PRESENTED BY SAYEED ALI & ELWIN PAUL

CONTENTS
         

DEFINITION OBJECTIVES PROCESS WHY PERFORMANCE APPRAISAL FAILS ALTERNATIVE SOURCES METHODS MBO SOURCES ERRORS BIBLIOGRAPHY

DEFINITION
Performance appraisal is the systematic, periodic and, so far as humanly possible, an impartial rating of an employee s excellence in matters pertaining to his present job and to his potentialities for a job -- Edwin. B.Flippo

OBJECTIVES
 Compensation decision  Promotion decision  Training and development

programmes  Feedback  Personal development

PROCESS
 Establish performance standards  Communicate the standards  Measure actual performance  Compare actual performance with standard

And discuss the appraisal



Taking corrective action if necessary

Performance appraisal fails because

Insufficient reward for performance

Manager lacks information

Lack of appraisal skills Manager not taking appraisal seriously

Unclear language

Performance appraisals fail because

Manager not prepared Ineffective discussion of employee development

Manager not being honest or sincere

Employee not receiving ongoing feedback

Alternative Sources of Performance Appraisal Supervisor

Team

Peers Self Customers

Subordinates

METHODS
PERFORMANCE APPRAISAL TECHNIQUES

INDIVIDUAL EVALUATION METHOD

MULTIPLE PERSON EVALUATION

OTHER METHODS

INDIVIDUAL EVALUATION METHOD

 Essay evaluation  Critical incidents  Checklists  Graphic rating scale  Behaviorally anchored rating scale

MULTIPLE PERSON EVALUATION METHOD

 RANKING  PAIRED COMPARISON  GROUP ORDER RANKING

OBJEC TIVES
 MBO

Performance Appraisal
Examples of graphic rating scale
Job Knowledge High
5 4 3 2 1
Low

Quality of work
Superior Above Average Average Below Unacceptable Average

Dependability

Rate this employees dependability by assigning a score according to the following scale: ______ 1 to 5 (poor) gives up quickly

6 to 10 (Average) does the routine work 11 to 15 (good) rarely gives up

Practical judgment

An example of BARS
USE of KNOWLEDGE Very high 9 8 7 6 5 4 3 2 Very low 1
[definition should follow]

A customer wanted to deposit a large amount of money. The teller explained to the customer that he could earn more interest on a money market account than with a savings account A customer applied for a new auto loan and had an E/I too high for approval. This employee suggested a lowerpriced auto with a lower payment to reduce his E/I When a customer called, this employee accurately answered her question about finance charges When a customer came to the bank for a loan, this employee had to search for instructions and kept the customer waiting

A customer wanted to cash a large check. The teller said that it could not be cashed but did not realized it was all right as long as the customer had that amount in her account

Management by Objectives
y Employee & Supervisor jointly set goals y Employee and supervisor then review goal

achievement at the end of the year y Research show that if goals are difficult but achievable, motivation increases

General Rule #1:

Organizational Goals and Objectives

Measures should assess progress

General Rule #2: Persons being evaluated should have some input in developing performance measurements and should be aware of them.

General Rule #3: Persons being evaluated should have appropriate skills and be provided the necessary equipment, information, and authority to be successful under the measurement system.

General Rule #4:

Feedback relative to performance should be provided in a timely and useful manner.

Summary of Appraisal Methods

ADVANTAGES
TRAITS
Inexpensive Meaningful Easy to use

DISADVANTAGES
Potential for error Poor for counseling Poor for allocating rewards Poor for promotional decisions Time consuming Costly Some rating error

BEHAVIOR

Specific dimensions Accepted by employees Useful for feedback OK for reward/promotion Less subjectivity bias Accepted by employees Performance-reward link Encourages goal setting Good for promotion decisions

RESULTS

Time consuming Focus on short term Criterion contamination Criterion deficiency

A balanced scorecard ultimately links all aspects of performance to the company s strategies. It is a performance measurement conceptualization that translates an organization's strategy into clear objectives, measures, targets, and initiatives organized by four perspectives:
financial, customers, business processes, and human resources.

The balanced scorecard provides a set of financial and nonfinancial measures that encompass both internal and external perspectives.

The Balanced Scorecard

HRM 6

Summary of Appraisal Methods

y Trait Methods y Advantages
y y y

Are inexpensive to develop Use meaningful dimensions Are easy to use Have high potential for rating errors Are not useful for employee counseling Are not useful for allocating rewards Are not useful for promotion decisions

y Disadvantages
y y y y

Summary of Appraisal Methods (cont d)

y Behavioral Methods y Advantages
y y y y

Use specific performance dimensions Are acceptable to employees and superiors Are useful for providing feedback Are fair for reward and promotion decisions Can be time-consuming to develop/use Can be costly to develop Have some potential for rating error

y Disadvantages
y y y

Summary of Appraisal Methods (cont d)

y Results Methods y Advantages
y y y y y

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

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

Sources of Performance Appraisal

y Manager and/or Supervisor y Appraisal done by an employee s manager and reviewed by a manager one level higher. y Self-Appraisal Performance y By the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview. y Subordinate Appraisal y Appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes.

Sources of Performance Appraisal

y Peer Appraisal y Appraisal by fellow employees, compiled into a single profile for use in an interview conducted by the employee s manager. y Team Appraisal y Appraisal, based on TQM concepts, recognizing team accomplishment rather than individual performance. y Customer Appraisal y Appraisal that seeks evaluation from both external and internal customers.

Weaknesses
y Developing BARS for all positions expensive and

impractical. y Dynamic environment requires constant updates of scales. y Difficult to demonstrate validity and alignment to stakeholders.

IMPROVING APPRAISAL: APPRAISAL SESSION

y Put Employee at Ease y Employee Participation
y Appeal y Self-evaluation

y Performance Focus y Sensitivity

y Tone y Positive Feedback

y Examples y Performance plans

Common rater-related errors raterrror of central tendency Leniency or strictness errors Similar-toSimilar-to-me errors Recency errors Contrast and halo errors

Rater Errors
y Error of Central Tendency y A rating error in which all employees are rated about average. y Leniency or Strictness Error y A rating error in which the appraiser tends to give all employees either unusually high or unusually low ratings. y Recency Error y A rating error in which appraisal is based largely on an employee s most recent behavior rather than on behavior throughout the appraisal period.

Rater Errors
y Contrast Error y A rating error in which an employee s evaluation is biased either upward or downward because of comparison with another employee just previously evaluated. y Similar-to-Me Error y An error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection.

CONCLUSION
 DEFINITION  OBJECTIVES  PROCESS  WHY PERFORMANCE APPRAISAL FAILS  ALTERNATIVE SOURCES  METHODS  MBO  SOURCES  ERRORS