hrm

1. PERFORMANCE APPRAISAL

2. Performance Appraisal
Systematic assessment and descriptions
of an employee’s accomplishments in the
assigned tasks and assessment of job
related strengths and weaknesses.
Why appraisal?
Organization needs to know how an
employee has performed just as an
employee needs to know how his
performance has been viewed by the
organization.

3. Performance Appraisal:
• It is an objective assessment of an individual’s
performance against well defined benchmarks.
• PA is a formal, structured system of measuring and
evaluating an employees 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, organisation and
society all benefit.
• Evaluating factors includes job knowledge, quality
and quantity of output, leadership qualities,
supervision, co-operation, dependability, judgment,
versatility, health, etc.

4. Relationship of PA and job analysis:
Job Analysis
Performance
Standards
Performance
Appraisal
Describes work and
personnel
requirement of a
particular job
Translate job
requirements into levels
of acceptable or
unacceptable
performance
Describes the job-
relevant strengths
and weaknesses of
each individual

5. Main Purpose of Employee Assessment:
 To effect promotions based on competence and
performance.
 To confirm the services of probationary
employees
upon their completing the probationary period
satisfactorily.
 To assess the training and development needs of
employees.
 To decide upon a pay raise where pay scales
have not been fixed.

6.  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.
 To improve communication.
 For determining whether HR programes
such as selection, training, and transfers
have been effective or not.

7. Multiple Purposes of PA:
General Purpose Specific Purpose
Developmental Issues Identification of individual needs
Performance Feedback
Determining Transfers and Job Assignments
Identification of Individual Strengths
Administrative Uses/ Decisions Salary
Promotion
Retention or Termination
Identification of poor performers
Organizational Maintenance/ Objectives HR Planning
Determining Organization Training Needs
Evaluation of Organizational Goal
Achievement
Evaluation of HR systems
Documentation Criteria for Validation Research
Documentation for HR Decisions
Helping to Meet Legal Requirements

8. What is the purpose of performance
appraisals?
Performance appraisals permit you
and your employee to review the
employee’s accomplishments of the
year. Performance appraisal sets the
foundation of the goals and objectives
for your employee for the upcoming
year.

9. Q. How should I use the self-evaluation process?
After your employee completes his/her
performance evaluation, review it with
him/her, come to an agreement on the
self-assessment and , if appropriate,
incorporate the employee’s comments
along with your own. The evaluation
should not be 100% the employee’s
self-appraisal.

10. Q. Is there a special formula to use to reach the
overall rating?
No, there is not.
Supervisors/managers must look
objectively at the employee’s
competencies and responsibilities and
ask yourself, “On the whole, how did
this employee do?”.

11. Performance Appraisal contributes to firm’s
Competitive Advantage:
Values
And
Behavior
Minimizing
Dissatisfaction and
Turnover
Improving
Performance
Strategy
And
Behavior
Making
Correct
Decisions
Competitive
Advantage
Ensuring
Legal
Compliance

12. Appraisal Process:
Objectives of
Performance
Appraisal
Establish Job
Expectations
Design an
Appraisal Program
Appraise
Performance
Performance
Interview
Use Appraisal Data
for
Appropriate
Purposes

13. 1. Objectives of Appraisal:
 It includes effecting promotions and transfers,
assessing training needs, awarding pay
increases, etc.
 Appraisal in future would assume systems
orientation from traditional way, which aims at
improving the performance instead of
assessing it.
 Towards end, appraisal system seeks to
evaluate opportunity factors including
physical environment such as noise,
ventilation and lightings, available resources
as human and computer assistance and

14. Multiple Objectives
It provides inputs to
a. Administration – for pay & promotion
decision.
b. Employees on his strengths &
weaknesses
c. Training, Counseling, Career
Planning and Succession Planning
Systems
d. Organization restructuring issues

15. Performance Appraisal Systems:
Traditional Systems System oriented
Guiding Value Attribution to individual Attribution to system
Primary Goals Control, documentation Development, problem
solving
Leadership practices Directional, Evaluative Facilitative, coaching
Appraisal Frequency Occasional frequent
Degree of formality High Low
Reward Practices Individual Orientation Group Orientation

16. 2. Establish Job Expectations:
 The second process in job appraisal
process which includes informing the
employee what is expected from him/her
on the job.
 Normally a discussion is held with the
superior to review the major duties
contained in the job description.
 Individuals are not expected to begin the
job until they understand what is expected
of them.

