Unit IV

4.1 Performance Appraisal

4.2 Management By Objectives
4.3 Career Management
4.4 Promotion, Demotion, Transfer
4.5 Review Questions

4.1 PERFORMANCE APPRAISAL

Introduction

In the management of human resource, there are two main control mechanisms – one
is performance appraisal and administration of discipline. This chapter deals with
performance appraisal. Once an employee is selected, trained and motivated, he is
now appraised for his performance. Performance appraisal is one of the traditional
techniques to make periodic assessment of work and the potentials of an employee. It
is known by various names like Employee rating, Efficiency rating, Performance
rating, Employee evaluation, Staff assessment, Service rating etc. However, the term
performance appraisal is the most widely used. Performance appraisal is evaluation
of performance against defined jobs. It is possibly management’s most powerful tool
in controlling performance and productivity of human resources in the organization.
It is considered an important function of human resource management. There are
various methods for performance appraisal.

137
MEANING OF PERFORMANCE APPRAISAL

Performance means to do something and appraisal means to decide the value

of work. Thus performance appraisal together means deciding the value of the work
done by an individual.

According to Edwin Flippo, “Performance appraisal is the systematic,

periodic and an impartial rating of an employee’s excellence in matters pertaining to
his present job and his potential for a better job.”

According to Dale Yoder, “Performance appraisal refers to the formal

procedures used in working organizations to evaluate the personalities and
contributions and potential of group members.”

In the words of Dale S. Beach, “Performance appraisal is the systematic

evaluation of the individual with regard to his performance on the job and his
potential for development.”

According to Scott, Clothier and Spriegel, “Merit rating or performance

appraisal is the process of evaluating the employee performance on the job in terms of
requirements of job.”

In short, it can be said that performance appraisal is a process of estimating or

judging the value, excellence or qualities of employees in an organization.

TERMINOLOGY USED FOR PERFORMANCE APPRAISAL

Performance appraisal is as old as mankind itself. Over the period since its
formal introduction in 1920, performance appraisal has undergone tremendous
changes in terms of its concept, philosophy and methods. Prof. Dale Beach has
provided a useful chart, showing the changes in the terminology of performance
appraisal, which have taken place since 1920, as summarized in the following table:

Trends in Performance Appraisal

138
 Item Earlier Emphasis Present Emphasis
Terminology Merit Rating Employee Appraisal/
Performance Appraisal
Purpose Determining qualifications for wage Development of individual,
increase, transfer, promotion, layoff improved performance on
the job, provide emotional
security.
Application For hourly-paid workers For technical, professional
and managerial personnel.
Factors rated Heavy emphasis on personal Heavy emphasis on results,
attributes accomplishments,
performance.
Techniques Rating scales, statistical Mutual goal-setting, critical
manipulation of data for comparison incidents, group appraisal,
purpose. performance standards, less
quantitative.
Post- Superior communicates his rating to Superior stimulates
appraisal employee and tries to sell his employees to analyses
interview evaluation to him, seeks to have himself and set own
employee conform to his view. objectives in line with job
requirements, superior is
helper and counselors.

PERFORMANCE APPRAISAL V/S JOB EVALUATION

Performance appraisal and job evaluation both the words seem same. But in
practice, there is wide difference between the two terms. Performance appraisal
identifies the differences among the employees in terms of their performance. But
job evaluation is an analysis of various job to know the demands which the normal
performance of particular jobs make on average performance of the employees
concerned.

139
140
Following table brings out the difference between job evaluation and performance
appraisal:

Sr. No. Job Evaluation Performance Appraisal

1 The job is rated. The job holder is rated.
2 It rates a job keeping in view the It rates a job holder on the basis
responsibilities, qualification, of his performance.
experience, working conditions
etc required to perform a job.
3 A job is rated before the employee Performance appraisal takes
is selected. place after an employee is hired
and placed on a particular job.
4 Its purpose is to determine wage Its purpose is to give effects of
levels for different jobs. promotions, transfers, assess
training needs, offer rewards,
award punishments, resort to lay-
off etc.
5 It is not compulsory. It is compulsory.
6 It is done by a committee It is done by employees
consisting of internal and external themselves, peers, supervisors or
experts. combination of them.

CONTENTS OF PERFORMANCE APPRAISAL

The contents of performance appraisal depends upon nature of job, level of

job, size of an organization, thinking of human resource manager and many other
factors. The following are covered in performance appraisal:

Personnel background

Regularity of attendance

141
Presentation: Written or oral or both

Ability to get along with others

Initiative

Leadership ability

Technical skills

Technical knowledge and ability

Capability to work

Strength and weaknesses

Ability to learn new things

Areas of interest

Capacity to take calculated risk

Flexibility in dealing with ideas of others

Attitudes towards job

Loyalty to the company

Self-confidence in decision-making

Ability to take responsibility

Accuracy in work

Knowledge of methods and procedures

Sense of unit

Ability to make adjustments in the face of frustrations and constraints

Ability to make suggestions and quality of suggestions etc.

142
CHARACTRISTICS OF PERFORMANCE APPRAISAL

Important characteristics of performance appraisal areas are as below:

Appraisal of employee performance: It is not appraisal of job, but it is appraisal of

performance of employees. It is evaluation of an employee, with reference to his
performance on the actual job.

Different from job evaluation: Performance appraisal is deferent from job

evaluation. Job evaluation rated the job while performance rates the job holder.

