human resource management-2003

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Performance Appraisal

Def;´It is the process of evaluating the performance &

the qualification of employees in terms of the requirments of the job for which he is employed, for the

purpose of administration including placement, selection for promotions providing financial rewards &other actions which require differential treatment among the members of a group as a distinguished fromactions affecting all the members equallyµ.



Importance

� Decisions regarding promotions & merit rating.

� Judging the effectiveness of personnel sub divisions.

� Measures link information gathering and decision making process.

� It helps pin point weak areas in the primary systems.

� Provide systematic judgement to back up salary increases, transfers etc.

� Suggesting needed changes in employees behavior, attitudes etc.

� Used as a base for coaching and counseling the individual by superior.

� To plan career development, human resources planning based on potentialities.



Purpose

� It unifies the appraisal procedure so that all employees are

rated in same manner.

� It provides information which is useful in making and

enforcing important decisions.

� It serves to stimulate and guide employee development.

� It gives supervisors a more effective tool for rating their

personnel.� It makes for better employer-employee relations .



Seven criteria for assessing

performance

� Q uality

� Q uantity

� Timeliness

� Cost effectiveness

� Need for supervision

� Interpersonal impact

� Training



Differences Between Administrative &

Employee Development Appraisal Criteria Employee Development Administrative

1. Definition of purpose Performance improvement

by advising employees

what is expected of them.

Information for decision:

Salary adjustments,

transfers , promotions,

reductions in work force

2.Basis for comparison Performance related to

predetermined standards

of performance

Performance relative to

other similar employer

3. Technique of Appraisal Results oriented appraisal Employee ranking

4. Role of supervisor Counselor Judge

5. Distribution of

Evaluation Information

Employee & supervisor Employee, supervisor,

personnel todlers, others

involved in administrative

actions listed above



APPROACHES TO PERFORMANCE

APPRAISAL

� A casual , Unsystematic & open Haphazard Appraisal

� The Traditional & Highly Systematic Measurementof Employee

� The Behavioural approach , Emphasizing Mutual goal-setting



A casual, unsystematic & open

Haphazard Appraisal:

It was commonly used in the past, but now it has been

given place to a more formal method, the main basis being

shortly seniority or quantitative measures of quality of out

put for the rank- and- file personnel



The Traditional & highly

systematic measurement

Employee characteristics

Employee contributions or both

it evaluates all the performance in the same

manner, utilizing the same approach. so that

the ratings obtained of separate personnel arecomparable.



The Behavioral emphasizing mutual goal

setting According to McGregor, in the traditional approach

,the supervisor is placed in the position of playing

goods.

Providing mutual goal-setting &appraisal of progress

by both the appraiser & appraisee

Based on the behavioral value of fundamental trust,

capability and responsibility of human beings.



THE EVALUATION PROCESS

� ESTABLISH PERFORMANCE STANDARDS

� COMMUNICATE EXPECTATIONS TO EMPLOYEES

� MEASUPERFORMANCE RE ACTUAL PERFORMANCE

� COMPARE ACTUAL PERFORMANCE WITH STANDARDS

� DISCUSS THE APPRAISAL WITH THE EMPLOYEE

� IF NECESSARY, INITIATE CORRECT ACTION



METHODS, TECHNIQ UES OR TOOLS FOR

APPRAISING PERFORMANCE



Several methods and techniques of appraisal are available for measurement of Several methods and techniques of appraisal are available for measurement of

the performance of an employee. The widely used categorization is that giventhe performance of an employee. The widely used categorization is that given

by Strauss and Sayles. They have classified performance appraisal methodsby Strauss and Sayles. They have classified performance appraisal methods

into two.into two.

Traditional MethodsTraditional Methods

1. Straight Ranking Method

2. Man-to-Man Comparison Method

3. Grading

4. Graphic Rating Scales5. Forced Choice Description Method

6. Forced Distribution Method

7. Check Lists

8. Free From Essay Method

9. Critical Incidents

10. Group Appraisal

11. Field Review Method

Modern MethodsModern Methods

1. Assessment Centre

2. Appraisal by Results or

Management by objectives

3. Human Asset Accounting Method4. Behaviorally Anchored Rating

Scales



TRADITIONAL METHODS

Straight Ranking Method:Straight Ranking Method:It is the oldest and simplest method of performance appraisal, bywhich the man and his performance are considered as an entity bythe rater. No attempt is made to fractionalize the ratee or hisperformance; the ³whole man´ is compared with the ³whole man´

P aired Comparison Technique:P aired Comparison Technique:By this technique, each employee is compared every trait with allthe other persons in pairs one at a time.

