TOPIC 4: PERFORMANCE APPRAISAL

Meaning
Performance Appraisal is systematic or formal evaluation of an employee’s performance over a given
period of time.

Reasons for Appraisal

1. To identify the individuals amount of job performance – whether is at acceptable levels or not.
2. To provide record of such employee’s performance for the purpose of incentive pay and rewards.
3. To identify “misplaced” employees so that suitable remedial may be taken.
4. To motivate individual employees.
5. To identify training and development needs amongst employees.
6. To identify the strengths and weakness of individuals so that timely stops may be taken to improve
the quality of personnel etc.
7. To focus attention on effectiveness of organization and to recognize individual achievement.
There are two types of appraisal
i. Formal
ii. Informal

Informal appraisal is not recorded or the outcome kept as part of organizational records though it can be
done on a daily basis. Formal appraisal is an organized activity whose outcome guides several decisions
in organization.

Appraisal Methods
1. Ranking Method
Employees are compared with one another on an overall basis and are ranked from best to poorest. The
best or most efficient employee is ranked as number one and the poorest is ranked as number last.
Main disadvantage is that ratings are subject to the judgment and bias of the rater who has to consider a
whole man.
Demerit-It does not reveal amount of difference between employees.
-Only shows how one is in relation to others.
2 Graphic Rating Scale
-Evaluation forms which contain a number of objectives, and trait qualities and characters to be rated like
quality of work and amount of work, job knowhow dependability, initiative, attitude, leadership quality and
emotional stability.
-The rater gives an estimate the extent to which subordinates possess each quality. The extent to which
quality is possessed is measured on a scale which can vary from three points to several points. In general
practice five-point scales is used. Some organizations use numbers in order to avoid the propensity of the
rater to tick mark central points. It may be numbered or defined. Thus numbers like 5, 4, 3, 2 and 1 may
denote points for various degrees of excellent-poor, high-low, or good-bad, and so on. Such numbers may
be expressed in terms like excellent, very good, average, poor and very poor; or very high, high, average,
low and very low.
Graphic scale method is good for measuring various job behaviors of an employee. But, it is bound to
limitations of rater’s bias while rating employee’s behavior at job.
3 Forced Distribution Method: This method was evolved to abolish the trend of rating most of the
employees at a higher end of the scale. The fundamental assumption in this method is that employees’
performance level conforms to a normal statistical distribution. For example, 10 per cent employees may be
rated as excellent, 40 per cent as above average, 20 per cent as average, 10 per cent below average, and
20 per cent as poor. It eliminates or minimizes the favoritism of rating many employees on a higher side. It
is simple and easy method to appraise employees. It becomes difficult when the rater has to explain why
an employee is placed in a particular grouping as compared to other.

4 Critical Incidents Method

-Written records are kept regarding highly favourable and highly unfavorable work actions. When such
actions affect institution effectiveness significantly entail positively or negatively, the superior writes down,
and that is considered critical incident.
-The exceptional events or occasions are known as “critical accident”. Each incidence represents a critical
situation in the course of work and the reaction of an employee during it reflects his success or failure.
Raters are required to record the reactions of an employee during critical situations.
-The method is however, tedious and time consuming when there are many employees.

5 . The use of Essay Method:

-In essay method the ratio assesses the employees on certain parameters in his own words.
Parameters used in essay method are:
1. Work performance informs of quality, quantity and costs.
2. Knowledge about job.
3. Knowledge about organization policies overall suitability of employee.
4. Employee characteristics and behaviour.

6 Check List Method:

The rater provides appraisal report by answering several questions related to the employee.
The questions prepared are related to work e.g.
1. Is she interested in job Yes/No?
2. Is he/she regular on the job?
3. Does he follow instructions properly?
4. Does he maintain discipline?
The rater simply ticks yes /no
7 Appraisal by results or objectives – also known as management by objectives.
It is a method of management as well as method of appraisal.
Steps involved in appraisal by results are:
1. It is a joint process between superior and his subordinates.
 2. The subordinates prepare his plan for specific period in light of overall plan provided by superior.
The final plan is prepared through mutual consultation.
3. Both the subordinate and superior decide on evaluation method, factors to consider and role of
supervisor.
4. After specified period, the superior makes performance evaluation of subordinate based on the
earlier agreed on criteria.
5. Superior discusses the results of evaluation with subordinate, corrective actions of necessary are
suggested and they agree to set targets for next period.

8. 360 Degree Feedback

-It is also known as multi source feedback and it is a process in which someone’s performance is assessed
and feedback given by a number of people around the person majorly the manager, subordinates,
colleagues, customer etc.
-Data is usually obtained from questionnaire that measure different perspectives of individuals against list
of competences. A typical questionnaire may cover aspects of performance such as leadership, team work,
communication, organizational skills, decisiveness, drive and adaptability.
-The ratings are given by the generations of the feedback on a scale against each heading.

