5 Basic Concepts in Performance Management and Appraisal Performance Appraisal: Setting work standards, assessing performance, and providing feedback to employees to motivate, correct, and continue their performance.Performance Management: An integrated approach to ensuring that an employee’s performance supports and contributes to the organization’s strategic aims.Comparing Performance Appraisal and Performance Management
6 Performance Management and Performance Appraisal Dynamic, continuous process.Improves organizational effectiveness.Strategic goals.Performance appraisal:Periodic (usually annual) event.Formal review.Last step in performance management process.Performance management is a goal-oriented system to ensure that organizational processes exist to maximize the productivity of employees, teams and, ultimately, the organization.A performance appraisal is a formal system of review and evaluation of individual or team performance.Performance management is an ongoing organizational process that is conducted to maximize the productivity of employees with the overall intention of improving the organization’s effectiveness. It is strategic in nature and involves every person and all HR processes in the organization. All are directly tied to achieving the organization’s goals.The performance appraisal is a periodic event to reflect and evaluate past performance with the intent to identify strengths and weaknesses of an employee’s performance and to identify developmental goals. A performance appraisal is just one part of a performance management system.Source: Mondy, R. (2008). Human resource management, 10th ed. New Jersey: Pearson Prentice Hall,
7 Defining the Employee’s Goals and Work Standards Assign Specific GoalsEncourage ParticipationAssign Measurable GoalsAssign Challenging but Doable GoalsGuidelines for Effective Goal Setting
8 Setting Goals SMART Goals: Specific, and clearly state the desired results.Measurable in answering “how much.”Attainable, and not too tough or too easy.Relevant to what’s to be achieved.Timely in reflecting deadlines and milestones.
9 An Introduction to Appraising Performance Performance Appraisal is an objective assessment of an individual’s performance against well defined benchmarks.
10 DefinitionsAccording to Edwin Flippo, "Performance Appraisal is the systematic, periodic and impartial rating of an employee's excellence, in matters pertaining to his present job and his potential for a better job.“ According to Dale Beach, "Performance Appraisal is the systematic evaluation of the individual with regards to his or her performance on the job and his potential for development."
11 An Introduction to Appraising Performance Why Appraise Performance?12Is basis for pay and promotion decisions.3Plays an integral role in performance management.4Helps in correcting deficiencies and reinforcing good performance.Is useful in career planning.
12 Objectives of Appraisal To effect promotions based on competence and performance.To confirm the services of probationary employees upon their completing the probationary period satisfactorily.To assess the training and development needs of employees.To decide upon a pay raise where (as in the unorganised sector) regular pay scales have not been fixed.
13 Objectives of Appraisal (contd..) 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.To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns.Finally, performance appraisal can be used to determine whether HR programmes such as selection, training, and transfers have been effective or not.
16 The Performance Appraisal Process Objectives of Performance AppraisalEstablish Job ExpectationsDesign an Appraisal ProgrammeAppraise PerformancePerformance InterviewUse Appraisal Data for Appropriate Purposes
19 Graphic Rating Scale Method A scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her level of performance for each trait.
24 Paired Comparison Method : In this method, each employee is compared with the other on one-to-one basis. This method makes judgement easier as compared to ranking method.. The total number of comparison can be ascertained by the following formula :Maximum no. of pairs = [n(n-1)]/2where N stands for number of employees to be evaluated.Example:If the following five students Ashok (A), Bina (B), Chitra (C), Dinesh (D), Eillen (E) have to be evaluated for the best student award, the total number of comparison would be = 10A with BA with C B with CA with D B with D C with DA with E B with E C with E D with EThe number of times a student gets a better score, would be the basis for selecting the Best Student. This method is not appropriate if a large number of students are required to be evaluated.
25 FIGURE 9–6 Ranking Employees by the Paired Comparison Method Note: + means “better than.” – means “worse than.” For each chart, add up the number of +’s in each column to get the highest-ranked employee.
26 Forced Distribution Method Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories.Example:15% high performers20% high-average performers30% average performers20% low-average performers15% low performers
28 Critical Incident Method This method evaluates an employee on the basis of certain `events' or `episodes' known as critical incident.The underlying principle of this method is "there are certain significant acts in each employee's behavior and performance, which can make all the difference between success and failure on the job.“Thus, in this method the rater focuses his attention on all those factors, that can make a difference between performing a job in a noteworthy manner.
29 Examples of Critical Incidents for an Assistant Plant Manager
30 Narrative FormsAll or part of the written appraisal may be in narrative form.Here, the person’s supervisor is responsible for providing an assessment of the employee’s past performance and required areas of improvement.
32 Annual Confidential Report (ACR) This is a traditional method of evaluating an employee's performance. It is normally used in Government departments and small business units. Here, the evaluation is done by the immediate boss or supervisor.The main limitation of this method is the ratings are generally not discussed with the ratee (only in case of adverse remark).
33 BARS (Behaviourally Anchored Rating Scale) In order to overcome the problem of judgmental evaluation, this method was conceived by some organisations. This method combines the benefits of Essay Method, Critical Incident and Rating scales.In this method the employee's behaviour and performance dimensions are analysed and used for evaluating the performance of the employee. The HR department is involved in the process of preparing the BARS. Based on the Employee's performance and behaviour, employees are anchored in different slots of good, average and poor. The rater is required to give corresponding ratings to the employee.
