PERFORMANCE APPRAISAL

Performance appraisal is the systematic evaluation of employees with respect to their

performance on their job and their potential for development. In other words, it is the
process of measuring productivity in terms of efficiency and effectiveness.
It evaluates the contribution of each employee to the accomplishment of company’s
goals.

“A systematic and objective way of evaluating both

work related behaviour and potential of employees”
PERFORMANCE APPRAISAL FEATURES

• Systematic process
• Not just an evaluation
• Periodical, not an one shot deal
• Both past and future oriented activity
• Not a job evaluation
• Not limited to judging
• Both formal and infomal
PURPOSE OF PERFORMANCE APPRAISAL

• - Providing feedback to employees about their performance

• - Determining who gets promoted
• - Facilitating layoff or downsizing decisions
• - Encouraging performance improvement
• - Motivating superior performance
• - Setting and measuring goals
• - Counseling poor performers
PURPOSE OF PERFORMANCE APPRAISAL
• - Determining compensation changes
• - Encouraging coaching and mentoring
• - Supporting manpower planning or succession planning
• - Determining individual training and development needs
• - Determining organizational training and development needs
• - Confirming that good hiring decisions are being made
• - Providing legal defensibility for personnel decisions
• - Improving overall organizational performance
 Task outcome

Personality traits Responsiblities

Performance
appraisal
evaluation

Behaviours Contributions
 Who actually does Performance Appraisal ?

SUB SELF
SUPERVISORS CUSTOMERS CONSULTANTS PEERS
ORDINATES APPRAISAL
When to appraisal
• Informal appraisals– when they feel necessary
• Systematic appraisals – on regular basis
• Every six months or annually
• In india , mostly at the date of joining annually
• Frequent feedback -- improved performance
• Appraisal for development purpose as well
Performance appraisal process
Establish performance standards

Communicate the standards

Measure actual performance

Compare actual performance with standards

and discuss the appraisal

Taking corrective action, if necessary

Establish performance standards
• Standard ,Against which performance is measured
• Related to desired results of each job
• Performance standard must be clear to both the appraiser and the
appraisee
 Performance Appraisal Form
INSTRUCTIONS
This form should be completed in draft in the first instances for the purpose of
facilitating discussions between the Executive Director/Supervisor and the staff member.
EXPLANATION OF RATINGS
5. Outstanding Level of performance in completing all tasks consistently
exceeds the standard established, especially in key areas of quality, quantity and
timeliness of output. Shows team spirit, initiative, contributes ideas and assists in
activities outside of key areas of responsibility.
4. Exceed Expectations Often exceeds performance standard for the
completion of tasks. Requires minimum supervision, is reliable, professional and
capable of rising to the occasion in handling the demands of work.
3. Meets Expectations Meets performance standard and fulfills duties and
responsibilities of the position in a satisfactory and timely manner. Performance is
competent with some supervision generally required.
2. Needs Improvement Does not always meet performance standard in all
major areas of responsibility. Demonstrates ability to complete some assignments but
needs supervision. Need for appropriate training and personal development.
1. Unacceptable Level of performance in completing tasks is consistently
below performance standard in spite of supervision, coaching and training.

Place a mark in the appropriate column which best reflects the performance of the
employee for each item listed below.
Communicate the standards
• Involves two parties
• Appraiser
• Appraisee
• Appraiser prepare job descriptions
• Helps Appraisee set his goals
• Analyse results
• Offers coaching and reward
Communicate the standards
• For the above
• Communication between appraiser and appraisee is important
• Response for standards from the appraisee should be noted and used for better
standardization process
• As pointed out by de cenzo and robbins

Two many jobs have vague performance

standards and the problem is compounded
when these standard are set in isolation
and do not involve the employee
Measure actual performance
• After the above two
• Requires the use of dependable performance measures,
ratings
• Performance measures
• To be helpful
• Must be easy to use
• Reliable
• Report
• Common source of information
• Personal observation
• Statistical reports
• Oral reports
• Written reports
Performance measures
objective subjective

• Usually Quantitative • Personal standards or

(verified by others opinion of those doing
• Ex: quantity of the evaluation
production ,absenteeism • Rating by superiors
,length of service ,overall goals
• for Lower level jobs ,contribution to socio-
cultural values of the
environment
• for Middle level
positions
 Compare actual performance with
standards and discuss the appraisal
• Actual performance – better or not good
• There is a way to communicate and discuss the final outcomes
• Assessing is not a easy task
• Affect the self –esteem of appraisee ,if negative
• Especially , subjective performance measures likely be questioned by appraisee
and leave him unhappy
Taking corrective action, if necessary
Corrective action is of two types

Put out the fires immediately

• Immediate action to set the things right and on track

Destroy the root

• Corrective action get to the source of deviation and seek to
adjust the deviation permanently
• But Amazon arguably gets its edge by using a data-driven approach with clear metrics to measure both
consumer and employee behavior. In Gallup's more objective assessment of the company's work ethos,
head of finance for Amazon Web Services, Sean Boyle says, "Data creates a lot of clarity around decision-
making. Data is incredibly liberating."
• So is performance management at Amazon about liberating employees to make the best decision on behalf
of the customer or is it as ruthless and unfair as the Times suggested? The answer depends on who you ask.
(More on that in a minute.)
• Only the best
• “You can work long, hard or smart, but at Amazon.com you can’t choose two out of three.” — Jeff Bezos
• At PerformYard, we're strong believers that every performance management process should have a clear
reason for existing. Whether you're pro or anti-Amazon, you have to admit, its performance management
purpose is clear: always demand the best.
• Amazon's 14 leadership principles serve as clear performance guideposts. And almost all of them focus on
an individual's ability to own and objectively test and defend their ideas, as opposed to "softer" things like
collaboration or development.
• But how does this play out in practice?
TRADITIONAL METHODS OF APPRAISAL

