–1
–1
MODULE-5MODULE-5MODULE-5MODULE-5
PERFORMANCE MANAGEMENT
Human ResourceHuman ResourceManagementManagement
Human ResourceHuman ResourceManagementManagement
Performance ManagementPerformance Managementand Appraisaland Appraisal
Performance ManagementPerformance Managementand Appraisaland Appraisal
OVERVIEWOVERVIEWOVERVIEWOVERVIEW
INTRODUCTION MEANING, NEED, PURPOSE, OBJECTIVES CONTENTS OF PAS, APPRAISERS DIFFERENT METHODS OF APPRAISALS USES OF PERFORMANCE APPRAISAL LIMITATIONS & PROBLEMS OF pa 360 DEGREE APPRAISAL POST APPRAISAL FEEDBACK
11–4
Performance AppraisalPerformance Appraisal Performance AppraisalPerformance Appraisal
Performance Appraisal (PA)– The process of evaluating how well employees
perform their jobs when compared to a set of standards, and then communicating the information to employees.
– Performance Appraisal is essential to understand & improve the employee’s performance through HRD.
– Performance appraisal indicates the level of desired performance level, level of actual performance & the gap b/w the two
11–5
Performance appraisal may be understood as the assessment of an individual’s performance in a systematic way.
The performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, cooperation, Judgment, versatility, health etc..
11–6
It is the systematic evaluation of the individual with respect to his/her performance on the job and his/her potential for development”
Assessment is generally not confined to past performance alone .
Potentials of the employee for future performance must also be assessed.
11–7
Meaning Of Performance appraisalMeaning Of Performance appraisalMeaning Of Performance appraisalMeaning Of Performance appraisal
Performance appraisal is method of evaluating the behaviors of employees in the workplace.
It includes both qualitative & quantitative techniques or aspects of job performance.
Performance refers to the degree of accomplishment of the tasks that make up an individual’s job.
It indicates how well an individual is fulfilling the job demands.
Performance is always measured in terms of results & not efforts.
11–8
Definition Definition Definition Definition
Performance appraisal is the systematic, periodic & an impartial rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job
- Edwin Flippo
11–9
DefinitionDefinitionDefinitionDefinition
“Performance Appraisal is a formal, structured system of measuring and evaluating job related behaviour and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more affectively in the future so that the employee, organization and society all benefits”
-Randall S Schuller
11–10
This definition states behaviour is also a part of the assessment .Behaviour can be active or passive – do something or do nothing.
Either way behaviour affects job results, employee assessment is as old as the concept of management.
Performance appraisal is linked to job analysis as shown in the fig below.
11–11
NEED FOR PANEED FOR PANEED FOR PANEED FOR PA
Provide information about performance ranks.Provide feedback information about the level of achievement & behaviour of the subordinate,Provide information which helps to counsel the subordinate.Provide information to diagnose deficiency in the employee regarding skill, knowledge & needs.To prevent grievances & in disciplinary activities.
11–12
Features Features Features Features PA is a systematic process consisting of a number of steps to be followed for evaluating and employees strengths and weaknesses
It is a systematic & objective description of an employee’s strengths & weaknesses in terms of the job.
PA seeks to secure information necessary for making objective & correct decisions on employees
11–13
PA is ongoing & continuous process where the evaluations are arranged periodically according to a definite plan.PA is not job evaluation.It refers to how well an employee is doing the assigned job.Job evaluation determines how much a job is worth to the organization & what is the range of pay should be assigned to the job.Establish plan of improvement.Appraisals are arranged periodically according to the definite plan.
11–14
PURPOSES OF PAPURPOSES OF PAPURPOSES OF PAPURPOSES OF PA
To create & maintain satisfactory level of performance.
To contribute to employee growth & development.
To help the superiors to have a proper understanding about the subordinates.
To guide the job changes with a help to continuous ranking.
To facilitate fair & equitable compensation based on performance.
To provide information for making decisions regarding layoff retrenchment etc .
11–15
Objectives of performance Objectives of performance appraisalappraisal
Objectives of performance Objectives of performance appraisalappraisal
Data relating to performance assessment of employees are recorded, stored and used for several purposes.
They are listed below: To effect promotions based on competence &
performance To confirm the services of probationary
employees after the completion of probationary period.
