Seminar in Economic Policy SEMINAR IN ECONOMIC POLICY THESIS ON MULTI RATER/ SOURCE PERFORMACE APPRAISAL HYPOTHESIS “Employee performance evaluation is perceived to be better in 360 degree multi-source feedback than in single source feedback system.” SUBMITTED TO: M R. A SHRAF J ANJUA SUBMITTED BY: S HAHZAD s ALIM I D: 2001-1-27-1859 1
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Seminar in Economic Policy
SEMINAR IN ECONOMIC POLICY
THESIS ON MULTI RATER/ SOURCEPERFORMACE APPRAISAL
HYPOTHESIS
“Employee performance evaluation is perceived to be better in 360 degree multi-source
feedback than in single source feedback system.”
SUBMITTED TO: M R. A SHRAF J ANJUA
SUBMITTED BY: S HAHZAD s ALIM
I D: 2001-1-27-1859
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Seminar in Economic Policy
HYPOTHESIS
“Employee performance evaluation is perceived to be better in 360 degree multi-source
feedback than in single source feedback system.”
OBJECTIVE OF THESIS
The purpose of my thesis is to study whether the Multi source performance appraisal is
more comprehensive, credible and effective performance measure for the organization as
compared to the single rater appraisal system.
INTRODUCTION
MULTI RATER/SOURCE PERFORMANCE ASSESSMENT
(360-DEGREE)
CONCEPT
Typically, performance appraisal has been limited to a feedback process between
employees and supervisors. However, with the increased focus on teamwork, employee
development, and customer service, the emphasis has shifted to employee feedback from
the full circle of sources.
.
It is a tool that provides each employee the opportunity to receive performance feedback
from his or her supervisor and four to eight peers, reporting staff members, co-workers
and customers. 360-degree feedback allows each individual to understand how others
view his/her effectiveness as an employee, co-worker, or staff member. The feedback
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provides insight about the skills and behaviors desired in the organization to accomplish
the mission, vision, and goals and live the values. The feedback is firmly planted in
behaviors needed to exceed customer expectations.
The organizational culture and mission must be considered, and the purpose of
feedback will differ with each source. For example, subordinate assessments of a
supervisor’s 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 team’s or agency’s results. The objectives of performance appraisal and the
particular aspects of performance that are to be assessed must be established before
determining which sources are appropriate.
SELF-ASSESSMENT
This form of performance information is actually quite common but usually used only as
an informal part of the supervisor-employee appraisal feedback session. Supervisors
frequently open the discussion with: “How do you feel you have performed?” In a
somewhat more formal approach, supervisors ask employees to identify the key
accomplishments they feel best represent their performance in critical and non-critical
performance elements. In a 360-degree approach, if self-ratings are going to be included,
structured forms and formal procedures are recommended.
BENEFITS
The most significant contribution of self-ratings is the improved communication
between supervisors and subordinates that results.
Self-ratings are particularly useful if the entire cycle of performance management
involves the employee in a self-assessment. For example, the employee should
keep notes of task accomplishments and failures throughout the performance-
monitoring period.
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SUPERIORS
Evaluations by superiors are the most traditional source of employee feedback. This form
of evaluation includes both the ratings of individuals by supervisors on elements in an
employee’s performance plan and the evaluation of programs and teams by senior
managers The danger in supervisory evaluations is the substantial amount of power and
influence wielded, often by the hand of a single rater.
BENEFITS
The first-line supervisor is often in the best position to effectively carry out the
full cycle of performance management
The supervisor may also have the broadest perspective on the work requirements
and be able to take into account shifts in those requirements.
PEERS
Reduced hierarchies in organizations, as well as the increasing use of teams and group
accountability, peers are often the most pertinent evaluators of their colleagues’
performance. Peers have a unique perspective on a co-worker’s job performance and
employees are generally very receptive to the concept of rating each other. Peer ratings
can be used when the employee’s expertise is known or the performance and results can
be observed. There are both significant contributions and serious pitfalls that must be
carefully considered before including this type of feedback in a multifaceted appraisal
program.
BENEFIT
¨The addition of peer feedback can help move the supervisor into a coaching role rather
than a purely judging role.
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SUBORDINATE.
Formal evaluation by subordinates is unusual, although from time to time subordinates
may be asked for input into the evaluation of their supervisor. When subordinates have an
input into their supervisor’s evaluation, supervisors have been known to improve their
interpersonal relations and reduce management by intimidation. Issues of anonymity and
adequate sampling of subordinates may be important in traditional appraisals.
BENEFITS
A formalized subordinate feedback program will give supervisors a more
comprehensive picture of employee issues and needs. Managers and supervisors
who assume they will sufficiently stay in touch with their employees’ needs by
relying solely on an “open door” policy get very inconsistent feedback at best.
