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Performance Appraisal Methods

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Performance Appraisal Methods

It is a systematic evaluation of an individual with respect to performance on the job and individuals potential for development. Definition 2: Formal System, Reasons and Measures of future performance It is formal, structured system of measuring, evaluating job related behaviors and outcomes to discover reasons of performance and how to perform effectively in future so that employee, organization and society all benefits.

Meaning of Performance Appraisals

Performance Appraisals is the assessment of individuals performance in a systematic way. It is a developmental tool used for all round development of the employee and the organization. The performance is measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility and health. Assessment should be confined to past as well as potential performance also. The second definition is more focused on behaviors as a part of assessment because behaviors do affect job results.

Performance Appraisals and Job Analysis Relationship

Job Analysis Describe the work and personnel requirement of a particular job. Performance Standards Translate job requirements into levels of acceptable or unacceptable performance Performance Appraisals Describe the job relevant strengths and weaknesses of each individual.

Objectives of Performance Appraisals

Use of Performance Appraisals 1. 2. 3. 4. 5. 6. 7. 8. Promotions Confirmations Training and Development Compensation reviews Competency building Improve communication Evaluation of HR Programs Feedback & Grievances

4 Goals of Performance Appraisals

General Goals Developmental Use Specific Goals Individual needs

Performance feedback Transfers and Placements Strengths and Development needs Salary Promotion Retention / Termination Recognition Lay offs Poor Performers identification HR Planning Training Needs Organizational Goal achievements Goal Identification HR Systems Evaluation Reinforcement of organizational needs Validation Research For HR Decisions Legal Requirements

Administrative Decisions / Uses

Organizational Maintenance

Documentation

Performance Appraisal Process

1. 2. 3. 4. 5. 6. 7. 8. Objectives definition of appraisal Job expectations establishment Design an appraisal program Appraise the performance Performance Interviews Use data for appropriate purposes Identify opportunities variables Using social processes, physical processes, human and computer assistance

Difference between Traditional and Modern (Systems) approach to Appraisals

Categories Traditional Appraisals Modern, Systems Appraisals

Guiding Values Leadership Styles Frequency Formalities Rewards

Individualistic, Control oriented, Documentary Directional, Evaluative Occasional High Individualistic

Systematic, Developmental, Problem solving Facilitative, Coaching Frequent Low Grouped, Organizational

TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS

Numerous methods have been devised to measure the quantity and quality of performance appraisals. Each of the methods is effective for some purposes for some organizations only. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or an employee. Broadly all methods of appraisals can be divided into two different categories.

Past Oriented Methods Future Oriented Methods

Past Oriented Methods 1. Rating Scales: Rating scales consists of several numerical scales representing job related performance criterions such as dependability, initiative, output, attendance, attitude etc. Each scales ranges from excellent to poor. The total numerical scores are computed and final conclusions are derived. Advantages Adaptability, easy to use, low cost, every type of job can be evaluated, large number of employees covered, no formal training required. Disadvantages Raters biases 2. Checklist: Under this method, checklist of statements of traits of employee in the form of Yes or No based questions is prepared. Here the rater only does the reporting or checking and HR department does the actual evaluation. Advantages economy, ease of administration, limited training required, standardization. Disadvantages Raters biases, use of improper weighs by HR, does not allow rater to give relative ratings 3. Forced Choice Method: The series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment. Advantages Absence of personal biases because of forced choice. Disadvantages Statements may be wrongly framed. 4. Forced Distribution Method: here employees are clustered around a high point on a rating scale. Rater is compelled to distribute the employees on all points on the scale. It is assumed that the performance is conformed to normal distribution. Advantages Eliminates Disadvantages Assumption of normal distribution, unrealistic, errors of central tendency. 5. Critical Incidents Method: The approach is focused on certain critical behaviors of employee that makes all the difference in the performance. Supervisors as and when they occur record such incidents. Advantages Evaluations are based on actual job behaviors, ratings are supported by descriptions, feedback is easy, reduces recency biases, chances of subordinate improvement are high. Disadvantages Negative incidents can be prioritized, forgetting incidents, overly close supervision; feedback may be too much and may appear to be punishment. 6. Behaviorally Anchored Rating Scales: statements of effective and ineffective behaviors determine the points. They are said to be behaviorally anchored. The rater is supposed to say, which behavior describes the employee performance. Advantages helps overcome rating errors. Disadvantages Suffers from distortions inherent in most rating techniques. 7. Field Review Method: This is an appraisal done by someone outside employees own department usually from corporate or HR department. Advantages Useful for managerial level promotions, when comparable information is needed, Disadvantages Outsider is generally not familiar with employees work environment, Observation of actual behaviors not possible.

