Concept of Performance Appraisal:

• Appraisal is the evaluation of worth, quality or merit.

• Quantitative and Qualitative aspects of Job Performance.
• Performance appraisal is a systematic evolution of personnel by
superiors or others familiar with their performance.
• Performance appraisal is the systematic evaluation of the individual
with regard to his or her performance on the job and his potential for
development.
• Performance appraisal is a systematic and objective way of judging
the relative worth or ability of an employee in performing his job. It
emphasizes on two aspects; systematic and objective.
Definition of Performance Appraisal:
• As per the views of C. Heyel (1973), “Performance appraisal is the process of evaluating the
performance and qualifications of the employees in terms of the requirements of the job for which
he is employed, for the purposes of administration including placement, selection for promotions,
providing financial rewards and other actions which require differential treatment among the
members of a group as distinguished from actions affecting all members equally”.
• According to Flippo, “ “Performance appraisal is a systematic, periodic and so far as humanly
possible, an impartial rating of an employee's excellence in matters pertaining to his present job
and to his potentialities for a better job.”
• According to Slabbert and Swanepoel – “Performance appraisal is a formal and systematic
process by means of which the relevant strengths and weaknesses of the employees are identified,
measured, recorded and developed.”
• According to Gomej-Mejia – “Performance Appraisal involves the identification, measurement
and management of human performance in organisation.”
Characteristics of Sound Appraisal System:

It should be simple and understandable by the employees. Any

complications need to be avoidable.
It should be suitable to be adopted for appraisal at regular intervals
because periodic appraisal enables the employees to improve.
It should create the atmosphere of mutual understanding and
confidence.
The system should be capable of giving equitable justice to all
employees. Therefore it should be objective and free from personal
bias.
The employees should be taken in confidence while preparing
performance appraisal.
Characteristics of Sound Appraisal System:
The system should be suitable to the organization from the points of its
structure, needs and more essentially based on latest development in the
area. It should be able to fulfill the desired purpose by locating potential for
promotion, increments, placements, transfers etc.
Special training is given to evaluated” for making him more impartial and
free from bias.
Negative appraisal of any employee should be immediately
communicated to him so that he can adopt measures for improvement.
The employee should be allowed to go in appeal in case his performance
appraisal is negative if he is not satisfied. By this the management will win
the confidence of the employees.
The performance appraisal system should not be aimed at harassing the
employees who are vital human resources and play very important role in
achieving organizational goals.
Purpose of Performance Appraisal:
To identify employee weaknesses and strengths;
To identify and meet training needs and aspirations;
To generate significant, relevant and valid information about employee;
To provide inputs to increments of rewards, transfers, promotion and salary
administration.
To help in improving employee’s performance if he is not found to be
suitable during the review period;
To create a desirable culture and tradition in the organisation;
To help in planning career development and human resources planning
based on potentialities.
To provide research data for improving overall human resources
information system (HRIS).
Answers to Questions??
 What is to be appraised?
Contents as per Job Analysis

Who will appraise?

Supervisors, Peers, Subordinates, Self-appraisal, Users of Services,
Consultants

When to appraise?
 Annually, Bi-annually, Quarterly

How to do the appraisal?

 Process of Performance Appraisal
Process of Performance Appraisal
Process of Performance Appraisal
1. Establish Performance Standards: The performance standards for each and
every job should be developed and discussed with the superiors after thorough
analysis of the job. These standards should be clear and not vague. They must be
measurable after certain period.

2. Communicate the Standards: After setting the performance standards of job,

the next activity is to communicate these standards to all concerned; at least two
parties – (a) appraiser (b) appraisee. It is necessary, these standards must be
modified. The appraiser must ensure that the information communicated by him has
been received by appraisee and understood clearly. As per opinion De Cenzo and
Robbins, “too many jobs have vague performance standards and the problem is
compound when these standards are set in isolation and do not involve the
employee.”

3. Measure Actual Performance: Now the next activity is to measure actual

performance of appraisee on the job after certain period. Generally four common
sources are used by appraiser to measure actual performance, personal observation,
statistical reports, oral reports and written reports.
Process of Performance Appraisal
4. Compare Actual Performance with Standards: The fourth activity is the comparison
of actual performance with standards. Sometimes actual performance may be better than
standards and sometimes it may go off the track. Any deviations between actual
performance and standard performance may be noted carefully for next activity.

