Libyan International University

Faculty of Pharmacy

Subject – Business Administration

Performance Appraisal

Presented by:
Mr. Jaser Asweri
[email protected]
20 / November / 2021

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 Contents

• Intended Learning Outcomes (ILOs)

• Introduction to Performance Appraisal.
• Components of Performance Appraisal.
• Performance Appraisal Types.
• Advantages of Performance Appraisal.
• Drawback of Performance Appraisal.
• Biases of Performance Appraisal.
• Conclusion.

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Intended learning outcomes (ILOs)
• In this class, the students should be able to:

▪ Understand the Performance Appraisal.

▪ Explain the Performance Appraisal Process.
▪ Identify Components of Performance Appraisal.
▪ Describe the Performance Appraisal Types.
▪ Recognize the advantages, drawbacks, and biases of
Performance Appraisal.

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 Introduction to Performance
Appraisal
• A performance appraisal is a regular review of an employee's
job performance and overall contribution to a company. Also
known as an "annual review," "performance review or
evaluation," or "employee appraisal,“
• the performance appraisal evaluates an employee’s skills,
achievements and growth, or lack thereof.
• Companies use performance appraisals to give employees
big-picture feedback on their work and to justify pay increases
and bonuses, as well as termination decisions.
• They can be conducted at any given time but tend to be annual,
semi-annual or quarterly.

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 Introduction to Performance
Appraisal
• Documenting performance provides a basis for pay
increases and promotions. Appraisals are also
important to help staff members improve their
performance and as a way by which they can be
rewarded or recognized for a job well done.
• An employee performance appraisal is a
process-often combining both written and oral
elements-whereby management evaluates and
provides feedback on employee job performance,
including steps to improve or redirect activities as
needed.
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 Why Companies give
Performance Appraisals ?
• Because companies have a limited pool of funds from
which to award raises and bonuses, performance
appraisals help determine how to allocate those funds.
• They provide a way for companies to determine
which employees have contributed the most to the
company’s growth so companies can reward their
top-performing employees accordingly.

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 Functions of Performance
Appraisal
Performance appraisal has three basic functions:
• (1) Provide adequate feedback to each person on his
or her performance.
• (2) Serve as a basis for modifying or changing
behavior toward more effective working habits.
•(3) Provide data to managers with which they may
judge future job assignments and compensation.

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Components

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 Performance Appraisal Types
• Self assessment: Individuals rate their job performance and
behavior.
• Peer assessment: An individual's work group rates his
performance.
• 360-degree feedback assessment: Includes input from an
individual, his/her supervisor and his/her peers.
• Negotiated appraisal: A newer trend, utilizes a mediator and
attempts to moderate the adversarial nature of performance
evaluations by allowing the subject to present first. Also
focuses on what the individual is doing right before any
criticism is given. This structure tends to be useful during
conflicts between subordinates and supervisors.
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 Performance Appraisal Process
❑ Performance appraisal provides an opportunity for the
employee and supervisor to discuss job related
performance and to establish goals for improvement
and further development.

❑ The goal of the performance appraisal is to enhance

the employee’s job performance while establishing
good communication channels between the employee
and the supervisor

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 CONT…

▪ Supervisor reviews employee job description (update if needed

and email a copy to the Director of Compensation).
▪ If changes are made to the employee's job description, update
the corresponding Position Evaluation Questionnaire (PEQ)
and email a copy to the Director of Compensation.
▪ Supervisor reviews employee attendance record from previous
year.
▪ Supervisor seeks feedback from employee regarding past year
accomplishments/challenges and future year goals.

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 CONT…

•Supervisor completes performance appraisal.

•Supervisor meets with employee to discuss performance
appraisal.
•Supervisor forwards completed appraisal to Department
Head for review and signature.
•Department Head forwards signed performance
appraisal to Human Resources.

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 Objectives of Performance
Appraisal
Performance Appraisal can be done with following
objectives in mind:
•1. To maintain records in order to determine
compensation packages, wage structure, salaries raises,
etc.
•2. To identify the strengths and weaknesses of
employees to place right men on right job.
•3. To maintain and assess the potential present in a
person for further growth and development.
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 CONT…

4. To provide a feedback to employees regarding their

performance and related status.
5. It serves as a basis for influencing working habits of
the employees.
6. To review and retain the promotional and other
training programs.

