WHAT IS PERFORMANCE

Performance is the sum of behavior plus results:

Performance = Behavior + Results

 If you only focus on behaviors, you won’t notice if you did not get desired
results

 If you only focus on results, you won’t notice if your employees don’t behave
correctly

Overall Performance = Ability x Motivation x Organizational Support + Chance

factors

= Competence x Commitment x Organizational

Support + Chance factors

Dr. Isa Mishra

 WHAT IS PERFORMANCE MANAGEMENT

Performance Appraisal is evaluating an employee’s performance on a job

in terms of its requirements.

Performance Management is a process which contributes to the effective

management of individuals and teams in order to achieve high levels of
organizational performance.
- Armstrong & Baron

It encompasses activities such as joint goal setting, continuous progress

review and frequent communication, feedback and coaching for improved
performance, implementation of employee development programmes and
rewarding achievements.

Dr. Isa Mishra

LINKAGE WITH OTHER HR SYSTEMS

Dr. Isa Mishra

 WHY MANAGE PERFORMANCE – Benefits of PM
Seeks employee commitment by sharing the vision and ethical values with all
employees
Establishes performance target as a result of inter linkage between individual
objectives with organizational goals & strategy
Establishes performance standards / criteria against which individual & team
performance is measured.
Provides regular feedback on employee’s performance with respect to the set
performance standards
Reviews performance and identifies areas for training & development as well
as competency improvement
Links rewards with performance thereby increasing motivation
Continuously enhances performance
Allows career planning
Automates mentoring process
Organizations can frame strategies in view of competition, based on
performance track
Is a critical link with other HR functions Dr. Isa Mishra
 Primary Uses of Performance Appraisals

Small Large All

Organizations Organizations Organizations
Compensation 80.2% 66.7% 74.9%
Performance
improvement 46.3% 53.3% 48.4%

Feedback 40.3% 40.6% 40.4%

Documentation 29.0% 32.2% 30.2%
Promotion 26.1% 22.8% 24.8%
Training 5.1% 9.4% 7.3%
Transfer 8.1% 6.1% 7.3%
Discharge 4.9% 6.7% 5.6%
Layoff 2.1% 2.8% 2.4%
Personnel research 1.8% 2.8% 2.2%
Manpower planning 0.7% 2.8% 1.5%
Raters’ Biases

DR. ISA MISHRA

 Halo Effect & Horn Effect

Halo Effect : When an employee performs well in a few areas of his work, then
the general tendency of a manager is to rate him well even in un-related areas
where his performance was mediocre.  Common examples – less absenteeism, timely
attendance, obedience.

The opposite of Halo effect is called “Horns” Effect in which a manager rates an
employee poorly, when he spots a few areas where he has been not performing
well.  It is a perceived negativity. In other words, in this type or rating error, the
overall rating of an employee gets influenced by good or bad performance in a few
areas of his/her work. Common examples – unkempt self, unexpected behaviour in
one instance.

DR. ISA MISHRA

 Leniency Error & Strictness / Severity
SCHOOL OF MANAGEMENT Error

Sometimes, managers tend to rate employees leniently or severely. This may be due

to factors like:

 Whether managers like an employee or not.  Personal bias or preferences creep

in the rating.
 Their general style is either lenient or strict.
 They compare employee’s performance with their personal standards (instead of
standards expected from the role).  This is also called as “Frame of reference”
error.
 Sometimes when employees are similar to the manager, it influences the
manager’s rating which will then be lenient.
 So in this case the rating is either positively or negatively skewed.

DR. ISA MISHRA

 Central Tendency Error
SCHOOL OF MANAGEMENT

Here, raters refer to average scores or mid-value scores.

Sometimes, managers with the intention of avoiding conflict, play it safe,

by rating employees in the middle of the rating scale. 

So it might be a “met expectation” for all performance parameters,

irrespective of whether in reality they have not met it or not.

These raters undermine the importance of Performance Appraisal.

