Performance Appraisal

Definitions: The process of arriving at judgments about a member’s past, present, or predicted future behavior against the background of his/her work environment or future performance potential.

Performance Appraisal: The Fear The most controversial and stressful practice in a organization. It seems that everybody dislikes it and the same time recognizes its importance. Performance appraisal enables organization to systemize the process and to reduce discrimination, inaccuracy, and double standards.

Purpose of Performance Appraisal To help make administrative decisions, especially related to pay determination and promotions, and to meet developmental objectives such as coaching subordinates and determining their training needs. To influence the ratings and the effectiveness of the system. To provide the key mechanism in which the context of the ratings interacts with the capabilities, cognitive and judgmental processes of the rater.

Reward Review Purposes of Performance Appraisal Performance Review Potential Review

Reward Review – should be reviewed after the employees’ performance had been evaluated. - increase morale; attitude & behavior; contribution had been recognized Potential Review – predicting employee’s suitability for promotion or horizontal movement in order to acquire new experiences or skills (psychological and sociological implications). Performance Review – managers must consider how employees can utilize their hard (technical) skills & soft skills. The review will enable managers to determine employees’ needs for counseling, training & development, identify promotion/demotion transfers and layoffs, and as a tool for improving communication.

Uses of Performance Appraisal Percent Compensation 85.6 Performance Feedback 65.1 Training 64.3 Promotion 45.3 Personnel Planning 43.1 Retention / discharge 30.3 Research 7.2 ** Based on responses from 600 organizations

Improper Performance Appraisal Process That Lead To ‘Competing and Conflicting Issues’ Failure to provide a fair basis for rewarding excellence; ii. Failure to serve performance appraisal as a monitoring system in order to promote self-motivated environment among employees; iii. Failure to define work roles and job responsibilities accordingly; and Failure to set up staff developmental support of each employee. Failure to inform the employees regarding the fundamental vision and mission of the organization

Categories of Performance Appraisal It is agreed that the formal and informal appraisal systems exist in every organization. The process involves three (3) broad categories of appraisal information (data): Diagnostic – at preoperational stage (selection, placement and development). Formative – personal development at initial and intermediate stages of employment. Summative – focus on decisions to implement personnel actions (compensation, tenure, dismissal, promotion, and reemployment).

Performance Appraisal Cycles / Process Establish organizational performance standard 4 1 Evaluate individual performance Determine method of performance standard 2 3 Compare performance level against predetermined standard

Performance Appraisal Cycles / process Establish standard – in terms of output, quality, cost efficiency, or time required to do the tasks. Be specific, measurable, attainable and achievable. Determine method – methods chosen should be the critical factors that will determine the success. Consider impacts on strengths & weaknesses.

Performance Appraisal Cycles / process Compare performance – the expected target must be within the employee’s ability to achieve. Measuring performance should be understandable and measurable. Corrective measures must be taken if there is a deviation from the set standard. Evaluate the performance – must be free from bias, double standard or any form of injustice. Evaluation should be based totally on work performance, not on employee’s attributes.

Who does the Appraising? The Immediate Supervisor – responsible to do 90% of all performance appraisal. The most qualified person to evaluate (has power to control rewards and punishments) The Next Most Immediate – to reassess the appraisal by supervisor to avoid personal bias. Peer Appraisal – close proximity enables peer to observe each other’s task and interpersonal behavior- possibly the single best informed source for performance appraisal (e.g. attendance, attitude, safety, adaptability, teamwork)

Who does the Appraising?... Self-Appraisal – employees may feel that they are given freedom to determine their own future. The key success depends on the mutual trust between managers and employees. Subordinate’s Appraisal of Supervisor – anti-hierarchical. Both managers and employees fell uncomfortable with the system. Managers are more likely not to accept the rating by the employees.

Who does the Appraising?... Internal or External Clients – a 360º turn, customers, employers, and employees to evaluate their own workers, and also the entire organization (Production dept. to do appraisal on the account dept, etc). Every dept. will look for its strengths and weaknesses compare with others. Independent Trained Observers /external consultants - neutral body hired to conduct appraisal of an organization. Decisions made by them will be more respected, accepted, and trusted. It may inherent cost, so is only suitable in evaluating higher level of managers.

360 Degree Performance Appraisal In today’s organization, employees must be more proactive and flexible in fulfilling their customers’ increasing demands and needs. The challenge for all organizations is to trying prosper in this information age and knowledge era to take full advantages of their human resource potentials.

360 Degree Performance Appraisal Characteristics 1. Involves more than 1 assessor or source to make evaluation. 2. Several people besides the immediate supervisor will review the performance of an employee. 3. The other source include people who have direct working contact with the employee such as his peers, subordinates and his internal as well as external customers. 4. Feedback from multiple sources will give better overview of employee’s performance as each assessor will have his/her own opinion about employee (Pollack & Pollack, 1996; Edwards, 1996)

360 Degree Performance Appraisal Supervisors & Management Customers Peers Employee Self Subordinates & Internal Customers

Benefits of A 360 – Degree Performance Appraisal Increase employees’ awareness of their strengths and weaknesses. Motivate behavior improvements in commented areas. Improve communication and relationship between employees and their appraisers. Reduce bias or unfair evaluation from one source.

Promote continuous learning and development in the organization. Benefits of A 360 – Degree Performance Appraisal ... contd Identify skills needed by employees to master in their present job or prepare for a new one. Promote continuous learning and development in the organization. Increase accountability of employees to their internal and external customers.

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