extended coffee breaks & roam
around purposelessly.
Assessment centre method (Tata, Wipro,
Cognizant, ICICI Bank)
• It is a multiple assessment of several
individuals performed simultaneously by a
group of trained evaluators
• Multiple assessment techniques are used
• Uses multiple assessment devices
• More objective and provides personal
development avenues
Self Appraisal
Some tips:
• Be honest
• Do the preparation
• Be objective
• Positive attitude
• Cover all the aspects
• Seek future responsibilities
360 Degree (Wipro, Infosys, Reliance Industries, Nestle,
J&J,IBM, Xerox etc.)

Boss
Team members
Peers

Feedback

Customers
Self
Staff
360 Degree at Johnson and Johnson
360 degree is used at J&J as a developmental tool and
not as performance measurement tool. The need for 360
degree at Johnson and Johnson can be articulated as:

• To help individuals receive real feedback on

leadership behaviour .
• To help individuals identify the areas of development
as leaders
• To help individuals create a personal development
plan
• To help individuals seek continuous feedback on
progress on the development plan and behaviour
change.
Pitfalls encountered in performance appraisal
• Unclear standards
• First impression
• Recent impression/recency
• Halo effect
• Horn effect
• Leniency
• Central tendency
• Shifting standards
• Different rater’s patterns
• Stereotyping( Rater’s bias)
• Spill-over effect
 Appraising Performance:
Problems and Solutions

How to Avoid
Appraisal Problems

Control
Know Use the Train Keep
Outside
Problems Right Tool Supervisors a Diary
Influences
 Who does the appraisal?

Immediate Supervisor Self-Rating

Peers
Potential Subordinates
Appraisers

Rating 360-Degree
Committee Feedback
Benefits of Performance appraisal

• Is basis for pay and promotion decisions.

• Plays an integral role in performance
management.
• Helps in correcting deficiencies and
reinforcing good performance.
• Is useful in career planning.