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Performance Appraisal Compiled by Dr. M.Venkatesan
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Page 1: Performace Appraisal

Performance Appraisal

Compiled by

Dr. M.Venkatesan

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Performance Appraisal

Systematic assessment and descriptions of an employee’s accomplishments in the assigned tasks and assessment of job related strengths and weaknesses.

Why appraisal?

Organization needs to know how an employee has performed just as an employee needs to know how his performance has been viewed by the organization.

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Multiple Objectives

It provides inputs to

a. Administration – for pay & promotion decision.

b. Employees on his strengths & weaknesses

c. Training, Counseling, Career Planning and Succession Planning Systems

d. Organization restructuring issues

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Appraisal Methods


ObjectivesAbsolute MethodRelative Standards

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Absolute Methods

Essay type Critical Incident Appraisal Checklist Graphic Rating Scale Forced Choice Behaviourally Anchored Rating Scales


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Relative Standards

Group Order Ranking Top one fifth Second one fifth

Individual Ranking Paired Comparison

by taking total of [n(n-1)]/2

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MBO Expression of expectations before beginning of

appraisal year Periodic reviews and feedback Year end data collection, final appraisal &

feedback Self Appraisal Appraisal discussion and final appraisals

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360 Appraisal Inputs from appraisers, peers, subordinates and

customers outside organizations.

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Problems in Performance Appraisal1. Relating to System-

a. How to evolve measure to assess managerial tasks.

b. Generate data on performance

c. Understanding of system at the top management level.

d. Reliable technique for measuring comparative merit and performance.

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Problems in Performance Appraisal2. Relating to Appraiser-

a. Playing God creates anxiety.

b. Evaluation of personality traits.

c. Bias and halo effect

d. Recency of incidents

e. Central Tendency

f. Too harsh too easy

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Problems in Performance Appraisal3. Relating to Appraisee-

His perspective on system depends on how he earns recognition vis-à-vis others. His criteria are rarely explicit.

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Some Persistent issues

1. Linkage with

a. Development plans

b. Reward Decisions

2. What gets evaluated: Performance or Person

3. Ethical issues in evaluation – Power Carries obligation

4. Subjectivity – Objectivity

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Performance Appraisal :

Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality, performance, potential, of its group members

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Relationship between jab analysis and performance appraisal:Job analysis performanceperformance

standards appraisal

Describes work

& Personnel


Of a particular


Translate job Into levels of To acceptableOr unacceptableperformance

Describes the Job relevant strengths and weakness ofEach individual

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Question arises?

Why do we measure performance? Effective performance appraisal

systems How do we measure performance?

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It is a step by step process It examine the employee strengths and

weaknesses Scientific and objective study Ongoing and continuous process Secure information for making correct

decisions on employees

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Needs and Objectives:

Provide feedback about employees Provide database Diagnose the S & W of individuals Provide coaching, counseling, career

planning to subordinates Develop positive relation and reduce

grievance Facilitates research in personnel


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Appraisal Benefits (cont.)

Appraisals offer employees: Direction Feedback Input Motivation

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Appraisal Benefits Appraisals offer the

company: Documentation Employee Development Feedback Legal protection Motivation system

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Why Appraisals Are Important

•Recognize accomplishments•Guide progress•Improve performance

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Why Important (cont.) Review performance Set goals Identify problems Discuss career advancement

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Steps in performance appraisalEstablishing job standards

Designing an appraisal programme

Appraise performance

Performance interview

Use appraisal dataFor appropriate purpose

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Process of PA

Setting performance

standardsTaking correctivestandards


Comparing standards



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Issues in appraisal system

Appraisal Design?

Formal and informal

Whose performance?

Who are the raters?

What problems?

How to solve?

What to evaluate?

When to evaluate?

What methods?

