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Chapter 1

Performance Appraisal
Definition and concept
According to Flippo, a prominent personality in the field of Human resources, “performance
appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the
matters pertaining to his present job and his potential for a better job." Performance appraisal is a
systematic way of reviewing and assessing the performance of employees during a given period
of time and planning for his future.
Performance Appraisal is an objective system to judge the ability of an individual employee to
perform his tasks. A good performance appraisal system should focus on the individual and his
development, besides helping him to achieve the desired performance. This means that while the
results are important the organization should also examine and prepare its human capital to
achieve this result. This holds true even for new inductees. There is a strong linkage between
induction, training and appraisal. In a large number of firms worldwide, a new recruit is expected
to discuss his schedule of work in achieving his induction objective
It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to
analyze his achievements and evaluate his contribution towards the achievements of the overall
organizational goals.
Performance appraisal: An opportunity for an organizational culture shift
• Performance appraisal process focuses on the goal setting approach throughout the
organization.

• Performance appraisal helps the clarity and understanding of the roles and responsibilities
of the employees.

• The performance appraisal processes have the potential positive effects on recruitment

• It increases organizational effectiveness i.e. what to do and how to do through a formal


and structured approach.

• Some evidence of the beneficial effects of team rewards


Therefore, performance appraisal is also an important link in the process of change in
organization culture.

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Chapter 2
OBJECTIVES OF Performance appraisal:

• To review the performance of the employees over a given period of time.

• To judge the gap between the actual and the desired performance.

• To help the management in exercising organizational control.

• Helps to strengthen the relationship and communication between superior – subordinates


and management – employees.

• To diagnose the strengths and weaknesses of the individuals so as to identify the training
and development needs of the future.

• To provide feedback to the employees regarding their past performance.

• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be performed


by the employees.

• To judge the effectiveness of the other human resource functions of the organization such
as recruitment, selection, training and development.

• To reduce the grievances of the employees.

Almost all organizations practice performance appraisal in one form or another to achieve certain
objectives. These objectives may vary from organization to organization or even within the same
organization from time to time. It has been found that there are two primary objectives behind
the use of this methodology. One is to use it as an evaluation system and second,
The aim of the evaluation system is to identify the performance gap. This means that it helps
determine the gap between the actual performance of the employee and that required or desired
by the organization.
The aim of the feedback system is to inform the employee about the quality of his work or
performance. This is an interactive process by which the employee can also speak about his
problems to his superior.
An effective performance appraisal system should emphasis individual objectives, organizational
objectives and also mutual objectives. From the viewpoint of individual objective the
performance appraisal should talk about
a) What task the individual is expected to do?
b) How well the individual has done the task?
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c) How can his performance be further improved?
d) His reward for doing well.
From the organizational view point a performance appraisal should generate manpower
information, improve efficiency and effectiveness serve as a mechanism of control and provide a
rational compensation structure. In short the appraisal system establishes and upholds the
principle of accountability in the absence of which organization failure is the only possible
outcome.
Finally, talking about mutual goals, the emphasis is on growth and development, harmony,
effectiveness and profitability.
Chapter 3
Purpose Of Performance Appraisal

Performance Appraisal is being practiced in 90% of the organizations worldwide. Self-


appraisal and potential appraisal also form a part of the performance appraisal processes.

Typically, Performance Appraisal is aimed at:

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control.

To diagnose the training and development needs of the future.

Provide information to assist in the HR decisions like promotions, transfers etc.

Provide clarity of the expectations and responsibilities of the functions to be performed by


the employees.

To judge the effectiveness of the other human resource functions of the organization such
as recruitment, selection, training and development.

To reduce the grievances of the employees.

Helps to strengthen the relationship and communication between superior – subordinates


and management – employees.

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According to a recent survey, the percentage of organisations (out of the total organisations
surveyed i.e. 50) using performance appraisal for the various purposes are as shown in the
diagram below:

The most significant reasons of using Performance appraisal are:

• Making payroll and compensation decisions – 80%

• Training and development needs – 71%

• Identifying the gaps in desired and actual performance and its cause – 76%

• Deciding future goals and course of action – 42%

• Promotions, demotions and transfers – 49%

Other purposes – 6% (including job analysis and providing superior support, assistance and
counseling)

Chapter 4

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Techniques in performance appraisal
Encourage Discussion
Research studies show that employees are likely to feel more satisfied with their appraisal result
if they have the chance to talk freely and discuss their performance. It is also more likely that
such employees will be better able to meet future performance goals.
Employees are also more likely to feel that the appraisal process is fair if they are given a chance
to talk about their performance. This is especially so when they are permitted to challenge and
appeal against their evaluation.

