Performance Appraisal

WHAT IS APPRAISAL?

Performance appraisal may be defined as a

structured formal interaction between a
subordinate and supervisor, that usually takes
the form of a periodic interview (annual,
semi-annual), in which the work
performance of the subordinate is examined
and discussed, with a view to identifying
weaknesses and strengths as well as
opportunities for improvement and skills
development.

WHAT IS APPRAISAL?

Effective performance appraisal systems

contains two basic systems operating in
conjunction:

an evaluation system and

a feedback system.

The main aim of the evaluation system is to

identify the performance gap (if any).
The main aim of the feedback system is to
inform the employee about the quality of his
or her performance.

Comparing Performance Appraisal and

Performance Management

Performance appraisal

Evaluating an employees current and/or

past performance relative to his or her
performance standards.

Performance management

The process employers use to make sure

employees are working toward
organizational goals.

WHY APPRAISAL?

The main aim of performance appraisal

is:

Encourage good performers

Encourage average performers to become
good performers
Encourage below average performers to
become good performers.

Performance Counseling is generally a

positive reinforcement process.

WHY APPRAISAL?

Performance Appraisal can be viewed

from two different point of views viz:

Employee Viewpoint: From the

employee viewpoint, the purpose of
performance appraisal is four-fold:

(1)
(2)
(3)
(4)

Tell me what you want me to do

Tell me how well I have done it
Help me improve my performance
Reward me for doing well.

WHY APPRAISAL?

Organizational Viewpoint:

One of the most important point for an

organization to have performance appraisal is
to establish the principle of accountability. The
objective is to align responsibility and
accountability at every organizational level.
It provides an opportunity for one-on-one
discussion of the employee and the supervisor
on important work related topics that may not
have been discussed otherwise.
Performance appraisal can have a profound
effect on levels of employee motivation and
satisfaction.

FOR WHOM IS THE APPRAISAL?

The concept of performance appraisal is

not just limited to managers or higher
level management but it is a tool that
can and should be used for the
employees of a company irrespective of
their level of work, as already explained
it has a high relevance to an employ's
performance and output.

PROCESS OF PERFORMANCE
APPRAISAL
Objectives of Performance
Appraisal
Establish Job Expectations

Design an Appraisal
program
Appraisal of Performance

Performance Interview

Use Appraisal Data for

Appropriate Purposes

OBJECTIVES OF APPRAISAL

Correlate with the organization's

philosophies and mission
Cover assessment of performance as well
as potential for development
Look after the needs of both the individual
and the organization

OBJECTIVES OF APPRAISAL

Help create a clean environment

Link rewards to achievements
Generate information for personnel
development and career planning
Suggesting appropriate person-task matching

JOB EXPECTATIONS

Here, the job expectations we are talking

about are not just about what an employee
wants from the company but also what
exactly in terms does the company wants
from the employee.

DESIGNING APPRAISAL

1.
2.
3.
4.

A program to monitor the performance of

the organizations employees is carefully
designed keeping in mind the following;
Formal Vs Informal Appraisal?
Who is to be appraised?
Who are the raters?
Evaluation Criteria?

THE APPRAISAL

This is the step where actually the

performance of the employee is measures
and marked.
The role of the counselor is of prime
importance at this step as his observations
are closely linked to the appraisal of the
employee.

THE APPRAISAL

1.
2.
3.
4.
5.

Some of the points kept in mind while

appraisal are:
Quantity of output
Quality of output
Punctuality of output
Presence at work
Cooperativeness

METHODS OF PERFORMANCE
APPRAISAL

Alternative Sources of
Performance Appraisal

Supervisor
Team
Peers

Self

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Subordinates
818

Customers
Presentation
Slide 84

Pros and Cons of 360-Degree

PROS
Appraisal

The system is more comprehensive in that responses are

gathered from multiple perspectives.

Quality of information is better. (Quality of respondents is more

important than quantity.)

