PERFORMANCE APPRAISAL SYSTEM IN INSURANCE
PERFORMANCE APPRAISAL SYSTEM IN TATA AIG LIFE INSURANCE
Introduction toPerformance Appraisal
The history of performance appraisal is quite brief.Its roots in
the early 20th century. But this is not very helpful, for the same
may be said about almost everything in the field of modern human
resources management. As a distinct and formal management procedure
used in the evaluation of work performance, appraisal really dates
from the time of the Second World War - not more than 60 years ago.
Yet in a broader sense, the practice of appraisal is a very ancient
art. In the scale of things historical, it might well lay claim to
being the world's second oldest profession!
There is, says Dulewicz (1989), ".. a basic human tendency to
make judgments about those one is working with, as well as about
oneself." Appraisal, it seems, is both inevitable and universal. In
the absence of a carefully structured system of appraisal, people
will tend to judge the work performance of others, including
subordinates, naturally, informally and arbitrarily.
The human inclination to judge can create serious motivational,
ethical and legal problems in the workplace. Without a structured
appraisal system, there is little chance of ensuring that the
judgments made will be lawful, fair, defensible and accurate.
Performance appraisal systems began as simple methods of income
justification. That is, appraisal was used to decide whether or not
the salary or wage of an individual employee was justified.
The process was firmly linked to material outcomes. If an
employee's performance was found to be less than ideal, a cut in
pay would follow. On the other hand, if their performance was
better than the supervisor expected, a pay rise was in order.
Little consideration, if any, was given to the developmental
possibilities of appraisal. It was felt that a cut in pay, or a
rise, should provide the only required impetus for an employee to
either improve or continue to perform well. Sometimes this basic
system succeeded in getting the results that were intended; but
more often than not, it failed.
For example, early motivational researchers were aware that
different people with roughly equal work abilities could be paid
the same amount of money and yet have quite different levels of
motivation and performance. These observations were confirmed in
empirical studies. Pay rates were important, yes; but they were not
the only element that had an impact on employee performance. It was
found that other issues, such as morale and self-esteem, could also
have a major influence.
As a result, the traditional emphasis on reward outcomes was
progressively rejected. In the 1950s in the United States, the
potential usefulness of appraisal as tool for motivation and
development was gradually recognized. The general model of
performance appraisal, as it is known today, began from that
time.
Most persons share a desire to know the answer to the question,
"How am I doing?" They want to know what is expected of them, how
well they are meeting the expectations, how they can improve, and
some want to know how they might qualify for higher
responsibilities. The process of performance appraisal should
provide the opportunity for discussion of these concerns. The
process should also provide the basis for enhanced communication
among college personnel.
The feedback is one of the most important tools provided by
Human Resources to managers as the motivational tool. The feedback
by Human Resources is organized usually in the process of the
Performance Appraisal. When speaking with HRM Professionals, you
can hear a lot about the performance management process and the
forms used to formalize the whole process of the performance
appraisals. Generally, the manager should give feedback and the
quality of the feedback provides the performance appraisals to the
individual employee. But as the HRM Function wants to have a
control over the whole performance management process, the main
stress is put on the formal record of the whole performance
appraisal discussion.
The performance appraisals can have a huge impact on the future
of the employee in the company. When the feedback is provided
correctly and the manager makes a follow up of all the agreements
done during the performance appraisal interview, the performance
appraisals can work without any formal documents.As the HRM
Function is responsible for the performance management process, it
brings new and better performance appraisal forms every single
year. And the result usually fails every year. The managers and the
employees do not see the benefits of participating in the
performance review process as they take it as an activity driven by
Human Resources for Human Resources.
The HRM Function cannot promote the performance appraisals as
the set of forms to be filled by the manager and confirmed by the
employee. The HRM Function has to promote the consequences of the
performance management process and the positive impact on the
future of the employee in the organization.
Definition of Performance AppraisalAppraisal is a process that
provides an analysis of a Persons overall capabilities and
potential, allowing informed decisions to be made for particular
purposes. An Important part of the process is assessment, whereby
data on an individuals past and current work behavior and
Performance are collected and reviewed.
Concepts
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 depicted in the diagram below. This
multiple-input approach to performance feedback is sometimes called
360-degree assessment to connote that full circle. There are no
prohibitions in law or regulation against using a variety of rating
sources, in addition to the employees supervisor, for assessing
performance.
Research has shown assessment approaches with multiple rating
sources provide more accurate, reliable, and credible information.
For this reason, the U.S. Office of Personnel Management supports
the use of multiple rating sources as an effective method of
assessing performance for formal appraisal and other evaluative and
developmental purposes. The circle, or perhaps more accurately the
sphere, of feedback sources consists of supervisors, peers,
subordinates, customers, and ones self. It is not necessary, or
always appropriate, to include all of the feedback sources in a
particular appraisal program.
The organizational culture and mission must be considered, and
the purpose of feedback will differ with each source. For example,
subordinate assessments of a supervisors 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 teams or agencys 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.
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 employees
performance plan and the evaluation of programs and teams by senior
managers.
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.
PEERS
With downsizing and reduced hierarchies in organizations, as
well as the increasing use of teams and group accountability, peers
are often the most relevant evaluators of their colleagues
performance. Peers have a unique perspective on a co-workers job
performance and employees are generally very receptive to the
concept of rating each other. Peer ratings can be used when the
employees 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.
SUBORDINATESAn upward-appraisal process or feedback survey
(sometimes referred to as a SAM, for Subordinates Appraising
Managers) is among the most significant and yet controversial
features of a full circle performance evaluation program. Both
managers being appraised and their own superiors agree that
subordinates have a unique, often essential, perspective. The
subordinate ratings provide particularly valuable data on
performance elements concerning managerial and supervisory
behaviors. However, there is usually great reluctance, even fear,
concerning implementation of this rating dimension. On balance, the
contributions can outweigh the concerns if the precautions noted
below are addressed.
CUSTOMERSExecutive Order 12862, Setting Customer Service
Standards, requires agencies to survey internal and external
customers, publish customer service standards, and measure agency
performance against these standards. Internal customers are defined
as users of products or services supplied by another employee or
group within the agency or organization. External customers are
outside the organization and include, but are not limited to, the
general public.
Basic PurposesEffective performance appraisal systems contain
two basic systems operating in conjunction: an evaluation system
and a feedback system.
The main aim of the evaluation system is to identify the
performance gap (if any). This gap is the shortfall that occurs
when performance does not meet the standard set by the organization
as acceptable.
The main aim of the feedback system is to inform the employee
about the quality of his or her performance. (However, the
information flow is not exclusively one way. The appraiser also
receives feedback from the employee about job problems, etc.)One of
the best ways to appreciate the purposes of performance appraisal
is to look at it from the different viewpoints of the main
stakeholders: the employee and the organization.
EMPLOYEE VIEWPOINTFrom the employee viewpoint, the purpose of
performance appraisal is four-fold:
(1) Tell me what you want me to do
(2) Tell me how well I have done it
(3) Help me improve my performance
(4) Reward me for doing well.
ORGANIZATIONAL VIEWPOINT
From the organization's viewpoint, one of the most important
reasons for having a system of performance appraisal is to
establish and uphold the principle of accountability.For decades it
has been known to researchers that one of the chief causes of
organizational failure is "non-alignment of responsibility and
accountability." Non-alignment occurs where employees are given
responsibilities and duties, but are not held accountable for the
way in which those responsibilities and duties are performed. What
typically happens is that several individuals or work units appear
to have overlapping roles.
The overlap allows - indeed actively encourages - each
individual or business unit to "pass the buck". This event, the
principle of accountability breaks down completely. Organizational
failure is the only possible outcome. In cases where the
non-alignment is not so severe, the organization may continue to
function, albeit inefficiently. Like a poorly made or badly tuned
engine, the non-aligned organization may run, but it will be
sluggish, costly and unreliable. One of the principal aims of
performance appraisal is to make people accountable. The objective
is to align responsibility and accountability at every
organizational level.