Constructive Intention
It is very important that employees recognize that negative appraisal feedback is provided with a
constructive intention, i.e., to help them overcome present difficulties and to improve their future
performance. Employees will be less anxious about criticism, and more likely to find it useful,
when the believe that the appraiser's intentions are helpful and constructive.
In contrast, other studies have reported that "destructive criticism" - which is vague, ill-
informed, unfair or harshly presented - will lead to problems such as anger, resentment, tension
and workplace conflict, as well as increased resistance to improvement, denial of problems, and
poorer performance.

Set Performance Goals


It has been shown in numerous studies that goal-setting is an important element in employee
motivation. Goals can stimulate employee effort, focus attention, increase persistence, and
encourage employees to find new and better ways to work.
The useful of goals as a stimulus to human motivation is one of the best supported theories in
management. It is also quite clear that goals which are "...specific, difficult and accepted by
employees will lead to higher levels of performance than easy, vague goals (such as do your
best) or no goals at all."
Appraiser Credibility
It is important that the appraiser (usually the employee's supervisor) be well-informed and
credible. Appraisers should feel comfortable with the techniques of appraisal, and should be
knowledgeable about the employee's job and performance.
When these conditions exist, employees are more likely to view the appraisal process as accurate
and fair. They also express more acceptances of the appraiser's feedback and a greater
willingness to change

Questionnaire related to performance appraisal


Q. Is there any comprehensive formula to calculate the overall rating?

Q. What if the employee refuses to agree or/and accept the review?

Q. How do you deal with an average or a non-performer?

Q. Should the review be confidential?

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Q. How should the ratings be given if there has been a change of supervisor or manager during
the period of the appraisal? How can input/feedback be collected for the appraisal process

Chapter 5

Chapter 6
Methods of Performance Appraisal
In order to achieve the objectives, a variety of performance appraisal methods have been
developed. The choice of method depends on organizational ethos, its objectives, size, product
and technology.
There are two type of performance appraisal method
1. Traditional method
2. Modern method

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Traditional method
Essay Method

In the essay method approach, the appraiser prepares a written statement about the employee
being appraised.

The statement usually concentrates on describing specific strengths and weaknesses in job
performance. It also suggests courses of action to remedy the identified problem areas.

The statement may be written and edited by the appraiser alone, or it be composed in
collaboration with the appraisee.

Advantages
The essay method is far less structured and confining than the rating scale method. It permits the

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appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply
with methods where the appraisal criteria are rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they feel
appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an
appraisal system the limits expression or assumes that employee traits can be neatly dissected
and scaled.
Disadvantages
Essay methods are time-consuming and difficult to administer. Appraisers often find the essay
technique more demanding than methods such as rating scales.

The techniques greatest advantage - freedom of expression - is also its greatest handicap. The
varying writing skills of appraisers can upset and distort the whole process. The process is
subjective and, in consequence, it is difficult to compare and contrast the results of individuals or
to draw any broad conclusions about organizational needs.
Straight ranking method
It is the oldest and the simplest method of performance appraisal, by which the man and
his performance are considered as an entity by the rater. That is the ranking of a man in a work
group is done against that of another. The relative position of each man is tested in terms of his
numerical rank. It may also be done by ranking a person on his job performance against that of
another member of a competitive group by placing him as number one or two or three in total
group i.e. persons are tested in order of merit and placed in a simple grouping.
This is the simplest method of separating the most efficient from the least efficient: and relatively
easy to develop and use. But there are also some limitations to it:
In practice it is very difficult to compare a single individual with human beings having varying
behavior.
The method only tells us how a man stands in relation to the others in the group but odes not
indicate how much better or worse he is than another.
PAIRED COMPARISON
A better technique of comparison than the straight ranking method, this method compares each
employee with all others in the group, one at a time. After all the comparisons on the basis of the
overall comparisons, the employees are given the final rankings.
This is an improvement over the straight ranking method. By this technique, each employee is
compared with all other persons in pairs one at a time. With this technique, judgment is easier
and simpler than with the ordinary ranking method. The number of times each individual is
compared with another is tallied on a piece of paper. These numbers yield the rank order of the
entire group. For example, if there are five persons to be compared, then A’s performance is
compared to B’s and decision is arrived at as to whose performance is better. Then A is compared
to C, D, E… in that order. Next B is compared with all the others individually. Since he has
already been compared with A, he is compared only with C, D, and E. A similar comparison is
made in respect of other personnel. Thus, by this method, we arrive at ten decisions, and only
two are involved in each decision. The number of decisions is determined by the formula N (N-
2), where N represents the number of persons to be compared.

