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Organizational
objectives/ Job description
Mission
Develop
Formal/ Informal
performance
Appraisals
matrix
Actual Vs Desired
First and foremost, a performance management system should link employee activities with
the organization goals. One of the primary way strategies are implement is through defining
results, behaviours and to some extent employee characteristics that are necessary for
carrying out these strategies planning.
Every function or practice of hrm is related with the mission and policies of the
organizational objectives therefore jobs are designed accordingly and it is mentioned in the
document of job description.
PMS can be formal or informal in nature on yearly or quarterly basis. On which point the
worker he lies relatively or where he falls and on basis of that shift, promotion, demotion,
salary appraisals or cutting and firing.
Actual Vs Desired
During appraisals what results come or what results were desired (PMS is outcome oriented).
2. Unbiased
Transparency, unbiased, no system is 100% unbiased as humans judging others. But biases
should be controlled. Employees should not be victimized.
3. Validity
The extent to which a performance measure assesses all the relevant aspects of job
performance i.e. accurate data available.
4. Reliability
5. Acceptability
Rule of thumb
E= T*A
6. Feasible
1. Communicating
Sending performance progress to top management
Guiding employees
Telling about the consequences self-corrective measures
2. Motivating Employees
Performance feedback that allows the employee, manager and personnel specialist to
intervene with appropriate action to improve the performance. To work to improve the
employee's performance by naming specific areas for improvement, developing a plan aimed
at improving these areas, supporting the employee's efforts at improvement via feedback and
assistance, and ensuring the employee's involvement and commitment to improving his or her
performance.
3. Decision making
Promotions, transfers and demotion are usually based on past or anticipated performance.
Often promotions are a reward for past performance.
4. Evaluating
Performance evaluations helps managers determine who should receive pay raises. Many
firms grant part of all their pay increases and bonuses based upon merit, which is determined
mostly through performance appraisals.
https://www.slideshare.net/cyrilajith/uses-of-performance-appraisals?from_action=save
What to appraise?
It evaluates an employee’s skills, achievements and growth, or lack thereof. Companies use
performance appraisals to give employees big-picture feedback on their work and to justify
pay increases and bonuses, as well as termination decisions. They can be conducted at any
given time but tend to be annual, semi-annual or quarterly
Traits
Behaviours
Outcomes
Supervisor
Boss
Subordinate
Peers
Customers
Self-assessment
Most performance appraisals are top-down, meaning supervisors evaluate their staff with no
input from the subject. But there are other types:
Self-assessment:
Peer assessment:
Negotiated appraisal:
A newer trend, utilizes a mediator and attempts to moderate the adversarial nature of
performance evaluations by allowing the subject to present first. Also focuses on what the
individual is doing right before any criticism is given. This structure tends to be useful during
conflicts between subordinates and supervisors.
Because companies have a limited pool of funds from which to award raises and bonuses,
performance appraisals help determine how to allocate those funds. They provide a way for
companies to determine which employees have contributed the most to the company’s growth
so companies can reward their top-performing employees accordingly.
Performance appraisals also help employees and their managers create a plan for employee
development through additional training and increased responsibilities, as well as to identify
shortcomings the employee could work to resolve.
Ideally, the performance appraisal is not the only time during the year that managers and
employees communicate about the employee’s contributions. More frequent conversations
help keep everyone on the same page, develop stronger relationships between employees and
managers, and make annual reviews less stressful.
The critical incident method of performance appraisal involved identifying and describing
specific events (or incidents) where the employee did something really well or something that
needs improvement. It's a technique based on the description of the event, and does not rely
on the assignment of ratings or rankings, although it is occasionally coupled with a ratings
type system.
The use of critical incidents is more demanding of the manager since it requires more than
ticking off things on a form -- the manager must actually write things out. On the other hand
critical incidents can be exceedingly useful in helping employees improve since the
information in them is more detailed ans specific than in methods that involve rating
employees.
Some managers encourage employees to record their own critical incidents (where the
employee excelled, situations that did not go well). That's an interesting variation that places
more responsibility with the employee, and also does not require the manager to have been
present when the incident occurred.
Generally, it's important that incidents be recorded AS THEY OCCUR, and not written at or
around the annual performance review. Delaying the recording of critical incident reports
(either good incidents or not so good) means a loss of detail and accuracy.
2. Management by objective
Management by objectives (MBO) is the appraisal method where managers and employees
together identify, plan, organize, and communicate objectives to focus on during a specific
appraisal period. After setting clear goals, managers and subordinates periodically discuss the
progress made to control and debate on the feasibility of achieving those set objectives.
This performance appraisal method is used to match the overarching organizational goals
with objectives of employees effectively while validating objectives using the SMART
method to see if the set objective is specific, measurable, achievable, realistic, and time-
sensitive.
