Chapter FOUR

Performance Appraisal
 CHAPTER OBJECTIVES

 After studying this chapter, you should be able to

• Explain the objectives and purposes of performance
appraisal
• Discuss the major steps in performance appraisal process

• Describe the various types of performance appraisal

methods.

• Illustrate with examples the factors that contribute to

effective performance appraisal

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 Introduction

• Performance: Level of accomplishment in fulfilling a

prescribed purpose/goal
• Performance Standards: Threshold, requirements,
expectations
• Performance Monitoring: follow-up, feedback, review of
performance progress
• Performance Measurement: the process of determining
the level of accomplishment (individual, Unit,
Organization)
• Performance Appraisal: Determining how well an
employee has performed vis-à-vis predetermined
standard
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 Objectives of performance appraisal

1. Providing basis for promotion/transfer/termination

2. Enhancing employees’ effectiveness
3. Identifying employees’ training and developmental
needs
4. Removing work alienation
5. Developing interpersonal relationship
6. Removing discontent

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 Purpose of Performance Appraisal

Administrative uses Developmental uses

• Compensation • Identifying strengths
• Promotion • Identifying areas for
• Disciplinary action change
• Dismissal • Training/development
• Downsizing • Coaching
• Career development

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 Performance Appraisal System

• Two basic systems:

 An evaluation system and
 A feedback system
 Incorporate viewpoints of the main stakeholders: the employee and
the organization.
 Employee viewpoint: clear and specific goals, feedback, seek the
ways to improve performance, rewards
 Organizational viewpoint: establishing and upholding the principle of
accountability.

o one of the chief causes of organizational failure is "non-

alignment of responsibility and accountability."

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 Performance Appraisal System-Cont’d
• Who are Appraisers?
 Supervisors/immediate officer, peers, subordinates,
employees’ themselves, users of service and consultants,
3600 feedback
 Appraiser skills

 When & HOW OFTEN SHOULD APPRAISALS BE DONE?

– ANNUALLY (Once a year), SEMI-ANNUALLY (every 6
months),QUARTERLY (every 3 months)
– MONTHLY, CONTINUOUSLY

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 Performance Appraisal System-Cont’d
 What should be rated?
 Criteria for assessing performance are:
Elements Focus
Results WHAT the individual achieved
• Actual job outputs
• Countable results
• Measurable outcomes and accomplishments
• Objectives achieved
• QQCT (Quantity/Quality/Cost/Timeliness)
• Timeliness _ adherence to schedule, meeting deadlines
Behaviors HOW the individual performed
• Adherence to organizational values
• Competencies/performance factors
• Traits/attributes/characteristics/ proficiencies
• Personal style, manner, and approach
• KASH (Knowledge/Attitudes/Skills/Habits)
• For an organization to be successful, both behaviors and results are important.
5.4 Stages of Performance Appraisal

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Performance Appraisal Process
External Environment
Internal Environment
1. Establish performance
standards or Goals-

2. Communicate performance
expectations To Employees

3. Measure Actual
Performance-

4. Compare Actual
Performance with
Standards-

5. Discuss Appraisal with

Employee &Review---

6. Initiate Corrective Action

 5.5 Performance Appraisal Methods

Traditional methods Modern methods

• Ranking • Behaviourally Anchored
• Pair comparison Ratings Scale/BARS/
• Graphic rating • Management By Objectives
• Forced distribution /MBO/
• Critical incident • 360o degree

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 Traditional Appraisal methods

1) Ranking
1st _____
2nd_____
3rd _____
2) Pair Comparison
Employee-1 _____ versus Employee-2 _____
Employee-1 _____ versus Employee-3 _____ etc.

