Performance based appraisal system

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I. Contents of getting performance based appraisal system

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Want to improve your sales organization fast? Consider ripping up your annual performance
appraisal system. If tearing up all those forms seems too harsh, try something a bit more polite,
such as shredding them. One way or another, just get rid of a process that actually hurts your
results.
Yes, we know that virtually every major corporation uses performance appraisal systems. We
know that they have become an integral part of salary recommendations, succession planning,
and employee development programs. But the key question is: Do they work? Moreover, do
performance appraisals improve performance, or are they a colossal waste of time? Has anybody
bothered to find out, or are we just assuming that performance appraisals must be a good thing
because everybody uses them?
The answer is: Performance appraisals don't work. In 1965, the Harvard Business Review
reported the results of a landmark study by Herbert Meyer, Emanuel Kay, and John French Jr.,
which tested the effectiveness of traditional performance appraisal systems at General Electric.
Unfortunately, this meticulous research, conducted decades ago, has had almost no impact on the
prevalence of performance appraisal systems at major corporations. Our own research suggests
that this article is as relevant today as it was when first published. Not many people listened then.
We hope you take note now.
Why the process fails

Naturally, we would expect that performance appraisal efforts, like any other management
activity, would show poor results if done poorly. To avoid this problem, Meyer and his
colleagues were careful to select a location that based performance appraisals on job
responsibilities, not on personal characteristics, and that provided managers intensive training in
the techniques for conducting appraisal reviews. In other words, they studied performance
appraisal systems at their best.
Their conclusions should alarm any manager or company that relies on performance appraisals.
The team found that comprehensive annual performance appraisals were of questionable value,
and more often than not, these appraisals eroded rather than improved performance. Let's look at
some specifics.
In general, the managers they studied offered both praise and criticism during their evaluations.
On average, the number of positive comments slightly exceeded the number of negative remarks.
Interestingly, employees tended to ignore the positive comments and viewed them largely as a
cushion for the negative points the manager brought up. These negative comments, rather than
serving as an impetus for improving performance, tended to make employees defensive. The
more criticism they heard, the more their actual performance declined after the appraisal. If you
think pointing out areas of weakness improves someone's performance, you are dead wrong.
Further examination of their research shows that praise tended to be about general
characteristics, but criticisms tended to be about specific incidents. That's something like saying,
"You're a good employee, but..." As a result, employees discounted the positive remarks and
focused instead on the negative comments.
Another notable conclusion related to timing. Annual performance reviews were -- and in many
cases still are -- done around the time of salary adjustments. Presumably, the performance review
explained an upcoming salary action. Employees viewed this connection with a high degree of
suspicion. They believed that negative comments were not made with a genuine interest in
helping them improve their performance; instead, they viewed the appraisals as a nit-picking
exercise designed to justify a meager raise.
A better approach
The research conducted by Meyer, Kay, and French suggests another important question. If
annual performance appraisals erode performance, what can managers do that actually enhances
productivity? Their research elaborated on instances when managers held work planning and
review sessions with their employees rather than annual performance reviews.
Here again, their findings dovetail with our research. They found that short-term goal setting was
much more likely to improve performance than annual performance reviews. When we ask
employees about their annual goals, we tend to get somewhat vague answers. When we ask about

this month's goals, the list is much more specific. Frequently setting goals and discussing
specific expectations is of much more value than setting broad annual goals.
At our sales summits, we ask sales executives how relevant the targets they set at the beginning
of the year are after six months. The overwhelming response is that those initial goals are rarely
meaningful after just two quarters. A declining or rising economy, a competitive entry, or a
competitive blunder can create situations that make annual targets less meaningful.
Reviewing expectations often allows managers to give genuine praise for real accomplishments.
Praise offered once a year is hardly ever believed, because it is usually much too general.
Frequent reviews also enable managers to hold meaningful discussions about the resources
employees may need to accomplish their goals. Few things are more frustrating for salespeople
than to be out there charging hard and generating customer interest for products the company has
become unable to ship or to provide.
Finally, setting expectations regularly and often can provide a framework for effective coaching.
Managers can use these opportunities to discuss how employees can improve their performance
by relying more on their individual strengths. While it's sometimes tempting to try to remake
people, great managers understand that people hardly ever respond positively to criticism. It's not
just because criticism feels like a slap in the face; criticism usually stems from areas in which
employees have little talent to draw on to improve their performance. Effective managers find
the most painless way possible to minimize the consequences of employee deficiencies.
How often should managers hold these discussions? Clearly, there is no one right answer for
every employee. Some employees want or need to discuss these issues more often than others.
Don't assume that your best people want less attention. They frequently want more, especially if
these discussions focus on the positive. Even senior executives like to discuss their
accomplishments regularly with their bosses.
We suggest that sales managers frequently sit down with their direct reports -- for at least an
hour. The discussion should include these matters:

performance, as measured against quantifiable goals. How have they performed against
revenue, customer engagement, and other important metrics?
the talents and strengths they bring to the job, and how they already have leveraged and
can continue to leverage them most effectively
their weaknesses and any areas of their job in which they struggle
skills that they might want or need to acquire
knowledge that they might want or need to acquire

The manager and salesperson should then agree on goals and targets. More important, they
should also discuss how they could effectively work together to accomplish these goals and
realize these developmental aspirations.
Setting expectations, providing appropriate resources for meaningful goals, recognizing
accomplishments, and taking an interest in employees' growth and development are all key
factors in building employee engagement, improving productivity, and lowering turnover. Why
not institute a performance appraisal system that actually helps you accomplish these goals
instead of one that works against you? Yes, you will undoubtedly face some internal battles to
make this happen at your company, but these are battles well worth fighting.
==================

III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors

determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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