BBA II Sem HRD Unit II

Potential Appraisal
A fundamental premise behind potential appraisal is that every individual has certain hidden qualities in
varying proportion. When these qualities are not properly tapped and utilized, these remain dormant.
Many organizations consider and use potential appraisal as a part of the performance appraisal
processes. Potential appraising is different from appraising performance.
Definitions
 The potential appraisal refers to the appraisal involving identification of the hidden talents and
skills of a person. The person might or might not be aware of them.
 Potential appraisal is a future-oriented appraisal whose main objective is to identify and evaluate
the potential of the employees to assume higher positions and responsibilities in the organizational
hierarchy.
 Potential refers to abilities of an employee which are currently not brought to use by an
organization. Potential means the talent capacity to undertake higher challenges on job in future.
Potential appraisal is concerned with unfolding these hidden attributes. These attributes may be in the form
of analytical power, creative imagination, sense of reality, ability to see future, ability to work in varied
environment, risk propensity, initiative, being proactive, passion for high achievement, problem-solving and
decision-making skills, and so on.
Potential appraisals are required to- inform employees about their future prospects, help the organization
chalk out a suitable succession plan, update training efforts from time to time, motivates the employees to
further develop their skills and competencies and to identify training needs.

Difference Between Performance & Potential Appraisal

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Need of Potential Appraisal
i. Helps assess the employees’ capacities, which pave way for them to give their best performance
ii. Helps assess an organization’s ability to develop future managers
iii. Helps assess the employees’ analytical power, which indicates the ability to analyze problems and
examine them critically
iv. Helps build creative imagination, which is the ability of presenting an existing thing in an
unconventional and new manner
v. Helps analyze the sense of reality, which refers to an employee’s way of interpreting a situation

Categories of Potential: Three categories of potential are -

i. Turn potential is the ability to do the work at the next level in an organizational hierarchy in the next
three to five years, or sooner.
ii. Growth potential refers to the ability to do work which is complex, more challenging, needs innovative
skills, pioneering expertise, etc., at the same level in the near future.
iii. Mastery potential is the ability to do the same type of work that is currently being done, in a better.

Indicators of Potential
• A sense of reality: This is the extent to which a person thinks and acts objectively, resisting purely
emotional pressures but pursuing realistic projects with enthusiasm.
• Imagination: Ability to let the mind range over a wide variety of possible causes of action, going beyond
conventional approaches to situations and not being confined to ‘This is the way it is always being done!’
• Power of analysis: The capacity to break down, reformulate or transform a complicated situation into
manageable terms.
• Breadth of vision: The ability to examine a problem in the context of a much broader framework of
reference; being able to detect, within a specific situation, relationships with those aspects which could be
affecting the situation.
• Persuasiveness: The ability to sell ideas to other people and gain a continuing commitment, particularly
when the individual is using personal influence rather than ‘management authority’.

Assessing the Potential of the Employee:

1. Find out the requirements of the higher job and see how the employee meets those requirements.
2. Does the employee have the knowledge, skills and attitude which could be utilised in the higher job?
3. How good are the personal performance parameters such as quality of decision making, willingness to
take up additional load/responsibilities, dependability, initiative, imagination, open minded to suggestions
and new ideas, interpersonal relationship etc.?
4. How could employee develop those qualities required for performing the job at higher level effectively?
5. Once the management has identified the person, they could provide necessary guidance, training and
development so that the person can take higher responsibilities and perform well in his new role.
Example: A good salesman need not be a good manager in the sales function since the job of a sales
manager requires managerial qualities apart from selling skills.

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Objectives of Potential Appraisal
1. Identify the abilities of an employee in order to evaluate whether that employee is suitable for future
assignments or otherwise, and
2. Occupy higher positions in the organizational hierarchy and undertake higher responsibilities because
past performance may not be a good indicator for future and higher role.
3. Inform employees about their future roles;
4. Make suitable corrections in training efforts from time to time;
5. Inform employees about they must do something for their career prospects;
6. Help organization for suitable succession plan;
7. Improve quality and quantity of performance of an employee; and
8. Give proper feedback to the employees for their potential.