DR. ISA MISHRA

 Recency Effect
SCHOOL OF MANAGEMENT

Though performance appraisals are done to rate an employee’s

performance through-out a year (or 6 month period etc.), managers tend to
remember only the past few months performance, and rate the employee’s
performance based on that. 

So any performance highs or performance lows of an employee in the

last few months, significantly influences the rating. Some ratees can
deliberately perform high towards the end of the year.

Appraisals conducted at long intervals can cause such errors.

Can be minimized by tracking performance on a continuous basis.

DR. ISA MISHRA

 Contrast Error
SCHOOL OF MANAGEMENT

Managers rate an employee by comparing him with other employees,

who may be perceived as standards themselves.

So, instead of giving rating based on the standards required for the job,
managers rate a person by comparing with other employees performance. 

In such cases, a person may be given higher ratings just because he is

better than others, but he may still lag behind when compared to the
standards expected.

This can be avoided by doing random appraisals for employees doing the
same nature of job.

DR. ISA MISHRA

 Similarity Effect
SCHOOL OF MANAGEMENT

“Same as me”

Managers sometimes over-rate an employee who is similar to

themselves in terms of personality, behaviour, background, way of dressing,
etc.

Ratees can deliberately ape such raters.

DR. ISA MISHRA

 Stereotyping Error
SCHOOL OF MANAGEMENT

Managers generalize about employee’s performance based on a group.

Grouping can be age-wise, experience-wise, region-wise or university-based
and so on. 

For instance, managers may generalize or stereotype saying that all

young employees do not take ownership of their work, or that freshets hired
from a particular university have great technical skills and so on.  But actually,
it is important that managers should consider individual differences

DR. ISA MISHRA

 Status Error
SCHOOL OF MANAGEMENT

Employees in higher levels are rated higher & employees in lower levels
are rated lower.

DR. ISA MISHRA

 Initial Impression Error
SCHOOL OF MANAGEMENT

“First Impression is the Last impression” effect

DR. ISA MISHRA

 Sympathy Effect
SCHOOL OF MANAGEMENT

Managers can rate employees higher in view of recent hardships faced

by ratee like – death in the family of ratee, broken marriage, family
disturbances, etc.

DR. ISA MISHRA

 Attribution Bias
SCHOOL OF MANAGEMENT

When managers attribute performance failures to internal factors and

successes to external causes / sources.

DR. ISA MISHRA

 Reducing Performance Bias / Error…
SCHOOL OF MANAGEMENT

1. Complete supervisor training on the fundamentals of performance management,

including your company’s philosophy and practices. Leadership training on
performance management also includes when and how to administer disciplinary
warnings, corrective action and suspensions, how to provide employees with
constructive feedback throughout the evaluation process and how to conduct annual
employee evaluation meetings.

2. Study the types of bias and errors most common in performance appraisals.

3. Review employee documents to gain a complete picture of past performance.

Contact employees’ supervisors in other departments when it’s difficult to piece together
work history and performance for long-term employees. Make note of discrepancies in
earlier performance appraisals that may compound later performance issues.

DR. ISA MISHRA

 Reducing Performance Bias / Error…
SCHOOL OF MANAGEMENT

4. Read the performance standards for all the job duties and tasks for which the
employee is responsible. Look at the performance throughout the entire evaluation
period as objectively as possible. Gather documents that support performance, such as
records, call logs, reports and other materials that measure the employee’s work
quantitatively.

5. Compare the performance standards to the actual work.

6. Draft the performance appraisal form and attach supporting documentation. Read
the evaluation from your perspective and then put yourself in the employee’s position,
reading from his perspective.