Advantages of 360o Feedback

- Individuals get broader perspective of how they are perceived by others.
- Gives a more rounded view of their performance.
- Increased awareness and relevance of competencies.
- Increased awareness by sermon management that they too have developed.

Disadvantages:
- People do not always give frank or honest feedback.
- Lack of action following feedback.
- Over reliance on technology.

THE PERFORMANCE APPRAISAL PROCESS

-The performance appraisal system of one organization may vary from other organizations, though some of
the specific steps that an organization may follow are as follows:
1. Establish Performance Standards: It begins by establishing performance standards i.e. what they expect
from their employee in terms of outputs, accomplishments and skills that they will evaluate with the
passage of time. The standards set should be clear and objective enough to be understood and measured.
The standards which are set are evolved out of job analysis and job descriptions. The expectation of the
manager from his employee should be clear so that it could be communicated to the subordinates that they
will be appraised against the standards set for them.
2. Communicating the Standards Set for an Employee: Once the standards for performance are set it
should be communicated to the concerned employee, about what it expected from them in terms of
performance. It should not be part of the employees’ job to estimate what they are expected do.
Communication is said to be two ways, mere passing of information to subordinate does not mean that the
work is done. Communication only takes place when the information given has taken place and has been
received and understood by subordinate. . If necessary, the standards may be tailored or revised in the
light of feedback obtained from the employees.
3. Measuring of the Actual Performances: It is one of the most crucial steps of performance appraisal
process. It is very important to know as how the performance will be measured and what should be
measured, thus four important sources frequently used by managers are personal observation, statistical
reports, oral reports, and written reports. What we measure gives an idea about what people in an
organization will attempt to achieve. The criteria which are considered must represent performance as
stated in the first two steps of the appraisal process.
4. Comparing Actual Performance with Standards Set in the Beginning: In this step of performance
appraisal the actual performance is compared with the expected or desired standard set. A comparison
between actual or desired standard may disclose the deviation between standard performance and actual
performance and will allow the evaluator to carry on with the discussion of the appraisal with the concerned
employees.
5. Discussion with the Concerned Employee
It gives an idea to the employee regarding their strengths and weaknesses. The impact of this discussion
may be positive or negative.
The impression that subordinates receive from their assessment has a very strong impact on their self
esteem and, is very important, for their future performances.
6. Initiate Corrective Action: Corrective action can be of two types; one is instant and deals primarily with
symptoms. The other is basic and deals with the causes. Instant corrective action is often described as
“putting out fires”, whereas basic corrective action gets to the source from where deviation has taken place
and seeks to adjust the differences permanently. Instant action corrects something right at a particular point
and gets things back on track. Basic action asks how and why performance deviated. In some instances,
managers may feel that they do not have the time to take basic corrective action and thus may go for
“perpetually put out fires

PROBLEMS WITH APPRAISAL

1. Lack of objectivity – most of the factors (attributes) are not measurable e.g. attitude, loyalty,
personality and hospitality.
2. Halo effect where rating in one faction may affect rating in other qualities or one factor becomes
paramount.
3. Different raters may apply different standards in appraisal and their judgments may differ e.g. some
ratios may hastate to assign poor ranks to employees with low performance and other may rank
people high.
4. Personal Bias – where employee is either appraised poorly or highly depending on personal
attitudes.
5. Recent behaviour bias where one is appraised based on recent developments whether negative or
positive.
 6. The process of performance appraisal may create defensiveness among employees as most
appraisal emphasize on uniformity.

Essentials of an Effective Appraisal System

1. Job Relatedness
The appraisal method should measure the performance and provide job related information.
2. Reliability and Validity
Appraisal system should provide consistent, reliable and valid information which can be used to
defend the organization even in legal challenges.
It is reliable of two different ratios can five same result of an individual validity when it measures
what is intended to measure.
3. Standardization
The appraisal procedures should be standard as it affects employees of all groups.
4. Legal Sanction
The appraisal practices must comply with provisions of various acts relating to labour.
5. Should be Viable
The technique should be practically viable to administer, possible to implement and economical to
undertake.
6. Appraisal should be trained
The appraisers should be trained so that they are well aware of their job and the relayed
documentation. They should be objective and not subjective.
7. Open Communication
A good appraisal system should provide feedback on continuing basis. Communication will help
both parties know the gaps and prepare for the future. Employees should be allowed to review the
results of their appraisal so that they can detect errors if any.
8. Due Process should be Followed
Formal procedures should be developed to enable employees who disagree with results to have a
means of pursuing their grievances.