Performance management for mba

1. Performance Management
Performance Management
Concept & Meaning
 Performance management is a process that consolidates goal setting,
performance appraisal & development into a single common system. It’s aim is to ensure
that the employee’s performance is supporting the company strategic aims.
 It means daily or weekly interaction to ensure continuous improvement in
employee capacity and performance.
 Performance management is a systematic & integrated approach to delivering
sustained success to organization by improving the performance of the people who work in
them & by developing the capabilities of team & individual contributors.
 It includes practice through which managers (superiors) work with their
employees (subordinates) to define the goals, develop employee capabilities
through training, measure & review employee performance in order to reward
performance, ultimately contributing to organizational success.
 Performance management is a process of designing & executing motivational
strategies, interventions & drivers with an objective to transform the raw potential of
Hr into performance.
 It is means of getting better results by understanding & managing performance
with an agreed framework of planned goals, standards and competency
requirement.

Definitions
“Performance management is a process which contributes to the effective management of
individuals and teams in order to achieve high levels of organizational performance.”
Michael Armstrong & Angela Baron
Definitions
“Performance management is a means of getting better results from the organization ,
teams and individuals with an agreed framework of planned goals, objectives & standards”.
Armstrong & Murlis
Definitions
“Performance management is about directing & supporting employees to work as effectively &
efficiently as possible in line the needs of the organization.”
Walters
Definitions
“ An effective performance management system aligns individual performance with the
organization’s mission, vision & objectives.” American Compensation Association

2. Objectives of Performance management
1. People came to know what is expected from them & they perform in a best manner to
achieve it.
2. To achieve improvements in organization performance.
3. Increases motivation & commitment of employees.

3. Continue…
4. Enable individual to develop their abilities, increase their job satisfaction & achieve
their full potential .
5. Enhance team cohesion & performance.
6. Develop open relationship between individual & their managers.
7. Provide opportunities for individual to express their aspirations & expectations about work.
Classification of performance objectives
Evaluative Objectives
•Bonuses & incentives
•Promotions
•Salary increases
Development Objective
•Feedback
•Motivation
•T&D
•Career Planning
Significance of Performance Management
1. Competitive Business Environment
2. Business HR Partnership
3. Fulfillment of Human Resource Needs
4. Performance Management as Core of HR
5. Integrated Motivational Tool
6. Institutionalizing High Performance work culture
7. Sustainable Results
8. Individual Collective Development
9. Measurable Management
10.Optimizing Human Capital
11. Renewal of Competencies
Challenges Of Performance Management
1. Engineering Alignment
2. Melding Culture-compatibility with work culture.
3. Perseverance- long efforts
4. Accountability-to create relevant performance indicators.
5. Unlearning Process
6. Internal Coherence- tighter integration b/w strategies, interventions and drivers.
7. Total Employee Involvement
8. Complexity
Examples of Organisations using performance management
American Express Services & Pfizer for cultural change.
Arts Council of England link pay to performance.
British Medical Association customer service.

4. Characteristics of Performance Management
Performance management is a planned process. It is concerned with measuring output in shape
of delivered performance compared with expected.
It is also concerned with input & values Inputs are Knowledge, skills, behavior required to produce
effective results.
Development needs are identified by assessing the extent to which expected level of
performance have been achieved through use of Knowledge, skills & attitude.
 It is a continuous and flexible process.
 It relies on consensus & co operation.
 It emphasizes on development .
Principles of Performance Management
 It translates corporate goals into individual team & departmental goals.
 It creates a understanding of what is required to improve performance & how it will be
achieved.
 It encourage two way communication.
 It measures performance against jointly agreed goals.
 It should apply to all staff.
 It requires continuous feedback.
There are 7 strategies of Performance Management-
1. Reward based performance management.
2. Career based performance management.
3. Team based performance management.
4. Culture based performance management.
5. Measurement based performance management.
6. Competency based performance management.
7. Leadership based performance management.
Performance Management

