session 7 performance appraisal system

8/3/2019 Session 7 Performance Appraisal System

1/37

PERFORMANCE APPRAISAL SYSTEMCorporate Score Card

OUTLINE

Definition

MeaningObjective /Need/Purpose / Importance

Company Strategies and PAStechniques

Process of PA

Essentials of Good PASMethods of PAS

Problems of PA


2/37

Definition & Meaning

It is the systematic evaluation of the individual with

respect to his or her performance on the job and his or herpotential for development

Performance refers to the accomplishment of tasks

A formal, structured system of measuring and evaluatingan employee's job related behaviors and outcomes todiscover how and why the employee is presently performingon the job and how the employee can perform moreeffectively in the future so that all the three cadres arebenefited i.e. the employee, organization, & society

PA indicates the desired performance level, level of actual

performance and the gap between these two


3/37


4/37

Objective /Need/Purpose / Importance

It helps in rectifying performance deficiencies & to set

new standards Eg.- Raymonds

Effective to take decisions regarding promotions andtransfers, pay raise where regular pay scales have not beenfixed Eg- Indian Rayon

To contribute to the employee growth & developmentthrough training and development Eg.-Tata Power

To provide information for making decision regarding layoff, retrenchment etc. Eg- Hyundai Engg

To prevent grievances and in disciplinary activities EgGalxo


5/37

Repetition of above slide into 4 broad categories


6/37

Company Strategies and PAStechniques

Strategies PA- Techniques Appraiser

Stability &

Sustainable

Growth

Traditional Superior

Expansion,Diversification,

M &A

Modern 360 DegreeAppraisal

Retrenchment Traditional Superior

Low Cost

Leadership, New

Product

Differentiation

Modern 360 Degree

Appraisal


7/37

Types of Appraisal Confirmation AppraisalThis determines whether the

assessment of the organization as regards the knowledge,skills and experience of the employee has been provenduring the testing period.

Potential Appraisal

People at the senior most levels inthe organizations hierarchy generally carry out potentialappraisals. It is more objective

Periodic AppraisalSeveral organizations carry thepractice of appraising their performance against targets aswell as assessing the candidates traits. Eg aggressivenessv/s assertiveness


8/37

Degrees of Appraisals

90 degree appraisal Boss & subordinate

180 degree appraisal Boss ,subordinate, peer

280 degree appraisal not applicable

360 degree appraisal Boss, subordinate,peers,

customers / clients

720 degree appraisal Under development


9/37

Process of PA

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purposes

Individual

Systems

Formal /Informal

App

Whose performance is

app ?

Who are raters

When to evaluate

How to evaluate

What methods to be used


10/37

Essentials of Good PASStandardized PAS

Uniformity of PAS

Defined Performance Standards

Trained Raters

Usage of relevant rating tools or methods

PAS should be based on job analysis

Consistent Documentation


11/37

Difference PA & PMS

Performance Appraisal Performance Mgmt System

PA is just a mechanism of controlling

employee performance through--salary

administration, reward administration,

promotion and taking disciplinary action. it

focuses on the method of appraisal.

PM is about managing the performance of the

employees by setting KRAs( key result areas)

and KPAs ( key performance areas) so that

people know that what targets they are expected

to achieve and what activities will be required to

accomplish your goals

PA the motive is to reward

People at the end or in the midst of theyear by means of incentives

PM the motive is to manage theperformance throughout the year and not

just judging it at the end of the year.

The main aim is to reward and notdevelop. main aim is development of performance tomake it reach to the level of excellence.

PA is just a systematic evaluation of theemployee based on traits and

performance.

PMs has 3 stages involved in it goal setting& motivation; encouraging process that is

applied; rewards and consequences.


12/37

Methods of PAS

Past Oriented Future Oriented

Rating Scales

Checklists

Forced Choice Methods

Forced Distribution Method

Critical Incident Method

Behaviorally Anchored Scales

Field Review Method

Performance Tests & Observations

Annual Confidential reports

Essay Method

Comparative Evaluation Approach

Management By Objectives

360 Degree Appraisal

Psychological Appraisal

Assessment Centers


13/37

Traditional Techniques Rating Scales

Simplest and popular method

Typical rating scale consisting of numerical scales each representing a

job related performance criterion ( eg- attendance, punctuality

cooperation etc rated from excellent to poor )

The rater calculates the no of score and links the incentives or salary

depending upon the score.

Checklists

A check list of statements on the traits of the employee and his or her

job is prepared in two columns Yes & No

Once this list is checked then the total calculated

Its easy, economical, ltd training required for the rater.

