Potential Appraisal

Why Potential Appraisal

• Employee is not fully aware of his potential—his
existing yet dormant abilities.
• Refers to the appraisal i.e. identification of the hidden
talents and skills of a person.
• searches for latent abilities of the employee are not
being used.
• Is part of the performance appraisal process. It is a
future-oriented appraisal
• Potential appraisal is the tool being used to track
hidden talents, skills and abilities of an employee
 Potential Appraisal

• This is a holistic approach in which in the

process, the employee’s strengths and
weaknesses are deeply identified
• Leads to identification and evaluation of the
employee’s untapped talents or undeveloped
skills to determine if the employee is fit to
accept a higher position or added
responsibilities.
• A potential appraisal is a forward-looking
process to see whether an employee will be
suitable or flexible for new working conditions
and challenges.
• process in which the main objective is to
assess the employee in his present role,
drafting ways to improve his performance, and
then ultimately move to evaluate to see his
suitability for higher responsibility.
 Need For Appraisal
• Create competitive environment foe better
performance
• Infuse a healthy organizational culture
• Boosting the morale and motivation of the
employees
• Attracting and retaining best talent
 Purpose or need of potential appraisal
1. To inform employees of their future prospects
2. To update training and recruitment activities
3. To advise employees about the work to be
done to enhance their career opportunities
4. To enable the organization to draft a
management succession programme
5. Motivate the employees to further develop
their skills and competencies
 Purpose of Potential Appraisal
• to inform employees about their possible
career path or future prospects
• to help the company chalk out succession
program
• to regularly update the training efforts and
enhance recruitment
• to motivate employees to further develop their
skills and competencies or overall performance
 CHARACTERISTICS
• Process of identifying hidden skills and abilities
in a person
• The time for potential appraisal is not fixed
• It is future oriented process
• Part of performance appraisal
• It does not guarantee promotion
 Characteristics and techniques of potential appraisal

• Reviewing the performance of the employee

forms the basis of potential appraisal since he
is assessed based on the targets he
accomplished and the skills he possesses and
uses. The results of the performance review
act as indicators on the employee’s aptitude to
handle extra responsibilities. 
 Steps of Potential Appraisal System

1. Role Description:
• A clear role description is required to have a
good potential appraisal system. There should
be clarity of roles and functions—which
means extensive job descriptions and various
functions involved to perform the job.
 2)QUALITY REQUIRED
• Besides clear descriptions of roles and functions, it
is also important to have a detailed list of qualities
required for the employee to perform and deliver.
These qualities are usually broadly divided into
four categories, which are listed below:
• A) Technical knowledge and skills
• B) Managerial capabilities and qualities
• C) Behavioral capabilities
• D) Conceptual capabilities
• Indicators of Quality:
• A potential appraisal system should also include
the various mechanisms for judging these qualities
in an employee. These mechanisms for judging
these qualities are:
• Rating by others
• Psychological tests
• Simulation games and exercises
• Performance appraisal records
 FEEDBACK
• If the organization believes in the
development of human resources it should
attempt to generate a climate of openness.
Such a climate is required for helping the
employees to understand their strengths and
weaknesses and to create opportunities for
development.
• A sense of reality: The employee thinks and acts objectively,
and resist purely emotional pressures.
• Imagination: The employee uses his imagination to pursue
objectives, and go beyond the conventional approach to
certain situations.
• Power of analysis: The employee can break down facts,
reformulate or transform crisis into manageable terms.
• The span of vision: The employee can examine a problem in
the context of a broader framework of reference.
• Persuasiveness: The employee can sell his ideas to people and
uses personal influence to gain a continuing commitment.
• 5) Organizing the System:
• Once the roles, the qualities required, and the indicators of quality are
listed down, then the system should be established. The potential
appraisal system should be organized in such a way that there is clarity
in the organizational policies and systematization of efforts.
• 6) Feedback:
• Finally, the last step should be the inclusion of the climate of
transparency and openness. This will help employees to understand
and gauge their abilities—and their strengths and weaknesses.
Providing feedback allows them to better perform their jobs and
develop their skills and abilities. Moreover, the company’s
management should incorporate regular one-on-one coaching or
periodic counseling.
 TECNIUQES OF POTENTIAL APPRAISAL
• Self appraisal Self appraisal form
• * Name of employee
• * Designation
• * Department
• * Reporting officer
• * Responsibilities
• * Accomplishments
• * Goals for next appraisal period
• * Area of improving * Problems faced
• Solutions tried
• Measures taken for personal and professional
development
• Best and worst aspects of the job
• Is the superior supportive
STEPS IN GOOD POTENTIAL APPRAISAL SYSTEM
• Role Descriptions: Organizational roles and functions must
be clearly defined
• Qualities needed to perform the roles: Based on job
descriptions, the roles to be played by people must be
prepared
• Rating mechanisms: Besides listing the functions and
qualities, the potential appraisal system must list
mechanisms of judging the qualities of employees such as:
• (i) Rating by others: The potential of a candidate could be
rated by the immediate supervisor who is acquainted with
candidate’s work in the past, especially his technical
capabilities
(ii) Tests: Managerial and behavioral dimensions can
be measured through a battery of psychological tests
(iii) Games: Simulation games and exercises could be
used to uncover the potential of a candidate
(iv) Records: Performance records and ratings of a
candidate on his previous jobs could be examined
carefully on various dimensions such as initiative,
creativity, risk taking ability etc, which might play a
key role in discharging his duties in a new job
 ORGANIZING THE SYSTEM HR

• manager must set up a system that will allow the introduction

of the scheme smoothly incorporating answers to some
complex questions like:
• (i) How much weightage to accord to merit in place of seniority
in promotions?
• (ii) How much weightage to accord to each of the performance
dimensions – technical, managerial, behavioural qualities?
• (iii) What are the mechanisms of assessing the individual on
different indicators of his potential, and with what degree of
reliability?
 Potential Appraisal at Philips India

• 1Conceptual Effectiveness:Vision, business

orientation, entrepreneurial orientation and
sense of reality.
• Operational Effectiveness:
• Result orientation, individual effectiveness, risk
taking and con­trol.
• 3. Interpersonal Effectiveness:Network
directedness, negotiating power, personal
influence and verbal behaviour.
• 4. Achievement Motivation:
• Drive, personal ambition, innovativeness, and
stability.
• Each of the criterions is then measured on five-
point scale. The final grading is based on the
appraisal by management development review
team that consists of members from functional
areas with whom the appraisees have close
interaction in the normal course of their job.
• Low Potential – Low Performance:
• These employees are low on both dimensions. These
can be advised to improve performance otherwise the
result will be planned separation.
• 2. High Potential – Low Performance:
• In order to utilize their high potential, these employees
are shifted either to new locations or new
departments. If still they do not improve their
performance, they are reclassified as question mark for
planned separation.
• 3. Low Potential – High Performance:
• They are performers termed as solid citizens.
They lack potential for higher job. Therefore,
they are encouraged to do their present jobs
better.
• 4. High Potential – High Performance:
• They are termed as stars. More developmental
efforts are directed towards them.