• Both are difficult to use with a large number of subordinates

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 Traditional Appraisal Methods

3. Narrative essay
• Unstructured (e.g., content, length)
• Affected by the writing ability of supervisors and time availability

4. Graphic Rating Scale _____ _____ _____ _____ _____

Very Average Excellent
Poor

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 Graphic rating scale
• Rating scales method rates employees according to defined factors
• Factors related to job performance are the quantity and quality of work,
and work related behaviours.
Example:
Employee’s Name______________ Department_____________
Rater’s Name__________________ Date__________
Factors Excellent Good Acceptable Fair (2) Poor (1)
(5) (4) (3)
1. Dependability
2. Initiative
3. Quality of work
4. attendance
5. Attitude
6. Cooperation
Overall output

Results
 Traditional Appraisal methods
5). Forced distribution methods
• An appraisal approach in which the rater is required to
assign individuals in a work group to a limited number of
categories similar to normal distribution.

Forced Distribution
Performance
50%
40%
40%

30%
20% 20%
20%
10% 10%
10%

0%
1 2 3 4 5
Assign appropriate proportions of people to each
performance category

6. Critical Incident Technique

– Keeps a log of a person’s effective and ineffective job behavior
 Critical Incidents Report.
Positive
• (Date) Employee volunteered for four extra assignments.
• (Date) Phone call received from professional X commending the
assistance given by employee A.
• (Date) Employee submitted progress report B two weeks ahead of
deadline. The report was complete and accurate. Employee exercised
independent judgment.

Negative:
• (Date) Employee failed to submit accurate and complete verification
reports. Auditors found deficiencies that warranted a payback.
• (Date) Employee refused to return phone calls to client, resulting in loss
of client.
• (Date) Employee missed the deadline for a grant proposal submission.
This resulted in the agency not receiving X amount of funds. Program X
had to be eliminated.
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 Modern Appraisal Methods
 Behaviorally Anchored rating Scale (BARS): Uses specific
descriptions of actual behaviors to rate various levels
of actual performance
 It involves five steps
1) Generate critical incidents (examples of good and poor job
performance)
2) Place Critical Incidents into performance dimensions (e.g.,
Responsibility, Initiative, Safety)
3) Retranslation Step (do step # 2 again with a separate group
of job experts. Discard incidents where disagreement exists
as to which dimension in which they belong)
4) Calculate the mean and standard deviation of each critical
incident (discard those with a large standard deviation)
5) Place critical incidents on a vertical scale 17
 Methods Appraisal Methods-Cont’d
• Behaviorally Anchored Rating Scale (BARS)
•Uses specific descriptions of actual behaviors to rate various levels of actual performance

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 Modern appraisal methods-Cont’d
Management By-Objective (MBO):
Steps in the MBO process:
1. Develop overall organizational goals

2. Joint goal setting: Establish specific goals (or goals) for various
departments, sub-units and individuals
 Formulate action plans

3. Performance review
 Review progress periodically

4. Appraise performance

5. Feedback
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360-degree appraisal

Collect evaluations of employee from numerous sources

measures performance by obtaining assessments of the
employee from a variety of sources:
 Some pitfalls in Performance appraisal

Problems in appraisal process

Common Appraisal Errors

 Unclear standards
 Halo Effect
 Leniency/Severity-undeserved high or low
 Central Tendency
 Recency Effect
 Contrast Effect/personal bias
 Subjectivity
 Poorly Planned Meeting
 Unprepared Supervisor

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 Issues for discussion
• Share your experiences about the practices
of performance appraisal in the work
place?
• Identify factors that could contribute to
effective performance appraisal.

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 SUMMARY: GUIDELINES FOR APPRAISALS
• Appraisal standards are job related -- based on job analysis

• Standards are clearly communicated to employees in advance

• Standards are responsive to actual worker behavior or effort

• Activities performed and results achieved are both appraised

• Appraisal criteria are consistently applied

• Raters are able to consistently observe work performance

• Raters are trained in appraisal and how to feedback results

 Always use document

Training and Development
 Introduction
 In today’s changing environment, employees at all levels
need additional training to improve performance in their
current jobs and bring about opportunity to mangers
develop their capability thereby bring organizational
effectiveness and efficiency.

 Human resource development offers competitive

advantages to a firm by removing performance deficiencies.

