Objectives of Performance Appraisal Performance

Come appraisal time and one of the most debated aspects of completing the fair-andsquare appraisal revolves around what is ‘measured’ and what is achieved’. And the fable of the Bees and the Bee Keepers is a very popular paradigm that often gets quoted at such times. It goes thus: The Story: Once upon a time there were two beekeepers that each had a beehive. The beekeepers worked for a company called Bees, Inc. The company’s customers loved its honey and demand for the product was increasing. So Bees, Inc. assigned each beekeeper a goal for increased honey production. The beekeepers had different ideas about how to meet their goal and designed different approaches to improve the performance of their hives.

The first beekeeper established a bee performance management approach that measured the number of flowers each bee visited. At considerable cost to the beekeeper, an extensive measurement system was created to count the flowers each bee visited. He also provided feedback to each bee at mid-season on his individual performance. He also created special awards for the bees who visited the most number of flowers. However, the bees were never told about the hive’s goal to produce more honey so that the company could increase honey sales.

Academic anxiety?
Get original paper in 3 hours and nail the task
Get your paper price

124 experts online

The second beekeeper also established a bee performance management approach but this approach communicated to each bee the goal of the hive for increased honey production. The beekeeper and his bees measured two aspects of their performance the amount of nectar each bee brought back to the hive and the amount of honey the hive produced. The performance of each bee and the hive’s overall performance were charted and posted on the hive’s bulletin board for all the bees to see. The beekeeper created a few awards for the bees that gathered the most nectar.

But he also established a hive incentive program that rewarded each bee in the hive based on the hive’s overall honey production the more honey produced, the more recognition each bee would receive. -4- Specially Uploaded for ProjectsParadise. com At the end of the season, the beekeepers evaluated their approaches. The first beekeeper found that his hive had indeed increased the number of flowers visited ,but the amount of honey produced by the hive had dropped. The Queen Bee reported that because the bees were so busy trying to visit as many flowers as possible, they imited the amount of nectar they would carry so they could fly faster. Also, since only the top performers would be recognized, the bees felt they were competing against each other for awards. As a result, they would not share valuable information with each other that could have helped improve the performance of all the bees (like the location of the flower filled fields they’d spotted on the way back to the hive). As the beekeeper handed out the awards to individual bees, unhappy buzzing was heard in the background.

After all was said and done, one of the high performing bees told the beekeeper that if he had known that the real goal was to make more honey, he would have worked totally differently. The second beekeeper, however, had very different results. Because each bee in his hive was focused on the hive’s goal of producing more honey. This Bess had concentrated their efforts on gathering more nectar in order to produce more honey than ever before. The bees worked together to determine the highest nectar yielding flowers and to create quicker processes for depositing the nectar they had gathered.

They also worked together to help increase the amount of nectar gathered by the poorer performers. Tile Queen Bee of this hive reported that the poor performers either improved their performance or transferred to hive No. 1, because the hive had reached its goal. The beekeeper rewarded each bee his portion of the hive incentive. The keeper was also surprised to hear a loud, happy buzz and a jubilant flapping of wings as he rewarded the individual highperforming bees with special recognition. Should you measure performance or mere activities of employees’s the one who does silent work but does not show of himself/herself or the one who puts up a show but hardly performs to be recognized and rewarded? This and other related questions are answered in this chapter. -5- Specially Uploaded for ProjectsParadise. com PERFORMANCE APPRAISAL An organization’s goals can be achieved only when people put in their best efforts. How to ascertain whether an employee has shown his or her best performance on a given job? The answer is performance appraisal. Employee assessment is one of the fundamental jobs of HRM. But not an easy one though.

This chapter is devoted to a detailed discussion of the nature and process of conducting performance appraisal. Meaning and Definition In simple terms, performance appraisal may be understood as the assessment of an individual’s performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgement, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.

A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. A more comprehensive definition is: Performance’ appraisal is a formal structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee organization and society all benefit.

The second definition includes employees’ behaviour as part of the assessment. Behaviour can be active or passive–do something or do nothing. Either way behaviour affects job results. The other terms used for performance appraisal arc: performance rating, employee assessment. Employees performance review, personnel appraisal, -6- Specially Uploaded for ProjectsParadise. com performance evaluation employee evaluation and (perhaps the oldest of the terms used) merit rating. In a formal sense, employee assessment is as old as, the concept of management and in an informal sense; it is probably as old as mankind.

Nor performance appraisal is done in isolation. It is linked to job analysis as shown in Fig. Performance Appraisal Job Analysis Performance Standards Describes work personnel requirement of a particular job and Translate job requirements I into levels of acceptable or I’ unacceptable performance Describes the job-relevant strengths and weaknesses of each individual Fig. Relationship of Performance Appraisal and Job Analysis Job analysis sets out requirements, which are translated into performance standards, which in turn from the basis for performance appraisal. -7-

Specially Uploaded for ProjectsParadise. com OBJECTIVES OF PERFORMANCE APPRAISAL Data relating to performance assessment of employees arc recorded, stored. and used for seven purposes. The main purposes of employee assessment are: 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 unorganized sector) regular pay scales have not been fixed. 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 a selection, training, and transfers have been effective or not.