5. Reward Strategy
Career Strategy
Team Strategy
Culture Strategy
Measurement Strategy
Competency Strategy
Leadership Strategy
Nurturing reward based performance management
Capitalizing on reward based performance management
Nurturing career based performance management
Capitalizing on career based performance management
Nurturing team based performance management
.Capitalizing on team based performance management
.Nurturing culture based performance management
.Capitalizing on culture based performance management
.Nurturing leadership based performance management
. Capitalizing on leadership based performance management
.Nurturing competency based performance management
Capitalizing on competency based performance management
.Nurturing measurement based performance management
Capitalizing on measurement based performance management
1. REWARD BASED PERFORMANCE MANAGEMENT
It is integrated reward system that ensures equitable avenues to employees for fulfillment of their
financial and non financial needs and recognition urge for their contribution to attainment of
organizational goals.
2. CAREER BASED PERFORMANCE MANAGEMENT
It is a combined effort of an individual employee and an organization to nurture and mature
aptitude and attitude of that employee in order to deliver results for both of them.
3. TEAM BASED PERFORMANCE MANAGEMENT
It is an activity in which tasks are interdependent and performed by different individuals in a
collective manner with distinct skills to produce a common goal with performance excellence.
4. CULTURE BASED PERFORMANCE MANAGEMENT
In context of performance management culture means shared strong work assumptions and
norms that facilitate the peak performance of employees and organization.
5. MEASUREMENT BASED PERFORMANCE MANAGEMENT
It is a set of tools employed to establish the efficacy ,utility and contribution of performance
management in enhancement of organizational and employees performance and set standards of
performance.
6. COMPETENCY BASED PERFORMANCE MANAGEMENT
It identifies and builds the most relevant competencies to facilitate peak employee and
organizational performance.
7. LEADERSHIP BASED PERFORMANCE MANAGEMENT
In performance management leadership is a process that maximizes performance of employees
and organization in all types of business environments and situations by-

6. 1. Sharply aligning objectives of P.M strategies with business strategies.
2. Nurturing leadership at all levels
3. Developing, integrating, executing and evaluating 6 performance management strategies.
Performance Appraisal Vs Performance management
Performance Appraisal Performance management
1. It emphasizes on Individual objectives. 1. It focuses on integrating organizational, team
& individual objective.
2. It uses qualitative & quantitative performance
measures.
2. It uses competency requirement & quantified
measures.
3. It reviews performance annually or
semiannually.
3. It reviews performance continuously.
4. It is often linked to reward. 4. It doesn't have direct link to reward.
5. It is isolated system not linked to
organizational goals.
5. It is integrated system aimed at organizational
& people development.
6. It focuses on past performance. 6. It is future focused.
7. It is related to “How well was the work
done”?
7. “What can be done to help employees perform
effectively?”
8. Rating is used to measure & evaluate
performance
8.Emphasis is on performance planning,
analysis, appraisal & development
9. It has complex paperwork. 9. In Performance management documentation is
minimum.
10. It is designed and monitored by HR
department.
10. It is designed by HR Dept. but could be
monitored by line managers.
11. Emphasis is on relative evaluation of
individuals
11. Emphasis is on performance improvement of
individual, teams & organization
12. Ownership is mostly with HR Deptt. 12. Ownership is with line managers and HR
Deptt.
13.Focus on identifying
Development needs at the end of appraisal
year.
13.Focus is on identifying developmental needs at
beginning of the appraisal year.
Benefits of Performance Management
1. For organisation-
• Align corporate individual & team objectives.
• Improve performance.
• Motivate employees.
• Help to retain skilled employees.
• Increase commitment.
• Provide basis for career planning.
2. For managers-
• Provide basis for clarifying performance & behavior expectations.
• Framework for reviewing performance.

