Performance Appraisal :

Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities
of a person for further growth and development. Performance appraisal is generally done in systematic ways which
are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. It serves as a basis for influencing working habits of the employees
6. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by following advantages:

Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient
employees. In this regards, inefficient workers can be dismissed or demoted in case.

Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is
possible through performance appraisal. Performance Appraisal tries to give worth to a performance.

Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are
dependent on performance appraisal. The criteria should be merit rather than seniority.

Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training
policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can be
designed for efficient employees. It also helps in framing future development programmes.

Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of
the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of
selection procedure. Future changes in selection methods can be made in this regard.

Communication: For an organization, effective communication between employees and employers is very

important. Through performance appraisal, communication can be sought for in the following ways:

1. Through performance appraisal, the employers can understand and accept skills of
subordinates.
2. The subordinates can also understand and create a trust and confidence in superiors.
3. It also helps in maintaining cordial and congenial labour management relationship.
4. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

 7.  Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of
employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a person
for better job and helps him to improve his performance in the future.

Errors in Performance Appraisal

1.  Halo Error-  When rater assigns ratings on the basis of an overall impression (positive or negative) of the person
being rated.  For example, an employee who topped the board examination for electrical engineers is regarded as
outstandin in the aspect of personal qualification.  If that impression spills over the other aaspects of evaluation, a
halo error is commited.
2.   Leniency Error - This is a rater's tendency to give  relatively high ratings to virtually everyone.  The opposite of
this is the strictness error where the raters tend to give everyone a low rating.  Most often, leniency errors happen
when peers assess one another.
3.  Central Tendency Error -This occurs when a rater lump everyone together around the average or middle
category.  The idea is that there are no very good or very poor performers on the dimension being rated.  As a result,
no true performance discrimination is made.
4.  Recency Error - This is a biased rating that develops by allowing the individual's most recent behavior to speak for
his or her overall performance on a particular dimension.  The result is a false picture of the individual's job
performance during thea entire period.
5.  Personal; Bias Error - This occurs when the rater allowsspecific biases, such as racial, age and gender to enter
into performance appraisals.  For example, a rater may intentionally give higher rating to a member of a certain
fraternity than to a non-member.

Reward System
INTRODUCTION
        The selection of an occupation by an individual, as well as the decision to join a particular organization
within that occupation, are influenced by the rewards that are thought to be available in the occupation or
organization. To prove this, simply look at the classified section of your local newspaper and notice how
many jobs highlight beginning salaries.  Hence, the take-home pay is of utmost consideration among
applicants.
Performance Appraisal and Rewards

Reward Systems in Organizations

How do organizations choose the best appraisal system for their
organization?
                  The following are excerpts from organizations that tell sommething about
the reward system.
                  After a company has designed and implemented a systematic performance
appraisal system and provided adequate feedback to employees, the next step is to
consider how to tie available corporate rewards to the outcomes of the appraisal.
Behavioral research consistently demonstrates that performance levels are highest
when rewards are contingent upon performance. Thus, in this section, we will
examine five aspects of reward systems in organizations: (1) functions served by
reward systems, (2) bases for reward distribution, (3) intrinsic versus extrinsic
rewards, (4) the relationship between money and motivation and, finally, (5) pay
secrecy.
Functions of Reward Systems
Reward systems in organizations are used for a variety of reasons. It is generally
agreed that reward systems influence the following:
 Job effort and performance. Following expectancy theory, employees’ effort and
performance would be expected to increase when they felt that rewards were contingent upon
good performance. Hence, reward systems serve a very basic motivational function.
 Attendance and retention. Reward systems have also been shown to influence an employee’s
decision to come to work or to remain with the organization. This was discussed in the previous
chapter.
 Employee commitment to the organization. It has been found that reward systems in no
small way influence employee commitment to the organization, primarily through the
exchange process.


 (Links to an external site.)That is, employees develop ties with organizations

when they perceive that the organization is interested in their welfare and willing to
protect their interests. To the extent that employee needs and goals are met by the
company, we would expect commitment to increase.