ORGANISATION PROFILEINTRODUCTION ON TATA AIG
THE TATA GROUP
The Tata Group, easily India's most recognized business group,
was founded by Jamsetji Tata and began with a textile mill in
central India in the 1870s. From there, it has evolved into a truly
diversified conglomerate spanning, among other sectors,
Engineering, Energy, Chemicals, Consumer Products, and
Communications & IT. The Tata Group is one of Indias best-known
industrial groups with an estimated turnover of around US $14.25
billion (approximately 26% of Indias GDP). With more than 220,000
employees across 91 major companies, it is also Indias largest
employer in the private sector.
The Tata Group pioneered several firsts in Indian industry
firsts, including: India's first private sector steel mill, first
private sector power utility, first luxury hotel chain and first
international airline, amongst others. Recently, the Tata Group's
pioneering spirit has been showcased by companies such as Tata
Consultancy Services (TCS), Asia's largest software and services
company, and Tata Motors, the first car maker in a developing
country to design and produce a car from the ground up.
The Tata Group stable of brands also includes many national and
some internationally renowned product and service brands,
including:Motors (multi-utility cars)
Tata Motors, India's largest automobile company, manufactures
two kinds of multi-utility vehicles: the well-appointed Tata Safari
and practical Tata Sumo.Tata Motors (Passenger Cars)
Tata Motors has a pioneering presence in India's automobile
industry, best illustrated by the path-breaking creation of the
Indica, a hatchback that was the country's first indigenously
designed and manufactured car. Since then the company has expanded
its passenger cars portfolio, which now also boasts the Indigo, a
sedan, and the Indigo Marina, a station wagon.The Taj Group of
Hotels (Luxury, Business and Leisure)
Jamsetji Nusserwanji Tata, the founder of the Tata Group,
incorporated the Indian Hotels Company on April 1, 1902, for the
ownership and operation of the renowned Taj Mahal Palace and Tower,
Mumbai. Indian Hotels and its subsidiaries are collectively known
as Taj Hotels Resorts and Palaces and, together, form the largest
hotel chain in IndiaTata Tea & Tetley
The Tata Group runs the world's second-largest branded tea
operation. Tata Tea and Tata Tetley are the two companies that
power the group's leadership drive in the worldwide tea
industry.Tata Salt
Besides tea and coffee, Tata Group enterprises are also involved
in the production of food additives and spices. Tata Salt is the No
1 food brand among India's most trusted brands. India's most
preferred salt is one of the purest available in the country.
Moreover, Tata Salt contains the right amount of iodine, vital for
physical and mental growth and development.
Titan
Titan Industries is India's leading manufacturer of watches and
the world's sixth largest manufacturer brand of watches. The
company makes about 7 million watches and clocks every year and has
a customer base of some 60 million. It enjoys over 50 per cent
market share in India's organized watch segment.Tanishq
Tanishq, a division of Titan Industries, is India's largest
jewellery brand. It has 74 boutiques in 55 cities across the
countryWestside (Garment Retail Outlet)
Trent, the Tata Company that owns and operates the Westside
chain of lifestyle stores, retails garments and household
accessories. Set up in 1998, Westside is among the fastest-growing
retail chains in India. It has a team of dedicated merchandisers,
store staff and in-house designers, and its store portfolio
comprises clothes and accompaniments for men, women and children.
The chain also sells household accessories, cosmetics and perfumes.
The other products and brands are: Tata Steelium, Tata Shaktee,
Tata Tiscon, Tata Bearings and Voltas.
By combining ethical values with business acumen, globalization
with national interests and core businesses with emerging ones, the
Tata Group aims to be the largest and most respected global brand
from India whilst fulfilling its long-standing commitment to
improving the quality of life of its stakeholders.
THE AIG GROUP
American International Group, Inc. is the world's leading
international insurance and financial services organization, with
operations in more than 130 countries and jurisdictions. AIG member
companies serve commercial, institutional and individual customers
through the most extensive worldwide property-casualty and life
insurance networks of any insurer. In the United States, AIG
companies are the largest underwriters of commercial and industrial
insurance and AIG American General is a top-ranked insurer. AIG's
global businesses also include retirement services, financial
services, and asset management.
AIG's financial services businesses include aircraft leasing,
financial products, trading and market making. American General
Finance leads AIGs growing global consumer finance business in the
United States. AIG also has one of the largest U.S. retirement
savings businesses through AIG SunAmerica and AIG VALIC, and is a
leader in asset management for the individual and institutional
markets, with specialized investment management capabilities in
equities, fixed income, alternative investments and real estate.
TATA AIG
Tata AIG Life Insurance Company Ltd. is a joint venture of the
Tata Group and American International Group, Inc. (AIG). The Tata
Group holds 74 per cent stake in the two insurance ventures while
AIG holds the balance 26 per cent stake. Tata AIG General Insurance
Company, which started its operations in India on January 22, 2001,
offers the complete range of insurance for automobile, home,
personal accident, travel, energy, marine, property and casualty,
as well as several specialized financial lines. Tata AIG Life
Insurance Company Ltd. is India's leading insurance company
providing both Life and General Insurance. It represents the trust
and integrity of TATA group combined with the international
expertise and financial strength of AIG, Inc.
For individuals: motor, health, and accident and health n
travel.
For Corporate: accident n health, travel, energy, property,
marine n contingency. INSURANCE REGULATORY DEVELOPMENT AUTHORITY
(IRDA)
ABOUT IRDA
IRDA is a government body that protects the interests of the
policyholders, to regulate, promote and ensure orderly growth of
the insurance industry and for matters connected therewith or
incidental thereto. The way RBI controls all the banks, in the same
manner IRDA takes control of all the insurance companies. It
includes registrations, licensing and laying down regulations for
proper conduct of business.IRDA NORMS FOR TRAINING AS A FINANCIAL
ADVISOR
A financial advisor must possess a license issued by IRDA.
The qualifications necessary before a license can be given are
that the person must:
Be at least 18 years old
Have passed at least the 12th standard or equivalent
examination
Have undergone practical training for at least 100 hrs in life
or general insurance business
Have passed the pre-recruitment examination conducted by the
IRDA.
DOCUMENTS REQUIRED
On the time of the registration, the candidate has to bring
along a list of documents. These are:
6 photographs
Identification proof
Date of birth proof
Highest Education proof
Residence proof
Rs. 1000/- Demand Draft favoring Tata AIG Life Insurance company
Ltd. Payable at New Delhi.
PRODUCT PROFILE OF TATA AIG
PRODUCTS
Tata AIG Life Insurance Company specializes in helping their
customer in fulfilling their future financial goals and builds an
extra security cover for their family and loved ones. The various
products offered are: Invest assure- Unit Linked Insurance Plan:
This highly flexible plan gives you full life cover AND high
returns AND the flexibility of deciding the length of your life
cover term, the amount of cover you receive & where the rest of
your premium is invested.
Mahalife: This exceptional policy ensures that you have a steady
income and insurance coverage for life! Premiums are payable only
for the first 12 years. You can even use this to create a steady
stream of post retirement income.
Educare: This first of its kind juvenile endowment policy is
geared toward funding your childs education. You can choose between
Assure Educare 18 and Assure Educare 21, depending on your childs
needs.
Shubh Life: This plan provides you 100% life insurance
protection and high returns on your investment but the premiums you
pay are among the lowest of any similar endowment policy.
Money Saver Plan : This savings plan provides you with cash
payments in the form of survival benefits at regular intervals to
fund your childs needs at critical milestones or support your
financial obligations. You get the dual benefits of life insurance
coverage plus the flexibility of periodic payments.
Nirvana & Nirvana Plus: This is Indias first and only
pension policy with a guaranteed addition of 10 percent of sum
assured every 5 years. You can choose from three levels of cover,
and also decide the age you want to retire.
Starkid: An exceptional endowment policy that ensures you can
afford to give your child the very best for his career &
marriage.
Health Protector: The average cost for a major surgery or
treatment in hospital is between three to five lakh. Health
Protector is the first product of its kind in India that offers you
protection in case ANYONE in your family has an accident or falls
ill.
MARKET SHARE OF TATA AIG TATA AIG Life Insurance Company has
said that it aimed to be the number-two private player in the life
insurance industry with a market share of 20 per cent by 2007.
