Performance Appraisal

Performance is an objective assessment of an individuals performance against well defined benchmarks. The performance of an employee has a direct and immediate impact on his customers, either internal or external. In service organizations like banks, hotels, customer feedback has become the most important tool in evaluating employee performance. In manufacturing organizations, the internal customer evaluate the performance of the employee.

How Performance Appraisal can Contribute to Firms Competitive Advantage

Objectives of Appraisal
1. To effect promotions based on competence and performance. 2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. 3. To assess the training and development needs of employees. 4. To decide upon a pay raise where (as in the unorganised sector) regular pay scales have not been fixed.

Objectives of Appraisal (Contd)

5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. 6. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. 7. Finally, performance appraisal can be used to determine whether HR programmes such as selection, training, and transfers have been effective or not.

The Performance Appraisal Process

ACTIVITY: Whats in your performance evaluation system?

WHY is performance measured? (use) WHAT is measured? (criteria) HOW is it measured? (performance appraisal formats) WHO measures performance? (sources of information) WHEN is it measured? (timing)

In your company

Why Is Performance Measured?

Enhances motivation & productivity Assists in validation studies Detects problems Helps evaluate change efforts Provides basis for making decisions
Differentiates employees in job-related areas Helps ensure legal compliance

What Is Measured?
Criteria
Dimensions against which performance is evaluated Job analysis is important!

Trait-based criteria Behavioral Criteria Results Criteria Multiple Criteria Assigning weights

Who Measures Performance?

Gadgets Electronic Supervisors Yourself Peers Subordinates (Upward) Customers Multiple (360)
Administrative versus developmental use

Who Measures Performance?

Gadgets Electronic Supervisors Yourself Peers Subordinates (Upward) Customers Multiple (360)
Administrative versus developmental use

When Is Performance Measured?

Base timing on organizations strategy Typical times include:
Focal-point (everyone at same time) Anniversary Natural time span of job

How frequently?

 The different appraisal methods used by the organizations in India and abroad are as:1. Management by Objectives( MBO):- The main aspects of MBO are clear and well-defined goals, a definite time-span to achieve the goals, and action plan and finally, timely and constructive feedback. These goals are set with the active participation of the employee and his supervisor. For successful implementation of MBO, the following are required: Quantifiable and measurable goals that are neither too easy nor too difficult to achieve. A well-laid out action providing for contingencies. Employees who are suitably equipped and motivated to achieve these goals. Continuous and constructive feedback and guidance. Objective evaluation of the performance. Identification of areas for improvement and corrective action.

PERFORMANCE APPRAISAL METHODS

Common Goals

Management by Objectives
Subordinate Goals

Department-Specific Goals

Review Organizational Performance

Supervisor Goals
Joint Agreement

New Input Interim Review Inappropriate Goals Eliminated Final Review

2. Graphic Rating Scale Method:- This method of appraisal requires the rater to rate the employees on factors like quantity and quality of work, job knowledge, dependability, punctuality , attendance etc. Disadvantages:A. Regarding the choice of employee behavior categories- important one may miss out and irrelevant might be get included B. Different people may interpret the written descriptions in different ways. This might lead to confusion and loss of reliability.

Graphic Rating Scale

3. Work Standards Approach:- This method is more suitable in a manufacturing scenario, where the goals are pre-determined work standards. The advantages of this approach is that the goals to be measured are very objective and also quantifiable. 4. Critical Incident Method:- In this method, the appraiser makes a note of all the critical incidents that reflect the behavior of the employee during the appraisal period. 5. Essay Appraisal:- In this method, the appraiser prepares a document describing the performance of the employee. Questions or guidelines are provided to the appraiser, based on which he analyses and describes the employees performance. 6. Forced Choice Rating Method:- In this method, the appraiser is required to assign ranks to different attributes of the employee. These attributes are all seemingly positive, but have different weights which are unknown to appraiser. The elements of subjectivity in this method is minimized as the appraiser has to assign a unique rank for each of the attributes.

7. Ranking Methods:- There are three commonly used methods of ranking namely Alternation, Paired comparison, and Forced distribution method. A. Alternation:-The appraiser ranks all his employees from the most valuable to the least valuable, based on their performance and contribution to the organization. B. Paired comparison method:- the appraiser ranks the employees , based on paired comparison. Every employee in the group is compared with every other employee in the group. The employee who is rated better in each pair the maximum number of times, is the best employee in the group. C. Forced distribution method:- In this method, the employees are categorized as top, standard, and Bottom and placed under a forced-distribution curve. E.g. GE has 20% of its employees in the top performers, 70% in the standard, and 10% in the non-performers group.

Paired Comparison Method

Trait: ____________ Employee C D + + + + 3 1

As Compared to: A A B C D

+ 1

+ 1

B ranks highest

Forced Distribution
Lowest Next Lowest Performers
10% 20%

Middle
40%

Next
20%

Highest Performers
10%

5 employees 10 employees

20 employees 10 employees 5 employees

8. Point Allocation Method:- In this method, the appraiser has to allocate points to different members in his team. He has at his disposal, a specific number of points which he has to distribute among his team members, based on their performance during the appraisal period. 9. Checklist:- In this method, the rater has to respond Yes or No to a set of questions which assess the employees performance and behavior. Normally, weights are attached to each of these questions based on which the final appraisal score of the employee is calculated.

