Seminar in Economic Policy

SEMINAR IN ECONOMIC POLICY

THESIS ON MULTI RATER/ SOURCE

PERFORMACE APPRAISAL

HYPOTHESIS

“Employee performance evaluation is perceived to be better in 360 degree multi-source

feedback than in single source feedback system.”

SUBMITTED TO: MR. ASHRAF JANJUA

SUBMITTED BY: SHAHZAD sALIM

ID: 2001-1-27-1859

HYPOTHESIS
“Employee performance evaluation is perceived to be better in 360 degree multi-source
feedback than in single source feedback system.”

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OBJECTIVE OF THESIS

The purpose of my thesis is to study whether the Multi source performance appraisal is
more comprehensive, credible and effective performance measure for the organization as
compared to the single rater appraisal system.

INTRODUCTION

M ULTI RATER/SOURCE PERFORMANCE ASSESSMENT

(360-DEGREE)

CONCEPT

Typically, performance appraisal has been limited to a feedback process between

employees and supervisors. However, with the increased focus on teamwork, employee
development, and customer service, the emphasis has shifted to employee feedback from
the full circle of sources.

.
It is a tool that provides each employee the opportunity to receive performance feedback
from his or her supervisor and four to eight peers, reporting staff members, co-workers
and customers. 360-degree feedback allows each individual to understand how others
view his/her effectiveness as an employee, co-worker, or staff member. The feedback
provides insight about the skills and behaviors desired in the organization to accomplish
the mission, vision, and goals and live the values. The feedback is firmly planted in
behaviors needed to exceed customer expectations.

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The organizational culture and mission must be considered, and the purpose of
feedback will differ with each source. For example, subordinate assessments of a
supervisor’s performance can provide valuable developmental guidance, peer feedback
can be the heart of excellence in teamwork, and customer service feedback focuses on the
quality of the team’s or agency’s results. The objectives of performance appraisal and the
particular aspects of performance that are to be assessed must be established before
determining which sources are appropriate.

SELF-ASSESSMENT

This form of performance information is actually quite common but usually used only as
an informal part of the supervisor-employee appraisal feedback session. Supervisors
frequently open the discussion with: “How do you feel you have performed?” In a
somewhat more formal approach, supervisors ask employees to identify the key
accomplishments they feel best represent their performance in critical and non-critical
performance elements. In a 360-degree approach, if self-ratings are going to be included,
structured forms and formal procedures are recommended.

BENEFITS
• The most significant contribution of self-ratings is the improved communication
between supervisors and subordinates that results.
• Self-ratings are particularly useful if the entire cycle of performance management
involves the employee in a self-assessment. For example, the employee should
keep notes of task accomplishments and failures throughout the performance-
monitoring period.

SUPERIORS

Evaluations by superiors are the most traditional source of employee feedback. This form
of evaluation includes both the ratings of individuals by supervisors on elements in an
employee’s performance plan and the evaluation of programs and teams by senior

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managers The danger in supervisory evaluations is the substantial amount of power and
influence wielded, often by the hand of a single rater.

BENEFITS

• The first-line supervisor is often in the best position to effectively carry out the
full cycle of performance management
• The supervisor may also have the broadest perspective on the work requirements
and be able to take into account shifts in those requirements.

PEERS
Reduced hierarchies in organizations, as well as the increasing use of teams and group
accountability, peers are often the most pertinent evaluators of their colleagues’
performance. Peers have a unique perspective on a co-worker’s job performance and
employees are generally very receptive to the concept of rating each other. Peer ratings
can be used when the employee’s expertise is known or the performance and results can
be observed. There are both significant contributions and serious pitfalls that must be
carefully considered before including this type of feedback in a multifaceted appraisal
program.

BENEFIT

¨The addition of peer feedback can help move the supervisor into a coaching role rather
than a purely judging role.

SUBORDINATE.