Techniques of Potential Appraisal:

1. Self-Appraisal: In this type of appraisal, an individual self-assesses and provides the necessary
evaluation of his outlook relating to his achievements. A self-appraisal datasheet is generally provided to the
individual, in which the worker evaluates himself on many dimensions, tells about various achievements,
virtues, difficulties encountered during the work period, etc. These self-appraisals are quite helpful in the
situations where the supervisor needs to involve employed in the process of the potential appraisal.
2. Peer Appraisal: This type of appraisal furnishes facts that remain unidentified from the evaluation by the
bosses. The peers can throw light on such facts regarding the performance of employees. This is so because
peers are well-versed with the strong and weak aspects of their co-workers, and they are more informed of
their managerial and individual capabilities. The appraisal by the peers has more authenticity and credibility,
unlike the appraisal by the bosses.
3. Manager/Supervisor Appraisal: It is the most commonly used method of potential appraisal. Most of
the time, an appraisal by a superior is appropriate and useful; however, it cannot always be applied.
Appraisals by the existing supervisors are objective and provide an extensive understanding of the
performance of the workers.
4. Management By Objective (MBO): MBO includes collective goal-establishment in which both the
superior and subordinates come together to establish goals. Subordinates are provided an opportunity to take
part in goal- an establishment for their relevant work areas. Thus, it would minimize ambiguity and
maximizes efficiency on the job. One more significant thing in MBO is the collective evaluation. While
giving feedback about performance, both superior and subordinates are concerned in order to discuss the
issues and barriers which took place while accomplishing the tasks.
5. Psychological Tests: Psychological compositions like cognitive and impulsive functioning present in a
certain worker are mainly evaluated through the application of the psychological tests. Psychometrics is a
mechanical terminology of the science used in psychological testing. This is a method that compares a
worker with colleagues at the workplace, how much perfection that worker possesses in particular work in
comparison to his peers.
6. Management Games: Business or management games are the factual business conditions that are
exhibited in the form of imitations. In business games, two or more hypothetical establishments compete
against each other in a supposed product market. The participants play the assumed role of the Chairman,
General Manager, Managing Director, Marketing Manager, etc. Decisions influencing the price rise, volume

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of production, and stockpiles are taken by each competitor. Their outcomes and findings are manipulated by
the computer systems, and a comparison is made between the outcomes of the competitors and outcomes of
the factual business conditions. The competitors can evaluate their performance level and can notice the
influence of their action on the other competitors and vice versa. These management games are helpful and
contribute to the appraisal of the performance of the employee.
7. Leadership Exercises: In an organization, the leader is the supreme head and leads from the front. The
leader is fully proficient in recognizing the qualities of himself as well as his staff. He is also skilled in
utilizing those qualities for the benefit of the organization. The leader is aware of the perfect time to head
the organization and implement the decisions for its betterment and is also fully aware of the appropriate
time to hand over the control of the authority to a competent administrator. These capabilities are developed
through the various leadership exercises.

