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What is Performance

 Performance Appraisal is an objective assessment

of an individual’s performance against well defined
 It is the systematic evaluation of the individual
with respect to his or her Performance on the job
and his or her potential for development.
 The other terms used for Performance Appraisal
are Performance rating,employee
assessment,employee performance
review,personnel Appraisal,Performance
evaluation,employee evaluation and merit rating.
Performance Appraisal is not
done in isolation. It is linked
to job analysis.

Job analysis Performance standards Performance appraisal

Translates job requirements Describe the job relevant

Describes work and personnel Strengths and weaknesses
Into levels of acceptable or
Requirement of a particular job Of each individual
unacceptable performance.
Objectives of Performance
 To effect promotions based on competence and

 To assess the training and development needs

of employees.

 To decide upon a pay scale where regular pay

scales have not been fixed.

 To let the employees know where they stand

insofar as their performance is concerned and
assist them with constructive criticism and
guidance for the purpose of their development.
 To improve communication.
Performance Appraisal provides a
format for dialogue between the
superior and the subordinate,and
improves understanding of
personal goal and concerns.

 Finally PA could be used to

determine whether HR
programmes such as
selection,training,and transfers
have been effective or not
Appraisal Process
Objectives of performance appraisal

Establish job expectations

Design an appraisal programme

Appraise performance

Performance interview

Use appraisal data for

appropriate purpose
Appraisal of potential at
 More and more of organisations are trying to assess
potential of their employees,particularly at the
managerial level.Cadbury India,Sandoz,Philips and
P&G are a few of the companies which seek to tap
managerial potential.
 At philips a two by two matrix is used to assess
performance and potential to perform.The vertical
axis measures potential while the horizontal actual
Problem stars

? Solid
Planned citizens


 Low potential-low performance- The
employees are considered as question
 High potential-low performance- These
are problem children
 High potential-high performance- These
are the star performers.
 Low potential-high performance- These
are called the solid citizens.
How Performance Appraisal can
contribute to firm’s competitive

Strategy and Improving Making correct

behaviour performance decisions

Values and advantage Ensuring legal
behaviour compliance

And turnover
Challenges of Performance
 Create a culture of excellence that inspires every
employee to improve and lend himself or herself to
be assessed.
 Align organisational objectives to individual
 Clear growth plans for talented individuals.
 Provide new challenges to rejuvenate careers that
have reached the plateau stage.
 Empower employees to make
decisions without the fear of failing.

 Embed teamwork in all operational

Legal issues associated
with Performance
 Performance Appraisal data are used to
make many important HR decisions.The
Appraisal system is a common target of
legal disputes by employees involving
charges of unfairness and bias.
 There are several recommendations to
assist employees in conducting fair
Performance Appraisal and avoiding legal
 Legally defensible Appraisal
procedure- all personnel decisions
should be based on a formal
standardised Performance Appraisal

 Legally defensible Appraisal

content- any Performance Appraisal
content should be based on job
analysis and Appraisals based on
traits should be avoided.
 Legally defensible
documentation of Appraisal
results- a thoroughly written
record of evidence leading to
termination decisions should be

 Legally defensible raters- the

raters should be trained ‘how to
use an Appraisal system’.