Formal evaluation by subordinates is unusual, although from time to time subordinates

may be asked for input into the evaluation of their supervisor. When subordinates have an
input into their supervisor’s evaluation, supervisors have been known to improve their

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interpersonal relations and reduce management by intimidation. Issues of anonymity and

adequate sampling of subordinates may be important in traditional appraisals.

BENEFITS

• A formalized subordinate feedback program will give supervisors a more

comprehensive picture of employee issues and needs. Managers and supervisors
who assume they will sufficiently stay in touch with their employees’ needs by
relying solely on an “open door” policy get very inconsistent feedback at best.

• Employees feel they have a greater voice in organizational decision-making and,

in fact, they do. Through managerial action plans and changes in work processes,
the employees can see the direct results of the feedback they have provided.

CUSTOMERS

Evaluations by outside clientele may be useful in instances when there is much personal
contact with outsiders or when the person being evaluated knows more about aspects of
the job than the supervisor. Internal customers are defined as users of products or services
supplied by another employee or group within the agency or organization may contribute
significant input

SINGLE-RATER PERFORMANCE EVALUATION

Single Source Performance Appraisal relies heavily on supervisor opinion & judgment
Moreover, they usually don’t work; they neither differentiate levels of performance nor
motivate employees to improve performance.

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PROBLEM IN SINGLE RATER PERFORMANCE ASSESSMENT

•
• Nepotism and Politics may dilute assessment. It may reflect the quality of the
rater-ratee relationship, not the actual work performance of employees.
• Once a worker is classified as a poor performer, it may take a long time for a
supervisor to notice the worker has improved.
• One particularly good or poor trait may contaminate other performance areas
considered in the evaluation.
• Different supervisors may have different standards in making evaluation
decisions
• Supervisors may tend to rate workers as average, especially when rating forms
require a written justification for a high or low rating.

Hence an employee’s supervisor-only performance appraisal may not truly reflect the
individual’s actual job performance. High-performing employees may receive poor
appraisals that limit their opportunity for rewards such as pay increases and promotions
due to the idiosyncrasies of the supervisor.

Recent performance appraisals have also included self-appraisals. In which employees

rate their own performance and skills development. Self-appraisals are often used to
complement supervisor appraisals. However, self-appraisals offer limited information for
employee improvement.

Leaders and employees at all levels of organizations are changing the way they receive
feedback in order to improve the quality of information. The new model for performance
feedback and appraisal turns the assessment process upside down. People are asking for
performance feedback from those with knowledge of their work behaviors, as well as
from their supervisor. This information, that comes from many asking for and getting
information from people rather than just is more honest, reliable and valid than traditional

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appraisals from supervisor only. Moreover, feedback from these multiple sources has a
more powerful impact on people than information from a single source, such as a
supervisor. In fact, no organization action has more power for motivating employee
behavior change than feedback from credible work associates.

METHODOLOGY

SAMPLE SIZE

The sample size includes two organizations, one using Multi source appraisal system and
the other using the Single-Source appraisal system.
 Getz Pharma pharmaceuticals Company. (Uses Multi Source feedback)
 EVA edible oil company (uses Single-Source appraisal system)

RESPONDENTS

A total number of 12 respondents will be included in this research- 6 each. The

respondents are employees at the high / middle management level and are assessor in the
appraisal process.

QUESTIONNAIRE

Q1. What Performance assessment tool is used in your organization?

Single-Source appraisal system

Multi source appraisal system

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Q 2. Who are the Raters Involved in the Process

• Self

• Manager (Boss)

• Direct Reports (Department Head)

• Peers

• Internal Customers

• External Customers

• Supervisor

Others (if any please Identify) __________________________

Q3 What are the possible reasons for using the current appraisal system?

Objectivity in evaluation

Influences employee motivation, performance, and job satisfaction

Provides a broader perspective of employee performance

Increases accountability of employees to their customers

Encourages two way communication

Assist in creating healthy changes in organization

Helps managers with their personal and professional development planning

Provides input for performance appraisals

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Helps in an organizations succession planning

Q4 Are there any evaluator accountability checks in your appraisal system?

