Performance Appraisal

Chapter- 10

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 Definition

• Performance appraisal can be defined

as the process of evaluating the
performance of an employee and
communicating the results of the
evaluation to him for the purpose of
rewarding or developing the employees.

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 Objectives

• Setting targets and goals as

performance standards
• Evaluating employee performance
• Identifying training and development
needs
• Rewarding performance
• Improving performance

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 The process
• Determination of standards or
performance based on the organizational
objectives and the job description.
• Measurement of performance against the
pre-determined goals and standards.
• Matching the performance with the
standards
• Communicating the results.
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 The appraisers

• Self appraisal
• Supervisors
• Peers
• Customers
• Subordinates

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 Performance Appraisals
Method
• Traditional method
• Modern Method

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 Traditional Method
• Management by Objective
• Graphic Rating Scale
• Work standards approach
• Essay appraisal
• Critical incident method
• Forced choice rating method
• Ranking method
• Checklist
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 Modern method

• Behaviorally Anchored Rating Scale

• 360 degree performance appraisal
• Team Appraisals
• Balanced Scorecard Method

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 Critical Incident method
Ex: A fire, sudden breakdown, accident

Workers reaction scale

A informed the supervisor immediately 5

B Become anxious on loss of output 4
C tried to repair the machine 3
D Complained for poor maintenance 2
E was happy to forced test 1

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 Checklist method
•Simple checklist method
•Weighted checklist method
•Forced choice method

Simple checklist method:

Is employee regular Y/N
Is employee respected by subordinate Y/N
Is employee helpful Y/N
Does he follow instruction Y/N
Does he keep the equipment in order Y/N

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 Weighted checklist
method

weights performance rating

(scale 1 to 5 )
Regularity 0.5
Loyalty 1.5
Willing to help 1.5
Quality of work 1.5
Relationship 2.0

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 Forced choice
method

Criteria Rating

1.Regularity on the job Most Least

•Always regular
•Inform in advance for delay
•Never regular
•Remain absent
•Neither regular nor irregular

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 Graphic Rating Scale
• Continuous Rating Scale
• Discontinuous Rating Scale

Employee name_________ Deptt_______

Rater’s name ___________ Date________
------------------------------------------------------------------------
Exc. Good Acceptable Fair Poor
5 4 3 2 1 _
Dependability
Initiative
Overall output
Attendance
Attitude
Cooperation
Total score
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Sugandha AgarwalRating Scale 13
 Indifferent
Enthusiastic

Attitude

No Interested Very
Interest enthusiastic

Discontinuous Rating Scale

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 BARS( behaviorally Anchored
rating scale)

• BARS are said to be behaviorally

anchored as the scales represent a
range of descriptive statements of
behavior varying from the least to the
most effective.
• A rater is expected to indicate which
behavior on each scale best descries an
employee’s performance.

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 MBO Process

• Set organizational goals

• Defining performance target
• Performance review
• feedback

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 Performance Appraisal
Methods
• Group Appraisal
• Ranking
• Paired comparison
• Forced distribution
• Performance tests Field review
technique

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 Ranking method

Employee Rank

A 2

B 1

C 3

D 5

E 4
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 Paired comparison
A
method
B C D E Final Rank
A - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - + 4

E - - - - - 5
No of Positive evaluation
Total no. of evaluation * 100 = employee superior evaluation

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 Forced Distribution method

No.
of
employees
10% 20% 40% 20% 10%
poor Below average good Excellent
average

Force distribution curve

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 Field review method
Performance subordinate peers superior customer
Dimension

Leadership ^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^
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 Balance Scorecard
The two basic features of the balanced
scorecard are:

• A balanced set of measures based on. the

four perspectives of balanced scorecard

• Linking the measures to Employee

Performance

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The four Perspectives recommended by Kaplan and Norton
for the managers to collect information are:

• The financial measures – The financial measures include

the results like profits, increase in the market share,
return on investments and other economic measures as
a result of the actions taken.
• The customers’ measures - These measures help to get
on customer satisfaction, the customer’s perspective
about the organization, customer loyalty, acquiring new
customers. The data can be collected from the
frequency and number of customer complaints, the time
taken to deliver the products and services, improvement
in quality etc.

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• The internal business measures – These are the measures
related to the organization’s internal processes which help to
achieve the customer satisfaction. It includes the infrastructure,
the long term and short term goals and objectives,
organizational processes and procedures, systems and the
human resources.

• The innovation and learning perspective. The innovation and

learning measures cover the organization's ability to learn,
innovate and improve. They can be judged by employee skills
matrix, key competencies, value added and the revenue per
employee.

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 360 degree feedback

• The 360 degree technique is

understood as systematic collection of
performance data on an individual or
group, derived from a number of
stakeholder- the stakeholder being the
immediate supervisor, team members,
customer, peers, and self.

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 Common Rating Errors
• Halo Effect
A person outstanding in one area tends to
receive outstanding or better than average
ratings in other areas as well, even when
such a rating is undeserved
• Negative Effect

A low rating in one area yields lower than

deserved ratings for other accomplishments
• Central Tendency

Assigning an average rating for all qualities

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• Confrontation Avoidance
• Discomfort with giving negative feedback
• Initial Performance
Rating an employee based solely on initial
impressions of performance
• Recency
Rating an employee based solely on most
recent performance which overshadows the
entire year’s performance

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