Performance Appraisal: Key Aspects and Trends

Amity Business School
Performance Appraisalpraisal
Performance
• The action or process of performing a task.
• Fulfillment of an obligation
• It is actual application.
• It is always the external evidence

Objective
• To provide a feedback to employees regarding their performance
and related status.
• To identify the strengths and weaknesses of employees to place

right men on right job.
• To maintain and assess the potential present in a person for

further growth and development.
• To maintain records in order to determine compensation packages,

wage structure, salaries raises, etc.
.
• To review and retain the promotional and other training
programmes.
Summary of Objective
• Opportunity to Regularly Discuss Results
• Supervisor Identifies Strengths and Weaknesses
• Fair and Equitable Format
• Basis for Salary/Promotion Recommendations

QUIZ
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10
What We Tend To Remember

• First impressions
• Recent behaviors
• Unusual behaviors
• Extreme behaviors
• Behavior consistent
with opinion
11
What We Tend to Forget
• Details
• The source of
the information
12
Common Rating Errors

• Halo or Horns
• Range Restriction
– leniency
– strictness
– central tendency
• Location Errors
– proximity
– contrast
13
Low Rater Reliability
Common rating
errors:
• Different standards
and comparisons
• Observation of
different behaviors
14
Making Attributions About Behavior
• Consensus
• Distinctiveness
• Consistency
15
Other Rating Issues

• Evaluation
Frequency
– semi-annual
– annual
– more frequent during
probation?
• Formal vs. informal
16
Issues and Problems in Performance
Appraisal
Incompetence
Lack of
impersonal
and timely Lack of Job
feedback- relatedness
Other issues
of
Performance
Lack of Appraisal- Lack of
Standardisation Reliability
Lack of Complicated
Documentation formats
17
https://www.youtube.com/watch?v=jCPaQuY-ejg
Historical Review/ Evolution of Performance

appraisal
19
Evolution of Performance Appraisal Methods

Job Description & Performance

Appraisal
What better way to assess an employee’s

performance than to compare it to the
expectations of the job
Job Description
• It is a list of:
o General Tasks/functions
o Key duties
o Key role interactions
o Professional skills
o Work environment
o Performance standards
o Salary and benefits
Effect of JD on Employee Performance

• Effective Recruiting
• Productivity
• Morale and Retention
• Annual reviews
• Organizational planning
History of PA Amity Business School
• Mid 1950 – Personality based system
• 1957 (McGregor) Participative and performance based

approach
• 1960- MBO – Goal setting and assessment of

performance related activities
• 1970 – Research on Rating scale and its use
• 1980-1990 – more holistic and vogue

• 1999 – Metacompetencies
Traditional Methods
• Straight Ranking Method
• Paired Comparison Method
• Grading method
• Graphic Rating Scale
• Confidential Report
• Essay Evaluation
Forced Choice Description Method

Checklist
Forced Distribution Method

(Joseph Tiffin)
• Rating of Two Factors:

1. Job Performance
2. Promotability
Essay Method
Modern Methods
• Critical Incident Technique

• BARS
• MBO
• Balance Score Card
• 360 Degree Appraisal
41
Critical Incident Technique

(Behaviour Based)
• Identify the major dimensions of

performance on the job
• Generate ‘Critical incidents’ of performance
• Double check that the incidents represents

one dimension (Retranslation)
• Assign effectiveness values to each

incidents
How to Construct BARS

• Step I: Collect critical incidents
• Step II: Identify performance dimensions
• Step III: Reclassification of incidents
• Step IV: Assigning scale values to the incidents
• Step V: Producing the final instruments

48
MBO (Management By Objective)

Key Elements:
1. Arranging organizational goals in a means- end
chain
2. Engaging in joint goal setting
3. Conducting periodic progress reviews
4. Conducting annual performance reviews