Appraisal by supervisor: Generally performance appraisal of an employee is

undertaken by his supervisor or by specially trained person or an expert.

Measurement of skills and ability: Performance appraisal is a process of estimating

or judging the value, excellence or qualities of employees in an organization. So it
measures skills and abilities of employees.

Strengths and weaknesses: Through performance appraisal, strengths and

weaknesses can be identified. So an employee can become aware about his strengths
and weaknesses and try to overcome his weaknesses.

Suggests improvement in performance: The objective of performance appraisal is

not only to appraise performance of an employee, but also to formulate plan to
improve the present performance of the employee. Thus performance appraisal gives
a chance to an employee to improve his performance in future, by showing ways for
better performance.

Use for promotion, transfer, wage etc. decision: On the basis of performance
appraisal of employees, their wages are determined, decisions about their promotion,
transfer etc. can be taken rightly.

Evaluation of employees in several aspects: The performance of employees is

measured with reference to several factors like self-confidence, regularity of
attendance, leadership ability, initiative, co-operation, job knowledge, dependability,
responsibility etc.

143
Continuous process: Performance appraisal is a continuous process. It is not a
temporary process rather it is endless process. Performance appraisal goes forever.

OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal is broadly used for following objectives.

To identify employees for promotion, transfer and demotion: Performance

appraisal provides an important base for promotion, transfer and demotion.
Performance appraisal measures ability and competence of employees. Hence
performance provides a scientific base for promotion of deserving employees.
Moreover, performance appraisal also tells whether transfer of an employee is
necessary or not. Its objective is also to assist management in decisions like
demotion, lay-off, and discharge of employees.

To determine training and development needs: Performance appraisal evaluates

skills and competence of employees. Hence it is useful for determining need of
training and development programs for employees. If any deficiency is found in
skills of employees, they can be rectified by training. On the basis of performance
appraisal, mental abilities and skills of higher level executives can also be developed.

To determine wage and salary: Performance appraisal reports are very useful to
determine increases or decreases in wage and salary. The wage and salary structure if
is framed on the basis of skills and abilities of employees, it is called an ideal wage
and salary structure.

To motivate employees: Performance appraisal provides motivation and incentives

to employees by providing feedback on their performance levels. Regular appraisal
tends to incentives to employees.

To maintain complete records of employees: Performance appraisal evaluates over

all performance of employees. Hence due to continuous performance appraisal,
complete and continuous records of performance of recommend promotion, transfer
etc.

144
To establish a basis for personnel research: Performance appraisal establishes an
important basis for research and reference for personnel decisions in future.
Performance appraisal provides necessary data for personnel research, which help in
formulating personnel policies.

To make recommendations for self-improvement: Performance appraisal finds out

deficiencies of employees. It tells where employees stand, how they are doing and
where improvements are needed. This leads the employees for self-improvement.

To confirm the services of probationary employees: Performance appraisal is used

to confirm the services of probationary employees upon their completing the
probationary period satisfactory.

METHODS OF PERFORMANCE APPRAISAL

Several methods or techniques are available for measuring the performance of

employees. Important methods of performance appraisal are as below:

Confidential Reports

Graphical Rating Scales Method

Ranking Method

Paired-Comparison Method

Forced Choice Method

Forced Distribution Method

Critical Incidents Method

Check List Method

Cost Accounting Method

Self-Appraisal Method

These methods are explained below:

145
Confidential Reports:

It is the traditional method of appraising employees mainly used in the government

departments. Evaluation is made by the immediate boss or supervisor for giving
effect to promotion and transfer. The report of evaluation of employees is not shown
to employees. It remains secret, i.e. why this method is known as confidential
reports. The confidential report includes information about an employee’s reliability,
ability, attendance, strengths, weaknesses, character, attitudes, discipline, job
knowledge etc. Confidential reports are of two types –

Unstructured Report and

Structured Reports

In unstructured report, information sought is not standardized. Generally information

about brief history of an employee, reliability, ability, attendance, strengths,
weaknesses, character, attitudes, discipline, job knowledge etc. are covered in the
unstructured reports. In structure reports, a standardized format for performance
appraisal is prepared by the company with the help of experts. The format of the
confidential reports may differ in different companies.

In this method, evaluation of employee remains secret. So, unhealthy competition

among employees reduces. But on the other hand, its criticisms are –

It is a subjective evaluation based on evaluator’s impression about appraise.

The feedback is not given to the appraise, the appraisal remains confirmed to
evaluation only than development.

Feedback, if any, is given in case of adverse remarks.

2. Graphical Rating Scales Method:

The graphical rating method is the most commonly used method. The employees are
rated on personality characteristics and performance. The rates is provided with a
printed form for each employee to be rated, containing a number of characteristics to

146
be rated. For showing the level of each quality, a horizontal line is drawn. The name
of the factor to be considered is written at the left hand end of the line. E.g. Skill – If
skills of an employee are assessed, then the word ‘Skill’ is written. Then at the
certain distance on that line, the degree of quality is noted. It begins with Excellent,
Good, Average, Weak and Very Weak. Now the degree of quality that a particular
employee being rated, possesses is marked on the graph by putting “tick mark” before
the appropriate scale.

Graphical rating scale method has two versions.

Adjectival Method: Under this method, adjectival phases are used against the
qualities. Following is a hypothetical illustration of this method.