8. Performance Tests & Observations: This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful. Advantage Tests may be apt to measure potential more than actual performance. Disadvantages Tests may suffer if costs of test development or administration are high. 9. Confidential Records: Mostly used by government departments, however its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR) and may record ratings with respect to following items; attendance, self expression, team work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness etc. The system is highly secretive and confidential. Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it is highly subjective and ratings can be manipulated because the evaluations are linked to HR actions like promotions etc. 10. Essay Method: In this method the rater writes down the employee description in detail within a number of broad categories like, overall impression of performance, promoteability of employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses and training needs of the employee. Advantage It is extremely useful in filing information gaps about the employees that often occur in a better-structured checklist. Disadvantages It its highly dependent upon the writing skills of rater and most of them are not good writers. They may get confused success depends on the memory power of raters. 11. Cost Accounting Method: Here performance is evaluated from the monetary returns yields to his or her organization. Cost to keep employee, and benefit the organization derives is ascertained. Hence it is more dependent upon cost and benefit analysis. 12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.

Ranking Methods: Superior ranks his worker based on merit, from best to worst. However how best and why best are not elaborated in this method. It is easy to administer and explanation. Paired Comparison Methods: In this method each employee is rated with another employee in the form of pairs. The number of comparisons may be calculated with the help of a formula as under.

N x (N-1) / 2 Future Oriented Methods 1. Management By Objectives: It means management by objectives and the performance is rated against the achievement of objectives stated by the management. MBO process goes as under.

Establish goals and desired outcomes for each subordinate Setting performance standards Comparison of actual goals with goals attained by the employee Establish new goals and new strategies for goals not achieved in previous year.

Advantage It is more useful for managerial positions. Disadvantages Not applicable to all jobs, allocation of merit pay may result in setting short-term goals rather than important and long-term goals etc. 2. Psychological Appraisals: These appraisals are more directed to assess employees potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depend upon the skills of psychologists who perform the evaluation.

3. Assessment Centers: This technique was first developed in USA and UK in 1943. An assessment center is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviors across a series of select exercises or work samples. Assessees are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. The characteristics assessed in assessment center can be assertiveness, persuasive ability, communicating ability, planning and organizational ability, self confidence, resistance to stress, energy level, decision making, sensitivity to feelings, administrative ability, creativity and mental alertness etc. Disadvantages Costs of employees traveling and lodging, psychologists, ratings strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in simulated situations. Those who are not selected for this also may get affected. Advantages well-conducted assessment center can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in assessment centers. The tests also make sure that the wrong people are not hired or promoted. Finally it clearly defines the criteria for selection and promotion. 4. 360-Degree Feedback: It is a technique which is systematic collection of performance data on an individual group, derived from a number of stakeholders like immediate supervisors, team members, customers, peers and self. In fact anyone who has useful information on how an employee does a job may be one of the appraisers. This technique is highly useful in terms of broader perspective, greater self-development and multi-source feedback is useful. 360-degree appraisals are useful to measure inter-personal skills, customer satisfaction and team building skills. However on the negative side, receiving feedback from multiple sources can be intimidating, threatening etc. Multiple raters may be less adept at providing balanced and objective feedback.

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International Journal of Engineering and Advanced Technology (IJEAT) ISSN: 2249 8958, Volume-2, Issue-3, February 2013 617

Techniques of Performance Appraisal-A Review

Ashima Aggarwal, Gour Sundar Mitra Thakur

Abstract- Performance appraisal system is used in the organizations to measure the effectiveness and efficiency of their employees. Performance Appraisal system is needed because every employee has a different attitude to handle the work. Performance Appraisal tends to improve the work performance, communication expectations, determining employee potential and aiding employee counseling. In this paper we present the review of some popular performance appraisal techniques along with their pros and cons. Ranking, Graphic Rating Scale, Critical Incident, Narrative Essays, Management By Objectives, Assessment Centers, BARS, 360 Degree and 720 Degree are some performance appraisal techniques. Keywords- Ranking, Graphic Rating Scale, Critical Incident, Narrative Essays, MBO, Assessment Centers, BARS, Human Resource Accounting, 360 degree appraisal,720 degree appraisal.

I. INTRODUCTION Performance appraisal has been synonymous with performance review, performance evaluation, performance assessment, performance measurement, employee evaluation, personnel review, staff assessment, service rating, etc. The development of performance appraisal has four distinct phases. It is called TEAM (Technical, Extended, Appraisal and Maintenance) approach [10]. Performance Appraisal is reviewing past performance, rewarding past performance, goal setting for future performance and employee development [14]. Employee s appraisal system may be considered one of the indicators of the quality of Human Resource Management in an organization. Properly designed and realized process of employees appraisal is not only the necessary basis of successful employee performance management, but also provides valuable information for other human resource management functions [2]. Performance Appraisal is important because it helps in Performance Feedback, Employee Training and Development Decisions, Validation of Selection process, Promotions & Transfers, Layoff Decisions, Compensation Decisions, Human Resource Planning (HRP), Career Development and Develop Interpersonal Relationship. Some techniques that were used in the past are not use during present time, like ranking, critical incident, narrative essays. In all the way of work time, many of new advance roads have been suggested for performance appraisal technique like MBO, Assessment Centers, BARS, Human Resource Accounting, 360 Degree and 720 Degree. Manuscript
received February, 2013 Ashima Aggarwal, Department of Computer Science and Engineering, Lovely Professional University, Phagwara, Punjab, India. Gour Sundar Mitra Thakur, Department of Computer Science and Engineering, Lovely Professional University, Phagwara, Punjab, India.