Mr. Trevor Bull, Managing Director, Tata AIG, estimated that by
2007, private players would have about 40 per cent of the total
life insurance market; currently dominated by the Life Insurance
Corporation. Tata AIG Life Insurance Co. is expecting a 85-90%
growth in its total premium income in 06-07.
Tata AIG has 85 offices in cities, and would be opening 20-25
new offices during 06-07 to cater to a larger customer base. Profit
from General Insurance for 05-06 is estimated to be 13.6 crore.
DEVELOPMENTAL PERFORMANCE APPRAISAL PURPOSES
The developmental approach to performance appraisal has been
related to employees as individuals. This approach has been
concerned with the use of performance appraisal as a contributor to
employee motivation, development, and human resources planning. The
development approach contained all of the traditional overall
organizational performance appraisal purposes and the following
additional purposes:
1. Provided employees the opportunity to formally indicate the
direction and level of the employee's ambition
2. Show organizational interest in employee development, which
was cited to help the enterprise retain ambitious, capable
employees instead of losing the employees to competitors
3. Provided a structure for communications between employees and
management to help clarify expectations of the employee by
management and the employee
4. Provide satisfaction and encouragement to the employee who
has been trying to perform well.
EXPECTATIONS OF A MANAGER IN DOING A PERFORMANCE APPRAISAL
The following is typically expected from company managers when
doing performance appraisals:
i. Translate organizational goals into individual job
objective.
ii. Communicate management's expectations regarding employee
performance.
iii. Provide feedback to the employee about job performance in
light of management's objectives.
iv. Coach the employee on how to achieve job
objectives/requirements.
v. Diagnose the employee's strengths and weaknesses.
vi. Determine what kind of development activities might help the
employee better utilize his or her skills improve performance on
the current job.
Objectives of Performance AppraisalsPerformance appraisals seek
to meet specific objectives. They include tell and sell, tell and
listen, problem solving, and mixed model. Tell and sell is
evaluative in nature. It is used for purely evaluative purposes.
The supervisor coaches by telling the employee the evaluation and
then persuading the employee to follow recommendations for
improvement. Tell and listen is evaluative in nature.
The supervisor coaches by telling the employee the evaluation
and then listens to the employee's reactions to the evaluation in a
nonjudgmental manner. Problem solving is developmental in nature
and involves counseling. It is used for employee development
purposes. The supervisor does not offer evaluation but lets the
employee decide his or her weak areas and works with the employee
to develop an action plan for improvement. The mixed model combines
coaching and counseling. It is used for both evaluative and
development purposes. The supervisor begins the appraisal with a
problem-solving session and concludes with a more directive tell
and sell approach.
Data relating to performance assessment of employees are
recorded , stored and use for several purposes. The main purposes
of employee assessment are as follows:-1. To effect promotions
based on competence and performance
2. To confirm the services of probationary employees upon their
completing the probationary period satisfactory.
3. To assess the training and development needs of
employees.
4. To decide upon the pay raise where regular pay scales have
not been fixed.
5. To let the employees know where they stand in so far their
performance is concerned and to assess them with constructive
criticism and guidance for the purpose of their development.
6. To improve communication. Performance appraisal provides the
format for dialogue between the superior and the subordinator, and
improves understanding of personal growth and concerns. This can
also have the effect of increasing the trust between rater and
ratee.
7. Finally, performance appraisal can be used to determine
whether HR programmes such as selection, training and transfers
have been effective or not.
BROADLY, PERFORMANCE APPRAISAL SERVES FOUR OBJECTIVES:1.
Development uses:
2. Administrative decision;
3. Organizational maintenance;
4. Documentation purposes
1. Pre-requisites for Effective & Successful Performance
Appraisal
The essentials of an effective performance system are as
follows:
Documentation means continuous noting and documenting the
performance. It also helps the evaluators to give a proof and the
basis of their ratings.
Standards / Goals the standards set should be clear, easy to
understand, achievable, motivating, time bound and measurable.
Practical and simple format - The appraisal format should be
simple, clear, fair and objective. Long and complicated formats are
time consuming, difficult to understand, and do not elicit much
useful information.
Evaluation technique An appropriate evaluation technique should
be selected; the appraisal system should be performance based and
uniform. The criteria for evaluation should be based on observable
and measurable characteristics of the behavior of the employee.
Communication Communication is an indispensable part of the
Performance appraisal process. The desired behavior or the expected
results should be communicated to the employees as well as the
evaluators. Communication also plays an important role in the
review or feedback meeting. Open communication system motivates the
employees to actively participate in the appraisal process.
Feedback The purpose of the feedback should be developmental
rather than judgmental. To maintain its utility, timely feedback
should be provided to the employees and the manner of giving
feedback should be such that it should have a motivating effect on
the employees future performance. Personal Bias Interpersonal
relationships can influence the evaluation and the decisions in the
performance appraisal process. Therefore, the evaluators should be
trained to carry out the processes of appraisals without personal
bias and effectively2. Benefits of AppraisalPerhaps the most
significant benefit of appraisal is that, in the rush and bustle of
daily working life, it offers a rare chance for a supervisor and
subordinate to have "time out" for a one-on-one discussion of
important work issues that might not otherwise be addressed.Almost
universally, where performance appraisal is conducted properly,
both supervisors and subordinates have reported the experience as
beneficial and positive.
Appraisal offers a valuable opportunity to focus on work
activities and goals, to identify and correct existing problems,
and to encourage better future performance. Thus the performance of
the whole organization is enhanced.
For many employees, an "official" appraisal interview may be the
only time they get to have exclusive, uninterrupted access to their
supervisor. Said one employee of a large organization after his
first formal performance appraisal, "In twenty years of work,
that's the first time anyone has ever bothered to sit down and tell
me how I'm doing."
The value of this intense and purposeful interaction between a
supervisors and subordinate should not be underestimated.
MOTIVATION AND SATISFACTION
Performance appraisal can have a profound effect on levels of
employee motivation and satisfaction - for better as well as for
worse. Performance appraisal provides employees with recognition
for their work efforts. The power of social recognition as an
incentive has been long noted. In fact, there is evidence that
human beings will even prefer negative recognition in preference to
no recognition at all.
If nothing else, the existence of an appraisal program indicates
to an employee that the organization is genuinely interested in
their individual performance and development. This alone can have a
positive influence on the individual's sense of worth, commitment
and belonging.
The strength and prevalence of this natural human desire for
individual recognition should not be overlooked. Absenteeism and
turnover rates in some organizations might be greatly reduced if
more attention were paid to it. Regular performance appraisal, at
least, is a good start.
TRAINING AND DEVELOPMENT
Performance appraisal offers an excellent opportunity - perhaps
the best that will ever occur - for a supervisor and subordinate to
recognize and agree upon individual training and development
needs.
During the discussion of an employee's work performance, the
presence or absence of work skills can become very obvious - even
to those who habitually reject the idea of training for them!
Performance appraisal can make the need for training more
pressing and relevant by linking it clearly to performance outcomes
and future career aspirations. From the point of view of the
organization as a whole, consolidated appraisal data can form a
picture of the overall demand for training. This data may be
analyzed by variables such as sex, department, etc. In this
respect, performance appraisal can provide a regular and efficient
training needs audit for the entire organization.
RECRUITMENT AND INDUCTION
Appraisal data can be used to monitor the success of the
organization's recruitment and induction practices. For example,
how well are the employees performing who were hired in the past
two years?
Appraisal data can also be used to monitor the effectiveness of
changes in recruitment strategies. By following the yearly data
related to new hires (and given sufficient numbers on which to base
the analysis) it is possible to assess whether the general quality
of the workforce is improving, staying steady, or declining.
EMPLOYEE EVALUATION
Though often understated or even denied, evaluation is a
legitimate and major objective of performance appraisal. But the
need to evaluate (i.e., to judge) is also an ongoing source of
tension, since evaluative and developmental priorities appear to
frequently clash. Yet at its most basic level, performance
appraisal is the process of examining and evaluating the
performance of an individual.
Though organizations have a clear right - some would say a duty
- to conduct such evaluations of performance, many still recoil
from the idea. To them, the explicit process of judgment can be
dehumanizing and demoralizing and a source of anxiety and distress
to employees.