To assess the training & development needs of employees
11–16
To decide on pay rise unorganized sector) To let the employees know where they stand & to guide them for their development.
To improve communication between a superior & subordinate & to set goals.
To ask HR programmes such as selection training & transfer are effective or not
11–17
OBJECTIVESOBJECTIVESOBJECTIVESOBJECTIVES
Work-Related Objectives Career Development Objectives Communications Organizational Objectives
11–18
Work-Related Objectives:Work-Related Objectives:Work-Related Objectives:Work-Related Objectives:
To assess the work of employees in relation to job requirements
To improve the efficiency To help management in fixing employees according to their capacity, interest, aptitude and qualifications
To carry out job evaluation
11–19
Career Development ObjectivesCareer Development ObjectivesCareer Development ObjectivesCareer Development Objectives
To assess the strong & weak points in the working of the employees and finding remedies for weak points through training
To determine career potential To plan promotions, transfers, lay offs etc. of the employees
To plan career goals
11–20
Communication Communication Communication Communication
To provide feedback to employees so that they come to know where they stand ad can improve their job performance
To clearly establish goals To provide coaching, counseling, career planning & motivation to employees
To develop positive superior-subordinates relations & thereby reduce grievances
11–21
Organizational ObjectivesOrganizational ObjectivesOrganizational ObjectivesOrganizational Objectives
To serve as a basis for promotion or demotion
To serve as a basis for wage & salary administration & considering pay increases & increments
To serve as a basis for planning suitable training & development programmes
To serve as a basis for transfer or termination in case of reduction in staff strength.
11–22
Identifying and MeasuringIdentifying and MeasuringEmployee PerformanceEmployee Performance
Identifying and MeasuringIdentifying and MeasuringEmployee PerformanceEmployee Performance
Performance Management System– Processes used to identify, encourage,
measure, evaluate, improve, and reward employee performance.
Performance– What an employee does and does not do.
• Quantity of output • Quality of output• Timeliness of output • Presence at work• Cooperativeness
Job Criteria– Important elements in a given job
11–23
Types of Performance InformationTypes of Performance InformationTypes of Performance InformationTypes of Performance Information
11–24
Trait-basedTrait-basedInformationInformation
Trait-basedTrait-basedInformationInformation
Behavior-basedBehavior-basedInformationInformation
Behavior-basedBehavior-basedInformationInformation
Results-basedResults-basedInformationInformation
Results-basedResults-basedInformationInformation
JobJobPerformance?Performance?
JobJobPerformance?Performance?
Potential Performance Criteria ProblemsPotential Performance Criteria ProblemsPotential Performance Criteria ProblemsPotential Performance Criteria Problems
11–25
ObjectivityObjectivityObjectivityObjectivity
DeficiencyDeficiencyDeficiencyDeficiency ContaminationContaminationContaminationContamination
PerformancePerformanceCriteriaCriteria
PerformancePerformanceCriteriaCriteria
Performance StandardsPerformance StandardsPerformance StandardsPerformance Standards
Performance Standards– Expected levels of performance
• Benchmarks• Goals• Targets
Characteristics of Well-defined Standards– Realistic– Measurable– Clearly understood
11–26
STRATEGIC MANAGEMENT & STRATEGIC MANAGEMENT & PERFORMANCE APPRAISELPERFORMANCE APPRAISEL
STRATEGIC MANAGEMENT & STRATEGIC MANAGEMENT & PERFORMANCE APPRAISELPERFORMANCE APPRAISEL
STRATEGIES PA TECHNIQUES
APPRAISER
Stability& sustainable growth
Traditional Superior
Expansion,diversification,M & A
Modern 360 Appraisal
Retrenchment Traditional Superior
Low cost leadership, New Product, Differentiation.
Modern 360 Appraisel
04/10/2304/10/2327
CONTENT OF PACONTENT OF PACONTENT OF PACONTENT OF PA
Content to be appraised is determined on the basis of job analysis.Content to be appraised vary with the purpose of appraisal & type & level of employees.
11–28
CONTENTS TO BE APPRAISED CONTENTS TO BE APPRAISED FOR AN OFFICERS JOBFOR AN OFFICERS JOB
CONTENTS TO BE APPRAISED CONTENTS TO BE APPRAISED FOR AN OFFICERS JOBFOR AN OFFICERS JOB
Regularity of attendance.Self Expression.Ability to work with others.Leadership styles & abilities.Initiative.Technical skill.Technical ability.Ability to grasp new things.