II. DIFFERENT TECHNIQUES OF PERFORMANCE APPRAISAL There are two types of measures are used in performance appraisal: Objective measures which are directly quantifiable and Subjective measures which are not directly quantifiable. Performance Appraisal can be broadly classified into two categories: Traditional Methods and Modern Methods. The performance appraisal methods are: Traditional Methods Traditional Methods are relatively older methods of performance appraisals. This method is based on studying the personal qualities of the employees. It may include knowledge, initiative, loyalty, leadership and judgment. A. Ranking Method According to Dessler et al. (2011), ranking method is ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all ranked [5]. B. Graphic Rating Scales In 1922, Paterson working with the employees of the Scott Company developed a graphic scale to provide the reliability, consistency over time, usefulness and practicality. Bradshaw in 1931 discussed improvements to the graphic rating scale that included behaviorism to anchor the scales and help better illustrate the trait [3]. In 1972, Flynn told that the five to nine scale points result in the highest quality of ratings. According to Dessler et al. (2011), Graphic Rating Scale is a scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her level of performance for each trait [5]. C. Critical Incident Method The technique was formally codified by the works of Fitts and Jones in 1947 for classifying pilot error experiences in reading and interpreting aircraft instruments. Fitts and Jones used the term errors rather than critical incidents. As opposed to Fitts and Jones way of collecting data, data gathering during task performance is now considered a defining criterion for critical incident methods. The work of John Flanagan in 1954 became the landmark critical incident technique, after his title entitled The Critical Incident Technique appeared in the psychological bulletin. Flanagan (1954) defined the critical incident technique as a set of procedures designed to describe human behavior by collecting description of events having special significance and meeting systematically defined criteria. Flanagan originally used trained observers to collect critical incident identification. Identification of the critical incidents during task performance can be a individual process or a mutual process between user and evaluator [9].According to Dessler et. al.(2011),Critical Incident method is keeping a record of Techniques of Performance Appraisal-A Review 618

uncommonly good or undesirable examples of an employees work related behavior and reviewing it with the employee at predetermined times [5 ]. D. Narrative Essays Evaluator writes an explanation about employees strength and weakness points, previous performance, positional and suggestion for his (her) improvement at the end of evaluation time. This technique mainly attempt to focus on behavior [7]. Modern Methods Modern Methods were devised to improve the traditional methods. It attempted to improve the shortcomings of the old methods such as biasness, subjectivity, etc. E. Management by Objectives In1954, Peter F. Drucker introduced Management By Objective in his book The Practice of Management. It comprises of three building blocks: object formulation, execution process and performance feedback [17]. In 2000,Weihrich suggested a new model: the system approach to MBO(SAMBO).SAMBO comprises seven elements: strategic planning and hierarchy of objects, setting objectives, planning for action, implementation of MBO, control and appraisal, subsystems, and organizational and management development[16]. F. Behaviorally Anchored Rating Scale (BARS) BARS were introduced by Smith and Kendall in 1963 with the attention of researchers concerned with the issue of reliability and validity of performance ratings. Behavioral anchor scales are more informative than simple numbers. Behaviorally anchored performance dimensions can be operationally and conceptually can be distinguished from one another [12]. Rater will act as observer not the judge. BARS help rater focus on specific desirable and undesirable incidents of work behavior which can serve as examples in discussing a rating. BARS use behavioral statements or concrete examples to illustrate multiple levels of performance for each element of performance [6]. G. Humans Resource Accounting The concept of human resource accounting was first developed by Sir William Petty in 1691.But research into true human resource accounting began in the 1960 by Rensis Likert. Prof. Flamholtz defines human resource accounting for people as an organizational resource. The main theory underlying the HRA is: The people are valuable resources of an organization or enterprise, information on investment and value of human resource is useful for decision making in the organization[15].This paper aims at analyzing the application of human resource accounting in heavy industries covering the period from 2001-2010.In1965, both Cronbach & Glaser and Naylor & Shine developed models for estimating the financial utility of personnel selection and used the concept of utility analysis . In 1966, Grojer and Johnson embrace both HRA and UA, suggest the concept of human resource costing and accounting (HRCA)[8]. Another method of human resource accounting is human resource value accounting (HRVA). H. Assessment Centers The assessment center method, in its modern form, came into existence as a result of AT & T Management Progress Study by Bray, Campbell & Grant in 1974.Common job simulations used in assessment centers are in basket exercises, group discussions, simulations of interviews with subordinates or clients, fact finding exerc ises, analysis/decision making problems, oral presentation exercises, written communication exercises[4]. I. 360 Degree It is a popular performance appraisal technique that involves evaluation input from multiple levels within the firm as well as external sources.360 Degree feedback relies on the input of an employee s superior, colleagues, subordinates, sometimes customers, suppliers and/or spouses[7].It provides people with information about the effect of their action on others in the workplace. It provides a notion of behavioral change might be elicited through a process of enhanced self-awareness.[6]. J. 720 Degree Rick Gal breath became dissatisfied with 360 degree reviews. Gal breath started using the 720 degree and defined it as a more intense, personalized and above all greater review of the upper level managers that brings in the perspective of their customers or investors, as well as subordinates. 720 degree review focuses on what matter most, which is the customer or investor perception of their work [13].720 degree approach gives people a very different view of themselves as leaders and growing individuals. 360 degree appraisal method is practiced twice. When the 360- Degree appraisal is done, then the performance of the employee is evaluated and having a good feedback mechanism, the boss sits down with the employee again a second time and gives him feedback and tips on achieving the set targets [14]. III. OTHER TECHNIQUES There are many other techniques such as 90 degree,180 degree,270 degree, balanced score card, mixed standard scale, human resource costing and accounting, paired comparison, forced distribution method, behavioral observation scale, mixed standard scale, electronic performance monitoring, confidential reports etc. are also used for performance appraisal but not discussed in this paper. Table 1 represents the summary of this paper. IV. CONCLUSION From this we conclude that there are many techniques that used for Technique Key Idea Advantages Disadvantages

