Performance appraisal

PERFORMANANCEAPPRAISAL

byProf. N. N. PANDAGIACR, RAYAGADA

Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development.

The process by which a manager or consultant (1) examines and evaluates an employee's work behavior by comparing it with preset standards, (2) documents the results of the comparison, and (3) uses the results to provide feedback to the employee to show where improvements are needed and why.

Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.

Performance appraisal is generally done in systematic ways which are as follows:a. The supervisors measure the pay of employees and compare it with targets and plans.b. The supervisor analyses the factors behind work performances of employees.c. The employers are in position to guide the employees for a better performance.

Objectives of Performance AppraisalPerformance Appraisal can be done with following objectives in mind:1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc. 2. To identify the strengths and weaknesses of employees to place right men on right job. 3. To maintain and assess the potential present in a person for further growth and development.

4. To provide a feedback to employees regarding their performance and related status. 5. To provide a feedback to employees regarding their performance and related status. 6. It serves as a basis for influencing working habits of the employees. 7. To review and retain the promotional and other training programmes.

Broadly, all the approaches to appraisal can be classified into I) Traditional methods II) Modern methods

TRADITIONAL METHODS MODERN METHODS

Graphic Rating scales Management by objectives

Checklists 360-Degree appraisal

Forced distribution method Psychological appraisals

Critical incident method Assessment centres

Field review method BARS

Performance tests and observations

Cost accounting Method

Annual confidential reports

Essay method

Comparative evaluation approach

Ranking method

1. Graphic Rating scale: Rating scales offer the advantages of adaptability, relatively easy use and low cost. Nearly every type of job can be evaluated with the rating scale, the only requirement being that the job-performance criteria should be changed. This way, a large number of employees can be evaluated in a short time, and the rater does not need any training to use the scale. The disadvantages of this method are several. The rater’s biases are likely to influence evaluation, and the biases are particularly pronounced on subjective criteria such as cooperation, attitude and initiative, furthermore, numerical scoring gives an illusion of precision that is really unfounded.

2. Checklist: Here a checklist of behaviour descriptions is prearranged and each person is evaluated against such list. Rater merely record the list and a separate group can allocate weight ages for each list and finally arrive at total points or marks obtained. Advantages: Checklist reduces subjectively because recording is done by someone else act as the rater. Rater, at the end put weightages and adds marks. Comparison possible. Limitations: Normally confined to staff of personnel department. Difficult for all jobs.

3. Straight Ranking Method – Under this method the employees are ranked from best to worst on some characteristics. The rater first finds the employee with the highest performance & the employees with the lowest performance in that particular job category and rates the former as the best and the latter as the poorest. Then the rater selects the next highest and lowest and so on until he rates all the employees in that group.

4. Critical incidents method: The critical incidents method of employee assessment has generated a lot of interest these days. The approach focuses on certain critical behaviours of an employee that make all the difference between effective and non-effective performance of a job. The critical incidents method of performance appraisal is based on managers' spending time during the year observing and gathering behavioral data on their employees, while looking extra carefully for those critical incidents.

5. Field review method: This is an appraisal by someone outside the assessee’s own department, usually someone from the corporate office or the HR Dept. The outsider reviews employee records and holds interviews with the ratee and his or her supervisor. The method is primarily used for making promotional decision at the managerial level. Field reviews are also useful when comparable information is needed form employees in different units or locations.

6. Essay method: In the essay method, the rater must describe the employee within a number of broad categories, such as (i) the rater’s overall impression of the employee’s performance, (ii) the profitability of the employee, (iii) the jobs that the employee is now able or qualified to perform, (iv) the strengths and weakness of the employee, and (v) the training and the development assistance required by the employee. Although this method may be used independently, it is most frequently found in combination with others. It is extremely useful in filing information gaps about the employees that often occur in the better-structured checklist method.

7. Confidential Records: Confidential records are maintained mostly in government departments, though its application in the industry is not ruled out.

It is descriptive in nature.Prepared at the end of the year.Prepared by the superior authorities which shows strength and weakness of employees.

8. Performance Tests and observations: With a limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may be of the paper-and-pencil variety or an actual demonstration of skills. The test must be reliable and validated to be useful. Even then, performance tests are apt to measure potential more than actual performance. In order for the test to the job related, observations should be made under circumstances likely to be encountered.

9. Paired Comparison MethodIn this method, each employee is compared with the other on one-to-one basis. This method makes judgment easier as compared to ranking method. The number of times the employee is rated as better in comparisons with others determines his or her final ranking.