Obstacles of Potential Appraisal

1. Bias of Appraiser The presence of ‘Halo Effect’ in evaluation of employees is the biggest weakness of
this method. A high rate is given to favoured employees whereas unfriendly employees are rated low.
2. Ambiguity in Standards If the standards are not clear, the supervisors may follow different standards for
different employees.
3. Insufficient Evidence An employee who can impress the boss may get a positive evaluation though his
impression in his own department may be very poor. In such cases, the performance appraisal will be
superfluous.
4. Several Qualities Remain without Appraisal Through performance appraisal, only few qualities of
employees can be measured. All individuals differ from each other in terms of background, values and
behaviour.
5. Leniency or Strictness Tenancy Every evaluator has his own valuation procedure which is regarded as
his own standard for evaluation. For example, some teachers are strict in evaluation of answer books
whereas others are lenient. The lenient tendency is known as ‘Positive Leniency Error’ whereas strict
tendency is called as ‘Negative Leniency Error’. The rating may be high or low depending upon the nature
of evaluators.
6. Average Rating Problem In order to give very low or very high rating, the top managers are required to
give reasons to justify the rating. The most common error committed in performance appraisal is to give
average rating to all employees. Moreover, low rating antagonizes the subordinates.
7. Influence of Man’s Job There is a tendency to give a high rating to highly paid jobs. So a senior
employee may get a higher rating than a junior employee.
8. Similarity Error The evaluator tries to look those qualities in subordinates which he himself possesses.
Those who show the similar characteristics are rated high.
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HRD Processes and Evaluation: Training
TRAINING AND DEVELOPMENT
Training
Training is concerned with imparting specific skills for particular purposes. The term Development refers to
the nature and direction of change induced among employees through the process of training and education.
Training of employees is considered as the acquisition of expertise which allows them to perform their task
as per the organisational needs.
Training is the instrument to achieve enhanced productivity, improved profits, innovation, image building
customer oriented services, and competitive advantage. It also helps in reducing workplace conflicts, but
increases employee confidence, satisfaction, coordination and vast opportunities to grow. Training is an
appropriate and orderly modification of behaviour through learning, development, which happen as result of
teaching, coaching, development and designed experience.

Benefits of Training: Training benefits an organisation in the following ways:

1. Trained employees make better and economic use of materials and equipments. Thus Maintenance cost is
reduced and the life of machines and equipments is increased.
2. It helps to improve the job satisfaction and morale of employees, resulting in improvements in their
earnings, job security and career prospects.
3. It helps to reduce the time & cost required to gain acceptable level of performance.
4. It facilitates delegation and decentralisation of authority. Trained employees are willing to accept new
and challenging assignments.
5. It helps to improve the quantity & quality of employees and their performances.
6. It helps to reduce the need for constant and close supervision of workers.
7. It enables the organisation to fill manpower needs; promising employees can be spotted and trained for
higher level jobs.
8. Trained employees reduce the frequency of mistakes and also accidents are reduced.

Purposes of Training
require training so as to perform their tasks effectively. Instruction, guidance,
coaching help them to handle jobs competently, without any wastage.
-level jobs (promotion).
oyees require refresher training so as to keep abreast of the latest developments in job
operations. In the face of rapid technological changes, this is an absolute necessity.
After training, the
employee can change jobs quickly, improve his performance levels and achieve career goals comfortably.

depending on organisational needs.

required to make employees more productive and useful in the long-run.

b- quickly and being. Able
to pull their own weight is one of the best ways for them to gain acceptance).

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DEVELOPMENT
In order to train people to get hold on new perspectives, technologies, or believes is termed as Development.
It facilitates the leaders to lead the whole organization to new heights by creating a proactive culture.
Development enables the employees to produce quality products, efficient services, and innovations.
Employee development consists of individual or employee and overall growth of the employee as when
employees of the organization would develop the organization, organization would be more flourished and
the employee performance would increase.
It gives learning breakthroughs aimed to grow employees by providing not only skills, but also general
environmental knowledge, better work practices and work attitudes, which may be beneficial to them in
attaining higher positions.
Modern approach of development in the Indian context is that organizations have realized the importance of
employee growth and consider it as a means to generate efficient qualified workforce to get better results.

TRAINING AND DEVELOPMENT

Training and Development in an organization ensures the changes in learning and behaviour of employees
in a systematic way.
Training and development refers to the process of systematically developing work related knowledge and
expertise in people for the purpose of improving performance.
It is the process for guiding employees to build up their abilities, knowledge base and personal as well as
organizational skills. Every employee in the organisation has a desire to be in demand, more valuable and
progressive, which can only be achieved through systematic and regular training and development.