Yes No

If yes please explain ____________________________________

Q5. What are the weights allocated to each of

• Self Peers

• Internal Customers

• External Customers

• Manager (Boss)

• Direct Reports

• Supervisor

Others (if any please identify) __________________________________

Q6. What levels of employees are assessed through the appraisal?

Upper Management

Middle Management

Lower Management

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Q7. What are the assessment criteria?

Responsibility: Knowledge and the fulfillment of task assigned and empowered

to deliver it on time.

Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information

Problem-Solving. Ability to take prudent & timely decision

.
Listens actively to internal and external customers

Takes initiative to make things happen.

Identifies, understands and responds to appropriate needs of business and

demonstrates broad business knowledge

Stretch- outperforming the targets

Effective & relevant communication

Q8. Are the results of the appraisal shared with the participants (evaluators &
evaluates)?

Yes No

Q9. What has been the impact on the following participants after the appraisal?

Positive Change Negative Change No Change

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Upper Management

Middle Management

Lower Management

Q .10 What is the aftereffect of performance appraisal on the following areas?

Negative Positive
External Customer responsiveness
Building relationships (with customers)
Value maximization
Voluntary Termination
Absenteeism
Employee Productivity
Costs Competitiveness

QUESTIONNAIRE ANALYSIS

QUESTION. 1

What is the form of appraisal prevailing in your organization?

Single-Source appraisal system

Multi Source appraisal system

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There are two organizations in this research; one implements the single source appraisal
system (EVA edible oil company) and the other GETZ PHARMA implements the 360-
degree form of system

360-degree appraisal system Getz Pharma

Single source appraisal system EVA edible oil company.

QUESTION .2
What are the objectives behind using the current appraisal?
360-degree appraisal Single source
system (GETZ appraisal system
PHARMA) (EVA)
Provides a broader perspective of employee performance 5 3
Objectivity in evaluation 5 0
Encourages two way communication 5 5
Assist in creating healthy changes in organization 2 0
Increases accountability of employees to their customers 2 0
Align employee performance with organization vision & 5 3
values
Provides input for performance appraisals 0 0
Platform for promoting Internal recruitment Policy 4 2
Influence employee development, motivation and job 3 0
satisfaction

Analysis

100% of the respondents using the single source appraisal system stated that it
appreciates two-way communication. 60% of the respondents were of the view that the
single source appraisal system allows to have a broader look at employee’s performance

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as compared to 100% in Multi Source appraisal. The above analysis indicates that
employee perceive more objectivity and fairness in 360 degree appraisal

Multi source appraisal showed better results about the skills and behaviors desired in the
organization to accomplish the mission, vision, and goals.60% of the respondents stated
that it assists each individual to understand his or her strengths and weaknesses, and to
contribute insights into aspects of his or her work. The feedback can firmly be planted in
behaviors needed to exceed customer expectations

6 A 360-degree appraisal (Getz

A ï, Single source apprais
5
4
3
2
1
0
Encourages extensive giving

Helps Changing
performance with the goals

motivation, performance,

for making decisions

regarding merit pay

Organisation
Influences employee

and receiving feedback

aligns employee

QUESTION .3
.
Who are the Raters Involved in the Process

• Self

• Manager (Boss)

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• Direct Reports

• Peers

• Internal Customers

• External Customers

• Supervisor

Others (if any please Identify) __________________________

Evaluators Single source 360-degree appraisal

appraisal
SELF No Yes

MANAGER Yes Yes

DIRECT REPORT Yes Yes

SUPERVISOR No No

INTERNAL CUSTOMER No Yes

EXTERNAL CUSTOMER No Yes

PEERS None Yes

Analysis

The Multi source appraisal involves all Managers, Department Heads Customers, Peers
and Supervisors to minimize biasness, prejudice and deficiencies that are prevalent in
single rate system. Although this approach can be time consuming but it can pay
dividends for the company in the long run in the form of productivity, low turn over and
loyalty etc.

