Performance Management &

Appraisals
The fundamental goal of performance management is to promote and
improve employee effectiveness. It is a continuous process where managers
and employees work together to plan monitor and review an employees
work together to plan, monitor and review an employees work objectives or
goals and his or her overall contribution to the organization.
Meaning of Performance Appraisal
• The role of HR in the present scenario has undergone a sea change and its focus is on
evolving such functional strategies which enable successful implementation of the major
corporate strategies. In a way, HR and corporate strategies function in alignment.
• Performance management is a much broader and a complicated function of HR, as it
encompasses activities such as joint goal setting, continuous progress review and frequent
communication, feedback and coaching for improved performance, implementation of
employee development programmes and rewarding achievements.
Meaning of performance management
• Performance management can be regarded as a systematic process by
which overall performance of an organization can be improved by
improving the performance of individuals within a team framework. It
is a required competence framework and establishing achievable
benchmarks.
• According to Armstrong and Baron: Performance management is a
both strategic and an integrated approach to delivering successful
results in organization by improving the performance and developing
the capabilities of teams and individuals.
Scope of Performance Management
• Developing clear job descriptions and employee performance plans
which includes the key result areas (KRA’s) and performance
indicators.
• Selection of right set of people by implementing an appropriate
selection process.
• Negotiating requirements and performance standards for measuring
the outcome and overall productivity against the predefined
benchmarks.
• Providing continuous coaching and feedback during the period of
delivery of performance.
Scope of performance management
• Identifying the training and development needs by measuring the outcomes
achieved against the set standards and implementing effective development
programs for improvement.
• Holding quarterly performance development discussions and evaluating
employee performance on the basis of performance plans.
• Designing effective compensation and reward systems for recognizing those
employees who excel in their jobs by achieving the set of standards in
accordance with the performance plans or rather exceed the performance
benchmarks.
• Providing promotional/career development support and guidance to the
employees.
Scope of performance management
• Performing exit interviews for understanding the cause of employee
discontentment and thereafter exit from an organization.
Objectives of Performance Management
• To enable the employees towards achievement of superior standards of work
performance.
• To help the employees in identifying the knowledge and skills required for
performing the job efficiently as this would drive their focus towards performing
the right task in the right wat.
• Boosting the performance of the employees by encouraging employee
empowerment, motivation and implementation of an effective reward mechanism.
• Promoting a two way system of communication between the supervisors and the
employees for clarifying expectations about the roles and accountabilities,
communicating the functional and organizational goals, providing a regular and a
transparent feedback for improving employee performance and continuous
coaching.
Objectives of performance management
• Identifying the barriers to effective performance and resolving those
barriers through constant monitoring, coaching and development
interventions.
• Creating a basis for several administrative decisions strategic
planning, succession planning, promotions and performance based
payment.
• Promoting personal growth and advancement in the career of the
employees by helping them in acquiring the desired knowledge and
skills.
Limitations of performance management
• Concerned with the output (the results achieved), outcomes,
processes required for reaching the results and also the inputs
(knowledge, skills and attitudes).
• Concerned with measurement of results and review of progress in the
achievement of set targets.
• Concerned with defining business plans in advance for shaping a
successful future.
• Striving for continuous improvement and continuous development by
creating a learning culture and an open systems.
Limitations of performance management
• Concerned with establishing a culture of trust and mutual
understanding that fosters free flow of communications at all levels in
matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the
team together.
• Concerned with the provision of procedural fairness and transparency
in the process of decision making.
Process of Performance Management system
• METHODS OF PA IN INDIAN ORGANIZATIONS
Traditional Method Modern Method

Ranking Method Management by Objectives

Graphic Rating scales Behaviourally Anchored Rating Scales

(BARS)
Critical Incident method Human Resource Accounting

Narrative Essays Assessment Centers

Check List Method 360 Degrees method

Forced Distribution Method 720 Degrees method

Confidential Report System

Methods of Performa nce Appraisals
• Graphic Rating Scales method: It rates employees based on a rating
scale that list a number of traits and a range of performance that
should be accomplished by the individuals. Graphic rating scale uses
the following basic three basic three scales in rating the employees
• a. Below expectations for poor and unsatisfactory performance. The
scale range normally provided for this category is between 0,1 to 3.
• b. Meet expectations for average performance and the scale range will
be 4 to 7.
• c. Role model for outstanding performance which is between 8 to 10.
• Limitation: No definition given for the rating scale.
Ranking Method
• In this method employees from the best to the worst based on certain
traits or criteria. This is one of the oldest means of appraisal which
rank employees from the most performing to the least performing.
This method is suitable to remunerate a small group employee usually
companies selling insurance or marketing at multilevel (MLM).
• The disadvantage of this method always enforce rivalry and
competition among employees and discourages team work.
Check List Method
• This method is a based on a series of statement that contains value in
relationship to their importance. The superior is asked to select “yes”
or “no” on each statement. Once the check list is completed it is send
to the HRD to prepare the final scores of the appraise.