5. Feedback to the Employee/ Discussion with Employee: In this activity the results of
stage forth are discussed with employee. The information which is received by appraisee
about his assessment has a great impact on his performance. Communicating poor
performance is difficult task of appraiser.

6. Taking Corrective Action, if Necessary/ Implement Personnel Action: This is the final
or last activity of the performance appraisal process. In this stage two types of corrective
action may be recommended by the appraiser. One is positive means salary increase or
promotion if actual performance of appraisee is up to the mark and second is negative
means coaching and counselling may be done if the performance is poor. If necessary
appraisee may be deputed for formal training courses.
Factors of Appraisal in India
CASELET: Bent Ericksen and Associates
• A doctor discharged a staff member who had been working for him
for nine months.

• She then claimed that her civil rights were violated and that she was
discriminated against because of her age. She was 46 years old.

• During an investigation, the doctor was asked to provide copies of

her performance evaluations to justify the contention that the
discharge was based on her performance, not her age.

• No performance evaluations had been given to any employees. This

claim led to an out- of-court settlement.
Case Considerations:
• The employee had been with the doctor for nine months and had not
received a performance appraisal. She claimed that she was not aware
that her performance was not satisfactory and was surprised when she
was terminated. She alleged that the sole reason for her discharge was
her age — that the doctor wanted to hire a younger person. The doctor
said she had been warned on several occasions, but nothing had been
documented.

• QUESTION: Similar claims are made against doctors in this

organisation every day. What can you do to prevent this from
happening?
Tentative Solutions:
• Make sure that a discharge/ separation does not come as a
surprise to an employee.
• One way to prevent this is to conduct written performance
appraisals on a regular basis.
• Provide ongoing, constructive feedback as close to the
notable work behavior as feasible.
• Enhance Transparency in working of the organisation.
A good performance review program should:
 Provide data for use in wage adjustments, promotions, reassignments,
disciplinary actions, and/or discharge.

 Provide objective, factual evaluations of an employee's performance, rather than a

snap judgment.

 Improve employees' job satisfaction and morale by communicating interest in

their progress and personal development.
 
 Provide information regarding an employee's need for training.
 
 Provide a forum for setting goals and performance standards for the next year or
appraisal period.
 
 Provide an opportunity for each employee to discuss job problems and interests.
How often should you do performance
appraisals?
• We recommend that a new employee be given a performance appraisal after
approximately four weeks and again eleven weeks from the date of hire. Committing to
this forces you to more closely observe a new employee's performance during the first
few weeks, recognizing that it is safer to let someone go during the orientation and
training period rather than later.
• A more complete review, using a standard format for consistency like our
"Performance Appraisal Form" covering such items as quality and quantity of
work, job knowledge, and staff and patient relations, should be conducted
approximately once a year. Each of these items may have some subsections that record
levels of performance.
• A note of caution: Many employers arrive at an overall rating of satisfactory, even
though the performance is far from acceptable in one category. This is a mistake! Do
not provide an overall rating. If you do — and later have to justify why you discharged an
employee — the authorities will only look at the overall satisfactory rating and wonder
why you discharged a satisfactory employee. Evaluations must be job-related,
balanced, and candid in presenting constructive guidance regarding performance
deficiencies. 
Methods of Performance Appraisal
 Traditional Methods of Performance Appraisal:

1. Ranking Method:
•It is the oldest and simplest formal systematic method of performance appraisal in which employee is
compared with all others for the purpose of placing order of worth. The employees are ranked from the
highest to the lowest or from the best to the worst.

•In doing this the employee who is the highest on the characteristic being measured and also the one who
is L lowest, are indicated. Then, the next highest and the next lowest between next highest and lowest
until all the employees to be rated have been ranked. Thus, if there are ten employees to be appraised,
there will be ten ranks from 1 to 10.

