HR 12

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Class 16

CHAPTER -16
Performance Appraisal
Introduction

The term performance appraisal refers to the 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, a
performance appraisal evaluates an employee's skills, achievements, and
growth, or lack thereof.
Performance Appraisal Methods
Traditional Methods

1. Ranking Method:It is the oldest and simplest formal systematic method of


performance appraisal in which employee is compared with all others for the
purpose of placing order of worth. The employees are ranked from the
highest to the lowest or from the best to the worst.
2. Paired Comparison: In a paired comparison system, the manager must
compare every employee with every other employee within the
department or work group. Each employee is compared with another, and
out of the two, the higher performer is given a score of 1. Once all the pairs
are compared, the scores are added.
3. Grading: In a grading/rating performance appraisal, managers use a
numerical (1-5) or descriptive scale to record an employee's performance
in specific areas of their job. Because they are easy to fill out and create
quantitative data, rating appraisals are very popular.
Traditional Methods

4. Forced Distribution method:Forced distribution is a method of employee


performance appraisal that many companies use. We also call it the forced
distribution method, stacked ranking, or bell-curve rating. It is a rating system
that employers use to evaluate their workers.

5. Forced Choice Method:In the forced choice method, the reviewer is given
a number of statements that apply to the employee, and the reviewer must
decide whether each statement is true or false. In other words, the reviewer
is forced to make a choice.

6. Checklist method: Checklist scale, a series of questions is asked and the


manager simply responds yes or no to the questions, which can fall into either
the behavioral or the trait method, or both.
Traditional Methods

7. Critical Incident Method: CI appraisal focuses the rater’s attention on those


critical or key behaviour that make the difference between doing a job
effectively and doing it ineffectively. What appraiser does is write down little
anecdotes that describe what the employee did which was especially effective or
ineffective.

8. Graphic Scale Method: A graphic rating scale (sometimes called a Likert


scale) is a performance appraisal method that lists desired traits and behaviors
for each role, then rates workers on each of those on a numbered scale.

9. Essay Method: Essay Appraisal is a traditional form of Appraisal also


known as “Free Form method.” It involves a description of the employee's
performance by his superior which needs to be based on facts and often includes
examples to support the information
Traditional Methods

10.Field Review Method: The field review method is conducted by someone


outside of the employee's own department, most often from HR or
corporate. The reviewer observed the employee for several days, then evaluates
performance.

11.Confidential Report Method: Confidential report system is well known


method of performance appraisal system mostly being used by the the
Government organisations and in the Indian Judiciary. In this method of
appraising system, subordinate is observed by his superiors regarding his
performance in the job and on his duties done
Modern Methods

1. MBO: developed by peter f drucker. In his book “The practice of


management”. MBO involves setting specific measurable goals with each
employee and then periodically reviewing the progress made. MBO almost
always refers to a comprehensive organization wide goal-setting and
appraisal program that consists of 6 main steps.

a. Set the organization’s goal


b. Set departmental goals
c. Discuss the departmental goals
d. Defined expected result
e. Performance review
f. Provide feedback

Objective and goals should be SMART


Modern Methods

Objective and goals should be SMART

S: Specific (Clear, straightforward, understandable)


M: Measurable (Quantitiy, Quality, time, money)
A: Achievable (Challenging but within the reach of a competent anf committed
person)
R: Relevant (Relevant to the objectives of the organization so that goal of the
individual is aligned to corporate goals)
T: Time framed (To be completed within time frame)
Modern Methods

2. BARS (Behaviorally Anchored Rating Scale): Proposed by Smith &


Kendall, 1963 . BARS combines the benefits of narrative critical incidents and
quantified ratings by anchoring a quantified scale with specific behavioral
examples of a good or poor performance. It requires five steps.

a. Generate Critical incidents


b. Develop performance dimensions
c. Reallocate incidents
d. Scale the incidents
e. Develop final instrument
Modern Methods
Modern Methods
3. 360 degree appraisal/multi-rater feedback/multisource feedback/full
circle appraisal: 360 degree feedback process involves collecting
perceptions about a person’s behaviour and the impact of that behaviour
from the person’s boss , direct reports, collegues, fellow members of project
teams, internal and external customers and suppliers.
Modern Methods

4. Assessment Centre Method: These are basically meant for evaluating the
potential of candidate to be considered for promotion , training or development.
In this approach, individuals from various departments are brought together to
spend two or three days working on an individual or group assignment similar
to the ones they would be handling when promoted. Observers rank the
performance of each and every participant in order for merit. In basket exercise,
role playing, transactional analysis, speech making for testing job candidates.
Bias in Performance Appraisal