Objectives of Training and Development

The principal objective of training and development is to ensure the availability of skilled and willing
workforce to an organization. Basically there are four key objectives:
Individual Objectives – Employees achieve their personal goals in the form of experiences, expertise,
career and monetary growth. Training and Development is a pathway for employees to learn new skills and
creating advancement towards employee satisfaction.
Organizational Objectives – Trained employees helps the organization in producing quality products
with quantity.
Functional Objectives – Employees help and cooperate with other colleagues in the department besides
taking risks and innovation with efficient handling and maintenance of machines and equipments.
Societal Objectives – Enabling the organisation socially responsible to the needs and challenges of the
society with ethical considerations.

Approach to Training and Development : This involves following phases:

essing what knowledge, skills and /or abilities are needed by learners;

reach the objectives, and means to carefully evaluate whether the objectives have been reached or not;

and materials themselves

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A systematic approach is always goal-oriented with the results of each phase being used by the next phase.
Typically, each phase provides ongoing evaluation feedback to other phases in order to improve the overall
system's process.

Methods of Training
1. On the Job Training: On the job training is considered to be the most effective and the oldest method of
training the operating personnel. Under this method, the worker is trained by his immediate supervisor or by
an experienced employee in real work situation. The trainee is explained the method of handling tools,
operating the machines etc.

Advantages of On-the-job training

1. Trainee learns in the actual job environment so that he is strongly motivated to learn.
2. No adjustment is needed after the training as it is not located in artificial situations.
3. Employees are trained in accordance with the job requirements. So it is realistic.
4. The training is cheaper &convenient. No separate equipment & space is required.
5. This method is used to train industrial employees as well as sales personnel.

Limitations of On-the-Job training

1. Training involves some interference in the normal work routine. At the same time the pressure of work
makes concentration on learning difficult.
2. Trainees may cause damage to machinery & equipment.
3. The effectiveness of training is dependent on the competence of supervisor.
4. This method of training is very much time consuming.
5. There is a tendency to ignore theory and concentrated only on practical part.
6. This method is not fit for training large number of employees at the same time.

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Methods of On the job Training
1. Apprenticeship Training usually combine on the job training and class room instruction in particular
subjects. The trainees serve as apprentices under the direct supervision of experts for a long period and some
stipend is paid to them during the training period. Trainees are imparted knowledge and skill in doing a
particular craft or series of related jobs. This is one of the oldest methods of training.
In India, specified industries are required under the apprenticeship Act 1962 to train a certain number of
apprentices in designated trades.

Advantages of apprenticeship training to the trainees

1. Trainees receive stipend in the course of training.
2. They also acquire valuable skills which carry a high price in the labour market.
3. They can be absorbed in the firm.
4. Apprenticeship programmes serve as a source of skilled labour for the employer.
5. Apprenticeship training is intense and provides sufficient knowledge and skill.
6. It is also popular for training technical and skilled personnel in crafts like machinists, fitters, carpenters,
electricians, welders, etc.

Drawbacks of apprenticeship training

1. It is an expensive and time consuming method of training.
2. There is no guarantee that the apprentice will continue to work in the same Org.
3. If the apprentices do not get employment after training, there is wastage of skill.
4. Compulsory apprenticeship schemes involve additional burden on industry.

2. Classroom Training: Under this method, theoretical instructions are provided to the trainees through the
joint efforts of employers and educational institutions. Employers send their employees for training to the
technical or vocational training institutes. Special courses are designed to fill the needs of the organisation
and lecture method is used for instruction. Lectures may be supplemented by group discussions, seminars,
demonstrations, films. etc. The purpose is to bring about the balance between theoretical and practical
knowledge.
The main purpose of the special course is to provide advanced knowledge in specific areas for the effective
performance of the job. Classroom training is suitable where concepts, problem solving ability and attitudes
are to be learnt or where depth in knowledge is required. This method is also known as 'internship training'.

3. Job Rotation: This kind of training involves shifting the trainee from one department to another or from
one job to another. This enables the trainee to gain a broader understanding of all parts of the business and
how the organisation as a whole functions. The trainee gets fully involved in the departments operations and
also gets a chance to test her own aptitude and ability. Job rotation allows trainees to interact with other
employees facilitating future cooperation among departments. When employees are trained by this method,
the organisation finds it easier at the time of promotions, replacements or transfers.