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What to evaluate? (Philip Model)

Problem children









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How PA contribute to firm’s competitive advantages

Improving performance

Making correct decision

Ensuring legal competence

Minimizing dissatisfactionAnd turnover

Values and behavior

Competitive advantage

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Problems in performance appraisal1. Errors In rating

Halo effects Stereotyping Central tendency Constant error Personal bias Spill over effect

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2. Incompetence

3. Negative approach

4. Multiple objectives

5. Resistance

6. Lack of knowledge

Problems in performance appraisal (Cont’d)

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Essentials of an effective appraisal system Mutual trust

Clear objectives Standardizations Training Job relatedness Documentation Feedback and participation Individual differences Post appraisal review Review and appeal

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Appraisals and Discrimination Title VII ADA Other fair employment Laws

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Discrimination (cont.) Failure to communicate standards Failure to give timely feedback Failure to allow employees to

correct performance Inconsistency in measuring

performance Failure to document performance


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Appraisal Forms

Define performance expectations Describe measurement tools Use a rating system Cover specific examples Set measurable goals

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Measure Performance

Measurement systems need to be: Specific Fair Consistent Clear Useful

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Measure Performance (cont.)

Systems can be: Numerical Textual Management by Objective (MBO) Behavior oriented

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Document Performance

Make sure documentation is objective Document performance of all

employees Provide complete and accurate

information Document performance on a regular


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Set Goals…. Based on job requirements Realistic Measurable Observable Challenging Prioritized

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Employee Input

Employees take an active role: Setting goals Designing action plans Identifying strengths and

weaknesses Employees participate in the PA


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Employees: Review performance Think about new goals

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Preparation (cont.)

Supervisors: Review performance Complete written appraisal Think about new goals Schedule time and place

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Start the Meeting Lay out agenda Talk about money Encourage input Give good news


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During the MeetingReview performance: Based on previous goals Noting strengths and

accomplishments Identifying areas for improvement

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Presentation Tips

Focus on the professional Give objective examples Invite response Listen actively Create “we” mentality

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During the Meeting (cont.) Set goals: Based on company goals

Building on areas that need improvement

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End the Meeting

Encourage good performance Lay out action plan Communicate outcome of goals not

met Confirm understanding

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Continuous Feedback

Formal appraisals Informal appraisals Open


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Recognize Good Performance Verbal

Public Tangible Monetary

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Identify Poor Performance

Act early Take the right approach Deal with employee reaction Handle continued poor


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Discipline Poor Performance Recognize problems Talk with employee Follow company policy

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Handle Hard Cases

Reviewing highly emotional employees

Rating former peers

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Key Points to Remember You must conduct objective appraisals on a

scheduled basis.

Appraisals tell employees how they’re doing and how they can improve.

Appraisals help create a system of motivation and rewards based on performance.

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Performance Appraisal Methods Individual Evaluation Methods

Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale MBO

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Critical Incident method

Ex: A fire, sudden breakdown, accident

Workers reaction scale

A informed the supervisor immediately 5B Become anxious on loss of output 4C tried to repair the machine 3D Complained for poor maintenance 2E 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/NIs employee respected by subordinate Y/NIs employee helpful Y/NDoes he follow instruction Y/NDoes he keep the equipment in order Y/N

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Weighted checklist method

weights performance rating(scale 1 to 5 )

Regularity 0.5Loyalty 1.5Willing to help 1.5Quality of work 1.5Relationship 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 _

DependabilityInitiativeOverall outputAttendanceAttitudeCooperationTotal score Continuous Rating Scale

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Discontinuous Rating Scale







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BARS( behaviorally Anchored rating scale)

Step 1. Identify critical incidents

Step 2. Select performance dimension

Step 3. Retranslate the incidents

Step 4. Assign scales to incidents

Step 5. Develop final instrument

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MBO Process

Set organizational goals Defining performance target Performance review feedback

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Group Appraisal Ranking Paired comparison Forced distribution Performance tests Field review


Performance Appraisal Methods

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Ranking methodEmployee Rank

A 2

B 1

C 3

D 5

E 4

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Paired comparison method

A B C D E Final RankA - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - + 4

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

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Forced Distribution method

10% 20% 40% 20% 10%

poor Belowaverage

average good Excellent

No. of employees

Force distribution curve

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Field review methodPerformance subordinate peers superior customerDimension

Leadership ^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^

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Performance criteria for executives For top managers

Return on capital employed Contribution to community development Degree of upward communication from middle-

level executives Degree of growth and expansion of enterprise.

