Performance

Management
 Discussion Points of this Topic
• Performance Management Systems,
• Objectives of Performance Appraisal,
• Performance standards,
• Sources of appraisals,
• The Appraisal Process,
• Methods of appraisals –
• Pitfalls in Performance Appraisal –
• Appraisal Interview
• Quality of Work Life (QWL)
 Performance management system

• Performance management system is the

systematic approach to measure the performance
of employees. It is a process through which the
organization aligns their mission, goals and
objectives with available resources (e.g.
Manpower, material etc), systems and set the
priorities.
• Managing employee’s performance is the key
objective of establishing systematic Performance
Management system in an organization.
 Performance Appraisal

“ Performance Appraisal is defined as the process of

evaluating the performance of an employee and
communicating the results of evaluation to him/her
for the purpose of rewarding or developing the
employee”
 Objectives
• Setting targets and goals as performance standards

• Evaluating employee performance

• Identifying T & D needs

• Rewarding performance

• Improving performance
 Appraisal Process
• Determination of standards of performance based on
organizational objectives and job description

• Measurement of employee performance against pre-

determined goals and standards

• Actual process of measurement

• Communicating the results of appraisal to the employee

concerned

• Discuss the appraisal with employees and put to effective

use
 Appraisers

• Self Appraisal

• Supervisors

• Peers

• Customers/Clients

• Subordinates
 Appraisal Interview

• The appraisal procedure starts with employee himself/herself

• He/she evaluates his/her own performance on various factors

mentioned in the appraisal form and assesses his/her strengths
and weaknesses

• Then, he/she discusses his/her appraisal form with the

supervisor and takes inputs and reaches an agreement on
future course of action

• This interaction is called as Appraisal interview

Challenges in conducting Appraisal Interview
• Organizational Culture

• Employee-Boss relationship

• Maturity level of individual

• An apprehensive employee

• A wary appraiser

• A biased appraiser

• Inexperience
 How to face Appraisal Interview challenges?

• Develop the culture

• Attach competency appraisal with performance

appraisal

• Set specific measurable goals at the beginning

• Training on conducting appraisal interview

• Equal chance should be given to appraisee and

appraiser to respond to each other
 Pitfalls in Performance Appraisal (1)
• Halo effect (the tendency for an impression created in one area to influence opinion in
another area.)

• Leniency effect
• Stringency effect
• Recency effect
• Primacy effect
• Central tendency effect
• Culture
 Pitfalls in Performance Appraisal (2)

• Stereotyping (generalizations about the personal attributes or characteristics of a group

of people)

• Perceptual set (Appraiser’s social and psychological background like beliefs, values,
community, ethical group and the like would form a perceptual set about the appraise. This
perceptual set affects the performance rating. )

• Fundamental attribution error

– People tend to and it's very human to attribute certain exhibited behavior with the
actors known characteristics while not determining the context which the
behavior manifested. Fundamental attribution makes people error because it's
based on own perceptions hence affects performance appraisal.
– It is defined as the tendency to judge a person in an unpleasant situation in a bad light, and
attribute her/his behavior to internal causes and qualities rather than understanding the
situation or circumstances that may cause the person to behave in that manner.
– How to avoid fundamental attribution error. 1 1. Guess a genuine reason: When you find
yourself judging a person based on characteristics, force yourself to find a genuine
reason for the action. 2 2. Think of the good qualities. 3 3. Benefit of the doubt.
 Uses of Performance Appraisal
• Helps in Determination of T & D needs
• Facilitates Improvement in organizational
effectiveness
• Becomes Basis for Compensation management
• Acts as a Basis for transfers, promotions, career and
succession planning
• Useful in cross-functional transfers and job
enrichment
• Useful for evaluation of overall Human Resources of
the organization and its value for the firm
 Ethics of Performance Appraisal
• Making the ratings more measurable and quantifiable

• Reducing subjectivity

• Using instrumental methods which have hidden

weights

• Having the feedback evaluated by a third party

• Training appraisers on how to provide negative

feedback
 Performance Appraisal Methods
• MBO
• Graphic rating scale
• Work standards approach
• Essay appraisal
• Critical incident method
• Forced choice rating method
• Point allocation method
• Checklist
• Behaviorally anchored rating scale (BARS)
• 360 degree performance appraisal
• Team appraisals
• Balanced scorecard method
• Ranking methods (Alternation, Paired Comparison and Forced
distribution)
 PA Methods
• MBO : Management by Objectives is employer-employee
driven approach of performance appraisal which involves
superior and subordinates in setting goals.
➢ Clear and well-defined goals and objectives
➢ Definite time-span/timelines to achieve these goals
➢ Action plans to achieve these goals
➢ Timely and Constructive feedback is given

• Graphic Rating Method: In this method traits or behaviors

that are important for effective performance are listed out and
each employee is rated against these traits.
➢ Sincerity,
➢ Dependability,
➢ Punctuality,
➢ Attendance,
➢ Behaviour towards subordinates etc.,
 PA Methods(Continued)
• Work standard approach: Goals are pre-determined
work standards that are based on average output of a
typical employee or by benchmarking against work
standards of a competitor in similar business

• Essay Appraisal: The appraiser prepares a document

describing the performance of the employee

• Critical incident method: Critical incidents that

reflect the behavior of employee during appraisal
period are recorded and noted to demonstrate traits of
employees
 PA Methods(Continued)
• Forced Choice Rating Method: In this, the rater is
forced to choose from the statements and should
decide which statement is true and which one is false.

• Point Allocation Method: Points are allocated to

employees from highest score to the least score based
on performance

• Checklist: Rater has to respond ‘Yes/No’ to questions

that assess the employee’s performance and behavior
 PA Methods(Continued)
• BARS (Behavioural Anchored Rating System) :
Involves evaluation of behavioral traits assessed on
different grounds.
➢ Identification of relevant job dimensions and
behavioral anchors by manger and employee for
each job dimension
➢ Determination of the scale values based on
consensus
• 360 Degree Performance Appraisal: Employees
performance is comprehensively evaluated by his/her
supervisor, peers, internal/external customers and
suppliers and subordinates
 PA Methods(Continued)
• Balance Scorecard: Measurement of performance that
channelizes the efforts of people to achieve organizational
goals . It involves:
➢ The customer's perspective : How customers see us ?
➢ The internal business perspective : What must we
excel at?
➢ The innovation and learning perspective : Can we
continue to improve and create value for our
services?
➢ The financial perspective : typically focused on profit
and market share. TCS Business Process Services Inducted by Palladium Group
into the Balanced Scorecard Hall of Fame
➢ https://www.tcs.com/tcs-bps-inducted-palladium-group-balanced-scorecard-hall-of-
fame#:~:text=The%20Balanced%20Scorecard%20%20%28BSC%29%20has%20enabled%20TC
S,vendors%2C%20with%20the%20goal%20of%20replacing%20elaborate%20workflows.
• Team Appraisals: Individual team members evaluate
their colleagues in the team and provide feedback
 PA Methods(Continued): Ranking Methods
• Alternation: Appraiser ranks all his employees from
most valuable to the least valuable based on their
performance and contributions to organization

• Paired Comparison method: Appraiser ranks the

employees based on comparison of each employee
with other employee in the group

• Forced Distribution method: Employees are rated

categorized as Top, Standard and Bottom and placed
under a forced distribution curve