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CRITICAL INCIDENTS METHODS
In this method of Performance appraisal, the evaluator rates the employee on the basis of critical
events and how the employee behaved during those incidents. It includes both negative and
positive points. The drawback of this method is that the supervisor has to note down the critical
incidents and the employee behavior as and when they occur this method was developed
following research conducted by the armed forces in the United States during World War II. The
essence of this system is that it attempts to measure worker’s performance in terms of certain
’events’ or ‘episodes’ that occur in the performances of the rate’s job. These events are known as
Critical incidents. The basis of this method is the principle that ”there are certain significant acts
in each employee’s behavior and performance which make all the difference between success
and failure on the job”. The supervisor keeps a written record of the events (either good or bad)
that can easily be recalled and used in the course of a periodical or formal appraisal. Feedback is
provided about the incidents during performance review session. Various behaviors are recorded
under such categories as the type of job, requirements for employees, judgment, learning ability,
productivity, and precision in work, responsibility and initiative. Say for example, a sales
manager may be trained to look for and recognize the following critical incidents in a sales
agent's performance: He treated a customer in a markedly impolite fashion; He helped a buyer to
prepare an unusually difficult purchase order He rejected a customer who was asking for a
discount for bulk purchase He failed to return an important phone call; and These critical
incidents are discovered after a thorough study of the personnel working on a job. The collected
incidents are than ranked in order of frequency and importance.

Field REVIEW
In this method, a senior member of the HR department or a training officer discusses and
interviews the supervisors to evaluate and rate their respective subordinates. A major drawback
of this method is that it is a very time consuming method. But this method helps to reduce the
superiors’ personal bias.

CHECKLIST METHOD
The rater is given a checklist of the descriptions of the behaviour of the employees on job. The
checklist contains a list of statements on the basis of which the rater describes the on the job
performance of the employees.

GRAPHIC RATING SCALE


In this method, an employee’s quality and quantity of work is assessed in a graphic scale
indicating different degrees of a particular trait. The factors taken into consideration include both
the personal characteristics and characteristics related to the on-the-job performance of the
employees. For example a trait like Job Knowledge may be judged on the range of average,
above average, outstanding or unsatisfactory.

FORCED DISTRIBUTION
To eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute the
employees in some fixed categories of ratings like on a normal distribution curve. The rater

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chooses the appropriate fit for the categories on his own discretion. broad conclusions about
organizational needs.
Modern method
The modern approach to performance development has made the performance appraisal process
more formal and structured. Now, the performance appraisal is taken as a tool to identify better
performing employees from others, employees’ training needs, career development paths,
rewards and bonuses and their promotions to the next levels.

Appraisals have become a continuous and periodic activity in the organizations. The results of
performance appraisals are used to take various other HR decisions like promotions, demotions,
transfers, training and development, reward outcomes. The modern approach to performance
appraisals includes a feedback process that helps to strengthen the relationships between
superiors and subordinates and improve communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is


developmental in nature. This recognizes employees as individuals and focuses on their
development.

Management by Objectives (MBO)

The use of management objectives was first widely advocated in the 1950s by the noted
management theorist Peter Drucker.
MBO is a process in which managers and their employees jointly set objectives for the
employee, periodically evaluate the performance, and reward according to the results
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.
Usually the objectives are established jointly by the supervisor and subordinate. An example of
an objective for a sales manager might be: Increase the gross monthly sales volume to $250,000
by 30 June.

Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the
skills needed to achieve the objective. Typically they do not rely on others to locate and specify
their strengths and weaknesses. They are expected to monitor their own development and
progress.
Advantages
The MBO approach overcomes some of the problems that arise as a result of assuming that the
employee traits needed for job success can be reliably identified and measured. Instead of
assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or
exceeds the set objectives, then he or she has demonstrated an acceptable level of job
performance. Employees are judged according to real outcomes, and not on their potential for
success, or on someone's subjective opinion of their abilities.

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The guiding principle of the MBO approach is that direct results can be observed, whereas the
traits and attributes of employees (which may or may not contribute to performance) must be
guessed at or inferred.
The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and
varied elements that go to make up employee performance.
MBO advocates claim that the performance of employees cannot be broken up into so many
constituent parts - as one might take apart an engine to study it. But put all the parts together and
the performance may be directly observed and measured.

Disadvantages
MBO methods of performance appraisal can give employees a satisfying sense of autonomy and
achievement. But on the downside, they can lead to unrealistic expectations about what can and
cannot be reasonably accomplished.
Supervisors and subordinates must have very good "reality checking" skills to use MBO
appraisal methods. They will need these skills during the initial stage of objective setting, and for
the purposes of self-auditing and self-monitoring.
Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills
needed to do their own "reality checking". Nor are these skills easily conveyed by training.
Reality itself is an intensely personal experience, prone to all forms of perceptual bias.
One of the strengths of the MBO method is the clarity of purpose that flows from a set of well-
articulated objectives. But this can be a source of weakness also. It has become very apparent
that the modern organization must be flexible to survive. Objectives, by their very nature, tend to
impose a certain rigidity.
Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty
for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also
possible that fluid objectives may be distorted to disguise or justify failures in performance.
360-Degree-Performance-Appraisals
In human resources or industrial/organizational psychology, 360-degree feedback, also known
as 'multi-rater feedback', 'multisource feedback', or 'multisource assessment', is employee
development feedback that comes from all around the employee. "360" refers to the 360 degrees
in a circle. The feedback would come from subordinates, peers, and managers in the
organizational hierarchy, as well as self-assessment, and in some cases external sources such as
customers and suppliers or other interested stakeholders. It may be contrasted with upward
feedback, where managers are given feedback by their direct reports, or a traditional
performance appraisal, where the employees are most often reviewed only by their manager.
The results from 360-degree feedback are often used by the person receiving the feedback to
plan their training and development. The results are also used by some organizations for making
promotional or pay decisions, which are sometimes called "360-degree review." Self assessment
is an indispensable part of 360 degree appraisals and therefore 360 degree Performance
appraisal have high employee involvement and also have the strongest impact on behavior and
performance. It provides a "360-degree review" of the employees’ performance and is
considered to be one of the most credible performance appraisal methods.

360 degree appraisal is also a powerful developmental tool because when conducted at regular
intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the

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employees. A 360 degree appraisal is generally found more suitable for the managers as it helps
to assess their leadership and managing styles. This technique is being effectively used across
the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys,
and Reliance Industries etc

ASSESSMENT CENTRES -
An assessment centre typically involves the use of methods like social/informal events, tests and
exercises, assignments being given to a group of employees to assess their competencies to take
higher responsibilities in the future. Generally, employees are given an assignment similar to the
job they would be expected to perform if promoted. The trained evaluators observe and evaluate
employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centers are interpersonal skills,
intellectual capability, planning and organizing capabilities, motivation, career orientation etc.
assessment centers are also an effective way to determine the training and development needs of
the targeted employees
The assessment center concept was initially applied to military situations by the German Army
in 1930s.the most important feature of this method is job related simulations or mock situations.
These simulations involve characteristics that managers feel are important for job success. The
evaluators observe and evaluate participants as they perform activities commonly found in these
higher-level jobs.

Some of the other features of this system are:


1. The use of situational exercises (such as in-basket exercise, a role-playing incident and
leaderless group discussion);
2. Evaluations are drawn from experienced managers with proven ability at different levels of
management;
3. They evaluate all employees, both individually and collectively, and each candidate is given
one of the four categories; more than acceptable, less than acceptable and unacceptable;
4. The members prepare a summary report, and a feedback on face-to-face basis is administered
to all the candidates who ask for it.