10. Behaviorally Anchored Rating Scale(BARS):BARS concentrates on the behavioral traits demonstrated by the employees instead of his actual performance. There are three steps in implementing a BARS system asDetermination of relevant job dimensions by the manager and the employee. Identification of behavioral anchors by the manager and the employee for each job dimension. Determination of the scale values to be used and grouping of anchors for each scale, value, based on consensus.

Behaviorally Anchored Rating Scale

7
6 5 4 3 2
F
Dimension: Transacting Loans (Corporate Loan Assistant)

Behavioral Observation Scale

Job: Maintenance Mechanic Dimension: Teamwork
Exhibits rude behavior that coworkers complain about (Reverse scored) Verbally shares technical knowledge with other technicians 0 0

Behavior Frequency
1 1 2 2 3 3 4 4 5 5

As needed, consults fellow workers for their ideas on ways to solve specific problems

11. 360 Degree Performance Appraisal:- A 360 Degree appraisal system aims at a comprehensive and objective appraisal of employee performance. In a 360 degree appraisal system, the employees performance is evaluated by his supervisor, his peers, his internal/external customers, his internal/external suppliers and his subordinates. 12.Team Appraisal:- In this method, the individual team members evaluate their colleagues in the team and provide feedback. This helps in synergizing individual efforts and taking the group performance to higher levels.

13. Balance Scorecard:- The balanced scorecard as a method of measuring performance channelizes the efforts of people to achieve organizational goals. The implementation of balanced scorecard involves formulating a strategy , and deciding what each employee needs to do to achieve the objectives based on strategy.

Concerns with Measuring Performance

Whats Measured
Criterion Contamination

Job Requirements

Criterion Deficiency

Criterion Relevance

Methods of Performance Appraisal

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Appraising Teams

28

Challenges of Appraisal

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The Appraisal Interview

The appraisal interview plays a prominent role in the success of a performance appraisal system. The appraisal procedure in most- modern organizations starts with the employee himself . He evaluates his own performance on the various factors mentioned in the appraisal form and assesses his strengths and weaknesses. This will help him identify the areas that need training of development inputs. The supervisor and the employee together discuss the appraisal, identify training and development needs of the employee and draw up and action plan.

Challenges of Appraisal Interview

1.
2.

3. 4. 5. 6. 7.

The organizational culture:- Absence of the right kind of organizational culture can lead to an ineffective process of performance appraisal. The relationship between the employee and his boss:- If they share a cordial and friendly relationship, the interview is more likely to proceed smoothly. The maturity level of the individuals:An apprehensive employee:- An apprehensive employee can change the mood of the interview by being very limpid and uncooperative. A wary appraiser:- An appraiser might not be very comfortable with the idea of judging and commenting on his colleagues performance. A biased appraiser:- The appraiser might be biased in favor of or against the appraisee for various reasons. Inexperience:- Inexperience of lack of any previous exposure to the process of performance appraisal can result in an ineffective and cursory exercise which might not benefit the individual or the organization.

How do we face the challenge

The org. has to develop the culture wherein the process of appraisal is viewed as a productive and constructive contributor to the growth of the org as well as the individual employee. Appraisal should of two types-competency and performance appraisal, which are interlinked. Setting specific, measurable goals at the beginning of the appraisal period helps. Training on how to conduct an appraisal interview, would be useful for those employee who are unfamiliar with the process. The apprisee and the appraiser should both give each other a chance to reflect and respond on every debatable aspect.

Appraisal Interviews
Follow Up Day by Day Ask for SelfAssessment Invite Participation

Establish Goals

Express Appreciation

Be Supportive Focus on Problem Solving Change the Behavior, not the Person

Minimize Criticism

Dont Forget the Feedback!

Do it immediately or soon after behavior Focus on behavior, not person Dont overload Schedule feedback & plan roles & responsibilities Give feedback privately Be a good listener Dont blame be a problemsolver Set goals & follow up Reward improvement

How to deliver effective feedback

Diagnose the cause of performance problem. Pay attention to situational constraints. Open the evaluation on a positive tone. State your intent to help improve performance. Deliver behavioral feedback. Describe rather than evaluate performance problems. Seek employees opinions and participation about situational constraints. Listen actively. Show that you understand by re-stating employees concerns in your own words. Sandwich performance problems between positive results. Consider opening/closing on a positive note.

Diagnose performance problems

Be aware of the fundamental attribution error: We tend to attribute our failures to external factors (I just didnt have the support of my boss). We tend to attribute others failures to their personal characteristics (he is lazy). Using the example of poor performance that you described in the critical incident earlier, diagnose the source of the problem by answering the questions in the table included next:

Delivering effective feedback

Do

Dont

Behavior: describe performance.

the amount of raw material waste that you produced was above average.

Conclusion: evaluate performance.

I cant tolerate your laziness.

Problem solving orientation: conveys trust in the employees ability to solve the problem.
Have you thought about what can be done to

Control orientation: emphasizes the supervisors power over the employee.