performance appraisal. It is very difficult to say that which technique is better than other technique because it depends upon the type and size of organization. Each technique has its own pros and cons. International Journal of Engineering and Advanced Technology (IJEAT) ISSN: 2249 8958, Volume-2, Issue-3, February 2013 619 Sl. No.

A.

Ranking Method

Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all ranked.

1.Fastest 2.Transparent 3.Cost Effective 4.Simple and easy to use

B.

Graphic Rating Scales

C.

Critical Incident

A scale that lists a number of traits and a range of performance for each, the employee is then rated by identifying the score that best describes his or her performance for each trait. Keeping a record of uncommonly good or undesirable examples of an employees work related behavior and reviewing it with the employee at predetermined times. Evaluator writes an explanation about employees strength and weakness points, previous

1. Simple. 2. Easily constructed. 3. Ease of use. 4. Results are standardized what allows comparison to be made between employees. 5. Reduce the personal bias.

1.Less objective 2. Morale problems who are not rated at or near the top of the list. 3. Suitable for small workforce. 4. Workers strengths and weakness cannot be easily determined. 1. Rating may be subjective. 2. Each characteristic is equally important in evaluation of the employees performance.

1. Easy and economic to develop and administer. 2. Based on direct observations. 3. It is time tested and provides more face time.

D.

Narrative Essays

1. Report actually shows employees performance. 2. Can Cover all factors. 3. Examples are given.

1. Time consuming and laborious to summarize and analyze the data. 2. Difficult to convince people to share their critical incidents through a survey. 3. Provides a personal perspective of organizational issues. 1. Time consuming. 2.Supervisor may write a biased essay 3. Effective writers are very difficult to

E.

Management by Objectives

performance, positional and suggestion for his (her) improvement at the end of evaluation time. Employees are evaluated how well they accomplished a specific set of objectives that have been determined to critical in the successful completion of the job.

4. Provides feedback.

find.

1. Easy to implement and measure. 2. Employee motivated as he is aware of expected roles and accountability. 3.Performance oriented diagnostic system 4. Facilitates employee counseling and guidance.

F.

Behaviorally Anchored Rating Scale

BARS combines elements from critical incident and graphic rating scale approaches. The supervisor rates employees according to items on a numerical scale.

1. Job behaviors describe employee performance in a better way. 2. More objective 3. More acceptances due to participation of managers and employees.

G.

Human Resource Accounting(HRA)

The people are valuable resources of an organization or enterprise, Information

1. Ascertain the cost of labor turnover. 2. Development of human resources.

1. Difficult to employees agree on goals. 2. Misses intangibles like honesty, integrity, quality, etc. 3. Interpretation of goals may vary from manager to manager, and employee to employee. 4. Time consuming, complicated, lengthy and expensive. 1. Scale independence may not be valid/ reliable. 2.Behaviors are activity oriented rather than result oriented 3. Very time consuming for generating BARS. 4. Each job will require creating separate BARS scale. 1. There are no specific & clear-cut guidelines for finding cost and value of human resources of an organization.

