PERFORMANCE APPRAISAL

Performance Appraisal:
It is an objective assessment of an individuals performance against well defined benchmarks. PA is a formal, structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organisation and society all benefit. Evaluating factors includes job knowledge, quality and quantity of output, leadership qualities, supervision, co-operation, dependability, judgment, versatility, health, etc.

Relationship of PA and job analysis:

Job Analysis

Performance Standards Translate job requirements into levels of acceptable or unacceptable performance

Performance Appraisal

Describes work and personnel requirement of a particular job

Describes the jobrelevant strengths and weaknesses of each individual

Main Purpose of Employee Assessment:

To effect promotions 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 pay scales have not been fixed.

To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To improve communication. For determining whether HR programes such as selection, training, and transfers have been effective or not.

Multiple Purposes of PA:

General Purpose Developmental Issues Specific Purpose Identification of individual needs Performance Feedback Determining Transfers and Job Assignments Identification of Individual Strengths Salary Promotion Retention or Termination Identification of poor performers HR Planning Determining Organization Training Needs Evaluation of Organizational Goal Achievement Evaluation of HR systems Criteria for Validation Research Documentation for HR Decisions Helping to Meet Legal Requirements

Administrative Uses/ Decisions

Organizational Maintenance/ Objectives

Documentation

Performance Appraisal contributes to firms Competitive Advantage:

Improving Performance Strategy And Behavior Making Correct Decisions

Competitive Advantage
Values And Behavior Minimizing Dissatisfaction and Turnover Ensuring Legal Compliance

Appraisal Process:
Objectives of Performance Appraisal Establish Job Expectations Design an Appraisal Program Appraise Performance Performance Interview Use Appraisal Data for Appropriate Purposes

1. Objectives of Appraisal:
It includes effecting promotions and transfers, assessing training needs, awarding pay increases, etc. Appraisal in future would assume systems orientation from traditional way, which aims at improving the performance instead of assessing it. Towards end, appraisal system seeks to evaluate opportunity factors including physical environment such as noise, ventilation and lightings, available resources as human and computer assistance and

Performance Appraisal Systems:

Traditional Systems System oriented

Guiding Value

Attribution to individual

Attribution to system

Primary Goals

Control, documentation

Development, problem solving Facilitative, coaching

Leadership practices

Directional, Evaluative

Appraisal Frequency

Occasional

frequent

Degree of formality

High

Low

Reward Practices

Individual Orientation

Group Orientation

2. Establish Job Expectations:

The second process in job appraisal process which includes informing the employee what is expected from him/her on the job. Normally a discussion is held with the superior to review the major duties contained in the job description. Individuals are not expected to begin the job until they understand what is expected of them.

3. Design Appraisal Program:

Formal Vs Informal What Methods? Whose Performanc e? Who Are the Raters?

When To Evaluate?

Appraisal Design

What To Evaluate? How To Solve?

What Problems?

PROBLEMS OF RATING
Performance appraisals are subjected to a wide variety of inaccuracies & biases referred to as rating errors. These errors occurs in raters observations, judgment, & information processing, and can effect assessment results.

TYPES OF RATING ERRORS

Leniency or Severity Central Tendency Halo Error Rater Effect Primacy & Recency Effects Perceptual Set Performance Dimension Order Spillover Effect Status Effect

Leniency or Severity: Performance appraisal in this case become subjective on the part of the rater. One rater may judge a particular criterion with severity, the other rater may judge the same with leniency. Example: Distribution of Judgment on Written Communication skill by Lenient & Severe Rater.

Central Tendency: This occurs when the employees are incorrectly rated near the average or middle of the scale. In such situation it becomes difficult to distinguish between excellent performance & poor performance. This error leads to range restriction. Halo Error: This occurs when one aspect of an individuals performance influences the evaluation of entire performance of the individual. Rating the employees separately on each of the performance criterion & encouraging raters to guard against the halo effect are the two ways to reduce the halo

Raters Effect: This occur because of factors like favoritism, stereotyping, & hostility. In such cases the rater does take into consideration the actual outcomes or behaviors, but gives judgment on the basis of his/her attitude towards the ratee. Sex, age, race, & friendship biases are examples of this type of error. Primacy & Recency Effects: The raters rating is heavily influenced by behavior exhibited by the ratee during the early stages of the review period (primacy) or by outcomes or behavior exhibited by the ratee near the end of the review period (recency). Composite performance of the ratee is one way to guard

Perceptual Set: This occurs when the raters assessment is influenced by previously held beliefs. Example if the Supervisor has a belief that employees hailing from one particular region are intelligent & hard working, then his subsequent rating for employees hailing from that region tends to be favorably high. Performance Dimension Order: Two or more dimensions on the performance follow or closely follow each other & both describes a similar quality. The rater rates the first dimension accurately & then rates the second dimension similar to the first because of the proximity.