I have decided that you should do X, Y, and Z.

Delivering effective feedback

Do Empathy: shows interest in the problem and in the employee.

I wasnt aware of that; let me sure I understand

Dont Neutrality: lack of interest.

Too bad, but we all have our own problems.

Equality
I have to make a decision pretty soon, but why dont you e-mail me your suggestions by Friday?

Superiority
I get paid to make decisions around here, not you.

The Appraisal Interview

How to Conduct an Appraisal Interview

be direct and specific dont get personal encourage the person to talk develop an action plan

PROBLEMS WITH PERFORMANCE APPRAISEL

JUDGEMENT ERRORS BECAUSE OF BIASES AND INACCURATE

EVALUTION, MISTAKES MAY BE COMMITED IN JUDGING PEOPLE. IT MAY INCLUDE: FIRST IMPRESSIONS (PRIMACY EFFECT) THE APPRAISERSS FIRST IMPRESSION MAY FORM AN ALL TIME POSITIVE OR ALL TIME NEGATIVE IMAGE OF EMPLOYES.

HELLO Effect WHEN ONE ASPECT OF THE SUBORIDINATE PERFORMANCE EFFECTS THE RATESR EVALUATION OF OTHER PERFORMANCE DIMENSIONS. HORN EFFECT WHEN ONE NEGATIVE QUALITY OF THE EMPLOYEE IS BEING RATED HARSHLY AND THAT LEADS TO OVERALL EVALUATIO.EVALUATION IS DONE KEEPING IN MIND THAT NEGATIVE FACTOR

 LINIENCY WHEN APPRAISEL IS DONE DEPENDING ON RATERS ON MENTAL MAKEUP. IF HIS MENTAL MAKEUP IS THE DECIDING FORCE, THEN SYSTEM IS OF NO IMPORTANCE. CENTRAL TENDENCY WHEN APPRAISERS RATE ALL EMPLOYEES AS AVERAGE PERFORMERS UNBOUTHERD ABOUT SOME OF THE EXCELLENT SUBORDINATES. STEREOTYPING STEREOTYPING IS A MENTAL PICTURE THAT AN INDIVIDUAL HOLDS ABOUT A PERSON BECAUSE OF THAT PERSONS SEX,AGE,RELIGION ETC. BY GENERALISING BEHAIVIOUR ON THE BASIS OF SUCH BLURRED IMAGES,PERFORMANCE IS OVERESTIMATED OR UNDERESTIMATED. EG. WOMEN ARE UNDERESTIMATED FOR PHYSICAL JOBS.

b) Poor appraisal form

Performance may also be influenced by the following factors: Rating scales may be vague &nuclear. Rating form may carry irrelevant dimensions. Forms may be too long and complex c) lack of rater preparedness

The rater may not be adequately trained to carry out performance management activities .Insufficient time ,incompetence and lack of functional knowledge may defense an unprepared rater . d)Ineffective organizational policies & practices
When the sincere efforts of the raters are not adequately motivated & rewarded them zeal to do work is lost !

Improving performance
Identify & agree to the problem Establish reasons for shortfall Decide on action required Create resource for action Monitor & provide feedback

Managing underperformers (checklist)

Were expectations reasonable- inlight of caliber/ ed Did the person get adequate support? Is it lack of skill, effort or attitude? Were the objectives clear?

Some indicative solutions

Re-examining the composition of team Clarifying objectives Redesigning the job Improving support, provide encouragement Training

Legal Issues
Legally Defensible Appraisal Procedures Legally Defensible Appraisal Content Legally Defensible Documentation of Appraisal Results Legally Defensible Raters
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Concerns of Measuring Performance Legal Defensibility

Use job analysis Use standardized & formal appraisal system Communicate performance standards in advance Use objective & uncontaminated data when possible Behavioralize as much as possible; watch out for traits or attitudes Evaluate employees on specific dimensions rather than on single global or overall measure Evaluators should observe performance in advance Use more than 1 rater when possible (reliability) Document extreme ratings (behavioral) Give employees opportunity to review appraisals Establish appeal system for disagreements Train raters to avoid discrimination & to evaluate performance consistently Appraise frequently (minimum: annually)

ESSENTIAL CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SINCE a no of crucial decisions are made on the basis of rating given by the appraiser, thus it must possess following features: 1) RELIABLITY & VALIDITY Appraisal system should provide consistent ,reliable and valid information and data which can be used to defend the organization. 2) Job relatedness It must measure the performance and provide information in the job related areas . 3) Standardisation Appraisal forms ,procedures ,rating etc. should be standardized. 4) Practical viability The techniques should be practically viable to administer ,possible to implement and economical to undertake continuously. 5) Legal sanction Appraisal must meet the laws of the land . 6) TRAINING TO APPRAISERS Appraisers must be provided training of rating & document appraisal to conduct ratings more confidently.

Last Recourses in Performance Management

Transfer
When employee and job are not well matched

Neutralize
Assign noncritical tasks to minimize the impact of deficiencies

Terminate
For dishonesty, habitual absenteeism, substance abuse, insubordination, and low productivity that cant be corrected