DR. ISA MISHRA

Methods of Appraisal

DR. ISA MISHRA

 PA – Traditional Methods…

1. Straight Ranking Method

 Simplest & oldest method
 Numbers are given in order of merit
 Blunt quantification of performance
 Does not account for behavioral parameters
 Only considers an individual’s efficiency in relation to others
 Does not provide a scientific basis for appraising performance

DR. ISA MISHRA

 PA – Traditional Methods…

2. Grading Method

 Widely used in educational institutions where basic evaluation

is required
 Grade definitions are laid down
 Grades are assigned to the performance dimensions which have
to be measured

Example:

A Excellent
B Very Good
C Good
D Average
E Poor DR. ISA MISHRA
 PA – Traditional Methods…

3. Paired Comparison Techniques

 Each employee is compared with others in pairs

 Not suitable when the number of employees is high

Example:
As compared A B C D E
to
A x
B x
C x
D x
E x

DR. ISA MISHRA

 PA – Traditional Methods…

4. Graphic / Linear Rating Scale

 Simplest & most widely used

 A continuous scale where performance is marked along a continuum
 It consists of several numerical scales, each representing a job related
performance criteria
 Can have up to 7 points, depending on the measurement dimension
 Enables quantification of performance scores & subsequent statistical analysis
 Scores are subject to interpretation of raters
 Reliability & validity is often questioned
 Results from this method may not always be objective

DR. ISA MISHRA

 PA – Traditional Methods…

Example

DR. ISA MISHRA

 PA – Traditional Methods…
SCHOOL OF MANAGEMENT

Example 2:
Sl. No. Job Dimension Rating Scale

Requires guidance Understands the Has exceptional

job understanding of job
Job knowledge (understands job & can
1 implement such understanding to improve
the job)
Remarks: Employees with exceptional understanding of the
job are rated as exceptionally good in risk taking

Exceptional in taking
Lacks initiative Takes initiative initiatives
2 Job Initiative (capable to generate new
ideas and is a self starter)
Remarks: When employees are rated as exceptional, they are
capable of taking initiatives & can generate new ideas

Poor in job Capable in job Exceptionally capable

application application in job application
3 Job Application (application minded on job)

Remarks: When employees are rated as exceptional, they can

always take new job challenges

DR. ISA MISHRA

 PA – Traditional Methods…

5. Confidential Report

 Descriptive report
 Prepared by employee’s immediate supervisor
 Highlights strengths & weaknesses of employee
 Can be subjective
 Does not offer any feedback to employee

DR. ISA MISHRA

 PA – Traditional Methods…

6. Free Essay Method

 Rater expresses in written form, the strengths & weaknesses of appraisee

 Descriptive & written as an essay
 Unstructured & open ended
 Highly subjective
 Prone to biases of rater
 Depends on writing skills of the rater, for effective interpretation

DR. ISA MISHRA

 PA – Traditional Methods…

7. Critical Incident Technique

 Measures performance in terms of certain events / critical incidents
 Prepares lists of statements of very effective & ineffective behaviour
 Manner of recording incidents need utmost care
 Manager has to record the critical incidents of employee’s behaviour
 Negative incidents may get more focus than required
 Can be useful in a performance review interview
 Recording in frequent intervals of time may be perceived as an additional chore
of the rater and this can delay actual performance of the rater recording the
incidents.
 Requires very close monitoring which may lead to demotivation
 This gives a delayed feedback to employees and not when the incident actually
happens.
DR. ISA MISHRA
PA – Traditional Methods…

DR. ISA MISHRA

PA – Traditional Methods…

DR. ISA MISHRA

 PA – Traditional Methods…

8. Checklist

 Checklist of pre-scaled descriptions of behaviour has to be prepared by rater

 Yes / no responses are compiled by rater who does not know the pre-assigned
scale values of the behaviour items
 Scale values / scores are averaged by the HR department
 Not an objective method

Example :

Is employee regular? Y/N

Is employee respected by team members? Y/N
Is employee helpful? Y/N
Does he follow instructions? Y/N
Does he maintain the equipment? Y/N

DR. ISA MISHRA

 PA – Traditional Methods…

9. Forced Choice :

 Positive and negative statements / phrases are given to the rater to describe
employee’s performance
 Rater is forced to select only those statements which are provided – worst or the
best fit
 Rater is not aware of the pre-assigned scale values of the behaviour items
 Not a popular method as it is forced
 There is no discussion, hence this method is redundant as there is no personal
interview

DR. ISA MISHRA

PA – Traditional Methods…

DR. ISA MISHRA

 PA – Traditional Methods…

10. Forced Distribution :

 Performance is evaluated based on a pre-determined distribution scale

 Comparative evaluation by rater in compliance to a specified distribution
 Forces discriminating ranking of employees even when performance is very
similar. This itself creates bias.
 Some good performers may get demotivated in the process of discrimination.