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Performance Appraisal Performance Appraisal 1 Performance Appraisal Michael J. Sepcot Illinois Institute of Technology Performance Appraisal 2 Performance appraisal, performance review, performance evaluation, personnel rating, merit rating, employee appraisal, or e
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The Performance Appraisal THE PERFORMANCE APPRAISAL Antoinette L. Wright Professor Karmetria Burton The Business Enterprise-BUS508 January 28, 2010 Abstract This paper discusses a few of the dynamics of ethics. As an employee of a company that focuses on ethics in the workplace has often found me in a quan
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Performance Appraisal Hrm Absolute Standards European Journal of Social Sciences Volume 7, Number 3 (2009) A New Framework for Selection of the Best Performance Appraisal Method Mostafa Jafari Industrial Engineering Department, Iran University of Science & Technology Narmak, Tehran, Iran E-mail: mostafajafari2006@yahoo.com Tel: +98-912
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Performance Appraisal Performance Appraisal Nearly all organizations seek to monitor the job performance of their members through an evaluation system. Employees who perform their jobs well are usually rewarded and those who do not are penalized. Although all organizations have adopted methods for personnel appraisal,
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Performance Appraisal Handbook U.S. Department of the Interior Performance Appraisal Handbook (370 DM 430) A Guide for Managers/Supervisors and Employees Performance Appraisal Handbook Table of Contents Timeline for the Performance Appraisal Process ...................................................................3
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Hrm Performance Appraisal Performance Appraisal Assignment Enclosure: Excel Sheet for Rough Work (In Mail) Submitted by: Group: 10 Kumar Gauraw (15) Ajay Gupta (37) Rajumoni Saikia(48) Tarakeswar Das(49) Question: How will you use Different methods to assess her performance? Answer: Graphic
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Objectives of Performance Appraisal Objectives of Performance Appraisal Performance Appraisal can be done with following objectives in mind: 1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc. 2. To identify the strengths and weaknesses of employees to place right men on
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Performance Appraisal ORGANIZATION PROFILE Leading Software Technologies Private Limited [LST] - is a leading provider of Software Development Company, Chennai (India) and a registered Nasscom member, focused on providing business relevant solutions to its Customers and established in 2000. Headquartered in the Chenn
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Developing a Performance Appraisal System raisal System Developing a Performance Appraisal System HSM/220 January 9, 2011 Dr. Karen Beard Developing a Performance Appraisal System Development of a performance appraisal system that is effective in a human service organization is of benefit for the organization and the employees. Fo
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Performance Appraisal System Performance Appraisal System Performance Appraisal System InterClean has set themselves apart from its competitors with its current Career Development plan. This development plan equips the organization with effective tools to do accurate job analysis and selection, train and mentor em

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Performance Appraisal HUMAN RESOURCE MANAGEMENT ESSAY PERFORMANCE APPRAISAL SYSTEM 11 January 2010 INTRODUCTION This essay is to answer the question two: Critically evaluate the advantages and disadvantages of individual performance appraisals/reviews. Assess to what extent such appraisals can contribute
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Evaluation Performance Appraisal Evaluation Performance Appraisal A performance appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding manager or
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Synopsis of Performance Appraisal PERFORMANCE APPRAISAL Appraising the performance, at individuals, groups, organizations, is a common practice of all societies. While in some instances these appraisal processes are structured and formally sanctioned, in some instances they are informal and integral part of daily life. Perform
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A Qualitative Analysis Report on an Employee's View of Performance Appraisal A QUALITATIVE ANALYSIS REPORT ON AN EMPLOYEES VIEW OF PERFORMANCE APPRAISAL INTRODUCTION Performance management aims to create a direct link between an individuals goals, the departments purpose and the objectives of the organization (Marchington et al, 2008). However, in most present
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An Investigation Into Effectiveness of Performance Appraisal Tools AN INVESTIGATION INTO THE EFFECTIVENESS OF PERFORMANCE APPRAISAL TOOLS USED ON EMPLOYEE PERFORMANCE: (A CASE OF KENYA ANTI CORRUPTION COMMISSION) BY: RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR AWARD OF A DEGREE OF BACHELOR OF BUSIN
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Traditional Methods of Performance Appraisal Top of Form Bottom of Form Top of Form Performance appraisal is a method of evaluating the behaviour of employees in the work spot, normally both the quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up
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Performance Appraisal

Performance Appraisal System Prepared For: Wade Larson HRM/531 August 23, 2010 Performance Appraisal System Career development is composed of many aspects in which managers and employees should be aware of. In order for managers to help employees be successful, they must know the employe
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Report on Performance Appraisal Gujarat Technological University MBA Semester - IV Syllabus for MBA Programme effective from the Academic Year 2009-10 onwards The course curriculum and syllabus for MBA of Gujarat Technological University are devised considering the norms of AICTE/UGC. While preparing the syllabus, the syllabi of
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Performance Appraisal Performance Appraisal B. The literature review accomplishes several important things. 1. It shares with the reader the results of other studies that are closely related to the study being reported (Fraenkel & Wallen, 1990). 2. It relates a st
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Checkpoint Performance Appraisal Hrm/240 CheckPoint: Performance Appraisal Rachel A. Kershaw HRM/240 University of Phoenix Karen M. Wilson Performance Appraisal Performance Appraisal is defined as a process that may be performed on an annual basis overall by a supervisor for the employees. Designed to help employees better understa
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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 5, May 2012, ISSN 2231 5780

