You are on page 1of 8

Performance Appraisal: Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth

of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. According to Flippo, a prominent personality in the field of Human resources, performance appraisal is the systematic, periodic and an impartial rating of an employees 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 an employee during a given period of time and planning for his future. 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. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the managements interest in the progress of the employees. 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

Process of Performance Appraisal: Establishing Performance Standards: The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards. Communicating the Standards: Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

Measuring the Actual Performance: The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. Comparing the Actual with the Desired Performance: The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance. Discussing the Results: The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. Decision Making: The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc. 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. According to a recent survey, the percentage of organizations (out of the total organizations 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)

Pre-requisites for Effective & Successful Performance Appraisal: The essentials of an effective performance system are as follows: Documentation means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings. Standards / Goals the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. Practical and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information. Evaluation technique An appropriate evaluation technique should be selected; the appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the behavior of the employee. Communication Communication is an indispensable part of the Performance appraisal process. The desired behavior or the expected results should be communicated to the employees as well as the evaluators. Communication also plays an important role in the review or feedback meeting. Open communication system motivates the employees to actively participate in the appraisal process. Feedback The purpose of the feedback should be developmental rather than judgmental. To maintain its utility, timely feedback should be provided to the employees and the manner of giving feedback should be such that it should have a motivating effect on the employees future performance. Personal Bias Interpersonal relationships can influence the evaluation and the decisions in the performance appraisal process. Therefore, the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively. How to Complete Performance Appraisal Form: Performance appraisal form provides the basis for the performance review, providing the feedback to the employees and the final rating of the employee. It also facilitates various other HR decisions and career development plans and decisions of the employees. Therefore, performance appraisal from should be filled with utmost care and objectivity. The Performance appraisal form should be filled by the immediate supervisor or manager of the employee in order to ensure that the appraiser if fully acquainted with the performance, responsibilities, targets and standards of the employee. All the instructions and guidelines on the appraisal form should be read and followed carefully. Be prepared with all the details of the performance, the standards, job description and the past appraisals of the employee. Clear and unambiguous description of the employee performance should be given in terms of average, above average, good and excellent performance.

The focus should be on the employees behavior throughout the year and not just his recent performance. Quantify the ratings, wherever possible, to ensure easy comparability. Substantiate and support your rating, and attach all the necessary documents (if required). Apart from the defined performance objectives and results, discuss the related issues as well covering all the aspects of the performance. When filling the appraisal form, be honest and objective.

Performance Appraisal for Employees at Different Levels: Performance appraisal is important for employees at all levels throughout the organization. The parameters, the characteristics and the standards for evaluation may be different, but the fundamentals of performance appraisal are the same. But as the level of the employees increases, performance appraisal is more effectively used as the tools of managing performance. Performance appraisal of Managers: Appraising the performance of managers is very important, but at the same time, it is one of the most difficult tasks in the organization. It is difficult because most of the managerial work cannot be quantified i.e. it is qualitative in nature like leading his/her team, guiding, motivating, planning etc. Therefore, the two things to be noted and evaluated for the purpose of appraisals are: Performance in accomplishing goals Performance as managers Performance in accomplishing goals: Managers are responsible for the performance of their teams as a whole. Performance in accomplishing goals would mean to look at the completion or achievement of the goals set for a team of employees which is being assigned to or working under a particular manager. The best measuring criteria for a manager are hi goals, his plans of course of action to achieve them and the extent of achievement of the goals. Performance as managers: The responsibilities of managers include a series of activities which are concerned with planning, organizing, directing, leading, motivating and controlling. Managers can be rated on the above parameters or characteristics Criteria for measuring performance at different levels: The criteria for measuring performance changes as the levels of the employees and their roles and responsibilities change. A few examples for each level are described below: For top level management Degree of organizational growth and expansion Extent of achievement of organizational goals Contribution towards the society Profitability and return on capital employed For middle level managers Performance of the departments or teams Co-ordination with other departments Optimal use of resources Costs Vs. revenues for a given period of time

The communication with superiors and subordinates

For front line supervisors Quantity of actual output against the targets Quality of output against the targets Number of accidents in a given period Rate of employee absenteeism Performance Appraisal Feedback: Performance appraisal process is incomplete without the feedback given to the employee about his appraisal and his performance. But the way of giving as well as receiving the feedback differs from person to person and their way of handling and their outlook towards the issue. According to a popular saying: A Successful man is one who can lay a firm foundation with the bricks others have thrown at him. Therefore, On the part of the person receiving the feedback, the following points are important to be taken care of: The employee should have a positive attitude towards the feedback process He should listen to the suggestions of the appraiser calmly and try to incorporate them in his plans He should not hesitate to ask for the help of his superiors Should have a co-operative attitude during the feedback meeting Dont judge the appraiser as a person Should take the feedback objectively Should not judge the appraiser as a person on the basis of the feedback On the part of the appraiser or the manager / person giving the feedback, the following points are to be taken care of: The appraiser should make the receiver feel comfortable during the feedback meeting. The appraiser should make it a two way conversation i.e. let the employee speak. Listen to the employee and note his points, suggestions, problems etc. The appraiser should not adopt a confrontational approach towards the meeting. The goal is not to criticize the employee. Provide a constructive feedback to the employee i.e. in a way which will motivate him to perform better. Have a positive attitude towards the process Try to understand the reasons of his failure. Be fair and objective Prepare yourself for what to say and how to say. Make the appraisal feedback meeting useful and productive for the organization and the employee. Self Appraisal Form: Self appraisal is the self evaluation where the employee himself gives the feedback or his views and points regarding his performance. The employee himself critically analyses the performance, his strengths, weaknesses, accomplishments, problems faced, the training and development needs (if any) etc. The self appraisal form generally starts with the employee details like: The name of the employee Designation Date of joining Date of last appraisal Department

