Professional Documents
Culture Documents
Appraisal Philosophy
PERFORMANCE APPRAISAL
In performance appraisal, there are certain criteria that are used. The three
most popular sets of criteria are;
1. good attitude
2. showing confidence
3. being dependable
4. looking busy
5. possessing a wealth of experience
When goals are set with the active participation of the employees, appraising
employee performance will be an easy task.
Measuring performance is the third step in the appraisal process. To determine
what actual performance is, it is necessary to acquire information about it.
Information may be derived from the following sources.
1. Personal Observation
2. Statistical Reports
3. Oral Reports
4. Written Reports
There are three different approaches which can be used for appraising
employees:
1. Absolute standards;
2. Relative standards; and
3. Objectives
Absolute Standards
Under this approach, the subjects of appraisal are not compared with other
persons. This approach consists of the following methods: the essay appraisal, the
critical incident appraisal, the checklist, the adjective rating scale, forced choice, and
behaviorally anchored rating scales.
Essay Appraisal
The critical incident appraisal can be very useful if the appraiser is given
enough time to observe the subject employee.
Checklist
Example:
The advantage of the checklist method is that it reduces some bias since
the rater and the scorer are different. The disadvantage is when there are many
job categories, a checklist of items must be prepared for each job categories and
that is costly in terms of materials and time consumed.
Forced-choice Appraisal
Example:
Example:
The greatest advantage of BARS is its ability to direct and monitor
behavior. The behavioral anchors let employees know what types of behavior are
expected of them which gives appraisers the opportunity to provide behaviorally
based feedback.
Relative Standards
Individual ranking
The individual ranking method requires the evaluator merely to list the
employees in order from highest to lowest. This method does not show the
difference between the first and second, or between the second and third.
Paired Comparison
This method ensures that each employee is compared against each other,
but the method can become unwieldy when large numbers of employees are
being compared.
Objectives
The third approach to appraisal makes use of objectives. This approach, also
known as management by objectives (MBO), is a process of joint goal setting between
a supervisor and a subordinate. It is also a process of converting organizational
objectives into individual objectives.
The advantages of MBO are the following:
Halo Error. This is a rating error that occurs when a rater assigns ratings on
the basis of an overall impression (positive or negative) of the person being rated. For
example, a teacher who topped the board examination for electrical engineers is
regarded as outstanding in the aspect of professional qualification. If that impression
spills over the other aspects of evaluation, a halo error is committed.
Central Tendency Error. This occurs when a rater lump everyone together
around the average, or middle, category. The idea is that there are no very good or very
poor performers on the dimension being rated. As a result, no true performance
discrimination is made.
Recency Error. This is a biased rating that develops by allowing the individuals
most recent behavior to speak for his or her overall performance on a particular
dimension. The result is a false picture of the individuals job performance during the
entire period.
Personal Biased Error. This occurs when a rater allows specific biases, such
as racial, age, and gender, to enter into performance appraisals. For example, a rater
may intentionally give higher rating to a member of a certain fraternity than to a non-
member.
There are several broad types of incentives that link pay with performance.
Major ones are shown in Figure 1. Perhaps the most popular measure is for the
amount of output to determine pay, as illustrated by a sales commission or a piece
rate. It provides a simple, direct connection between performance and reward. Those
workers who produce more are rewarded more. Often pay is determined by a
combination quantity-quality measure in order to ensure that a high quality product
or service is maintained.
Wage Incentives
Wage incentives provide more pay for more production. The main reason for use
of wage incentives is clear: They nearly always increase productivity while decreasing
unit labor costs. Workers under normal conditions without wage incentives have the
capacity to produce more, and wage incentives are one way to release that potential.
The increased productivity often is substantial.
Basic pay rates, performance pay increases, and most other incentive systems
recognize individual differences, whereas profit sharing recognizes mutual interests.
Employees become interested in the economic success of their employer when they see
that their own rewards are affected by it. Greater institutional teamwork tends to
develop.
1. Profits are not directly related to an employees effort on the job. Poor market
conditions may nullify an employees hard work.
2. Employees must wait for their reward, and this lengthy delay diminishes its
impact.
3. Since profits are somewhat unpredictable, total worker income may vary from
year to year. Some workers may prefer the security of a more stable wage or
salary.
4. Some union leaders have historically been suspicious of profit sharing. They
fear that it would undermine union loyalty, result in varied total earnings from
company to company, and weaken their organizing company.
Example:
Gain Sharing
Gain sharing is another type of group incentive which is also called production
sharing. A gain-sharing plan is a program that established a historical base period of
organizational performance, measures improvements, and shares the gains with
employees on some formula basis. Examples of performance factors measured include
inventory levels, labor hours per unit of product, usage of materials and supplies, and
quality of finished goods. The idea is to pinpoint areas that are controllable by
employees and then give them an incentive for identifying and implementing ideas that
will result in cost savings.
Behavioral Basis
Contingency Factors
Example:
Skill-Based Pay
In contrast to salaries (which pay someone to hold a job) and wage incentives
(which pay for the level of performance), skill-based pay (also called knowledge-based
pay or multi-skill pay) rewards individuals for what they know how to do. Employees
are paid for the range, depth, and type of skills in which they demonstrate capabilities.
They start working at a flat hourly rate and receive increases for either developing
skills within their primary job or learning how to perform other jobs within their work
unit. Some companies provide increases for each new job learned; most others require
employees to acquire blocks of related new skills, which may take several years to
learn. Substantial amounts of training must be made available for the system to work,
and methods for fairly pricing jobs and certifying employee skill levels need to be
established. Some skill-based pay systems have supervisors evaluate the knowledge
and skill of the employees; others allow work teams to assess the progress of each
trainee.
1. Provide strong motivation for employees to develop their work-related skills, they
reinforce an employees sense of self-esteem, and provide the organization with a
highly flexible workforce that can fill in when someone is absent.
2. Boredom is reduced since workers rotate among jobs to learn them.
3. The employees hourly rate received is often higher than the rate that would be
paid for the task being performed, since only in a perfect system would all
employees be constantly using their highest skill.
4. Workers perceived the system as equitable both in the sense of their costs and
rewards being matched and in the knowledge that all employees with the same
skills earn the same pay.
1. The average hourly pay rate will be greater than normal since most employees
will voluntarily learn higher-level jobs.
2. A substantial investment in employee training must be made, especially in the
time spent coaching by supervisors and peers.
3. Not all employees like skill-based pay because it places pressure on them to
move up the skill ladder. The subsequent dissatisfaction may lead to a variety of
consequences, including employee turnover.
4. Some employees will qualify themselves for skill areas that they will be unlikely
to use, causing the organization to pay them higher rates than they deserve
from a performance standpoint.
Skill-based pay, like other incentive programs, works best when the organizational
culture of the firm is generally supportive and trusting. The system should be
understood by employees, they must have realistic expectations about their prospects
for higher pay levels, it must be possible for them to learn new skills and to have these
skills promptly evaluated, and there must be some limits on which skills they can
qualify for. Under these conditions, the program is consistent with the other incentives
discussed, since it links employee pay with the potential for increased performance.