At the end of the review period (quarterly, half-yearly, or annual), employees are judged by
their results. Success is rewarded with promotion and a salary hike whereas failure is dealt
with transfer or further training. This process usually lays more stress on tangible goals and
intangible aspects like interpersonal skills, commitment, etc. are often brushed under the rug.
To ensure success, the MBO process needs to be embedded in the organizational-wide goal
setting and appraisal process. By incorporating MBO into the performance management
process, businesses can improve employee’s commitment, amplify chances for goal
accomplishment, and enable employees to think futuristically.
Ideal for:
Measuring the quantitative and qualitative output of senior management like managers,
directors, and executive (business of any size)
1. Every manager must have 5-10 goals expressed in specific, measurable terms
2. Manager can propose their goals in writing, which will be finalized after review
3. Each goal needs to include a description and a clear plan (list of tasks) to accomplish
it
4. Determine how progress will be measured and how frequently (minimum quarterly)
5. List down corrective actions that will be taken if progress is not in accordance with
plans
6. Ensure that goals at each level are related to the organizational objectives and levels
above/below
Retail giant Walmart, uses an extensive MBO participatory approach to manage the
performance of its top, middle, and first-line managers
Open ended narration also called an essay, is simply a written analysis of an employee's
performance. It's one of the oldest appraisal methods. Lisa tells Tanya that she can think of it
as a written performance report on an employee. The method is very individualized and
qualitative in nature.
• Quality of work
• Teamwork
• Sense of responsibility
• Ethics etc.
Ratings are usually on a Likert scale of 1-5, 1 being Non-existent, 2 being Average, 3
being Good, 4 being Very Good and 5 being Excellent.
4. Very Good: Reliable worker. Good quality of work. Checks work and observes.
5. Excellent: Work is of high quality. Errors are rare, if any. Little wasted effort.
Advantages:
Disadvantages:
2. Difficulty in rating: Rating against labels like excellent and poor is difficult at
times even tricky as the scale does not exemplify the ideal behaviours
required for a achieving a rating.
4. They are good at identifying the best and poorest of employees. However, it
does not help while differentiating the average employees.
The first step in BARS creation is generation of critical incidents that depict typical
workplace behaviour. The next step is editing these critical incidents into a common format
and removing any redundancy. After normalization, the critical instances are randomized and
assessed for effectiveness. Remaining critical incidents are used to create BARS and evaluate
employee performance.
Ideal for:
Businesses of all sizes and industries can use BARS to assess the performance of their entire
workforce from the entry level agent to c-suite executives
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. In doing
this the employee who is the highest on the characteristic being measured and also the one
who is L lowest, are indicated. Then, the next highest and the next lowest between next
highest and lowest until all the employees to be rated have been ranked. Thus, if there are ten
employees to be appraised, there will be ten ranks from 1 to 10.
It does not tell that how much better or worse one is than another,
The task of ranking individuals is difficult when a large number of employees are
rated, and
It is very difficult to compare one individual with others having varying behavioural
traits. To remedy these defects, the paired comparison method of performance
appraisal has been evolved.
7. 360-Degree Feedback
1. Self-appraisals
Self-appraisals offer employees a chance to look back at their performance and understand
their strengths and weaknesses. However, if self-appraisals are performed without structured
forms or formal procedures, it can become lenient, fickle, and biased.
2. Managerial reviews
Performance reviews done by managers are a part of the traditional and basic form of
appraisals. These reviews must include individual employee ratings awarded by supervisors
as well as the evaluation of a team or program done by senior managers.
3. Peer reviews
As hierarchies move out of the organizational picture, coworkers get a unique perspective on
the employee’s performance making them the most relevant evaluator. These reviews help
determine an employee’s ability to work well with the team, take up initiatives, and be a
reliable contributor. However, friendship or animosity between peers may end up distorting
the final evaluation results.
This upward appraisal component of the 360-degree feedback is a delicate and significant
step. reporters tend to have the most unique perspective from a managerial point of view.
However, reluctance or fear of retribution can skew appraisal results.
The client component of this phase can include either internal customers such as users of
product within the organization or external customers who are not a part of the company but
interact with this specific employee on a regular basis.
Customer reviews can evaluate the output of an employee better, however, these external
users often do not see the impact of processes or policies on an employee’s output.
Increase the individual’s awareness of how they perform and the impact it has on
other stakeholders
Serve as a key to initiate coaching, counselling, and career development activities
Encourage employees to invest in self-development and embrace change management
Integrate performance feedback with work culture and promote engagement
Ideal for:
Private sector organizations than public sector organisations as peer reviews at public sector
organizations are more lenient.
Top private organizations like RBS, Sainsbury’s, and G4S are using 360-degree, multi-rater
performance feedback to measure employee performance
Bell curve method assumes that employees in a company can be divided into groups such as:
This forced method of ranking the employees has its own advantages and disadvantages.
The Bell curve model might turn out to be too rigid in cases where the employee
strength in the organization is less. Here the manager might be forced to put
employees in specific ratings just for the sake of bell curve requirements.
