Performance Appraisals

Contents
1. 2. 3. 4. 5. 6. 7. Understanding Performance Appraisal Characteristics and Objectives of PA Benefits to Company & Employees Performance Appraisal Design Problems in PA Performance Appraisal Process Performance Appraisal Methods

Performance Appraisal Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality, performance, potential, of an Organizations' Human Resources.

The Questions?
Why do we measure performance? What are the effective performance appraisal systems? How do we measure performance?

Characteristics of Performance Appraisals

It is a step by step process It examine the employee strengths and weaknesses Scientific and objective study Ongoing and continuous process Secure information for making correct decisions on employees

PA - Needs and Objectives

Provide feedback about employees Provide database Diagnose the S & W of individuals Provide coaching, counseling, career planning to subordinates Develop positive relation and reduce grievance Facilitates research in personnel management

Appraisal Benefits - Company

Appraisals offer the company: Documentation Employee Development Feedback Legal protection Motivation system

Appraisal Benefits - Employees

Appraisals offer employees: Direction Feedback Input Motivation

Why Appraisals Are Important ? Recognize accomplishments Guide progress Improve performance Review performance Set goals Identify problems Discuss career advancement

Steps in performance appraisal

Establishing job standards Designing an appraisal programme Appraise performance Performance interview Use appraisal data For appropriate purpose

Process of Performance Appraisals

Setting performance standards

Taking corrective measures

Communicating standards

Discussing results Comparing standards

Measuring standards

Issues in Appraisal Design Process

Formal and informal What methods? Whose performance?

When to evaluate? Appraisal Design?

Who are the raters?

What to evaluate? How to solve?

What problems?

Performance Levels to evaluate? (Philip Model)

H Potential L

Problem children Planned separation L

Stars Social citizen H

Performance

How PA contribute to Company s competitive advantage?

Improving performance Values and behavior Competitive advantage Minimize Dissatisfaction levels Ensuring legal competence Making correct decision

Problems in performance appraisal 1. Errors In rating Halo effects Stereotyping Central tendency Constant error Personal bias Spill over effect

2. 3. 4. 5. 6.

Problems in performance appraisal (Cont d) Incompetence Negative approach Multiple objectives Resistance Lack of knowledge

Essentials of an effective appraisal system

Mutual trust Clear objectives Standardizations Training Job relatedness Documentation Feedback and participation Individual differences Post appraisal review Review and appeal

Discrimination
Failure to communicate standards Failure to give timely feedback Failure to allow employees to correct performance Inconsistency in measuring performance Failure to document performance objectively

Appraisal Forms
Define performance expectations Describe measurement tools Use a rating system Cover specific examples Set measurable goals

Document Performance
Make sure documentation is objective Document performance of all employees Provide complete and accurate information Document performance on a regular basis

Set Goals .
Based on job requirements Realistic Measurable Observable Challenging Prioritized

Employees Inputs
Employees take an active role in: Setting goals Designing action plans Identifying strengths and weaknesses Employees participate in the PA meeting

Preparing for Performance Appraisal

Preparation for the interview begins with completing the appraisal form. The Appraiser should allow enough time to complete the form carefully and thoughtfully. The Appraiser should think about how the employee is likely to react to the appraisal and should plan how to handle the employee s reaction. Also be ready with some ideas for how to correct problems noted in the appraisal.

Preparation
Notify the employee ahead of the time of the interview. Arrange for a private place to hold the interview. Make arrangements to prevent interruptions. This is a very important event for both the supervisor and the employee--treat it as such.

Guidelines for Conducting the Interview

Begin the interview session by an attempt to put the employee at ease.
A refreshment and small talk may help break the ice.

Review the employee s self-evaluation first, if there is one.

Ask for reasons for the various ratings. Then the supervisor describes his or her evaluation of the employee.
Start with an overall impression, then explain the contents of the appraisal forms. Most employees are waiting for the bad news, so it is probably most effective to describe areas for improvement first. Then describe the employee s strengths.

Start the Meeting

Start with totally out of the topic / subject. Find out personal details / updates Lay out agenda Talk about colleagues, work etc., Encourage appraisee inputs Give good news first, always.

During the Meeting

Review performance Based on previous goals Noting strengths and accomplishments Identifying areas for improvement Set goals: Based on company goals Focus on areas that need improvement

End the Meeting

Encourage good performance Lay out action plan for next review cycle Communicate outcome of goals did not meet Confirm mutual understanding Share the deficiencies, if any, in more subtle way.

Tips to have effective Review meetings

Focus on the overall performance, not the recent incidents. Recall the whole year / period s contributions, both positive and negative. Share positives - Always Give objective examples Invite response Listen actively Create we mentality

Continuous Feedback
Formal appraisals Informal appraisals Open communication

Recognize & Reward Good Performance

Verbal Public Tangible Monetary

Identify Poor Performance

Act early Take the right approach Deal with employee reaction Handle continued poor performance Be careful while reviewing highly emotional employees

Discipline Poor Performance

Recognize problems, in detail. Talk to the employees, at length. Help them to get over the problems, if any. Follow company policy in taking discipline actions, if needed.

Key Points to Remember

You must conduct objective appraisals on a scheduled basis. Appraisals tell employees how they re doing and how they can improve. Appraisals help create a system of motivation and rewards based on performance.

