PERFORMANCE APPRAISAL-A CONCEPTUAL FRAMEWORK Slide-1 CHAPTER-1 PERFORMANCE APPRAISAL-A CONCEPTUAL FRAMEWORK Slide-2 OBJECTIVE OF THE SESSION Concept

t and Definitions of Performance Appraisal Performance Appraisal System-purpose Objectives of Performance Appraisal Purpose of Performance Appraisal Process of Performance Appraisal Benefits and Limitations Performance Appraisal System Vs. Performance Management System Slide-3 CONCEPT AND DEFINITIONS

Performance Appraisal is a process of assessing, summarizing and developing the work of an employee on both qualitative and quantitative terms. Slide-4 Concept and Definitions contd.. Performance appraisal includes all formal procedures used to evaluate personalities and contributions and potentials of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees. Dale Yoder Performance appraisal is the systematic evaluation of the individual with respect to his or her potential for development. Dale S. Beach Slide-5 Performance Appraisal System It consists of established procedure for evaluating the work of employees on regular basis. The performance appraisal system is a part of the ongoing management process, the purposes of which are to: Provide for systematic planning by allowing the manager to identify critical job elements and objectives. Slide-6

Performance Appraisal System contd Conduct a systematic review of an employees overall performance and provide constructive feedback. Provide objective information to guide management decisions on promotions, etc. Establish an objective basis for determining annual performance. Slide-7 OBJECTIVES

To support management in determining roles for employees, To assess performance of employees, To provide ways to align corporate and individual goals, To enhance communication, To develop the subordinates skills, To improve the efficiency and effectiveness of employees.

Slide-8 Purpose of Performance Appraisal The purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: The employees The organization Slide-9 Purpose of Performance Appraisal contd. Viewpoint of the Employee From the employee viewpoint, the purposes of performance appraisal are as follows: Determine the required output from the employees. Describe the level of performance of the employee. Constructive suggestions to improve performance of employees. Reward better performance by the employees. Slide-10 Purpose of Performance Appraisal contd.

Viewpoint of the Organization

From the organizations viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and maintain the principle of accountability.

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The assessment system aims at identifying the performance gap. This gap is the deficit that occurs when performance does not meet the acceptable standard set by the organization. The feedback system is to inform the employee about the quality of employees performance.

PURPO APPRAI

Slide-12 PROCESS

PROCE

Establishing Performance Standards: The employees will have to be assessed against the standards set for their performance. There should be some base on which one can say that the performance of a person is good, average, poor, etc., The standards may be in quantity and quality of production in case of workers. Personality traits like: leadership, initiative, imagination in case of executives; files cleared in case of office staff, etc. These standards will help in setting yardsticks for evaluating performance. Communicating Performance Standards to Employees: The standards set for performance should be communicated to the employees. They should know what is expected of them. In case of inadequate informations about standards, the employees will be in a dilemma over the managements expectations. When the standards are communicated to employees properly, they will make necessary efforts to perform to meet the expected standards. It is essential to obtain feedback from employees to ensure whether the expected standards are met.

Measuring Actual Performance: The next step in the evaluation process is to measure actual performance of employees. The performance may be measured through personal observation, statistical reports, oral reports, written reports etc.

Comparing Actual Performance with Standards: The actual performance is compared with the standards set earlier to find out the position of employees. The employees are evaluated and judged by their potential for growth and advancement. Deviations in performance are also noted at this stage. Discussing Appraisal with Employees: The assessment reports are periodically discussed with employees concerned. The weak points, good points and difficulties are indicated for helping employees to improve their performance. The information received by employees influences their performance. It also influences their attitude and work in future. It may be easy to convey good reports but it requires tact to discuss adverse reports.

Taking Corrective Action: Evaluation process will be useful only when corrective action is taken on the basis of reports. One corrective action may be in the form of counsel, warning etc.; other action may be in the form of: additional training, refresher courses, delegation of more authority, special assignments, coaching etc. These actions will be useful in helping employees to improve their performance in future. Slide-13

Slide-14 Benefits to Individual Performance appraisal provides following benefits to the individual: Gaining better understanding of their role and responsibilities. Better understanding clearly how and where they fit in within the organization. Understanding better of how performance is assessed and monitored.