• The demerit with this method is it is difficult to assemble analyse and

weigh a number of statements about employee characteristics and
contributions.
Forced distribution method
• It is a very old method. It is used by large organizations like ICICI bank,
Aditya Birla Group. 75% to 80% of Indian companies use this bell
curve shaped PA system to rank their employees into three categories
which is excellent, good and poor in a forced distribution order. Top
ranked employees are considered “high potential” and often retained
by the management for rapid career and leadership development
programs.
• This method is controversial due to the competition it creates and
also the employee that does not fit into any of three categories will
not have their performance reflected truly.
Essay Appraisal method
• This method is also known as “free form method”. It is used for
professional positions in Indian organizations. The superior is required
to give in writing an informed and honest account of the employees
strength, weakness, potentials which often includes examples and
evidences to support the evaluation process.
• The disadvantage of this method is subject to inseparability of
biasness by the evaluator and highly subjective.
Critical incidents method
• It was developed by Flanagan and Burns (Flanagan and Burns). It required
identifying critical job requirements which are vital for the success of a
job. This critical incident represents the outstanding (positive) or
poor(negative) behaviour of employees on the occupation. For instance
for customer service personnel the following incidents could be identified.
• Customer complaint, Turn over time(very prompt with 10 minutes)
• Negative incidents are more noticeable than positive incidents. Besides
this method requires regular note down from superiors which may not be
liked by the employees. It is argued that constant monitoring from the
superior leads to emotional exhaustion, employee withdrawal and high
absenteeism.
Confidential Report system
• It is a technique mainly used by government organizations. This is a
traditional and convenient method preferred by Indian senior officials
to determine employees promotion. Similar to narrative essay
method the supervisor or superior writes a confidential report on
their employees performance primarily on the subordinate behaviour,
conduct and remarks if any.
• Since this report only been seen by authorised persons for evaluation,
it fails to provide feedback to the appraise. The employee does not
know his or her strength and weakness which may result in lack of
enthusiasm and motivation.
BARS(Behaviourally anchored Rating scale)
• It is a modern appraisal tool that anchors a numerical rating scale with specific
examples of good or poor performance. The steps:
• A superior with knowledge on the job to describe effective and ineffective job
performance incidents.
• To have these incidents to be grouped into smaller set 5 to 10 dimensions and
defined.
• Get another group to verify reassign each incident to the cluster which fits best.
• Scale the incidents.
• Develop and instruments which comprise a series of vertical scales that are
anchored by the included incidents.
Rating scales
• Research has not proven conclusively that BARS are superior to other
scale formats in terms of their ability to produce precise ratings of
individual performance.
Performance appraisal process
• There are six steps:
• 1. Establish performance standards
• The appraisal process begins with the establishment of performance
standards. The managers must determine what outputs,
accomplishments and skills will be evaluated. These standards should
have evolved out of job analysis and job descriptions.
• These performance standards should also be clear and objective to
be understood and measured. Standards should not be expressed in
an articulated or vague manner such as “a good job” or a “full days
work” as these vague phrases tells nothing.
PA process
• Communicate performance expectations to employees
• Once the performance standards are established, this need to be communicated
to the respective employees so that they come to know what is expected of them.
Past experience indicates that not communicating standards to the employees
compounds the appraisal problem.
• It must be noted that mere transference of information (relating to performance
standards, for example) from the manager to the employees is not
communication. It becomes communication only when the transference of
information has taken place and has been received and under stood by the
employees.
• The feed back from the employees on the standards communicated to them must
be obtained. It is a two way process.
PA process
• Measure actual performance: This is the third step involved in the
appraisal process. In this stage, the actual performance of the
employee is measured on the basis of information available from
various sources such as personal observation, statistical reports, oral
reports and written reports.
• Needless to mention the evaluators feelings should not influence the
performance measurement of the employee. Measurement must be
objective based on facts and findings.
PA process
• Compare actual performance with standards:
• In this stage the actual performance is compared with the
predetermined standards. Such a comparison may reveal the
deviation between standard performance and actual performance
and will enable the evaluator to proceed to the fifth step in the
process that is the discussion of the appraisal with the concerned
employees.
PA process
• The fifth step iin the appraisal process is to communicate to and
discuss with the employees the results of the appraisal. This is in fact
one of the most challenging tasks the managers face to present an
accurate appraisal to the employees and then make them accept the