DR. ISA MISHRA

PA – Traditional Methods…

DR. ISA MISHRA

 Why Normalization?

Forced ranking is a procedure

that requires managers to assign
employees into predetermined
groups according to their
performance and potential.

Normalization is done :
1. To remove any personal biases from the appraisal scores
2. To rectify any judgmental errors. Managers have a tendency to rate differently –
some are naturally lenient while some fall on the opposite end of the spectrum.
However, more often than not, it is the employees reporting to them that experience
the brunt of these variations.
DR. ISA MISHRA
 Normalization - process

 It is a major policy issue in any organization and HR will not and should
not do on their own.
 Normally a steering committee decides the percentage.
 If the ratings are skewed, then the HR shall return all the forms for
reconsideration. They highlight the percentage norms and request the
Managers to correct and send them back.
 If the variation is minimal, they sit and resolve. HR s role is to highlight
the Policy and ensure that policy is maintained.
 If some variation is to be done, it is referred to the steering committee.

DR. ISA MISHRA

 Why Bell Curve?

1. Traditionally applied in performance appraisals as a method of

segregating elite performers from average performers, and
further distinguishing below par employees from the overall
average. 
2. Typically, the Bell Curve segregates all employees into distinct
baskets — top, average and bottom performers — with the vast
majority being treated as average performers. 
3. Bell Curve at some point had helped to work within budgets.

DR. ISA MISHRA

 Challenges of PMS with Bell Curve method…

 Sense of disengagement amongst employees for not being rated as per their
perception. The bell curve rating system can damage employee morale by
force grouping top and low performers regardless of their actual performance.
 It can develop a sense of insecurity amongst managers who fear attrition from
employees
 Employees are invariably compared against one another. Can lead to
demotivation in the minds of employees who are at the receiving end of this
process, especially the ones who are just about at the border of “star” and
“solid” performers. Constant comparisons happen with a certain set of
performers
 Many times, top performers are rated as average for lack of “quota” which can
lead to detachment and resentment. 
DR. ISA MISHRA
 Challenges of PMS with Bell Curve method

 Companies that have adopted the bell curve method in the past have looked
at the bottom 5-10% of ranked employees as disposable, instead of focusing
on improvement within teams.
 Performance appraisals should be conducted on an individual’s performance,
even if the work done is a team work. If not, this can lead to demotivation.
 Bell Curves can produce Inaccurate and Unfair Assessments. When teams
exceed performance goals, performance cannot be accurately measured on
the bell curve. The bell curve forces individuals to rank low on the scale, even
though they have surpassed expectations.
 Employees who fall in the middle of the curve make up 80% of the team
population, forcing budget management to focus on mid-value employees.

DR. ISA MISHRA

 Replacing the Bell Curve

India’s largest IT services company Tata Consultancy Services (TCS) has done away
with the Bell Curve Model of employee appraisal. This was following other global
tech giants like IBM and Accenture who have done away with this model. 

 Employees are being appraised on individual performances

 Appraisals will be more regular than an annual or quarterly feature.
 Yearly reviews are now giving way to continuous process of feedback to
employees at regular intervals. 

DR. ISA MISHRA

 IBM - Checkpoint

IBM has revamped its yearly appraisal process with a new system -

Checkpoint. Unlike annual mechanisms where a yearly review of the
performance is done, Checkpoint  looks into continuous feedback. 

This mechanism was designed keeping in mind the rigorous feedback and
deliberation on the part of thousands of employees who were invited to
co-create it. The idea behind its genesis was to have a transparent, merit
based assessment of work which was employee friendly.