17. 3. Design Appraisal Program:
Appraisal
Design
Who Are
the
Raters?
When To
Evaluate?
Formal
Vs
Informal
How To
Solve?
What
Methods?
Whose
Performanc
e?
What
Problems?
What To
Evaluate?

18. 4. Performance Interview
It has 3 goals:
To change behavior of employees whose
performance does not meet organizational
requirements or their own personal goals.
To maintain the behavior of employees
who perform in an acceptable manner.
To recognize superior performance
behaviors so that they will be continued.

19. 5. Use of Appraisal Data:
Data and information outputs of a
performance-appraisal program can
critically influence the coveted employer-
employee reward opportunities.
It could be useful in following areas of
HRM:
I. Remuneration administration
II. Validation of selection programs
III. Employee training and development
programs
IV. Promotion, transfer and lay-off decisions

20. What should be Rated?
There are six criterion for assessing performance:
 Quality: The degree to which the performance of an
activity conforms with the ideal way of performing
that activity.
 Quantity: The amount produced, expressed in
monetary terms, no. of units, or no. of completed
activity cycles.
 Timeliness: The degree to which an activity is completed
or a result is produced, at the earliest time desirable
from the standpoint of both coordinating with the
output of others and of maximizing the time available
for other activities.

21.  Cost Effectiveness: The degree to which the
organization's resources is maximized in the sense
of getting the highest gain or reduction in loss from
each unit or instance of use of a resource.
 Need for Supervision: The degree to which a job
performer can carry out a job function without
either having to request supervisory assistance or
requiring supervisory intervention to prevent an
adverse outcome.
 Interpersonal Impact: The degree to which a performer
promotes feeling of self-esteem, goodwill & co-
operation among co-workers & subordinates.

22. TIMING OF EVALUATION
How often should the employee be
assessed?
 The general trend is to evaluate once in
three months, or six months, or once in a
year.
 according to a survey conducted in 1997,
70% of the organization conduct
performance appraisal once a year.
 Newly hired employees are rated more
frequently than older ones.
 Frequent assessment is better than
phased evaluation because in former case
we get constant feedback enabling a
person to improve his/her performance if

23. METHODS OF APPRAISAL
There are numerous methods to measure the
quality & quantity of employee’s job performance.
Each of the method is effective for some purpose,
for the organizations. Broadly, all the approaches to
appraisal can be classified into:
 Traditional Methods (past oriented)
 Modern Methods (future oriented)

24. Traditional Methods
1. Ranking method
2. Paired comparison
3. Grading
4. Forced distribution
method
5. Forced choice method
6. Checklist method
7. Critical incidents
method
8. Graphic scale method
9. Essay method
10. Field review method
11. Confidential report
Modern Methods
1. Management by
Objectives (MBO)
2. Behaviorally
anchored rating
scales
3. Assessment centres
4. 360-degree appraisal
5. Cost accounting
method

26. Traditional Methods
1. Ranking method: One employee is
compared with all others for the purpose of
placing them in a simple rank order of worth. The
employees are ranked from the highest to the
lowest or from the best to the worst. The
employee who is the highest on the
characteristics being measured and also the one
who is the lowest, are indicated. Then the next
highest and the next lowest are chosen ,
alternating between next highest and lowest until
all the employees to be rated have been ranked.
Thus, if there are ten employees to be appraised,
there will be ten ranks from 1 to 10.

27. Limitations
1. It does not tell that how much better or
worse one is than another,
2. The task of ranking individuals is difficult
when a large number of employees are
rated,
3. It is very difficult to compare one
individual with others having varying
behavioural traits. To remedy these
defects, the paired comparison method pf
performance appraisal has been evolved.