Broadly, performance appraisal serves four objectives(i) (ii) (iii) (iv) developmental uses, administrative uses/decisions, organizational maintenance/objectives, and documentation purposes -8- Specially Uploaded for ProjectsParadise. com Table below outlines these and specific uses more clearly:- Multiple Purposes of Performance Assessment General Applications Developmental Uses Specific Purpose Identification of individual needs Performance feedback Determining transfers and job assignments Identification of individual strengths ad development needs Salary Promotion

Administrative Uses/Decisions Retention or termination Recognition of individual performance Lay-offs Identification of poor performers HR planning Determining organization training needs Evaluation of organizational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organizational development needs Criteria for validation research Documentation for HR decisions Helping to meet legal requirements Organizational Maintenance/ Objectives Documentation -9- Specially Uploaded for ProjectsParadise. com PERFORMANCE APPRAISAL AND COMPETITIVE ADVANTAGE

The objectives of performance appraisal, listed above, point out the purpose which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm’s competitive strength. Besides encouraging high levels of performance, the evaluation system helps identify employees with potential, reward performance equitably and determine employee’s need for training. Specifically, performance appraisal helps an organization gain competitive edge in the following ways (see Fig below) Strategy and Behavior Improving Performance Making correct decisions

Competitive Advantage Values and Behaviour Minimizing dissatisfaction and turnover Ensuring Legal Compliance – 10 – Specially Uploaded for ProjectsParadise. com Fig: How Performance Appraisal can contribute to Firm’s Competitive Advantage? Improving Performance An effective appraisal system can contribute to competitive advantage by improving employee job performance in two ways-by directing employee behaviour towards organizational goals, as was done by the second beekeeper (see opening case), and by monitoring that behaviour to ensure that the goals are met. Making Correct Decisions

As stated above, appraisal is a critical input in making decisions on such issues as pay raise, promotion, transfer, training, discharges and completion of probationary periods. Right decision on each of these can contribute to competitive strength of an organization. If promotion, for example, is made on performance, the promotee feels motivated to enhance his or her performance. Ensuring Legal Compliance Promotions made on factors other than performance might land up a firm in a legal battle, thus diverting its focus on non-productive areas, as it happened to Williamson Magar.

Organizations can minimize costly performance-related litigation by using appraisal systems that give fair and accurate ratings. Minimizing Job Dissatisfaction and Turnover Employees tend to become emotional and frustrated if they perceive that the ratings they get are unfair and inaccurate. Such employees find that the efforts they had put in became futile and obviously get de-motivated. Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased turnover.

Fair and accurate appraisal results in high motivation and increased – 11 – Specially Uploaded for ProjectsParadise. com job satisfaction. An organization having satisfied and motivated employees will have an edge over its competitors. Consistency between Organizational Strategy and Behaviour An organization needs a strategy consistent with the behaviour of its employees if it were to realize its goals. A truism of organizational life is that people engage themselves in behaviours that they perceive will be rewarded.

As employees want to be rewarded, they tend to occupy themselves more with those activities on which the organization emphasizes. For example, if the focus is on service, employees will behave in ways that will help them in gaining rewards associated with service delivery. If the focus is on cost control, employees will seek to control cost and thus be recongnised and rewarded. If the focus is on rewarding productivity, employees will strive for productivity.

The performance appraisal becomes not only a means of knowing if the employees’ behaviour is consistent with the overall strategic focus, but also a way of bringing to the fore any negative consequence of the strategy- behaviour fit For example, a single point productivity focus may include potential negative consequences such as decreased quality and co-operations. Thus, the performance appraisal system is an important organizational mechanism to elicit feedback on the consistency of the strategy-behaviour link. Organizational Strategy and Performance Appraisal

The performance appraisal system serves many organizational objectives and goals. Besides encouraging high level of performance, the evaluation system is useful in identifying employees with potential, rewarding performance equitably. And determining employees’ needs for development. These are all the activities that should support the organization’s strategic orientation. Although these activities are clearly instrumental in achieving corporate plans and long-term growth, typical appraisal systems in most organizations have been focused on short-term goals. 12 – Specially Uploaded for ProjectsParadise. com From the strategic management point of view, organizations can be grouped into three categories defenders, prospectors and analyzers. Performance appraisal has definite roles in all the three strategies. Typically, defenders have a narrow and relatively stable product-market domain. Because of this narrow focus, these organizations seldom need to make major adjustments in their technology. Structure or methods of operations. They devote primary attention to improving the efficiency of their existing operations.