11–29
Ability to reason. Originality & Resourcefulness. Creative skills. Area of interest. Are of suitability. Judgment skills. Integrity. Honesty . Sincerity. Knowledge of systems & Procedures.
11–30
Who Conducts AppraisalsWho Conducts AppraisalsWho Conducts AppraisalsWho Conducts Appraisals
Supervisors who rate their subordinates Employees who rate their supervisors Team members who rate each other Outside sources Employees’ self-appraisal Multisource (360° feedback) appraisal
11–31
APPRAISERSAPPRAISERSAPPRAISERSAPPRAISERS
04/10/2304/10/2332
APPRAISERSAPPRAISERSAPPRAISERSAPPRAISERS
Who is an Appraiser? An appraiser may be any person who has thorough
knowledge about the job contentContents to be appraised.Standards of contents.Who observes the employee while performing the job.
11–33
Qualities of an appraiser.Should be capable of determining what is more important & what is less important.Should prepare reports.Make judgments without any bias.
11–34
Multisource AppraisalMultisource AppraisalMultisource AppraisalMultisource Appraisal
Figure 11–6Figure 11–611–35
Typical appraisersTypical appraisersTypical appraisersTypical appraisers
Supervisors.Peers.Subordinates.Employees Themselves.Users of serviceConsultants.Performance by all these parties is called 360 performance appraisal.
11–36
AppraisersAppraisersAppraisersAppraisers
The appraiser may be any person who has thorough knowledge about
the job content Contents to be appraised Standards of contents Who observes the employee while performing a job.
He should prepare reports and make judgment without bias.
11–37
Self-AppraiserSelf-AppraiserSelf-AppraiserSelf-Appraiser It is a common practice today , with the employees being given a role in evaluating their own performance.
The employee is best equipped to evaluate his performance because he understands his strengths and weaknesses the best.
11–38
SuperiorsSuperiors SuperiorsSuperiors
It is the responsibility to ensure that his subordinates perform their jobs well
Hence, the authority to evaluate the employee performance has traditionally with the supervisor.
Even today, the supervisor has a very important role to play in the appraisal of his subordinates.
11–39
Peers Peers Peers Peers Peer evaluation is a very sensitive area as it may lead to false and unhealthy appraisals, because of the competition among peers.
Peer appraisal has to be used to assess the communication & interpersonal skills of the employee, which can affect the team performance.
11–40
Customers/ ClientsCustomers/ ClientsCustomers/ ClientsCustomers/ Clients The performance of an employee has a direct & immediate impact on his customers either internal or external.
11–41
Basic Performance Appraisal Basic Performance Appraisal ProcessProcess
Basic Performance Appraisal Basic Performance Appraisal ProcessProcess
Establishing StandardsEstablishing Standards
Communicating Standards to EmployeesCommunicating Standards to Employees
Measuring Actual PerformanceMeasuring Actual Performance
Comparing Actual with StandardsComparing Actual with Standards
Discussing Reports with EmployeesDiscussing Reports with Employees
Taking Corrective ActionTaking Corrective Action
11–42
Performance StandardsPerformance StandardsPerformance StandardsPerformance Standards
Performance Standards– Expected levels of performance
• Benchmarks• Goals• Targets
Characteristics of Well-defined Standards– Realistic– Measurable– Clearly understood
11–43
Terms Defining Standards on One CompanyTerms Defining Standards on One CompanyTerms Defining Standards on One CompanyTerms Defining Standards on One Company
11–44
Methods of performance appraisalMethods of performance appraisalMethods of performance appraisalMethods of performance appraisal
Traditional Methods Confidential Report Graphic Scales Straight Ranking Paired Comparisons Grading System Forced Distribution Check List Method Critical Incident Method Free Essay Method Group Appraisal Field Review Nominations Work Sample Tests
Modern Methods
Assessment Centre
Human Resource Accounting
Management by Objectives
360 Degree PA
11–45
Confidential ReportConfidential ReportConfidential ReportConfidential Report This method is used in government departments and public enterprises.
These reports differ from dept to dept & from level to level
CR is written for a unit of one year and relates to the performance, ability & character of the employee during that year.
