HRM Module 4

Semester-II, BVB College - MBA Dept.
Place - Hubli
Subject Title & Code - HRM (10MBAHC205) Date – 21/04/2011
Topic – Performance Appraisal Presented by – Supreetha . B .M.
PERFORMANCE APPRAISAL
1
Semester-II, BVB College - MBA Dept. Place - Hubli
Topics Covered;
1. Meaning
2. Purpose of appraisal
3. Factors affecting appraisal
4. Performance appraisal process
5. Performance appraisal methods
6. Appraisal and post appraisal interview
7. Evaluation of good appraisal system
8. Performance counseling
9. Employee engagement
10. Competency mapping.
2
OBJECTIVES
At the end of the module you should be able;

1. Understand the objectives of performance appraisal.
2. Determine the sources of error in performance appraisal.
3. Illustrate the major types of performance appraisal systems.
4. Understand the importance of goal setting in performance
improvement.
5. Outline an effective appraisal interview.
3
INTRODUCTION
Human resources are considered to the most valuable assets in an

organization.
It is the sum total of inherent abilities acquired knowledge and
skills presented talents and aptitudes of the employed persons
who compromise executives, supervisors and the rank file
employees
It may note here that human resources should be utilized
maximum possible extent, in order to achieve individual and
organization goals, it is thus the employee’s performance which
untimely decides and attain goals.
Conti….
4
In many organizations - but not all - appraisal results are

used, either directly or indirectly, to help determine reward
outcomes.
That is, the appraisal results are used to identify the better
performing employees who should get the majority of
available merit pay increases, bonuses, and promotions.
By the same token, appraisal results are used to identify
poorer performers, who may require some form of
counseling, or in extreme cases, demotion, dismissal or
decreases in pay.
5
Meaning
‘Performance appraisal is a formal, structured

system of measuring and evaluating an
employees job - related behaviors and outcomes
to discover how and why the employee is
presently performing on the job and how the
employee can perform more effectively in the
future so that the employee, organization, and
society all can get benefits’.
Conti….
6
Simply put, it is the observation and evaluation of a

employee’s work behavior and accomplishments for
the purpose of making decisions about the employee.
These decisions may include wage, salary, and
benefit determinations; promotion, demotion,
transfer, or termination actions; and coaching and
counseling, training, or career development options.
7
There are three basic functions of an effective performance

appraisal:
1. To provide adequate feedback to staff members on their
performance
2. To serve as an opportunity to communicate face-to-face
modifications or changes to existing performance objectives
3. To provide data to administrators so they can evaluate a
employee and judge future job assignments and
compensation
8
PURPOSE
1. Set standardized process of implementing

performance appraisals to ensure that each
individual is judged fairly and keeps
discrimination.
2. Avoids legal challenges that could result from
termination or demotion.
3. Ensures that job performance expectations are

consistent throughout organizational processes.
9
4. Making payroll and compensation decisions – 80%

5. Training and development needs – 71%
6. Identifying the gaps in desired and actual
performance and its cause – 76%
7. Deciding future goals and course of action – 42%
8. Promotions, demotions and transfers – 49%
10
Factors
Figure-1
11
The Performance - Appraisal Cycle

Employee
Employee
skills
skills &
&
abilities
abilities
Training
Training &
&
Effort Promotion
Promotion
Effort &
&
behavior
behavior
If positive
If negative
Manager’s
Manager’s
Performance
Performance appraisal
appraisal
Figure-2
12
Relationship between job analysis and performance appraisal:
Job Analysis Performance Performance

Standards Appraisal
Describes work Translate job Describes the

& Personnel Into levels of Job relevant
Requirement Of To acceptable strengths and
a particular job Or unacceptable weakness of
performance Each individual
Figure-3
13
Performance Appraisal Process
1. Establish and communicate expectations for

performance.
2. Observe and measure individual performance
against standards.
3. Reinforce performance to provide remedies
14
QUESTION ARISES?
1. Why do we measure performance?