Factor of qualities Excellent Very Average Weak Very

good weak
1.Quantity of work
2.Skills
3.Initiative
4.Attitude
5.Understanding

Numerical Method Under this method, mathematical numbers are used against the
qualities. Following is a hypothetical illustration of this method:

Factor of qualities 1 2 3 4 5
1.Quantity of work
2.Skills
3.Initiative
4.Attitude
5.Understanding

147
Advantages

This method is very simple and popular.

It is less costly.

Every type of the job can be evaluated with scale.

Large number of employees can be assessed within a short time rating.

Traits are defined in advance, so that the ambiguity is less.

It shows degree of each trait, so it is more mathematical.

Disadvantages

It is very difficult task to decide relative weightage of different traits.

The rater’s biases are likely to influence evaluation.

It is difficult to ensure uniformity in this method, as rating would differ with different
raters.

3. Ranking Method

One of the important limitations of graphical scale method is that if two or

more employees get same rating, it becomes difficult to make appraisal of such
employees. In order to overcome such a drawback, ranking method has been
developed. This is the oldest and simplest method of performance appraisal. The
ranking method requires the rater to rank his subordinates one after another form the
highest to lowest based on overall job performance. So here on person is compared
with all others for the purpose of placing them in a simple rank order of worth.

Advantages

This is very simple method of separating the most efficient to least efficient.

When numbers of workers are very less, this method can be more useful.

148
Disadvantages

It does not tell how much better or worse one is than another.

When number of workers to be rated is very large, this method can not be used.

It is very difficult to compare one individual with other especially when they are
having varying behavioral traits.

This method is more subjective.

4. Paired Comparison Method

In order to overcome difficulty of ranking method, the paired comparison

method is adopted. So this method is an improvement over simple ranking. Under
this method, every employee in a job family is compared with every other employee
to determine who is a better worker. The rater is provided with a bunch of slips each
containing a pair of names. Now the rater puts a tick mark against the employee
whom he considers the better of two. The number of times this employee is
compared as better with others determines his final ranking. The number of pairs for
a given number of employees is determined by following formula.

N (N x 1) / 2

Where N = Total number of employees to be compared

Results of these comparisons are tabulated and a rank is assigned to each

individual. For example, if there are four persons to be compared namely A, B, C and
D, the above formula gives 4(4 x 1) / 2 = 6 pairs. These are:

A with B B with C C with D

A with C B with D

A with D

149
Advantages

This method of performance is very simple.

It is less expensive method.

This method gives more reliable rating than the simple ranking method.

This method is more suitable when a group is relatively small.

Disadvantages

When a group is large, this method is not suitable.

This method cannot be sues for periodic employees’ rating, as it does not evaluate
any improvement in the employee that might have been made over a period of time.

5. Forced Choice Method

The forced choice method has been evolved in order to reduce the personal
bias or prejudice of the rater. This method was developed after a great deal of
research conducted for the military services during World War II. Since then a
number of industrial concerns have adopted it. This methods call for objective
reporting and minimum subjective judgment. Under this method, a rating form is
specifically constructed for a number or groups, with a group of four statements for
each other. From the four statements, two of which positive and two are negative.
The rater is asked to pick up one statement that is the most appropriate for the
employee being rated and also the least appropriate statement from each group. Here
the rater cannot put tick both the statements favoring the employee, as well as he is
forced to put tick one favorable and one unfavorable statement out of ready-made
prescribed statements i.e. why this method is known as forced choice method.
Examples of such favorable and unfavorable statements are given below.

About maintenance of machine:

An employee remains present on machine during working hours.

150
His attendance is satisfactory on machine.

He remains present on machine but his attendance is not satisfactory.

He rapidly increases speed of machine

About understanding of job: (A) An employee possess good and clear understanding
of the job. (B) Production increases due to good and clear understanding of the job.
(C) Much more time is taken to get and clear understanding of the job. (D) He can not
at all get any understanding of the job.

Advantages

There is less scope for personal bias.

The possibility of rating an employee too high level or too low level reduces.

Employee rating makes more objective.

Disadvantages

If the statements are not framed accurately, rating will not be helpful for employee
development.

Trained technicians are required to prepare sets of series of statements for each group.
Hence such statements are expensive to develop.

The rater does not know how many points are given for a particular statement. So
managers do not like to rate in the dark.

Results of evaluation do not prove useful for counselling and training purposes
because the rater is ignorant of how he is evaluating the individual.

6. Forced Distribution Method

This method was developed by Joseph Tiffen, to eliminate the central

tendency of rating most of employees at a higher end of the scale. Under this method,
the rater is required to evaluate an employee on the basis of predetermined

151
distribution scale. So this method assumes that employee performance level confirms
to a normal statistical distribution i.e. 10, 20, 40, 20 and 10. For example, a rater us
forced to place certain percentage of total employees as under.

Excellent 10%

Good 20%

Average 40%

Fair 20%

Poor 10%

Now the rater distributes all the employees on above scale location.
Employees are placed between two extremes of ‘good’ and ‘bad’ job performances.
In the above example, 10 per cent are placed at top of the scale – excellent, 20 per
cent are given good, 40 per cent are given average, 20 per cent are given fair and 10
per cent poor performance.

This method assumes that, of the total personnel, 10 per cent must go to the
top grade, 20 per cent to the second grade, 40 per cent to the middle grade, 20 per
cent to the grade next to the lowest end of the scale and 10 per cent to the lowest
grade, i.e. why this method is known a forced distribution method.