Spillover Effect: Referring to past performance appraisal to unjustifiably influence current rating. Past rating, good or bad, results in similar rating for current period although the demonstrated behavior does not deserve the rating, good or bad.

Status Effect: It refers to overrating of employees in higher-level job or jobs held in high esteem, and underrating employees in lower-level job or jobs held in low esteem.

SOLVING RATERS PROBLEM

The best way to overcome the raters problem is to provide training. Training is not a cure-all for all the ills of the appraisal systems. From practical point of view there are many other factors like: union pressure turnover rates time constraints But training can improve the appraisal system to the extent of distortion that occurs due to the raters errors such as halo, leniency, central tendency & bias. Example raters are shown video-tape of jobs being performed & asked to rate the workers.

What should be Rated?

There are six criterion for assessing performance: Quality: The degree to which the performance of an activity conforms with the ideal way of performing that activity.

Quantity: The amount produced, expressed in monetary terms, no. of units, or no. of completed activity cycles. Timeliness: The degree to which an activity is completed or a result is produced, at the earliest time desirable from the standpoint of both coordinating with the output of others and of maximizing the time available for other activities.

Cost Effectiveness: The degree to which the organization's resources is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource. Need for Supervision: The degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome. Interpersonal Impact: The degree to which a performer promotes feeling of self-esteem, goodwill & co-operation among co-workers & subordinates.

TIMING OF EVALUATION
How often should the employee be assessed? The general trend is to evaluate once in three months, or six months, or once in a year. according to a survey conducted in 1997, 70% of the organization conduct performance appraisal once a year. Newly hired employees are rated more frequently than older ones. Frequent assessment is better than phased evaluation because in former case we get constant feedback enabling a person to improve his/her performance if

METHODS OF APPRAISAL
There are numerous methods to measure the quality & quantity of employees job performance. Each of the method is effective for some purpose, for the organizations. Broadly, all the approaches to appraisal can be classified into: Past-Oriented Method Future-Oriented Method

PAST-ORIENTED METHOD
Rating Scale: In this technique for appraisal the performance criterion such as dependability, output, attendance, attitude, co-operation, and like are rated on the scale ranging from excellent to poor. Advantages: adaptability relatively ease use low cost Disadvantages: raters biases are likely to influence evaluation especially in case of subjective performance criterions.

Checklist: Under this method, a checklist of statements on the traits of the employee and his/her job is prepared in two columns-viz, a Yes column and No column. The rater is just supposed to tick Yes or No in front of those traits being evaluated. When points are allotted to the checklist it becomes a weighted checklist. Advantages: economy ease of administration limited training of rater standardization Disadvantages: susceptibility to raters biases (especially halo effect) use of personality criterion instead of performance

Forced Choice Method: In this, the rater is given a series of statement about the employees. These statements are arranged in blocks of two or more, and rater indicates which statement is most or least descriptive of the employees. In this method the rater if forced to select statements which are readymade. Example: Typical statements are Learns Fast ....works hard work is reliable..performance is a good example for Absent often...others usually tardy Advantages: absence of personal bias in rating Disadvantages: statements may not be properly framed-they may

Forced Distribution Method: One of the error in rating is central tendency- clustering of large no. of employees around a high point on a rating scale. Forced distribution helps in overcoming this problem by compelling the rater to distribute the ratees on all points on the rating scale. The method is based on the assumption that the employees performance level conforms to a normal statistical distribution.