7. • Improve team and individual performance.
• Support leadership ,motivating & team building process.
• Provide basis for helping under performers.
• To develop individual.
• Provide basis for providing non financial rewards to staff.
3. For Individuals-
• Clarity of roles and objectives.
• Encourage & support to perform well.
• Basis for assessing performance.
• Guidance & help in developing abilities.
NURTURING ORGANIZATION SPECIFIC PERFORMANCE
MANAGEMENT
1.Auditing
Prevailing
P.M
3. Executing
P.M.S
2. Designing
Org. specific
P.M.S
• P.M.S should be organization specific and fit to the requirements of each organization.
Institutionalizing Organization Specific Performance Management
• Integrating a particular performance strategy with all other strategies.
• To leverage on a particular performance strategy.
• Example- Initiating leadership based performance management strategy and leveraging it
to achieve performance centric reward system.
MOTIVATIONAL THEORIES
Maslow’s hierarchy of needs
Physiological Needs
Security Needs
Social Needs
Self-esteem
Needs
Self
actuali
zation
Leadership based performance
management
Competency & Measurement
based performance
management
Culture & Team based
performance management
Career based performance
management
Reward based
Performance mgmt.

8. 2. Two Factor Motivational Theory
(Herzberg’s Hygiene –Motivator Factors)
Motivators
Hygiene Factors
•Leadership based performance mgmt
•Competency based performance mgmt
•Measurement based performance
mgmt
•Culture based performance mgmt.
• Team based performance mgmt.
• Career based performance mgmt.
• Reward based performance mgmt.
3. Alderfer’s Existence Relatedness-
Growth (ERG) Theory
EXISTENCE
RELATEDNESS
GROWTH
•Reward based performance management
•Culture based performance management
•Team based performance management
•Leadership based performance
management
•Competency based performance
management
•Measurement based performance
management
•Career based performance management
4. Vroom’s Valence-Expectancy-
Instrumentality Theory
Establishing association
b/w desired action and
reward mgmt
Performance
Excellence
OutcomeExpectancy &
InstrumentalityValence

9. 5. Cognitive Evaluation Theory
Effectiveness of performance management
Extrinsic
Motivators &
rewards
Intrinsic motivators
& rewards
Components of performance
management
MONITORING
DEVELOPING
RATING
REWARDING
PLANNING
Components of Performance Management
1. Planning:-
• It is setting performance expectations & goals for groups and individuals to direct their
efforts towards organizational objectives.
• Communicating the organization goals & then translating these into departmental goals.
• Clarifying specific goal for each employee.
• Establishing the elements and standards of their performance appraisal plans.
2. Monitoring:-
It means measuring performance & make reports, providing feedback to employees on
progress towards reaching goals.
Supervisors are provided monitoring opportunity to check how employee are meeting
predetermined standards.

10. 3. Developing:-
It means increasing the capacity to perform through training, assignments that introduce new
skills or improving work processes etc.
Supervisors & employees are provided opportunity to identify developmental needs for
carrying out the process.
4. Rating:-
It is used to evaluate employee performance against standards during appraisal period.
It helps in comparing performance & identifying best performers.
Performance appraisal consists following steps-
Performance objectives
Job expectations
Assessment & feedback
Evaluation
Appraisal discussion.
5. Rewarding:-
It means recognizing employee individually & as members of group for their
performance & contribution to organization mission.
Rewards, recognition & compensation all play a role in providing the consequences needed to
keep employee’s goal directed performance on track.
Performance Management process
Business & departmental goals
Performance & development plan
Action work & development
Continuous monitoring & feedback
Formal review feedback & assessmentReward
Corporate mission & goals
Performance & development agreement
Competence evidence
Performance standard
Performance
measurement
Rating
Competence requirements
Performance Management Process
1. Corporate mission & strategic goals-
It helps determine the type of jobs, skills & nature of employee performance that organization
require to achieve its objectives.
2. Business & departmental plans and goals-
After setting corporate objectives business and departmental goals are set.

