PERFORMANCE

APPRAISALS
 Definition of Performance
Appraisal
• Performance appraisal is the systematic evaluation of
an individual’s job performance and potential for
development.
• Performance appraisal is the assessment of an
employee’s job performance. It has two primary
purposes:
– Administrative- provides information for making salary,
promotion and layoff decisions.
– Development- diagnosis training needs and enables career
planning.
 Definition of PA (cont.)
• Gary Dessler: "Performance appraisal is the process of evaluating an employee’s
performance of a job in terms of its requirements.“
• Wayne Cascio: "Performance appraisal is the process of evaluating the performance
and qualifications of the employees in terms of the requirements of the job for which he
is employed, for purposes of administration including placement, selection for
promotions, providing financial rewards and other actions which require differential
treatment among the members of a group as distinguished from actions affecting all
members equally.“
• Edwin B. Flippo: "Performance appraisal is a systematic evaluation of the individual
with respect to his or her performance on the job and his or her potential for
development.“
• Dale Yoder: "Performance appraisal includes all formal procedures used to evaluate the
personalities, contributions, and potentials of group members in a working organization.
It is a continuous process to secure information necessary for making correct and
objective decisions about employees.“
• Robert L. Mathis and John H. Jackson: "Performance appraisal is the process of
determining and communicating to an employee how he or she is performing on the job
and establishing a plan for improvement."
Purpose of Performance Appraisal Systems

• Goal: Maintain Organizational Productivity

• Results:
Organization Productivity Individual
Performance
• Methods: Individual Performance Goals
 Objectives
• Opportunity to Regularly Discuss Results
• Supervisor Identifies Strengths and
Weaknesses
• Fair and Equitable Format
• Basis for Salary/Promotion
Recommendations
 Main Purposes of Performance Management

• Individual Rewards (Base and Incentive)

• Feedback for Sub-Ordinate (Plus and Minus)
• Recognition of Superior Performance
• Documentation of Weak Performance
• Personnel Decision-Making
• Future Goal Commitments (Planned
Achievements)
 Reasons for Appraisals
• Compensation "Pay for Performance"
• Job Performance Improvements
• Feedback to Subordinates
• Documentation for Decisions
• Goal Setting - Later Evaluation
• Promotion Decisions
• Identify Training Needs
• HR Planning
 Primary Uses of Performance Appraisals
Small Large All
Organizations Organizations Organizations
Compensation 80.2% 66.7% 74.9%
Performance
46.3% 53.3% 48.4%
improvement
Feedback 40.3% 40.6% 40.4%
Documentation 29.0% 32.2% 30.2%
Promotion 26.1% 22.8% 24.8%
Training 5.1% 9.4% 7.3%
Transfer 8.1% 6.1% 7.3%
Discharge 4.9% 6.7% 5.6%
Layoff 2.1% 2.8% 2.4%
Personnel research 1.8% 2.8% 2.2%
Manpower planning 0.7% 2.8% 1.5%
Trends in Managing Performance
Appraising/Evaluating

VERSUS

Managing Performance

Superior Performance leads to Superior Rewards

Issue: How to objectively measure specific goals!

 •Objectives of Performance Appraisal

•According to:
•Employee •Organization

concrete and tangible

measuring the efficiency
particulars about their work
maintaining organizational
assessment of performance
control.

•Aims at:
mutual goals of the employees & the
 Personal development
organization.
 work satisfaction growth & development
 involvement in the increase harmony & enhance
organization. effectiveness
 •Process

•Setting
•performance
•Taking corrective
•standards •Communicating
•standards
•standards

•Discussing •Measuring
•results •standards
•Comparing
•standards
 Methods of Performance Appraisal
Traditional Methods Modern Method
1. Graphic Rating scales
1. Assessment Center
2. Ranking Method
3. Paired comparison 2. Appraisal by Results or
4. Forced Distribution Method Management by Objectives
5. Checks lists (simple ,weighted, 3. Human Asset Accounting
force choiced)
4. Behaviorally observation scales
6. Forced choice Description
method 5. Behaviorally Anchored Rating
7. Essay / Free Form Appraisal scales
8. Group Appraisal 6. Balance Score Card
9. Confidential Report
7. Productivity Measures
10.Critical Incidents
11.Field Review Method 8. Psychological Appraisal
Graphic Rating scales
Ranking Method
Paired comparison
Forced Distribution Method
Checks lists
 Confidential Report
• It is written for a unit of one year and relates to the
performance, ability and character of the employee during
that year.

• A very casual attitude is found among raters while filling

confidential reports of the employees working under them.

• The report is not data based but subjective.

