PERFORMANCE APPRAISALS

LEARNING OBJECTIVES

• Nature of Performance Appraisal

• Objectives of Performance Appraisal

• Process of Appraisal

• Methods of Appraisal

• Problems of Rating
 Nature of Performance Appraisal
• PERFORMANCE APPRAISAL: Assessment of an individual's
performance in a systematic way

• Performance being measured against factors as Job Knowledge,

Quality & Quantity of output, Initiative, Leadership abilities,
Dependability, Co-operation, Judgment etc.

• Performance Appraisal is an objective assessment of an individual’s

performance against well defined benchmarks.

• Assessment should not be confined to past performance alone.

Potentials of the employee for future performance must also be
assessed.

• Performance appraisal is also known as performance rating,

employee assessment, employee performance review, personnel
appraisal, performance evaluation
 OBJECTIVES

• Effect Promotions based on competence and performance.

• Confirm the services of probationary employees
• Assess the training and development needs of employees
• Decide upon a pay raise
• Let employees know where they stand insofar as their
performance is concerned
• Determine whether HR programmes (selection, training,
transfers) have been effective or not
• Basis for Salary/Promotion recommendations
APPRAISAL PROCESS
Objectives of performance
appraisal

Establish Job Expectations

Design an Appraisal
Programme

Appraise Performance

Performance Interview

Archive Appraisal Data

Use Appraisal Data

 PERFORMANCE APPRAISAL
• ESTABLISH JOB EXPECTATIONS:
Informing the employee what is expected of him or her on the job. Individual’s should not
be expected to begin the job until they understand what is expected of them

• DESIGN APPRAISAL PROGRAMME :

• Formal vs Informal Appraisal

• Whose Performance is to be assessed?

• Who are the raters?

• What problems are encountered?

• How to solve the problems?

• What should be evaluated?

• When to evaluate?

• What methods of appraisal are to be used?

 PROBLEMS OF RATING
Performance Appraisals are subject to a wide variety of inaccuracies and
biases referred to as ‘rating errors’.
Errors occur in the rater’s observations, Judgment, and information
processing and can seriously affect assessment results

•TYPES OF ERRORS :

•LENIENCY OR SEVERITY: Results in Subjective assessment. Subjective

assessment defeats the very purpose of performance appraisal. Severity
refers to being unduly critical of an employee’s performance.

•CENTRAL TENDENCY: Employees are incorrectly rated near the average

or middle of the scale.
The attitude of the rater is to play safe, stems from certain doubts
and anxieties which the rater have while assessing the ratees.
 PROBLEMS OF RATING

• HALO ERROR: One aspect of an individual’s performance

influences the evaluation of the entire performance of the individual.

• RATER EFFECT: This includes favouritism, stereotyping, and

hostility. Excessively high or low scores are given only to certain
individual’s or groups based on the rater’s attitude towards the ratee
not on the actual outcomes or behaviours.

• PRIMACY AND RECENCY EFFECTS: Rater’s ratings are heavily

influenced either by behaviour exhibited by the ratee during the
early stages of the review period (primacy) or by outcomes, or
behaviour exhibited by the ratee near the end of the review period
(Recency)
 PROBLEMS OF RATING

• PERCEPTUAL SET: Rater’s assessment is influenced by previously

held beliefs.

• PERFORMANCE DIMENSION ORDER: Two or more

dimensions on a performance instrument follow or closely follow
each other and both describe or rotate to a similar quality

• SPILLOVER EFFECT: Allowing past performance appraisal ratings

to unjustifiably influence current ratings.

• STATUS EFFECT: It refers to overrating of employees in higher-

level job or jobs held in high esteem, and underrating employees in
lower-level job or jobs held in low esteem
 WHAT SHOULD BE RATED

• Determine the evaluation criteria to design an appraisal programme.

• EVALUATION CRITERIA :
 Quality

 Quantity

 Timeliness

 Cost Effectiveness

 Need for Supervision

 Interpersonal Impact and

 Community Service
 METHODS OF APPRAISAL
PAST-ORIENTED METHODS

1) Rating Scales

2) Checklist FUTURE-ORIENTED METHODS

3) Forced Choice Method 1) Management by Objectives (MBO)

4) Forced Distribution Method 2) Psychological Appraisals

5) Critical Incidents Method
3) Assessment Centres
6) BARS (Behaviourally Anchored Rating
4) 360-Degree Feedback
Scales)
5) 720-Degree Feedback
7) Cost Accounting Method

8) Ranking Method

9) Paired –comparison Method

10) Essay Method

 PAST-ORIENTED METHODS
 RATING SCALES
Typical rating scale consists of several numerical scales, each representing
a job related performance criterion such as dependability, initiative,
output, attendance, attitude, co-operation. Each Scale ranges from
excellent to poor. The rater checks the appropriate performance level on
each criterion, then computes the employee’s total numerical score.