The major limitations are:


1. It is a time consuming process.
2. A relatively expensive process.
3. Assessment center rating are said to be strongly influenced by participants interpersonal
skills.
An assessment centre for Performance appraisal of an employee typically includes:

• Social/Informal Events – An assessment centre has a group of participants and also a


few assessors which gives a chance to the employees to socialize with a variety of
people and also to share information and know more about the organisation.

• Information Sessions – information sessions are also a part of the assessment centres.

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They provide information to the employees about the organisation, their roles and
responsibilities, the activities and the procedures etc.

• Assignments- assignments in assessment centers include various tests and exercises


which are specially designed to assess the competencies and the potential of the
employees. These include various interviews, psychometric tests, management games etc
all these assignments are focused at the target job.
The following are the common features of all assessment centres:

• The final results is based on the pass/fail criteria

• All the activities are carried out to fill the targeted job.

• Each session lasts from 1 to 5 days.

• The results are based on the assessment of the assessors with less emphasis on self-
assessment

• Immediate review or feedbacks are not provided to the employees.


An organization’s human resources can be a vital competitive advantage and assessment centre
helps in getting the right people in right places. The major competencies that are judged in
assessment centers are interpersonal skills, intellectual capability, planning and organizing
capabilities, motivation, career orientation etc. assessment centers are also an effective way to
determine the training and development needs of the targeted employees
BEHAVIORALLY ANCHORED RATING SCALES

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the
graphic rating scale and critical incidents method. It consists of predetermined critical areas of
job performance or sets of behavioral statements describing important job performance qualities
as good or bad (for e.g. the qualities like inter-personal relationships, adaptability and reliability,
job knowledge etc). These statements are developed from critical incidents.

In this method, an employee’s actual job behavior is judged against the desired behavior by
recording and comparing the behavior with BARS. Developing and practicing BARS requires
expert knowledge.

HUMAN RESOURCE ACCOUNTING METHOD

Human resources are valuable assets for every organization. Human resource accounting
method tries to find the relative worth of these assets in the terms of money. In this method the
Performance appraisal of the employees is judged in terms of cost and contribution of the
employees. The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs etc whereas their
contribution includes the total value added (in monetary terms). The difference between the cost
and the contribution will be the performance of the employees. Ideally, the contribution of the

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employees should be greater than the cost incurred on them.

Rating Scales

The rating scale is a performance appraisal form on which the manager simply checks off the
employee’s level of performance. Some of the possible areas evaluated include quantity of
work, quality of work, dependability, judgment, attitude, cooperation, and initiative

The rating scale method offers a high degree of structure for appraisals. Each employee trait or
characteristic is rated on a bipolar scale that usually has several points ranging from "poor" to
"excellent" (or some similar arrangement).
The traits assessed on these scales include employee attributes such as cooperation,
communications ability, initiative, punctuality and technical (work skills) competence. The
nature and scope of the traits selected for inclusion is limited only by the imagination of the
scale's designer, or by the organization's need to know.
The one major provision in selecting traits is that they should be in some way relevant to the
appraiser’s job. The traits selected by some organizations have been unwise and have resulted in
legal action on the grounds of discrimination.

Advantages
The greatest advantage of rating scales is that they are structured and standardized. This allows
ratings to be easily compared and contrasted - even for entire workforces.
Each employee is subjected to the same basic appraisal process and rating criteria, with the same
range of responses. This encourages equality in treatment for all appraises and imposes standard
measures of performance across all parts of the organization.
Rating scale methods are easy to use and understand. The concept of the rating scale makes
obvious sense; both appraisers and appraises have an intuitive appreciation for the simple and
efficient logic of the bipolar scale. The result is widespread acceptance and popularity for this
approach.