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 Advantages of Performance
Appraisal
• Performance appraisal is an investment for the company,
which can be justified by following advantages:
1. Promotion: Performance Appraisal helps the supervisors
to determine the promotion programs for efficient
employees. Inefficient workers are dismissed or demoted.
2. Compensation: Compensation packages, which includes
bonus, high salary rates, extra benefits, allowances and
are dependent on performance appraisal. The criteria
should be merit rather than seniority.

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 Advantages of Performance
Appraisal
3. Employees Development: The systematic procedure of
performance appraisal helps the supervisors to frame
training policies and programmes. It helps to analyze
strengths and weaknesses of employees so that new jobs can
be designed for efficient employees.
4. Selection Validation: Performance Appraisal helps the
supervisors to understand the validity and importance of the
selection procedure. The supervisors come to know the
validity and thereby the strengths and weaknesses of
selection procedure. Future changes in selection methods
can be made in this regard.
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 Advantages of Performance
Appraisal
5. Communication: For an organization, effective communication
between employees and employers is very important. By
performance appraisal, organization can ensure effective
communication.
6. Motivation: Performance appraisal serves as a motivation tool.
Through evaluating performance of employees, a person’s efficiency
can be determined if the targets are achieved. This very well
motivates a person for better job and helps him to improve his
performance in the future.

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 Drawbacks of performance
appraisal
1- No matter how well defined the dimensions for
appraising performance on quantitative goals are,
judgments on performance are usually subjective and
impressionistic.
2- Because appraisals provide inadequate information
about the subtleties of performance, managers using
them to compare employees for the purposes of
determining salary increases often make arbitrary
judgments.
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 Drawbacks of performance
appraisal
3- Ratings by different managers, and especially those
in different units, are usually incomparable. What is
excellent work in one unit may be unacceptable in
another in the same company.
4- When salary increases are allocated on the basis of a
curve of normal distribution, which is in turn based on
rating of results rather than on behaviour, competent
employees may not only be denied increases, but may
also become demotivated.

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 Drawbacks of performance
appraisal
5- Trying to base promotion and layoff decisions on
appraisal data leaves the decisions open to acrimonious
debate.
6- Although managers are urged to give feedback freely
and often, there are no built-in mechanisms for ensuring
that they do so. Delay in feedback creates both
frustration, when good performance is not quickly
recognized, and anger, when judgment is rendered for
inadequacies long past.

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 Performance Appraisal Biases
A bias is a prejudice in favor of or against someone or
something. It should be understood that employees expect
their performance evaluations to be fair and free of biases.
Here are four common ones:
1. Contrast - This occurs when the manager compares an
employee’s performance to other employees instead of the
company standard. When employees are ranked in
comparison, someone must end up at the bottom, even if
they are exceeding the company standard. The problem is
not the employee- it is the standard that has been set.

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 Performance Appraisal Biases
2. Halo-Effect - An employee is rated highly(or low) in all
areas because of one thing they do really well(or bad). A
sales woman hits the numbers and senior leadership loves it.
However, behind the scenes, she creates havoc and does not
have the respect of her co-workers.
3. Leniency –A manager gives everyone a satisfactory
rating. This occurs when a manager has a large span of
control coupled with a common review date. Somewhere
over span of control number, the manager is burned out and
starts giving everyone a satisfactory response.
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 Performance Appraisal Biases

4. Recency - The employee’s most recent behavior

becomes the primary focus of the review. A poor
performer does something terrific and their past
performance is forgotten. Alternatively, an excellent
performer makes a mistake and it weighs down the
rest of the review.

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 Conclusion
• performance appraisal is one of the most important
factors in any organization and also a great tool used to
record productivity.
• Also conducting a performance appraisal will improve
productivity and also the morale of the employees.
• Appraisals are a positive way for a manager to let the
employees know how well they are performing the
duties that are assigned to them.

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