CHAPTER : 7

PERFORMANCE APPRAISAL

OBJECTIVES OF THE CHAPTERConcept of Performance AppraisalNeed for Performance AppraisalThe Appraisal ProcessPerformance Appraisal Methods and typesThe Appraisal InterviewProblems and solutions in Performance

AppraisalUses of Performance AppraisalManagerial careerRole of counseling in HRM

CONCEPT OF PERFORMANCE APPRAISAL

Performance appraisal can be defined as the process of evaluating the performance of an employee and communicating the results of the evaluation to him/her for the purpose of rewarding or developing the employee.

OBJECTIVES OF PERFORMANCE APPRAISAL

Facilitates optimization of employee performance

Helps taking administrative decisions relating to payment of incentives, promotions etc.

Helps identify training needs

THE APPRAISAL PROCESS

Determining the standards for Performance appraisal

Measuring performance againstpre-determined standards

Actual process ofmeasurement

Communicating the results to the employee concerned

Implementation

THE APPRAISERS

Different appraisers

Self-Appraisal SubordinatesSupervisors Peers Customers/

Clients

PERFORMANCE APPRAISAL METHODS

Traditional MethodsManagement by ObjectivesGraphic rating scaleWork standards approachEssay appraisalCritical incident methodForced choice ratingPoint allocation methodRanking methodsChecklist

Modern MethodsBehaviorally Anchored

Rating Scale (BARS)360 degree

performance appraisalTeam AppraisalsBalanced scorecard

method

TRADITIONAL METHODS

Management by Objectives (MBO)The main aspects of MBO are clear and well-defined

goals, a definite time-span to achieve the goals, an action plan and finally, timely and constructive feedback.

Graphic Rating Method In this method, the rater rates the employees on factors

like quantity and quality of work, job knowledge, dependability, punctuality, attendance etc.

Work Standards Approach In this method, work standards are set based on the

average output of a typical employee or by benchmarking against the work standards of a competitor in a similar business.

Essay Appraisal In the method, the appraiser prepares a document

describing the performance of an employee.

Critical Incident MethodThe appraiser makes note of all the critical incidents

that reflect the performance or behavior of the employee during the appraisal period.

Forced Choice Rating MethodThe appraiser assigns ranks to different attributes of the

employee and later the HR department, applies the weights and arrives at a score which is the final appraisal score.

Point Allocation Method In this method, the appraiser has to allocate points to

different members in his team and the best performer gets the highest score.

ChecklistThe rater has to respond ‘Yes’ or ‘No’ to a set of

questions which assess the employee's performance and behavior.

Ranking Methods

Alternation:The appraiser ranksall his employees

from the most valuableto the least valuable.

Paired comparison:Every employee in the group is compared withevery other employee in

the group. The Employeewho is rated better in

each pair the maximum times is the best

employee .

Forced Distribution:In this method, employees are

categorized as “Top”,“Standard” and

“Bottom”. This methodhelps the organization

get rid of non-performers.

MODERN METHODS

Behaviorally Anchored Rating Scales (BARS) BARS concentrates on the behavioral traits demonstrated

by the employees instead of his actual performance. It combines the benefits of critical incidents and graphic rating scale by anchoring a scale with specific behavioral examples of good or poor performance.

It is time consuming and expensive method. The behaviors used are more activity oriented than result oriented.

.

360 degree Performance Appraisal

In a 360 degree appraisal system, the employee's performance is evaluated by his supervisor, his peers, his internal/external suppliers and his subordinates. It is a systematic collection of performance data on an individual or group, derived from a number of stakeholders, team members, customers, peers, and self.

It provides a broader perspective about an employee’s performance by facilitating self-development of employees.

This appraisal is effective in identifying and measuring interpersonal skills, customer-satisfaction and team-building skills.

Team Appraisals In the team appraisal method, the individual team

members evaluate their colleagues in the team and provide feedback.

Balanced ScorecardThe implementation of balanced scorecard involves

formulating a strategy, and deciding what each employee needs to do to achieve the objectives based on the strategy.

In the HR Scorecard, individual responsibilities are assigned based on the strategy and the achievements are tracked.

THE APPRAISAL INTERVIEW

Challenges of Appraisal InterviewThe organizational cultureThe relationship between the employee and his bossThe maturity level of the individualsAn apprehensive employeeA wary appraiserA biased appraiser Inexperience

PITFALLS IN PERFORMANCE APPRAISAL

Halo effectThe appraiser appraises the employee based on one

single characteristic.