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4. Job enrichment: is a process that is characterized by adding dimensions to existing jobs to make them
more motivating. Examples of job enrichment include adding extra tasks (also called job enlargement),
increasing skill variety, adding meaning to jobs, creating autonomy, and giving feedback.

Job enrichment is a process where the organization try to boosts up the morale of employee by providing a
importance and higher work satisfaction to their employees. They treat them well by offering best of tasks
that hep them improve and perks just as offered to their superiors or mangers.

In job enrichment, a candidate might be eligible for those benefits which can provide security and growth
in the post of work.

5. Job Empowerment is defined as the ways in which organizations provide their employees with a certain
degree of autonomy and control in their day-to-day activities.
Employee empowerment is a management philosophy that emphasizes the importance of giving employees
the autonomy, resources and support they need to act independently and be held accountable for the
decisions they make.

Types of Empowerment ranges from self-strength to efficiency building and can be categorized into five
main parts – social, educational, economic, political and psychological.

Off The Job Methods

1. Vestibule Training: Under this method, employees are trained in a special training centre within the
plant. In the vestibule training, an attempt is made to duplicate the actual conditions of the work place as
nearly as possible. The training is provided by qualified instructors under carefully planned and controlled
learning conditions. The emphasis is on learning rather than on production.

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Advantages of Vestibule training
1. The trainees are free from pressure of the work and can concentrate fully on learning.
2. It is less time consuming due to better concentration by trainees & specialist trainers.
3. Thorough and uniform training is possible as the learning conditions are carefully controlled. It is
possible to teach the best and standardised methods for a job.
4. There is little danger of the costly machines being damaged or mishandled.
5. Vestibule training is suitable when a large number of people are to be trained at the same time and for
the same kind of work.

Disadvantages of Vestibule training

1. Vestibule training is expensive as it involves duplication of materials, equipment and conditions of the
work place. Expert trainers are employed at the high remuneration. Also Workers do not contribute to
production during the training period.
2. The artificial training atmosphere may create the adjustment problems for the trainees when they are
placed on the job.
3. It is very difficult to reproduce the actual shop conditions in the vestibule school.

2. Class Room Lectures/Conferences: This approach is well adapted to conveying specific information
rules, procedures or methods. The use of audio-visuals or demonstrations can often make a formal
classroom presentation more interesting while increasing retention and clarifying more difficult points.
3. Films: They can provide information and demonstrate skills that are not easily represented by the other
techniques. Used in conjunction with conference discussions, it is a very effective method in certain cases.
4. Case Study: Taken from actual experiences of organisations, cases represent attempts to describe, as
accurately as possible real problems that managers have faced. Trainees study the cases to determine
problems, analyse causes, develop alternative solutions, finding best solution, and implement it.
5. Computer Modelling: It simulates the work environment by programming a computer to imitate some of
the realities of the job and allows learning to take place without the risk or high costs to be incurred.
6. Programmed Instruction: This method incorporates a prearranged and proposed acquisition of some
specific skills or general knowledge. Information is broken into meaningful units and these units are
arranged in a proper way to form a logical and sequential learning package i.e. from simple to complex. The
trainee goes through these units by answering questions or filling the blanks.