28. 2. Paired-comparison method-
The appraiser compares each employee with
every other employee, one at a time. The no.
of comparisons may be calculated by following
formula
Where N stands for no. of employees
3. Grading- certain categories of worth are established in
advance and carefully defined. There can be three categories
established for employees : outstanding, satisfactory, and
unsatisfactory. There can be more than three grades. Employee
performance is compared with grade definitions. The employee
is allocated to the grade that best describes his or her
performance. The major drawback of this method is that the
rater may rate most of the employees on the higher side of
their performance.
2
)
1
( 
N
N

29. 4. Forced Distribution Method: One of the error in rating is
central tendency- clustering of large no. of employees around
a high point on a rating scale. Forced distribution helps in
overcoming this problem by compelling the rater to distribute
the ratees on all points on the rating scale. The method is
based on the assumption that the employees performance
level conforms to a normal statistical distribution.

30. 5. Forced Choice Method: The rater is given a series of
statement about the employees. These statements are
arranged in blocks of two or more, and rater indicates which
statement is most or least descriptive of the employees. In
this method the rater if forced to select statements which are
readymade.
Example: Typical statements are
Learns Fast ………....works hard
work is reliable……..performance is a good example for
Absent often………...others usually tardy
Advantages:
 absence of personal bias in rating
Disadvantages:
 statements may not be properly framed-they may not be
precisely descriptive of the ratee’s traits

31. 6. Checklist method: Under this method, a checklist of statements
on the traits of the employee and his/her job is prepared in two
columns-viz, a ‘Yes’ column and ‘No’ column. The rater is just
supposed to tick Yes or No in front of those traits being
evaluated. When points are allotted to the checklist it becomes
a ‘weighted checklist’.
Advantages:
 economy
 ease of administration
 limited training of rater
 standardization
Disadvantages:
 susceptibility to rater’s biases (especially halo effect)
 use of personality criterion instead of performance
 use of improper weights by the HR Department

32. 7. Critical Incidents Methods: The approach focuses on certain
critical behavior of an employees that make all the difference
between effective & non effective performance of a job. Such
incidents are recorded by superiors as & when they occur.
Advantages:
 evaluation is based on actual job behavior
 the approach has descriptions in support of particular rating of
employee
 chance that subordinates will improve because they learn, what
is expected from them
Disadvantages:
 negative incidences are more noticeable than positive ones
 Overly close supervision may result

33. 9. ESSAY METHOD:
The rater must describe the employee of broad
categories, such as
i. The rater’s overall impression of the employee’s
performance
ii. The promotability of the employee
iii. The jobs that the employee is now able or
qualified to problem
iv. The strength and weaknesses of the employee
v. The training and the development assistant
required by the employee
The strength of this method depends on the writing
skills and analytical ability of the rater.

34. 10. FIELD REVIEW METHOD:
Appraisal by someone from outside the assessee’s
own department, usually someone from the
corporate office or HR office. The outsider reviews
employee records and holds interviews with the
ratee and his or her superior. It is used for
making promotional decision at the managerial level.
Drawbacks:
 An ‘outsider’ is not usually familiar with conditions
in an employee’s work environment.
 An ‘outsider’ review does not have the opportunity
to observe employee behavior of performance over
a period of time and in a variety of situations.

35. 11. CONFIDENTIAL RECORDS:
Maintained mostly in government departments. The
report has following 14 items-
Attendance, Self-expression, Ability to work with
others, Leadership, Initiative, Technical ability, Ability to
understand the new material, Ability to reason,
Originality and resourcefulness, Areas of work that
suits the person best, Judgement, Integrity,
Responsibility, Defect
◦ 12 of these are filled on a 4-point grade scale.
◦ Integrity and justification are considered separately.
◦ Overall rating on a 5-point grade scale is separately
given.
 PERFORMANCE TESTS AND OBSERVATIONS:
Test of knowledge or skills to measure the potential
more than actual performance.

36. Modern Methods
This technique is used because of following reasons-
 It is not enough if only the past performance is
assessed.
 Performance in the coming days is equally
important.
Commonly used techniques:
Management by Objectives
Psychological Appraisals
Assessment Centers
360-Degree Feedback

37. MANAGEMENT BY OBJECTIVES
 MBO is a process that converts Organisational
objectives into individual objectives.
 The MBO philosophy is built on the
assumptions that individuals can be responsible,
can exercise self-direction and not require
external controls and threats of punishments to
motivate them to work towards their objectives.

