HRM

PERFORMANCE MANAGEMENT
AND
PERFORMANCE APPRAISAL???
PERFORMANCE APPRAISAL
ASSESSMENT OF PERFORMANCE ESSENTIAL FOR
SURVIVAL AND GROWTH OF AN ORGANISATION.

PERFORMANCE APPRAISAL ---------WHY NEEDED ?

A) FOR THE ORGANISATION:

 Utilisation of abilities and potentialities

 Basis for promotions, assignment of responsibilities etc.
 Basis for training and development of HR

B) FOR THE INDIVIDUAL:

 Plan and control work in a better way

 Feedback
 Career planning and development
PERFORMANCE APPRAISAL

IF YOU DON’T ASSESS PERFORMANCE YOU CANNOT :

 MONITOR IT
 CONTROL IT
 MANAGE IT

IF YOU WANT TO ASSESS PERFORMANCE, YOU HAVE TO –

 UNDERSTAND IT
 STATE IT
 PLAN IT
 DEVELOP YARDSTICKS TO MEASURE IT
 
PERFORMANCE APPRAISAL

IF YOU WANT TO IMPROVE PERFORMANCE, THE PERFORMER

HAS TO –

 UNDERSTAND IT
 ASPIRE FOR IT
 POSSESS COMPETENCIES
 WORK FOR IT

APPRAISEE EXPECTS :

 TO KNOW WHAT HIS/HER DUTIES AND RESPONSIBILITIES

ARE
 TO KNOW WHAT IS EXPECTED OF HIM/HER
 TO KNOW HOW HE/SHE IS DOING
 TO HAVE APPRAISER’S HELP, IF NEED BE
 REWARDS TO BE COMMENSURATE WITH PERFORMANCE
PERFORMANCE APPRAISAL

APPRAISER SHOULD :

 Prepare job responsibilities

 Facilitate appraisee to set goals/targets
 Analyse results with appraisee
 Advise, guide, coach and counsel
 Rewards for good results
PERFORMANCE APPRAISAL

THUS,

Performance appraisal and review is the formal,

systematic assessment of how well employees are
performing their jobs in relation to established
standards and the dialogue about that assessment
with employees.

MOREOVER, THE RESULTS OF PERFORMANCE

APPRAISAL ALSO HAVE A SIGNIFICANT IMPACT ON
OTHER HR PROCESSES SUCH AS TRAINING AND
DEVELOPMENT, COMPENSATION AND PROMOTION
DECISIONS…
PERFORMANCE APPRAISAL
PURPOSE(S) OF PERFORMANCE APPRAISAL (2 broad categories)

a) EVALUATION GOALS –
 Giving feedback to employees so they know where they stand
 Developing valid data for pay and promotion decisions and providing a
means for communicating these decisions
 Helping the manager make retention and discharge decisions and
providing a means for warning employees about unsatisfactory
performance.

b) COACHING AND DEVELOPMENT GOALS –

 Counseling and coaching employees in order to improve their
performance and develop future potential.
 Developing commitment to the organization through discussion of career
opportunities and career planning
 Motivating employees through recognition and support
 Strengthening superior-subordinate relations
 Diagnosing individual and organizational problems.
PERFORMANCE APPRAISAL
DEFINITION
PA is a formal, structured system of measuring and evaluating an
employee’s job related behaviors and outcomes to discover how
and why the employee is presently performing on the job and how
the employee can perform more effectively in the future so that the
employee as well as the organization benefit.

WHOSE PERFORMANCE SHOULD BE RATED?

All Employees

WHO ARE RATERS ?

Raters can be :
 Immediate supervisor
 Subordinates
 Peers
 Customers-internal/external
 Rating committee
 Self
DEV. PERFORMANCE MGMT. SYSTEMS
THE PERFORMANCE MGMT. PROCESS (steps)

 Identifying dimensions of job performance

 Defining and communicating performance standards

 Determining who will conduct the appraisal

 Choosing appropriate methods of performance

appraisal

 Communicating appraisals to employees

PERFORMANCE APPRAISAL
COMPONENTS OF A PERFORMANCE REVIEWAND DEVELOPMENT
SYSTEM (An Example)

 Part I - KRAs(*)

 Part II - JOB RELATED FACTORS(*)

 
 Part III - ASSESSMENT BY INTERNAL CUSTOMER(*)

 Part IV - GROWTH POTENTIAL ASSESSMENT

 Part V - Communication

 Part VI - DEVELOPMENTAL PLAN

 Part VII - FINAL COMMENTS BY COMMITTEE (APPRAISER,

HOD, GM)
(Self Appraisal!)
PERFORMANCE APPRAISAL
(self-appraisal)

KRAs –
 
 Realistic and achievable
 Mutually agreed
 In line with deptt./organization objectives

BEHAVIOR – ORIENTED DIMENSIONS (job related factors)

 
A TARGET-CHASING EMPLOYEE COULD EASILY TRAMPLE
OVER THE COMPANY’S VALUES, ITS CREDIBILITY, ITS
CUSTOMERS IN HIS RUTHLESS BID TO MEET NUMERICAL
GOALS.
 
Appraisal systems, therefore, must test employees not just on
result-oriented parameters but also on “behavior oriented
dimensions”
PERFORMANCE APPRAISAL
INTERNAL CUSTOMER

Each department has internal customers. Every

employee should strive for 100% satisfaction of the
internal customer.

PERFORMANCE COUNSELING

Appraisals should be counseling-oriented.