appraisal in a constructive manner.
• A discussion on appraisal enables employees to know their strengths
and weaknesses. This has in turn impact on their future performance.
• Yes, the impact may be positive or negative depending upon how the
appraisal is presented and discussed with the employees.
PA process
• Initiate corrective action: The final step in the appraisal process is the initiation of
corrective action when it is necessary. The areas needing improvement are identified and
then the measures to correct or improve the performance are identified and initiated.
• Advantages of PA:
• Clear expectations set at the right of beginning.
• Right directions towards goals
• Self analysis can be odne
• Better communication
• No conflicts
• Transperancy
• Less supervision
PA process - Benefits
• Less supervision
• Opportunity to develop
• Good results.
Challenges of PA
• Once a year or twice critiquing at the annual appraisal encourages
people to save up and squirrel away both praise and criticism for
months instead of giving it at the appropriate time.
• To see that motivation is not getting affected managers try to give
more marks.
• Appraisal confounds different functions: feedback, coaching,
development, pay decisions, legal documentations.
• Appraisal is evaluation by ambush because employees were
encouraged to meet a standard they had not seen, understood or
thought relevant to their job.
Challenges of PA
• Appraisals are either too inflexible to force real differentiation between
individuals on trivial criteria or else so specific that no useful
comparative data is generated.
• The appraisal system is not organization wide; special groups opt out
quite unreasonably and unfairly.
• Appraising and giving feedback are skills that needs to be taught before
any system is put in place that is the system is not supported by training.
• The rating scale means the numbers and the words do not match.
• A cost benefit analysis of designing, implementing and maintain a
performance management system implies that frankly it isn’t worth it.
Challenges of PA
• Individual appraisal ruins team work and team spirit. Traditionally
appraisal is done on an individual basis: it’s the individuals style, effort
and outcome that are appraised not the team that they are in, if
indeed they are.
Feedback and Coaching
• Coaching is :
• Focussed on future behaviour.
• Developmental
• Inquiry oriented
• Used to help the better performance move ahead by releasing potential in a
way that works best for the individual and the organization.
• Feedback:
Focussed on past behaviour
• Evaluative
• Telling or advice oriented
Feed back and Coaching
• Often used to help poor performers change behaviour in a prescribed direction in
a way that works best for the organizations.
• Coaching is preparative. Feedback is corrective.
• Coaching focusses on possibilities. Feedback focusses on adjustment.
• Coaching inquiry oriented. Feedback is scrutiny-oriented.
• Coaching stems from developmental needs. Feedback stems from judgmental
needs.
• Coaching is about assisting employees reach their goals for the future. Feedback is
about reinforcing appropriate behaviour.
• Coaching is more about helping employees grow. Feedback is more about helping
employees not fail.
Career planning and succession planning
• Career planning: Is the process by which one selects career goals and
the path to these goals.
• Career development is those personal improvements one undertakes
to achieve a personal career plan.
• Career management is the process of designing and implementing
goals, plans and strategies to enable the organization to satisfy
employee needs while allowing individuals to achieve their career
goals.
Career planning
• Stages of Career planning:
• Exploration
• Growth and getting established
• Maintenance and adjustment to self
• Decline
Steps involved in career planning
• Step 1: Needs: Defining the present system
• Step 2: Vision: Determining new directions and possibilities
• Step 3: Action plan: Deciding on practical first steps
• Step 4: Results : Maintaining the change
• Advantages of Career planning:
• Satisfying employees needs
• Improves employees performance on the joy
• Enhances employees commitment
• Increases morale of an employee
Career planning
• Limitations:
• Dual career families
• Declining career opportunities
• Low ceiling careers
• Downsizing/delayering and careers
Succession planning
• Succession may be from internal employees or external people.
• Succession from is advantageous to the organization as well as to the
internal employees.
• Organization can buy the employees loyalty and commitment,
belongingness, shared feeling of development along with the
organization by promoting the internal employees.
• Employees get the benefits of growth in the organization.
• The organization mostly prefers to encourage the growth and
development of its employees and as such tends to prefer succession
from within.
Succession planning
• Organizations, appraise employees potentialities, identify training
gaps for future vacancies, and develop them for higher and varied
jobs.
• The scope of succession plan would be more when the organization
grows steadily and employees have potentialities to take up higher
responsibilities.
Succession planning
• Advantages: Enabling seamless transition
• Back up staff
• Having skills and knowledge for emergency situations as well as future
needs
• Enhanced staff motivation
• Reduced cost and time for training for replacement.
• Disadvantages:
• Difficulty in selecting the right people and right people and
determining their developmental needs.
Succession planning
• Potential for grooming for positions that may not be there in the
future.
• Difficulties in maintain the motivation levels.
• Possibility of poaching by other organizations.
• Inherent cost of training and mentoring.