 CHECKLIST
A checklist of statements on the traits of the employee and his or her job is
prepared in two columns. – ‘Yes’ column and a ‘No’ column. The rater
should tick the ‘yes’ column if the answer to the statement is positive and
in column ‘No’ if the answer is negative. Points allotted to the checklist,
the technique becomes weighted checklist.
 PAST-ORIENTED METHODS

 FORCED CHOICE METHOD

The rater is given a series of statements about an employee, indicates which
statement is most or least descriptive of the employee.

The rater is forced to select statements which are readymade.

 FORCED DISTRIBUTION METHOD

The rater is compelled to distribute the ratees on all the points on the
rating scale. The method operates under an assumption that the employee
performance level conforms to a normal statistical distribution – to a bell
shaped curve.
Employee performance ratings distributed along bell-shaped curve.
 FORCED CHOICE METHOD

•Criteria Rating
•1.Regularity on the job Most Least

•Always regular
•Inform in advance for delay
•Never regular
•Remain absent
•Neither regular nor
irregular
Forced Distribution on a Bell-Shaped Curve
 PAST-ORIENTED METHODS
 CRITICAL INCIDENTS METHOD
The approach focuses on certain critical behaviours of an employee that
make all the difference between effective and non-effective performance
of a job . Such incidents are recorded by the supervisors as and when they
occur.
 BARS (BEHAVIOURALLY ANCHORED RATING SCALES)
Rating scales whose scale points are determined by statements of
effective and ineffective behaviours. The scales represent a range of
descriptive statements of behaviour varying from the least to the most
effective. A rater must indicate which behaviour on each scale best
describes an employee’s performance.
 COST ACCOUNTING METHOD
This method evaluates performance from the monetary returns the
employee yields to his or her company. A relationship is established
between the cost included in keeping the employee and the benefit the
firm derives from him or her.
BEHAVIORALLY-ANCHORED RATING SCALE
Example :for Customer Service Skills
 PAST-ORIENTED METHODS
 RANKING METHOD
The superior ranks his or her subordinates in the order of their
merit, starting from the best to the worst. All that HR
department knows is that A is better than B. The ‘How’ and
‘Why’ are not questioned, nor answered.
 PAIRED –COMPARISON METHOD
The appraiser compares each employee with every other
employee, one at a time. The number of comparisons may be
calculated with the help of a formula;
N(N-1)
2
where N stands for the number of employees to be compared.
 METHODS OF APPRAISAL IMPORTANT
FUTURE-ORIENTED METHODS:

1) Management by Objectives (MBO)

2) Psychological Appraisals

3) Assessment Centres

4) 360-Degree Feedback

5) 720-Degree Feedback
 FUTURE-ORIENTED METHODS
 MANAGEMENT BY OBJECTIVES (MBO)
Concept was first given by Peter F. Drucker in 1954 when his The
Practice of Management was first published.
Four Steps of application of MBO in Performance Appraisal
1. The first step is to establish the goals each subordinate is to attain. The
goals typically refer to the desired outcome to be achieved. These goals
can then be used to evaluate employee performance.
2. The Second step involves setting the performance standard for the
subordinates . As subordinates perform, they know fairly well what there
is to do, what has been done, and what remains to be done.
3. The actual level of goal attainment is compared with the goals agreed
upon. The evaluator explores reasons for the goals that were not met and
for the goals that were exceeded. This step helps determine possible
training needs.
4. The final step involves establishing new goals, and, possibly, new
strategies for goals not previously attained.
 THE MBO PROCESS