Advantages

The problem of different appraisers using different parts of the scale is avoided.

This method tends to reduce or to eliminate bias.

This method is very simple to understand and to apply in organizations.

Disadvantages

The rater cannot explain why he had placed a particular employee in one category and
another in some other category.

152
This method disregards exceptional cases where most of the persons may fall into the
top category or into the lowest category.

7. Critical Incidents Method

Under this method, behavior of employees on happening of specific occasions or
significant incident is recorded. The rater focuses his attention on those critical
behaviors that make the difference between performing a job in a noteworthy manner.
Critical incident method requires every supervisor to record in a notebook all of such
significant incidents in each employee behavior, which indicate positive or negative
behavior. These are recorded in a specifically designed notebook which contains
categories or characteristics under which various behaviors can be recorded. Thus
critical incidents method evaluates not the traits of employees but only behavior. A
list of critical incidents is prepared and given to the supervisor or rate who observes
the behavior of his subordinates. Generally lists of critical events are prepared to
evaluate the productivity, accuracy in work, sense of responsibility, learning ability,
judgment, precision in work etc. To give an illustration, a supervisor may recognize
following critical incidents in a worker’s performance-

Helped in implementing a new work method.

Became upset to new work method.

Refused to help a fellow worker to cope up with new method.

Suggested an improvement in the new work method.

A list of some such critical incidents is given below.

Talks rudely and very loudly on the telephone.

Increases unnecessary speed of machine, which may cause damage to machine.

Rejected a bid that was excessively over-priced.

He improved the design of the internal material requisition from.

Helped fellow workers to solve problems.

153
Refused to work overtime when asked for.

Remained always punctual in own work.

Uses new sales techniques and brings big orders.

Such critical incidents are discovered after a through study of the personnel working
on a job. The collected incidents are than ranked in order of frequency and
importance.

Advantages

This method provides an objective basis for conducting a discussion of an

individual’s work performance.

This method is based on actual job behavior, not on traits of an employee.

There is less scope for bias.

The supervisor need note to evaluate an employee, but is asked to note the behavior
of workers on occurrence of critical incidents only.

Disadvantages

Negative incidents are generally more noticeable then the positive ones.

It is difficult task to identify noticeable critical factor and extra work is required for
the rater.

In order to identify critical incidents in the workers, very close supervision is required
and very close supervision may not be to the liking of workers.

Sometimes critical incidents may not take place even once during the year and hence
it may not be possible to evaluate the employees.

8. Check List Method

Under this method, a list of specific statements describing the performance

and behavior of employees is prescribed and the rater is asked to tick those statements

154
which correctly describe the actual behavior of each employee. Generally questions
with their answers in ‘Yes’ or in ‘No’ are prepared by the human resource
department. Each question carries a weightage in relationship to their importance.
When the check-list is completed, it is sent to the human resource department to
prepare the final scores for all appraises based on all questions. An illustration of
sample check-list is given below.

Question Yes No

Is he regular in the job?

Can he anticipate need for repairing?

Has he complete knowledge of job?

Does he maintain discipline well?

Is he willing to help his co-workers?

Is he respected by his subordinates?

Does he follow instructions properly?

Advantages

Under this method, behavior is not based solely on general impression.

This method compels the supervisor to think in terms of specific aspects of an

employee’s behavior.

Disadvantages

It is difficult to assemble, analyze and weight a number of statements about employee

characteristics and contributions.

It is a time consuming and expensive method, because a check list of questions must
be prepared for each category of job.

9. Cost Accounting Method:

155
 This method evaluates an employee on the basis of what he earns from the
company. This method focuses relationship between the cost involved in keeping
employee and monetary return yield by the employee. The monetary returns
(benefits) to the organization against the cost involved in keeping the employee are
the evaluation for the performance. So this method is closely related with Human
Resource Accounting.

Following points are taken into consideration while evaluating the

performance.

Cost of recruitment, selection and placement

Cost of training – development

Average value of units produced or services tendered

Overhead expenses

Loss to the firm due to errors, industrial accidents, wastage, damage etc.

Time value of supervisors or other raters spent by them in evaluation etc.

This method is purely accounting related method. It gives clear picture of net
benefits earned by the organization form an employee.

Main drawback of this method is that it considers only monetary value of an

employee. So the tasks which cannot be measured in monetary terms can not be
evaluated by this method.

10. Self Appraisal Method

As the name indicates, under this method, an employee himself assesses his own
performance and evaluates himself. An employee knows very well his strengths, his
weaknesses and tries to improve his weaknesses. Standards are established for
production, quality, attendance, wastage etc. i.e. standards are established for the
performance of employee. Points are to be allotted to each factor. Now the employee
appraises his own performance with the established performance and evaluates his

156
self. Therefore under this method, supervisor is neither rater nor evaluator. This
method is more suitable when employees are trained and well aware of their
responsibilities.

For an example, if attendance of an employee is 90 per cent of the working, ‘A’ grade
may be given to him; if attendance is 70 per cent of the working, he may be given ‘B’
grade…..

Advantages

This is less expensive method, because under this method, except stationary, no
expenses are to be incurred.

There is no question of rater’s bias, as an employee is himself the rater..

This method provides incentives to the employees for better performance.

Disadvantages

It is too much to except that an employee will show his deficiencies perfectly.