Characteristics
• Helps to align the goals
• Provide focus
• Use S.M.A.R.T. system for establishing the
goals
• Prevents “Activity Trap”
• Empowers employees
• Emphasizes participative management
• Concentrates on key result areas
360 Degree Appraisal Method

• Used for Middle and Senior level employees

• Offer a more comprehensive view towards the performance of employees.
• Min of 12 raters
• Create a channel of open communication
• Very expensive
Balance Score Card

(Robert and David)
Setting of BSC:
 Vision + Mission + Values = Goals + Objectives +

strategies
 Strategy maps Action Plan (Projects &

Initiatives)
 BSC : A careful selected set of quantifiable measures

derived from organization’s strategy maps
56
57
BSC
Financial Perspective
(How do we look to our share holders)
Customer Persepective
(How do our customer See us)
Internal Process Perspective

(How well the business is Running)
Employee Knowledge and Growth Perspective

Two Types of KPIs

• Leading Indicators: Measure activities that has significant effect on future
performance
• Lagging Indicators: Measure the output of past activity

Performance Management
Factors affecting Performance

77
Definition
Performance Management is
defined as :
Strategic & Integrated
approach to deliver successful
results in the organization by
improving the performance
and developing the capabilities
of team & individuals.
(Armstrong & Baron)
78
Performance Management
Features:
•Emphasis on both Development & Evaluation
•Defining individual strength and developmental needs
•Integration of results and means of achieving it.
•Separation of developmental review from salary review
Basic aim of PMS:

1.Understanding + Participation + Use -- expectations
2.Capacity Levels of capability
level of support by management
resources made available to them

Components of Effective PMS

• Performance Planning
• Performance appraisal and Reviewing
• Feedback followed by personal counseling and performance facilitation
• Rewarding good performance
• Performance improvement plans
• Potential apprasial
PMS Cycle
PERFORMANCE MANAGEMENT
SEQUENCE

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Amity Business School

• The action or process of performing a task.

• It is always the external evidence

• To identify the strengths and weaknesses of employees to place

• To maintain and assess the potential present in a person for

• To maintain records in order to determine compensation packages,

• Supervisor Identifies Strengths and Weaknesses

• Fair and Equitable Format

• Basis for Salary/Promotion Recommendations

What We Tend To Remember

What We Tend to Forget

Common Rating Errors

Low Rater Reliability

Making Attributions About Behavior

Other Rating Issues

• Formal vs. informal

Historical Review/ Evolution of Performance

Evolution of Performance Appraisal Methods

Job Description & Performance

What better way to assess an employee’s

Effect of JD on Employee Performance

• Mid 1950 – Personality based system

• 1957 (McGregor) Participative and performance based

• 1960- MBO – Goal setting and assessment of

• 1970 – Research on Rating scale and its use

• 1980-1990 – more holistic and vogue

Forced Choice Description Method

Forced Distribution Method

• Rating of Two Factors:

• Critical Incident Technique

Critical Incident Technique

• Identify the major dimensions of

• Generate ‘Critical incidents’ of performance

• Double check that the incidents represents

• Assign effectiveness values to each

How to Construct BARS

• Step II: Identify performance dimensions

• Step III: Reclassification of incidents

• Step IV: Assigning scale values to the incidents

• Step V: Producing the final instruments

MBO (Management By Objective)

2. Engaging in joint goal setting

3. Conducting periodic progress reviews

4. Conducting annual performance reviews

360 Degree Appraisal Method

• Used for Middle and Senior level employees

Balance Score Card

 Vision + Mission + Values = Goals + Objectives +

 Strategy maps Action Plan (Projects &

 BSC : A careful selected set of quantifiable measures

Internal Process Perspective

Employee Knowledge and Growth Perspective

Two Types of KPIs

• Lagging Indicators: Measure the output of past activity

Factors affecting Performance

Basic aim of PMS:

2.Capacity Levels of capability

level of support by management

resources made available to them

Components of Effective PMS

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