It complements TQM initiatives by emphasizing

internal/external customers and teams.
It may lessen bias/prejudice since feedback comes from more
people, not one individual.
Feedback from peers and others may increase employee selfdevelopment.

Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, Has 360-Degree Feedback Gone Amok? Academy of Management
Executive 12, no. 2 (May 1998): 8694; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, Does 360-Degree Feedback Negatively Affect Company
Performance? HRMagazine 47, no. 6 (June 2002): 5459; Maury Peiperl, Getting 360-Degree Feedback Right, Harvard Business Review 79, no. 1 (January
2001): 14247; Jack Kondrasuk, Mary Riley, and Wang Hua, If We Want to Pay for Performance, How Do We Judge Performance? Journal of Compensation
and Benefits 15, no. 2 (September/October 1999): 3540; Mary Graybill, From Paper to Computer, The Human Resource Professional 13, no. 6 (November/
December 2000): 1819; David W. Bracken, Lynn Summers, and John Fleenor, High-Tech 360, Training and Development 52, no. 8 (August 1988): 4245;
Gary Meyer, Performance Reviews Made Easy, Paperless, HRMagazine 45, no. 10 (October 2000): 18184.

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Figure
8.5a

Pros and Cons of 360-Degree

CONS
Appraisal

The system is complex in combining all the responses.

Feedback can be intimidating and cause resentment if
employee feels the respondents have ganged up.

There may be conflicting opinions, though they may all be

accurate from the respective standpoints.
The system requires training to work effectively.
Employees may collude or game the system by giving invalid
evaluations to one another.
Appraisers may not be accountable if their evaluations are
anonymous.

Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, Has 360-Degree Feedback Gone Amok? Academy of Management
Executive 12, no. 2 (May 1998): 8694; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, Does 360-Degree Feedback Negatively Affect Company
Performance? HRMagazine 47, no. 6 (June 2002): 5459; Maury Peiperl, Getting 360-Degree Feedback Right, Harvard Business Review 79, no. 1 (January
2001): 14247; Jack Kondrasuk, Mary Riley, and Wang Hua, If We Want to Pay for Performance, How Do We Judge Performance? Journal of Compensation
and Benefits 15, no. 2 (September/October 1999): 3540; Mary Graybill, From Paper to Computer, The Human Resource Professional 13, no. 6 (November/
December 2000): 1819; David W. Bracken, Lynn Summers, and John Fleenor, High-Tech 360, Training and Development 52, no. 8 (August 1988): 4245;
Gary Meyer, Performance Reviews Made Easy, Paperless, HRMagazine 45, no. 10 (October 2000): 18184.

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Figure
8.5b

360-Degree Performance
Appraisal System Integrity
Safeguards

Assure anonymity.
Make respondents accountable.
Prevent gaming of the system.
Use statistical procedures.
Identify and quantify biases.

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Training Performance
Appraisers
Common rater-related
errors

Error of central tendency

Leniency or strictness errors
Similar-to-me errors
Recency errors
Contrast and halo errors
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Rater Errors

Error of Central Tendency

Leniency or Strictness Error

A rating error in which all employees are

rated about average.
A rating error in which the appraiser tends
to give all employees either unusually high
or unusually low ratings.

Recency Error

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A rating error in which

appraisal is based
823

Rater Errors

Contrast Error

A rating error in which an employees

evaluation is biased either upward or
downward because of comparison with
another employee just previously
evaluated.

Similar-to-Me Error

An error in which an appraiser inflates the

Copyright evaluation
2004
of an employee because of a
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mutual personal connection.

Trait Methods

Graphic Rating
Scale

Mixed
Standard Scale

Trait
Methods

Forced-Choice

Essay
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Trait Methods

Graphic Rating-Scale Method

A trait approach to performance appraisal

whereby each employee is rated according
to a scale of individual characteristics.

Mixed-Standard Scale Method

An approach to performance appraisal

similar to other scale methods but based
on comparison with (better than, equal to,
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worse than) a standard.