It is been said by some that appraisal cannot serve the needs of
evaluation and development at the same time; it must be one or the
other. But there may be an acceptable middle ground, where the need
to evaluate employees objectively, and the need to encourage and
develop them, can be balanced.
3. Five Rules for Performance Appraisals
Performance appraisals can be stressful for both the manager and
the employee receiving the appraisal. The process of writing and
delivering the appraisal can be eased, however, by following these
five guidelines:A. Start the appraisal process at least two weeks
prior to the appraisal meeting. Complete the appraisal form in
advance. This will allow you time to adequately consider each of
the areas of assessment and to think of examples that you can use
in the assessment. Gather any documentation you might need (i.e.,
notes-to-file, attendance records, last years appraisal). Give the
employee ample notice of the date and time of the appraisal
meeting, this will allow the employee to begin his/her preparation
too. B. Keep the examples observable and non-evaluative. Without
explicitly linking an assessment to an observation, managers risk
confusing, angering, or demoralizing their employees. The
assessment, and the examples given in the assessment, should be
non-judgmental, that is, they should be based on observable facts
and not personal commentary. Wrong: Youre always late. You lack
discipline.
C. Right: In the last month you have been late-to-work four
times. In the above examples, the Wrong statement is a judgment
(you lack discipline), it is accusatory, and it is generalized
(always late). The Right statement references information that is
observable and can be verified if necessary. The employee cannot
contest the statement.
D. A word of caution: be aware of halos and horns. We tend to
allow our personal feelings toward an individual to bias the way in
which we assess their work performance. By basing your assessment
on observable incidents and required job standards you lessen the
chance of the employee accusing you of giving a poor appraisal
because you, dont like me. Conversely, you will avoid giving a more
favorable appraisal to someone simply because you like them as an
individual. Everyone will be appraised, equally, based on their
performance.
E. Evaluate the person against the standards of the job and
against their prior years development goal(s), if applicable. Do
not evaluate a persons work ability based on what a co-worker is
capable of doing. If the job description states that a person must
process 8 claims per hour, and they do, they are adequately meeting
the standards of the job. The fact that their co-worker can process
10 claims per hour has no bearing on the first individuals
assessment. If the appraisal is a yearly process, and part of that
process is setting developmental goals, such as learning new
software or taking on additional responsibilities, these goals
should be reviewed and assessed in terms of completion and the
quality of completion. If the goals have not been met, re-evaluate
them and transfer them to this years assessment if still
applicable.
F. When setting future goals, or correcting poor performance,
tell the employees what the desired behavior looks like - tell them
what you would like to see more of. Frequently the employee doesnt
know what correct behavior to substitute for the incorrect
behavior. Additionally, if you cannot envision what the desired
performance is, neither can your worker.
G. Wrong: You need to work on handling customers better. Right:
Speak more slowly when talking with customers. You and I know
insurance inside and out, but remember that most of what we speak
about is very foreign to our customers.The Wrong statement, above,
is too vague. The Right statement addresses a particular issue and
suggests a way to correct it.
H. Do not dominate the conversation. The appraisal isnt about
you. You should speak approximately 40% of the time and let the
employee speak 60% of the time. Build on his/her ideas and
comments. Ask the employee how s/he feels s/he is doing in the job.
Are there frustrations? Is there something new s/he would like to
learn or additional responsibility s/he would like to take on? What
can you do to make the job more enjoyable or more meaningful for
the individual? Appraisals should be less about judging past
accomplishments and more about planning for future development.
People will happily work toward goals that they set, but rarely
work happily toward goals that are set for them.
I. Close the appraisal meeting in a positive manner. Gain
agreement with the employee regarding what was discussed and the
goals that were set. Plan follow-up meetings if necessary. Ask the
employee, Is there anything else we should discuss? S/he might have
been waiting for the perfect opportunity to bring something up and
sensing that the meeting is about to be over, will realize s/he
should put it on the table now. Thank the employee for their time
and tell them that you have great faith in their continued success
with the company and the goals that were set.
TWO FINAL THOUGHTS:
If at all possible, it is wise to separate appraisals and pay
increases. While one (appraisal) contributes to the other (pay
increase), they are not dependent on each other. For example, if
Janes appraisal score last year was a four (out of a possible 4)
and her pay increase was 5%; and this year her appraisal is also a
four, but the increase is 3%, how does one explain that to the
employee? Perhaps the lower pay increase is attributable to an
economic downturn or large capital investments that restrict the
amount of available moneys.
By previously linking the appraisal score to a dollar amount,
youve unnecessarily created a one-to-one correlation and set the
employee up for disappointment this year.
Also, keep in mind that appraisals are legal documents. They are
one of the first things looked at during legal investigations. The
appraisal should be a record of information that has been
communicated to the employee regarding performance and managements
evaluation of that performance. This fact reinforces the need for
objective, standards based, appraisals.
It is your responsibility as a manager to develop your
employees. Not only does having a more talented staff make your
life easier, but it reflects well on you
Evaluating Your Most Important Asset:
The Employee Performance Appraisal Process
The employee performance appraisal enables you to identify,
evaluate and develop an individual's performance. It is a tool to
encourage strong performers to maintain their high level of
performance and to motivate poor performers to do better. OTHER
IMPORTANT BENEFITS OF A FORMAL APPRAISAL PROCESS ARE:
i. validation of hiring practices are the right people in the
right positions?
ii. provision of an objective measuring tool on which
compensation decisions, and promotions can be based
iii. identification of training needs individually,
departmentally and organizationally
iv. identification of employees who have the potential for
advancement or who might be better suited in other areas of the
organization
In short, it is critical that your organization appropriately
evaluate its employees. Let's see how best to do it.
PERFORMANCE STANDARDSA key component of the performance
appraisal process is the creation of specific performance criteria
or competencies. These performance standards must be developed,
defined and communicated to the incumbent with performance
monitored against those standards throughout the year. Without
equitable and objective standards, questions will continue to arise
about how performance is measured and how compensation decisions
are made.
The standards should be:
included in the job description
based on the position, not the present or former incumbent
reasonable, measurable and specific
subject to change as the position evolves
Once developed and communicated, the standards may need to be
modified. In some cases, they are revised as a result of feedback
from the incumbent. This is especially true in the case of a newly
created position. In other instances, performance standards may
need to be revised for particular business units or departments as
the focus of the organization changes. In all instances, the
performance standards should accurately reflect the skills,
behaviors and goals that the organization values.
Here is an example of how standards might be modified. An
organization's call center employees or sales staff will typically
be evaluated on how well they service the external customer.
However, many employees don't have the opportunity to "touch" the
customer. If your organization believes that service is its true
value proposition, then you must consider internal customer
service. Doing so will ultimately enhance your external service.
For instance, employees of your service departments (i.e. systems,
human resources, finance) might best be evaluated utilizing a
standard measuring how well they service other departments within
the organization.
PREPARING THE EVALUATIONWhether the actual evaluation tool is
numerically based, a narrative overview or some combination of
both, the performance appraisal tool needs to be user friendly for
the manager, and easily understood by the employee. If numerical
rankings or categories such as "Above Average", "Below Average" and
the like are used, a detailed definition should accompany each
category so that the standard is clear to the reviewer and the
employee.
The evaluation should be a comprehensive and detailed account of
the employee's performance. Try to be specific. Use concrete
examples whenever possible. Detail how the employee met surpassed
or fell short of the previously established performance standards
and goals.
There are at least three common mistakes to avoid. Too often,
managers simply check off a numerical rating on an evaluation form
and then try to write a narrative justifying the chosen rating.
Actually, the process should be just the reverse. The reviewer
should first thoughtfully detail the employee's performance in each
relevant area. The resulting narrative will then allow you to
naturally select the rating. Using this approach avoids the
artificial task of justifying a rating which was selected before
you actually evaluated the employee's performance.
A second common mistake is not making enough time available to
complete the process. Employees are an organization's most
important asset. This is especially so in our information based
economy. You must take the appropriate time to properly complete
the employee performance appraisal process or the quality of your
most important asset will erode over time.
A third type of problem is presented by overrating the average
performer or underrating the good one. A manager who avoids dealing
with a poor performer and rates the employee inappropriately high
places the organization at risk if corrective action is necessary
in the future.