2. How do we measure performance?
15
REASONS FOR MEASURING PERFORMANCE
1. Helping Set Objectives And Planning Work Schedules

2. Rewarding Efficient And Effective Workers
3. Promoting, Separating Or Transferring As Appropriate
4. Evaluating Different Work Methods, Tools Or Equipment
16
5. assessing or modifying working conditions

6. estimating and allocating costs
7. assessing employee's attitudes
8. increasing supervisors' understanding of staff needs or
9. improving and strengthening supervisor/subordinate relationships.
17
Methods of Performance Appraisal
Performance Appraisal Methods
Individual evaluation method Multi-person evaluation Others

1. Confidence report 9.Ranking 12.Group appraisal
2. Essay evaluation 10.Paired comparison 13.HRA

3. Critical incidents 11.Forced distribution 14.Assessment centre
4. Checklist 15.Field review
5. Graphic rating scale

6. Behavioral anchored rating
7. Forced choice method
8. MBO 18
360-degree Feedback System
 multi-rater feedback, multisource feedback, or multisource assessment -

feedback that comes from all around an employee.
 "360" refers to the 360 degrees in a circle, with an individual figuratively in
the center of the circle.
 Feedback is provided by subordinates, peers, and supervisors. It also
includes a self-assessment and, in some cases, feedback from external sources
such as customers and suppliers or other interested stakeholders.
19
BENEFITS OF APPRAISAL SYSTEM
Appraisals offer employees: Appraisals offer the company:

Direction Documentation
Feedback Employee Development
Input Feedback
Motivation Legal protection
Motivation system
20
Appraisal Interview
Performance appraisal interview is the first stage of the performance appraisal

process.
Involves - employee and manager sitting face to face to discuss threadbare all
aspects of the employee’s performance and thrash out any differences in
perception or evaluation.
Provides the employee with a chance to defend himself or herself against poor
evaluation by the manager and also gives the manager a chance to explain what
he or she thinks about the employee’s performance.
Conti….
21
In a nutshell, the performance appraisal interview precedes the normalization

process and is subsequent to the employee filling up the evaluation form and
the manager likewise doing so.
The interview is the stage where both sides debate and argue the employees’
side of the story as well as the manager’s perception.
22
Why Appraisal Interview?
Figure-4 Conti… 23
Figure-5
Conti… 24
Figure-6
Conti… 25
Figure-7 Conti…
26
Figure-8 Conti…
27
Effective Preparation
Figure-9 Cont….
28
Figure-10 29
Appraisal Interview Structure
1. Introduction
2. Interview
3. Summary
30
Introduction
Conti…. 31
32
Interview
33
Summary
34
Post appraisal interview
The post appraisal interview is an essential part of the performance appraisal

system.
The employee gets useful feedback information about how effectively and
efficiently he is able to discharge the assigned duties.
It also gives the opportunity to employee to explain his views about the
ratings, standards, rating methods, internal and external causes for low level
of performance.
Conti….
35
The appraiser gets a chance to explain the employee his rating, the traits and
behavior he has taken into account for appraisal, etc. He can utilize this
opportunity to offer constructive suggestions help, guide and coach the
employee for his advancement.
The post appraisal interview helps both parties to review standards, set new
standards based on the experience gained.
36
It, thus, serves to meet the following objectives:

1. to let employees know where they stand;
2. to help employees do a better job by clarifying what is expected of them;
3. to plan opportunities for development and growth;
4. to strengthen the superior-subordinate working relationship by developing
a mutual agreement of goals;
5. to provide an opportunity for employees to express themselves on
performance-related issues.

37
How To Prepare A Good Performance Evaluation?
1. Avoid the "Halo and Horns"

2. Set goals
3. Keep score all year long
4. Participate in formal performance review meeting
5. Assess oneself
6. Positive attitude
38
Employee Performance
Managing employee performance is one of the key drivers for organizational success in
the present context of firms trying to adopt a resource centered view of the
organization.
Successful employee performance management includes goal setting, timely feedback,
communication and measured success.
This allows employees to better identify what their management and organization expects
from their performance and allows them to feel more connected to the success of the
company.
39
Objectives
1. Increase two-way communication

2. Clarify mission, goals, responsibilities, priorities and expectations
3. Identify and resolve performance problems
4. Recognize quality performance
5. Provide a basis for administrative decisions such as promotions,
succession and strategic planning, and pay for performance.
40
Performance management
ective feedback
Performance = Behavior + Results

Performance management can focus on the performance of an organization, a
department, employee, or even the processes to build a product or service, as
well as many other areas.
According to Armstrong and Baron (1998), Performance Management is both
a strategic and an integrated approach to delivering successful results in
organizations by improving the performance and developing the capabilities
of teams and individuals.
Performance management is an ongoing communication process which is
carried between the supervisors and the employees through out the year.
41
Process of Performance Management
Figure-11
42
Performance Counseling
Performance counseling can be defined as the help provided by a manager to

his subordinates in analyzing their performance and other job behaviors in
order to increase their job effectiveness.
Performance counseling essentially focuses on the analysis of performance on
the job, and identification of training needs for further improvement.
43
Feedback & Counseling
The purpose of both counseling and feedback is to provide employees with

the information, advice and assistance they need to contribute fully to the
achievement of organization's objectives and, where a person fails to make
the required contribution, to demonstrate that managers have made an
appropriate effort to assist them.
44
Situations for Counseling
1. As part of a regular system of performance feedback.