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GRAPHIC RATING SCALE

It is the oldest and most popular methods of

evaluation.
In this method a set of performance factors
like quantity and quality of work,
depth of knowledge, cooperation, loyalty,
attendance, honesty and initiative are listed.
The appraiser has to mark them each on a
scale of 1 to 5 where 1 is poorly informed and
5 shows complete mastery of all phases of
work.

Graphic Rating
Scale With
Provision For
Comments

HRM

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Trait Methods

Forced-Choice Method

Requires the rater to choose from

statements designed to distinguish
between successful and unsuccessful
performance.

Essay Method

Requires the rater to compose a statement

describing employee behavior.

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Example Of A Mixed-standard Scale

HRM 3Copyright 2004

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WRITTEN ESSAY

In the essay method approach, the appraiser

prepares a written statement about the
employee being appraised.
Describes specific strengths and weaknesses
in job performance.
Suggest remedy as well.
It is the simplest method of appraisal as it is
a narrative describing employees strengths,
weaknesses, past performances, potential
and suggestions for improvement.

Behavioral Methods
Critical Incident
Behavioral Checklist

Behavioral
Methods

Behaviorally Anchored
Rating Scale (BARS)
Behavior Observation
Scale (BOS)

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Behavioral Methods

Critical Incident

An unusual event denoting superior or

inferior employee performance in some
part of the job.

Behaviorally Anchored Rating Scale

(BARS)

A performance appraisal that consists of a

series of vertical scales, one for each
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Examples Of A Bars For Municipal Fire Companies

FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.

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AllAssociates. Reprinted with permission.
Source: Adapted
from Landy, Jacobs, and
rights reserved.

HRM 4
834

Sample Items From Behavior Observation Scales

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HRM 0
835

Results Methods

Management by Objectives (MBO)

A philosophy of management that rates

performance on the basis of employee
achievement of goals set by mutual
agreement of employee and manager.

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Performance Appraisal under an MBO Program

Management by Objectives

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Figure
8.6
837

Summary of Appraisal
Methods
TRAITS

BEHAVIOR

RESULTS

ADVANTAGES

DISADVANTAGES

Inexpensive
Meaningful
Easy to use

Potential for error

Poor for counseling
Poor for allocating rewards
Poor for promotional decisions

Specific dimensions
Accepted by employees
Useful for feedback
OK for reward/promotion

Time consuming
Costly
Some rating error

Less subjectivity bias

Accepted by employees
Performance-reward link
Encourages goal setting
Good for promotion
decisions

Time consuming
Focus on short term
Criterion contamination
Criterion deficiency

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Presentation
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The Balanced
Scorecard

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Source: Robert
Kaplan and David
Norton, Strategic
HRM 6
Learning and the
Balanced

Personal
Scorecard

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Robert Kaplan
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the Balanced
Scorecard

and David Norton, Using

840
as a Strategic

HRM 7

Summary of Appraisal
Methods

Trait Methods

Advantages

Are inexpensive to develop

Use meaningful dimensions
Are easy to use

Disadvantages

Have high potential for rating errors

Are not useful for employee counseling
Are not useful for allocating rewards
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Are not useful for promotion
decisions
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841

Figure
8.7a

Summary of Appraisal
Methods (contd)

Behavioral Methods

Advantages

Use specific performance dimensions

Are acceptable to employees and superiors
Are useful for providing feedback
Are fair for reward and promotion decisions

Disadvantages

Can be time-consuming to develop/use

Can be costly to develop
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Have some potential
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842for rating error

Figure
8.7b

Summary of Appraisal
Methods (contd)

Results Methods

Advantages

Have less subjectivity bias

Are acceptable to employees and superiors
Link individual to organizational performance
Encourage mutual goal setting
Are good for reward and promotion decisions

Disadvantages
Are time-consuming to develop/use
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encourage
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May
short-term perspective
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May
use contaminated criteria

Figure
8.7c

RESULT METHOD

MBO (management by objectives) methods of

performance appraisal are results-oriented.
That is, they seek to measure employee
performance by examining the extent to
which predetermined work objectives have
been met.
Once an objective is agreed, the employee is
usually expected to self-audit; that is, to
identify the skills needed to achieve the
objective. After that They are expected to
monitor their own development and progress

BEHAVIOURALLY ANCHORED
RATING SCALE

BARS combine elements from critical incident

and graphic rating scale approaches.