38.  MANAGEMENT BY OBJECTIVES:
1. Establishment of Goals
2. Setting the performance standard
3. Actual level of job attainment is compared with
the goals agreed upon.
4. Establishing new goals and new strategies for
goals not previously attained.
It is used with managerial personnel
and employees who have a fairly wide range of
flexibility and self-control in their jobs.
Drawbacks:
Not applicable for all jobs in all organizations

39.  PSYCHOLOGICAL APPRAISALS:
When psychologists are used for evaluations, they asses an
individual’s future potential and not past performance. The appraisal
consists of in-depth interviews, psychological tests, discussions with
supervisors and a review of other evaluations.
 ASSESSMENT CENTRES:
An assessment center is a central location where managers may
come together to have their participation in job-related exercises
evaluated by trained observers.
The characteristics assessed in a typical assessment
center include assertiveness, persuasive ability, communicating
ability, planning and organizational ability, self-confidence, resistance
to stress, energy level, decision-making, sensitivity to the feelings of
others, administrative ability, creativity and mental alertness.

40.  360-DEGREE FEEDBACK:
A systematic collection of performance
data on an individual or group, derived from a
number of stakeholders (immediate
supervisors), team members, customers,
peers, and self.
 It facilitates greater self-development of the
employee.
 It provide formalized communication links
between an employee and his or her internal
or external customers.
Drawbacks:
 Receiving feedback on performance from
multiple sources can be intimidating.
 The technique take a long time on selecting
the rater, designing questionnaires, and
analyzing the data.

41.  Behaviorally Anchored Rating Scales: BARS are
rating whose scale points are determined by statements of
effective and ineffective behaviors. A rater is expected to
indicate which behavior on each scale best describes an
employee’s performance. BARS has following features:
 Area of performance to be evaluated are identified & defined
by the peoples who will use the scales.
 The scales are anchored by descriptions of actual job
behavior that supervisor agree, represents specific levels of
performance.
 All dimensions of performance to be evaluated are based on
observable behaviors & are relevant to the job being
evaluated since BARS are tailor-made for the job.
 Since the raters who will actually use the scales are actively
involved in the development process.

42. Construction of BARS (steps)
1. Identification of performance measures
(identify those areas on which
performance of persons are going to be
evaluated)
2. Identification of critical Behaviour
(different Behaviour in one situation)
3. Re-classification of critical behaviour
4. Scaling of critical behaviour
5. Development of bars instrument

43.  Create a culture of excellence that inspires every
employee to improve and lend himself or herself to be
assessed.
 Align organizational objectives to individual aspirations.
 Clear growth paths for talented individuals.
 Provide new challenges to rejuvenate careers that have
reached the Plateau stage.
 Forge a partnership with people for managing their
careers.
(contd…)
CHALLENGES OF PERFORMANCE
APPRAISAL

44.  Empower employees to make decisions without the fear
of failing.
 Embed teamwork in all operational processes.
 Debureaucratise the organization structure for ease of
flow of information.
CHALLENGES OF PERFORMANCE
APPRAISAL

45.  Performance appraisal data are used to make many
important HR decisions (e.g. pay, promotion, training,
transfer, and termination).
 The appraisal system is a common target of legal
disputes by employees involving charges of unfairness
and bias.
(contd…)
LEGAL ISSUES ASSOCIATED WITH
PERFORMANCE APPRAISAL

46. Problems in Performance Appraisal
1. Relating to System-
a. How to evolve measure to assess
managerial tasks.
b. Generate data on performance
c. Understanding of system at the top
management level.
d. Reliable technique for measuring
comparative merit and performance.

47. Problems in Performance Appraisal
2. Relating to Appraiser-
a. Playing God creates anxiety.
b. Evaluation of personality traits.
c. Bias and halo effect
d. Regency of incidents
e. Central Tendency
f. Too harsh too easy

48. Problems in Performance Appraisal
3. Relating to Appraisee-
His perspective on system depends on
how he earns recognition vis-à-vis others.
His criteria are rarely explicit.