2. Assessing the performance of a probationer.
3. In the context of performance appraisal.
4. Assessing training and development needs.
5. After a selection process.
Conti….
45
6. If a employee is planning to retire or resign from the service.

7. Where there is a decline in work performance.
8. Where the standard of conduct is not being met.
9. Where there has been particularly good performance.
10. Where a difficulty has been overcome.
11. To maintain continuing good performance.
46
Counselling Need Symptoms
Sudden  Decreased production

change of
behaviour  Wasting material
High absenteeism  Difficulty in absorbing
Increased in the job training
absence  Spoiling the work
High accident rate  Getting involved
Increased fatigue  Talking in a high pitch
Loss in quality
47
Counselling Techniques
 Control anger
 Be geographically well placed
 Be an active listener
 Be constructive
 Be interested
 Be able to relate
 Be compassionate
 Maintain confidentiality
 Be available
 Be careful
 Be accepting
 Refer to experts
 Be non-judgmental
48
Process of counseling
Rapport Building Exploration Action Planning
Attending Exploring
Searching
Listening Problem-
Problem- Decision making
Acceptance Identification
Supporting
Supporting
Diagnosis
Figure-12
49
Feedback
Feedback is generally informal and involves manager and subordinate

exchanging information in a broad range of situations about how both can
best work together to achieve the goals of the organization.
Feedback ranges from oral comments on a person’s performance to written

reports, such as probation, performance appraisal or referee reports.
50
Providing effective feedback
1. Based on open, two-way communication

2. Timely and regular;
3. Factual and specific;
4. Constructive; and
5. Follow up.
51
If feed back fails !
COUNSELLING is a formal process, initiated when a person has not responded

to advice and assistance of manager had provided on a less formal basis, and
will usually involve manager taking the following steps:
 Advise the person in advance that a discussion about his or her work
performance or conduct is to be held at a given time and place, with
sufficient notice to enable both to come to the discussion prepared
 Arrange for the meeting to be held in private, although a support
person for the person being counseled may be present, as well as
someone manager may have asked to attend as an observer and
 Keep a brief record of the meeting—this could be a diary note.
52
Who should be pre se nt?
ec ti ve feedback
A counseling discussion - manager or supervisor and a staff member - requests

the presence of a support person or independent observer.
A person/s attending a session in this capacity would not normally take part in
the discussion and their presence and role should be clarified before the
session commences.
53
How and whe re s hould manage r counse l ?
ec ti ve feedback
1. Generally - praised in public and criticized in private.

2. It is advisable first to let a person know they have done a good job and
then the improvement areas.
3. Formal counseling - place which is private and free from distractions.
4. A suitable time – discussion - agreed in advance and sufficient notice
given to allow both to prepare adequately.
54
Employee Engagement
ec ti ve feedback
Employee Engagement is the extent to which workforce commitment, both

emotional and intellectual, exists relative to accomplishing the work, mission, and
vision of the organization.
Engagement can be seen as a heightened level of ownership where each employee
wants to do whatever they can for the benefit of their internal and external
customers, and for the success of the organization as a whole.
Employee engagement - work engagement - worker engagement, is a business
management concept.
Conti….
55
An "engaged employee" is one who is fully involved in, and enthusiastic about,
his or her work, and thus will act in a way that furthers their organization's
interests.
According to Scarlett Surveys, "Employee Engagement is a measureable degree
of an employee's positive or negative emotional attachment to their job,
colleagues and organization which profoundly influences their willingness to
learn & perform at work".
Thus engagement is distinctively different from satisfaction, motivation, culture,
climate and opinion and very difficult to measure.
56
What is e mpl oye e e ngage m e nt ?
ec ti ve feedback
The extent that an employee believes in the mission purpose and values of an
organization and demonstrates that commitment through their actions as an
employee and their attitude towards the employer and customers.
Employee engagement is a step ahead than employee Satisfaction:

 Belief in the organization
 Desire to work to make things better
 Understanding of business context and the ‘bigger picture’
Respectful of, and helpful to, colleagues
 Willingness to ‘go the extra mile’

 Keeping up to date with developments in the field
Conti….
57
Defining e mploye e engage me nt
ec ti ve feedback
Engagement is the energy, passion, or ‘fire in the belly’

employees have for their employer:
Figure-13
58
Types of Employee
1. Engaged
2. Not Engaged
3. Disengaged
Scary Statistics
17%
29%
Engaged
Not Engaged
Disengaged
54%
Figure-14
59
Compone nts of e m pl oye e e ngageme nt
ec ti ve feedback
1. Cognitive
2. Emotional
3. Behavioral
Figure-15 60
Employee engagement is influenced by
1. Employee perceptions of job importance.

2. Employee clarity of job expectations.
3. Career advancement/improvement opportunities.
4. Regular feedback and dialogue with superiors
5. Quality of working relationships with peers, superiors, & subordinates
6. Perceptions of the ethos and values of the organization
61
Types of engagement activities
 Communication activities
 Reward schemes
 Activities to build the culture of the organization
 Team building activities

 Leadership development activities
62
Common engagement drivers across companies
83%
64% 61%
60% 59%
30%
Career Company Senior Work Recognition

Resources Pay
Opportunities Practices Leadership
Figure-16 63
Competency mapping
Introduction
Ongoing and unrelenting economic, social and technological changes have

spurred the need for flexible, skilled workers who can help their organizations
succeed and sustain a competitive advantage.
To be relevant within organizations and indispensable to clients and
customers alike, workplace learning and professionals performance must
continually reconsider their competencies, update their skills and have the
courage to make necessary changes. Businesses and managing business has
and will always be complex.
64
History
Benjamin Bloom – Educationists – USA - mid fifties - foundation - identifying

educational objectives and thereby defining the knowledge, attitudes and
skills needed to be developed in education.
David McClelland - Harvard Psychologist - pioneered the competency
movement across the world.
Books on
"Talent and Society", "Achievement Motive", etc brought out several new
dimensions of the competencies.
These competencies exposed by McClelland dealt with the affective domain in
Bloom's terminology.
Conti….
65
Turning point - competency movement - article published in American

Psychologist in 1973 by McClelland.
Presented - traditional achievement and intelligence scores may not be able to
predict job success.
- what is required is to profile the exact competencies required to
perform a given job effectively and measure them using a variety
of tests.
Latter – McBer, Consulting Firm - founded - David McClelland - his associate
Berlew - specialized in mapping the competencies of entrepreneurs and
managers across the world.
Developed a new - yet simple methodology - the Behavior Event Interviewing
(BEI) to map the competencies.
66
What do we mean when we say “COMPETENCY” ?
A Competency is an underlying characteristic of a person which enables

him /her to deliver superior performance in a given job, role or a situation.
Competencies are seen mainly as inputs.
They consist of clusters of knowledge, attitudes and skills that affect an
individual’s ability to perform.
67
Components of Competency
Three major components;

Knowledge
Skills
Attitude
Conti….
68
Surface Competencies
Most easily developed
Skill
Self Concept
Value
Traits & Motives
Attitude
Knowledge
Core Competencies
Most difficult to develop
Figure-17 Components of Competency

69
Iceberg Model of Components Of Competency motive
Figure-18 70
Who identifies competencies?
one or more of the following category of people:

1. Experts
2. HR Specialists
3. Job analysts
4. Psychologists
5. Industrial Engineers etc.
In consultation with:
i. Line Managers
ii. Current & Past Role holders
iii. Supervising Seniors
iv. Reporting and Reviewing Officers
v. Internal Customers
71
Classification of Competencies
1. Basic Competencies
2. Professional Competencies
3. Organizational Competencies
Conti….
72
1. BASIC COMPETENCIES
Determine the level of motivation Determine the intellectual ability

Motivational Competencies: Intellectual Competencies:
o Continuous Learning o Communication
o Perseverance o Creativity
o Achievement Orientation o Analytical Ability
o Time Management o Planning and Organizing
Social Competencies: Emotional Competencies:

o Team Work o Initiative
o Inter-personal Skills o Optimism
o Responsibility o Self Confidence
o Customer Satisfaction o Leadership
o Managing Stress
o Managing Change
73
Determine the level of social ability Determine emotional quotient
2. Professional Competencies
1. Knowledge
2. Experience
3. Expertise gained by an individual employee.
74
3. Organizational Competencies
1. Generic Competencies
> Communication
> Team Working & Interpersonal Effectiveness
> Influencing Ability
> Achievement Orientation
> Networking Ability
> Creative Thinking
> Strategic Thinking
> Tolerance to non-compliance, non-congruence, non-conformance
75
2. Managerial Competencies
> Customer Orientation