 It ensures that organizations have sufficient people with

capabilities required for achieving their missions and goals

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 Training, Education and Development
 Training refers to the process of imparting specific skills/ job
related skills
– Training tends to be done for current job.

 Education provides a knowledge base that underpins any

other activities the individual may engage in at a later stage
and is more of theoretical learning in classroom.

 Development refers to the learning opportunities designed

to help employees grow.
 It allows both training and educational activities to be integrated.

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 Distinction among training and development

• Training Vs Development
Training Development

1. Focus on present jobs, task oriented Focus on future responsibility; growth

2. Short-term : periodic process Long-term on-going process

3. Target is operative employees Target is managerial employees

4. Confined to hands-on-skills & Develop conceptual, interpersonal,

Knowledge technical and decision making skills

5. Remedial effort Develop employees potential

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 Development: practices that help employees gain the competencies
they will need in the future in order to advance in their careers

Career development

Core
development
Coaching approaches Mentoring

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 objectives of training and Dev’t
The particular objectives of training and Dev’t are to:

• Develop the competences of employees and improve their

performance;
• Help people to grow within the organization
• Reduce the learning time for employees starting in new jobs
(appointment, transfers and/or promotion)

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 Inputs in training and Development
Basic inputs from training and Development:
• Skills: Motor skills (performance of specific physical
activities), interpersonal skills/people skills (listening,
persuading, and showing an understanding of others’
feelings).
• Education
 theoretical concepts and develop a sense of reasoning and
judgement.
• Development
 Knowledge about business environment, management principles and
techniques, human relations, specific industry analysis and the like is
useful for better management of the company.
• Ethics
• Attitudinal Changes
• Decisions Making and Problem Solving Skills 30
 The training process
Five generic steps of training
• Need Assessment: is the systematic approach of analysing what training is
needed. ( job description and person specification Vs KSA of employees,
Performance appraisal data)
 Training & Dev’t need= Standard performance-actual performance

• Identifying Training Objectives: based on gap analysis, which

indicates the distance between where an organization is with its
employee capabilities and where it needs to be.
 KSA (Knowledge, Skill, & Attitude). Note: the success of training should be
measured in terms of the objectives set.
• Designing Training and Development Program:1) who participate in the
program? (2) Who are the trainers? (3) What methods and techniques are to be used for
training? (4) What should be the level of training? (5) What learning principles are needed?
(6) Where is the program conducted?
 lectures, audio-visuals, on-the-job training, programmed instruction, computer
aided instruction, simulation and sensitivity training
• Implementation of the Training Program
• Evaluation of the training program
 Levels of training evaluation: Reaction– Learning---- Behaviour---- Results
 Evaluation of the training program—cont’d
Assume that 30 employees attend a two-day workshop on “customer
handing” skills.
• A reaction-level measure could be gathered by having the employees
complete a survey that asked them to rate the value of the training, the
style of the instructors, and the usefulness of the training to them.

• Learning levels can be evaluated by measuring how well trainees have

learned facts, ideas, concepts, theories, and attitudes. Tests on the
training material are commonly used for evaluating learning (before &
after training).

• Evaluating training at the behavioral level means observing the

required behaviors for customer handing!

• Results level: Employers evaluate results by measuring the effect of

training on the achievement of organizational objectives (productivity…).
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 Discussion issues

• Share your experiences about the

practices of training and development
programs in an organization.
• What do you recommend to make training
programs to be effective?

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 HOW TO MAKE TRAINING EFFECTIVE?
1. Ensure that the management commits itself to allocate major
resources and adequate time to training. This is what high-
performing organizations do.

2. Ensure that training contributes to competitive strategies of the

firm.
3. Ensure that a comprehensive and systematic approach to
training exists, and training and retraining are done at all levels
on a continuous and ongoing basis.

4. Make learning one of the fundamental values of the company.

– Let this philosophy percolate down to all employees in the organization.
5. Ensure that there is proper linkage among organizational,
operational and individual training needs.
6. Create a system to evaluate the effectiveness of training