PERFORMANCE APPRAISAL

Submitted by:Akash Meena (10)Deepika Taank (12)Balendu Singh (16)

What is performance appraisal

• Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee.

• The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee.

• Its aim is to measure what an employee does.

Objectives of performance appraisal• To effect promotion based on competence and performance

• To confirm the services of probationary employees upon their completing the probationary period satisfactorily.

• To assess the training and development needs of employees

• To decide upon a pay raise where ( as in the unorganized sector ) regular pay scales have not been fixed.

• To let the employees know where they stand in so far as their performance is concerned and to assist them with constructive criticism and guidance for the purpose o their development

• To improve communication. It provides a format for dialogue between the superior and the subordinate.

• It improves the understanding of personal goals and concerns.

• It can be used to determine whether HR programs such as selection, training and transfer have been effective or not

Techniques of performance appraisal

Traditional approach

• Traditionally, performance appraisal has been used as just a method for determining and justifying the salaries of the employees.

• After it is used as a tool for determining rewards and punishments for the past performance of the employees

• This approach did not consider the developmental aspects of the employee performance.

• The primary concern of the traditional approach is to judge the performance of the organization as a whole by the past performances of its employees

• In 1950s the performance appraisal was recognized as a complete system in itself and the Modern Approach to performance appraisal was developed.

1. ESSAY OR FREE FORM APPRAISAL

Under this method, the rater is asked to express the strong as well as weak points of the employee’s behavior. While preparing the essay on the employee, the rater considers the following factors: (i) Job knowledge and potential of the employee; (ii) Employee’s understanding of the company’s programmes, policies, objectives, etc.; (iii) The employee’s relations with co-workers and superiors; (iv) The employee’s general planning, organizing and controlling ability; (v) The attitudes and perceptions of the employee, in general. . A major drawback of the method is the inseparability of the bias of the evaluator.BPL, Birla 3M, Wheels India and Bata follows this method.

2. STRAIGHT RANKING METHOD

This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

3. PAIRED COMPARISON

A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. Godrej soaps,KOPRAN, NOCIL and OTIS follows this method.

4. CRITICAL INCIDENTS METHODS

Under this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior. At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance. An example of a good critical incident of a sales assistant is the following:

Cont.

An example of a good critical incident of a sales assistant is the following:

July 20 – The sales clerk patiently attended to the customers complaint. He is polite, prompt, enthusiastic in solving the customers’ problem.

On the other hand the bad critical incident may appear as under:• July 20 – The sales assistant stayed 45 minutes over on his break

during the busiest part of the day. He failed to answer the store manager’s call thrice. He is lazy, negligent, stubborn and uninterested in work.

• ITC Classic finance, Voltas, VST Industries etc follows this method.

5. FIELD REVIEW

In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias.

6. CHECKLIST METHOD• A checklist represents, in its simplest form, a set of objectives

or descriptive statements about the employee and his behavior. If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank. A more recent variation of the checklist method is the weighted list. Under this, the value of each question may be weighted equally or certain questions may be weighted more heavily than others. The following are some of the sample questions in the checklist.

• Is the employee really interested in the task assigned? Yes/No

• Is he respected by his colleagues (co-workers) Yes/No

Cont. • Does he give respect to his superiors? Yes/No• Does he follow instructions properly? Yes/No• Does he make mistakes frequently? Yes/No

A rating score from the checklist helps the manager in evaluation of the performance of the employee. The checklist method has a serious limitation. The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions. Another limitation could be that this method is expensive and time consuming. Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employee’s characteristics, contributions and behaviors. In spite of these limitations, the checklist method is most frequently used in the employee’s performance evaluation. WIDIA, CEAT, Modern threads and BOC uses this method.

7.GRAPHIC RATING SCALE

Perhaps the most commonly used method of performance evaluation is the graphic rating scale. of course, it is also one of the oldest methods of evaluation in use. Under this method, a printed form, as shown below, is used to evaluate the performance of an employee. A variety of traits may be used in these types of rating devices, the most common being the quantity and quality of work. The rating scales can also be adapted by including traits that the company considers important for effectiveness on the job. A model of a graphic rating scale is given below.

Quantity of work: Volume of work under normal working conditions

Unsatisfactory         

Fair Satisfactory Good Outstanding

Quality of work: Neatness, thoroughness and accuracy of work Knowledge of job

A clear understanding of the factors connected with the job

Attitude: Exhibits enthusiasm and cooperativeness on the job

Dependability: Conscientious, thorough, reliable, accurate, with respect to attendance, reliefs, lunch breaks, etc.

Cooperation: Willingness and ability to work with others to produce desired goals.

8. FORCED DISTRIBUTIONThis method was developed to eliminate bias and the

preponderance of high ratings that might occur in some organizations. The primary purpose of the forced choice method is to correct the tendency of a rater to give consistently high or low ratings to all the employees. This method makes use of several sets of pair phrases, two of which may be positive and two negative and the rater is asked to indicate which of the four phrases is the most and least descriptive of a particular worker. Actually, the statement items are grounded in such a way that the rater cannot easily judge which statements apply to the most effective employee. The following box is a classic illustration of the forced choice items in organizations.

Cont.Table: Forced Choice Items1.       Least                                                            Most          A        Does not anticipate difficulties                 A          B        Grasps explanations easily and quickly     B          C        Does not waste time                              C          D        Very easy to talk to                                D2.       Least                                                            Most          A        Can be a leader                                      A          B        Wastes time on unproductive things          B          C        At all times, cool and calm                       C          D        Smart worker                                         D

  The favorable qualities earn a plus credit and the unfavorable ones earn the reverse. The worker gets over plus when the positive factors override the negative ones or when one of the negative phrases is checked as being insignificantly rated.