However, the greatest limitations of this appraisal method are that:

(i)It does not tell that how much better or worse one is than another,
(ii) The task of ranking individuals is difficult when a large number of employees are rated, and
(iii) It is very difficult to compare one individual with others having varying behavioral traits. To remedy
these defects, the paired comparison method of perfor­mance appraisal has been evolved.
2. GRAPHIC RATING SCALE
• The graphic rating scale, a behavioral method, is perhaps the most popular choice for
performance evaluations. This type of evaluation lists traits required for the job and asks the
source to rate the individual on each attribute. A discrete scale is one that shows a number of
different points. The ratings can include a scale of 1–10; excellent, average, or poor; or meets,
exceeds, or doesn’t meet expectations, for example. A continuous scale shows a scale and the
manager puts a mark on the continuum scale that best represents the employee’s performance.

• Graphic rating scale method identifies specific desired traits, behavior factors or performance
criteria, such as, quality and quantity of work, cooperativeness, analytical ability, decisiveness,
initiative, emotional stability, etc. Employees are rated on a scale based on the extent to which
they exhibit the desired behavior or the extent to which they meet the desired performance criteria.

• The rating for each factor will be done on the basis of numbers (1, 2, 3, 4, and 5) or descriptions
(excellent, very good, average, poor, etc.) The central idea behind using rating scales is to provide
the appraiser with a continuous representation of various degrees of particular qualities or
characteristics being present in employees.
Poor — — — — — — — — Excellent
3. Critical Incidents Method:
• Under this method the immediate supervisor tries to make a continuous record of all the
good or bad incidents of a person’s work-related behaviour. Whenever employees are found
doing something good or positive which contribute towards increasing the overall
productivity of the organisation or creating a healthy work atmosphere it is recorded as their
positive contribution.
• At the same time whenever they commit a mistake, a blunder or an error because of which
damage has been incurred to machinery or the overall productivity of the organisation gets
adversely affected it adds to their negative contributions. At the end of the rating period,
these recorded critical incidents whether positive or negative are used in the evaluation of the
employee’s performance.
• The biggest positive feature of this technique is that it measures behaviours which are critical
to the effective performance of the job. Using this method facilitates a feedback by providing
the employees with concrete examples of actual behaviours committed by them. If proper
records are maintained of these critical incidents it provides the most realistic measurement
of an employee’s performance on the job.
• Although this method is an improvement and it tries to minimize the subjectivity problems
associated with other appraisal systems, it also suffers from certain limitations. As
employees are aware of the fact that they are being noticed by their supervisors, it might add
to their level of anxiety and hostility. Others tend to hide those behaviours which they feel
will adversely affect their performance reviews. In either case, the end results are distorted
performance reviews.
4. CONFIDENTIAL REPORT:
• This is one of the traditional methods of performance appraisal, however, it’s not usually
practiced in private firms. Mostly, public organizations or secret agencies employ this
technique in their appraisal process. As suggested by name, Confidential Report System
involves handing over the employee’s appraisal to senior level management in sealed
envelopes. These envelopes include their performance detail in a certain time frame. The
height of confidentiality is that even the employee who is subject to the assessment is
not allowed free access to the particular envelope. Only the authorized appraisal writer
and senior management is allowed access to it.
• Even though this method allows managers to be objective and candid about their
employees, still, it is host to some limitations. Since employees do not have access to
their performance information, it gets difficult for them to take corrective measures and
improve their performance. Confidential Report System ensures that employees do not
see their rating or predict their future incremental growth changes. Due to the secretive
nature of this method, it is not most likely that this technique would increase employee
productivity.
• It is the traditional way of appraising employees mainly in the Government
Departments. Evaluation is made by the immediate boss or supervisor for giving effect
to promotion and transfer. Usually a structured format is devised to collect information
on employee’s strength weakness, intelligence, attitude, character, attendance,
discipline, etc. report.
5. PAIRED COMPARISON METHOD:
• In this method all the employees’ performances are compared with other
employees but comparison is made with only one member at a time. The
number of times each member is preferred over the other is recorded. These
numbers determine the ranks of members and obviously the top performers
will be those with highest ranks for more number of times.
