Performance Appraisal &

Performance Management
• Job performance is an individual output in
terms of quality and quantity expected from
every employee in a particular job
• Measuring performance is an essential
function in business management
Performance management:
It is the process of managing and developing employee performance
throughout the organization. It aims at planning, tracking and assessing
employee performance for a specific period. The end result of performance
management is to motivate employees and further increase their efficiency
and effectiveness.

Performance appraisal:
The process of evaluating employee performance on a regular basis is
called as performance appraisal. Although, unlike performance
management, it is restricted to evaluating past performance and conducted
once or twice a year, depending upon the organisation’s policies.

Thus essentially, performance appraisal is an integral part of a

comprehensive performance management approach.
Performance Appraisal Performance Management

Evaluating the performance and Managing and developing employee

potential of employees typically to to foster growth within the organisation
determine compensation performance

Once or twice year Ongoing process

Conducted by HR department along Multiple stakeholders are involved with

direct managers as the process is ongoing

Corrections are made retrospectively It is a forward looking process

Performance appraisal is a system Performance management is a process

Typically inflexible Completely flexible

More of an individualistic approach Can adopt according to the team’s values

Considered as an operational tool Primarily considered as a strategic tool

WHY Performance
Management?
• Popularity of TQM concepts
• PA are not useless but counterproductive
• Razor sharp effort- continuous improvement–
employers to continuously set the goals-
employees must continuously improve the
performance from one appraisal period to
next
 Defining Employee’s Goals
• Assign specific goals – better performance
• Assign measurable goals – quantitative
• Assign challenging but doable goals-
challenging but not impossible or unrealistic
• SMART
 Components of Effective PMS
• Direction sharing
Communicating the org’s vision, mission….
throughout the org and then translating it
into achievable goals
• Role Clarification
In terms of day to day goals
• Goal setting and planning
Translating orgs goals into specific goals
• Goal alignment
link between emp’s and org’s goals
• Ongoing performance monitoring
• Ongoing feedback
face to face and computer based regarding
progress towards goals
• Coaching and support
• Performance Appraisal
• Reward, recognition and compensation
to keep employees goal directed performance
on track
• ROI management
to make sure employees performance is
linked to comps overall measurable
performance
 PERFORMANCE APPRAISAL
• PA is the periodic and systematic assessment
of employees in terms of the performance,
aptitudes, capabilities and other qualities
which are necessary for successfully carrying
out their jobs
• It is the systematic evaluation of the individual
with respect to his/her performance on the
job and his/her potential for development
 Objectives
• To provide an adequate feedback to each
employee for his or her performance
• To serve as a basis for improving or changing
behaviour towards more effective working
habits
• To provide data to managers so that they can
judge future job assignments
• To decide whether to confirm employee or
not
• To identify strengths or weaknesses of
employees
• To estimate effectiveness of employees
• To suggest measures to prevent grievances
 Purpose of PA
Organizations use PA for three purposes
• Administrative- rationale for making
personnel decisions, salary decisions,
promotions, transfers etc.
• Employee Development- Appraisal data can
be used for emp development purposes
• Program Assessment- The records can show
how effective the rec, sel and placement have
been in supplying a qualified workforce
 Advantages
PA helps an org gain competitive advantage in
following ways
• Improving performance
By directing emps behavior towards goals
By monitoring that behaviour to ensure that
goals are met
• Making correct decisions
decisions regarding pay,promotion, transfer,
training etc.for eg promotion on basis of
performance
• Ensuring legal compliance
Org can minimize costly litigation by using
appraisal systems that give fair and accurate
ratings
• Minimising job dissatisfaction and turnover
Fair and accurate appr results in high
motivation and increased job satisfaction
Appraisal Process
 Objectives of PA

Establish job expectations

Design an Appraisal program

Appraise Performance

Performance Interview

Use appraisal data for

appropriate purpose
 1. Objectives of Appraisal
• Include promotions, transfers, assessing
training needs, pay increase etc.
• Systems approach of appraisal aims at
improving the performance instead of merely
assessing it
 TRADITIONAL SYSTEMS

Guiding Value Attribution to Individual Attribution to System

Primary Goals Control, documentation Development, problem solving

Appraisal Frequency Occasional Frequent

Degree of Formality High Low

Reward Practices Individual Orientation Group Orientation

 2.Establish Job Expectations
• Includes informing the employee what is
expected of him on the job
 3.Design Appraisal Programe
• Poses several questions
 Formal Vs
Informal
Whose
What
Performance?
Methods?