9. CONFIDENTIAL REPORTSIt is mostly used in government organizations. It is a descriptive

report prepared, generally at the end of every year, by the employee’s immediate superior. The report highlights the strengths and weaknesses of the subordinate. The report is not databased. The impressions of the superior about the subordinate are merely recorded there. It does not offer any feedback to the appraisee. The appraisee is not very sure about why his ratings have fallen despite his best efforts, why others are rated high when compared to him, how to rectify his mistakes, if any; on what basis he is going to be evaluated next year, etc. Since the report is generally not made public and hence no feedback is available, the subjective analysis of the superior is likely to be hotly contested. In recent years, due to pressure from courts and trade unions, the details of a negative confidential report are given to the appraisee.

10. GROUP APRAISAL

Under this method, an employee is appraised by a group of appraisers. This groups consists of the immediate supervisors of the employee to other supervisors who have close contact with the employee’s work, manager or head of the department and consultants. The head of the department or manager may be the chairman of the group and the immediate supervisor may act as the coordinator for the group activities. This group uses any one techniques discussed earlier.Kinetic Honda, Birla VXL, and Blue Star follows this method.

Modern approach The modern approach to performance development has

made the performance appraisal process more formal and structured.

the performance appraisal is taken as a tool to identify better performing employees from others, employees training needs, career development paths, rewards and bonuses and their promotions to the next levels.

Now appraisals have become a continuous and periodic activity in the organizations.

The results of performance appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and development, reward outcomes

It also includes feedback.

MODERN METHODS

• Behaviourally Anchored Rating Scale• Assessment Centre• Human Resource Accounting• Management by Objectives• 360 Degree Appraisal

BARS• It combines elements of the traditional rating

scales and critical incident methods.• Using BARS, job behaviours from critical

incidents-effective and ineffective behaviours are described more objectively.

• The method employs individuals who are familiar with a particular job to identify its major components.

• Then they rank and validate specific behaviours for each of the components.

HOW TO CONSTRUCT BARS• Step I: Collect Critical Incidents: Job holder

and supervisors who have knowledge of the job describe specific examples of effective and ineffective behaviours related to job performance.

• Step II: Identify performance Dimensions: The people were assigned of developing the instrument cluster pertaining to the incidents into a small set of key performance dimensions. Generally between 5-10 dimensions account for most of the performance.

Examples of performance dimensions include technical competence, relationship with

customer handling or paperwork and meeting day-to-day deadlines.• Step III: Reclassification of Incidents: Another group of participations who are knowledgeable about the job is instructed to translate or reclassify the critical incidents generated previously. They are given the definition of job dimension and told to assign each critical incident to the dimension that it best describes.

• Step IV: Assigning Scale Values to the Incidents: Each incident is then rated on a one-to-nine scale with respect to how well it represents performance on the appropriate dimension. A rating of 1 represents ineffective performance; the top scale value indicates very effective performance. The second group of participants generally assigns the scale values.

• Step V: Producing the final instrument: About 6-7 incidents for each performance dimension will be used as behavioural anchors.

ASSESSNENT CENTRE• This method of appraising was first applied in

the German Army in 1930.Later, business and industrial houses started using this method.

• This is not a PA Technique• It is a system or organisation, where

assessment of several individuals is done by various experts by using various techniques.

• In basket, role playing ,case studies, simulation etc are used to evaluate the employees.

Human Resources Accounting

• HR Accounting deals with cost and contribution of human resources to the organisation.

Management By Objectives (MBO)

• MBO is a process in which managers / employees set objectives for the employee, periodically evaluate the performance, and reward according to the result.

• MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods).

THE MBO PROCESS

UNIQUE FEATURES AND ADVANTAGES OF MBO

• Clarity of goals – With MBO, came the concept of SMART goals i.e. goals that are:SpecificMeasurableAchievableRealistic, andTime bound.

• Motivation for employees.• Better communication and Coordination.• MBO focuses attention on what must be

accomplished (goals) rather than how it is to be accomplished (methods).

360 Degree Performance Appraisals It is known as 'multi-rater feedback‘. It is the most comprehensive appraisal where

the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job.

360 degree appraisal has four integral components:

1. Self appraisal2. Superior’s appraisal3. Subordinate’s appraisal4. Peer appraisal

Performance appraisal in Coca Cola Ltd

Performance appraisal in COCA-COLA LTD. is done annually.

For appraisal in Coca-Cola Ltd. a SELF-APPRAISAL form is given to the staff members and they fill it up.

Then after according to their self-observation and through the appraisal form filled by the staff members rating is given to the members.

Accordingly then incentives and promotions are granted. In COCA-COLA LTD. at the majority senior staff

members submit all the information timely to their superiors.

Old Performance Appraisal System

• The appraisal occurred once a year.• It required employees to document

their accomplishments.• The manager would assess these

accomplishments in writing and assign numerical ratings.

• The appraisal included a summary written appraisal and a rating from 1 (unsatisfactory) to 5 (exceptional).

• Merit increases were tied to the summary rating level.

• Merit increase information and performance

appraisals occurred in one session.

DRAWBACKS

• Inequitable ratings

• Employee dissatisfaction

• All employees given merit raises irrespective of their performances.

New Performance Appraisal System

• The absence of a numerical rating system.

• The presence of a half-year feedback session.

• The provision for development planning.

• Prohibition in the appraisal guidelines of the use of subjective assessments of performance.