6. GRADING SYSTEM:
• In this method, different grades are given to the employees based on their contribution
to the organization. Grades may be in the form of alphabets (A, B, C, D, E, F..) or in words
like excellent, very good, moderate, bad, very bad, worst or excellent, good, bad. Based on
the grades given, promotions, hikes, training, etc. are planned.
• The usual dimensions of a graphic scale are:
1. Grade A = Outstanding
2.Grade B = Above average
3.Grade C = Average
4.Grade D = Below average
5. Grade E = Unsatisfactory
• The advantage of this scale is that grading of employee on the scale highlights the need for
improvement in his abilities to perform the job. If an employee is placed at Grade D, his
performance is below average and he needs to improve upon it.
• The limitation of this method is that every manager does not follow the same method of
rating people at a particular grade. An employee who is assigned Grade A by one manager
may be assigned Grade B or C by another manager. This method is, thus, sensitive to
errors.
7. Checklist Method:
• In this method the employer starts with a list of factors in their checklist, such as,
does the employee cooperate with other co-workers, do they keep their work place
neat and clean, do they follow their supervisors instructions closely, do they reach
on their workplace in time, and are they able to achieve the work targets assigned
to them properly.
• Each factor or item receives a numerical value based on its perceived importance
to successful job performance. Those items that are deemed more important are
assigned higher values. The actual performance of all the employees on the job is
measured and is compared against the checklist. Their scores on the appraisal are
determined by summing the scores of the factors checked by the rater.
• One of the biggest advantages of using the checklist method is the convenience to
the supervisors as they simply have to say yes or no in front of the statements or
the factors provided to them. It saves their time and the same checklist can be
discussed with the employees and a feedback can be given to them.
• However developing an effective checklist, measuring the performance against
the checklist and finally interpreting the results might not be very simple for the
supervisors
8. FORCED CHOICE METHOD
•  In this method, the appraiser is given a set of statements and asked to select one
statement which defines the employee.
• Let us consider the following three statements,
• He/ She is a team player.
• He/ She needs to be trained to improve the skill set.
• He/ She completes the assigned tasks in time.
• The appraiser has to select one statement as a part of the evaluation process.
• This is a time-consuming method.
• It is a method to evaluate employee performance according to a predetermined
distribution scale. Generally the organizations use five grade scales where one end of the
scale represents the best job performance and the other represents the poorest job
performance. All the employees are rated somewhere on the scale according to their level
of performance in comparison to other employees.
• The biggest advantage of using ranking method is its low cost, less effort and simplicity.
But the ranking method is not considered a very scientific and objective method because
there is lots of ambiguity and vagueness involved in ranking the various employees.
Chances of personal biasness and favoritism are many in this case as ranks are being
assigned by supervisors as per their own opinion and judgment.
9. ESSAY METHOD:
• In this method, the appraiser writes about the characteristics of the
employee in his own words in the form of an essay. With this, the strong
and weak points can be easily known.
• But the essay depends on the writing skills of the appraiser. Sometimes,
there may be a chance of weak areas getting more highlighted than the
strong areas of an employee. This may demotivate the employee.
• This is an unstructured form of performance appraisal where grades are not
assigned to performance parameters. As the employees perform their jobs, the
evaluators or raters keep track of the performance and note their positive and
negative job attributes like quality and quantity of performance, knowledge
about the job skills and organisational policies, employees’ strengths and
weaknesses, their potential to work, need for training etc.
• At the end of the period, they analyse all these points and give brief
description of their performance in the form of an essay. This method has the
merit of rating the employees purely on the basis of their actual performance.
It reduces personal bias of the raters. However, different raters have styles and
perception about rating the qualities of a person and this method, thus, may
not be totally error free.
10. FIELD REVIEW METHOD:
• In this method, the appraiser takes the help of subordinates and supervisors to
rate an employee.
• This method is mostly used during the promotions and increments.
• It is a time-consuming process.
This is an appraisal by someone outside the assessor’s own dept., usually someone
from the corporate office or HR dept.

Two disadvantages of field review method are:

•An outsider is not familiar with conditions in an employee’s work environment.

•He does not have an opportunity to observe employee behavior of performance over
a period of time.