Finally, make sure that your performance appraisal tool is
updated on a periodic basis to remain relevant to your employees
and business objectives.
TWO PRIMARY APPROACHES: "DATE OF HIRE" AND "FOCAL" REVIEWS Some
organizations use a " date of hire" or anniversary date evaluation
review. Others use a focal review process that is tied to the
organization's budget. There are advantages and disadvantages to
both approaches.
"Date of hire" or anniversary reviews allow managers to stagger
evaluations throughout the year. Some months there may not be any
evaluations to complete. At other times during the year, many may
be necessary. Most managers indicate that the employee evaluation
process is less burdensome when the date of hire or anniversary
date method is employed. However, there are disadvantages. A
manager can easily overspend the salary increase portion of the
budget in the beginning of the year leaving less money for good
performers whose anniversary dates fall at the end of the year.
Additionally, it is difficult to measure similarly tasked employees
against each other when reviewing them at different times of the
year.
The focal review process coordinates employee reviews and
related compensation decisions with the company's budget process.
All reviews are done at the same time. Performance is evaluated in
a more comparative setting than when the date of hire or
anniversary method is used. However, focal reviews place a heavy
burden on managers who have numerous direct reports. Additionally,
focal reviews place a strenuous burden on the payroll manager and
have an immediate, substantial impact on cash flow because all of
the related salary increases occur at the same time.
If you are thinking of converting from an anniversary date to a
focal method of employee evaluations, make sure you speak to a
colleague who has made the change to get her perspective.
DELIVERING THE PERFORMANCE APPRAISALThe best performance
appraisal will be perceived by the employee as a disaster if it is
not delivered effectively by the manager. "One-on-One" dialogue
between the manager and the employee is critical. The review should
be conducted in a private, quiet place with plenty of uninterrupted
time set aside for a true dialogue, not a soliloquy by the
manager.
Employees wait all year for this feedback even though there
shouldn't be any surprises if you have followed the process
throughout the year. Most employees want an opportunity to talk
about how they think things are going. They want to be able to
express their aspirations and comment generally on the
organization. While a self-evaluation tool can provide this
opportunity, uninterrupted discussion time with the manager shows
employees that they are indeed the valued asset they truly are.
This personal exchange can also be used to set goals for the
following year and to confirm that the employee understands your
expectations.
Whose job is this anyway?
Responsibility for the performance appraisal process resides
with the organization's supervisors and managers, not simply the
human resource department. In fact, senior management must support
the process in order to create maximum value for the organization.
The human resource department functions merely as the coach. All
managers, including senior management, must take the field.
Think about it
The performance appraisal system should be equitable, accurate
and timely. It should create a process whereby strong performers
are acknowledged and rewarded, average performers are encouraged
and poor performers are coached and counseled toward improvement or
ultimately separated from the organization.
Performance appraisal training can help your organization avoid
the problems described in this article by showing managers how to
objectively measure performance, prepare an evaluation, communicate
with the employee and follow up as appropriate. The cost of this
training is minimal compared to the return you will receive on your
investment. Remember, employees are your most important
asset!Understanding Employee Performance
Accurately tracking and reporting employee performance can
present a huge problem for even the smallest of companies, not to
mention much larger corporations. The value of tracking employee
performance is quite apparent. When all is said and done your
business needs to be profitable. If employee performance is not
closely watched the business will continue to allow underperforming
employees to hurt the bottom line. The health of the business
depends on understanding and making informed decisions based on
employee performance research.
To this end a few business software technology companies have
developed dashboard solutions to ease the burden of tracking and
understanding employee performance data. Fittingly this dashboard
software solution is commonly referred to as a performance
dashboard.
The information displayed by the performance dashboard is based
on the leading indicators of performance that your organization has
identified. These leading indicators are also thought of as key
performance indicators. A key performance indicator serves as a
variable that helps quantify the level of performance any given
employee is realizing.
For instance, in a sales environment one key performance
indicator might be the level of sales dollars a particular
representative brings in each month. Continuing with this example,
as management examines the performance dashboard which displays the
key performance indicators and their values for each employee
surely they will want to know which employees are underperforming
in terms of the amount of sales dollars they bring in each
month.
Management will probably weight the key performance indicators
as they see fit, then use the information displayed on the
performance dashboard to rank the sales representatives from best
to worst. In this manner they can objectively examine employee
performance across the board and hopefully identify ways to improve
the performance of underperforming employees.
The real value of a performance dashboard really lies in being
able to bring all relevant information together in one spot and
present it in such a way that the information is understandable and
can be interpreted accurately. A performance dashboard enhances the
decision making process as it relates to employee performance by
saving managers valuable time and providing them with equally
valuable information so they can make the right decision.
Any business that relies heavily on its employee workforce
should seriously consider using a performance dashboard to analyze
employee performance. A performance dashboard has proven its worth
by helping countless managers get the most out of their employees
by identifying the strengths and weaknesses of their workforce.
Weaknesses can be fortified once they are recognized but if you
are lacking the ability to identify the key performance indicator
that weighs in below average across the board then you will have a
hard time righting the ship. A performance dashboard helps you
determine which key performance indicator is a problem area and
will require additional training to boost employee performance.
TATA AIG LIFE INSURANCE
Methods Of Performance Appraisal ASSESSMENT CENTRES An
assessment centre typically involves the use of methods like
social/informal events, tests and exercises, assignments being
given to a group of employees to assess their competencies to take
higher responsibilities in the future. Generally, employees are
given an assignment similar to the job they would be expected to
perform if promoted. The trained evaluators observe and evaluate
employees as they perform the assigned jobs and are evaluated on
job related characteristics.
The major competencies that are judged in assessment centers are
interpersonal skills, intellectual capability, planning and
organizing capabilities, motivation, career orientation etc.
assessment centers are also an effective way to determine the
training and development needs of the targeted employees.
BEHAVIORALLY ANCHORED RATING SCALESBehaviorally Anchored Rating
Scales (BARS) is a relatively new technique which combines the
graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of
behavioral statements describing important job performance
qualities as good or bad (for eg. the qualities like inter-personal
relationships, adaptability and reliability, job knowledge etc).
These statements are developed from critical incidents.
In this method, an employees actual job behavior is judged
against the desired behavior by recording and comparing the
behavior with BARS. Developing and practicing BARS requires expert
knowledgePerformance Factor Rating Scale
Unacceptable(Marks = 0)
Performance below minimal acceptable standards; immediate
improvement required.
Below Average (Marks = 1)
Performance sometimes meets requirements, but not consistently;
improvement necessary.
Average (Marks = 2)
Performance fully meets job requirements on a consistent
basis.
Good(Marks = 3)
Performance frequently exceeds requirements. Performs the task
and /or function consistently in a timely manner; initiates and/or
volunteers; performs the task and/or function at a very high
quality level.
EXCELLENT(Marks = 4)
Performance consistently exceeds requirements; with minimum
supervision and/or direction, achievements are well beyond those
expected at this levPerformance Appraisal Percentage
Rating% of RatingIncrease
1 Excellent ( Rating = 4)80% - 100%20%
2 Good ( Rating = 3)60% - 80%15%
3 Average ( Rating = 2)40% - 60%10%
4 Below Average ( Rating = 1)20% - 40%5%
5 Unacceptable ( Rating = 0)0% - 20%0%
HUMAN RESOURCE ACCOUNTING METHOD
Human resources are valuable assets for every organization.
Human resource accounting method tries to find the relative worth
of these assets in the terms of money. In this method the
Performance appraisal of the employees is judged in terms of cost
and contribution of the employees.
The cost of employees include all the expenses incurred on them
like their compensation, recruitment and selection costs, induction
and training costs etc whereas their contribution includes the
total value added (in monetary terms). The difference between the
cost and the contribution will be the performance of the employees.
Ideally, the contribution of the employees should be greater than
the cost incurred on them.
360-DEGREE-PERFORMANCE-APPRAISAL METHOD
Performance appraisal is the process of obtaining, analyzing and
recording information about the relative worth of an employee. The
focus of the performance appraisal is measuring and improving the
actual performance of the employee and also the future potential of
the employee. Its aim is to measure what an employee does.