11. 3. Performance & development agreement-
It is an agreement on objectives & accountabilities reached by individual with their managers.
The agreement is reached at formal review meeting & recorded.
A performance agreement defines the work to be done, the results to be attained, the
performance standards to be achieved & competence level required.
Performance agreement form the basis for development, assessment & feedback.
4. The performance & development plan-
What individual need to do & know to improve their performance & develop their skills and
competencies & how the manager can provide guidance.
It provides a learning plan for which individual are responsible with support to their managers &
organisation.
It includes L & D activities like coaching, mentoring, job enrichment, job enlargement.
5. Action-work, development & support-
Performance management helps people to get into action so that they achieve planned &
agreed results.
It is work & people related activity focuses on what has to be done, how it is done & what is
achieved.
It is concerned with people, helping them to learn & providing support.
6. Continuous monitoring & feedback:-
It is process of managing & developing performance standards which reflect practice of
direction setting, monitoring & measuring performance.
7. Formal review, feedback & assessment:-
• Formal review meeting between managers and individuals or team leader & their teams.
• It can held twice in a year or quarterly.
• It provides the focal point for consideration of key performance & development issues.
8. Rating-
It indicates the quality of performance or competence achieved by employee.
It produce a summary for record of how well or not so well someone is doing.
Types of Performance
Exceptional Performance-
(exceeds expectations,outstanding)
Well balanced Performance-
(consistent performance,meeting objective)
Barely effective Performance-
(Don’t meet all objectives & role requirement)
Unacceptable Performance-
(Fails to meet objectives, lack of ability & commitment)
9. Performance related pay-
It is paying for performance or competence or both.
It motivates people to perform better.
It is fair & reward people according to performance & competence.

12. Elements of Performance Management
PROCESS-
It should be continuous and carried out regularly.
PEOPLE MANAGEMENT CAPABILITY-
Manager should possess KSA and behaviors to raise performance standards.
Talk to the people
Build feedback
Notice great performances
Formal discussions
Help employees
Motivation-
Organizations communicate performance management and seek commitment of
employees.
Measurement Criteria and rewards-
Individual Performance
The organizational effectiveness
Their use to allocate rewards
Role of HR professionals-
It should help managers and their employees succeed.
Learning Organization-
Organizations are able to learn from their performance management experience.
Culture and clarity of purpose
PERFORMANCE APPRAISAL
Meaning
Performance appraisal is assessment of individual performance against well defined benchmarks.
Performance appraisal is structured system of measuring and evaluating an employee job related
behavior to find out how and why employee is presently performing on the job and how the
employee can perform more effectively in the future.
Meaning
• Performance appraisal is the process of obtaining, analyzing and recording information
about the relative worth of an employee.
• The focus of the performance appraisal is measuring and improving the actual
performance of the employee and also the future potential of the employee.
DEFINITION
 “Performance appraisal is the systematic, periodic and an impartial rating of an employee’s
excellence in the matters pertaining to his present job and his potential for a better job.“
FLIPPO

13. DEFINITION
“Performance appraisal is the formal ,systematic assessment of how well employees are
performing their jobs in relation to established standards, and the communication of that
assessment to employees.”
WENDELL FRENCH
DEFINITION
“ Performance appraisal involves the identification, measurement and management of human
performance in organizations.”
GOMEJ MEJIA
Objective of Appraisal
• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• Helps to strengthen the relationship and communication between superior subordinates and
management employees.
• To diagnose the strengths and weaknesses of the individuals so as to identify the training
and development needs of the future.
• To provide feedback to the employees regarding their past performance.
• Provide information to assist in the other personal decisions in the organization.
• Provide clarity of the expectations and responsibilities of the functions to be performed by
the employees.
• To judge the effectiveness of the other human resource functions of the organization such
as recruitment, selection, training and development.
• To reduce the grievances of the employees.
Process of performance appraisal