Employees feel they have a greater voice in organizational decision-making and,
in fact, they do. Through managerial action plans and changes in work processes,
the employees can see the direct results of the feedback they have provided.
CUSTOMERS
Evaluations by outside clientele may be useful in instances when there is much personal
contact with outsiders or when the person being evaluated knows more about aspects of
the job than the supervisor. Internal customers are defined as users of products or services
supplied by another employee or group within the agency or organization may contribute
significant input
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SINGLE-RATER PERFORMANCE EVALUATION
Single Source Performance Appraisal relies heavily on supervisor opinion & judgment
Moreover, they usually don’t work; they neither differentiate levels of performance nor
motivate employees to improve performance.
PROBLEM IN SINGLE RATER PERFORMANCE ASSESSMENT
Nepotism and Politics may dilute assessment. It may reflect the quality of the
rater-ratee relationship, not the actual work performance of employees.
Once a worker is classified as a poor performer, it may take a long time for a
supervisor to notice the worker has improved.
One particularly good or poor trait may contaminate other performance areas
considered in the evaluation.
Different supervisors may have different standards in making evaluation
decisions
Supervisors may tend to rate workers as average, especially when rating forms
require a written justification for a high or low rating.
Hence an employee’s supervisor-only performance appraisal may not truly reflect the
individual’s actual job performance. High-performing employees may receive poor
appraisals that limit their opportunity for rewards such as pay increases and promotions
due to the idiosyncrasies of the supervisor.
Recent performance appraisals have also included self-appraisals. In which employees
rate their own performance and skills development. Self-appraisals are often used to
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complement supervisor appraisals. However, self-appraisals offer limited information for
employee improvement.
Leaders and employees at all levels of organizations are changing the way they receive
feedback in order to improve the quality of information. The new model for performance
feedback and appraisal turns the assessment process upside down. People are asking for
performance feedback from those with knowledge of their work behaviors, as well as
from their supervisor. This information, that comes from many asking for and getting
information from people rather than just is more honest, reliable and valid than traditional
appraisals from supervisor only. Moreover, feedback from these multiple sources has a
more powerful impact on people than information from a single source, such as a
supervisor. In fact, no organization action has more power for motivating employee
behavior change than feedback from credible work associates.
METHODOLOGY
SAMPLE SIZE
The sample size includes two organizations, one using Multi source appraisal system and
the other using the Single-Source appraisal system.
Getz Pharma pharmaceuticals Company. (Uses Multi Source feedback)
EVA edible oil company (uses Single-Source appraisal system)
RESPONDENTS
A total number of 12 respondents will be included in this research- 6 each. The
respondents are employees at the high / middle management level and are assessor in the
appraisal process.
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QUESTIONNAIRE
Q1. What Performance assessment tool is used in your organization?
Single-Source appraisal system
Multi source appraisal system
Q 2. Who are the Raters Involved in the Process
Self
Manager (Boss)
Direct Reports (Department Head)
Peers
Internal Customers
External Customers
Supervisor
Others (if any please Identify) __________________________
Q 3 What are the possible reasons for using the current appraisal system?
Objectivity in evaluation
Influences employee motivation, performance, and job satisfaction
Provides a broader perspective of employee performance
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Increases accountability of employees to their customers
Encourages two way communication
Assist in creating healthy changes in organization
Helps managers with their personal and professional development planning
Provides input for performance appraisals
Helps in an organizations succession planning
Q4 Are there any evaluator accountability checks in your appraisal system?
Yes No
If yes please explain ____________________________________
Q5. What are the weights allocated to each of
Self Peers
Internal Customers
External Customers
Manager (Boss)
Direct Reports
Supervisor
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Others (if any please identify) __________________________________
Q6. What levels of employees are assessed through the appraisal?
Upper Management
Middle Management
Lower Management
Q7. What are the assessment criteria?
Responsibility: Knowledge and the fulfillment of task assigned and empowered
to deliver it on time.
Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information
Problem-Solving. Ability to take prudent & timely decision
.
Listens actively to internal and external customers
Takes initiative to make things happen.
Identifies, understands and responds to appropriate needs of business and
demonstrates broad business knowledge
Stretch- outperforming the targets
Effective & relevant communication
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Q8. Are the results of the appraisal shared with the participants (evaluators &
evaluates)?
Yes No
Q9. What has been the impact on the following participants after the appraisal?
Positive Change Negative Change No Change
Upper Management
Middle Management
Lower Management
Q .10 What is the aftereffect of performance appraisal on the following areas?
Negative Positive
External Customer responsiveness
Building relationships (with customers)
Value maximization
Voluntary Termination
Absenteeism
Employee Productivity
Costs Competitiveness
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QUESTIONNAIRE ANALYSIS
QUESTION. 1
What is the form of appraisal prevailing in your organization?
