Performance

Appraisal And
Incentives

ASHISH ALOK
18BCE1119
Meaning of performance Appraisal

In simple words,
Performance Appraisal is a process of assessing
the performance and progress of an employee
on a given job and his potential for future
development.

According to Dale,
“ Performance Appraisal is the systematic
evaluation of the individuals with respect to
his or her performance on the job and his or
her potential for development.
 Purposes of Performance
Management
• Strategic Purpose – how effective performance
helps the organization achieve its business
objectives.
• Administrative Purpose – how organizations
use the system to provide information for day-to-
day decisions about salary, benefits, and
recognition programs.
• Developmental Purpose – how the system
serves as a basis for developing employees’
knowledge and skills.
Procedure for conducting performance appraisal
1. Establishing Performance Standards:

The Performance appraisal process beings with setting

up of standards for appraising the performance of
employees. There should be some base on which one
must say that the performance is good, average or bad.

2. Communicating the Standards:

The standards set for performance should be

communicated to the employees and explained to them,
so that they come to know what is expected from them
3. Measurement of Actual Performance:
This requires choosing the right technique of
measurement, identifying the internal and external
factors influencing performance and collecting
information on results achieved.

4. Comparing Actual with Standards:

Actual Performance is compared with the

predetermined standards of performance. Such
comparison will reveal deviation , which may be
positive or negative.
Metods of performance appraisal
Traditional Methods:
1. Confidential Report.
2. Essay Method.
3. Straight Ranking Method.
4. Paired Comparison Method.
5. Forced Distribution Method.
6. Graphic Rating Scales.
7. Checklist Method.
8. Critical Incident Method.
9.
Group
Stages of Performance Appraisal
 Criteria for Effective
Performance Management
Appraisal Methods
Feedback

• Coaches provide feedback to their team just

as managers provide feedback to their
employees.
• Feedback is important so that individuals
know what they are doing well and what areas
they may need to work on.
Types of Performance Measurement
Rating Errors
Contrast errors:

Distributional errors:

Rater bias:
Improving Performance
 Legal and Ethical Issues in
Performance Management
• Legal
– Performance management processes are
often scrutinized in cases of discrimination or
dismissal.
• Ethical
– Employee monitoring via electronic devices
and computers may raise concerns over
employee privacy.
Purpose of Incentives

• Mutual Rewards

• Increased motivation

• Increased company morale

• Increased company loyalty

• Increased productivity
SUCCESSFUL INCENTIVE PLANS

* Employees have a desire for an

incentive plan.

* Employees are encouraged to

participate.

* Employees see a clear connection between the

incentive payments they receive and their job
performance.

* Employees are committed to meeting the

standards.

* Standards are challenging but

achievable.
Incentives for Professional Employees

Managerial and executive Incentives

Bonuses and merit increases

Double-track wedge system

Profit sharing and stock ownership

Executive Perquisistes (Perks)