According to Flippo, a prominent personality in the field of
Human resources, performance appraisal is the systematic, periodic
and an impartial rating of an employees excellence in the matters
pertaining to his present job and his potential for a better
job."
Performance appraisal is a systematic way of reviewing and
assessing the performance of an employee during a given period of
time and planning for his future. It is a powerful tool to
calibrate, refine and reward the performance of the employee.
It helps to analyze his achievements and evaluate his
contribution towards the achievements of the overall organizational
goals. By focusing the attention on performance, performance
appraisal goes to the heart of personnel management and reflects
the managements interest in the progress of the employees.
Techniques in Performance Appraisal
In a landmark study, Locher & Teel (1977) found that the
three most common appraisal methods in general use are rating
scales (56%), essay methods (25%) and results- oriented or MBO
methods (13%).
Certain techniques in performance appraisal have been thoroughly
investigated, and some have been found to yield better results than
others.
ENCOURAGE DISCUSSION
Research studies show that employees are likely to feel more
satisfied with their appraisal result if they have the chance to
talk freely and discuss their performance. It is also more likely
that such employees will be better able to meet future performance
goals.
Employees are also more likely to feel that the appraisal
process is fair if they are given a chance to talk about their
performance. This especially so when they are permitted to
challenge and appeal against their evaluation.
CONSTRUCTIVE INTENTION
It is very important that employees recognize that negative
appraisal feedback is provided with a constructive intention, i.e.,
to help them overcome present difficulties and to improve their
future performance. Employees will be less anxious about criticism,
and more likely to find it useful, when they believe that the
appraiser's intentions are helpful and constructive.
In contrast, other studies have reported that "destructive
criticism" - which is vague, ill-informed, unfair or harshly
presented - will lead to problems such as anger, resentment,
tension and workplace conflict, as well as increased resistance to
improvement, denial of problems, and poorer performance.
SET PERFORMANCE GOALS
It has been shown in numerous studies that goal-setting is an
important element in employee motivation. Goals can stimulate
employee effort, focus attention, increase persistence, and
encourage employees to find new and better ways to work.
The useful of goals as a stimulus to human motivation is one of
the best supported theories in management. It is also quite clear
that goals which are "...specific, difficult and accepted by
employees will lead to higher levels of performance than easy,
vague goals (such as do your best) or no goals at all."
APPRAISER CREDIBILITY
It is important that the appraiser (usually the employee's
supervisor) be well-informed and credible. Appraisers should feel
comfortable with the techniques of appraisal, and should be
knowledgeable about the employee's job and performance.
When these conditions exist, employees are more likely to view
the appraisal process as accurate and fair. They also express more
acceptance of the appraiser's feedback and a greater willingness to
change.
Following are the different methods of Performance Appraisal.
Each of these has its own combination of strengths and weaknesses,
and none is able to achieve all the purposes for which management
institutes performance appraisal systems.
Nor is any one technique able to evade all of the pitfalls. The
best anyone can hope to do is to match an appropriate appraisal
method to a particular performance appraisal goal.
ESSAY APPRAISAL
In its simplest form, this technique asks the rater to write a
paragraph or more covering an individual's strengths, weaknesses,
potential, and so on. In most selection situations, particularly
those involving professional, sales, or managerial positions, essay
appraisals from former employers, teachers, or associates carry
significant weight. The assumption seems to be that an honest and
informed statement -either by word of mouth or in writing- from
someone who knows a man well, is fully as valid as more formal and
more complicated methods.
The biggest drawback to essay appraisals is their variability in
length and content. Moreover, since different essays touch on
different aspects of a man's performance or personal
qualifications, essay ratings are difficult to combine or compare.
For comparability, some type of more formal method, like the
graphic rating scale, is desirable.
FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce
bias and establish objective standards of comparison between
individuals, but it does not involve the intervention of a third
party. Although there are many variations of this method, the most
common one asks raters to choose from among groups of statements
those which best fit the individual being rated and those which
least fit him.
The statements are then weighted or scored, very much the way a
psychological test is scored. People with high scores are, by
definition, the better employees; those with low scores are the
poorer ones. Since the rater does not know what the scoring weights
for each statement are, in theory at least, he cannot play
favorites. He simply describes his people, and someone in the
personnel department applies the scoring weights to determine who
gets the best rating.
The rationale behind this technique is difficult to fault. It is
the same rationale used in developing selection test batteries. In
practice, however, the forced-choice method tends to irritate
raters, who feel they are not being trusted. They want to say
openly how they rate someone and not be second-guessed or tricked
into making "honest" appraisals.
A few clever raters have even found ways to beat the system.
When they want to give average employee Harry Smith a high rating,
they simply describe the best employee they know. If the best
employee is Elliott Jones, they describe Jones on Smith's
forced-choice form. Thus, Smith gets a good rating and hopefully a
raise.
An additional drawback is the difficulty and cost of developing
forms. Consequently, the technique is usually limited to middle-
and lower-management levels where the jobs are sufficiently similar
to make standard or common forms feasible.
Finally, forced-choice forms tend to be of little value- and
probably have a negative effect- when used in performance appraisal
interviews.
CRITICAL INCIDENT APPRAISAL
The discussion of ratings with employees has, in many companies,
proved to be a traumatic experience for supervisors. Some have
learned from bitter experience what General Electric later
documented; people who receive honest but negative feedback are
typically not motivated to do better - and often do worse - after
the appraisal interview. Consequently, supervisors tend to avoid
such interviews, or if forced to hold them, avoid giving negative
ratings when the ratings have to be shown to the employee.
One stumbling block has no doubt been the unsatisfactory rating
form used. Typically, these are graphic scales that often include
rather vague traits like initiative, cooperativeness, reliability,
and even personality. Discussing these with an employee can be
difficult. The critical incident technique looks like a natural to
some people for performance review interviews, because it gives a
supervisor actual, factual incidents to discuss with an employee.
Supervisors are asked to keep a record, a "little black book," on
each employee and to record actual incidents of positive or
negative behavior. For example:
Bob Mitchell, who has been rated as somewhat unreliable, fails
to meet several deadlines during the appraisal period. His
supervisor makes a note of these incidents and is now prepared with
hard, factual data:
"Bob, I rated you down on reliability because, on three
different occasions over the last two months, you told me you would
do something and you didn't do it. You remember six weeks ago when
I. . ."
Instead of arguing over traits, the discussion now deals with
actual behavior. Possibly, Bob has misunderstood the supervisor or
has good reasons for his apparent "unreliability." If so, he now
has an opportunity to respond. His performance, not his
personality, is being criticized. He knows specifically how to
perform differently if he wants to be rated higher the next time.
Of course, Bob might feel the supervisor was using unfairly high
standards in evaluating his performance. But at least he would know
just what those standards are.
There are, however, several drawbacks to this approach. It
requires that supervisors jot down incidents on a daily or, at the
very least, a weekly basis. This can become a chore. Furthermore,
the critical incident rating technique need not, but may, cause a
supervisor to delay feedback to employees. And it is hardly
desirable to wait six months or a year to confront an employee with
a misdeed or mistake.
Finally, the supervisor sets the standards. If they seem unfair
to a subordinate, might he not be more motivated if he at least has
some say in setting, or at least agreeing to, the standards against
which he is judged?
MANAGEMENT BY OBJECTIVES
To avoid, or to deal with, the feeling that they are being
judged by unfairly high standards, employees in some organizations
are being asked to set - or help set - their own performance goals.
Within the past five or six years, MBO has become something of a
fad and is so familiar to most managers that I will not dwell on it
here.
It should be noted, however, that when MBO is applied at lower
organizational levels, employees do not always want to be involved
in their own goal setting. As Arthur N. Turner and Paul R. Lawrence
discovered, many do not want self-direction or autonomy. As a
result, more coercive variations of MBO are becoming increasingly
common, and some critics see MBO drifting into a kind of
manipulative form of management in which pseudo-participation
substitutes for the real thing. Employees are consulted, but
management ends up imposing its standards and its objectives.
Some organizations, therefore, are introducing a work-standards
approach to goal setting in which the goals are openly set by
management. In fact, there appears to be something of a vogue in
the setting of such work standards in white-collar and service
areas.