Reporting officer

The next section is, commonly, designed to gather the information from the employee regarding his on-the-job performance and his responsibilities: The current responsibilities held by the employee Accomplishments Goals for the next appraisal period Areas for improvement Training requirements felt for the present job Responsibilities the employee would like to add to his current responsibilities Problems faced Solutions tried Measures taken for personal and professional development Best and worst aspects of the job Is the superior supportive The form also includes a section where the employee rates himself on various behavioral parameters like: Communication skills Inter-personal skills Problem-solving Team work Adaptability/Flexibility Initiative Decision Making Leadership Maturity The self appraisal form also includes a section where the employee can quote examples and incidents to support his ratings and answers. The self appraisal form generally ends with a subjective section asking for suggestions and the choice of discussing any other topic that the employee feels the need to raise and discuss. Potential Appraisal Form: Potential appraisal is an important part of the appraisal process. Appraising an employees potential helps to evaluate and his/her capability for growth and development to greater challenges, responsibilities and positions in the organizational hierarchy. Most organizations incorporate potential appraisal in their appraisal processes for identifying and developing suitable employee base for succession planning. This Performance appraisal concentrates on the future, based on the performance of the past and helps in developing the personal interests of the employees in alignment to the organizational goals. With the help of the potential appraisal form, the employees/ individuals are judged on various performance and behavioral parameters like: The performance areas in which the improvement or development is indicated. The accomplishments and the targets achieved in the current appraisal period Overall rating of the performance What skills, knowledge, competencies and qualities should be developed? Has the employee taken any steps for improving his performance and his career development? Recommendations for the training and development of the employee Updating knowledge on the latest developments on their job related and subject areas.

Rate the employee on the following characteristics or how does the employee fair on following behavioral characteristics: Decision making Independent Confidence towards the job Handling stress and pressure Inter-personal skills, both with superiors and subordinates Leadership, motivating and conflict handling

The past performance of the employee and the potential of performing in future helps to identify the hidden talents. FAQs about Performance Appraisal Program: Q. What is the purpose of performance appraisals? Performance appraisals help to strategically review the performance of the employees, their strengths, weaknesses and accomplishments during the year. Performance appraisal allows deciding the goals, objectives and the desired performance standards for the employee for the upcoming year. Q. How should the self appraisal be used? Self appraisal or self evaluation is the review of the performance by the employee himself. The self evaluation should be discussed with the employee and if appropriate, should be incorporated in the final rating. Q. Is there any comprehensive formula to calculate the overall rating? No, there is no comprehensive formula for doing so. The overall rating should be based on a number of factors like the extent of goals achieved, the overall performance of the employee, his competencies etc. Q. How should the ratings be given if there has been a change of supervisor or manager during the period of the appraisal? To complete the Performance appraisal subjectively and fairly, it is advised to consult the previous supervisor or manager. If this is not possible, consult the supervisors superior to get his views and inputs. Q. How can input/feedback be collected for the appraisal process? Different input forms can be used for taking the feedback from the various sources like the superior, peers, customers, vendors and the employee himself. All the perspectives thus received should be combined in the appropriate manner and to get an overall, complete view of the employees performance. Observation can also be exercised by the superior to obtain information. Q. What if the employee refuses to agree or/and accept the review? First of all, ensure that the employee has got a chance to review his completed appraisal form. If the employee refuses to accept his appraisal, try to sort out the problem by discussing his reasons of dissatisfaction with him calmly. If the employee refuses to co-operate, then pass the documents to the HR department with a note on it that the employee has refused to accept and let them take the necessary action. Q. How do you deal with an average or a non-performer? Provide constructive feedback and try to motivate the employee.

Keep the focus on the performance, not the personality of the employee. Provide training and development opportunities to the employee Discuss and take the employees inputs on how to solve the problem. Plan the course of action and standards in agreement with the employee. If no improvement takes place, inform the human resources or your superior about the problem.

Q. Should the review be confidential? The Individual performance reviews should be kept confidential and should not be accessible to other employees. They should also be stored at a safe place with limited access. Outdated reviews should be destroyed. The appraisal can also be kept as a part of the HR records of the employee.