The total number of comparison can be ascertained by the following formula :where N stands for number of employees to be evaluated.The concept can be illustrated with the help of thefollowing example.If the following five students Ashok (A), Bina (B), Chitra (C), Dinesh (D), Eillen (E) have to be evaluated for the best student award, the total number of comparison would be = 10

A with BA with C B with CA with D B with D C with DA with E B with E C with E D with E

The number of times a student gets a better score, would be the basis for selecting the Best Student. This method is not appropriate if a large number of students are required to be evaluated.

10. Forced Distribution Method The method under the operation that an employees performance can be plotted in a bell-shaped curve. Here 10% of the employees are given excellent grade, 20% are given good grade, 40% are given average grade, next 20% are given below average grade and last 10% are given unsatisfactory grade.

The modern techniques of performance are-1. Management by Objectives (MBO)MBO can be described as "a process whereby the superior and the immediate subordinate of an organisation jointly identify the common goals, define each individual's major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."

In this method emphasis is laid on stating objectives for Key Result Areas (KRAs) in Quantifiable terms.

MBO is used as a performance appraisal technique, as it is easy to measure whether the stated objectives have been achieved or not.

Objective: • To change behaviour and attitude towards getting the job done. • It is management system and philosophy that stress goals rather than method. • It provides responsibility and accountability. • To meet these needs by providing opportunities for participation in goal-setting process. On the basis of these factors rater’s especially HR department used to make appraisal of the employees in the organization.

2. 360-Degree Method – The 360-degree technique is understood as systematic collection of performance data on an individual or a, group derived from a number of stakeholders—the stakeholders being the immediate, team members customers peers and

self.

The 360-degree appraisal provides a broader perspective about an employee’s performance. In addition, the technique facilitates greater self-development of the employees. Besides, the 360-degree appraisal provides formalized communication links between an employee and his or her customers. It makes the employee feel much more accountable to his or her internal or external customers.

The technique is particularly helpful in assessing soft skills possessed by employees. By design, the 360-degree appraisal is effective in identifying and measuring interpersonal skills, customer satisfaction, and team-building skills.

3. Psychological AppraisalsLarge organizations employ full-time industrial psychologists. When psychologists are used for evaluations, they assess and individual’s future potential and not past performance. The appraisal normally consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations.

The psychologists writes an evaluation of the employee’s intellectual, emotional, motivational and other related characteristics that suggest individual potential and may predict future performance.

Because this approach is slow and costly, it is usually required for bright young members who, think, may have considerable potential within the organization. Since the quality of the appraisal depends largely on the skills of the psychologists, some employees object to this type of evaluation, especially if cross-cultural differences exist.

4. Assessment Centres This method was used to appraise army officers in Germany way back in 1930s. The concept was adapted from army to business arena in 1960s. In India, the concept has been adopted by organisations such as Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox recently.

This method is mainly used to evaluate executive and supervisory potential. Here employees are taken to a place away from work and a series of tests and exercises are administered. For example, assesses are asked to participate in; in-basket exercise, simulations, group exercise and role plays. Performance of the employee is evaluated in each of these tests and feedback is provided to the ratee, in terms of strengths and weaknesses.

5. BARS (Behaviourally Anchored Rating Scale)

In order to overcome the problem of judgmental evaluation, this method was conceived by some organisations. This method combines the benefits of Essay Method, Critical Incident and Rating scales.

In this method the employee's behaviour and performance dimensions are analysed and used for evaluating the performance of the employee.

The HR department is involved in the process of preparing the BARS. Based on the Employee's performance and behaviour, employees are anchored in different slots of good, average and poor. The rater is required to give corresponding ratings to the employee.

HE HAS COMMOND OVER THE SUBJECTHE HAS LATEST INFORMATION

HE IS DEPENDABLE

HE HAS SUBJECT KNOWLEDGEHE IS NOT UP-TO-DATE

HE IS NOT VERY DEPENDABLE

HE HAS NO SUBJECT KNOWLEDGEHE HAS NO LATEST INFORMATION

HE IS NOT DEPEDNABLE

BARS

GOOD

AVERAGE

POOR

6. Cost Accounting method/ Human asset accounting methodThis method evaluates an employee's performance in relation to the contribution of an employee in monetary terms. Here the rater evaluates the employee in terms of cost of retaining the employee and the benefits the organisation derives from him/her.

The following factors are taken into account in this method :(1) Cost of training the employee.(2) Quality of product or service rendered.(3) Accidents, damages, errors, spoilage, wastages, etc.(4) The time spent in appraising the employee.