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What is Performance Appraisal

PA is the method of evaluating the behaviour of the employees in the workplace, normally including both quantitative and qualitative aspect of the job.
How the employee is performing
How the employee can develop What the superior can do to make it happen How the job is going

Performance Appraisal :
Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality, performance, potential, of its group members

The system of basic HRM practices

Job Security
(Employer Branding)

Employee well-being Rewards / Pay

(HR planning)


Job Design / Work organization




Evaluation Feedback Objective setting


Career planning & development Succession planning Training Job rotation Challenging Assignments Talent development

Corporate Social responsibility? (Outplacement)

Performance Appraisal
Higher-level strategies and

SMART GOALS Specific Measurable Agreed Realistic Timed

Agreeing on performance objectives

Evaluation of periods performance & feedback

Key issues: Procedural and distributive justice, focus & effectiveness of incentives

Deciding on training and development plans Career Planning & Counceling


Expectancy theory & Performance Appraisal

Expectancy Theory
Expectancy Goal can be reached Instrumentality Behavior leads to rewards Valence Reward is desired Motivation


Goal Setting

Performance Evaluation

Reward Tangible & Intangible

Performance appraisal

WHY conduct a Performance Appraisal

Provide information about the performance ranks. Decision regarding salary revision, confirmation, promotion and demotions. Provide feedback about level of achievement and behaviour of the subordinate. Provide information which helps to counsel the employees.

Provide information to diagnose the deficiency of

the employees. Provide training and development needs of the employees.

WHEN to conduct a Performance Appraisal

The performance review must occur atleast once in a year. Some companies review twice in a year. However, as a part of Performance Management, the performance review is a continuing, ongoing activity.

OBJECTIVES of Performance Appraisal

Establish a more effective two way communication Set performance objectives Help improve current performance Assess past performance

Provide feedback on performance

Identify training & development needs Allocate rewards Identify staff with promotional possibilities Assist in career planning decisions

It is a step by step process It examine the employee strengths and weaknesses Scientific and objective study Ongoing and continuous process Secure information for making correct decisions on employees

Needs and Objectives:

Provide feedback about employees Provide database Diagnose the S & W of individuals Provide coaching, counseling, career planning to subordinates Develop positive relation and reduce grievance Facilitates research in personnel management

WHO are involved in Performance Appraisal

The Appraisee The Appraiser HR Department

Content of Performance Management

Regularity of the Attendance. Judgmental Skills.

Ability to work individually or in group.

Leadership skills.

Area of improvement.
Past Achievement.

Initiative, Technical skills.

Ability to grasp new things. Area of interest. Attitude. Job Knowledge.

Honesty and sincerity.


Cost & Time consciousness


Appraisal Benefits (cont.)

Appraisals offer employees:
Direction Feedback Input Motivation

Appraisal Benefits
Appraisals offer the company:
Documentation Employee Development Feedback Legal protection Motivation system

Why Appraisals Are Important

Recognize accomplishments Guide progress Improve performance

Why Important (cont.)

Review performance Set goals Identify problems Discuss career advancement

Steps in performance appraisal

Establishing job standards

Designing an appraisal programme

Appraise performance Performance interview Use appraisal data For appropriate purpose

Process of PA
Taking corrective standards Setting performance standards Communicating standards

Discussing results Comparing standards

Measuring standards

Issues in appraisal system

Formal and informal What methods? Whose performance?

When to evaluate?

Appraisal Design?

Who are the raters?

What to evaluate?

What problems?

How to solve?

What to evaluate? (Philip Model)

Problem children Planned separation

stars Social citizen

Potential L L


How PA contribute to firms competitive advantages

Improving performance
Making correct decision Competitive advantage

Values and behavior

Minimizing dissatisfaction And turnover

Ensuring legal competence

Problems in performance appraisal

1. Errors In rating Halo effects Stereotyping Central tendency Constant error Personal bias Spill over effect

Problems in performance appraisal (Contd)

2. 3. 4. 5. 6. Incompetence Negative approach Multiple objectives Resistance Lack of knowledge

Essentials of an effective appraisal system

Mutual trust Clear objectives Standardizations Training Job relatedness Documentation Feedback and participation Individual differences Post appraisal review Review and appeal

Failure to communicate standards Failure to give timely feedback Failure to allow employees to correct performance Inconsistency in measuring performance Failure to document performance objectively

Appraisal Forms
Define performance expectations Describe measurement tools Use a rating system Cover specific examples Set measurable goals

Measure Performance
Measurement systems need to be: Specific Fair Consistent Clear Useful

Measure Performance (cont.)

Systems can be: Numerical Textual Management by Objective (MBO) Behavior oriented

Document Performance
Make sure documentation is objective Document performance of all employees Provide complete and accurate information Document performance on a regular basis

Set Goals.
Based on job requirements Realistic Measurable Observable Challenging Prioritized

Employee Input

Employees take an active role:

Setting goals Designing action plans Identifying strengths and weaknesses Employees participate in the PA meeting

Employees: Review performance Think about new goals

Preparation (cont.)
Review performance Complete written appraisal Think about new goals Schedule time and place

Start the Meeting

Lay out agenda Talk about money Encourage input Give good news first

During the Meeting

Review performance: Based on previous goals Noting strengths and accomplishments Identifying areas for improvement

Presentation Tips
Focus on the professional Give objective examples Invite response Listen actively Create we mentality

During the Meeting (cont.)