Disadvantages

Trait Relevance
Are the selected rating-scale traits clearly relevant to the jobs of all the appraises? It is inevitable
that with a standardized and fixed system of appraisal that certain traits will have a greater
relevance in some jobs than in others.
For example, the trait "initiative" might not be very important in a job that is tightly defined and
rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an
employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities
to use and display that particular trait. The relevance of rating scales is therefore said to be
context-sensitive. Job and workplace circumstances must be taken into account.
Systemic Disadvantage
Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the
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relevant indicators of employee performance. There is an assumption that all the true and best
indicators of performance are included, and all false and irrelevant indicators are excluded.
This is an assumption very difficult to prove in practice. It is possible that an employee's
performance may depend on factors that have not been included in the selected traits. Such
employees may end up with ratings that do not truly or fairly reflect their effort or value to the
organization. Employees in this class are systemically disadvantaged by the rating scale method.
Perceptual Errors
This includes various well-known problems of selective perception (such as the horns and halos
effect) as well as problems of perceived meaning.
Selective perception is the human tendency to make private and highly subjective assessments
of what a person is "really like", and then seek evidence to support that view (while ignoring or
downplaying evidence that might contradict it).
This is a common and normal psychological phenomenon. All human beings are affected by it.
In other words, we see in others what we want to see in them.
An example is the supervisor who believes that an employee is inherently good (halo effect) and
so ignores evidence that might suggest otherwise. Instead of correcting the slackening
employee, the supervisor covers for them and may even offer excuses for their declining
performance.
On the other hand, a supervisor may have formed the impression that an employee is bad (horns
effect). The supervisor becomes unreasonably harsh in their assessment of the employee, and
always ready to criticize and undermine them.
The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more subtle
manifestations, it can be a significant threat to the effectiveness and credibility of performance
appraisal.
Perceived Meaning
Problems of perceived meaning occur when appraisers do not share the same opinion about the
meaning of the selected traits and the language used on the rating scales.
For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting
work problems to a supervisor. To another appraiser, this might suggest an excessive
dependence on supervisory assistance - and thus a lack of initiative.
As well, the language and terms used to construct a scale - such as "Performance exceeds
expectations" or "Below average skill" - may mean different things to different appraisers.
Rating Errors
The problem here is not so much errors in perception as errors in appraiser judgment and
motive. Unlike perceptual errors, these errors may be (at times) deliberate.
The most common rating error is central tendency. Busy appraisers, or those wary of
confrontations and repercussions, may be tempted to dole out too many passive, middle-of-the-
road ratings (e.g., "satisfactory" or "adequate"), regardless of the actual performance of a
subordinate. Thus the spread of ratings tends to clump excessively around the middle of the
scale. This problem is worsened in organizations where the appraisal process does not enjoy
strong management support, or where the appraisers do not feel confident with the task of
appraisal.

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Chapter 7
Current Global Trends In Performance Appraisal Program
The performance appraisal process has become the heart of the human resource
management system in the organizations. Performance appraisal defines and measures
the performance of the employees and the organization as a whole. It is a tool for
accessing the performance of the organization.

The important issues and points concerning performance appraisal in the present world
are:

The focus of the performance appraisals is turning towards career development relying
on the dialogues and discussions with the superiors.

Performance measuring, rating and review systems have become more detailed,
structured and person specific than before.

Performance related pay is being incorporated in the strategies used by the


organisations.

Trend towards a 360-degree feedback system

The problems in the implementation of the performance appraisal processes are being
anticipated and efforts are being made to overcome them.

In India, the performance appraisal processes are faced with a lot of obstacles, the most
prominent being the lack of quantifiable indicators of the performance.

GLOBAL TRENDS

The emergence of following concepts and the following trends related to Performance
appraisal can be seen in the global scenario:

360 Degree Appraisal


360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive
appraisal where the feedback about the employees’ performance comes from all the
sources that come in contact with the employee on his job. Organisations are increasingly
using feedback from various sources such as peer input, customer feedback, and input

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from superiors. Different forms with different formats are being used to obtain the
information regarding the employee performance.

Team Performance Appraisal


According to a wall street journal headline, “Teams have become commonplace in U.S.
Companies”. Most of the performance appraisal techniques are formulated with individuals in
mind i.e. to measure and rate the performance of the individual employee. Therefore, with the
number of teams increasing in the organisations, it becomes difficult to measure and appraise
the performance of the team. The question is how to separate the performance of the team from
the performance of the employees. A solution to this problem that is being adopted by the
companies is to measure both the individual and the team performance. Sometimes, team based
objectives are also included in the individual performance plans.