www.zenithresearch.org.in

135

AN ANALYTICAL STUDY OF PERFORMANCE APPRAISAL SYSTEM OF THE SELECTED INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) COMPANIES SHREYA RUSTUM VIRANI* *Assistant Professor,
Jayawantrao Sawant College of Engineering, Pune, Maharashtra, India. ABSTRACT In recent years, performance management has become more important because managers are under constant pressure to improve the performance of their organisations. It is now realised that the performance of organisations influence the organisations continued existence and success. The increasing realisation that one of the key roles of managers is to manage employees performance is the key to the success of management in general and performance management in particular. It is now well accepted that performance management is a wider concept than performance appraisal. Appraisal being part of performance management plays a vital role in encouraging desirable performance and discourages undesirable performances before they become ingrained. Performance appraisal is a systematic and objective way of judging the relative worth or ability of an employee in performing his job. With above aim in view, the researcher has made an attempt in this work to gather and critically examine the valuable inputs from various representative ITES companies and carry out a deductive/inductive analysis of the qualitative and quantitative data for arriving at desired results. The researcher has done detailed analysis of performance appraisal system of the selected ITES companies. This research comes up with a view that the respondents of the selected ITES companies are in agreement with their existing performance appraisal system. KEYWORDS: Performance Management, Performance appraisal system, Case study, ITES Companies. ______________________________________________________________________________ INTRODUCTION Due to rapid globalisation of world economy, the context and paradigm of performance in the organisational perspective has undergone sea change. Organisations now have to face competitive pressures, uncertainty, and dynamic environment and above all rising expectations of the customers that includes the external as well as internal customers. These factors have compelled organisations

to manage performance of employees for achieving and sustaining their competitiveness. Performance is a behaviour that leads to results. Performance of an employee does not happen in isolation or without adequate reason. There are casual factors which include employee to perform better. Such factors are motivation, leadership, reward and compensation system, promotion system, training and development etc. ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 5, May
2012, ISSN 2231 5780 www.zenithresearch.org.in

136

Armstrong (2005) describes the role of performance appraisal as a tool for looking for-ward to what needs to be done by people in the organisation in order to achieve purpose of the job, to meet new challenges, better use of technology skills and attributes. In addition it will develop both organisational and individual capabilities and reach agreement on areas where performance needs to be improved. According to Dessler (2002), performance appraisal is defined as evaluating an employees current or past performance relative to his or her performance standards. It therefore involves the following: Setting a work standard

Assessing the employees actual performance relative these standards.

Providing feedback to employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above par. Performance appraisal aims to determine the relationship between the individual effort and results, as well as between individual results and the attainment of organisational goals and objectives. There is no ideal or standardized performance appraisal procedure since its scope depends mainly upon the organisational goals and objectives and the purpose of the appraisal, as well as on the skills of the appraisers and on the appraisal methods involved. In the present paper some live case studies of selected ITES companies have been taken and their performance appraisal systems with reference to its practices and processes have been evaluated. LITERATURE REVIEW Performance appraisal is a well-established way of providing milestones, feedback, guidance and monitoring for staff. A further development is tying this appraisal into a larger and more complex system of performance management (Weightman,1999). CIPD (2008d) support the view that whilst performance appraisal is an important part of performance management, it is only one tool amongst a range of tools that can be used to manage performance. The performance appraisal is essentially a formal mechanism of reviewing individual employee performance. Fletcher (2001) defines it as the activities through which organisations to assess employees and develop their competence, enhance performance and distribute rewards. OBJECTIVES 1. To critically examine the Performance Appraisal Systems of ITES companies with reference to its practices and processes at the different levels. 2. To draw the necessary findings in the light of the data analysed and interpreted.
ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 5, May 2012, ISSN 2231 5780

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CASE STUDY In the present paper the selected ITES (Information Technology Enabled Services) Companies from Pune region namely ZS Associates Ltd., Tata Consultancy Services (TCS), Infosys, IBM, Patni, have been taken for study. The existing Performance Appraisal System of these selected ITES companies has been critically examined. The data required for this purpose has been extracted through well-structured questionnaires DATA COLLECTION AND SAMPLING In order to fulfil the above mentioned objectives and to meet the requirement of the research the data has been collected in the following ways: PRIMARY DATA QUESTIONNAIRE: Comprehensive structured questionnaire was designed for collecting the data. The questionnaire was designed for the managers and executives working at the middle and top level of management in ITES companies. DIRECT INTERVIEW: The required information for the present research has been acquired through direct interview of the officials working at the top management; the study has been conducted objectively. The interviews were taken in an unstructured form and further analysis / outcome has been suitably presented SAMPLING FRAME The list of the ITES companies was taken from the yellow pages, which served as the frame for the purpose of the study. This provided the complete list and companies were taken into consideration from the same. SAMPLING TECHNIQUE AND SAMPLE SIZE Stratified sampling method was used to design sample. From the selected ITES companies, the respondents were categorized into Managers or Executives working in these companies and employees working under them. Random sampling was used to collect the data. The lists of persons working in these companies were taken and randomly respondents were selected to collect the data. SAMPLE PLAN The total numbers of companies selected are 5. From each company random selection of 12 employees is done. LIST OF THE SELECTED ITES COMPANIES In the present paper, the following companies have been taken for the study. ZENITH
International Journal of Multidisciplinary Research Vol.2 Issue 5, May 2012, ISSN 2231 5780