Set goals: Based on company goals Building on areas that need improvement

End the Meeting

Encourage good performance Lay out action plan Communicate outcome of goals not met Confirm understanding

Continuous Feedback
Formal appraisals Informal appraisals Open communication

Recognize Good Performance

Verbal Public Tangible Monetary

Identify Poor Performance

Act early Take the right approach Deal with employee reaction Handle continued poor performance

Discipline Poor Performance

Recognize problems Talk with employee Follow company policy

Handle Hard Cases

Reviewing highly emotional employees Rating former peers

Performance Appraisal Methods

Individual Evaluation Methods Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale MBO

Performance Appraisal Methods

Group Appraisal
Ranking Paired comparison Forced distribution Performance tests Field review technique

Performance Appraisal Methods

1. Confidential report 2. Essay evaluation 3. Critical incidents 4. Checklists 5. Graphic rating scale 6. Straight Ranking 7. Paired comparison 8. Forced distribution 9. Grading system 10.Field review technique 11.Nominations 12.Work samples
Traditional methods

Performance Appraisal Methods

Modern methods 1. Assessment centre 2. Human resource accounting costs & contribution 3. Behaviorally anchored rating scale 4. MBO 5. 360 performance apparaisal

Traditional Methods of Performance Appraisal.

Graphic Rating Scales: This is the oldest and most widely method used for performance appraisal. The scales may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the job).

Table: Typical Graphic Rating Scale Employee Name................... Job title ................. Department ......................... Rate ............... Data ..................................
Quantity of work: Volume of work under normal working conditions Quality of work: Neatness, thoroughness and accuracy of work Knowledge of job A clear understanding of the factors connected with the job Unsatisfactory (1) Fair (2) Satisfacto ry (3) Good (4) Out Standi ng (5)

Attitude: Exhibits enthusiasm and cooperativeness on the job

Ranking Method
This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

Extremely good


Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country.

Above average Average Below average Poor Extremely poor

5 4 3 2 1

Can expect to initiate creative ideas for improved sales.

Can expect to keep in touch with the customers throughout the year. Can manage, with difficulty, to deliver the goods in time. Can expect to unload the trucks when asked by the supervisor. Can expect to inform only a part of the customers. Can expect to take extended coffee breaks and roam around purposelessly.

Paired Comparison Method

A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

Forced distribution method

Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution.

Checklist Method
Another simple type of individual evaluation method is the checklist.
Is the employee really interested in the task assigned? Is he respected by his colleagues (co-workers) Does he give respect to his superiors? Does he follow instructions properly? Does he make mistakes frequently? Yes/No Yes/No Yes/No Yes/No Yes/No

Critical Incidence Method

Under this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job . July 20 Mr. Paul patiently attended to the major customers complaint. He is polite, prompt, enthusiastic in solving the customers problem. On the other hand the bad critical incident may appear as under: September 28 Mr. Paul stayed 45 minutes over on his break during the busiest part of the day. He failed to answer the store managers call thrice.

Essay Method
This method asked managers / supervisors to describe strengths and weaknesses of an employees behavior.

Confidential Report
It is mostly used in government organizations. It is a descriptive report prepared, generally at the end of every year, by the employees immediate superior. The report highlights the strengths and weaknesses of the subordinate.

Modern Methods

A process whereby the superior and subordinates of the organization jointly identify its common objectives, define each individuals major areas of responsibility. Establishment of Goals Setting the performance standard Actual level of job attainment is compared with the goals agreed upon. Establishing new goals and new strategies for goals not previously attained.

1. 2. 3. 4.

When psychologists are used for evaluations, they asses an individuals potential. The appraisal consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations.

Assessment Centre
This not a technique of performance appraisal by itself. In fact, this is a system or organization where assessment of several individual is done by experts by using various techniques. These techniques used role playing, case studies etc.


What is 360 DF?

360 Degree Feedback is a multi - rater feedback system where an individual is

assessed by a number of assessors including

his boss, direct reports, colleagues, internal customers and external customers

What is 360 DF?

Feedback collected from Using a specially designed tool Anonymously

Internal Customers




External Customers

Team Members

Common Problems Associated with Conducting the Appraisal

1. Halo/horn effect employees extreme competence in one area shines over all others. Conversely, employee does poorly in one area and this overshadows all areas.

2. Bias own prejudices {race, national origin, gender, appearance, etc.} influence the appraisal
3. Comparison Rating contrasting one employee with another

Common Problems Associated with Conducting the Appraisal 3. Central Tendency rate everyone as average 4. Recency Effect focusing on performance instead of entire year recent

5. Personal Prejudice If the rater dislikes one group or employees, he may rate them at the lower end. 6. Favoritism evaluating friends or those who dont make waves, etc. more favorably than others

Performance criteria for Executives

For top managers
Return on capital employed Contribution to community development Degree of upward communication from middle-level executives Degree of growth and expansion of enterprise.

For middle level Managers

Departmental performance Coordination among employees Degree of upward communication from supervisors Degree of clarity about corporate goals and policies

For supervisors
Quality and quantity of output in a given period Labor cost per unit of output in a given period Material cost per unit in a given period Rate of absenteeism and turnover of employees No of accidents in a given period

Key Points to Remember

You must conduct objective appraisals on a scheduled basis. Appraisals tell employees how theyre doing and how they can improve. Appraisals help create a system of motivation and rewards based on performance.