Rank and Yank Strategy


Also known as the “Up or out policy”, the rank and yank strategy refers to the performance
appraisal model in which best-to-worst ranking methods are used to identify and separate the
poor performers from the good performers. Then the action plans and the improvement
opportunities of the poor performers are discussed and they are given to improve their
performance in a given time period, after which the appropriate HR decisions are taken. Some
of the organizations following this strategy are Ford, Microsoft and Sun Microsystems

Chapter 8
Performance Appraisal in Government Organizations
The commitment to the performance appraisal system in public organizations in India is
very low. Low commitment and lack of accountability are the major reasons for the low
institutionalization of the performance appraisal processes in government organizations.
Performance appraisal in most of the government enterprises is not directly linked to
rewards, training or promotions due to which the approach towards the whole process
remains unprofessional. There is a lack of the appropriate atmosphere and professional
approach towards the performance appraisal system and the objective of the whole
exercise is defeated.

The most common method of Performance appraisal that is used in most of the
government organizations is confidential report (popularly known as CR) written by the
superior of the employees.

The following are the major discrepancies found in the performance appraisal processes
being followed at the government organizations.
○ Most of the indicators used for measuring the performance the employees are not
quantifiable in nature, making it difficult to measure the performance.

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○ Due to the lack of accountability and job security, most government employees
have a laser faire attitude towards their work.

○ Unavailability of the job descriptions for many employees.

○ Most of the objectives in government organisations are unchallenging, unrealistic


and not timely reviewed and updated.

○ It is difficult to measure the average performance of the government employees.

○ Unprofessional and unstructured approach towards the process.

○ There is often a lot of bias and subjectivity involved in the ratings given by the
superiors.

○ Lack of complete information on appraisal forms due to expertise and relevant


training; often, the appraisals are not conducted on a regular basis.

○ In government organizations, team appraisal is often not possible.

Chapter 9
Conclusion
For an organization to be an effective organization and to achieve its goals, it is very important
to monitor or measure its’ and its employee performance on a regular basis. Effective
monitoring and measuring also includes providing timely feedback and reviews to employees
for their work and performance according to the pre-determined goals and standards and solving
the problems faced. Timely recognition of the accomplishments also motivates the employees
and help to improve the performance.

Measuring the performance of the employees based only on one or some factors can provide
with inaccurate results and leave a bad impression on the employees as well as the organization.
For example: By measuring only the activities in employee’s performance, an organization
might rate most of its employees as outstanding, even when the organization as a whole might
have failed to meet its goals and objectives. Therefore, a balanced set of measures (commonly
known as balanced scorecard) should be used for measuring the performance of the employee
Performance appraisal is also closely linked to other HR processes like helps to identify the
training and development needs, promotions, demotions, changes in the compensation etc. A
feedback communicated in a positive manner goes a long way to motivate the employees and
helps to identify individual career developmental plans. Based on the evaluation, employees can
develop their career goals, achieve new levels of competencies and chart their career
progression. Performance appraisal encourages employees to reinforce their strengths and
overcome their weaknesses. Performance appraisal is a formal exercise carried out for all
executives and workers/staff with respect to their contributions made towards the growth of the
organization. The aim is to measure the overall performance of an employee over a period of
time, usually one year, by his immediate supervisor so as to provide a feedback to the
employees and aid the management. Performance appraisal does not merely measure the
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performance of the people but has many other benefits. Performance appraisal helps
management to collect data on human resources and use it for enhancing responsiveness of the
organization. Since performance appraisal is done by people who have emotions, there will
always be some subjectivity. Though criterion could be stipulated, personal likings and biases
will influence the evaluation. Every assessor has a price expectation of a particular type of
behavior

Bibliography
• Thomas F. Patterson (1987) Refining Performance Appraisal.
http://www.joe.org/joe/1987winter/a5.html. Retrieved on 2007-01-18.
• Joyce Margulies Performance Appraisals.
• http://www.bnabooks.com.
• 1998, Archer North & Associatiates, Introduction to Performance Appraisal,
http://www.performance-appraisal.com
• http://appraisals.naukrihub.com/
• www.performance-appraisal
• www.wikipedia.com
• www.wikianswers.com

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