Benefit

Getting insight into how their performance is perceived.

Slide-15 Benefits to Individual contd. Understanding of their strengths, weaknesses and developmental needs. Identifying ways in which they can improve performance. Providing opportunity to discuss and clarify developmental and training needs. Understanding and agreeing their objectives for the next year. Providing opportunity to discuss career direction and prospects Slide-16 Benefits to Manager Performance appraisal provides following benefits to the manager: Providing opportunities, to hear and exchange views and opinions which take the employees away from the normal stress of work. Granting opportunities to identify any potential difficulties or weaknesses. Understanding the available resources in the organization. Giving opportunities to plan for and set objectives for future. Slide-17 Benefits to Manager contd.. Providing opportunities to think about and clarify their own roles and responsibilities. Offering opportunities to plan for achieving improved performance. Providing opportunities to plan for further delegation and coaching. Giving opportunity to motivate members of the team Slide-18 Benefits to Organization A Performance appraisal provides following benefits to the organization: A structured means of identifying and assessing potential. Up-to-date information regarding the expectations and aspirations of employees. Slide-19 Benefits to Organization contd.. Information on which to base decisions about promotions and motivation. An opportunity to review succession planning. Information about training needs which can act as a basis for developing training plans. Slide-20 Limitations

Halo Error Leniency or Severity Central Tendency or Averaging Similarity Error Recency Error Bias

Halo Error: The inclination to evaluate an employee on the basis of one particular trait or characteristic is known as Halo error. The performance appraiser judges an employee on the strength of a particular trait and does not base his judgement on his overall performance. Leniency or Severity: The evaluators have their own value system which acts as a standard for performance evaluation. Some evaluators may be lenient and may give a high rating to all the employees. The performance evaluator may be strict otherwise and will award low ratings to everyone. The tendency of awarding high rating is positive leniency and the tendency of giving low rating is known as negative leniency. This limitation is specifically severe with graphic rating scales, when firms do not tell their supervisors to avoid giving all their employees high or low ratings.

Central Tendency or Averaging: Some performance appraisers stick to the average while appraising the employees. That is, the appraisers do not want to rate their appraisees too high or too low. This problem arises particularly when the appraiser is not concerned about the performance of the employees. Similarity Error: The appraisers mental attitude is the determinant criteria for this error of similarity. The appraiser may use his own characteristics as a basis for evaluating the employees. If the appraiser is soft and tolerant in nature, then he will endeavor to identify the similar trait in employees. Among the employees, those who have the similar characteristic will be graded high and those who do not have the same will be rated low.

Recency Error: The appraiser may consider the recent behavior of the employees and ignore the past behavior of them over a period of time, to assess and evaluate the performance. Bias: This may exist on the employees personal characteristics such as sex, age, race and position etc. The higher ratings or grades are given to people in higher positions. The appraiser may have preference for the employees who belong to his or her own sex, race etc. Slide-21 Criteria for Effective Performance Appraisal Make performance appraisal part of an ongoing process Look at all aspects of an employees performance Make specific and constructive judgment

Criticize work habits and behaviors, no the person Dont let marginal employees slide Keep complete written records for all performance appraisals

Slide-22 Comparison of Performance Appraisal System & Performance Management System Performance Management System Employee objectives may be Performance management included in performance appraisal system emphasizes on system. integrating corporate, team and individual objectives. Some qualitative performance Performance management indicators may also be included in system often includes performance appraisal system. Competence requirements as well as quantified measures. Annual appraisal in case of Performance management performance appraisal system. system emphasis on continuous review with one or more formal reviews. Performance appraisal system Performance management includes top-down system with system is joint process, without ratings. ratings. Performance Appraisal System Slide-23 Comparison of Performance Appraisal System & Performance Management System Performance appraisal system is often linked to pay. Performance appraisal system contains complex paper work. Performance appraisal system is conducted by Human Resource Department. Performance management system may not directly link to pay. Documentation often minimized in performance management system. Performance management system is owned by line management.

Slide-24 SUMMARY OF THE SESSION Concept and Definitions of Performance Appraisal Performance Appraisal System-purpose

Objectives of Performance Appraisal Purpose of Performance Appraisal Process of Performance Appraisal Benefits and Limitations Performance Appraisal System Vs. Performance Management System