Single-Source appraisal system
Multi Source appraisal system
There are two organizations in this research; one implements the single source appraisal
system (EVA edible oil company) and the other GETZ PHARMA implements the 360-
degree form of system
360-degree appraisal system Getz Pharma
Single source appraisal system EVA edible oil company.
QUESTION .2
What are the objectives behind using the current appraisal?
360-degree appraisal
system (GETZ
PHARMA)
Single source
appraisal system
(EVA)
Provides a broader perspective of employee performance 5 3
Objectivity in evaluation 5 0
Encourages two way communication 5 5
Assist in creating healthy changes in organization 2 0
Increases accountability of employees to their customers 2 0
Align employee performance with organization vision &
values
5 3
Provides input for performance appraisals 0 0
Platform for promoting Internal recruitment Policy 4 2
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Influence employee development, motivation and job
satisfaction
3 0
Analysis
100% of the respondents using the single source appraisal system stated that it
appreciates two-way communication. 60% of the respondents were of the view that the
single source appraisal system allows to have a broader look at employee’s performance
as compared to 100% in Multi Source appraisal. The above analysis indicates that
employee perceive more objectivity and fairness in 360 degree appraisal
Multi source appraisal showed better results about the skills and behaviors desired in the
organization to accomplish the mission, vision, and goals.60% of the respondents stated
that it assists each individual to understand his or her strengths and weaknesses, and to
contribute insights into aspects of his or her work. The feedback can firmly be planted in
behaviors needed to exceed customer expectations
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QUESTION .3
. Who are the Raters Involved in the Process
Self
Manager (Boss)
Direct Reports
Peers
Internal Customers
External Customers
Supervisor
Others (if any please Identify) __________________________
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Evaluators Single source
appraisal
360-degree appraisal
SELF No Yes
MANAGER Yes Yes
DIRECT REPORT Yes Yes
SUPERVISOR No No
INTERNAL CUSTOMER No Yes
EXTERNAL CUSTOMER No Yes
PEERS None Yes
Analysis
The Multi source appraisal involves all Managers, Department Heads Customers, Peers
and Supervisors to minimize biasness, prejudice and deficiencies that are prevalent in
single rate system. Although this approach can be time consuming but it can pay
dividends for the company in the long run in the form of productivity, low turn over and
loyalty etc.
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QUESTION .4
Is there any assessor answerability verification in your performance evaluation
system?
Yes No
If yes please explain ____________________________
Appraisal form Evaluator accountability
Verification
Single Source Appraisal No
Multi Source Appraisal Yes
Analysis
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There are no accountability checks in the single source appraisal system. Whereas in the
360-degree appraisal system there are accountability checks; at GETZ PHARMA
employees get an opportunity to express their views both verbally and on the document
itself.
QUESTION .5
What are the weightages allocated to each of these evaluators?
Self Internal Customers
Manager (Boss) External Customers
Direct Reports Supervisor
Peers
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WEIGHTAGES ASSIGNED
Seminar in Economic Policy
Evaluators Single source appraisal 360-degree appraisal
SELF None 17%
MANAGER None 17%
DIRECT REPORT None 17%
SUPERVISORS None 17%
INTERNAL
CUSTOMER
None 8.5%
EXTERNAL
CUSTOMER
None 8.5%
PEERS & OTHERS None 8.5%+8.5%
Analysis
The above figure reveals that equal weight age is assigned to all the key assessors to
minimize the undue / substantial influence of one or two evaluators. The consensus of
opinion enhances the credibility of the evaluation process .In the single source appraisal
system there are no weightages assigned to both the supervisor and the section /
department head.
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QUESTION .5
What layers of management are assessed through the appraisal?
Upper Management
Middle Management
Lower Management
Management Layers Single source appraisal 360-degree appraisal
Upper Management Yes Yes
Middle Management Yes Yes
Lower Management Yes Yes
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Analysis
All the management layers are assessed in both the single source appraisal system and the
multi source 360-degree appraisal system.
QUESTION .7
Responsibility: Knowledge and the fulfillment of task assigned and empowered
to deliver it on time.
Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information
Problem-Solving. Ability to take prudent & timely decision
.
Listens actively to internal and external customers
Takes initiative to make things happen.
Identifies, understands and responds to appropriate needs of business and
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demonstrates broad business knowledge
Stretch- outperforming the targets
Effective & relevant communication
Assessment Criteria Single source appraisal 360-degree appraisal
Responsibility Yes Yes
Team work Yes Yes
Problem Solving Yes Yes
Target Fulfillment Yes Yes
Customer Service No Yes
Proactive No No
Business Skills No Yes
Communication Yes Yes
Analysis
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The above question was targeted to explore the assessment criteria used in both the single
source and Multi Source appraisal system. According to the answers given by the
participants, the single source appraisal system in EVA assesses:
Responsibility: Knowledge and the fulfillment of task assigned and empowered
to deliver it on time.