35 Behaviorally Anchored Rating Scale (BARS) Developing a BARSGenerate critical incidentsDevelop performance dimensionsReallocate incidentsScale the incidentsDevelop a final instrumentAdvantages of BARSA more accurate gaugeClearer standardsFeedbackIndependent dimensionsConsistency
36 Example of a Behaviorally Anchored Rating Scale for the Dimension Salesmanship Skills
37 Management by Objectives (MBO) A comprehensive and formal organizationwide goal-setting and appraisal program requiring:Setting of organization’s goals.Setting of departmental goals.Discussion of departmental goals.Defining expected results (setting individual goals).Conducting periodic performance reviews.Providing performance feedback.
38 Using MBO Problems with MBO Setting unclear objectives Conflict with subordinates over objectivesTime-consuming appraisal process
39 Computerized and Web-Based Performance Appraisal Performance appraisal software programsKeep notes on subordinates during the year.Electronically rate employees on a series of performance traits.Generate written text to support each part of the appraisal.Electronic performance monitoring (EPM)Having supervisors electronically monitor the amount of computerized data an employee is processing per day, and thereby his or her performance.
40 Assessment Centres :This method was used to appraise army officers in Germany way back in 1930s. The concept was adapted from army to business arena in 1960s. In India, the concept has been adopted by organisations such as Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox recently.This method is mainly used to evaluate executive and supervisory potential. Here employees are taken to a place away from work and a series of tests and exercises are administered. For example, assesses are asked to participate in; in-basket exercise, simulations, group exercise and role plays. Performance of the employee is evaluated in each of these tests and feedback is provided to the ratee, in terms of strengths and weaknesses.
41 360o Appraisal Method :Where multiple raters are involved in evaluating performance, the technique is called 360-degree appraisal.The 360-degree technique is understood as systematic collection of performance data on an individual or a, group derived from a number of stakeholders—the stakeholders being the immediate, team members customers peers and self.In this method an employee's performance is evaluated by his supervisor, subordinates, peers and customers (or an outside expert).All these appraisers provide information or feedback by completing a questionnaire designed for this purpose.
42 The 360-degree degree appraisal provides a broader perspective about an employee’s performance. In addition, the technique facilitates greater self-development of the employee.It enables an employee to compare his evaluation about self with perceptions of othersThough this method was developed to bring about a degree of objectivity, it still suffers from subjectivity.
43 Appraising Performance: Problems and Solutions Unclear StandardsLeniency or StrictnessHalo EffectPotential Rating Scale Appraisal ProblemsCentral TendencyBias
44 TABLE 9–2 A Graphic Rating Scale with Unclear Standards ExcellentGoodFairPoorQuality of workQuantity of workCreativityIntegrityNote: For example, what exactly is meant by “good,” “quantity of work,” and so forth?
45 Appraising Performance: Problems and Solutions (continued) Know ProblemsControl Outside InfluencesUse the Right ToolHow to Avoid Appraisal ProblemsTrain SupervisorsKeep a Diary
46 TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools Graphic rating scaleSimple to use; provides a quantitative rating for each employee.Standards may be unclear; halo effect, central tendency, leniency, bias can also be problems.BARSProvides behavioral “anchors.” BARS is very accurate.Difficult to develop.Alternation rankingSimple to use (but not as simple as graphic rating scales). Avoids central tendency and other problems of rating scales.Can cause disagreements among employees and may be unfair if all employees are, in fact, excellent.Forced distribution methodEnd up with a predetermined number or % of people in each group.Employees’ appraisal results depend on your choice of cutoff points.Critical incident methodHelps specify what is “right” and “wrong” about the employee’s performance; forces supervisor to evaluate subordinates on an ongoing basis.Difficult to rate or rank employees relative to one another.MBOTied to jointly agreed-upon performance objectives.Time-consuming.
47 Who Should Do the Appraising? Self-RatingSubordinates360-Degree FeedbackPotential AppraisersImmediate SupervisorPeersRating Committee
48 The Appraisal Interview Satisfactory—PromotableSatisfactory—Not PromotableUnsatisfactory—CorrectableUnsatisfactory—UncorrectableTypes of Appraisal Interviews
49 The Appraisal Interview (continued) Talk in terms of objective work data.Don’t tiptoe around.Don’t get personal.Encourage the person to talk.Guidelines for Conducting an Interview
50 The Appraisal Interview (continued) How to Handle a Defensive Subordinate12Recognize that defensive behavior is normal.3Never attack a person’s defenses.4Postpone action.Recognize your own limitations.
51 The Appraisal Interview (continued) How to Criticize a Subordinate132Do it in a manner that lets the person maintain his or her dignity and sense of worth.4Criticize in private, and do it constructively.5Give daily feedback so that the review has no surprises.Never say the person is “always” wrong.Criticism should be objective and free of biases.
53 Formal Written Warnings Purposes of a Written WarningTo shake your employee out of bad habits.To help you defend your rating, both to your own boss and (if needed) to the courts.A Written Warning Should:Identify standards by which employee is judged.Make clear that employee was aware of the standard.Specify deficiencies relative to the standard.Indicate employee’s prior opportunity for correction.
54 Creating the Total Performance Management Process “What is our strategy and what are our goals?”“What does this mean for the goals we set for our employees, and for how we train, appraise, promote, and reward them?”
55 PMS in IndiaPerformance evaluation has reached high maturity levels in Indian organizations.Successful practices like goal setting, balanced scorecard, development orientation etc., are being introduced and it mostly covers managerial employees and employees who are not part of any union.ACR system of government is being changed to PMS.Online appraisal systems are also used.Initiatives like training, appraisals, multiple levels appraisers, reviews, etc. are undertaken to improve the quality of PMS.
56 Let’s Practice Your Performance Appraisal Skills Student role play.