But has halo effect as disadvantage


14/37

Checklist Appraisal Questions

Yes No1. Does the employee willingly cooperate

with others in completing work assignments? ___ ___2. Does the employee have adequate job knowledge

to perform duties in a satisfactory manner? ___ ___3. In terms of quality, is the employees work acceptable? ___ ___4. Does the employee meet deadlines for the completion

of work assignments? ___ ___5. Does the employees record indicate ___ ___

unexcused absences?

6. Does the employee follow safety rules and regulations? ___ ___


15/37

Graphic Rating ScaleName_____________________________ Dept.___________________________Date_______________

Outstanding Good Satisfactory Fair Unsatisfactory

Quantity Volume of acceptableof work work under normal conditions ___ ___ ___ ___ ___

Comments:

Quality Thoroughness, neatness, and ___ ___ ___ ___ ___of work accuracy of work

Comments:

Knowledge Clear understanding of the facts ___ ___ ___ ___ ___of job or factors pertinent to the job

Comments:

Personalqualities Personality, appearance, ___ ___ ___ ___ ___

sociability, leadership, integrityComments:


16/37

Performance Tests & Observations

With a ltd no of jobs, employee assessment may be based upon a test ofknowledge or skills. The test may be of paper and pencil variety or an

actual demonstration of skills. These should be reliable and validated.Annual Confidential reports

Confidential records are maintained mostly in govt depts. Though itsapplication in the industry is not ruled out. For eg. ITI called this ACR and

measured attendance, self expression, ability to work with others etc

Essay Method

Here we emphasize the overall performance based on Ss & Ws ofemployees performance rather than specific dimensions

By asking supervisors to enumerate specific egs of employee behaviorminimizes bias to some extent.

Essays are not amenable for evaluation and analysis

Quality of analysis depends upon the writing ability and not on employeeperformance


17/37

Cost Accounting approachThis method evaluates performance form the monetary returns the employee yields to his orher organization.

A relationship is established between the cost included in keeping the employee and thebenefit the organization derives from him or her.

Comparative Evaluation Approach

These are collection of different methods that compare one workers performance withthat of his or her coworkers.

Generally conducted by supervisors. They are useful in deciding merit pay increases,promotions, and organizational rewards.

Ranking Method

In the first one the supervisor ranks his or her subordinates in the order of their merit.The rater finds the employee with best performance and worst performance rates theformer best and later worst.Eg- Bajaj Tempo &BASF

Paired Comparison Method

The appraiser appraises each employee with every other employee one at a time. EgGodrej Soaps, NOCIL


18/37

Forced Choice Methods

The rater is given statements about the employees. These statements have to bearranged in blocks of two or more. and the rater indicates which statement is

most or least descriptive of the employeeThe rater is forced to select statements which are readymade.

Absence of personal bias , Disadvantage- if statements not properly framed Eg-Ceat , Modern threads follow this

Forced Distribution Method

This method prevents the rater from rating the employee too high or too low.

The rater has to distribute his rating in a pattern to confirm normal frequencydistribution

It is assumed that the employee performance levels conform to a bell shapedcurve.

Critical Incident MethodThe approach focuses on certain critical behaviors of an employeethat make all the difference between effective and no effectiveperformance of a job. Such incidents are then recorded by thesuperiors. Evaluation is based on actual job behavior.

M d M th d


19/37

Modern Methods

MBOEg - L & T , HALIt is a process whereby the superior and subordinate

managers of an organization jointly identify its commongoals, define each individuals major areas of responsibilityin terms of results expected of him and use these measures asguides for operating the unit and assessing the contributions

of each of its membersDefn 2

MBOA system approach to managing and organizationwhere those accountable for directing the organization first

determine where they want to take the organizationA process requiring & encouraging all key managementpersonnel to contribute their maximum to achieve overallobjectives

An effort to blend & balance all the goals of all key personnel


20/37

Objectives

To change behaviors and attitudes towards

getting the job done.

It is results oriented, it is performance that counts

It is management system and philosophy thatstress goals rather than methods

It provides responsibility and accountability andrecognizes that employees have needs forachievement and self fulfillment


21/37

Process

Set Organizational Goals

Joint Goal Setting

Performance Reviews

Set Check posts

Feedback


22/37

BenefitsIt increases employee motivation

Managers are more likely to compete withthemselves

It reduces role conflicting and ambiguity

It forces & aids in planning

It identifies problems at an early stage

It helps individual manager to develop interpersonal

skills, leadership skills , listening, planning, counseling,motivatin and evaluatin


23/37

Assessment Centers First developed in the US & UK 1943

Used for evaluating executive or supervisory potential. A central location where mgrs come together have their

participation in job related exercises evaluated by trainedobservers

To observe the participants over the period of time byobserving their behavior through various exercises like inbasket, work groups, role playing etc.