CR is not data based but subjective
11–46
No feedback is provided to the employee bring appraises and therefore its credibility is very low
This method focuses on evaluating rather than developing the employee.
The employee who is appraised never knows his weakness and the opportunities available for overcoming them.
In recent years, due to pressure from courts & trade unions, details of a negative confidential report are given to the appraiser.
11–47
Comparing individual performance to an absolute standard. Judgments about performance are recorded on a scale.
Oldest & widely used. Also known as linear rating scale or simple
rating scale. Appraisers given printed forms which contain
the various objectives, the qualities to be rated like analytical ability, creative ability, initiative, leadership qualities, emotional stability etc in case of managerial personnel.
Graphic Rating scales MethodGraphic Rating scales MethodGraphic Rating scales MethodGraphic Rating scales Method
11–48
Graphic Rating scales MethodGraphic Rating scales MethodGraphic Rating scales MethodGraphic Rating scales Method The qualities in respect of workmen
could be quantity and quality of work, job knowledge, attitude, dependability, initiative etc.
The rating scale used could be continuous rating scale or discontinuous rating scale.
In continuous scale, the points are in a particular order. For e.g 0 to 5 i.e. 0,1,2,3,4,5 where 5 is the highest.
11–49
AttitudeAttitude
DependabilityDependability
CooperationCooperation
Job Job KnowledgeKnowledge
Quantity of Quantity of WorkWork
UnsatisfactoryUnsatisfactory PoorPoor FairFair AverageAverage GoodGood ExcellentExcellent
00 11 443322 55
00
00
00
00
00
11
11
11
11
11
22
22
22
22
22
33
33
33
33
33
44
44
44
44
55
55
55
55
55
44
CONTINUOUS RATING SCALECONTINUOUS RATING SCALE11–50
In discontinuous scale, the appraiser assigns the points against each quality or character.
The points given by the rater to each character are added up to find out the overall performance.
The employees are then ranked on the basis of the total points assigned to them.
Graphic rating scales MethodGraphic rating scales MethodGraphic rating scales MethodGraphic rating scales Method
11–51
NONOINTRESTINTREST
INDIFFERENTINDIFFERENT INTRESTEDINTRESTED ENTHUSIASTICENTHUSIASTIC VERYVERYENTHUSIASTICENTHUSIASTIC
ATTITUDEATTITUDE
DISCONTINUOUS RATING SCALEDISCONTINUOUS RATING SCALE
11–52
The employees are ranked from best to worst on some characteristics.
The rater first finds the employee with the highest performance & employees with the lowest performance.
The rater then selects the next highest and next lowest and so on until all the employees in that group are rated.
Relatively easy and inexpensive but reliability and validity open to doubt.
Another limitation is the size of the difference between the various ranks is not well defined.
Straight Ranking MethodStraight Ranking MethodStraight Ranking MethodStraight Ranking Method
11–53
The appraiser ranks the employees by comparing one employee with all other employee in the group, one at a time.
Each employee is assigned a capital letter like A,B,C,etc & one separate sheet used for each employee.
For each plotted pair, write the letter of the employee who has done a superior overall job and assign a certain percentage of the total positive evaluation.
Paired Comparison MethodPaired Comparison MethodPaired Comparison MethodPaired Comparison Method
11–54
If a department has two outstanding
employees and six average employees and if this method is correctly used, the two employees will get a much higher percentage of positive comparison than the other six.
Number of comparisons = N (N-1) / 2.
For large number of employees, it is time consuming.
11–55
Grading SystemGrading SystemGrading SystemGrading System Certain features like analytical ability, co-operativeness, dependability, job-knowledge, etc are selected for evaluation.
The employees are given grades according to the judgment of the rater.
The grades may be such as: A-outstanding; B-very good; C-satisfaction D-average; E-below average The actual performance of every employee is rated with various grades in mind
11–56
Forced Distribution MethodForced Distribution MethodForced Distribution MethodForced Distribution Method
Is developed to prevent the raters from rating too high or too low.
Under this method, the rater after assigning the points to the performance of each employee has to distribute his ratings in a pattern to conform to normal frequency distribution.
Requires the raters to spread their employee evaluations in a prescribed distributions
11–57
Forced Distribution on a Bell-Shaped CurveForced Distribution on a Bell-Shaped CurveForced Distribution on a Bell-Shaped CurveForced Distribution on a Bell-Shaped Curve
11–58
Forced DistributionForced DistributionForced DistributionForced Distribution
– Performance appraisal method in which ratings of employees are distributed along a bell-shaped curve.