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 Evaluators
Seminar in Economic Policy

Yes

No

Self Manager Direct Peers Internal External Supervisor

(Boss) Reports Customers Customers
Single Source appraisal 360-Degree appraisal

QUESTION .4

Is there any assessor answerability verification in your performance evaluation

system?

Yes No

If yes please explain ____________________________

Appraisal form Evaluator accountability

Verification
Single Source Appraisal No

Multi Source Appraisal Yes

Analysis
There are no accountability checks in the single source appraisal system. Whereas in the
360-degree appraisal system there are accountability checks; at GETZ PHARMA

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employees get an opportunity to express their views both verbally and on the document
itself.

Is there Assessor answerability

verification
Yes

No

Single source Multi Source Appraisal

appraisal

Accountability checks

QUESTION .5

What are the weightages allocated to each of these evaluators?

• Self Internal Customers

• Manager (Boss) External Customers

• Direct Reports Supervisor

• Peers

WEIGHTAGES ASSIGNED

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Evaluators Single source appraisal 360-degree appraisal

SELF None 17%

MANAGER None 17%

DIRECT REPORT None 17%

SUPERVISORS None 17%

INTERNAL None 8.5%

CUSTOMER
EXTERNAL None 8.5%
CUSTOMER

PEERS & OTHERS None 8.5%+8.5%

Analysis
The above figure reveals that equal weight age is assigned to all the key assessors to
minimize the undue / substantial influence of one or two evaluators. The consensus of
opinion enhances the credibility of the evaluation process .In the single source appraisal
system there are no weightages assigned to both the supervisor and the section /
department head.

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what are the weightages assigned to each evaluator

0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0

SUPERVISOR

CUSTOMER
CUSTOMER
MANAGER

PEERS &
SELF

REPORT

OTHERS
EXTERNAL
DIRECT

INTERNAL
Single source appraisal 360-degree appraisal

QUESTION .5
What layers of management are assessed through the appraisal?

Upper Management

Middle Management

Lower Management

Management Layers Single source appraisal 360-degree appraisal

Upper Management Yes Yes

Middle Management Yes Yes

Lower Management Yes Yes

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Analysis

All the management layers are assessed in both the single source appraisal system and the
multi source 360-degree appraisal system.

What levels of employees are assessed through the

appraisal

Yes

No

Upper Middle Lower

Management Managemet Management
Single source apraisal 360-degree appraisal

QUESTION .7

Responsibility: Knowledge and the fulfillment of task assigned and empowered

to deliver it on time.

Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information

Problem-Solving. Ability to take prudent & timely decision

.
Listens actively to internal and external customers

Takes initiative to make things happen.

Identifies, understands and responds to appropriate needs of business and

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demonstrates broad business knowledge

Stretch- outperforming the targets

Effective & relevant communication

Assessment Criteria Single source appraisal 360-degree appraisal

Responsibility Yes Yes

Team work Yes Yes

Problem Solving Yes Yes

Target Fulfillment Yes Yes

Customer Service No Yes

Proactive No No

Business Skills No Yes

Communication Yes Yes

Analysis

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The above question was targeted to explore the assessment criteria used in both the single
source and Multi Source appraisal system. According to the answers given by the
participants, the single source appraisal system in EVA assesses:

 Responsibility: Knowledge and the fulfillment of task assigned and empowered

to deliver it on time.
 Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information
 Problem-Solving. Ability to take prudent & timely decision
 Stretch- outperforming the targets
 Effective & relevant communication.

Whereas the answers provided by respondents at GETZ PHARMA, the 360-degree

appraisal system assesses the above 5 mentioned criteria including the

 Identifies, understands and responds to appropriate needs of business and

demonstrates broad business knowledge

 Listens actively to internal and external customers

None of the appraisal system focused on employee,s initiative taking ability probably
due to lower & upper managment limited span of control.

QUESTION .8

Are the results of the appraisal shared with the participants (evaluators &
evaluates)?