www.zenithresearch.org.in

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ZS Associates Ltd., Tata Consultancy Services (TCS), Infosys, IBM India Pvt. Ltd. Patni Computer Systems RESEARCH METHODOLOGY ITES Companies METHOD OF ANALYSIS AND TOOLS USED Filled up questionnaires were examined for their correctness and observed gaps were mitigated through follow up with the respondents. In the current research work, data related to research topic was fed to the SPSS (Statistical Package for Social Sciences), and then various operations were performed. Data analysis was done by using various statistical techniques such as frequency, multiple responses, mean etc. in order to draw meaningful findings and conclusion. DATA ANALYSIS AND FINDINGS In the light of the above objectives stated the data analysis is presented in tabular format [Table No. 1 to Table No. 6]. TABLE NO. 1: CRITERIAS CONSIDERED FOR PERFORMANCE APPRAISAL IN THE SELECTED ITES COMPANIES Criteria ZS Associates TCS (%) Infosys (%) IBM (%) (%) Achievemen t of Objectives Ability of meeting defined standards Ability to meet deadlines Output/Resu lt of employees 12 12 -10

Patni (%) 10

14

14

--

--

--

12

12

--

--

--

25

25

25

 O O O O O O O O O O O O O O O O

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Performance appraisal system in Infosys

Article by Rajalakshmi Rahul on August 15, 2012 Discuss now (0) Go to comments An effective and well managed performance appraisal system is one of the best ways to provide the ongoing support system. It can give both individuals and managers a structured system to achieve goals and targets successfully without the need for close supervision. A performance appraisal system also exalts the organizational decisions quality ranging from allocation of reward to layoffs, transfers and promotions (Grote et, al, 2005). They also exalt the employee decisions quality ranging from choices of career to decisions about where to raise ones effort and time. Now the organizational success is based on the individuals and employees performance. Managers who know how to make the best use of the performance appraisal system are more effective managers.

An overview of performance appraisal system of Infosys, India

Infosys believes in meritocracy and has built a high performance work culture among its workforce. To align the employees performance with Infosys business goals, regular performance driven appraisals are conducted. Infosys has three tracks for its performance appraisal system (Rao and Rao, 2004; Fernando, 2010). They are:

Track 1
The first track deals with review of performance relying on feedback and tasks on technical/ personality competencies. Infosys is moving to a role based structure and competencies for each of the roles with standard expected levels of behaviors. Training needs are derived based on the tasks evaluations and competency feedback.

Track 2
The second track is the senior management appraisal. People in managerial roles undergo this annually. Here the employee fills up a self appraisal form and carries it forward to a panel of discussion. The panel includes:

The head of the department. The immediate supervisor of the appraise. Senior management personals from another department.

Promotions are decided on the basis of their review (Khan and Jain, 2004).

Track 3
360 degree appraisal constitutes the third track. This has been happening over the last 3 years for all departments and practice units. Levels covered include the head of delivery, heads of departments/practice units, all the people who report to the heads and all others holding leadership positions in the organization.

Infosys Overhauling Performance Appraisal system

Posted on January 18, 2009 by The Mentor Infosys has now hired global HR consultant Mercer to work on the overhaul its Performance Appraisal system and the process will be completed before June. Our current performance management system does not meet the requirements of a 100,000-plus organisation. The new system is undergoing evaluation by Mercer, TV Mohandas Pai, Infosys director for HR, education, research and administration . The key aspects being looked at in the new system include sharper focus on technology, condensing the number of roles while increasing span of control. The new system will seek to define roles more clearly and try to more carefully match roles to employee aspirations. All programmers may not want to become managers. As we grow and move up the value chain there will be more opportunities for engineers to either go deeper into technology areas or take up senior managerial roles. The overhaul will provide us with room to create more options and multiple career streams for employees, Mr Pai added, while declining to share specific details on the overhaul. The current span of control is 1:2:5.5. That is, on an average for every one project manager there are two managers and 5.5 developers. Now, with the increasing number of employees this could increase. On the other hand programmers who dont want to be managers can opt for hi-tech areas like technology architecture, system designers and so on. Incidentally, TCS, which has over 130,000 staff had also overhauled its structure in April last year. We had put in place a new structure about nine months back to manage the large employee numbers. Under this we became more vertically focused and now have 18 industry solution units, said Ajoy Mukherjee, global head of HR for TCS. The overhauled system while catering to a larger employee base will also try and create more opportunities to move up the ladder. The larger companies (like TCS, Infosys) are looking at the structure keeping in view the growing employee base and challenges they might face a decade or two from now. At present the employee force is young and most of them are programmers. They may not like to be programmers as the workforce ages. The overhaul will help meet those challenges, said executive search firm EMA Partners managing partner (India) K Sudarshan. Source : Economic Times, January 17, 2009 Filed under: Appraisals, From the Web | 1 Comment