Characteristics such as assertiveness, persuasive ability,planning and organization ability self confidence creativityetc is checked.

Eg -Crompton Greaves,Eicher, HLL, Modi Xerox,ICICI Bank, Tatas, Birla Group


24/37

Psychological appraisal

They consist of in-depth interviews, psychological tests,consultations and discussions with the supervisors,

employees etc

An evaluation of the employees intellectual, emotional,

motivational and other related characteristics thatsuggest individual potential and may predict future

performance.

From these evaluations placement and development

decisions may be made to shape the person career.


25/37

Behaviorally Anchored Scales

Sometimes called behavioral expectation scale are

rating scales whose scale points are determined by

statements of effective and ineffective behavior. They

are said to be behaviourally anchored in that the scales

represent a range of descriptive statements of behaviour

varying from the least to the most effective


26/37

Behaviorally AnchoredRating Scale (BARS)

Engineers Name: _________________________

9 ___ This engineer applies a full range of technical skills and can beexpected to perform all assignments in an excellent manner.

8 ___

7 ___ This engineer is able to apply in most situations a good rangeof technical skills and can be expected to perform mostassignments well.

6 ___

5 ___ This engineer is able to apply some technical skills and canbe expected to complete most assignments adequately.

Problems of PA


27/37

Problems of PA1. Rating Biasesage, color, sex, favoritism etc

2. Halo Effectthe tendency of raters to excessively depend on therating of one trait or behavioral considerations. To minimize this oneshould rate the employees on one trait and then the next. Eg-employee working late be rated high on productivity.

3. Error of Central TendencyRaters follow a play safe policywherein they rate the employees near the central point and avoid

them rating towards the ends.4. Leniency & Strictnessthis crops up when some raters have a

tendency to be liberal in their rating.

5. Personal Prejudiceif the rater dislikes an employee he may ratethem at the lower end, which distorts the rating purpose.

6. Recency EffectRaters generally remember the recent actions of theemployees and rate them

7. Failure of Superiors

8. Negative Ratings

9. Horns effect

the appraiser bases his report on negative trait notgiving any weight age to positive traits


28/37

Tackling the Challenges in PA

Open Meeting

Encouraging Employees

AppraiserTelling Facts

Counseling Meetings


29/37

360 Degree Appraisal

Immediate Supervisors

Peers /Subordinates

Self Appraisals

Users oftheservices /Consultants

Eg- Ponds, Grasim, Hewlett Packard, Colgate - Palmolive


30/37

The Concept

For example, subordinate assessments of a supervisors performance can provide

valuable developmental guidance, peer feedback can be the heart of excellence in

teamwork, and customer service feedback focuses on the quality of the teams or

agencysresults.


31/37

The Process


32/37

Companies using 360 degreeperformance appraisalsBellcore

International

Ltd(1998)

Johnson &

Johnson

Ltd(1980s)Wipro

Technologies Ltd

(Dec17th 2002)

Xerox (1980s)

IBM (1980)

Bell Atlantic (1980)

Co examples of


33/37

Co examples of

Performance Appraisal System

Co Name PA System

Xerox Provide a core set of metricsfor use across the

organizationToyota Focus performance reviews

on goals rather thannumbers to ensure

employee alignmentFedex Design a balance scorecard

performance mgmt system.


34/37

Modern performance review

Goal Setting

Progress Review

Performance Review

720 Feedback provides a comparison of a participant'sresults over a period of time, often 12-18 months. This

comparison informs participants of their developmental

progress and gives them an opportunity to update and

change their action plan.


35/37

Bell shaped appraisal in BPO

A

B+ B+

BB


36/37

Performance appraisal at TCS

Balance score card on four parameterson 1-5 scale

Financial

Internal Customers Growth

Five scale = superstar One scale = underperformer


37/37

Performance appraisal at Sunmicro system

Forced ranking - rank and yank

Employees are ranked in three groups

top 20% - superior

next 70% - standard

remaining 10% - underperformers

Forced ranking - rank and yank in

Enron corporation produced hotbed ofachievers" -

session 7 performance appraisal system

Documents