Chapter 10

Appraising and Managing Performance

Human Resource Management, 5E

Learning Objectives
Understand the nature of performance evaluation Compare and contrast performance appraisal and job evaluation Explain different stages in evaluation Describe job evaluation process

Human Resource Management, 5E

Objectives of Appraisal
To effect promotions based on competence and performance. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To assess the training and development needs of employees. To decide upon a pay raise where (as in the unorganised sector) regular pay scales have not been fixed.
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Objectives of Appraisal (contd..)

To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. Finally, performance appraisal can be used to determine whether HR programmes such as selection, training, and transfers have been effective or not.
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Multiple Purposes of Appraisal

Table 10.1. Multiple Purposes of Performance Assessment General Applications
Developmental Uses

Specific Purpose
Identification of individual needs Performance feedback Determining transfer and job assignments Identification of individual strengths and developmental needs Salary Promotion Retention or termination Recognition of individual performance Lay-offs Identification of poor performers HR planning Determining organisation training needs Evaluation of organisational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organisational development Criteria for validation research Documentation for HR decisions Helping to meet legal requirements

Administrative Uses/Decisions

Organisational Maintenance/Objectives

Documentation

Source: Cynthia D. Fisher, et al. Human resource management, Houghton Mifflin, 1997, p.455

Human Resource Management, 5E

How Performance Appraisal can Contribute to Firms Competitive Advantage

Improving Performance Strategy and Behaviour Competitive Advantage Values and Behaviour Minimising Dissatisfaction and Turnover
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Making Correct Decisions

Ensuring Legal Compliance

The Performance Appraisal Process

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purposes

Human Resource Management, 5E

Problems of Rating
Leniency or severity Central tendency Halo error Rater effect Primacy and recency effects Perceptual set Spillover effect Status effect
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Methods of Performance Appraisal

MBO Future-oriented

Rating Scales Cost Accounting Checklists

360 Degree Appraisal

Assessment Centres

Essay

Forced Choice

ACRS Tests and Observations

Appraisal Methods

Forced Distribution Critical Incident

Field Review BARS

Psychological Appraisals

Past-oriented

Human Resource Management, 5E

Challenges of Appraisal
Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed Align organisational objectives to individual aspirations Clear growth paths for talented individuals Provide new challenges to rejuvenate careers that have reached the plateau stage Forge a partnership with people for managing their careers Empower employees to make decisions without the fear of failing Embed teamwork in all operational processes Debureaucratise the organisation structure for ease of flow of information

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Appraising Teams
Identify KRAs critical to business during the year Set tangible targets for each KRA. Incorporate stretch elements for each target. Fix the minimum acceptable target Determine intangible parameters (like initiative), which indicate pockets of individual excellence with the team

Evaluate performance of the team against pre-determined targets

Communicate the results to ensure transparency

Measure the performance of the team (actual versus targets) every month

Identify individuals who have excelled. Discount subjective factors by including assessors from outside the team to identify outstanding individuals.

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Legal Issues
Legally Defensible Appraisal Procedures Legally Defensible Appraisal Content Legally Defensible Documentation of Appraisal Results Legally Defensible Raters

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Deference Between Job Evaluation and Performance Appraisal

Table 10.7. Difference between Job Evaluation and Performance Appraisal Job Evaluation Job Appraisal The job is rated, keeping in view such factors as Employee is rated on the basis of his or responsibility, qualification, experience, working her performance conditions, etc. required for performance of the job. A job is rated before the employee is appointed to occupy it. The purpose is to establish satisfactory wage differentials Evaluation takes after the employee has been hired and placed on a job The purpose is to effect promotions, offer reward, award punishments, assess training needs, resort to lay-offs, transfers, etc.

It is not compulsory. Many organisations carry on Compulsory. It is done regularly for all without it. Where it is followed, it is mainly for lower jobs. level jobs. Job evaluation committee (comprising internal and external experts) is constituted for the purpose of evaluation. Appraisal is done by employees themselves, peers, superiors, group of people, or combinations of these.

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Job-evaluation Process
Objectives of Job evaluation Job Analysis Job description Job specification

Job evaluation programme Wage survey Employee classification

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Methods of Job Evaluation

Analytical Methods Point Ranking Method Factor Comparison Method Job Evaluation NonAnalytical Methods Ranking Method Job-Grading Method

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Reality Check
Were you at any time a beneficiary or victim of halo-error? Recollect and write down the details.

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Reality Check
In most family-owned business, sons or daughters join fathers business. In such scenarios, fathers are the bosses and off springs are the subordinates. How should such bosses rate performances of their subordinates? Which of these errors are likely to occur.

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Reality Check
Why is job evaluation not so pervasive as performance appraisal?

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