Leniency effectThe appraiser gives high ratings and only positive

feedback to the appraisee, irrespective of his actual performance.

Stringency effectThe appraiser being very strict in rating the employees.

Recency effectThis occurs when the recent performance of the

appraisee dominates the appraisal.

Primacy effectThe appraiser tends to be influenced by the behavior

exhibited in the early stages of the appraisal period.

Central tendency effect It is the tendency of the appraiser to rate most of the

appraisers in the middle of the performance scale.

Stereotyping It involves judging someone based on the group he

belongs to and the appraiser's perception of the group.

CultureThe culture of the organization or the country can

influence the appraiser to rate the appraisee in a particular way.

Perceptual setThe appraiser might have an expectation level which

might distort the perception and judgment of actual performance.

Fundamental attribution errorHere, the appraiser underestimates the influence of

external factors and overestimates the influence of internal factors while judging the performance.

USES OF PERFORMANCE APPRAISAL

To determine the training and development needs

It forms the basis for compensation management

It forms basis for transfers and promotionsIt helps in succession planning

ETHICS IN PERFORMANCE APPRAISAL

The employees of the organization must be convinced about the effectiveness

Making the ratings more measurable and quantifiable

Assuring and maintaining the confidentiality of the appraisal

Managerial Career

Career development is important for companies to create and sustain a continuous learning environment

The biggest challenge companies face is how to balance advancing current employees’ careers with simultaneously attracting and acquiring employees with new skills

The growing use of teams is influencing the concept of careerse.g., project careers

What Is Career Management?

Career managementCareer management is the process through which employees:Become aware of their own interests, values,

strengths, and weaknessesObtain information about job opportunities

within the companyIdentify career goalsEstablish action plans to achieve career goals

Comparison of Traditional Careerand Protean Career:

DimensionDimension Traditional CareerTraditional Career Protean CareerProtean Career

Goal Promotions

Salary increase

Psychological success

Psychological contract Security for commitment Employability for flexibility

Mobility Vertical Lateral

Responsibility for Management

Company Employee

Pattern Linear and expert Spiral and transitory

Expertise Know how Learn how

Development Heavy reliance on formal training

Greater reliance on relationships and job experiences

The career management process:

Self-Assessment

Reality Check

Goal SettingAction

Planning

Components of the Career Management Process: (1 of 2)

Self-AssessmentUse of information by employees to determine

their career interests, values, aptitudes, and behavioral tendencies

Often involves psychological tests

Reality CheckInformation employees receive about how the

company evaluates their skills and knowledge and where they fit into company plans

Components of the Career Management Process: (2 of 2)

Goal SettingThe process of employees developing short-

and long-term career objectivesUsually discussed with the manager and written

into a development plan

Action PlanningEmployees determining how they will achieve

their short- and long-term career goals

Managers’ Role in Career Management

Roles Responsibilities

Coach Probe problems, interests, values, needsListenClarify concernsDefine concerns

Appraiser Give feedbackClarify company standardsClarify job responsibilitiesClarify company needs

Advisor Generate options, experiences, and relationshipsAssist in goal settingProvide recommendations

Referral agent Link to career management resources

Follow up on career management plan

Company’s Role in Career Management

Companies are responsible for providing employees with the resources needed to be successful in career planning:Career workshopsInformation on career and job opportunitiesCareer planning workbooksCareer counselingCareer paths

COUNSELINGCOUNSELLING IS A THERAPEUTICPROCESS OF

PROVIDING HELP ANDSUPPORT TO PEOPLE TO FACE AND SAIL THROUGH DIFFICULT TIMES INLIFE.

IT HELPS PEOPLE TO SEE THINGS FROM A DIFFERENT VIEWPOINT AND ENCOURAGE THEM TO DRAFT THEIR ACTION PLAN

WHEN

Unrealistic TargetsExcessive WorkloadAbsenteeism and Late ComingLack of awareness of policies

&proceduresPerformance IssuesSlipping DeadlinesCareer Problems

HOWListen to problems/Address IssuesProvide Feedback and help counselee to see a

different view point Investigate problems/mattersAvoid word of mouth and see the root cause with

evidenceSuggest/Recommend solutionsObserve behavior and clarify expectationsDetermine right course of action and reach Draft plan of action and follow up

COUNSELING SKILLSActive ListeningAppropriate Body LanguageIntelligent QuestioningProblem SolvingConnecting & Reflecting BackMutual InfluencingReading Non verbal BehaviorsNot imposing superiority or patronageConcluding & Recommending