> Organizing Skills
> Cross functional Perspective
> Planning Skills
> Execution Skills
> Analytical Skills
> Decision Making
> Delegation:
> Leadership
> Developing and supporting subordinates for effectiveness
76
3. Functional/Technical Competencies
> Business awareness
> Business skills
> Technical skills
77
Competency Mapping
Competency mapping is the process of identification of the competencies

required to perform successfully a given job or role or a set of tasks at a given
point of time.
It generally examines two areas: emotional intelligence or emotional quotient
(EQ), and strengths of the individual in areas like team structure, leadership,
and decision-making.
78
Need for Competency Mapping
1. Increased cost of manpower
2. Competent people are available for performing various critical roles.
3. Reduce manpower costs and pass on the advantage to the customer.
4. Right kind of human resources - technology, finances, customers and

markets, systems and processes – use in a right manner or manage effectively
5. Time management, nurturing of competence, increased emphasis on

performance management systems.
6. Strategic advantage given by employee competencies in building the core

competencies of the organization.
79
Areas of Implementation
80
Process of Competency Mapping
Preparation
Preparation of
of
Questionnaire
Questionnaire
Collection
Collection
of
of Responses
Responses
Analysis
Analysis Findings
Findings
81
Conclusion
Competency Mapping therefore, is a process of identifying key competencies

for an organization and/or a job and incorporating those competencies
throughout the various processes (i.e. job evaluation, training, recruitment) of
the organization.
82

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Semester-II, BVB College - MBA Dept.

At the end of the module you should be able;

Human resources are considered to the most valuable assets in an

In many organizations - but not all - appraisal results are

‘Performance appraisal is a formal, structured

Simply put, it is the observation and evaluation of a

There are three basic functions of an effective performance

1. Set standardized process of implementing

3. Ensures that job performance expectations are

4. Making payroll and compensation decisions – 80%

The Performance - Appraisal Cycle

Relationship between job analysis and performance appraisal:

Job Analysis Performance Performance

Describes work Translate job Describes the

Performance Appraisal Process

1. Establish and communicate expectations for

1. Why do we measure performance?

REASONS FOR MEASURING PERFORMANCE

1. Helping Set Objectives And Planning Work Schedules

5. assessing or modifying working conditions

Methods of Performance Appraisal

Performance Appraisal Methods

Individual evaluation method Multi-person evaluation Others

2. Essay evaluation 10.Paired comparison 13.HRA

4. Checklist 15.Field review

5. Graphic rating scale

360-degree Feedback System

 multi-rater feedback, multisource feedback, or multisource assessment -

BENEFITS OF APPRAISAL SYSTEM

Appraisals offer employees: Appraisals offer the company:

Performance appraisal interview is the first stage of the performance appraisal

In a nutshell, the performance appraisal interview precedes the normalization

Why Appraisal Interview?

Appraisal Interview Structure

Post appraisal interview

The post appraisal interview is an essential part of the performance appraisal

It, thus, serves to meet the following objectives:

How To Prepare A Good Performance Evaluation?

1. Avoid the "Halo and Horns"

1. Increase two-way communication

Performance = Behavior + Results

Process of Performance Management

Performance counseling can be defined as the help provided by a manager to

Feedback & Counseling

The purpose of both counseling and feedback is to provide employees with

Situations for Counseling

1. As part of a regular system of performance feedback.

6. If a employee is planning to retire or resign from the service.

Counselling Need Symptoms

Sudden  Decreased production

Rapport Building Exploration Action Planning

Feedback is generally informal and involves manager and subordinate

Feedback ranges from oral comments on a person’s performance to written

Providing effective feedback

1. Based on open, two-way communication

If feed back fails !

COUNSELLING is a formal process, initiated when a person has not responded

A counseling discussion - manager or supervisor and a staff member - requests

1. Generally - praised in public and criticized in private.

Employee Engagement is the extent to which workforce commitment, both

Employee engagement is a step ahead than employee Satisfaction:

 Willingness to ‘go the extra mile’

Engagement is the energy, passion, or ‘fire in the belly’

Employee engagement is influenced by