FORCED CHOICE CRITICAL INCIDENT

RATING SCALES
FORCED TESTS AND
CHECKLISTS
DISTRIBUTION OBSERVATION

FIELD REVIEW BARS

COST ACRS
ACCOUNTING ESSAY
RATING SCALES
• Several numerical scales representing a job
related performance such as output, attendance,
attitude, co-operation etc. By rating it from
excellent to poor
• The total numerical score obtained is linked to
salary increase

ADVANTAGES
•Simplest and most popular at low cost
•Rater does not need training to use this
scale
•For large employees at short period
DISADVANTAGES
•Rater’s biases are likely to influence
evaluation
•Co-operation, attitude and initiative
kind of criteria ratings can be changed
as per the rater
CHECKLIST
• Based on certain criteria, rater just ticks either ‘yes’ or
‘no’ columns, which is then passed on to the HR team
• Points are assigned for each ‘yes’ or ‘no’ and the total
score is arrived
• When points are allocated to checklist, the technique
becomes a weighted checklist

ADVANTAGES
•Ease of Administration
•Limited training of rater
•Standardization
DISADVANTAGES
•Susceptibility to rater’s biases
•Use of personality criteria than
performance criteria
•Misinterpretation of checklist items
•Use of improper weights by HR dept
•Doesn’t allow relative rating
FORCED CHOICE MODEL
• Rater is given series of readymade statements about an
employee, arranged in blocks of 2 or more,
• Rater indicates which statement is most or least
descriptive of the employee
• Actual assessment is done by the HR team
• Example: Learns fast------------------- Works Hard

ADVANTAGES
• Absence of personal bias in rating
since the statements are readymade
DISADVANTAGES
•Statements may not be properly
framed
•Statements may not be precisely
descriptive of the ratee’s traits
FORCED DISTRIBUTION MODEL
• Assumes that employee performance level conforms
to a normal statistical distribution (bell shaped curve)
• Due to various negative impacts due to this method,
companies like Microsoft, Bosch, WIPRO, Cisco,
Infosys did away with this method
 ADVANTAGES
It makes the rater to distribute the ratees
on all points on a rating scale
Identifies the future leaders of an
organization
Helps overcome the leniency weakness
DISADVANTAGES
Difficulties for the rater to place
employees in lower or in the highest
group and also to justify to the employee
for their rating
This is usually done annually, which
indirectly encourages employees to
commit same mistake and carry negative
attitude throughout the year
Kills innovation, promotes bureaucratic
and political culture
This is to assess an individual’s
performance and not the team as a whole
There is constant pressure on the
manager regarding the exit of employees
who are categorized as poor performers
CRITICAL INCIDENCE METHOD
• Focuses on certain critical behaviours of an employee
that determines the effective performance in a job
• This is gaining a lot of interest these days
• The incidents are recorded by the superiors as and
when it is occurs
• Example:

Continuing Duties Targets Critical Incidents

Supervise machinery No shutdowns due to Instituted new preventive

maintenance faulty machinery maintenance system for
plant, prevented a
machine breakdown by
discovering faulty part
 ADVANTAGES DISADVANTAGES

Evaluation is based on actual job Negative incidents are generally more

behaviour noticeable than positive ones

Giving job related feedback to the ratee is
easy since there is description in support
of a particular rating
Reduces bias, if raters record incidents
throughout the rating period
The recording of incidents is a chore to
the supervisor and maybe put off and
easily forgotten
Overly close supervision may result

Increases the employees performance Managers may unload a series of

because they learn more precisely what is complaints about incidents during annual
expected of them performance review. The feedback may
be too much at one time and thus appear
as a punishment to the ratee
FACTORS THAT DISTORT
PERFORMANCE
APPRAISAL
(1) JUDGEMENT ERRORS
• People commit mistakes while evaluating people and their
performance.

• These are of various types:

(i) First impressions
(ii) Halo
(iii) Horn effect
(iv) Leniency
(v) Central tendency
(vi) Stereotyping
(vii) Recency effect
(2) POOR APPRAISAL FORMS
• The appraisal process might also be influenced by the following
factors:
a) The rating scale may be quite vague and clear.
b) The rating form may ignore important aspects of job
performance.
c) The rating form may contain additional,irrelevant
performance dimensions.
d) The forms may be too long and complex.
(3) LACK OF RATER PREPAREDNESS
• The raters may not be adequately trained to carry out performance
management activities.

• They may not have sufficient time to carry out appraisals and conduct
thorough feedback sessions.

• Sometimes they may not be competent to do the evaluations owing to

a poor self-image and lack od self-confidence.
(4) INEFFECTIVE ORGANISATIONAL POLICIES AND
PRACTICES
• If the sincere appraisal effort put in is not suitably rewarded,the
motivation to do the job thoroughly finishes off.
• Low ratings given by raters are viewed negatively by management.
• So,most employees receive satisfactory ratings,despite poor
performance.
POTENTIAL APPRAISAL
• Past performance may not be a good indicator of the suitability for a
higher role.

• To overcome this adequacy,organisations must think of a new system

called potential appraisal.

• The potential appraisal is to identify the potential of a given employee

to occupy higher positions in the organisational hierarchy
• Potential appraisals are required to:
(i) Inform employees about their future
prospects.
(ii) Help the organisation chalk out a suitable
succession plan.
(iii) Update training efforts from time to time.
(iv) Advise employees about what they must do
to improve their career prospects.