Critical Incidents Methods: The approach focuses on certain critical behavior of an employees that make all the difference between effective & non effective performance of a job. Such incidents are recorded by superiors as & when they occur. Advantages: evaluation is based on actual job behavior the approach has descriptions in support of particular rating of employee it also reduces recency bias chance that subordinates will improve because they learn, what is expected from them Disadvantages: negative incidences are more noticeable than positive ones Overly close supervision may result

Behaviorally Anchored Rating Scales: BARS are rating whose scale points are determined by statements of effective and ineffective behaviors. A rater is expected to indicate which behavior on each scale best describes an employees performance. BARS has following features: Area of performance to be evaluated are identified & defined by the peoples who will use the scales. The scales are anchored by descriptions of actual job behavior that supervisor agree, represents specific levels of performance. All dimensions of performance to be evaluated are based on observable behaviors & are relevant to the job being evaluated since BARS are tailormade for the job. Since the raters who will actually use the scales

 FIELD REVIEW METHOD:

Appraisal by someone from outside the assessees own department, usually someone from the corporate office or HR office. The outsider reviews employee records and holds interviews with the ratee and his or her superior. It is used for making promotional decision at the managerial level. Drawbacks: An outsider is not usually familiar with conditions in an employees work environment.

PERFORMANCE TESTS AND OBSERVATIONS:

Test of knowledge or skills to measure the potential more than actual performance.

CONFIDENTIAL RECORDS:

Maintained mostly in government departments. The report has following 14 itemsAttendance, Self-expression, Ability to work with others, Leadership, Initiative, Technical ability, Ability to understand the new material, Ability to reason, Originality and resourcefulness, Areas of work that suits the person best, Judgement, Integrity, Responsibility, Defect 12 of these are filled on a 4-point grade scale. Integrity and justification are considered

ESSAY METHOD:

The rater must describe the employee of broad categories, such as i. The raters overall impression of the employees performance ii. The promotability of the employee iii. The jobs that the employee is now able or qualified to problem iv. The strength and weaknesses of the employee v. The training and the development assistant required by the employee The strength of this method depends on the writing skills and analytical ability of the rater.

 Paired-comparison method- the appraiser compares each employee with every other employee, one at a time. The no. of comparisons may be calculated by following N ( N 1) formula
2
,Where stands for no. of employees

FUTURE ORIENTED APPRAISALS: This technique is used because of following reasons It is not enough if only the past performance is assessed. Performance in the coming days is equally important.

Commonly used techniques: Management by Objectives

Psychological Appraisals

 MANAGEMENT BY OBJECTIVES:

1. Establishment of Goals 2. Setting the performance standard 3. Actual level of job attainment is compared with the goals agreed upon. 4. Establishing new goals and new strategies for goals not previously attained.

It is used with managerial personnel and employees who have a fairly wide range of flexibility and selfcontrol in their jobs.
Drawbacks:

Not applicable for all jobs in all

 PSYCHOLOGICAL

APPRAISALS:

When psychologists are used for evaluations, they asses an individuals future potential and not past performance. The appraisal consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations.
ASSESSMENT

CENTERS:

An assessment center is a central location where managers may come together to have their participation in job-related exercises evaluated by trained observers.
The characteristics assessed in a typical assessment center include assertiveness, persuasive ability, communicating ability, planning

360-DEGREE FEEDBACK: A systematic collection of performance data on an individual or group, derived from a number of stakeholders (immediate supervisors), team members, customers, peers, and self. It facilitates greater self-development of the employee. It provide formalized communication links between an employee and his or her internal or external customers.
Drawbacks: Receiving feedback on performance from multiple sources can be intimidating. The technique take a long time on selecting the rater, designing questionnaires, and analyzing the data.

4. Performance Interview It has 3 goals: To change behavior of employees whose performance does not meet organizational requirements or their own personal goals. To maintain the behavior of employees who perform in an acceptable manner. To recognize superior performance behaviors so that they will be continued.

5. Use of Appraisal Data: Data and information outputs of a performance-appraisal program can critically influence the coveted employeremployee reward opportunities. It could be useful in following areas of HRM: I. Remuneration administration II. Validation of selection programs III. Employee training and development programs IV. Promotion, transfer and lay-off decisions

CHALLENGES OF PERFORMANCE APPRAISAL

Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed. Align organizational objectives to individual aspirations. Clear growth paths for talented individuals.

Provide new challenges to rejuvenate careers that have reached the Plateau stage.
Forge a partnership with people for managing their careers.
(contd)

CHALLENGES OF PERFORMANCE APPRAISAL

Empower employees to make decisions without the fear of failing. Embed teamwork in all operational processes. Debureaucratise the organization structure for ease of flow of information.

LEGAL ISSUES ASSOCIATED WITH PERFORMANCE APPRAISAL

Performance appraisal data are used to make many important HR decisions (e.g. pay, promotion, training, transfer, and termination). The appraisal system is a common target of legal disputes by employees involving charges of unfairness and bias.

(contd)