• No feedback is provided to the employee being appraised
and therefore, its credibility is very low.

• The employee who is apprised never knows his weaknesses

and the opportunities available for overcoming them.
 Group Appraisal

• In this appraisal method, employees are

rated by an appraisal group, consists of
supervisor, and three or four other persons
who have some knowledge of their
performance. This method is devoid of
personal bias but only drawback is very time
consuming.
 Field Review Method
• In this method, an expert from the personnel
department interviews line supervisors to
evaluate their respective subordinates.
• The expert questions the supervisor and
obtains all the important information on each
employee and takes notes in his notebook.
• The employees are generally classified into
three categories as outstanding, satisfactory
and unsatisfactory.
 Nomination

• In this method, appraisers are asked to identify the

exceptionally good and exceptionally poor
performances who are then singled out for special
treatment.
 Work Sample Tests

• In this method, employees are given, from time to

time, work related testes which are then evaluated
 Modern Methods

ASSESSMENT CENTER

• It is a central location where the managers may

come together to participate in job related exercises
evaluated by trained observers.
• The principle idea is to evaluate managers over a
period of time, by observing and later evaluating
their behavior across a series of select exercises or
work samples.
 Assessment Center
contd…
• Managers are asked to participate in in-basket
exercises, role playing and similar activities, which
require the same attributes for successful
performance as on the actual job.

• After recording the observations, the raters meet to

discuss these observations and decision regarding
the performance of each manager is based upon the
discussion of observations.
•
• It is time consuming and an expensive method.
 Human Resource Accounting

• This method attaches money values to the value of a

firm’s internal human resources and its external
customer goodwill.

• Performance is judged in terms of costs and

contributions of employees.

• Costs of human resources consist of expenditure on

human resource planning, recruitment, selection,
indication, training, etc.
 Human Resource Accounting contd…

• Contribution of human resource is the money value

of labor productivity or value added by human
resources.

• Difference between cost and contribution will reflect

the performance of employees.
 Behaviorally Anchored Rating Scale

• It combines the benefits of critical incidents and

graphic rating scale by anchoring a scale with specific
behavioral examples of good or poor performance.

• It is time consuming and expensive method. The

behaviors used are more activity oriented than result
oriented.

• This technique is not biased by the experience and

evaluation of the rater.
 •Behavioral Anchored Rating Scales
Performance Points Behavior
Extremely 7 Can expect trainee to make valuable
good suggestions for increased sales and to have
positive relationships with customers all over
the country.
Good 6 Can expect to initiate creative ideas for
improved sales.
Above average 5 Can expect to keep in touch with the
customers throughout the year.
Average 4 Can manage, with difficulty, to deliver the
goods in time.
Below average 3 Can expect to unload the trucks when asked
by the supervisor.
Poor 2 Can expect to inform only a part of the
customers.
Extremely 1 Can expect to take extended coffee breaks &
poor roam around purposelessly.
 Management By Objectives (MBO)

• It refers to comprehensive, organizational

measurable goals for each employee and then
periodically discusses his progress towards these
goals.

• It leads to greater satisfaction, greater agreement,

greater comfort and less tension and hostility
between the workers.
 Management By Objectives (MBO)
contd…
• It can be applied with great success if the
performance appraisal program consists of the
following elements.
 Detailed job descriptions.
 Superior should have trust in subordinates to
establish goals.
 Emphasis should be on problem solving.
 360-Degree Performance Appraisals

• It is a systematic collection of performance data on

an individual or group, derived from a number of
stakeholders, team members, customers, peers, and
self.
• It provides a broader perspective about an
employee’s performance by facilitating self-
development of employees.
• This appraisal is effective in identifying and
measuring interpersonal skills, customer-satisfaction
and team-building skills.
 The 360º Appraisal
Supervisor

Other Superiors Other Superiors

Individual
Peers Staff Customers
Self-Assessment

Teams Teams

Sub-Ordinates
•360 degree performance appraisal
 Post Appraisal Interviews and Feedback

• The post appraisal interview is an essential part of

the performance appraisal system.
• The employee gets useful feedback information
about how effectively and efficiently he is able to
discharge the assigned duties.
• It also gives the opportunity to an employee to
explain his views about the rating standards, rating
methods, internal and external causes for low level
of performance.
 Who Performs the Appraisal?
• Immediate Supervisor
• Higher Management
• Self-Appraisals
• Peers (Co-Workers)
• Evaluation Teams
• Customers
• “360° Appraisals”
 Supervisor Appraisal