ManMan--to Man Comparison Method:to Man Comparison Method:This method was used by the USA army during the First World War.Here, instead of comparing a ³whole man´ to a ³whole man´personnel are compared to the key man in respect of one factor at atime. This method is used in Job evaluation and is known as thefactor comparison method.



Grading method:

Under this system, the rater considers certain features and marks themaccordingly to a scale. The selected features may be analytical ability,cooperativeness, dependability etc. They may be: A-outstanding; B-verygood; C-good or average; D-fair; E-poor; and-B or (B-) very poor or hopeless.

Graphic or Linear Rating Scale:Graphic or Linear Rating Scale:

This is the most commonly used method of performance appraisal. Therating scale method is easy to understand and easy to use, and permits astatistical tabulation of scores. It is the most common evaluation tool usedtoday.

F orced Choice Description Method:F orced Choice Description Method:This method was developed after a great deal of research conducted for

the military services during World War II. It attempts to correct a raterstendency to give consistently high or consistently low ratings to all theemployees.



F orced Distribution Method:

This method was evolved by Joseph Tiffin after statistical work. This

system is used to eliminate or minimize rater bias, so that all personnel may

not be placed at the higher end or at the lower end of the scale. It requires

the rater to appraise an employee according to a pre-determined distribution

scale.

Check List:Check List:Under this method, the rater does not evaluate employee performance; he

supplies reports about it and the final rating is done by the personnel

department. A series of questions are presented concerning an employee to

his behavior. The value of each question may be weighed equally or certain

questions may be weighed more heavily than others.



F ree Essay Method:

Under this method, the supervisor makes a free form, open-ended appraisalof an employee in his own words and puts down his impressions about the

employee. The description is always as factual and concrete as possible.

No attempt is made to evaluate an employee in a quantitative manner.

Critical Incident Method:Critical Incident Method:

This method was developed following research conducted by the armed

forces in the United States during World War II. The essence of this system

is that it attempts to measure workers performance in terms of certain

µevents¶ or µepisodes¶ that occur in the performance of the ratee¶s job. These

events are known as critical incidents. The basis of this method is the

principle that ³ there are certain significant acts in each employees behavior

and performance which make all the difference between success and failure

on the job.



Group Appraisal Method:

Under this method, employee are rated by an appraisal group,consisting of their supervisor and three or four other supervisors

who have some knowledge of their performance. The supervisor

explains to the group the nature of his subordinates duties. The

group then discusses the standards of performance for that job, the

actual performance of the job-holder, and the causes of their particular level of performance, and offers suggestions for future

improvement, if any.

F ield Review Method:F ield Review Method:

Under this method, a trainer employee from the personnel

department interviews line supervisors to evaluate their respectivesubordinates. The appraisal is equipped with definite test questions,

usually memorized in advance, which he puts to the supervisor.



Important Advantages and Disadvantages of Appraisal Tools

Appraisal Tool Appraisal Tool Advantages Advantages DisadvantagesDisadvantages

1.Graphic Rating Scales1.Graphic Rating Scales (i) Simple to use; (ii) Provides a(i) Simple to use; (ii) Provides a

quantitative rating for eachquantitative rating for each

employee.employee.

(i) Standards may be unclear;(i) Standards may be unclear;

(ii) Halo effect, central tendency,(ii) Halo effect, central tendency,

leniency, bias can be the mainleniency, bias can be the main

problems.problems.

2. Alternatives Ranking2. Alternatives Ranking (i) Simple to use; (ii) Avoids(i) Simple to use; (ii) Avoids

central tendency and other central tendency and other problems of rating scales.problems of rating scales.

(i) Ratings may still not be(i) Ratings may still not be

Precise.Precise.

3. Paired Comparison3. Paired Comparison

MethodMethod

Results in more precise rankingResults in more precise ranking

than does alternative rankingthan does alternative ranking

More difficult than rankingMore difficult than ranking

4. Forced Distribution4. Forced Distribution

MethodMethod

Results in predeterminedResults in predetermined

number of people in each groupnumber of people in each group

Appraisal results depend on the Appraisal results depend on the

adequacy of original choice of adequacy of original choice of

cutcut--off points.off points.

5. Critical Incident Method5. Critical Incident Method Helps specify what is ³right´Helps specify what is ³right´

and ³wrong´ about theand ³wrong´ about the

employees performanceemployees performance

Difficult to rate or rankDifficult to rate or rank

employees relative to oneemployees relative to one

another another

6. BARS6. BARS Participation of employees inParticipation of employees in

developing the BARS leads todeveloping the BARS leads to

more accurate gaugemore accurate gauge

Very difficult to developVery difficult to develop



GENERAL DEMERITS OF TRADITIONAL TECHNIQ UES

� Managers generally are not qualified to assess personality traits, and mostmanagers are even not properly trained to conduct evaluation and

performance interviews. They have very vague notions of the purpose of

evaluations.