It is difficult task to fix up various standards for performance of employees.

It is difficult to determine production of each employee is all cases.

IMPORTANCE OF PERFORMANCE APPRAISAL

Performance appraisal is considered as a most significant and indispensable

function of human resource management and has wide range of utility. The
importance of performance appraisal is stated as under.

1. It provides a scientific basis to identify employees for promotion, transfer and

demotion.
2. It helps to determine training and development needs for the employees.
3. Performance appraisal reports are very useful to determine increases or
decreases in wage and salary. The wage and salary structure if is framed on

157
 the basis of skills and abilities of employees, it is called an ideal wage and
salary structure.
4. It provides a scientific basis for judging the merit or worth of employees who
will try to improve their performance if it is not up to the satisfaction of
employees.
5. It helps the supervisors to evaluate the performance and to know the potentials
of their subordinates. So works can be assigned to the individuals for which
they are best suited. Thus it facilitates the correct placement of workers.
6. Performance appraisal provides motivation and incentives to employees by
providing feedback on their performance levels. Regular appraisal tends to
incentives to employees.
7. The supervisors may use the result of performance appraisal for the purpose of
constructive guiding the employees in the efficient performance of work.
8. Performance appraisal finds out deficiencies of employees. It tells where
employees stand, how they are doing and where improvements are needed.
This leads the employees for self-improvement.
9. As a result of performance appraisal, employees develop a sense of
competition with fellow workmen. This ultimately results in an increase in
production.
10. Performance appraisal evaluates over all performance of employees. Hence
due to continuous performance appraisal, complete and continuous records of
performance of employee can be easily mentioned.
11. When employees know that will be treated strictly on the basis of scientific
evaluation of their performance, they generally avoid to complain, which
reduces grievances and indiscipline can be controlled.
12. Periodic and accurate appraisal constraints a supervisor to be alert and
competent in his work.
13. Due to performance appraisal, there will be an atmosphere of trust and
confidence in management. Employees can freely discuss about their
performance with their supervisors. This leads to better employer-employee
relationship.

158
 14. Performance appraisal establishes an important basis for research and
reference for personnel decisions in future. Performance appraisal provides
necessary data for personnel research, which help in formulating personnel
policies.

PROBLEMS IN PERFORMANCE APPRAISAL

All the methods of performance appraisal have certain drawbacks. There are
some problems and issues associated with the methods of performance appraisal that
make appraisal system ineffective. Major problems in the performance appraisal are
as under.

1. There is a tendency to assess not only an employee, but also job. So job
evaluation and performance appraisal both become similar.
2. Performance appraisal merely measures traits of human performance. It
ignores measurement of human value and human value is significant
importance in human resource management.
3. Most of the appraisal methods involve rater’s judgment of one kind or the
other. Hence inherent error of ‘central tendency’ or ‘leniency’ involved in the
process cause the judgments bias.
4. There is possibility of ‘halo effect’ i.e. there is a possibility to rate an
individual uniformly high or low on other traits if he is extraordinarily high or
low in one particular trait.
5. Errors in designing rating forms may also be responsible for failure of rating
system.
6. No significant relationship is found between employee performance
evaluation and their promotions. Transfers, placements etc.
7. Sometimes due to lack of time, supervisors take only a few minutes to
complete the appraisal before its submission. In such a case, performance
appraisal cannot give a true picture about actual performance of the employee.
8. The evaluation of an employee made by two different raters reveals
remarkable variation.

159
 9. There is unwillingness on the part of supervisors to tell employees plainly
how to improve their performance.

4.2 MANAGEMENT BY OBJECTIVES

Management by objectives – commonly referred to as MBO – is a performance

appraisal method that determines how closely aligned an employee’s goals are to
organizational goals. MBO appraisals are suitable for measuring quantitative and
qualitative output of high-level employees. High-level employees such as managers
generally report to directors, according to hierarchy and the chain of authority present
in many organizations. Therefore, managers and the directors or executives they
report to often work together to establish MBO goals for this type of appraisal
method.

Performance Appraisals

Employers use performance appraisals to measure both the quantity and quality of
production. An MBO appraisal is just one method among several types of
performance measurement tools. Others include graphic ratings scales, narrative
evaluations, 360-degree appraisals, peer evaluations, and forced ranking or
differentiation appraisals. Performance appraisals typically are conducted annually,
and employers often base decisions about salary raises, wage increases and year-end
bonuses on employee performance.

Position

MBO appraisal methods differ significantly from other performance evaluation

methods because MBO appraisals are typically used for employees in leadership
roles. The reason is because MBO goals are expressly tied to organizational success.
Employees with leadership responsibilities -- managers, directors and above --
usually have duties that have direct correlation to their company’s success. Therefore,
the objectives identified in a manager’s MBO appraisal typically reflect department
goals that will substantially affect the organization.

160
Collaboration

In employee evaluation methods such as narrative performance appraisals, graphic

rating scales, and peer evaluations, the supervisor or manager provides insight on
goals the leader wants employees to attain throughout the evaluation year. By
contrast, MBO appraisals are constructed with equal input from both the manager and
the person who supervises the manager, such as an executive employee or a director.
There’s greater collaboration in constructing MBO goals than there is in identifying
goals for a production worker or for administrative support personnel. MBO goals
usually meet the standards of well-constructed goals according to the SMART
principles: specific, measurable, attainable, relevant and time-specific.