Performance Appraisal Methods

Performance Appraisal Methods

Individual Evaluation Methods Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale MBO

Critical-Incident Appraisal
Critical-incident Appraisal: A performance appraisal in which the supervisor keeps a record of incidents that show positive and negative ways the employee has acted; the supervisor uses this record to assess the employee s performance. To conduct a critical-incident appraisal, the supervisor keeps a written record of incidents that show positive and negative ways in which the employee has acted.
The record should include dates, people involved, actions taken, and any other details that are relevant. At the time of the appraisal, the supervisor reviews the record to reach an overall evaluation of the employee s behavior. During the appraisal interview, the employee has a chance to respond to each of the incidents recorded.

Critical Incident method

Ex: A fire, sudden breakdown, accident Workers A B C D E reaction informed the supervisor immediately Become anxious on loss of output tried to repair the machine Complained for poor maintenance was happy to avoid work scale 5 4 3 2 1

Checklist method
Simple checklist method Weighted checklist method Forced choice method

Simple checklist method: Is employee regular Is employee respected by subordinate Is employee helpful Does he follow instruction Does he keep the equipment in order

Y/N Y/N Y/N Y/N Y/N

Weighted checklist method

Weightage 1. 2. 3. 4. 5. Regularity Loyalty Willing to help Quality of work Working relationships Performance Rating
(scale 1 to 5 )

10% 10% 20% 20% 40%

Forced-Choice Approach
Forced-choice Approach: A performance appraisal that presents the appraiser with sets of statements describing employee behavior; the appraiser must choose which statement is most characteristic of the employee and which is least characteristic. This type of appraisal form gives the supervisor sets of statements describing employee behavior. For each set of statements, the supervisor must select the one that is most and the one that is least characteristic of the employee. These questionnaires prevent the supervisor from saying only positive things about employees. It is used when an organization finds that supervisors have been rating an unbelievably high proportion of employees as above average.

Forced Choice Method

Criteria 1.Regularity on the job Always regular Inform in advance for delay Never regular Remain absent Neither regular nor irregular Rating

Graphic Rating Scale

Graphic Rating Scale: A performance appraisal that rates the degree to which the employee has achieved various characteristics. The graphic rating scale is the most common type of appraisal used. Various characteristics such as job knowledge or punctuality are rated by the degree of achievement. The rate usually receives a score of 1 to 5, with 5 representing excellent performance. Some forms allow for additional comments. The advantage of this type of appraisal is that it is relatively easy to use. However, the ratings themselves are subjective. What one supervisor considers excellent may seem just average to someone else. Also, many supervisors tend to rate everyone as being at least a little bit above average. Additional descriptive information is an attempt to overcome these problems.

Graphic Rating Scale

Employee name_________ Deptt_______ Raters name ___________ Date________ -----------------------------------------------------------------------Exclnt. Good Acceptable Fair Poor 5 4 3 2 1 _ 1. Dependability 2. Initiative 3. Overall output 4. Attendance 5. Attitude 6. Cooperation Total score

Behaviorally Anchored Rating Scales

Behaviorally Anchored Rating Scales: A performance appraisal in which the employee is rated on scales containing statements describing performance in several areas.
This is a method of performance appraisal that is tailored to the organization and positions within that organization. Some organizations pay behavioral scientists or organizational psychologists to create behaviorally anchored rating scales. These scales rate employee performance in several areas. The supervisor selects the statement that best describes how the employee performs. Each job title in the organization has a different set of rating statements. The advantage of using this technique is that it is tailored to the organization s objectives for employees. It also tends to be less subjective than some other approaches. However, developing the scales is time-consuming and therefore relatively expensive.

BARS( Behaviorally Anchored Rating Scale)

Step 1. Step 2. Step 3. Step 4. Step 5.

Identify critical incidents Select performance dimension Retranslate the incidents Assign scales to incidents Develop final instrument

Management by Objectives (MBO)

In organizations where MBO is used to set goals and objectives for employees, the supervisor will use this approach for performance appraisal also.
The appraisal is based on whether or not the employee has met his or her objectives. The advantage is that employees know what to expect. The supervisor focuses on results rather than more subjective criteria.

MBO Process
Set organizational goals Defining performance target Performance review feedback

Performance Appraisal Methods

Group Appraisal
Ranking Paired comparison Forced distribution Performance tests Field review technique

Ranking method
Employee A B C D E Rank 2 1 3 5 4

Forced Distribution Method

No. of employees 10% 20% 40% 20% 10% Excellent

poor Below average good average Force distribution curve

360* Appraisal Process

360-degree Feedback: Performance appraisal that combines assessment from several sources. Because the supervisor cannot know all of an employee s behaviors and their impact on others in the organization, the supervisor may combine his or her appraisal with self-assessments by the employee or with appraisals by peers or subordinates.
Combining several sources of appraisals is called 360-degree feedback. The self-assessment may be done before the interview. Then the supervisor and employee can compare the employee s appraisal with his or her own evaluation.

360* Appraisal Process

Performance Dimension Leadership Communication Interpersonal skills Decision making Technical skills Motivation subordinate peers superior customer

^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

^ ^ ^

Performance Appraisal Guidelines for Different Levels

For Senior Management

Return on capital employed Contribution to community development Degree of upward communication from middle-level executives Degree of growth and expansion of enterprise.

for Middle Level Managers

Departmental performance Coordination among employees Degree of upward communication from supervisors Degree of clarity about corporate goals and policies

For Junior Level Managers

Quality and quantity of output in a given period Labor cost per unit of output in a given period Material cost per unit in a given period Rate of absenteeism and turnover of employees No of accidents in a given period

Any Questions ???