The appraiser rates the employees based on

items along a continuum, but the points are
the examples of actual behavior rather than
general traits or descriptions.

Graphic rating scales:

BARS improvement

Behaviorally Anchored Rating Scales

(BARS)

Use critical incidents as anchors

Involves multiple groups of employees in
development

Identify important job elements

Describe critical incidents at various levels of
performance
Check for inter-rater reliability

Behaviorally Anchored Rating Scales

(BARS) = Has behavior anchors

1. List critical incidents

2.Critical incidents retranslated to
dimensions.
3.Cluster Dimensions
4. Critical incidents rated on 5,7, 9 (?) point
scale
5. Critical incidents worded as expectations

IMPROVING APPRAISAL

Emphasize Behavior Rather Than Traits

Recording Performance Behavior Periodically
Using Multiple Evaluators
Evaluate Selectively
Provide employees with Due process
Appraiser Credibility
360 Degree Feedback.

PERFORMANCE INTERVIEW

After the performance appraisal is done ,

a performance interview is done. Here,
the raters meet the concerned employee
and discuss and review his performance
so that they will receive feedback about
where they stand in the eyes of their
superiors.

PERFORMANCE INTERVIEW

(i)

(ii)
(iii)

Performance interview has 3 main goalsTo change behavior that does not meet
organizational requirements or employees
personal goals.
To maintain the behavior of employees who
has performed in an acceptable manner.
To recognize superior performance
behaviors so that they will be continued.

APPRAISAL DATA
1.
2.
3.

4.
5.

6.

Remuneration administration
Validation of selection programs
Employee training and development
programs
Promotion, transfer and lay-off decisions
Grievance and discipline programs
HR planning

SOME OTHER METHODS

CRITICAL INCIDENTS

This method involves focusing the evaluators

attention on the behaviors that are key in
making the difference between executing a
job effectively and ineffectively
The appraiser writes down anecdotes that
describe what the employee did that was
especially effective or ineffective
The list of critical incidents so formed
provides the behavior that are desirable and
those that call for improvement.

CASE

Mr. Jackie Shroff is a new recruit in your factory,

Shroffs given confirmation letter,
He has filled out the necessary forms
Taken to the Personnel Manager for a formal welcome.
HR tells Jackie Shroff that in case he ever has a problem, he can
come to the former.
Monthly review meetings: Jackie Shroffs progress.
The production team feels he is very responsible and a
committed workman
Takes initiative in leading teams and coming up with good
Kaizens.
He is proving to be a good sportsman too, proved in a match.

CASE
2 months later:

Production officers say that Jackie Shroff has started lessening

his involvement

While he is still doing an excellent job on the shop-floor,

somehow his motivation seems to have decreased.

Weekly review meeting

Personnel Manager delegates this job to you.

HR manager calls Mr. Jackie Shroff and ask him what is wrong.
His answer was nothing.

You speak to a few informers on the shop-floor and find out

that some workmen have been telling Jackie to behave like the
rest of them and not show-off to the management as being
extra smart.
Being new, he feels scared to take initiative and has decided to
be like the rest of them. You decide to counsel him, explain the
steps and approach you will follow.

Problem
Need
Needs to perform
well

Drive
Self esteem,
Social needs

Barrier

Goal

Co workers
pressure

Frustration
Defense Mech.

Withdrawal
from motivation
Compromise

SOLUTION

SOLUTION
Counseling of
Mr. Jackie
Acts as a role model
Leads to better performance
Of other team members
Counseling of other
Team members
Appraisal of other
Team members

THANK YOU