Types of Employees' Training

(a) Induction or Orientation Training seeks to adjust newly appointed employees to the work
environment. New employee needs to be made fully familiar with his job, his superiors and subordinates
and with the rules and regulations of the organisation.
(b) Safety Training is provided to minimise accidents and damage to machinery It involves instructions in
the use of safety devices and in safety consciousness.
(c) Refresher Training: When existing techniques become obsolete employees have to be trained for new
methods and techniques. With the passage of time employees may forget some of the methods of doing

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work. Refresher training is designed to revive and refresh the knowledge and to update the skills of the
existing employees.
(d) Job Training refers to the training provided with a view to increase the knowledge and skill of an
employee for improving performance on the job. Employees may be taught the correct methods of handling
equipment and machines used in a job. Such training helps to reduce accidents, waste and inefficiency.
(e) Promotional Training involves training of existing employees to enable them to perform higher level
jobs. Employees with potential are selected and given training before their promotion, so that they do not
find it difficult to shoulder the higher responsibilities of the new positions to which they are promoted.
(f) Remedial Training: Such training is designed to correct the mistakes and shortcomings in the behaviour
and performance of employees.

Training Needs Assessment

A training needs assessment indicates an employee's current skills and competency levels. This evaluation is
then used to determine where each employee stands in terms of the required competency level needed for
maximum performance and productivity in the present and future.
Training needs assessment is one of the best ways to deal with competency gaps. It can be conducted at any
time like hiring, making career development plans, performance reviews, succession planning and dealing
with changes related to the job position.
Training needs assessment survey and training needs assessment reports should be conducted regularly
through training needs assessment form and training needs assessment questions to determine whether there
is a need for training and whether the existing programs are proving effective in the organization.
The processes of Training Needs Assessment can be divided into five steps:
i) Identify problem and needs; ii) Determine design of needs assessment;
iii) Collect data; iv) Analyze data; and v) Provide feedback.

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Sources that will determine training needs assessment are as follows
1. Focus groups 5. Needs analysis
2. Assessment centers 6. Needs assessment questionnaire
3. Skills test 7. Exit interviews
4. Observations 8. Employee interviews
Advantages: The benefits of Training needs assessment are as follows
1. Training needs assessment is considered beneficial for an organization as it helps it to determine the
employees who need training through performance evaluations, self-assessments, focus groups,
customer feedback, etc.
2. It helps to identify performance gaps. It encourages both existing and new employees to take
competency assessments to know the need for training and the areas which should be targeted.
3. It helps to direct resources to priority areas to meet business goals. It also helps in preventing
unnecessary training and thus saves money and time
4. It helps to improve the efficiency and productivity level of an employee.
5. It helps to improve the quality of services. The training helps to meet the desired goals
6. It helps to train the right employee for the right job with the right approach
7. Training assessment helps to collect qualitative and quantitative data
8. It is considered beneficial as it prioritizes training needs so that employees can become innovative,
efficient and innovative in their jobs.
9. It helps to achieve a higher return on investment
10. It provides an opportunity for learning and development through proper training

Evaluation of Training Program

Training evaluation refers to the process of collecting the outcomes needed to determine if training is
effective. The company constantly evaluates the effectiveness of training programs to find if the money they
have invested has been spending properly or not.
There are three types of criteria for evaluating training: internal, external, and participant’s reaction. Most
experts argue that it is more effective to use multiple criteria to evaluate training. One view of a multiple-
evaluation system was developed by Kirpatrick(1998).
Training programs can be evaluated by asking the following questions.
1. Has change occurred after training?
2. Is the change due to training?
3. Is the change positive or negative?
4. Will the change continue with every training program?
4 Steps of Evaluation Process of Training Program
1. Reaction 3. Behavior
2. Learning 4. Result

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1. Reaction: Reaction refers to the attitude of employees about the training, whether the employee considers
training to be a positive or negative one. If the reaction is positive, then people have accepted the program,
and changes will be possible.
2. Learning: Another method of judging effectiveness is to identify levels of learning, i.e., how much the
people have learned during the training. This can be found out by trainers mark sheet, the report submitted
by the employee, and actual performance.
3. Behavior: The HR department needs to understand the behavior of the employees, to understand the
effectiveness of training. The behavioral change can be seen in how the person interacts with juniors, peer
groups, and seniors. They mark the behavior change and inform the HR department of the success of the
training program.
4. Result: Results provided by the employee in monetary terms also determine the effectiveness of the
training program, i.e., employee success in handling the project, the group performance before and after
training, etc.
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