Performance Appraisal

• Performance appraisal is a
method of evaluating the
behavior of employees in the
work spot, normally including
both the quantitative and
qualitative aspects of job
performance
• The process of Performance
Appraisal helps the employee
and the management to know
the level of employee’s
performance compared to the
standard/pre-determined level
 Some Important features of
Performance Appraisal
PA is a systematic
description of an employee’s
job-relevant strengths and
weaknesses
 Scheme
• Performance appraisal
– Nature of
– Appraisal process
– Edward Deming on appraisal
– Challenges of appraisal
– Legal issues
• Job evaluation
– Job evaluation process
– Methods of evaluation
– Alternative to job evaluation
 Learning Objectives
• Understand the nature of performance
evaluation

• Compare and contrast performance

appraisal and job evaluation

• Explain different stages in evaluation

• Describe job evaluation process

 Opening Case
Two bee-keepers story

• Bee Keeper 1 focused on the number

of flowers visited by bees

• Bee Keeper 2 focused on honey

produced, irrespective of the number of
flowers visited

• Who is right?
 Objectives of Appraisal
1. To effect promotions based on competence
and performance.

2. To confirm the services of probationary

employees upon their completing the
probationary period satisfactorily.

3. To assess the training and development

needs of employees.

4. To decide upon a pay raise where (as in

the unorganised sector) regular pay scales
have not been fixed.
Objectives of Appraisal (Contd…)
5. To let the employees know where they stand
insofar as their performance is concerned and
to assist them with constructive criticism and
guidance for the purpose of their development.
6. To improve communication. Performance
appraisal provides a format for dialogue
between the superior and the subordinate, and
improves understanding of personal goals and
concerns. This can also have the effect of
increasing the trust between the rater and the
ratee.
7. Finally, performance appraisal can be used
to determine whether HR programmes such as
Objectives of Appraisal
How Performance Appraisal can Contribute
to Firm’s Competitive Advantage
The Performance Appraisal
Process
Problems of Rating
• Leniency or severity
• Central tendency
• Halo error
• Rater effect
• Primacy and recency effects
• Perceptual set
• Spillover effect
• Status effect
Methods of Performance Appraisal
Challenges of Appraisal
Appraising Teams
 Legal Issues
• Legally Defensible Appraisal Procedures

• Legally Defensible Appraisal Content

• Legally Defensible Documentation of

Appraisal Results

• Legally Defensible Raters

Deference Between Job Evaluation and

Performance Appraisal
Job-evaluation Process
Methods of Job Evaluatoin
• The basic purpose is to find out
how well the employee is
performing the job and to establish
a plan for improvement
• PA are arranged periodically
according to a definite plan
• PA is a continuous process
 PURPOSE for Performance
Appraisal
• To Create and maintain a
satisfactory level of
performance
• To contribute to employee
growth and development
 PURPOSE for Performance
Appraisal
• To help the superiors to have a
proper understanding about
their subordinates

• To facilitate fair and equitable

compensation based on
performance
• To facilitate for testing and
validating the selection
process

• To provide information for

making decisions regarding
lay-off, retrenchment etc
• To ensure organizational
effectiveness through
improved standards
• To guide the job changes
 Evaluation Process
Establish performance standards

Communicate performance expectations

to employees

Measure actual performance

Compare actual with standards

Discuss the appraisal with employees

If necessary, initiate corrective action

 Content of Performance Appraisal

1) Regularity of Attendance 1) Area of Stability

2) Self Expressing: Written and Oral 2) Initiative
3) Ability to work with others 3) Technical Skills
4) Leadership style and abilities 4) Creative Skills
5) Technical Ability/ Knowledge 5) Areas of Interest
6) Ability to grasp new things 6) Judgment Skills
7) Reasoning Ability 7) Integrity
8) Originality and Resourcefulness 8) Honesty and Sincerity
9) Capability for assuming responsibility 9) Job Knowledge
10) Level of acceptance of subordinates 10) Organizational knowledge
11) Knowledge of Systems & Procedures 11) Quality of suggestions
 Methods of
Performance Appraisal

Traditional Modern
Methods Methods
 Methods of Performance Appraisal
Traditional Methods
1) Straight ranking method
2) Graphic rating scales
3) Paired comparison method
4) Grading
5) Forced choice distribution method
6) Checklist method
7) Critical incident method
8) Group appraisal method
9) Free form or Essay method
10) Confidential reports
 Methods of Performance Appraisal
Modern Methods

1) Behaviorally Anchored Rating

Scales
2) Management by Objectives
3) Human Resource Accounting
4) Assessment Center
5) Psychological Appraisal
 How to construct BARS

1)Collect critical incidents

2)Identify performance dimensions
3)Reclassification of incidents
4)Assigning scale values to the
incidents
5)Producing the final instrument
Problems of Performance Appraisal

 Halo Effect
 Error of Central tendency
 Leniency and Strictness
 Personal Prejudice
 The Recency Effect