As in the bell curve model, the managers can give only a limited number of
employees in the top performer’s category, employees who have actually performed
exceedingly well through the year might be forced to be categorized in the Average
performers’ category for some valid Bell curve requirements. This will lead to a loss
of morale among the employees.
But we should understand that timely and appropriate feedback is definitely essential
to improve employee performance. Telling everyone they are doing better than what
we expect from them might send a wrong message to the employee that they need not
strive more for success.
Companies like CSC have begun rating employees on an extreme bell curve with the
expectation that 40% of the workforce will fall short of expectations. At the same
time, software giants like Microsoft have abolished the Employee Evaluation System
and have started to follow a new approach that will make it easier for the managers to
allocate rewards in a manner that reflects the unique contributions of their employees
and teams.
So probably we could conclude this on-going debate by considering 360-degree
feedback from the employee’s subordinates, peers and seniors to know how they are
perceived in the workplace along with the bell-curve based normalization
methodology. This would bring a more well-rounded review and help in a more
accurate assessment of the employee’s performance.
What are your thoughts on the bell curve method of performance appraisal? What is
the evaluation method followed in your organization? Share your views in the
comments section.
9. Annual Confidential Report:
It is the traditional way of appraising employees mainly in the Government Departments.
Evaluation is made by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on employee’s strength
weakness, intelligence, attitude, character, attendance, discipline, etc. report.
1. Recency bias
Definition
When reviewing an employee’s performance, managers tend to focus on the most recent time
period instead of the total time period.
You can also call this the “What have you done for me lately?” bias. If someone recently
rocked a presentation or flubbed a deal, that recent performance is going to loom larger in a
manager’s mind. Why? Because it’s easier to remember things that happened recently.
Preventionstrategy
So how do we help others and ourselves overcome this bias? It’s important to document
performance at different points in time throughout the time period. Did someone just
complete a 3-month project? Great, send their peers a request for feedback so you can get
some data on how well they did. Did someone just complete internal training? Awesome,
request feedback from the instructor about their participation. This way, at the end of the
year, you have more frequent data points from throughout the entire time period.
Definition
Allowing one good or bad trait to overshadow others, i.e. letting an employee’s congenial
sense of humor override their poor communication skills.
We all have our own pet peeves and turn-ons. Sometimes those quirks can overshadow our
ability to assess people overall. This is why attractive people are much more likely to be rated
as trustworthy. However, if/when they fail to live up to those higher expectations, attractive
people also suffer a penalty for not living up to the presumptions of others.
Prevention strategy
Make sure to evaluate performance on multiple dimensions of performance instead of leaving
it open to interpretation. Are you rating individual achievement, but failing to look at the way
people contribute to the success of others? Does this person happen to have a particular set of
highly sought after technical skills, but they don’t finish their work on time? Make sure at
least 2-3 different aspects of performance to get a holistic view so that one awesome or awful
trait or skill doesn’t overshadow everything else.
3. Stereotyping Bias
It is related to directly targeting someone on the basis race, gender, religion, ethnicity etc in
decision making it creates a lot of issues of validity and reliability. When giving feedback,
individuals tend to focus more on the personality and attitudes of women. Contrarily, they
focus more on behaviours and accomplishments of men. This exacerbates gender bias,
growth/promotion opportunities, and the pay gap.
Prevention strategy
Sometimes unstructured feedback allow bias to creep in. So, without some criteria, people
will redefine the criteria for success in their own image. The big takeaway, as Stanford
researchers have put it, is that open boxes on feedback forms make feedback open to bias.
That’s why it helps to take a “mad libs” approach to feedback – help raters by giving them a
format and then allowing them to fill in the blanks. Nudge managers into specifically talking
about situations, behaviors, and impacts rather than personality or style.
4. Locus of control
Locus of control is a psychological concept that refers to how strongly people believe they
have control over the situations and experiences that affect their lives. A person attributes its
failures on external causes and achievements as its internal factors. We should control this
bias to fairly judge others.
5. Escalation of commitment
7. Hindsight bias
Hindsight bias is a term used in psychology to explain the tendency of people to overestimate
their ability to have predicted an outcome that could not possibly have been predicted. Tip of
the ice berg means that only taking decision on appeared facts instead of in depth
circumstances
8. Overconfidence bias
The overconfidence bias is the tendency people have to be more confident in their own
abilities, such as driving, teaching, or spelling, than is objectively reasonable. For example, at
job a person performing duties for a reasonable amount of time thinks that he has become a
mastery in it and becomes over confident.
9. Cognitive Blind-spot
Blind Spot Bias is the tendency to see oneself as less biased than other people, or to be able to
identify more cognitive biases in others than in oneself.
The best way to overcome your own blind spots is to recruit someone else to look for them,
and (this part is important!) believe them when they tell you what's going on. That “someone
else” needs to know what to look for, and be candid with you when they see a blind spot in
action.