1. Leniency Error:Leniency errors occur when the supervisor assesses an


employee's performance as high even when he/she has exerted low
effort and would therefore not deserve the reward
2. Halo Effect: The individual's performance is completely appraised on the
basis of a perceived positive quality, feature or trait. In other words this
is the tendency to rate a man uniformly high or low in other traits if he
is extra-ordinarily high or low in one particular trait.
3. Horn Effect:The horns effect is the tendency for a single negative
attribute to cause raters to mark everything on the low end of the scale.
One bad attribute seems to spoil the bunch. Like the halo effect, the horns
effect makes decision making challenging
Bias in Performance Appraisal

4. Similarity Error: When evaluators rate other people in the same ways that
the evaluaters perceive themselves .

5. Central Tendency Error:Central tendency is the inclination of managers to


rate all their subordinates with an “average” score during performance appraisal.
For instance, if the rating scale was from 1-7, the managers would leave out the
extremes i.e. 1,2,6,7 and rate all the employees with a score between 3-5.

6. Recency Effect:Recency bias occurs when the manager bases the evaluation
on the last few weeks or months rather than the entire evaluation period. It's
important to consider the employee's performance during the entire review
period when completing the performance review form
Bias in Performance Appraisal

7. Primacy Effect: Opposite to Recency. Here initial impressions influences


the decision on year end appraisal irrespective of whether the employee has
been able to keep up the initial impression or not.

8. Raters Effect: It includes favoritism, stereotyping and hostility . Exclusively


high or low scores are given only to certain individuals or groups based on the
rater’s attitude towards the ratee , not on the actual outcome or behaviour. Ex
are age, sex, race, religion.

9. Perceptual Set: This occurs when the raters’ assessment is influenced by his
belief. If the supervisor for example has a belief that employees hailing from
one particular region are intelligent and hard working, his subsequent rating of
an employee hailing from that region tends to be favouraly high.
Bias in Performance Appraisal

10. Spill-Over Effect: This refers to allowing past performance appraisal rating
to unjustifiably influence current ratings, past ratings, good or bad, result in
similar rating for the current period although the demonstrated behaviour does
not deserve the rating, good or bad.

11. First Impression Error: It is the rater’s tendency to let their first
impression of an employee’s performance carry too much weight in evaluation
of performance over an entire rating period.

12. Contrast Error: When a rater unintentionally compares people with one
another. Suppose a rater is evaluating three employees and one of them is an
outstanding performer . Observing the high performer may raise the rater’s
expectation so that he give the other two employees low ratings even though
their performance is above average.
Bias in Performance Appraisal

13. Status Effect: It refers to overrating of employees in higher-level held in


high esteem and understanding employees in lower level jobs held in low
esteem.
QUESTIONS & ANSWERS
QUESTION & ANSWERS

1. The manager has a belief that employees hailing from Punjab are
intelligent and hardworking and thus rates an employee hailing from
Punjab to be very high. This is an example of
a. Leniency or strictness
b. Horn effect
c. Central tendency
d. Perceptual set
QUESTION & ANSWERS

2. Which of the following performance management system was deleoved by


Charles L Hulin and Milton R Blood?
a. Forced distribution method
b. MBO
c. BARS
a. Critical incident
QUESTION & ANSWERS
3. Arrange the following steps of behaviourally anchored rating scale in
sequence ?
a. Generate critical incidents
b. Develop performace dimensions
c. Develop final instrument
d. Scale the incidents
e. Reallocate incidents
Codes
(A) a.b, e,d,c
(B) A,b,c,d,e
(C) B,a,c,d,e
(D) C, d,a,e,b
QUESTION & ANSWERS

4. Which of the following methods of performance appraisal places


predetermined percentages of rates into several performance categories. ?

a. Alteration ranking method


b. Paired comparison method
c. Graphic rating scale
a. Forced distribution method
QUESTION & ANSWERS

5. Which of the following is an essential prerequisite of MBO ?

a. Joint goal setting


b. Mid term review
c. Developing reviews
d. All of the above
QUESTION & ANSWERS

6. The 360 degree feedback involves the evaluation of employees by ?

a. HR managers
b. Employees
c. supervisors
d. All whoa re directly contact with the ratee
QUESTION & ANSWERS

7. The performance evaluation can be defined as a process of evaluating?

a. Past performance
b. Present performance
c. Future performance
d. Past and present performance
QUESTION & ANSWERS

1. d
2.c
3.a
4.d
5.d
6.d
7.d
Thank You

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