WORK-STANDARDS APPROACH
Instead of asking employees to set their own performance goals,
many organizations set measured daily work standards. In short, the
work standards technique establishes work and staffing targets
aimed at improving productivity. When realistically used, it can
make possible an objective and accurate appraisal of the work of
employees and supervisors.
To be effective, the standards must be visible and fair. Hence a
good deal of time is spent observing employees on the job,
simplifying and improving the job where possible, and attempting to
arrive at realistic output standards.
It is not clear, in every case, that work standards have been
integrated with an organization's performance appraisal program.
However, since the work-standards program provides each employee
with a more or less complete set of his job duties, it would seem
only natural that supervisors will eventually relate performance
appraisal and interview comments to these duties. I would expect
this to happen increasingly where work standards exist. The use of
work standards should make performance interviews less threatening
than the use of personal, more subjective standards alone.
The most serious drawback appears to be the problem of
comparability. If people are evaluated on different standards, how
can the ratings be brought together for comparison purposes when
decisions have to be made on promotions or on salary increases? For
these purposes some form of ranking is necessary.
RANKING METHODS
For comparative purposes, particularly when it is necessary to
compare people who work for different supervisors, individual
statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons
involve an overall subjective judgment to which a host of
additional facts and impressions must somehow be added. There is no
single form or way to do this.
Comparing people in different units for the purpose of, say,
choosing a service supervisor or determining the relative size of
salary increases for different supervisors, requires subjective
judgment, not statistics. The best approach appears to be a ranking
technique involving pooled judgment. The two most effective methods
are alternation ranking and paired comparison ranking. Alternation
ranking:
In this method, the names of employees are listed on the
left-hand side of a sheet of paper - preferably in random order. If
the rankings are for salary purposes, a supervisor is asked to
choose the "most valuable" employee on the list, cross his name
off, and put it at the top of the column on the right-hand side of
the sheet. Next, he selects the "least valuable" employee on the
list, crosses his name off, and puts it at the bottom of the
right-hand column. The ranker then selects the "most valuable"
person from the remaining list, crosses his name off and enters it
below the top name on the right-hand list, and so on.
Paired-comparison ranking:
This technique is probably just as accurate as alternation
ranking and might be more so. But with large numbers of employees
it becomes extremely time consuming and cumbersome.
To illustrate the method, let us say we have five employees: Mr.
Abbott, Mr. Barnes, Mr. Cox, Mr. Drew, and Mr. Eliot. We list their
names on the left-hand side of the sheet. We compare Abbott with
Barnes on whatever criterion we have chosen, say, present value to
the organization.
If we feel Abbott is more valuable than Barnes, we put a tally
beside Abbott's name. We then compare Abbott with Cox, with Drew,
and with Eliot. The process is repeated for each individual. The
man with the most tallies is the most valuable person, at least in
the eyes of the rater; the man with no tallies at all is regarded
as the least valuable person.
Both ranking techniques, particularly when combined with
multiple rankings (i.e., when two or more people are asked to make
independent rankings of the same work group and their lists are
averaged), are among the best available for generating valid
order-of-merit rankings for salary administration purposes.
Producing Premium Performance
Poor performance is often blamed on employees, but usually it is
not purely their fault. To achieve premium performance you need an
effective performance management framework. There are 7 elements to
developing an effective performance management framework which
combine together to result in premium employee performance. Find
out why most performance appraisal processes don't work - and how
to create a system to achieve premium performance.One of the major
issues that arises in managing a small or medium size business is
in the area of employee performance. Many business owners are
frustrated with the poor performance of their team or some
individuals within their team. No matter how hard they try, they
dont seem to be able to create a sustainable improvement in
performance. The tendency is to blame the employees for poor
performance. However, more often than not, the problem stems from
not establishing an effective performance management framework.
There are a number of elements that create a framework for
producing premium performance.
The most important element is to establish a clear description
of the required outcome of the job. This may be in terms of a
position description if the job is broad and covers a number of
responsibilities. Or it may simply be providing a sample or a
picture of an article that should be produced by the work. When
there is a clear understanding of the output required, it is much
more likely that result will be produced.
The second element requires establishing a best practice
approach to doing the work. Often there are many ways a job can be
done, but usually only one way is the most efficient. A best
practice approach involves determining the best way to do the job
and then requiring everyone to do the job the same way to maximize
efficiency.
The third element is to establish a timeframe or deadline for
the completion of the work. The employee will know if they are on
track if they know how long the job should take.
When you use a best practice approach and establish a timeframe
for the work, you can also provide a target for output over time.
In other words, if you work so many hours you should produce x
amount of product. This allows us to establish a productivity
target.
When an employee starts a new job, it is best to teach or train
the person in how to do the work. This may involve showing the new
employee what is done for the first time or two and then watching
while the employee tries it a time or two, or until you are
satisfied they can do it without help. This is one of the most
frustrating parts of the delegation process. The time it takes to
complete this element puts a lot of people off. They need to
realize that some short term pain leads to much long term gain,
rather than allow the loss of some short term productivity to keep
them from ever delegating their difficult tasks.
A very important element that many forget in the delegation
process is to establish a process to measure and monitor results.
One of the greatest dangers in business growth is that of losing
control because growth means we can no longer physically see
everything that goes on. Losing control leads to poor productivity
and quality and escalating costs, all of which will destroy your
business if left unchecked. Control comes from knowing the results
of particular actions and being able to provide feedback or make
changes if the results are outside the parameters required.
The results achieved in a job over an extended period of time
can be influenced positively by developing an appraisal process.
The appraisal process should provide feedback to the employee about
how they are performing in the job relative to expectations, how
their performance affects the success of the organization and how
they interact with the components of the organization around
them.
The appraisal approach that gets best results is to adopt a
coaching role with your employees, rather than an examiner role.
Too often, performance appraisal meetings are set up for failure
because the two parties come to the meeting with different
objectives. The manager wants to highlight areas of poor
performance and take steps to improve these areas, but the employee
wants to be told how well they have done. This often occurs when
appraisals are held annually or six monthly and conflict is created
when the judgments are subjective. The result usually is
disappointment and demotivation on the part of the employee and
frustration from the manager. Both people hate the process and no
effective outcome is achieved. It is much better to conduct
appraisal meetings frequently, to compare actual results with
targets, using objective rather than subjective measures. The
coaching meetings then can be used as a discussion focused on
performance improvement, instead of a confrontation about how the
employee felt they had performed.
The final element of the performance management framework is the
reward process. Every positive outcome should result in a reward
for the employee. This can be tangible or intangible and dependent
on the level of maturity and experience of the employee. For some
positions, it is appropriate for rewards to be small, frequent and
immediate, where for other positions, more long term and cumulative
rewards are appropriate. However, this element is often a neglected
or an ill thought out part of the process and as such, has the
potential to undermine results.
A good reward process supports and enhances the management
process and increases motivation for achieving premium
performance.
The important lesson to learn is that results can be influenced
through establishing an effective performance management framework
which requires all elements to work together effectively. Poor
performance often results if any elements are either missing from
the process or are poorly designed and become a negative influence
on performance. But a well designed and coordinated framework means
that all elements work together systematically to produce premium
performance.
Ten Tips for Creating a Employee Appraisal System
Face the facts: Creating a new employee performance appraisal
system is a difficult undertaking. Its even more difficult if the
organization doesnt have a logical, well-tested, step-by-step
process to follow in developing their new procedure. One Get top
management actively involved. Without top managements commitment
and visible support, no program can succeed. Top management must
establish strategic plans, identify values and core competencies,
appoint an appropriate Implementation Team, demonstrate the
importance of performance management by being active participants
in the process, and use appraisal results in management
decisions.
Two
Establish the criteria for an ideal system. Consider the needs
of the four stakeholder groups of any appraisal system: Appraisers
who must evaluate performance; Appraisees whose performance is
being assessed; Human Resources professionals who must administer
the system; and the Senior Management group that must lead the
organization into the future. Identifying their expectations at the
start helps assure their support once the system is finally
designed. Ask each group: "What will it take for you to consider
this system a smashing success?" Dont settle for less.