14. Step 1.ESTABLISHING PERFORMANCE STANDARDS
• It is used as the base to compare the actual performance of the employees.
• This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the organizational goals
and objectives.
• The standards set should be clear, easily understandable and in measurable terms.
Step 2.COMMUNICATING THE STANDARDS
• Management communicate the standards to all the employees of the organization. The
employees should be informed and the standards should be clearly explained to them.
• It will help them to understand their roles and to know what exactly is expected from them.
• The standards should also be communicated to the appraisers or the evaluators .
Step 3.MEASURING THE ACTUAL PERFORMANCE
• Measuring the actual performance of the employees that is the work done by the
employees during the specified period of time.
• It is a continuous process which involves monitoring the performance throughout the year.
• Careful selection of the appropriate techniques of measurement,
Step 4.COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE
• The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards
set.
• Actual performance> Standard performance
OR
Actual performance < Standard performance
Step 5.DISCUSSING RESULTS
• The result of the appraisal is communicated and discussed with the employees on one-to-
one basis. The focus of this discussion is on communication and listening.
• To solve the problems faced and motivate the employees to perform better.
Step 6.DECISION MAKING
• To take decisions which can be taken either to improve the performance of the employees,
take the required corrective actions, or the related HR decisions like rewards, promotions,
demotions, transfers etc
Purpose of performance appraisal
• According to a recent survey
(out of the total organisations surveyed i.e. 50)
• Making payroll and compensation decisions – 80%
• Training and development needs – 71%
• Identifying the gaps in desired and actual performance and its cause – 76%
• Deciding future goals and course of action 42%
• Promotions, demotions and transfers – 49%
• Other purposes – 6% (including job analysis and providing superior support, assistance and
counseling)

15. Challenges Of Performance Appraisal
1.Determining the evaluation criteria
Identification of the appraisal criteria is one of the biggest problems faced by the top management.
• For the purpose of evaluation, the criteria selected should be in quantifiable or
measurable terms.
2.Create a rating instrument
• To judge the performance of the employees rather than the employee.
• The focus of the system should be on the development of the employees of the
organization
3. Lack of competence
• Top management should choose the raters or the evaluators carefully.
• They should have the required expertise and the knowledge to decide the criteria
accurately.
• They should have the experience and the necessary training to carry out the appraisal
process.
4. Errors in rating and evaluation
• Many errors based on the personal bias like
• Stereotyping-Mental picture that an individual holds about a person because of that
person’s age, sex, religion, caste etc.
• Halo effect -One trait influencing the evaluator’s rating for all other traits.
• Horn effect- one negative quality of employee is rated harshly.
5.Resistance
• The appraisal process may face resistance from the employees and the trade unions for the
fear of negative ratings.

16. Methods of Performance Appraisal
Methods of Performance
Appraisal
Performance Appraisal
Traditional Methods Modern Methods
Rating Scales M.B.O
Checklist 360 degree Appraisal
Straight Ranking Psychological Appraisal
Critical Incident Assessment Centre
Field Review B.A.R.S
Confidential Records HRA
Essay Method
Cost Accounting Method
Comparative Evaluation
Paired Comparison
Graphical rating
Forced distribution
Traditional -Methods
Rating Scales:-
1. It is simplest and most popular technique for appraising employee performance.
Each scale ranges from excellent to poor.
2. Rater checks the appropriate performance level & computes the total score.
Rating Scale
Employee Name:- Department:-
Rater’s Name:- Date:-
Excellent Good Acceptable Fair Poor
5 4 3 2 1
1.Dependability - - - - -
2.Initiative - - - - -
3.Overall output - - - - -
4.Attendance - - - - -
5 Attitude - - - - -
- - - - -
- - - - -
20.Quality of work - - - - -
Total + + + + +
Total Score

17. 2.Checklist:-
a. checklist is a list of statement that describe the characteristics & performance of
employee on the job.
b. It has two columns yes or no column.
c. After ticking off the rater forwards the list to H.r department for actual assessment.
Simple Checklist
1.Is the employee regular on the job Yes/No
2.Is his or her attendance satisfactory Yes/No
3.Does he or she co-operate with workers. Yes/No
4.Does he or she obey orders. Yes/No
5.Does he or she evade responsibility. Yes/No
3.Straight Ranking:-
a. In this method evaluator assigns relative ranks to all the employees in same work unit doing
the same job.
b. Employees are ranked from poorest to best on the basis of overall performance.
Straight Ranking Method
Employee Name Rank
A 1
B 5
C 3
D 4
E 2
4.Critical Incident :-
a. In this method supervisor keeps a written record of critical events & employee behavior
during such events.
b. The rating of employee depends on the positive and negative behavior during these events.
Example-
A fire
A sudden breakdown of machinery.
Critical Incident Score
Worker Reaction Score
A Informed to supervisor immediately 5
B Became anxious of loss of output 4
C Tried to repair the machine 3
D Complained of poor maintenance 2
E Was happy to get rest 1
5.Field Review Method:-
a. In this method appraisal is done by someone outside the assesses own department.
b. A training officer from H.R department reviews employee records & holds interview with the
ratees & his superior.
c. It is used for making promotional decisions at managerial level.

