Performance Appraisal Performance Appraisal: The process by which a manager or consultant examines and evaluates an employee's work behavior

by comparing it with preset standards, documents the results of the comparison, and uses the results to provide feedback to the employee to show where improvements are needed and why. Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired. As per Dale Yoder, - Performance Appraisal includes all formal procedures used to evaluate contributions, potentials and personalities of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees. Performance appraisal is variously known as employee evaluation, employee efficiency rating, performance rating, merit rating, employee developing program, development report, personnel development or progress record or report, personnel performance record, employee progress report, employee service rating, personnel rating,

 employee ability rating and they all mean the same thing.

Purpose of Performance Appraisal: 1. Career Development This provides an opportunity for discussion of career objectives, and creation of a strategy designed to maximize career potential. To provide an opportunity for career counseling To help in succession planning. To assess training needs To plan for career development To assess and develop individual abilities To provide an objective basis on which to base decisions about training and promotion 2. Feedback As well, feedback is encouraged in both directions: as such, employees are encouraged to prepare ratings of their supervisors. To provide constructive feedback to the individual regarding how their performance is seen. This provides a structured format for the discussion of performance issues on a regular basis. Feedback either reinforces performance strengths, or provides the opportunity to discuss resolution of performance deficiencies. 3. Administrative Uses of Performance appraisal

Salary Promotion Retention/termination Recognition of performance Layoffs Identification of poor performers

4. Performance History This provides a performance history which is not dependent upon human memory, and which may be useful in the full range of personnel decisions, including compensation decision-making. To review past and present performance, identifying strengths and weaknesses. 5. Organizational Goals To clarify, for the individual, organizational expectations This provides an opportunity to view ones performance in the context of broader organizational goals. To assess future promotion prospects and potential To set objectives for the next period 6. Job Standards This provides an opportunity for clearer articulation and definition of performance expectations. 7. Documentation use of of Performance appraisal Documentation for HR decisions Helping to meet legal requirements

Objectives of Performance Appraisal: Performance appraisal essentially helps to identify employees who are performing their assigned tasks well and those who are not done so and also the reasons for such performance.

Todays appraisals are believed to have three basic objectives: the amount of annual increment; promotion; and training. Broadly speaking, the objectives of performance appraisal could be described as: 1. Judgmental 2. Developmental Judgmental objectives focus on evaluation Providing feedback to employees to know where they stand Developing valid data for administrative decisions covering placement, pay, promotion, punishment, etc. Developmental objectives focus on helping Diagnosing individual and organizational strengths and weaknesses.

 Counseling, coaching, career and succession planning, employee morale and motivation. Developing positive superior - subordinate relationships. In short, the objectives of performance appraisal could be: To prevent grievances To improve job performance To increase analytical abilities of supervisors To assist management in promotion, demotion, and transfer problems To reveal areas where training is needed. Methods of Performance Appraisal: There are several methods and techniques for measuring the excellence of employee performance. Different authors have suggested different approaches and have classified the methods accordingly. The most widely accepted categorization comes, from Strauss and Sayles. They have classified performance of Performance Appraisal appraisal methods Methods into traditional and newer/modern methods:
Traditional Methods

A. Traditional methods rating of an Centre individuals 1. Straight Ranking Method lay emphasis on 1. Assessment Method personally traits such as initiative, dependability, 2. Man-to-Man Comparison 2. Appraisal by Results drive, or Method Management by Objectives (MBO) responsibility, creativity, integrity, leadership potential, 3. Grading Method 3. Human Asset Accounting Method intelligence, judgment, and organizing ability, etc. 4. Graphic Rating Scales Method 4. Behaviorally Anchored Rating B.Forced Newer or Description Modern methods place more 5. Choice Scales emphasis on the evaluation of work results (job achievements) than on Method (BARS) 6. Forced Distribution Method 5. 360-Degree Feedback personality traits. 7. Check List Method 6. Computerized & web-based 8. Free Form Essay Method performance appraisal 9. Critical Incidents Method 10. Group Appraisal 11. Field Review Method 12. ACR Method

Newer/Modern Methods

Results oriented appraisals are comparatively of recent origin and tend to be more objective and worthwhile especially for counseling and development purposes. However, it is important to note that these two types are not exclusively separate.

Traditional Method Straight Ranking Method: The performance appraisal of straight ranking is used to assess the working performance of employees from the highest to lowest levels. Managers will make comparisons of an employee with the others, instead of making comparison of each employee with some certain standards. This method is very helpful for choosing the best performer among the best of the performances. Its biggest drawback is that it can trigger rivalry among its employees, which may adversely affect the entire working environment.