Three Appoint an Implementation Team. This task force should be
a diagonal slice of both appraisers and appraises from different
levels and functions in the organization. The implementation team
is responsible for accomplishing the two major requirements for a
successful system. First, developing appropriate appraisal forms,
policies and procedures. Second (and the task too often overlooked)
assuring a successful deployment.
Four
Design the form first. The appraisal form is a lightning rod
that will attract everyones attention. Design the form early and
get lots of feedback on it. Dont believe anybody who tells you that
the form isnt important. Theyre wrong. If youre designing a new
form internally, make sure it assesses both behaviors and
results.
.
Five
Build your mission, vision, values, and core competencies into
the form. Performance appraisal is a means, not an end. The real
objective of any performance management system is to make sure that
the companys strategic plan and vision and values are communicated
and achieved. Core competencies expected of all organization
members should be included, described and assessed. If your mission
statement isnt clearly visible in the performance appraisal system,
cynicism will likely result. Values become real only when people
are held accountable for living up to them.
Six
Assure on-going communication. Circulate drafts and invite users
to make recommendations. Keep the development process visible
through announcements and regular updates. Use surveys, float trial
balloons, request suggestions and remember the cardinal principle
"People support what they help create."
Seven
Train all appraisers. Performance appraisal requires a multitude
of skills behavioral observation and discrimination, goal-setting,
developing people, confronting unacceptable performance,
persuading, problem-solving, planning, etc. Unless appraiser
training is universal and comprehensive, the program wont produce
much. And dont ignore the most important requirement of all: the
need for courage.
Eight
Orient all appraisees. The programs purposes and procedures must
be explained in advance and explained enthusiastically to everyone
who will be affected by it. Specific skills training should be
provided if the new performance management procedure requires
self-appraisal, multi-rater feed-back, upward appraisal, or
individual development planning.
Nine
Use the results. If the results of the performance appraisal are
not visibly used in making promotion, salary, development,
transfer, training and termination decisions, people will realize
that its merely an exercise
Ten
Monitor and revise the program. Audit the quality of appraisals,
the extent to which the system is being used, and the extent to
which the original objectives have been met. (One of the great
advantages of an online performance appraisal system is that all of
these data are available instantaneously.)
Provide feedback to management, appraisers and appraisees. Train
new appraisers as they are appointed to supervisory positions.
Actively seek and incorporate suggestions for improvement. A
companys performance appraisal process is critically important. It
answers the two questions that every member of an organization
wants to know: 1) What do you expect of me? and 2) How am I doing
at meeting your expectations? Using these ten tips will help you
develop or select a system to will give accurate and complete
answers to everyone.
Performance Appraisal for Employees at Different LevelsIN TATA
AIG LIFE Performance appraisal is important for employees at all
levels throughout the organization. The parameters, the
characteristics and the standards for evaluation may be different,
but the fundamentals of performance appraisal are the same. But as
the level of the employees increases, performance appraisal is more
effectively used as the tools of managing performance.
PERFORMANCE APPRAISAL OF MANAGERS:Appraising the performance of
managers is very important, but at the same time, it is one of the
most difficult tasks in the organization. It is difficult because
most of the managerial work cannot be quantified i.e. it is
qualitative in nature like leading his/her team, guiding,
motivating, planning etc.
Therefore, the two things to be noted and evaluated for the
purpose of appraisals are:
Performance in accomplishing goals, and
Performance as managers
PERFORMANCE IN ACCOMPLISHING GOALS
Managers are responsible for the performance of their teams as a
whole. Performance in accomplishing goals would mean to look at the
completion or achievement of the goals set for a team of employees
which is being assigned to or working under a particular manager.
The best measuring criteria for a manager are hi goals, his plans
of course of action to achieve them and the extent of achievement
of the goals.
PERFORMANCE AS MANAGERS
The responsibilities of managers include a series of activities
which are concerned with planning, organizing, directing, leading,
motivating and controlling. Managers can be rated on the above
parameters or characteristics
Criteria for measuring performance at different levels:
The criteria for measuring performance changes as the levels of
the employees and their roles and responsibilities change.
A few examples for each level are described below:
For top level management Degree of organizational growth and
expansion
Extent of achievement of organizational goals
Contribution towards the society
Profitability and return on capital employed
For middle level managers Performance of the departments or
teams
Co-ordination with other departments
Optimal use of resources
Costs Vs. revenues for a given period of time
The communication with superiors and subordinates
For front line supervisors Quantity of actual output against the
targets
Quality of output against the targets
Number of accidents in a given period
Rate of employee absenteeismCurrent Global trends in Performance
Appraisal Program
The performance appraisal process has become the heart of the
human resource management system in the organizations. Performance
appraisal defines and measures the performance of the employees and
the organization as a whole. It is a tool for accessing the
performance of the organization. The important issues and points
concerning performance appraisal in the present world are:
The focus of the performance appraisals is turning towards
career development relying on the dialogues and discussions with
the superiors.
Performance measuring, rating and review systems have become
more detailed, structured and person specific than before.
Performance related pay is being incorporated in the strategies
used by the organizations.
Trend towards a 360-degree feedback system
The problems in the implementation of the performance appraisal
processes are being anticipated and efforts are being made to
overcome them.
In India, the performance appraisal processes are faced with a
lot of obstacles, the most prominent being the lack of quantifiable
indicators of the performance.
Global trendsThe emergence of following concepts and the
following trends related to Performance appraisal can be seen in
the global scenario:
360 DEGREE APPRAISAL360 degree feedback, also known as
'multi-rater feedback', is the most comprehensive appraisal where
the feedback about the employees performance comes from all the
sources that come in contact with the employee on his job.
Organizations are increasingly using feedback from various sources
such as peer input, customer feedback, and input from superiors.
Different forms with different formats are being used to obtain the
information regarding the employee performance.TEAM PERFORMANCE
APPRAISALAccording to a wall street journal headline, Teams have
become commonplace in U.S. Companies. Most of the performance
appraisal techniques are formulated with individuals in mind i.e.
to measure and rate the performance of the individual employee.
Therefore, with the number of teams increasing in the
organizations, it becomes difficult to measure and appraise the
performance of the team. The question is how to separate the
performance of the team from the performance of the employees. A
solution to this problem that is being adopted by the companies is
to measure both the individual and the team performance. Sometimes,
team based objectives are also included in the individual
performance plans.
RANK AND YANK STRATEGY
Also known as the Up or out policy, the rank and yank strategy
refers to the performance appraisal model in which best-to-worst
ranking methods are used to identify and separate the poor
performers from the good performers. Then the action plans and the
improvement opportunities of the poor performers are discussed and
they are given to improve their performance in a given time period,
after which the appropriate HR decisions are taken. Some of the
organizations following this strategy are Ford, Microsoft and Sun
Microsystems.
Why Do We Need Performance Appraisals?
Performance Appraisal is an objective system to judge the
ability of an individual employee to perform his tasks. A good
performance appraisal system should focus on the individual and his
development, besides helping him to achieve the desired
performance. This means that while the results are important the
organization should also examine and prepare its human capital to
achieve this result. This holds true even for new inductees.
There is a strong linkage between induction, training and
appraisal. In a large number of firms worldwide, a new recruit is
expected to discuss his schedule of work in achieving his induction
objective. This schedule of work becomes a part of his job for the
next few months.
RESEARCH AND SURVEY
TATA AIG LIFE
Statement of the Problem:
Performance appraisal is a process of assessing, summarizing and
developing the work performance of an employee. In order to be
effective and constructive, the performance manager should make
every effort to obtain as much objective information about the
employee's performance as possible. Low performance can push the
organization back in todays tough competition scenario. The project
is aimed at analyzing the performance appraisal in insurance
companies.
Objective:
The various objectives of our research are as follows:
A. To examine why an appraisal system is important
B. To study existing appraisal system in TATA AIG across
Insurance Industry
C. To find the expectation of appraiser and appraise To
determine the satisfaction level of the appraisee
D. To reveal the various loopholes in the appraisal system if
any
E. To find the consequences of an inappropriately conducted
appraisal system
Research Methodology:The data source: Primary as well as
Secondary.The research approach: Survey Method.The research
instrument: Questionnaire.The respondents: The Managers &
Employees of various organizations.The primary data was collected
with the help of survey information. A concise questionna