Performance Appraisal

Definitions
Performance appraisal is a systematic evaluation of individuals work related performance / behavior and potential for development.
It is also an objective assessment of her / his performance against well defined benchmarks.

It describes the job relevant strengths and weaknesses of each individual.

Objectives of Performance Appraisal

Compensation decisions Promotion decisions Training and development programs Feedback Personal development

Reasons for Performance Appraisal

Improving performance Making correct decisions Ensuring legal compliance Minimizing dissatisfaction & turnover Values & Behavior Strategy & Operations

Performance Appraisal Programs

Appraisal Programs

Administrative
Compensation Job Evaluation

Developmental
Ind. Evaluation Training Career Planning

Purposes of Performance Appraisal

Benefits for Performance Appraisal

Employer perspective [Administrative uses] Despite imperfect measurement techniques, individual differences in performance can make a difference to company performance.

Documentation of performance appraisal and feedback may be required for legal defense.
Appraisal offers a rational basis for constructing a bonus or merit system. Appraisal dimensions and standards can help to implement strategic goals and clarify performance expectations. Employee perspective [Developmental purposes]

Individual feedback helps people to rectify their mistakes and get ahead, focusing more on their unique strengths.
Assessment and reorganization of performance levels can motivate employees to improve their performance.

Performance Appraisal & Other HRM Functions

Performance appraisal judges effectiveness of recruitment efforts

Recruitment

Quality of applicants determines feasible performance standards

Selection should produce workers best able to meet job requirements Training and development aids achievement of performance standards

Performance appraisal validates selection function

Selection

Performance appraisal determines training needs

Training and Development

Performance appraisal is a factor in determining pay

Compensation Management

Compensation can affect appraisal of performance

Performance appraisal justifies personnel actions

Appraisal standards and Labor Relations methods may be subject to negotiation

Features of Performance Appraisal

Setting up work standards and feedback mechanism Consistency between organizational strategy and job behavior Consistency between organizational values and job behavior

Sources of Performance Appraisal

Supervisor

Team

Peers Self Customers

Subordinates

Performance Appraisal Process

Objectives of Performance Appraisal Establish Job Expectations Design an Appraisal Program Appraise Performance Performance Interview Use Appraisal Data for Appropriate Purposes

Steps Involved in Performance Appraisal Process

Establish Performance Standards
These are benchmarks against which performance is measured. They should relate to the desired results of each job. They must be clear to both the appraiser and the appraisee. Good performance goals should speak about What is the task to be accomplished? What will it look like when it is accomplished? When must it be completed? What are the cost considerations? What are the likely payoffs to the employee?

Steps Involved in Performance Appraisal Process

Communicate the Standards
The Appraiser should prepare job descriptions clearly Help the appraisee set own goals and targets

Analyze results objectively

Offer coaching and guidance

The Appraisee should be clear about what he is doing and why he is doing

Steps Involved in Performance Appraisal Process

Measure Actual Performance
Use reliable and dependable performance measures.
These must be easy to use and report on critical behaviors that determine performance.

These would generally include: personal observation, statistical reports, oral reports and written reports.
These may be objective or subjective.

Objective measures are generally quantitative, and include quality of production, degree of training needed, accidents in a given period, absenteeism, length of service etc. Such measures are used for evaluating lower level jobs.
Subjective measures are based on opinions of those doing evaluation and are not verifiable by others; generally used for evaluating middle level positions.

Steps Involved in Performance Appraisal Process

Compare actual performance with standards
Not an easy job

Emotional factors to be taken into account

Affects the self esteem of the appraisee Criteria likely to be questioned, if the appraisal turns out to be negative

Take corrective action

Put out the fires
Set things in order Arrive at new goals for achieving superior performance

360 Degree Appraisal

360 Degree Appraisal

Manager and/or Supervisor Appraisal done by an employees manager and reviewed by a manager one level higher. Self-Appraisal Performance By the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview. Subordinate Appraisal Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes.

360 Degree Appraisal

Peer Appraisal Appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employees manager. Team Appraisal Appraisal, based on TQM concepts, recognizing team accomplishment rather than individual performance. Customer Appraisal Appraisal that seeks evaluation from both external and internal customers.

Pros and Cons of 360-Degree Appraisal

PROS The system is more comprehensive in that responses are gathered from multiple perspectives. Quality of information is better. (Quality respondents is more important than quantity) of

It complements TQM initiatives by emphasizing internal/external customers and teams.

It may lessen bias/prejudice since feedback comes from more people, not one individual. Feedback from peers and others may increase employee self-development.

Pros and Cons of 360-Degree Appraisal

CONS The system is complex in combining all the responses.

Feedback can be intimidating and cause resentment if employee feels the respondents have ganged up.
There may be conflicting opinions, though they may all be accurate from the respective standpoints. The system requires training to work effectively. Employees may collude or game the system by giving invalid evaluations to one another. Appraisers may not be accountable if their evaluations are anonymous.

360-Degree Performance Appraisal System Integrity Safeguards

Assure anonymity Make respondents accountable Prevent gaming of the system Use statistical procedures Identify and quantify biases

Performance Appraisal Methods

Trait Method Behavioral Method Results Method

Trait Method
Graphic Rating Scale
Mixed Standard Scale

Trait Methods

Forced-Choice

Essay

Trait Method

Graphic Rating-Scale Method A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics. Mixed-Standard Scale Method An approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard. Forced-Choice Method Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance. Essay Method Requires the rater to compose a statement describing employee behavior.

Trait Method

Graphic Rating Scale With Provision For Comments

Trait Method

Example Of A Mixedstandard Scale

Behavioral Method
Critical Incident

Behavioral Checklist

Behavioral Methods
Behaviorally Anchored Rating Scale (BARS) Behavior Observation Scale (BOS)

Behavioral Method
Critical Incident An unusual event denoting superior or inferior employee performance in some part of the job. Behaviorally Anchored Rating Scale (BARS) A performance appraisal that consists of a series of vertical scales, one for each dimension of job performance. Behavior Observation Scale (BOS) A performance appraisal that measures the frequency of observed behavior.

Behavioral Method

Example Of A Bar For Municipal Fire Companies

Behavioral Method

Sample From Behavior Observation Scales

Results Method
Management by Objectives (MBO) A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager.

Performance Appraisal under an MBO Program

Summary of Appraisal Methods

ADVANTAGES
TRAITS
Inexpensive Meaningful Easy to use

DISADVANTAGES
Potential for error Poor for counseling Poor for allocating rewards Poor for promotional decisions

BEHAVIOR

Specific dimensions Accepted by employees Useful for feedback OK for reward/promotion

Time consuming Costly Some rating error

RESULTS

Less subjectivity bias Accepted by employees Performance-reward link Encourages goal setting Good for promotion decisions

Time consuming Focus on short term Criterion contamination Criterion deficiency

Reasons Why Appraisal Programs Fail

Manager lacks information Insufficient reward for performance Lack of appraisal skills Manager not taking appraisal seriously

Unclear language

Performance appraisals fail because

Manager not prepared Ineffective discussion of employee development

Manager not being honest or sincere

Employee not receiving ongoing feedback