– Drawbacks• Assumes a normal distribution of performance.• Resistance by managers to placing individuals in the
lowest or highest groups.• Providing explanation for placement in a higher or
lower grouping can be difficult.• Is not readily applicable to small groups of employees.
11–59
Check List MethodCheck List MethodCheck List MethodCheck List Method
A check list is a list of statements that describes the characteristics and performance of employees on the job.
Three types: Simple Check List Weighted Check List Forced Choice Checklist
11–60
Simple Check ListSimple Check ListSimple Check ListSimple Check List
Under this method the supervisor are provided with printed forms containing descriptive questions about the performance of employees
The supervisor has the answer in yes or no.
After ticking these questions the forms are sent to Personnel Dept where final rating is done
11–61
Check list for operatorsCheck list for operators..Check list for operatorsCheck list for operators..
Is the employee hard working? Yes/No Does he/she possess adequate knowledge about the job?
Yes/No Is his/her attendance satisfactory? Yes/No Does he/she maintain his/her equipment in good Condition?
Yes/No Does she/he cooperate with coworkers? Yes/No Does he/she keep his/her temper? Yes/No Does he/she obey orders? Yes/No Does he/she observe safety preparations? Yes/No Does he/she complete the work? Yes/No Does he/she evade responsibility? Yes/No
11–62
Weighted Check ListWeighted Check ListWeighted Check ListWeighted Check List
It is used particularly with the objective of avoiding scope for personal prejudices.
In this method, weights are assigned to different statements to indicate statements to indicate their relative importance.
It involves a very lengthy & time consuming procedure.
11–63
Weighted ChecklistWeighted ChecklistWeighted ChecklistWeighted Checklist
Traits Weights
Performance Scale Ratings {1 - 5}
1. Regularity 0.5
2. Knowledge of the Job
1.0
3. Dependability 1.5
4. Interpersonal relations
2.0
5.Loyalty 1.5
6. Leadership Potential 1.5
11–64
Forced Choice ChecklistForced Choice ChecklistForced Choice ChecklistForced Choice Checklist
In this checklist, 5 statements are given for each trait, two most descriptive statements, two least descriptive statements & one neutral statement.
The rater is required to tick one statement each from the most descriptive and least descriptive ones.
Aim- to minimize the rater’s personal bias. This approach is known as the forced choice method because the rater is forced to select statements which are ready made
11–65
Forced Choice Check List- SampleForced Choice Check List- SampleForced Choice Check List- SampleForced Choice Check List- Sample
1. Regularity Most Leasta. Always regularb. Informs in advance for absence or delayc. Never regulard. Remains absent without prior noticee. Neither regular nor irregular
11–66
Critical incident method: Critical incident method: Critical incident method: Critical incident method: In this method, the performance is rated the basis of certain events or incidents which may have really happened recording these incidents avoids biases and Judgment is easy.
e.g. refused to cooperate with co workers refused to undergo future training refused to obey orders Showed presence of mind in saving a worker when there was accidental fire
He helped fellow employees in solving their problems
11–67
Free Essay MethodFree Essay MethodFree Essay MethodFree Essay Method
This method requires the manager to write a short essay describing each employees performance during rating period.
This format emphasizes evaluation of overall performance, based on strengths/ weaknesses of employee performance rather than specific job dimensions.
By asking supervisors to enumerate specific examples of employee behavior, the essay technique minimizes supervisory bias & the halo effect
BPL, Birla 3M, Bata- follow this method11–68
Group AppraisalGroup AppraisalGroup AppraisalGroup Appraisal
Employees are rated by an appraisal group, consisting of their supervisor, 3 or 4 other persons who have some knowledge of their performance.
Supervisor- explains to the group the nature of his subordinates duties.
Group then discusses the stds of performance for that job, and actual performance of the employee and the causes of their particular level of performance
Offers suggestions for future improvements11–69
Field Review MethodField Review MethodField Review MethodField Review Method
An expert from the personnel dept interviews line supervisors to evaluate their respective subordinates.
The expert questions the supervisor & obtains all the important information on each employee and takes notes in his note book.