Grading Method: Here, evaluation of the performance is based upon certain traits of the employees like employee motivation, attitude, flexibility, quality of work, quantity of work, cooperativeness, participation in team work and so on. Every employee is graded on each of these traits. Usually, it is done objectively by yes/no or satisfactory/unsatisfactory check boxes. The disadvantage of this performance appraisal process is that there is no specific definition for any given trait. Evaluation of a particular trait often vary from one person to the other. This may create confusion among the employees and gives rise to tension between the employee and the employer. Critical Incidents Method: This format of performance appraisal is a method which is involved identifying and describing specific incidents where employees did something really well or that needs improving during their performance period. ACR Method:
The annual confidential report of the employees are written with a view to adjudge their performance every year in the areas of their work conduct, character and capabilities. According to this method the officer reported on should complete self-appraisal and send the ACR from to the Reporting Authority within the specific time of the last date of the period for which the ACR is to be written. The Reporting Authority must given his assessment of the officer reported upon within specific time from the last date of the period for which the ACR is to be written. In

case of any delay, specific reasons for the late must be recorded on the ACR.

Newer Methods Management by Objectives (MBO) MBO is a method of performance appraisal in which managers or employers set a list of objectives and make assessments on their performance on a regular basis, and finally make rewards based on the results achieved. This method mostly cares about the results achieved (goals) but not to the way how employees can fulfill them. Behaviorally anchored rating scales This formatted performance appraisal is based on making rates on behaviors or sets of indicators to determine the effectiveness or ineffectiveness of working performance. The form is a mix of the rating scale and critical incident techniques to assess performance of the staff. 360 degree performance appraisal The style of 360 degree performance appraisal is a method that employees will give confidential and anonymous assessments on their colleagues. Performance-appraisal data collected from 'all around' an employee his or her peers, subordinates, supervisors, and sometimes, from internal and external customers. Its main objective usually is to assess training and development needs and to provide competence-related

information for succession planning not promotion or pay increase. Also called multi-rater assessment, multi-source assessment, multi-source feedback.

Employee Motivation
Motivation: Employee Motivation is an inner drive to behave or act in a certain manner. It is an employee's intrinsic enthusiasm about and drive to accomplish activities related to work. Motivation is that internal drive that causes an individual to decide to take action.

An individual's motivation is influenced by biological, intellectual, social and emotional factors. As such, motivation is a complex, not easily defined, intrinsic driving force that can also be influenced by external factors. Every employee has activities, events, people, and goals in his or her life that he or she finds motivating. So, motivation about some aspect of life exists in each person's consciousness and actions.

Importance of Motivation:
Managers and scholars alike have long been inspired in attempting to find out why some employees tend to work harder than others. The study of motivation helps managers understand this variance in performance. Furthermore, knowledge of what motivates people allows managers to take constructive steps to improve their employees work performance. Before understanding the different types of motivation, we need to examine closely the nature of motivation. The term motivation derives from the Latin word movere, meaning, to move. This means that no one can understand a persons motivation until that person behaves or literally moves. Kreitner describes motivation as the psychological process that gives behavior purpose and direction, while Moorhead and Griffin explain motivation as the set of forces that causes people to engage in one behavior rather than some alternative behavior. Employees are essentially the most important aspect of an organization. Managers strive to motivate their employees so that they are willing to perform at their highest levels. When employees work hard, come to work regularly and continue making positive contributions to the organization, the business will be able to cut costs and yield more profit, both of which are the ultimate goals of any organization. On the contrary, unmotivated employees will mean the organization will have people that are not willing to do well in the jobs or have to hire

more people to do different jobs, which contribute to higher operating costs and a reduction in profit. Techniques of Motivation: There are two types of Motivational Technique, such as 1. Positive Motivation (i) (ii) Financial Non Financial

2. Negative Motivation (iii) Financial

(iv) Non Financial Positive Motivation: In real sense, motivation means positive motivation. Positive motivation induces people to do work in the best possible manner and to improve their performance. Under this better facilities and rewards are provided for their better performance. Such rewards and facilities may be financial and non-financial. Financial incentives- Those incentives which satisfy the subordinates by providing them rewards in terms of rupees. Money has been recognized as a chief source of satisfying the needs of people. Money is also helpful to satisfy the social needs by possessing various material items. Financial incentives can be of the following types: Compensation Salary Advance Bonus Increment Special Incentive

 Prize Money etc. Non-financial incentives- Besides the monetary incentives, there are certain non-financial incentives which can satisfy the ego and self- actualization needs of employees. The incentives which cannot be measured in terms of money are under the category of Non- monetary incentives. Whenever a manager has to satisfy the psychological needs of the subordinates, he makes use of non-financial incentives. Non- financial incentives can be of the following types: Security of service Praise or recognition Suggestion scheme Job enrichment Promotion opportunities Rewarding etc.