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For middle level managers

Departmental performance Coordination among employees Degree of upward communication from

supervisors Degree of clarity about corporate goals and


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For supervisors

Quality and quantity of output in a given period Labor cost per unit of output in a given period Material cost per unit in a given period Rate of absenteeism and turnover of employees No of accidents in a given period

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Performance Appraisal system is a part of ongoing management process, the purposes of which are to:

Provide for systematic planning by allowing the manager to identify critical job elements & objectives.

Conduct a systematic review of employees overall performance & provide constructive feedback.

Provide objective information to guide management decisions on promotions etc.

Establish an objective basis for determining annual performance.

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Establishing Performance Standards Communicating Performance Standards to

employees  Measuring Actual Performance Comparing Actual Performance with

Standards  Discussing appraisal with the employees Taking Corrective Action

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The following criteria should be followed to make the performance appraisal more effective:

Make performance appraisal part of an ongoing process

Look at all aspects of an employee’s performance

Make specific and constructive judgments Criticize work habits & behavior, not the person Don’t let marginal employees slide Keep complete written records for all

performance appraisals.

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Developing Business Plans Establishing aspects of performance that need

to be measured Setting up Systems to Monitor & Evaluate Defining the General Performance Expectations

of Employees Agreements on Specific Performance Objectives Developing an Internal Communications System Ensuring that the performance Appraisal

System is well understood & is working effectively

Supporting employees to help them perform well

Seeking Performance improvement Recognizing & Rewarding good performance

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Technical Managerial Human Conceptual

Skilled workers, operators, clerks, typist, foreman, etc.

Very much essential

Not needed Some desirable Some essential

Not Needed

First level supervisor, junior

Very essential A few are desirable

Some desirable Some essential

Not Needed

Junior & middle level manager

Some important many not essential

Important Some essential

A few are useful

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Junior & middle level manager

Some important many not essential

Important Some essential

A few are useful

Senior managers, Head of Dept./Sec

A few are desirable

Very essential

Many are needed Some are important


Unit Heads, GM etc.

A few are desirable

Very essential

Many are essential & important


Chief Executives

Not needed Important Very essential

Most Essential

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Traditional Modern

•Graphic Rating Scales•Confidential Report•Straight Ranking Method•Paired Comparison Method•Forced Distribution Method•Grading System•Checklist Method•Critical Incident Method

•HR Scorecard•HR Accounting•Competency Mapping•Assessment & Development Centre•360 degree Appraisal•540 degree Appraisal•Management by Objective (MOB)•Behaviorally Anchored Rating Scale (BARS)

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Identifying Job Families Identifying Competencies Defining Competencies Strategizing Competencies Defining Measurement Scale Position Profiling Person Profiling

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Development of Reward Strategy


Business Strategy

Satisfy need and expectations of stake holdersProvide added value to customers

HR Stratery

Define what the organization wants & is prepared to pay for encourage & support desired behaviorDevelop & maintain competitve pay policies which will attract & retain high quality people.Adopt a total rewards approach which includes a mix of rewards the best meets & individuals needs.

Reward Strategy

Obtain, develop and retain the skilled, motivated & committed people the organization needs

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Reward Management Process

Non FinancialRewards

Employee Benefits


Business Reward Pay Pay Levels Total ImprovedStrategy Strategy Structures & relativities remuneration performance

Job Evaluation

Performance Pay

Perfomance EmployeeMangement development