There is no rating form with factors or degrees, but overall ratings are obtained.
Employees classified into 3 categories Outstanding; satisfactory; unsatisfactory
11–70
NominationsNominationsNominationsNominations
Appraisers are asked to identify the exceptionally good and exceptionally poor performers, who are then singled out for special treatment
11–71
Work Sample TestsWork Sample TestsWork Sample TestsWork Sample Tests
Employees are given, from time to time, work related tests which are then evaluated.
11–72
MODERN METHODSMODERN METHODSMODERN METHODSMODERN METHODS
BARS Assessment Centre Human Resource Accounting Management by Objectives 360 Degree PA
11–73
Behaviorally Anchored Rating Scales {BARS}Behaviorally Anchored Rating Scales {BARS}Behaviorally Anchored Rating Scales {BARS}Behaviorally Anchored Rating Scales {BARS}
It combines the benefits of critical incidents & graphic rating scales by anchoring a scale with specific behavioral examples of good or poor performance.
11–74
3 steps in implementing a BARS System.
11–75
Determination of relevant job dimensions by the Determination of relevant job dimensions by the manager & the employeemanager & the employee
Determination of relevant job dimensions by the Determination of relevant job dimensions by the manager & the employeemanager & the employee
Identification of behavioral anchors by manager Identification of behavioral anchors by manager and employee for each job dimensionsand employee for each job dimensions
Identification of behavioral anchors by manager Identification of behavioral anchors by manager and employee for each job dimensionsand employee for each job dimensions
Determination of the scale values to be used & groupingDetermination of the scale values to be used & groupingOf anchors for each scale value, based on consensusOf anchors for each scale value, based on consensus
Determination of the scale values to be used & groupingDetermination of the scale values to be used & groupingOf anchors for each scale value, based on consensusOf anchors for each scale value, based on consensus
How to construct BARSHow to construct BARSHow to construct BARSHow to construct BARS
Step 1: Collect Critical IncidentsStep 1: Collect Critical IncidentsStep 1: Collect Critical IncidentsStep 1: Collect Critical Incidents
Step 2: Identify Performance DimensionsStep 2: Identify Performance DimensionsStep 2: Identify Performance DimensionsStep 2: Identify Performance Dimensions
Step 3: Reclassification of IncidentsStep 3: Reclassification of IncidentsStep 3: Reclassification of IncidentsStep 3: Reclassification of Incidents
Step 4: Assigning Scale Values to the IncidentsStep 4: Assigning Scale Values to the IncidentsStep 4: Assigning Scale Values to the IncidentsStep 4: Assigning Scale Values to the Incidents
Step 5: Producing the Final InstrumentStep 5: Producing the Final InstrumentStep 5: Producing the Final InstrumentStep 5: Producing the Final Instrument
11–76
Sample of BARS systemSample of BARS systemSample of BARS systemSample of BARS system
Dimension: Planning & Organizing
Scale Value Anchor
5 [ ] Excellent Develops a comprehensive plan, documents well, obtains approval & distributes to all concerned
4 [ ] Good Lays out all plans and allows for slack. Satisfies customer time constraints and overruns are infrequent
3 [ ] Average Revises due dates as project progresses & investigates customer complaints. Does not report slippages in plan
2 [ ] Below Average Poor plans & unrealistic time schedules are common. Cannot plan for more a day or two ahead
1 [ ] Unacceptable Seldom completes a project and does not bother. Fails due to lack of planning and is not interested in improving 11–77
Assessment CentreAssessment CentreAssessment CentreAssessment Centre
This method of appraising was first applied in the German Army in 1930.
It is a system, where assessment of several individuals is done by various experts by using various techniques.
Techniques- in basket, role playing, case studies, stimulation exercises, transactional analysis etc
Idea- to evaluate managers over a period of time, by observing & later evaluating their behavior across a series of select exercises.
An assessment centre generally measures interpersonal skills, communication skills, ability to plan & organize, self confidence, resistance to stress, mental alertness etc
11–78
Human Resources AccountingHuman Resources AccountingHuman Resources AccountingHuman Resources Accounting
It deals with cost of and contribution of human resources to the organization.
Cost of the employee includes cost of man power planning, recruitment, selection, induction, placement, training, development, wages & benefits etc.
Employee contribution is the money value of employee service which can be measured by labour productivity or value added by human resources.