� Some managers discourage good performance by over-emphasizing

shortcomings and almost neglecting good work. Others have little effect on

poor workers because they tend to sugar-coat their criticisms. consequentlythe real message is lost.

� Raters personality also plays an important part in the effectiveness of

evaluation programmes. some raters are by temperament, overtly harsh

and give low ratings to all subordinates. Others are too lenient and give

everyone a good rating; some raters play favorites, some are victims of

µhalo effect¶.� The relative status of raters in their organization is a factor that is important

to the validity of performance appraisal. Using more raters or endorsements

by a superior reduces rater bias and increases validity of appraisal.



NEWER OR MODERN METHOD OF APPRAISAL AND CAREER DEVELOPMENT

1.1. APPRAISAL BY RESULTS OR MANAGEMENT BY OBJECTIVES (MBO)APPRAISAL BY RESULTS OR MANAGEMENT BY OBJECTIVES (MBO)

This method has been evolved by Peter Drucker.

MBO has been defined as:

(1) It is defined ³as a process where by the superior and subordinatemanagers of an organization jointly identify its common goals,

define each individuals major area of responsibility in terms of

results expected of him and use these measures as guides for

operating the unit and assessing the contribution of each of its

members.

(2) An effort to blend and balance all the goals of all key personnel

(3) An evaluation mechanism



MBO P rocess

It consists of five basic steps as follows:

1. Set Organization goals

2. Joint goal setting

3. Performance reviews

4. Set check posts

5. Feed back



BENEFITS OF MBO PROGRAMME

MBO helps and increases employee motivation

Managers are more likely to compete with themselves than with

other managers

MBO results in a ³means ends´ chain

MBO reduces role conflict and ambiguity MBO provides more objective appraisal criteria

MBO forces and aids in planning

MBO identifies problems better and early

MBO identifies performance deficiencies

MBO helps the individual manager to develop personal leadership



2. ASSESSMENT CENTRE METHOD

The purpose of this method was and is to test candidates in a social

situation, using a number of assessors and a variety of procedures.

The most important feature of the assessment centre is job-related

simulations.

Assessments are made to determine employee potential for purposes of promotion and is generally done with the help of a

couple of employees and involves a paper-and-pencil test,

interviews and situational exercises.



3.HUMAN ASSET ACCOUNTING METHOD

Refers to activity devoted to attaching money estimates to the valueof a firm¶s internal human organization and its external customer

good will.

4. BEHAVIOURALLY ANCHORED RATING SCALES (BARS)4. BEHAVIOURALLY ANCHORED RATING SCALES (BARS)

The procedure for BARS is usually five stepped:

Generate Critical Incidents

Develop Performance Dimensions

Reallocate Incidents

Scale of Incidents

Develop Final Instrument



FACTORS DETERRING OBJECTIVE EVALUATION OR PROBLEMS OF

APPRAISAL

There are many significant factors whichdeter or impede objective evaluation.These factors are:

1.1. The Halo Effect or Error The Halo Effect or Error : Theµhalo¶ effect refers to the tendencyto rate an individual consistentlyhigh or low or average on the

various traits, depending uponwhether the rater¶s over-allimpression of the individual isfavorable or not.

2.2. Leniency or Strictness TendencyLeniency or Strictness Tendencyor Constant Errorsor Constant Errors:1. Positive leniency error

2. negative leniency error

3. The Central Tendency ProblemThe Central Tendency Problem:: Itassigns ³average ratings´ to all theemployees with a view to avoidingcommitment or involvement

4.4. Similarity Error Similarity Error :: This type of error occurs when the evaluator rates

other people in the same way heperceives himself.

5.5. Miscellaneous Biases:Miscellaneous Biases: Biasagainst employees on ground of sex,race, religion or position is also acommon error in rating. The rater may also be influenced byorganizational influence and give

higher ratings to those holdinghigher positions.

6.6. Social DifferentiationSocial Differentiation:: It makesevaluations using µtrait¶ criteriaunreliable.



ETHICS OF APPRAISAL

In any performance appraisal, due consideration must be given to the ethics of

appraisal. In this connection, M.S. Kellog has suggested the following do¶s and don'ts:

Don¶t appraise without knowing why the appraisal is needed;

Appraise on the basis of sufficient information and relevant

information;

Be honest on your assessment of all the facts you have obtained;

Don¶t write one thing and say another;

In offering an appraisal, make it plain that this is only your personal

opinion of the facts as you see them;

Pass on appraisal information only to those who have good reason to

want it;

Don¶t imply the existence of an appraisal that has not been made;

Don¶t accept another¶s appraisal without knowing the basis on which it

was made.

human resource management-2003

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