Because of the emphasis 011building skills within the organization, successful defenders use performance appraisal for identifying training needs. Performance appraisal is usually more behaviour oriented. Organizations with a prospector strategy continuously search for different product and market opportunities. In addition, these organizations regularly experiment with potential responses to new and emerging environmental trends. Prospectors are often the harbingers of change.

Because of the emphasis on skills identification and acquisition of human resources from external sources, as opposed to skills building with the organization, prospectors often use the performance appraisal as a means of identifying staffing needs. The emphasis is on results. Finally, the focus is on division and corporate performance evaluation as they compare with other companies during the same evaluation period. Organizations with an analyzer strategy operate in two types of product-. market domains. One domain is stable while the other is changing.

In their more innovative areas, managers watch their competitors closely and rapidly adopt the ideas that appear promising. In general, analyzers use cost effective technologies for stable products and project or matrix technologies for new product. Analyzers tend to emphasize both skill building and skill i1cquisilion and employ extensive training programmes. Thus, these organizations attempt to identify both training as well as staffing needs. The appraisal systems are considered at the individual, group and divisional levels.

Finally, successful analyzers have a tendency to examine current performance with past performance within the organization. Cross-sectional comparisons (comparisons among ‘companies) may also occur. Whatever the category, a performance appraisal system has strategic importance to a firm in three ways: – 13 – Specially Uploaded for ProjectsParadise. com 1. Feedback mechanism, 2. Consistency between organizational strategy and job behaviour, and 3. Consistency between organizational values and job behaviour. APPRAISAL PROCESS

Figure below outlines the performance- appraisal process. Each step in the process is crucial and is arranged logically. The process as shown in Fig. Below is somewhat idea1ised. Many organizations make every effort to approximate the ideal process, resulting in first-rate appraisal systems. Unfortunately, many others fail to consider one or more of the steps and, therefore, have less-effective appraisal system. Objectives of Appraisal Establish job Expectation Design an appraisal performance Performance interview Use appraisal data for appropriate purposes 1.

Objectives of Appraisal Objectives of appraisal as stated above include effecting promotions and transfers, assessing training needs, awarding pay increases, and the like. The emphasis in all these is to correct problems. Theses objectives are appropriate as long as the approach in – 14 – Specially Uploaded for ProjectsParadise. com appraisal is individual. Appraisal in future, would assume systems orientations. In the systems approach, the objectives of appraisal stretch beyond the traditional ones. In the systems approach, appraisal aims at improving the performance, instead of merely assessing it.

Towards this end, an appraisal system seeks to evaluate opportunity factors. Opportunity factors include the physical environment such as noise, ventilation and lightings, available resources such as human and computer assistance and social processes such as leadership effectiveness. These opportunity variables are more important than individual abilities in determining work performance. In the systems approach the emphasis is not on individual assessment and rewards or punishments. But it is on how work the work system affects an individual’s. In the systems approach the emphasis is not on individual assessment and rewards or punishments.

But it is on how the work systems affect an individual’s performance. In order to use a systems approach, managers must learn to appreciate the impact that systems levels factors have on individual performance and subordinates must adjust to lack of competition among individuals. Thus, if a systems approach is going to be successful, the employee must believe that by working towards shared goals, everyone will benefit. Not that the role of the individual is undermined. The individual is responsible for a large percentage of his or her work performance.

Employees should not be encouraged to seek organizational reasons for his failures. The identifications of systems obstacles should be used to facilitate development and motivation, not as an excuse to poor performance. The following table displays some of the differences between the traditional approach and the systems-oriented one. PERFORMANCE APPRAISAL SYSTEMS Traditional Attribution to individual Control, documentation Directional, evaluative Occasional High Individual orientation Systems Attribution to systems Development, problem solving Facilitative, coaching Frequent Low Group orientation

Guiding value Primary roles Leadership practices Appraisal frequency Degree of formality Reward practices – 15 – Specially Uploaded for ProjectsParadise. com 2. Establish Job Expectations The second step in the appraisal process is to establish job expectations. This includes informing the employee what is expected of him or her on the job. Normally, a discussion is held with his or her superior to review the major duties contained in the job place of formal performance evaluation. 3. Design Appraisal Programme Designing an appraisal programme poses several questions which we need to answers. They are: – 1.

Formals versus informal appraisal 2. Whose performance is to be assessed? 3. Who are the raters? 4. What problems are encountered? 5. How to solve the problems? 6. What should be evaluated? 7. When to evaluate? 8. What methods of appraisal are to be used? What methods? Formal V/s Informal Whose performanc e When to evaluate? Appraisal design What are the raters? What to evaluate? How to solve? What problems – 16 – Specially Uploaded for ProjectsParadise. com 1. Whose performance should be rated? To the question as to whose performance should be rated, the answer is obvious—employees, is it individual or teams?