18. 6.Confidential Report:-
a. It is mostly used in government organisations.
b. A confidential report is prepared by employee immediate superior. it covers the strengths
and weaknesses, main achievement and failure, personality and behavior of employee.
c. It is used for promotion & transfer of employees.
7.Essay Method:-In this method evaluator writes a short essay on the employee performance.It
includes-
• Promotability of employees.
• The jobs that employee is able to perform.
• The strengths & weaknesses of employee.
• The T & D assistance required.
8.Cost Accounting Method:-
This method evaluates performance from the monetary returns the employee yields to his or her
organisation.
Cost Accounting Method
Rank Rating % ofSurplus/deficit
of contribution to cost
of employee.
5 Extremely good performance over 200
4 Good performance 150-200
3 Slightly good 100-150
2 Neither poor not good 0-100
1 Slightly poor 0
9.Comparative Evaluation :-
a. It compares one workers performance with his/her co-workers.
b. It is conducted by superior.
c. it is useful in deciding merit pay increase, promotions & organisational rewards.
10. Paired Comparison Method:-
a. In this Method appraiser compares each employee with every other employee after it
rank is given.
b. The no. of comparisons can be calculated with help of following formula:-
N(N-I)/2 here N= no. of employees to be compared.
Paired comparison Method
A B C D E Final Rank
A - - - + + 2
B + - - + + 3
C + + + + + 5
D + + + + - 4
E - - + - - 1

19. 11.FORCED DISTRIBUTION
• To eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute
the employees in some fixed categories of ratings like on a normal distribution curve. The
rater chooses the appropriate fit for the categories on his own discretion
12. GRAPHIC RATING SCALE
• In this method, an employee’s quality and quantity of work is assessed in a graphic scale
indicating different degrees of a particular trait.
• It include both the personal characteristics and characteristics related to the on the job
performance of the employees.
• For example a trait like Job Knowledge may be judged on the range of average, above
average, outstanding or unsatisfactory.
Modern-Methods
1.M.B.O(Management by objective):-
• The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in
1954.
• Superior and subordinate managers of an organisation jointly identify their common
goals,define each individual major areas of responsibility in terms of result expected and
assess the contribution of each members.
Main steps in M.B.O process-
• Set Organisation Goals.
• Set Departmental Goals.
• Discuss Departmental Goals.
• Define Expected Results.
• Performance Review.
• Provide Feedback.
M.B.O process

20. Advantages of MBO
1. Clarity of goals
• The goals thus set are clear, motivating and there is a linkage between organizational
goals and performance targets of the employees.
2. Motivation – in terms of job satisfaction, employee empowerment and commitment.
3. Better communication and Coordination-
helps to maintain harmonious relationships
Example:-Larsen & Toubro
2.Psychological Appraisal:-
• This appraisal consist of in-depth interview, psychological tests, discussion with
supervisors & review of other evaluations.
• The psychologist then writes an evaluation of the employee’s intellectual,
emotional,motivation & other characteristics that suggests individual potential.
3. 360 degree feedback
• 360 degree feedback, also known as 'multi-rater feedback‘
• 360 degree respondents for an employee can be his/her peers, managers (i.e. superior),
subordinates, team members, customers, suppliers/ vendors - anyone who comes into
contact with the employee and can provide valuable insights and information.
• It provides multi- source feedback & facilitates self development.
• It is useful in assessing soft skills.
Example
• G.E(India),
• Reliance Industries,
• Godrej,
• Wipro,Infosys,
• Thomas cook,
• S.B.I,
• Aditya birla etc.