Team Work: Use of teams and group accountability. Making most out of the
collective expertise. Builds consensus and shares relevant information
Problem-Solving. Ability to take prudent & timely decision
Stretch- outperforming the targets
Effective & relevant communication.
Whereas the answers provided by respondents at GETZ PHARMA, the 360-degree
appraisal system assesses the above 5 mentioned criteria including the
Identifies, understands and responds to appropriate needs of business and
demonstrates broad business knowledge
Listens actively to internal and external customers
None of the appraisal system focused on employee,s initiative taking ability probably
due to lower & upper managment limited span of control.
QUESTION .8
Are the results of the appraisal shared with the participants (evaluators &
evaluates)?
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Yes No
Single source appraisal Yes
360-degree appraisal YES
Analysis
Respondents in both the forms of appraisal system stated that the results are shared with
them (the ratee’s).
QUESTION .9
What has been the impact on all the layers of Management after the appraisal?
Positive Change Negative Change No Change
Upper Management
Middle Management
Lower Management
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SHARING OF RESULTS
Seminar in Economic Policy
Single source appraisal 360-degree appraisal
Positive
Change
Negative
Change
No
Change
Positive
change
Negative
Change
No
Change
Upper Management 5 0 0 5 0 0
Middle Management 5 0 0 5 0 0
Lower Management 3 0 2 5 0 0
Analysis
This question was aimed at finding out the changes that occurred after the appraisal was
carried out.
After the single source appraisal, 100% respondents felt a positive change in the upper
management and the middle management levels, in terms of the efforts being made.
Whereas 60% felt a positive change, 40% felt no change in the lower management level.
After the 360-degree appraisal, 100% respondents felt a positive change in all the three
management levels.
QUESTION. 10
What is the aftereffect of performance appraisal on the following areas?
Negative Positive
External Customer responsiveness
Building relationships (with customers)
Value maximization
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Seminar in Economic Policy
Voluntary Termination
Absenteeism
Employee Productivity
Costs Competitiveness
Single source appraisal 360-degree appraisal
Negative Positive Negative Positive
External Customer
responsiveness
0 0 0 4
Building relationships (with
customers)
0 0 0 5
Value maximization 0 0 0 3
Voluntary Termination 0 0 0 2
Absenteeism 0 0 0 3
Employee Productivity 0 0 0 2
Costs Competitiveness 0 0 0 0
Analysis
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This question was aimed at finding out the impact on the various aspects stated above,
after the appraisal in both the organizations.
As far as the single source appraisal is concerned, all the respondents felt that there was
no direct link between this form of appraisal and the stated areas.
Whereas at GETZ PHARMA (implementing the 360-degree form of appraisal), 100%
respondents felt a positive impact on customer feedback and building lasting
relationships (with customers). Where as 40% of respondents tend to believe that
employee appraisal assist in creating maximum value to all stakeholder and employee
sense of belongingness to the company. Employee strive harder when they perceive merit
based evaluation and the constructive relation between performance & rewards
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S UMMARY OF FINDINGS
Performance appraisal is the process through which an employee’s job performance is
formally assessed. 360-degree feedback allows each individual to understand how others
view his/her effectiveness as an employee, co-worker, or staff member. The 100% of the
respondents were of the view that Multi Source Appraisal is aligned with the skills and
behaviors desired in the organization as compared to 60% in Single Source Performance
Appraisal that relies heavily on supervisor opinion & judgment. The Questionnaire
response showed 80% of participant’s believe that diversity & consensus of opinion in
Multi source appraisal provides a platform for organization succession planning and
enhances the credibility of the evaluation process. The above findings also revealed that
Employees are assessed on wider range of criteria’s i.e Responsibility, Teamwork,
Problem Solving, Target Fulfillment, Customer satisfaction and Business Skills in multi
rater appraisal as compared to single rater appraisal. The multi rated appraisal included
Self, Manager (Boss), Direct Reports (Department Head), Peers, Internal Customers,
external Customers and Supervisor, Where as Single Rated Appraisal included only
supervisor & department head. The danger in supervisory evaluations is the substantial
amount of power and influence wielded, often gifted in few hands. 100% respondents felt
a positive impact on customer feedback and building lasting relationships (with
customers) in multi rated appraisal. Where as 40% of respondents tend to believe that
(Single rated) employee appraisal assist in creating maximum value to all stakeholder
and employee sense of belongingness to the company.
CONCLUSION:
I may conclude that it has been proved Multi source performance appraisal is more
comprehensive, credible and effective performance measure for the organization as
compared to the single rater appraisal system and the hypothesis states true that
“Employee performance evaluation is perceived to be better in 360 degree multi-
source feedback than in single source feedback system.”