The new system, Checkpoint, considers different dimensions of an

employee's performance - business results, impact on client success,
innovation, personal responsibility to other, and skills.

DR. ISA MISHRA

 PA – Traditional Methods

11. Field Review :

 An indirect method of appraising performance

 HR representative interviews supervisor regarding employee’s performance.
 Appraiser has to be equipped with the queries.
 May not reflect the true performance level of employees as it is an indirect
method
 Is not very accurate, as individual assessors may differ in their standards
 Essay & graphic rating techniques can be combined to overcome for a systematic
review

DR. ISA MISHRA

 PA – Modern Methods…

1. Management by Objectives / Results or Goal Mgt. (MBO) Peter F. Drucker in 1954

Steps :

 Decide mutually set goals, which should be tangible, verifiable &

measureable. These have to be aligned with / to cascade from
organizational goals.

 The performance standards for the employee on each job dimension are set.

 Actual level of goal attainment / performance is compared with the goals /

performance standards agreed upon

 Performance has to be reviewed and results measured.

 Establishes new goals & new strategies to achieve goals not achieved
previously

DR. ISA MISHRA

 PA – Modern Methods…

Advantages :

 Management by objectives (MBO) is a result-oriented process and focuses on

settling and controlling goals
 It encourages managers to do detailed performance planning
 Performance standards are jointly set, hence there is no ambiguity pertaining to
KRAs of each employee.
 It clearly establishes the responsibilities and authority of the manager & employee.
 Overcomes problems of trait based approaches as it concentrates on actual
outcomes.
 Employees feel proud of being part of the organizational goals. This improves their
morale and commitment.
 Employees are evaluated as per real outcomes, not on their potential for success or
on the subjective opinion of their abilities.
 MBO often highlights the area in which the employees need further training,
leading to career development.
 MBO puts strong emphasis on quantifiable objectives, due to which the
measurement and appraisal can be more objective, specific and equitable.
 It improves communication between management and subordinates

DR. ISA MISHRA

 PA – Modern Methods…

Disadvantages :

 MBO can only succeed if it has the complete support of the top management.
 MBO may be resented by subordinates. They may be under pressure to get along
with the management when setting goals and objectives and these goals may be set
unrealistically high. This may lower their morale and they may become suspicious
about the philosophy behind MBO.
 As MBO emphasizes on quantifying the goals and objectives, those areas which are
difficult to quantify cannot be easily / accurately evaluated.
 Time consuming and increased paperwork
 Most managers may not be sufficiently skilled in interpersonal interactions such as
coaching and counseling, which is extensively required.
 The emphasis is more on short-term goals. Since the goals are mostly quantitative
in nature, it is difficult to do long-range planning because all the variables affecting
the process of planning cannot be accurately forecast due to the constantly changing
socio-economic and technological environment which affect the stability of goals.

DR. ISA MISHRA

 PA – Modern Methods…

2. Assessment Centre

It is an important tool for selection, training & development and includes:

 Different types of Psychological tests.

 Management games.
 In-Basket exercises where the candidate is asked to solve different management
problems.
 Group Discussion (GD) about different management topics.
 Oral presentations of management topics
 Analysis of real time case studies
 Good report writing

DR. ISA MISHRA

 PA – Modern Methods…

Advantages :

 Used for selection, training and promotion of candidates as potential can be

studied
 Candidate can find out their strengths and weakness
 Candidate can improve performance and improve on identified weaknesses
 Method is valid as candidate is evaluated by many different experts.
 Identification of leaders, self directed team members and followers
 Can be used for matching people for jobs
 Can be used for competency development

Disadvantages :

 Assessment centre is very costly.

 Highly experienced managers are required to evaluate the candidates.
 The process / evaluation can be questioned in absence of predefined
quantifiable & measurable performance dimensions.
 The candidates may not get proper feedback

DR. ISA MISHRA

 PA – Modern Methods…

3. BARS – Behaviorally Anchored Rating Scales

 Examples of effective and ineffective behavior related to job are collected from
people with knowledge of job using the critical incident technique. Alternatively,
data may be collected through the careful examination of data from a recent task
analysis.
 For each performance standard, some standard statements are provided. These
are plotted on BARS scales.
 Discussions are conducted to identify significant job dimensions that need to be
evaluated.
 Relate the identified effective & non-effective behaviour to the required
performance dimensions.
 Assign numerical values to each such performance dimension.

