Chapter

10
Appraising and Managing
Performance

Human Resource Management, 5E 1

 Meaning and Definition
Performance Appraisal is formal,
structured system of measuring and
evaluating an employee’s job related
behaviours and outcomes to discover
how and why the employee is
presently performing on the job and
how the employee can perform more
effectly in the future so that the
employee, organisation and society
all benefit.
Human Resource Management, 5E 2
 Multiple Purposes of Appraisal
Table 10.1. Multiple Purposes of Performance Assessment

General Applications Specific Purpose

Identification of individual needs
Performance feedback
Developmental Uses
Determining transfer and job assignments
Identification of individual strengths and developmental
needs
Salary
Promotion
Retention or termination
Administrative Uses/Decisions
Recognition of individual performance
Lay-offs
Identification of poor performers
HR planning
Determining organisation training needs
Organisational Evaluation of organisational goal achievement
Maintenance/Objectives Information for goal identification
Evaluation of HR systems
Reinforcement of organisational development
Criteria for validation research
Documentation Documentation for HR decisions
Helping to meet legal requirements

Source: Cynthia D. Fisher, et al. Human resource management, Houghton Mifflin, 1997, p.455

Human Resource Management, 5E 3

How Performance Appraisal can Contribute
to Firm’s Competitive Advantage
Improving
Performance
Making
Strategy and
Correct
Behaviour
Decisions

Competitive
Advantage

Ensuring
Values and
Legal
Behaviour
Compliance

Minimising
Dissatisfaction
and Turnover

Human Resource Management, 5E 4

 Organisational Strategy and
Performance Appraisal
Three categories of Strategies
 Defenders
 Prospectors
 Analysers

For three primary purposes

 Feedback mMechanism
 Consistancy between organisational
strategies and job behaviour
 Consistancy between oorganisational
values and job behaviour
Human Resource Management, 5E 5
The Performance Appraisal
Process
Objectives of
Performance Appraisal

Establish Job
Expectations

Design an Appraisal
Programme

Appraise Performance

Performance Interview

Use Appraisal Data for

Appropriate Purposes

Human Resource Management, 5E 6

 Problems of Rating
 Leniency or severity
 Central tendency
 Halo error
 Rater effect
 Primacy and recency effects
 Perceptual set
 Spillover effect
 Status effect
Human Resource Management, 5E 7
 Past Oriented Methods
 Rating Scale
 Checklist
 Forced Choice Method
 Forced Distribution Method
 Critical Incident Method
 Behaviorally Anchored Rating Scales
 Field Review Method
 Confidential Records

Human Resource Management, 5E 8

 Past Oriented Methods
 Essay Method
 Performance Tests and Observations
 Cost Accounting Method
 Comparative Evaluation Approach

Human Resource Management, 5E 9

 Future Oriented Method
 Management by Objective
 Psychological Appraisals
 Assessment Centers
 360 Degree Feedback

Human Resource Management, 5E 10

 Challenges of Appraisal
 Create a culture of excellence that inspires every
employee to improve and lend himself or herself to be
assessed
 Align organisational objectives to individual
aspirations
 Clear growth paths for talented individuals
 Provide new challenges to rejuvenate careers that
have reached the plateau stage
 Forge a partnership with people for managing their
careers
 Empower employees to make decisions without the
fear of failing
 Embed teamwork in all operational processes
 Debureaucratise the organisation structure for ease of
flow of information
Human Resource Management, 5E 11
 Appraising Teams
Identify KRAs critical
to business during the
year
Set tangible targets for Determine intangible
each KRA. Incorporate parameters (like initiative),
stretch elements for each which indicate pockets of
target. Fix the minimum individual excellence with
acceptable target the team

Evaluate performance Communicate the Measure the performance

of the team against results to ensure of the team (actual versus
pre-determined targets transparency targets) every month

Identify individuals who have excelled.

Discount subjective factors by including
assessors from outside the team to
identify outstanding individuals.

Human Resource Management, 5E 12

 Legal Issues
 Legally Defensible Appraisal
Procedures
 Legally Defensible Appraisal Content
 Legally Defensible Documentation of
Appraisal Results
 Legally Defensible Raters

Human Resource Management, 5E 13

 Deference Between Job
Evaluation and
Performance Appraisal
Table 10.7. Difference between Job Evaluation and Performance
Appraisal
Job Evaluation
The job is rated, keeping in view such
factors as responsibility, qualification,
experience, working conditions, etc.
required for performance of the job.
A job is rated before the employee is
appointed to occupy it.
The purpose is to establish satisfactory
wage differentials
It is not compulsory. Many organisations
carry on without it. Where it is followed, it is
mainly for lower level jobs.
Job evaluation committee (comprising
internal and external experts) is constituted
for the purpose of evaluation.
Human Resource Management, 5E
Job Appraisal
Employee is rated on the basis of
his or her performance
Evaluation takes after the
employee has been hired and
placed on a job
The purpose is to effect
promotions, offer reward, award
punishments, assess training
needs, resort to lay-offs, transfers,
etc.
Compulsory. It is done regularly
for all jobs.
Appraisal is done by employees
themselves, peers, superiors,
group of people, or combinations
of these.
14
Job-evaluation Process
Objectives of Job
evaluation

Job Analysis

Job description Job specification

Job evaluation
programme

Wage survey

Employee
classification

Human Resource Management, 5E 15

Methods of Job Evaluation
Analytical
Methods
• Point Ranking
Method
• Factor
Comparison
Method
Job
Evaluation Non-
Analytical
Methods
• Ranking
Method
• Job-Grading
Method

Human Resource Management, 5E 16

 Reality Check
 Were you at any time a beneficiary
or victim of halo-error? Recollect and
write down the details.

Human Resource Management, 5E 17

 Reality Check
 Inmost family-owned business, sons
or daughters join fathers’ business.
In such scenarios, fathers are the
bosses and off springs are the
subordinates. How should such
bosses rate performances of their
subordinates? Which of these errors
are likely to occur.

Human Resource Management, 5E 18

 Reality Check
 Whyis job evaluation not so
pervasive as performance appraisal?

Human Resource Management, 5E 19