Performance Appraisal System

Chapter 8
 Performance Appraisal
• Performance appraisal (PA) is the process of evaluating how well
employees perform their jobs when compared to a set of
standards,

• and then communicating that information to those employees

Gary Dessler
 PA and PM
PA
•Performance Appraisal is a
method of evaluating the
behaviour of employees at
work including the
quantitative and qualitative
aspects of a job
•Performance Appraisal is a
part of the Performance
Management System
PM
•Processes used to identify,
encourage, measure,
evaluate, improve, and
reward employee
performance
•Performance Management
System includes
performance appraisal
 PA and PM
PA PM

•The scope is limited to •The scope is extensive

evaluating performance

•It takes place at periodic •It is a continuous process

intervals
 What is appraising
• An appraisal is a document evaluating the value of something

• An expert estimation of the quality, quantity, and other

characteristics of someone or something

• What is performance

• Performance refers to the degree of accomplishment of the tasks

that make up an individuals job
 Features of PA
• Typically defined a process that is delivered by the supervisor to the
subordinate, it is designed to assess/evaluate the employees
performance against set goals and standard metrics

• The purpose is also to identify and establish a plan for areas of

improvement

• Arranged periodically according to a definite plan

• It serves an administrative as well as a developmental

purpose
 Purpose -Developmental
• Provide performance feedback
• Identify individual strengths / weakness
• Recognise individual performance
• Assist in goal identification
• Evaluate goal achievement
• Identify individual training needs
• Determine organisational training needs
• Reinforce authority structure
• Allow employees to discuss concerns
• Improve communication
• Provide a forum for leaders to help
 Purpose -Administrative
• Document personnel decisions
• Determine promotion candidates
• Determine transfers and assignments
• Identify poor performance
• Decide retention or termination
• Decide on layoffs
• Validate selection criteria
• Evaluate training programs and purpose
• Personnel planning
• Make reward/ compensation decisions
 Case Study
• Firm Zunex is into plastic manufacturing and supplying and has over
800 employees across India at it’s various units. They have an HR
head and two HR managers (one for factories and one for offices)
and each manager has a team under him.

• Their Performance Appraisal System has the following key features:

• It is a confidential system where the subordinates do not know the

ratings given by the superiors
• The PA form is highly subjective
• The training needs are inputs are given by the superiors
• All salary increment, promotion and other such decisions are
confidential
 Case Study
• Discuss your views on this PA system
• Do you think it is a fair and transparent system
• Do you think implementing a 360 degree system would work better
in this situation
• What can you correct about the lack of upward feedback in this
situation
• Do you think this confidential system of appraising is prevalent and
relevant in today’s times
• If given a chance what changes would you like to see in the PA
system of this company
 Methods of PA
Traditional Systems
Confidential Appraisal System

• Here the superiors make comprehensive subjective reports on

accomplishments, fallouts, mistakes, merits, etc.

• The subordinates know the results through a letter and/or verbal

interaction

• There is no room for upward feedback.

• Usually in factories and such environments and some government

units it is quite prevalent
 Methods of PA
Traditional Systems
Ranking Method

• Listing of all employees from highest to lowest in performance

• Every employee is given a rank (just like in schools). “A” is the

highest, B is below A and so on

• Degree of superiority is not mentioned

• It is only a mental assessment and is highly subjective

• Standards may or may not be set and are seldom used for ranking
 Methods of PA
Traditional Systems
Grading System

• Evaluation against grades like

“A” - Outstanding
“B” - Very Good
“C” - Good
“D” - Fair
“E” - Poor

• Grades related to attributes such as job knowledge, judgement,

leadership, cooperative attitude, etc
 Methods of PA
Traditional Systems
Graphic Rating Scale Method

• This allows the assessor to mark an employee’s performance on a

continuum against set parameters of measurement.

• Factors like quantity of output, quality of output, initiative, integrity,

etc., are selected depending upon the employee category.

• The factors and their degree are marked on a graph paper

• Seems simple, economical and a time-saving

• Highly subjective
 Methods of PA
Traditional Systems
Check-list Method

• Performance appraisal tool that uses a list of statements or words

that are checked by assessors. For e.g.
• ________ can be expected to finish work on time
• ________ seldom agrees to work overtime

• Each statement is assigned a value depending upon its importance.

• Assessor rates and adds a plus or a minus sign or a question mark

• The final result is the average value of the scale

 Methods of PA
Traditional Systems
The Critical Incidents Appraisal Method

• Success and failure for given tasks is rated by virtue of indicators

• Perceived as a meritorious method but the definition of ‘critical’

may vary with different superiors

• Sometimes positives may not be noted

• If measures and metrics are set this method could be a good

meritorious method
 Methods of PA
Traditional Systems
The Essay Appraisal Method

• Reporting manager/superior writes a small paragraph on the

subordinate’s accomplishments, fallouts, strengths, weaknesses,
potentials and so on.

• It is a highly subjective method

 Methods of PA
Current Systems
Goal Setting Method

• Goals and targets are set mutually by the subordinates and the
superiors

• Performance is assessed against these set standards.

• Employee does a self rating, followed by the superiors giving his

rating and a mutual rating is then established

• Appraisal is reviewed by Reviewing Officer (Reporting Officer’s boss

and/or JR)
End of Chapter 8