• Performance appraisal done by an

employee’s manager and often reviewed by
a manager one level higher.
 Self-Appraisal
• Performance appraisal done by the
employee being evaluated, generally on an
appraisal form completed by the employee
prior to the performance review.
 Subordinate Appraisal
• Performance appraisal of a superior by an
employee, which is more appropriate for
developmental than for administrative
purposes.
 Peer Appraisal
• Performance appraisal done by one’s fellow
employees, generally on forms that are
complied into a single profile for use in the
performance interview conducted by the
employee’s manager.
 Team Appraisal
• Performance appraisal, based on TQM
concepts, that recognizes team
accomplishment rather than individual
performance.
 Performance Appraisal Problems
• First Impression
• Halo Effect
• Horn Effect
• Leniency
• Central Tendency
• Stereotyping
• Recency Effect
• Poor Appraisal Form
• Lack of Rater’s Preparedness
• Ineffective Organizational Policies
• Popularity Contest
• Punitive Implications
• Stereotypes
• Poor Training of Raters
 Cont’d….

• Little Benefit Relative to Time Commitment

• Face to Face Confrontation
• Unskilled Appraisers
• Role Conflict: Judge or Teacher
 Appraisal Training Programs Needs

1. Explain Objectives
2. Review the Instrument
3. Define the Performance Standards
4. Understand Typical Subjective Errors
5. Teach Interviewing Skills
 Scheduling the Performance Appraisal

1. Schedule the review and notify the

employee ten days or two weeks in advance.

2. Ask the employee to prepare for the session

by reviewing his or her performance, job
objectives, and development goals.

3. Clearly state that this will be the formal

annual performance appraisal.
 Preparing for the Review
for the Performance Appraisal
1. Review the performance documentation collected throughout
the year. Concentrate on work patterns that have developed.
2. Be prepared to give specific examples of above- or below-
average performance.
3. When performance falls short of expectations, determine what
changes need to be made. If performance meets or exceeds
expectations, discuss this and plan how to reinforce it.
4. After the appraisal is written, set it aside for a few days and
then review it again.
5. Follow whatever steps are required by your organization’s
performance appraisal system.
 Appraisal Interviews
• Schedule the interview 10 to 14 days in
advance.
• Provide subordinates with a “guide” to
follow in planning for the interview.
• Consider which of the following approaches
to use:
– Tell-and-sell method
– Tell-and-listen method
– Problem-solving method (generally preferable)
 Tell-and-Sell Interviews
1. Supervisor persuades employee to change
in a prescribed way.
2. Employees sees how changed behavior will
be of great benefit.
 Tell-and-Listen Interviews
1. Supervisor covers strengths/weaknesses for
first half
2. Solicits employee’s feelings about
comments
3. Deal with disagreement, non-defensively
4. Negotiate future concrete objectives
 The Problem Solving Interview
1. Discuss strengths and weaknesses since last review
2. Explore feelings of sub-ordinate
3. Listening, accepting, and responding are essential
4. Stimulate growth (performance) job
5. Discuss problems, needs, innovations, satisfactions and
dissatisfactions since last review
6. Listen and respond with goal of helping person and
productivity.
 Appraisal Interviews
• During the Interview:
– Emphasize strengths to build on.
– Suggest more acceptable ways of acting.
– Concentrate on present opportunities for growth.
• Techniques:
– Listen more than you talk.
– Use a variety of types of questions.
– Avoid the sandwich technique.
 Establishing Job Related Performance Standards

1. Relevant
2. Free From Contamination
3. Reliable - Inter Rater Consistency
Post Appraisal Interviews and Feedback
contd…
• It, serves to meet the following objectives.
 To let employees know where they stand.
 To help employees do a better job by clarifying what
is expected of them.
 To plan opportunities for development and growth.
 To strengthen the superior-subordinate working
relationship by developing a mutual agreement of
goals.
 To provide an opportunity for employees to express
themselves on performance related issues.
 Performance Appraisal
Interview Needs

• Trained Interview Techniques

• Honesty in Appraisal
• Well Planned Structure
• Carefully Conducted
• Feedback Openness
• Adequate Time (more than one session
occasionally)
 Procedural Guidelines
1. Listen More Than Talk (1/3 rule)
2. Vary the Questions (Open ended/elaboration)
3. Follow-up Questions (force through responses)
4. Reflect Feelings (clarify-sincerity)
5. Avoid Sandwich Technique (Positive-Negative-Positive)

• Why? Signals Bad News

• No More Bad News
• Discourages Real Communication
 •Issues in appraisal system
•Formal and informal

•What methods?
•Whose performance?

•Appraisal
•When to evaluate? •Who are the raters?
• Design

•What problems?
•What to evaluate?

•How to solve?
•Advantages
•Disadvantages
THANK YOU