 Job satisfaction. Job satisfaction has also been shown to be related to rewards, as discussed
in the previous chapter. Edward E. Lawler, a well-known researcher on employee
compensation, has identified four conclusions concerning the relationship between rewards
and satisfaction: (1) satisfaction with a reward is a function of both how much is received
and how much the individual feels should have been received; (2) satisfaction is influenced
by comparisons with what happens to others, especially one’s coworkers; (3) people differ
with respect to the rewards they value; and (4) some rewards are satisfying because they
lead to other rewards.
 Occupational and organizational choice. Finally, the selection of an occupation by an
individual, as well as the decision to join a particular organization within that occupation, are
influenced by the rewards that are thought to be available in the occupation or organization. To
prove this, simply look at the classified section of your local newspaper and notice how many jobs
highlight beginning salaries.

The Exchange Process Between Employee and Organization

(Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA
4.0 license)
Reward systems in organizations have far-reaching consequences for both individual
satisfaction and organizational effectiveness. Unfortunately, cases can easily be cited
where reward systems have been distorted to punish good performance or inhibit
creativity. Consider, for example, the Greyhound Bus Company 
 
REWARDS
                   After staffing, training, career planning and development, and performance appraisal, a final
requirement is necessary to ensure effective performance.  The requirement refers to the design and
implementation of reward systems.  
TYPES OF ORGANIZATIONAL INCENTIVES

 
1.,  Intrinsic rewards- are those that the worker receives from the job itself, such as pride in one's work, a
feeling of accomplishment, or being part of a team.  These rewards are self-regulated as the worker is not
dependent on an outsider, such as the manager, to provide for them.  Managing intrinswic work rewards
present the additional challenge of designing a work setting so that employees can, in effect, reward
themselves for a job well done.
2.  Extrinsic rewards are those that the workers get from the employee, usually money, a promotion or
benefits.
3.  Financial rewards - are those that enhance an employee's financial well being directly through wages,
bonuses, profit sharing, and the like.
4.  Non-financial rewards - are indirect enhancement of an employee's financial well being.  This is done
through supportive benefits like pension plans, paid vacations, paid sick leaves and purchase discounts.
5.  Performance-based rewards - are those given using performance as basis.  These rewards take the form
of commissions ,piecework pay plans, incentive systems, group bonuses or other forms of merit pay.
6.  Membership-based rewards - refer to those that are given to all employeesregardless of performance. 
This type includes cost of living increases, benefits, and salary increasesattributable to labor market
conditions, seniority or time in rank, credentials such as a college degree, or future potential asuch as a new
MBA degree from a prestigious university.

Foundations of Organizational
Structure
INTRODUCTION
          Different types of organizational structures place unique demands on people who work within them.
Not all people are suited to a certain type of structure; some are better suited to a simple structure, others
are suited to a bureaucracy, and still others are most productive in a matrix structure.  This is important to
know because organizational structures can only be effective if the people working within them are well-
matched with the structure.

             The organizational chart above is a line organization, so far the simplest of the all types.  One can easily
recognize who has a higher position, same level positions and the subordinates under the production manager
which  has foremen as assisstants down to the workmen.
            Organizational structure refers to the formal pattern of how people   and jobs are grouped in an organization. 
It is often illustrated by an organizational chart, specifying who reports to whom.
Basic Elements of Organizational Structure
1.  work specialization - tasks in the organization are subdivided into separate jobs.
2.  departmentation - grouping of jobs under the authority of a single manager for planning, coordination and control.
3.  pattern of authority- organization members are allowed to make decisions without approval of another member.
4.   span of control- number of subordinates reporting to a single supervisor
5.   coordination of activities-linking of activities in the organization that serve to achieve a common goalor objective.
The basis of grouping jobs in departmentation are:
1.  knowledge and skills
2.  work process and function
3.  Time
4.  Product
5.  Customer
6.  Location
New Organization Design Options
1.     Outsourcing organizations - also known as virtual organization is an arrangement by which the organization
have wrok performed for it by groups outside the organization.
2.     Team Structure - makes use of teams as the central device to coordinate work activities.  Team members must
be generalists as well as specialists.

                  The above illustration is the line and staff form of organizational structure  wherein the sales manager has
a consultant in the position of market forecaster.  The 2nd level makes use of a training director intended for the 
development and training of the salespeople.

     
The bureaucracy form of organization is illustrated which is a rational, systematic and precise form of organiazation in
which rules, regulations, and techniques of control are precisely defined.  Our government system uses the
bureaucratic form.
                                             The matrix organizational design as shown above is one that superimposes
                                                                                     a product or project-based design.