Performance Appraisal System

Meaning Performance appraisal can be described as an important tool by which the

organizations:

Measure their employees performance against certain laid down standards.

Take corrective steps through training, interventions or placement decisions.

Reward good performance and

Attempt to raise the employee performance to a higher level.

Purposes of Appraisal:

1. It can serve as a basis for job change or promotion.

2. By identifying strengths and weaknesses of an employee it serves as a guide for

formulating a suitable training and development programme to improve his quality of
performance in his present work.

3. It serves as a feedback to the employee.

4. It serves as an important incentive to all the employees who are by the existence of an
appraisal system assured of the managements continued interest in then and of their
continuous possibility to develop.

5. The existence of a regular appraisal system tends to make the supervisors and
executives more observant of their subordinates.

6. Performance appraisal often provides the rational foundation for the payment of price
work wages, bonus, etc.

7. Performance appraisal serves as means for evaluating the effectiveness of devices

used for the selection and classification of workers.

8. Permanent performance appraisal records of employees help management to give up

sole reliance upon personal knowledge of who may be shifted.

Who can appraise?:

1. The immediate manger. 4. Personnel department specialist.

2. Other managers familiar with the 5. The employees peer.

employees work.
6. Service users.
3. A higher level manger.
7. The employees himself.
Page 1 of 7
 8. The employees subordinates.

Designing an Appraisal System:

The process of designing an appraisal system should involve managers, employees, HR

professionals and both internal and external customers in making decision about each of the
following issues:

Measurement Content.

Measurement Process.

Defining the rater (i.e. who should rate performances).

Defining the rater (i.e. the level of performance to rate).

Administrative characteristics.

Measurement Process:

Type of Measurement Scale - highest or lowest.

Types of Rating instruments - there are three basic ways in which raters can make
performance assessments :

They can make comparisons among raters performance.

They can make comparisons among anchors or performance level and select one most
descriptive of the person being appraisal, and

They can make comparisons of individuals.

Performance Appraisal Methods:

1. Ranking Method 2. Rating Scale Method

3. Check List Method 4. Forced Choice Method

5. Field Review 6. Critical incident Technique

7. Confidential Report 8. Essay Appraisal

Six Primary criteria on which the values of performance may be assessed

Page 2 of 7
 4 Cost- The degree to which the use of the organizations resources (e.g., human, monetary,
Effectiveness: technological, materials) is maximized in the sense of getting the highest gain or
reduction in loss form each unit or instance of use of a resource.

5 Need for The degree to which a performer can carry out a job
Supervision: function without either having to request supervisory
assistance or requiring supervisory intervention to prevent
an adverse outcome.

6 Interpersonal The degree to which a performer promotes feelings of self-esteem, goodwill, and
Impact: cooperativeness among concerned and subordinates.

Difference between Job Evaluation and Performance Appraisal:

1 Quality: The degree to which the process or result of carrying out an activity approaches
perfection, in-terms of other conform ding to some ideas way of performing the activity
or fulfilling the activities intended purpose.

2 Quantity : They amount produced, expressed in such terms as money value, number of units, or
number of completed activity cycles.
Page 3 of 7
3 Timeliness: The degree to which an activity is computerized, or a result produced, at
the earliest time desirable from the standpoints of both coordinating with
the outputs of others and maximizing the time available for other
activities.
Management by Objectives (MBO):

What is MBO?

MBO is a process by which managers at different levels and their subordinates work together
in identifying goals and establishing objectives consistent with the organizational goals and
attaining them. Thus, MBO is not only an aid to planning but also motivating factor.

MBO Type Programmes:

(1) Management by Results; (2) Goals Management; (3) Work Planning and Review ;( 4)
Goals and Controls; (5) Appraising by Results.

THE PROCESS OF MBO:

Preliminary Setting of Objectives at the Top;

Classification of Organizational Goals

Setting of subordinate objectives;

Recycling of Objectives;

Performance Appraisal.

PRE-REQUISITES FOR INSTALLING AN MBO PROGRAMME:

The purpose and area of MBO should be defined clearly.

Since the top management plays a crucial role, its favorable attitude and Support is
must.

The people who will be involved in the programme should be prepared mentally and
physically for it.

Participation of superiors and subordinates in setting organizational objectives,

Progress review, and performance appraisal is necessary.

Each employee should be provided with feedback information for self-direction and
self-control.

The MBO programmes should be implemented at all levels including the

Departmental level and its grass-root level

360o Appraisal

Page 4 of 7
It is that system of appraisal where the system collects performance information from
multiple parties, including ones peers, superiors & customers. In addition to that it enables
an employee to compare his or her perception about self with perceptions of others.

Merits & Demerits

Merits Demerits

Evaluates methods applied to achieve Ignores performance in terms of

targets reaching goals

Reveals strengths & weakness in Colleagues responses tend to biased

management style

Forces inflexible managers to initiate Assesses deny the truth of negative

self-change feedback

Creates an atmosphere of teamwork The system can be used to humiliate

& improvement people

Unearths truth about organizational Linking findings to rewards can prove

culture & ambience to be unfair

Errors in Appraisal

1. Judgment Errors

(a) First impression (e) Central tendency

(b) Halo (f) Stereo typing

(c) Horn Effect (g) Regency effect

(d) Leniency

2. Poor Appraisal forms 4. Ineffective organizational policies

& practices
3. Lack of rater preparedness
Appraisal Interview:

The performance appraisal of an employee is generally followed up by an interview which

serves as a feedback for him. The main objectives of this feedback interview are:

(a) To bring in more classify in the roles of the supervisor and the employee.

(b) To increase the supervisors awareness of all those factors which facilitate or retard the
achievement of desired goals by the employee.
Page 5 of 7
(c) To provide employee with an opportunity to release his tensions and stare his anxieties.

(d) To provide employee with an opportunity to realize his strengths, weakness,

achievements
and failures so that he gets a duper insight into his behavior.

(e) To sharpen the behavioral skills of both the supervisor and the employee.

(f) To encourage employee to get goals for further development.

Generally, there are three types of appraisal interview as under:

1. Tell and Sell 2. Tell and listen 3. Problem solving Interview (or counseling)

Essay Appraisal:

In this technique, the rater who may be the former employer, teacher or associate of the
candidate is requested to give in writing an informed and honest amount of the candidates
strengths, weakness, potentials, and so on.

Limitations of Traditional Appraisal Methods:

. Emphasis on Human 3. Hyper critical or 5. Reluctance to play

performance without Horns Effect. good.
regard for Human Values.
4. Control tendency and 6. Defensiveness of
2. Halo Effect. briency. employees

Critical Incident Method:

In this method the first step is to draw up for each job a list of critical job requirements that
is, those requirements. Which are vital for success or failure on the job? For example in the
job of a salesman the following critical factors may be identified:

1. Following up: 5. Persisting on tough 8. Preventing price -

Complaints, requests,
orders.
2. Planning ahead.
3. Communicating true
information to managers
and customers.
accounts. cutting by dealers and
customers.
6. Pointing out uses for
other company products 9. Knowing customer
the salesmans own line. requirements.
7. Using new sales 10. Initiating new selling
techniques and methods. ideas.

4. Carrying out promises.

Page 6 of 7
Confidential Report: In this method each employee is rated confidentially by one or more
senior officers for his performance.

Page 7 of 7