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Yes No

SHARING OF RESULTS
Single source appraisal Yes
360-degree appraisal YES

Analysis
Respondents in both the forms of appraisal system stated that the results are shared with
them (the ratee’s).
QUESTION .9

Are the results shared with the participants

Yes

No

Single source 360-degree appraisal

appraisal

Accountability checks

What has been the impact on all the layers of Management after the appraisal?

Positive Change Negative Change No Change

Upper Management

Middle Management

Lower Management
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Single source appraisal 360-degree appraisal

Positive Negative No Positive Negative No

Change Change Change change Change Change
Upper Management 5 0 0 5 0 0

Middle Management 5 0 0 5 0 0

Lower Management 3 0 2 5 0 0

Analysis
This question was aimed at finding out the changes that occurred after the appraisal was
carried out.

After the single source appraisal, 100% respondents felt a positive change in the upper
management and the middle management levels, in terms of the efforts being made.
Whereas 60% felt a positive change, 40% felt no change in the lower management level.

After the 360-degree appraisal, 100% respondents felt a positive change in all the three
management levels.

QUESTION. 10

What is the aftereffect of performance appraisal on the following areas?

Negative Positive
External Customer responsiveness
Building relationships (with customers)
Value maximization
Voluntary Termination

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Absenteeism
Employee Productivity
Costs Competitiveness

Single source appraisal 360-degree appraisal

Negative Positive Negative Positive

External Customer 0 0 0 4
responsiveness
Building relationships (with 0 0 0 5
customers)
Value maximization 0 0 0 3

Voluntary Termination 0 0 0 2

Absenteeism 0 0 0 3

Employee Productivity 0 0 0 2

Costs Competitiveness 0 0 0 0

Analysis
This question was aimed at finding out the impact on the various aspects stated above,
after the appraisal in both the organizations.

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As far as the single source appraisal is concerned, all the respondents felt that there was
no direct link between this form of appraisal and the stated areas.

Whereas at GETZ PHARMA (implementing the 360-degree form of appraisal), 100%

respondents felt a positive impact on customer feedback and building lasting
relationships (with customers). Where as 40% of respondents tend to believe that
employee appraisal assist in creating maximum value to all stakeholder and employee
sense of belongingness to the company. Employee strive harder when they perceive merit
based evaluation and the constructive relation between performance & rewards

SUMMARY OF FINDINGS
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Performance appraisal is the process through which an employee’s job performance is

formally assessed. 360-degree feedback allows each individual to understand how others
view his/her effectiveness as an employee, co-worker, or staff member. The 100% of the
respondents were of the view that Multi Source Appraisal is aligned with the skills and
behaviors desired in the organization as compared to 60% in Single Source Performance
Appraisal that relies heavily on supervisor opinion & judgment. The Questionnaire
response showed 80% of participant’s believe that diversity & consensus of opinion in
Multi source appraisal provides a platform for organization succession planning and
enhances the credibility of the evaluation process. The above findings also revealed that
Employees are assessed on wider range of criteria’s i.e Responsibility, Teamwork,
Problem Solving, Target Fulfillment, Customer satisfaction and Business Skills in multi
rater appraisal as compared to single rater appraisal. The multi rated appraisal included
Self, Manager (Boss), Direct Reports (Department Head), Peers, Internal Customers,
external Customers and Supervisor, Where as Single Rated Appraisal included only
supervisor & department head. The danger in supervisory evaluations is the substantial
amount of power and influence wielded, often gifted in few hands. 100% respondents felt
a positive impact on customer feedback and building lasting relationships (with
customers) in multi rated appraisal. Where as 40% of respondents tend to believe that
(Single rated) employee appraisal assist in creating maximum value to all stakeholder
and employee sense of belongingness to the company.

CONCLUSION:
I may conclude that it has been proved Multi source performance appraisal is more
comprehensive, credible and effective performance measure for the organization as
compared to the single rater appraisal system and the hypothesis states true that
“Employee performance evaluation is perceived to be better in 360 degree multi-
source feedback than in single source feedback system.”

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