21. Arguments Against 360 Degree Performance Appraisal
• 360 performance rating system is not a validated or corroborated technique
• With the increase in the number of raters from one to five (commonly), it become difficult
to separate, calculate and eliminate personal biasness and differences.
• · It is often time consuming and difficult to analyze the information gathered.
• The results can be manipulated by the employees towards their desired ratings with the
help of the raters.
• The 360 degree appraisal mechanism can have a adversely effect the motivation and the
performance of the employees.
• 360 degree feedback can be adversely affected by the customers perception of the
organisation and their incomplete knowledge about the process and the clarity of the
process.
• Often, the process suffers because of the lack of knowledge on the part of the participants
or the raters.
1. Self appraisal-
• It gives a chance to the employee to look at his/her strengths and weaknesses, his
achievements, and judge his own performance.
2. Superior’s appraisal-
• The employees’ responsibilities and actual performance is rated by the superior.
3. Subordinate’s appraisal- It judge the employee on the parameters like communication and
motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as
internal customers
4. Peer appraisal – It can help to find employees’ abilities to work in a team, co-operation and
sensitivity towards others.
4.B.A.R.S(Behaviourally Anchored Rating Scales):-
• It is a relatively new technique which combines the graphic rating scale and critical
incidents method.
• This scale represent a range of descriptive statement of behavior varying from most to
least effective
• Rater must indicate which behavior on each scale best describes an employee
performance.
• Critical areas of job performance and the most effective behavior for getting result is
determined in advance.
• It consists of predetermined critical areas of job performance or sets of behavioral
statements describing important job performance qualities as good or bad (for eg. the
qualities like inter personal relationships, adaptability and reliability, job knowledge etc).
• These statements are developed from critical incidents.

22. • In this method, an employee’s actual job behaviour is judged against the desired behaviour
by recording and comparing the behaviour with BARS. Developing and practicing BARS
requires expert knowledge.
5. Assessment Centres:-
a. An assessment centre is a central location where group of managers work together to have
their participation in job related exercise evaluated by trained observers
b. Assesses participate in in basket exercise, work groups, simulation, role playing & other
activities.
c. An assessment centre measures interpersonal skills, communication skills, ability to plan &
organise, decision making etc.
d. Assessment centre refers to a method to objectively observe and assess the people in
action by experts or HR professionals with the help of various assessment tools and
instruments.
e. An assessment centre typically involves the use of methods like social/informal events,
tests and exercises, assignments being given to a group of employees to assess their
competencies and on the job behaviour and potential to take higher responsibilities in the
future.
f. An assessment centre typically involves the use of methods like social/informal events,
tests and exercises, assignments being given to a group of employees
g. Employees are given an assignment similar to the job they would be expected to perform if
promoted.
h. An assessment centre for performance appraisal of an employee typically includes:-
Social/Informal Events –
• An assessment centre has a group of participants and also a few assessors which gives a
chance to the employees to socialize with a variety of people and also to share information
and know more about the organisation.
Information Sessions –
• Information sessions are also a part of the assessment centre’s. They provide information
to the employees about the organisation, their roles and responsibilities, the activities and
the procedures etc.
Assignments-
• Assignments in assessment centre’s include various tests and exercises which are
specially designed to assess the competencies and the potential of the employees. These
include various interviews, psychometric tests, management games etc. all these
assignments are focused at the target job.
• The following are the common features of all assessment centres:
• The final results is based on the pass/fail criteria
• All the activities are carried out to fill the targeted job.
• Each session lasts from 1 to 5 days.
• The results are based on the assessment of the assessors with less emphasis on
self-assessment
• Immediate review or feedback are not provided to the employees.
It is done to determine employee potential for
promotion.

23. Example-
Crompton Greaves
Eicher
H.L.L
Modi Xerox etc.
6. HUMAN RESOURCE ACCOUNTING METHOD
• Human resource accounting method tries to find the relative worth of human assets in the
terms of money.
• In this method the Performance of the employees is judged in terms of cost and contribution
of the employees.
• The cost of employees include all the expenses incurred on them like their compensation,
recruitment and selection costs, induction and training costs etc whereas their contribution
includes the total value added (in monetary terms).
• The difference between the cost and the contribution will be the performance of the
employees. Ideally, the contribution of the employees should be greater than the cost
incurred on them.