• 1. Job review and

Goal establishment

• 2. Development of
performance standards

• 3. Comparison – Goal
established &
Attainment

•4. Continuing
performance discussions –
Establishing new goals
 FUTURE-ORIENTED METHODS
 PSYCHOLOGICAL APPRAISALS
Psychologists are used for evaluations, they assess an individual’s future potential and
not past performance. The appraisal normally consists of in-depth interviews,
psychological tests, discussions with supervisors, and a review of other evaluations.
The psychologist then writes an evaluation of the employee’s intellectual emotional,
motivational and other related characteristics that suggest individual potential and may
predict future performance.
 ASSESSMENT CENTRES
• ‘A method for assessing aptitude and performance; applied to an individual or a
group of participants by trained assessors using various aptitude diagnostic processes
in order to obtain information about applicants' abilities or development potential.’
• This does not refer to a location, but to a process that is being increasingly used by
organizations to assess staff, either as part of the recruitment process or for internal
development and promotion. The ‘Aptitude Diagnostic processes’ referred to in this
definition are the exercises and tests that you will undertake during your assessment
centre. Individual exercises
• psychometric tests, in-tray or e-tray exercises, presentations, written exercises, role
plays, interviews
• Group tasks, group exercises, business case studies, physical challenges
 ASSESSMENT CENTRE
• WHAT ARE IN-TRAY EXERCISES?
• How would you cope on the job with an inbox full of urgent tasks and
limited time? You'll need to prove that you can prioritize under pressure to
impress recruiters in the e-tray or in-tray exercise
• In-tray exercises, or the digital 'e-tray' equivalent are a test of your ability
to deal with a real work scenario: requests, demands on your time, and
information overload.
• It's a typical Monday morning
• The scenario will be set, for example: it's Monday morning, the work has piled up and
you have to prioritize your tasks before a big meeting at 9.30 am.
• You'll work at a desk with an in-tray full of typical paperwork and be asked to work
through it within a time limit (often between 30 minutes to an hour).
• The items normally found in an in-tray include: phone messages, memos, letters,
documents, reports, and e-mails, as well as a planner or calendar. The subject matter is
usually related to the type of job you are going for.
• You have to read through the information, put it in order of priority for action and then
explain what type of action is required and how you will deal with each situation: return
a call, forward the information to someone else, arrange a meeting, delegate work to
another colleague, deal with a complaint, and so on
• The digital upgrade: e-tray exercises
• Some employers use an 'e-tray exercise', which is the same as
an in-tray exercise but uses an e-mail inbox. You work at a
computer dealing with e-mails. Like the paper equivalent,
these will be a mix of requests, memos, phone messages and
information. Some e-tray exercise e-mails have a multiple
choice selection of actions to choose from or potential
answers to a simple calculation that has been requested.

• The principles for tackling e-trays are the same as those for
the traditional in-tray: read through all the information
available, and decide on the priority and actions for each
piece of correspondence.
 IMPORTANCE OF ASSESSMENT CENTRE
 Assessment centre is the most effective selection method for predicting
successful performance in the target job.
 They are far more accurate than a standard recruitment process as they
allow a broader range of selection methods to be used during the
process
 They enable interviewers to assess existing performance as well as
predict future job performance
 They give the opportunity to assess and differentiate between candidates
who seem very similar - in terms of quality - on paper
 They give the candidates a better insight into the role as they are tested
on exercises, which are typical for the role they have applied for
 They help employers build an employer brand. Candidates who attend
assessment centres which genuinely reflect the job and the organization
are often impressed by that company, even if they are rejected
 FUTURE-ORIENTED METHODS
 360-DEGREE FEEDBACK
Multiple raters within the organisation are involved in evaluation
performance. The 360-degree technique is understood as systematic
collection of performance data on an individual or group, derived from a
number of stakeholders- The stakeholders being the immediate
supervisor, team members, Peers, and self. In fact, anyone who has useful
information on ‘how an employee does the job’ may be one of the
appraiser

 720-DEGREE FEEDBACK
Assessment is made not only from inside the company but from groups
outside the organization. External assessors include investors, customers,
or suppliers. External stakeholders become important because, ultimately
they are the groups who will determine the future of the organisation.
 Measuring Performance
Organization’s common
goals Measures of
organization performance

Department-specific goals
Measures of department
performance

Subordinate proposes goals

Supervisor lists goals and
and measures for his or her
measures for subordinate
job

Joint agreement on
subordinate goals and
measures

Final review of subordinate Periodic review periods New inputs provided

results measured against providing feedback on
esta-blished or revised interim results measured
goals against established goals Inappropriate goals eliminated
 APPRAISE PERFORMANCE

Next step in the appraisal process is to measure the

performance. Measurement is necessary; What gets
measured gets done.
Assessment should focus on:
 Individual traits

 Behaviors exhibited by the assesses

 Knowledge/skills possessed , and

 Results achieved
 PERFORMANCE INTERVIEW

Raters should discuss and review the performance with the ratees.

Provide feedback about where they stand in the eyes of superiors

Performance Interview has three goals:

i. To change behavior of employees whose performance does not meet
organizational requirements or their own personal goals

ii. To maintain the behavior of employees who perform in an acceptable

manner, and

iii. To recognize superior performance behaviors so that they will be

continued
 APPRAISAL PROCESS

ARCIVING PERFORMANCE DATA

Organizations need to archive or store the appraisal data so that at

any point in future, the information can be retrieved and used.
Raters should discuss and review the performance with the
ratees.

USE OF APPRAISAL DATA

The final step in the evaluation process is the use of evaluation

data. The data and information generated through performance
evaluation must be used by the HR department.
 FOLLOWING ARE THE AREAS OF HRM

 Remuneration administration

 Validation of selection programmes

 Employee training and development programmes

 Promotion, transfer and lay – off decisions

 Grievance and discipline programmes

 HR Planning