Appraisals 2009
Posted on January 18, 2009 by The Mentor The performance appraisals this year may not only mean assessment of an employees achievements but may also bring in changes in the way companies assess and reward

employees. More importantly, there will be a shift in the parameters and goal setting benchmarks. A few voices from the HR Industry Human resources consultancy e2e People Practices Pvt. Ltd is working with large information technology (IT) and back office services clients to create more tangible, measurable objectives for certain job roles and restructure the performance-based portion of those salaries. Performance-linked pay may increase to as much as 40% or 50% from the previous norm of close to 20%, says Yeshasvini Ramaswamy, who runs the consultancy. Roles that are directly linked to performance milestones and clear-cut job objectives had some variable components to their salaries, but the economic downturn and pressure to cut costs yet avoid layoffs are forcing human resources departments to think a little more creatively. Organizations are moving into very specific key result areas, says Ramaswamy. Pressures are tight, budgets are tight. It is getting more driven down into direct revenue and senior positions. In the sectors worst hit by the slowdownbanking, finance and real estatesalaries, along with hiring, are more or less frozen. But in sectors such as consulting, information technology and back-office services, says Sandeep Chaudhary, who leads the performance and rewards practice at Hewitt Associates LLC, salary changes are driven more by the drop in attrition rate. The ratea measure of the number of individuals leaving their jobsis down by almost 50% since 2007 by some estimates. There are less job opportunities in the market place, which means they (companies) can be far more prudent in terms of salary increases, says Chaudhary. It is not fuelled by buoyant market conditions, so it is only made by performance. Senior managers, Chaudhary says, are looking at little or no direct salary increases, but should expect the performance-based portion of their pay to grow 5-20%. Middle management at offshore financial and back office services providers will see last years 12-15% raises drop to 78%. Reviews will become much more important. What we are hearing companies say this year, is that they will be more strict about enforcing norms of differentiation, with variable payout, and merit increases linked to the performance rating, says Gangapriya Chakraverti, a business head at Mercer LLC in India who specializes in compensation. Managers, she says, are being asked to follow a so-called bell curve in their grading scale this year, and award positive reviews to only half of their employees. Companies are also considering introducing or increasing variable pay at junior levels, though the amount varies by industry and position. Entry-level roles in IT and retail will start seeing 510% variable portions of a salary, and sales positions in insurance and at back office service providers can carry targets that can account for 20% of a salary. Since variable pay is often folded into a larger salary package, it is sometimes difficult to tell if the percentage has increased, say business school placement officials. Madhu Vij, who heads placements at the Faculty of Management Studies in New Delhi, says while the bulk of offers are yet to come in, companies have stopped offering signing bonuses. She expects the base salary for some offers to be less than they had been in the past. In addition to tweaking the variable portion of salaries, companies are considering other ways to keep promises while cutting, or at least stretching out, their costs. They are experimenting with techniques such as staggering payouts or making them quarterly, says Ramaswamy.

Companies on the April-March calendar, which most Indian firms follow, will only implement salary changes and hold reviews in April. While multinational firms and companies in other geographies have long linked salaries to performance, Indias more relaxed work culture has traditionally made the associati on more difficult. Risk pay, the concept, is not very widely deployed in India, says E. Balaji, chief executive officer of Ma Foi Management Consultants Ltd. And culturally managers have an issue telling employees you havent performed well, says Chakraverti. Source : Aruna Vishwanatha, Livemint, January 15, 2009 Filed under: Appraisals, salary | Leave a Comment

Infosys Overhauling Performance Appraisal system

Posted on January 18, 2009 by The Mentor Infosys has now hired global HR consultant Mercer to work on the overhaul its Performance Appraisal system and the process will be completed before June. Our current performance management system does not meet the requirements of a 100,000-plus organisation. The new system is undergoing evaluation by Mercer, TV Mohandas Pai, Infosys director for HR, education, research and administration . The key aspects being looked at in the new system include sharper focus on technology, condensing the number of roles while increasing span of control. The new system will seek to define roles more clearly and try to more carefully match roles to employee aspirations. All programmers may not want to become managers. As we grow and move up the value chain there will be more opportunities for engineers to either go deeper into technology areas or take up senior managerial roles. The overhaul will provide us with room to create more options and multiple career streams for employees, Mr Pai added, while declining to share specific details on the overhaul. The current span of control is 1:2:5.5. That is, on an average for every one project manager there are two managers and 5.5 developers. Now, with the increasing number of employees this could increase. On the other hand programmers who dont want to be managers can opt for hi -tech areas like technology architecture, system designers and so on. Incidentally, TCS, which has over 130,000 staff had also overhauled its structure in April last year. We had put in place a new structure about nine months back to manage the large employee numbers. Under this we became more vertically focused and now have 18 industry solution units, said Ajoy Mukherjee, global head of HR for TCS. The overhauled system while catering to a larger employee base will also try and create more opportunities to move up the ladder. The larger companies (like TCS, Infosys) are looking at

the structure keeping in view the growing employee base and challenges they might face a decade or two from now. At present the employee force is young and most of them are programmers. They may not like to be programmers as the workforce ages. The overhaul will help meet those challenges, said executive search firm EMA Partners managing partner (India) K Sudarshan. Source : Economic Times, January 17, 2009