Negative Motivation: Negative motivation aims at controlling the negative efforts of the work and seeks to create a sense of fear for the worker, which he has to suffer for lack of good performance. It is based on the concept that if a worker fails in achieving the desired results, he should be punished. Financial: Depriving from various financial incentive and charging indemnity. Non Financial: Depriving from various non-financial incentive and giving punishment assignment. Both positive and negative motivation aim at inspiring the will of the people to work but they differ in their approaches. Whereas one approaches the people to work in the best possible manner providing better monetary and non-monetary incentives, the other tries to induce the man by cutting their wages and other facilities and amenities on the belief that man works out of fear.

Motivation theory
At a simple level, it seems obvious that people do things, such as go to work, in order to get stuff they want and to avoid stuff they don't want. Why exactly they want what they do and don't want what they don't is still something a mystery. It's a black box and it hasn't been fully penetrated. Overall, the basic perspective on motivation looks something like this:

In other words, you have certain needs or wants (these terms will be used interchangeably), and this causes you to do certain things (behavior), which satisfy those needs (satisfaction), and this can then change which needs/wants are primary (either intensifying certain ones, or allowing you to move on to other ones). A variation on this model, particularly appropriate from an experimenter's or manager's point of view, would be to add a box labeled "reward" between "behavior" and "satisfaction". So that subjects (or employees), who have certain needs do certain things (behavior), which then get them rewards set up by the experimenter or manager (such as raises or bonuses), which satisfy the needs, and so on.

Two-factor theory
The two-factor theory (also known as Herzberg's motivation-hygiene theory and dual-factor theory) states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction. It was developed by Frederick Herzberg, a psychologist, who theorized that job satisfaction and job dissatisfaction act independently of each other. Two-factor theory fundamentals: Attitudes and their connection with industrial mental health are related to Maslow's theory of motivation. His findings have had a considerable theoretical, as well as a practical, influence on attitudes toward administration. According to Herzberg, individuals are not content with the satisfaction of lower-order needs at work, for example, those associated with minimum salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of higher-level psychological needs having to do with achievement, recognition, responsibility, advancement, and the nature of the work itself.

Limitations of Two-Factor Theory The two factor theory is not free from limitations: 1. The two-factor theory overlooks situational variables. 2. Herzberg assumed a correlation between satisfaction and productivity. But the research conducted by Herzberg stressed upon satisfaction and ignored productivity. 3. The theorys reliability is uncertain. Analysis has to be made by the raters. The raters may spoil the findings by analyzing same response in different manner. 4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable despite the fact that he may hate/object part of his job.
William Ouchi's Z Theory: Theory Z of Ouchi is Dr. William Ouchi's so-called "Japanese Management" style popularized during the Asian economic boom of the 1980s. For Ouchi, Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. According to Ouchi, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction. Ironically, "Japanese Management" and Theory Z itself were based on Dr. W. Edwards Deming's famous "14 points". Deming, an American scholar whose management and motivation theories were more popular outside the United States, went on to help lay the foundation of Japanese organizational development during their expansion in the world economy in the 1980s. Deming's theories are summarized in his two books, Out of the Crisis and The New Economics, in which he spells out his "System of Profound Knowledge". He was a frequent advisor to Japanese business and government leaders, and eventually became a revered counselor. Deming was awarded the Second Order of the Sacred Treasures by the former Emperor Hirohito, and American businesses tried to use his "Japanese" approach to improve their competitive position.

Equity Theory Suppose employee A gets a 20% raise and employee B gets a 10% raise. Will both be motivated as a result? Will A be twice as motivated? Will be B be negatively motivated? Equity theory says that it is not the actual reward that motivates, but the perception, and the perception is based not on the reward in isolation, but in comparison with the efforts that went into getting it, and the rewards and efforts of others. If everyone got a 5% raise, B is likely to feel quite pleased with her raise, even if she worked harder than everyone else. But if A got an even higher raise, B perceives that she worked just as hard as A, she will be unhappy.

In other words, people's motivation results from a ratio of ratios: a person compares the ratio of reward to effort with the comparable ratio of reward to effort that they think others are getting. Of course, in terms of actually predicting how a person will react to a given motivator, this will get pretty complicated: 1. People do not have complete information about how others are rewarded. So they are going on perceptions, rumors, inferences. 2. Some people are more sensitive to equity issues than others 3. Some people are willing to ignore short-term inequities as long as they expect things to work out in the long-term. Expectancy theory : Expectancy theory proposes that an individual will decide to behave or act in a certain way because they are motivated to select a specific behavior over other behaviors due to what they expect the result of that selected behavior will be. In essence, the motivation of the behavior selection is determined by the desirability of the outcome. However, at the core of the theory is the cognitive process of how an individual processes the different motivational elements. This is done before making the ultimate choice. The outcome is not the sole determining factor in making the decision of how to behave. "This theory emphasizes the needs for organizations to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and wanted by the recipients."

Reference: 1. Notes of Mohammal Jamal Uddin 2. Wikipedia 3. SourceInside.com 4. www.wpi.edu 5. www.cipd.co.uk