Timing

MBO appraisals differ significantly from other types of appraisal methods concerning
milestones and timing. There generally are two types of time-specific MBO goals:
annual goals and intermediate goals. When a manager and director discuss the
manager's MBO goals, they define all of the company's available resources and the
time it will take the manager to attain each goal. For example, if a manager’s goal is
to reduce legal expenses for employment claims by 10 percent annually, the resources
available might be employee relations specialists in the HR department who are
qualified to respond to employee claims instead of immediately sending claims to the
company’s lawyer. The first-quarter measurement of the MBO appraisal would,
therefore, assess whether there have been any claims, and which claims have been
handled by employee relations specialists instead of lawyers. At the end of the year,
the total number of claims and legal expenses factor into the manager’s annual
performance according to MBO measurements

4.3 CAREER MANAGEMENT

The career management process begins with setting goals/objectives. A relatively

specific goal/objective must be formulated. This task may be quite difficult when the
individual lacks knowledge of career opportunities and/or is not fully aware of their
talents and abilities. However, the entire career management process is based on the

161
establishment of defined goals/objectives whether specific or general in nature.
Utilizing career assessments may be a critical step in identifying opportunities and
career paths that most resonate with someone. Career assessments can range from
quick and informal to more indepth. Regardless of the ones you use, you will need to
evaluate them. Most assessments found today for free (although good) do not offer an
in-depth evaluation.

The time horizon for the achievement of the selected goals or objectives - short term,
medium term or long term - will have a major influence on their formulation.

Short term goals (one or two years) are usually specific and limited in scope. Short
term goals are easier to formulate. Make sure they are achievable and relate to your
longer term career goals.

Intermediate goals (3 to 20 years) tend to be less specific and more open ended than
short term goals. Both intermediate and long term goals are more difficult to
formulate than short term goals because there are so many unknowns about the future.

Long term goals (Over 20 years), of course, are the most fluid of all. Lack of life
experience and knowledge about potential opportunities and pitfalls make the
formulation of long term goals/objectives very difficult. Long range goals/objectives,
however, may be easily modified as additional information is received without a great
loss of career efforts because of experience/knowledge transfer from one career to
another.

Making career choices and decisions – the traditional focus of careers interventions.
The changed nature of work means that individuals may now have to revisit this
process more frequently now and in the future, more than in the past.

Managing the organizational career – concerns the career management tasks of

individuals within the workplace, such as decision-making, life-stage transitions,
dealing with stress etc.

162
Managing 'boundaryless' careers – refers to skills needed by workers whose
employment is beyond the boundaries of a single organization, a workstyle common
among, for example, artists and designers.

Taking control of one's personal development – as employers take less responsibility,

employees need to take control of their own development in order to maintain and
enhance their employability.

CAREER DEVELOPMENT

The primary focus of career is an individual. Each individual in an organization

continues to formulate, implement, monitor and fulfill his or her own mission in life
through employment. In other words, they are engaged in Career Management. The
word ‘Career’ means a general lifelong course of action a person chooses to pursue or
a sequence of positions occupied by a person during the course of a lifetime. The
Oxford Dictionary describes career as a course or progress through life or an
occupation or profession engaged in as a life-work and a way of making a livelihood
and advancing oneself. To some people, career means advancement, in which case,
jobs offering little chance for advancement would not be careers. According to
another perspective, careers are equated with certain high status occupations, while
lower status occupations are merely jobs.

According to Schein’s description of career-cone, career changes may happen along

three basic dimensions namely a vertical movement between different levels, a
horizontal movement between different jobs at the same level and a radical movement
toward or away from the inner circles of power in an organization. Every person’s
career goes alternatively through a period of change, followed by a period of stability
before transforming again. A recent idea with regard to careers is known as career
security, it enjoins upon people to develop professional or occupational security due
to the development of useful skills and competence rather than depending upon
organizations for providing them job security.

Career development initiatives should develop people for the long term needs of the
organizations and at the same time equip them to meet the dynamic changes that

163
would take place over a period of time. This may involve several steps to be carried
out by the employing organizations. First step would be to orient employees on the
numerous career opportunities, choices and paths that might be available to them.
Subsequently, a detailed assessment of individual’s fitness for different career options
would be an essential step. Career mapping based on business plans and futuristic
training is to be considered by every manager of human resources.

Career guidance and counseling, Career Workshops, allotment of a variety of

challenging tasks, roles and responsibilities based on the interests and capabilities of
the employees would follow the assessment as a third step. Training and
Development inputs to further enhance the competence of person would have to
precede every stage of career progression. Jobs can be designed to range from highly
simple to highly complex tasks in terms of use of the employees’ skills. Job
enrichment, job enlargement and job rotations are beneficial steps in shaping an
individual’s career.