DR. ISA MISHRA

PA – Modern Methods…

DR. ISA MISHRA

 PA – Modern Methods…

Advantages :

 Provides opportunity to both appraiser & appraisee to interact while developing

standards for each performance dimension.
 Facilitates more accurate ratings of the target person's behavior or performance
 Brings the benefits of both qualitative and quantitative data to the employee
appraisal process

Disadvantages :

 Time consuming
 Often accused of being subject to unreliability and leniency error

DR. ISA MISHRA

 PA – Modern Methods…

5. 360 Degree Appraisal

A gift - a chance to
see ourselves
as others see us

DR. ISA MISHRA

PA – Modern Methods…
360 Degree - Concept

DR. ISA MISHRA

 PA – Modern Methods…
360 Degree - Concept

Also known as :

Multi-rater feedback
Multi-source feedback
Full-circle appraisal
Group performance review

360° feedback answers three basic questions:

Why should I improve my performance?
What do I need to improve?
How can I improve?
DR. ISA MISHRA
 PA – Modern Methods…
360 Degree - Methodology

Step 1: The Questionnaire served on peer, subordinate & superior

Questionnaire comprises questions on :

- Leadership - Team Player

- Communication - Organisational Skills
- Decision- Making - Adaptability
- Expertise - Vision

Step 2: Collection of ratings

Step 3 : Data Processing

Step 4 : Personal Development Plan for each assessee

DR. ISA MISHRA

 PA – Modern Methods…
360 Degree – Practice at Industry

Communication of 360
degree assessment to
the assessees
(25th April, 2017)

DR. ISA MISHRA

 PA – Modern Methods…
360 Degree - Benefits

For the organisation:

 Promotes constructive feedback and open communication
 Develops a culture of continuous performance improvement
 Builds leadership/ managerial capability
 Embeds values and expected working competencies
 Can be a powerful trigger for change
 Provides feedback about leadership and management ‘strength’
For the appraisee:
 Increased self-awareness
 Discovering the blind spots
 Understanding the strengths and opportunities for development
 Taking ownership and control of own development
 Helps managers to know how to get it ‘right’
DR. ISA MISHRA
 PA – Modern Methods…
360 Degree - Disadvantages

 Time consuming
 Can fail in the hands of untrained facilitators.
 Feedback can be useless if it is improperly stated in PDP.
 Can impose an environment of suspicion if the information is not openly
and honestly managed.

DR. ISA MISHRA

 PA – Modern Methods…
SCHOOL OF MANAGEMENT Degrees of Appraisal

• A 90 degree performance appraisal would be a single person review. Either a

self evaluation or a boss creates the review.
• A 180-degree feedback, is where your raters are at the same level as you
(peers or colleagues), and a person you report to.
• A 270-degree feedback, is where we utilize only three sources of information,
i.e. superior, peers and the assessed.
• A 360-degree feedback (also known as multi-rater feedback, multi source
feedback, or multi source assessment) is a process through which feedback
from an employee's subordinates, colleagues, and supervisor(s), as well as a
self-evaluation by the employee themselves is gathered.

DR. ISA MISHRA

 PA – Modern Methods…
SCHOOL OF MANAGEMENT Degrees of Appraisal

• A 540 degree appraisal adds an external element as feedback is also

collected from customers or clients. It has 5
dimensions: appraiser/manager, the appraisee (self-appraisal), peers,
subordinates and customer/clients.
• 720 degree performance appraisal is an integrated method
of performance appraisal where, the performance of an employee is
evaluated from 360 degrees(Management, Colleagues, Self and also
customers) and timely feedback is given and performance is evaluated
again based on the targets that are set.

DR. ISA MISHRA