11–79
Employee performance can be taken as positive when contribution is more than the cost
Performance can be viewed as negative if cost is more than contribution.
+ Performance- measured in terms of percentage of excess of employee contribution over the cost of employee
- Performance calculated in terms of percentage of deficit in employee contribution compared to cost to the employee
11–80
Management By ObjectivesManagement By ObjectivesManagement By ObjectivesManagement By Objectives
Also called as Goal Setting Approach Requires the managers to set a specific measurable goals with each employee and then periodically discuss his progress to wards these goals
Always refers to a comprehensive, organization wise goal setting and appraisal programme that consists of the following steps:
11–81
STEPSSTEPSSTEPSSTEPS
i. Set the Organization’s Goalsii. Set departmental Goalsiii. Discuss Departmental Goalsiv. Define Expected Results {Set
Individual Goals}v. Performance Reviewvi. Provide Feed Back
11–82
360 Degree Performance Appraisal360 Degree Performance Appraisal360 Degree Performance Appraisal360 Degree Performance Appraisal
A 360 degree appraisal system aims at a comprehensive & objective appraisal of employee performance
In a 360 degree appraisal system, the employee’s performance is evaluated by his supervisor, his peers, his internal/external customers, his internal/external suppliers and his subordinates.
This system reduces the subjectivity of a traditional supervisor appraisal
11–83
360 Degree Performance Appraisal 360 Degree Performance Appraisal 360 Degree Performance Appraisal 360 Degree Performance Appraisal
It is also comprehensive because the feedback is given by the peers, customers, suppliers & subordinates of the employee, who are more directly affected by his behavior and performance, apart from the boss.
11–84
SupervisorsSupervisorsSupervisorsSupervisors
Supervisors include superiors of the employee, other superiors having knowledge about the work of the employee & department head or manager.
Immediate superiors appraise then performance which in turn is reviewed by the departmental head/,manager.
11–85
Peers Peers Peers Peers
Peer appraisal may be reliable if the work group is stable over a reasonably long period of time and performs tasks that require interaction.
Little research has been conducted to determine how peers establish standards for evaluating others or the overall affect of peer appraisal on the group’s attitude.
11–86
SubordinatesSubordinatesSubordinatesSubordinates
The concept of having superiors rated by subordinates is being used in most organizations today.
11–87
Self-AppraisalSelf-AppraisalSelf-AppraisalSelf-Appraisal
If individuals understand the objectives they are expected to achieve and the standards by which they are to be evaluated,
they are to a great extent in the best position to appraise their own performance.
Employee development means self development, employee who appraise their own performance may become highly motivated
11–88
Users of Services / CustomersUsers of Services / CustomersUsers of Services / CustomersUsers of Services / Customers
Employee performance in service org relating to behaviors, promptness , speed in doing the job and accuracy can be better judged by the customers or users of services.
11–89
Limitations of performance Limitations of performance appraisalappraisal
Limitations of performance Limitations of performance appraisalappraisal
Leniency or severity: A manager may be too lenient towards an employee rating or too severe (strict).
Central tendency: Average/middle range of rating may be employed for all employees
Halo error: One aspect of the individual influences the performance rating. E.g. an employee going very late & works even after working hours may be favored & promoted
Rater effect: Favoritism, stereotyping, biases, sex, age, race and friendship are the reasons.
11–90
Primacy & recency effects: early stages of career performance or recent performance are count.
Spill over effect: past performance rating influences current performance rating.
Status effect: depending on the hierarchy or the job title, performance is rated.
Perception effect: strong beliefs / prejudice e.g. regional favoritism.
Performance dimension effect: error in the measurement of performance.
11–91
Uses of Performance AppraisalUses of Performance AppraisalUses of Performance AppraisalUses of Performance Appraisal
Performance Appraisal (PA)– The process of evaluating how well
employees perform their jobs when compared to a set of standards, and then communicating the information to employees.
– Informal Appraisal• Day-to-day contacts, largely undocumented
– Systematic Appraisal• Formal contact at regular time intervals, usually
documented
11–92
T & D needs of the employees can be determined
Org effectiveness can be improved by improving the individual performances of the employees
PAS forms the basis for compensation management in org
Can be used for transfers, promotions and other career planning activities of individual employees
11–93
Uses of Performance AppraisalUses of Performance AppraisalUses of Performance AppraisalUses of Performance Appraisal
An effective PAS also helps in succession planning in the org
An assessment of the value of the human resources helps in org planning.