Appraisal Who are the

When to Design Raters?
Evaluate?

What to What
Evaluate? How to Problems?
Solve?
 a. Formal Vs Informal
• First step to decide whether appraisal should be
formal or informal
• Formal
- occur at specified time period- once or twice in
a year
-require for the purpose of employee evaluation
• Informal app. Occurs whenever supervisor feels
the need for communication eg. Recognition of
performance
• Mixture of both can be used
• Formal appraisal is used as primary evaluation
and informal is useful for more performance
feedback
b.Whose Performance should be rated
• Obviously Employees
• Individual or group?
• Group level- when there is difficulty in
identifying individual performance and if
group cohesiveness has to be assessed
• Group level- if the tasks are interdependent
 c. Who are the raters
• Immediate Supervisor- most fit because he is
familiar with subordinate
• Subordinate- can assess the performance of
superiors- ability to communicate, delegate
work, allocate resources, disseminate
information, resolve intrapersonal conflict,
and deal with employees on fair basis
• Peers
- better position to evaluate certain facts of job
performance which supervisors or subord cannot
do
-Contribution to workgroup projects,
interpersonal effectiveness, communication skills,
reliability and initiative
-may result in distortion of evaluation
-serious conflicts among coworkers may develop
• Clients – seldom used for rating, provide
feedback on interest, courtesy, dependibility
and innovativeness
• Rating Committees
- composed of immediate supervisors and
three or four other supervisors
-objectivity in rating
• Self Appraisal-rate own performance
• In practice , combination of methods can be
used for ex. Evaluation of self may be followed
by a superior, the personnel department, or
by the HR department
 d. Problems of Rating
• PA are subject to wide variety of inaccuracies
and biases referred to as ‘rating errors’
• Occur in raters observation, judgement and
information processing
 e. Solving rater’s problem
• Providing training to raters
 f. What should be rated
• Quality
result approaches perfection in terms of
conformity to standards
• Quantity
Amount produced in terms of no. of units,
monetary terms or no of completed activity
standards
• Timeliness
Activity completed at earliest time desirable
• Cost Effectiveness
The degree to which the use of the org’s
resources (HR, monetary, technological and
material) is maximized in the sense of getting
the highest gain or reduction in loss from each
unit
• Need of Supervision
The degree to which a job performer can carry out a
job function with minimum supervisory assistance
• Interpersonal Impact
The degree to which a performer promotes
feeling of self esteem , goodwill and co-
operation among coworkers and subordinates

There is also need for assessing the potential

of an employee for future performance,
particularly for shouldering higher
responsibilities
 g. Timing of evaluation
• Frequency?
• General trend- once in 3 mths, 6 mths or in a
year
• Newly hired employees are rated more
frequently than old ones
• Frequent evaluation is better which helps in
giving timely feedback and corrective actions
 h.Methods
• Depends on org
• Modern or traditional
Performance Feedback
• Effective and timely feedback is a critical
component of a successful performance
management program
• If effective feedback is given to employees on
their progress towards their goals, employee
performance will improve.
• People need to know in a timely manner how
they're doing, what's working, and what's not.
• Feedback can come from many different
sources: managers and supervisors,
measurement systems, peers, and customers
Make sure feedback is:

Focus on the Expectation (task or behavior)

• Focus on what the employee has done (or not done). Focus on the situation, issue, or
behavior, not on the person.

Timeliness
• Employees should receive information about how they're doing as timely as possible

Specific
• Pinpoint discrete, observable performance expectations/ behaviors; Be objective

Simple
• Concentrate on one or two things at a time; don’t overwhelm the employee with too much
information at once.

Relevant
• Make sure the employee can act on feedback (does he or she have the skills,
knowledge, systems support, or whatever else is required)?