Career Planning is an ongoing process through which an individual sets career goals
and identifies the means to achieve them. As a saying goes, “If you don’t know where
you are going, any road will get you there”. Self-awareness helps keeping one’s
career related decisions in harmony with the deep inner values. By suppressing self-
awareness, some high achievers suffer from a severe sense of deprivation at the end
of their career. An individual could also shape one’s own career by planning for it and
reviewing, renewing and adapting the plan during the entire work life. A dependable
Career Strategy from an individual’s perspective involves the following steps:

Preparing a personal profile based on introspection and psychometric testing such as

Vocational Interest tests and personality tests

Developing professional goals in the form of a mission statement

Analyzing the external and internal environment influencing careers

Developing strategic career alternatives based on the analyses

Evaluating alternatives and selection of the one that is most attractive

164
Preparing a set of guidelines and milestones for the career plan as it is set into action.

CAREER STRATEGIES

The procedure of making the most out of one’s career begins at the very beginning
stage when a person selects the right company to work for. Identifying a dependable
adviser, being continually exceptional in one’s job and constantly improving skills by
reading and learning from others would be crucial in the early years of work life.
Coping with challenges arising out of jealousy and power games within organizations
and with the fast changing external environment call for a great deal of attention in
the years that follow one’s training period. Negotiating intelligently by making
beneficial trade-offs, improving one’s qualifications and credentials, building
visibility and forging alliances with well wishers, creating a favorable impression in
the top levels of management would be of help in the middle stage of career. Taking
independent charge, picking a winning team, shaping lives of team members,
managing stress, and striving to stay on top are the sequential tasks of the final stage
of an individuals’ career.

CAREER ANCHORS

There are distinct patterns of self-perceived talents, attitudes, motives and values that
guide and stabilize a person’s career after the initial years of earning real-world work
experience and feedback. These patterns are called as Career Anchors. These anchors
provide a growing area of stability within the individual’s attitudes, which anchors
the interpretation of career and life options. Typical career anchors include those of
technical competence, managerial competence, security and autonomy. These anchors
affect considerably the way individuals see themselves, their jobs and their
organizations. For example, some employees using a technical competence anchor get
concerned mainly with technical tasks. They refuse to become involved in aspects of
managerial tasks.

165
CAREER STAGES

There are four major career stages according to experts on career management.
During the first stage there is considerable exploration. The young employee searches
for an identity and undergoes considerable self-examination and role tryouts. This
stage usually results in taking a number of different jobs and is in general, a very
unstable and relatively unproductive period in the person’s career. At the end of the
phase, a career statement emerges based on the crystallization of an individual’s
views of themselves. For example, Human Resource Management aspirants begin to
view themselves as sound in human relationships, labour laws and recruitment
practices.

In the second stage, establishment, the employee begins to settle down and indicates a
need for intimacy. This is usually a growing productive period in the employee’s
career. The third stage of maintenance occurs when the person levels off at a highly
productive but plain period with little growth. At this stage the person has a need for
generosity, which is nothing but a concern to leave something to the next generation.
This need often leads the person to assume a paternalistic or mentor role with younger
subordinate. The person may either have a growth spurt or become stagnant and
decline during this career stage. The final stage is decline, when the person gradually
gives up his active participation in official life.

4.3 PROMOTIONS, DEMOTIONS AND TRANSFERS

Promotion is the movement of an employee from current job to another that is higher
in pay, perquisites, prestige, privileges, authority and power, wider in jurisdiction and
responsibility with a likelihood of increase in the level a person is occupying
presently in the organizational hierarchy. A mere shifting of an employee to a
different job which has better working hours, better office space or more pleasant
location would not be called promotion. A promotion process begins with the
screening of a number of possible candidates for promotion and culminates in the
official notification of the elevation of an employee to a higher rank within the
establishment. Promotions could be used as a motivational tool as it brings enhanced

166
working conditions for the promoted persons. Promotions that merely increase job
complexity without any real improvement in jurisdiction could be called as Pseudo-
promotions and are resented by employees. Decisions to promote might be based on
360 degree appraisals of performance and potentials. Job Knowledge tests could also
be applied for promotions.

Promotion may be based on seniority or merit. Using merit as the sole basis for
promotion is subject to criticism because determining merit criteria often lacks
reliability and objectivity. Most organizations try to combine seniority and merit in a
formula called seniority-cum-merit. Under this formula, a certain number of years of
service is taken as the cut-off level initially. Then, if there are more persons than
required for promotion in that level, merit is given consideration. Some organizations
are engaged in promotion forecasts that allow them to identify people with high
advancement potential. The high-potential employees are then given special kinds of
developmental experiences.

While filling vacancies in managerial positions, promotion from within an

organization is to be preferred to recruitment from outside because merit-based
promotion is generally viewed as a reward for excellent services rendered by an
employee. If seniority were not the sole criterion for promotions, employees at all
levels would be encouraged to show initiative and assume greater responsibility in
their work. At the same time, it could be imprudent to pick up the top performer in
any area for a bigger job where the demands are quite different. Promotions should
not be decided upon parameters like college degree, intelligence and popularity of a
person. Not all people would desire to get added burdens and shoulder additional
responsibilities. Hence a person’s willingness is to be considered thoroughly before
taking any decisions on promotion.

Performance factors like ability to develop good subordinates, operating with

minimum direction and having a record of accomplishments are found to be
extremely helpful characteristics for a person to be eligible for promotion. Personality
characteristics like openness to accept criticism, ability to communicate effectively
and respect for fellow human beings tend to make the person survive after the

167
promotion. However the socio-environmental factors surrounding employees like
their personal life, family unity, superior’s reputation and promotional prospects and
connections with power centers, are also given importance in practice, even though
they are not concerned with the individual’s effort.

People desirous of promotion might be adopting many of the tactics to acquire greater
power. Exuding confidence, progressing one step at a time, making one’s activities
central and non-substitutable to the organization, developing expertise, committing
the rare and uncommitted feats, engaging in rational persuasion of others, upward
appeals quoting consent of higher ups, pressure tactics like using demands and
threats, image building through attention-seeking activities, regulating information
flow upward and downward, networking with people and other such types of
behavior that are political in nature.