Counseling helps the appraiser gauge the feelings
of the appraisee so that he/she can analyse his/her
performance.
PERFORMANCE APPRAISAL

POTENTIAL APPRAISAL

 Director & Sr. VP (HR & operational policy), Philips

India : “People are like icebergs. What you see
above the surface (performance) is only a small
part. A large part – the attributes needed to perform
excellently in a future job – which I call potential is
not immediately visible. It is hidden below the
surface”. (BT)

 Uncovering the iceberg may be difficult, but it is

also critical for corporate survival.
 
 Director, Glaxo India : “It is an important area
because people have to be prepared to take up
higher responsibilities”. (BT)
PERFORMANCE AND POTENTIAL

Low Potential – Low Performance (??- Planned Separation)

High Potential – Low Performance (Problem Children)

High Potential – High Performance (Race Horses-Stars)

Low Potential – High Performance (Solid Citizens)

 PERFORMANCE APPRAISAL
METHODS OF APPRAISING PERFORMANCE
(past oriented methods)

NARRATIVE ESSAY – Rater describes, in writing, an emplyoee’s

strengths, weaknesses and potential, together with suggestions for
improvement.
RANKING – Rater orders all employees from highest to lowest,
from “best” employee to “worst” employee.
PAIRED COMPARISION – Each employee is compared with
every other employee (for every trait like quantity of work, quality
of work, so on). The rater to choose the “better” of each pair, and
each employee’s rank is determined by counting the number of
times she or he was rated superior.
FORCED DISTRIBUTION
 
(DRAW – a normal probability curve) X axis – no. of employees, Y
axis- scores 10%------20%--------40%------------20%---------10%)
 
Assumption – Overall distribution of ratings is forced into a normal,
bell-shaped curve.
 PERFORMANCE APPRAISAL
BEHAVIORAL CHECKLIST – Rater is provided with a
series of statements that describe job-related behavior.
His/her task is simply to “check” which of the statements, or
the extent to which each statement, describes the employee.
Eg. “She/he follows up on customer complaints” – always,
very often, fairly often, occasionally, never

FORCED CHOICE – The rater is given a series of

statements about an employee. The statements are
arranged in blocks of two/more, and the rater indicates
which statement is most or least descriptive of an employee.

GRAPHICAL RATING SCALE – Here the rater typically

rates on a 5-pt. scale. Eg. Job knowledge might be rated
1(poorly informed about work duties) to 5 (has complete
mastery of all phases of the job).
 PERFORMANCE APPRAISAL
CRITICAL INCIDENTS – The appraiser writes down
anecdotes that describe what the employee did that was
especially effective or ineffective (only specific behaviors,
not vaguely defined personality traits, are cited).
+ve –(date) patiently attended to customers complaints.
-ve- (date) overstayed during lunch, calls went unattended.

BEHAVIORALLY ANCHORED RATING SCALE (BARS) –

A combination of rating-scale methods. The appraiser rates
the employees based on items along a continuum. BARS
are developed in a 5-step process.

Step 1- Collect critical incidents

Step 2- Identify performance dimensions
Step 3- Reclassification of incidents
Step 4- Assigning scale values to the incidents
Step 5 – Producing the final instruments
 PERFORMANCE APPRAISAL
METHODS OF APPRAISING EMPLOYEE PERFORMANCE
(future oriented) Contd…

MANAGEMENT BY OBJECTIVES(P Drucker,1954) – Managing

that relies on goal setting to establish objectives for the
organization as a whole, for each deptt., for each manager within
each deptt. and for each employee. 3 things important here :

Meet to agree on the major objectives for a given period of time.

Develop plans for how and when the objectives will be accomplished

Agree on the yardstick for determining whether the objectives have

been met.
 PERFORMANCE APPRAISAL
METHODS OF APPRAISING EMPLOYEE PERFORMANCE
(future oriented) Contd…

360 DEGREE APPRAISAL –Multiple raters. Multiple-source

feedback facilities greater self-development ; it makes the
employee feel much more accountable to his/her external
customers.

ASSESSMENT CENTRE(an approach not a physical place) –

requires the participants to complete a range of tests/exercises
which simulate the activities they might encounter in the target job.
The principal idea is to evaluate managers over a period of time,
say 1-3 days, by observing (and later evaluating ) their behavior
across a series of select exercises- in-basket, case discussions,
role playing, psychol.tests etc. The characteristics assessed in a
typical AC include assertiveness, communicating ability, self-
confidence, decision making , resistance to stress etc.
 PERFORMANCE APPRAISAL
PROBLEMS/ERRORS

HALO EFFECT – This is a tendency to let the assessment of a

single trait influence the evaluation of other traits too.
 
HORNS EFFECT – This is a tendency to allow one negative trait
of the employee color the entire appraisal.
 
LENIENCY ERROR – Depending upon the appraiser’s own value
system or mental make-up, which acts as a standard, employees
may be rated leniently or strictly.

Such ratings do not carry any reference to actual performance of

the employees. Some appraisers consistently assign high values
to all employees, regardless of merit. The strictness tendency is a
reverse situaion
 PERFORMANCE APPRAISAL
PROBLEMS/ERRORS (Contd..)

CENTRAL TENDENCY – Here the rater assign mostly middle-

range scores/values to all individuals under appraisal. Usually, this
is caused by lack of information about the employee and his
behavior (attitude of the rater is to play safe).

STEREOTYPING – This is a standard mental picture an appraiser

holds about an individual according to the category he/she
represents – which could be sex, age, religion, caste, etc.
(generalizations).

SPILL-OVER EFFECT – This refers to allowing past performance

to influence the evaluation of present performance. Past ratings
result in similar rating the current period.
 
PRIMACY & RECENCY EFFECT – The rater’s ratings are heavily
influenced by behavior exhibited by the ratee during the early
stages of the review period (primacy) or by outcomes, or behavior
exhibited by the ratee near the end of the review period (recency).