Helps in evaluating and auditing the existing plans, processes and systems in the org.
11–94
Uses of Performance AppraisalUses of Performance AppraisalUses of Performance AppraisalUses of Performance Appraisal
Uses of Performance Appraisal (cont’d)Uses of Performance Appraisal (cont’d)Uses of Performance Appraisal (cont’d)Uses of Performance Appraisal (cont’d)
PerformancePerformanceAppraisalAppraisal
PerformancePerformanceAppraisalAppraisal
Giving Performance Giving Performance FeedbackFeedback
Giving Performance Giving Performance FeedbackFeedback
Administering Wages Administering Wages and Salariesand Salaries
Administering Wages Administering Wages and Salariesand Salaries
Identifying Strengths Identifying Strengths and Weaknessesand Weaknesses
Identifying Strengths Identifying Strengths and Weaknessesand Weaknesses
11–95
Feedback as a SystemFeedback as a SystemFeedback as a SystemFeedback as a System
11–96
Action Based on Action Based on EvaluationEvaluation
Action Based on Action Based on EvaluationEvaluation
DataDataDataData EvaluationEvaluationof Dataof Data
EvaluationEvaluationof Dataof Data
FeedbackFeedbackSystemSystem
FeedbackFeedbackSystemSystem
Appraisal Interview HintsAppraisal Interview HintsAppraisal Interview HintsAppraisal Interview Hints
11–97Figure 11–12
Essentials of an Effective Appraisal SystemEssentials of an Effective Appraisal SystemEssentials of an Effective Appraisal SystemEssentials of an Effective Appraisal System
Mutual Trust & confidence
Reliability Validity Specific Objectives Standardization Training to Appraisers
Job relatedness Feed back Individual differences
Post Appraisal Interview
Review & Appeal
11–98
Performance Management SystemPerformance Management SystemPerformance Management SystemPerformance Management System
Effective PMS systems are:– Consistent with the strategic mission of the
organization– Beneficial as development tool– Useful as an administrative tool– Legal and job-related– Viewed as generally fair by employees– Effective in documenting employee
performance
11–99
PA is used as basis of so many HR Decisions like promotions, dismissals, transfers etc
Appraisal system is a common target of legal disputes by employees, involving charges of unfairness and personal biases
Recommendations have been made to assist the employers in conducting PA and to avoid legal suits.
Recommendations are based on the court judgment.
11–100
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
Legally Defensible Appraisal Procedures– Every org should have a formal standardized
performance appraisal system. All the HR decisions should be based on this system.
– Employees should be aware and knowledgeable about all specific performance stds.
– All the employees should be given opportunity to review their appraisal results.
– Supervisor should be trained to use the appraisal instruments properly
11–101
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
Legally Defensible Appraisal Procedures– Appraisal criteria based on job analysis– Absence of disparate impact and evidence of
validity– Formal evaluation criterion that limit managerial
discretion– Formal rating instrument linked to job duties and
responsibilities– Personal knowledge of and contact with ratee– Training of supervisors in conducting appraisals– Review process to prevent undue control of
careers– Counseling to help poor performers improve
11–102
Legally Defensible Appraisal Content– Job analysis should be conducted to establish the
performance appraisal contents.– Appraisals based on traits should be avoided
unless these can be defined in terms of observable behavior.
– Specific job related performance dimensions should be used rather than global measures.
– Subjective ratings should be used only as one component of the overall appraisal process
– Performance dimension should be assigned weights to reflect their relative importance in calculating the composite performance score.
11–103
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
Legally Defensible documentation of appraisal results– Written documentation for extreme ratings
should be maintained and it must be consistent with numerical ratings
– All the raters should follow consistent documentation requirements
– A written documented record of all information and reasons bearing on any HR decisions should be properly maintained.
11–104
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
Legally Defensible appraisers– The raters should be trained in or thoroughly
instructed in how to use an appraisal system– The raters should have substantial daily
contact with employees they are rating.– Whenever possible, have more than one
rater conduct the appraisal and conduct all such appraisal & conduct all such appraisals independently.
11–105
Performance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the LawPerformance Appraisals and the Law
11–106