If a person is denied promotion or overlooked upon at discussions for promotions, he

or she might feel severely frustrated. The frustration would be particularly high if the
candidate has nurtured deep desire for the promotion and had been sure of reaching it.
Frustration would be heightened if the person had taken a lot of efforts to be eligible
for promotion and if the next chance for promotion is remote. Being scheduled for
promotion and getting dropped from the list would lead most people to feel the urge
to quit their jobs.

Awarding promotions are the most significant forms of recognizing superior

performance. Therefore, it is extremely important that promotions be fair and based
on merit and untainted by favouritism. Though many people accept the obligation to
avoid racial, sexual, age and religious discrimination in recruitment, very little
attention is paid to discrimination against the disadvantaged groups during promotion.

Affirmative action is to be taken to specially train the traditionally marginalized

groups to face the challenges of a competitive and potentially hostile environment.
When promotion occurs in the same category like clerical, manual or managerial
groups, within one grade to another, it is called as lateral promotions. When
employees are shifted from a lower category to a higher category, such promotions

168
are called vertical promotion. During times of monetary crisis, the management can
grant promotions without any rise in pay, benefits and allowances. Such promotions
are known as dry promotions and the promoted employees would not be paid the
increased wages when they are promoted.

Demotion is the diametric opposite process of promotion. It is a course of action by

which an employee is assigned a downward assignment in the organizational
hierarchy to a different job with lesser pay, inferior designation, lower category,
reduced status and responsibility. An organization uses demotion less frequently than
the other aspects of mobility, primarily because of its serious negative implications on
the employee’s career and morale. An employee is likely to accept a demotion rather
than lose the job altogether if the employment opportunities in the job market outside
are less.

Every manager is said to rise to his or her level of incompetence. In that case,
demotion would be one of the consequences arising out of an employee’s inability to
match the requirements of the present job, or when a promotion has been made
provisionally. Demotion may also occur as a disciplinary measure owing to the acts
of commission of malpractice by the employees. In the context when employee
turnover is high and organizational structures are flattering, demotion could be losing
its significance and impact. Demotion would be less frustrating to an employee if the
placement in a particular position had been notified as temporary and revocable.

Transfer is reshuffling of human resources from one unit of work place to another. It
involves lateral mobility of employees from one post to another within an
organization. Through transfers, people are shifted to a job that is comparatively
equivalent in pay, responsibility and organizational level. Transfers may be
voluntarily sought by employees or may be used as the sole prerogative of the
managements. They could be occurring on a mutual basis between two employees or
as a sequence of transfers. Transfers may occur within or outside functions,
departments, units or divisions.

169
Transfers serve a number of purposes. They may be carried out to enhance efficiency
in the utilization of human resources through the redistribution of work force’s size
and strength according to changing needs. A transfer is said to be a replacement
transfer if it is caused due to the displacement of an existing incumbent in a job. It is
called remedial transfer if it is initiated to correct a previous incorrect placement.
Transfers might also be ordered to satisfy the requirements of employee to work
under a better superior or to move into a job with brighter career prospects or be in a
more convenient location.

Transfers are also at times used to keep promotion ladders open to keep individuals
not having growth opportunities in their own department, continued to be interested
in their work. Some times, transfers are also effected to stall layoff. Since transfers
expose employees to others’ jobs, work can continue even during periods of
emergency such as accidents or strike, when some employees are unavailable to
work. An employee may be transferred because management feels that crucial forms
of competence could be put to use in another deserving place. Thus it becomes an
employee assistance measure. Transfer may be a developmental device to provide
more exposure to the employees and make them more versatile. Transfers may at
times be necessary to diminish conflicts between colleagues. Transfers may be used
as a disciplinary measure to punish employees indulging in any acts of misconduct. In
this case, they are called penal transfers.

Transfers help reducing monotony and boredom felt by employees and thereby
enhance their satisfaction on job and the morale of their groups. They can also
prepare an employee for challenging assignments in the future. The intervening
authorities from above could shift over-dominating employees. Better employer-
employee relations and stabilization of changing work requirements in different
departments or locations are the other beneficial outcomes of transfers. On the
negative side, transfers might be viewed as an inconvenience to those who are
reluctant to move. Managers might feel that they are unfairly made to move away
from their pet projects and supportive superiors. Some employees may feel it
uncomfortable when they have to separate from their affiliates at work and might

170
have to adapt to a more demanding work schedule. Shifting of experienced hands and
minds may affect productivity in the department from which a person is transferred.
Dual career couples might have objections when only one of them is transferred.
Arbitrary and discriminatory transfers can affect the employees’ morale.

4.4 REVIEW QUESTIONS

1. What is training? Discuss importance of training.

2. What do you mean by training? Distinguish between training, development
and education.
3. Explain various methods of training.
4. Discuss methods of training for workers.
5. Explain methods of training for supervisors.
6. What is performance appraisal? What are its objectives?
7. Discuss the need and significance of performance appraisal to an industrial
enterprise.
8. Define the term performance appraisal and discuss the problems that distort
performance appraisal.
9. “Performance appraisal is an effective tool for the human resource manager to
determine promotion, transfer, demotion, and training needs.” Discuss this
statement.
10. Discuss importance and limitations of performance appraisal.

171