Specifically the rate may be defined as the individual, work group, division, or organizations. It is also possible to define the rate at multiple levels. For example, under some condition, it may be desirable to appraise performance both at work-group level for merit-pay increases and at the individual level to assess training needs. Two conditions necessitate a group level appraisal—group cohesiveness and difficulty in identifying individual performance. Description. Individual should not be expected to begin the job until they understand what is expected out of them. 2.

Formal V/s informal appraisal: – the first step in designing an appraisal programme is to decide whether the appraisal should be formal or informal. Formal appraisal usually occurs at specified time periods—once or twice year. Formal appraisals are most often required by the organizations for the purposes of employee evaluation. Informal performance appraisal can occur whenever the superior feels the need for communication. For example, if the employee has been consistently meeting or executing standards, an informal appraisal may be in order to simply recognize this fact.

Discussions can take place anywhere in the organizations, ranging from the managers office to the canteen. But care needs to be taken to ensure that the discussion is held in private. Many organizations encourage a mixture of both formal and informal appraisal. The formal appraisal is most often used as primary evaluation. However, the informal appraisal is very helpful for more performance feedback. Informal appraisal should not take the Group cohesiveness refers to shared feeling among work-team members. There is cooperation and clear understanding to accomplish tasks which are 17 – Specially Uploaded for ProjectsParadise. com interdependent. Any attempt to assess individual performance shall undermine group cohesiveness and tend to promote individualistic or even competitive orientation. The difficulty in identifying individual contribution is also important to consider. In some cases, interdependent of tasks is so complete that it is difficult to identify who has contributed what. There is no other choice but to view that task as a team effort. But the point to be remembered is that the performance of all employees must be rated.

All must become raters. 3. Who are Raters? Raters can be immediate supervisors, specialist from the HR department, subordinates. Peers, committees, clients, self appraisal, or a combination of several. a. Immediate supervisor is the fit candidate to appraise the performance of his or her subordinate. There are 3 reasons in support of this choice. No one is familiar with the subordinate’s performance than his or her superior. Another reason is that the superior has the responsibility of managing a particular unit. When the tasks of evaluating a subordinate is given to nother person, the superior authority may be undermined seriously. Finally, training and development of subordinate is am portent element in every mangers job. Since appraisal programme are often clearly linked to training and development, the immediate superior may be the legal choice to conduct the performance evaluation. b. Subordinate can assess the performance of their superiors. The use of this choice may be useful in assessing an employee ability to communicate, delegate work, allocate resources, disseminate information, resolve intrapersonal conflict, and deal with employees on a fair basis.

But the problem with the subordinate evaluation is that supervisors tend to become popular, not by effective leadership, but by mere gimmicks. c. Peers are in better position to evaluate certain facts of job performance which the subordinates or supervisors cannot do. Such facts include – 18 – Specially Uploaded for ProjectsParadise. com contribution skills, reliability and initiative. Closeness of the working relationships and the amount of personal contacts place peers in a better position to make accurate assessments. Unfortunately friendship or animosity may result in distortion of evaluation.

Further when reward allocation is based on peer evaluation, series conflicts among co-workers may develop. Finally join together to rate each other high. d. Although clients are seldom used for rating employee performance, nothing prevents an organization from using this source. Clients may be members within the organization who have direct contact with the rate and make use of an output (goods or services) this employee provides. Interest, courtesy, dependability and innovativeness are but a few of the qualities for which clients can offer rating information.

Clients, external to the organization can also offer similar kinds of information. Where appraisal is made by the superior, peers, subordinates and clients, it is called the 360-degree system of appraisal. First developed at General Electric, US in 1992 the system has become popular in our country too. GE (India). Reliance Industries, Crompton Greaves, Godrej Soaps, Wipro, Infosys, Thermax and Thomas Cook are using the method with greater benefits. The Arthur Anderson Survey 1997 reveals that 20% of the organization use 360 degree method.

In the 360 degree method, besides assessing performance. Other attributes of the assess—talents, behavioral quirks, values, ethical standards, tempers and loyalty are evaluated by the people who are best placed to do it. Many employees use rating committees to evaluate employees. These committees are often composed of the employee’s immediate supervisor and three or four other supervisors who come in contact with the employee. This choice is welcome when an employee in the course of his or her job performs a variety of tasks in different environment. For e. g. supervisor may work with the employee when technical aspects of a job are being performed and another supervisor may deal with the same employee in situations where communications skills are crucial. There are several benefits in – 19 – Specially Uploaded for ProjectsParadise. com using multiple raters. First there may be objectivity in rating as more than rater is involved in the assessment. Furthermore where there are differences in the rater ought ratings they usually stem from the fact that raters at different level in the organization often observe different facets of an employee performance-the appraisal to reflect these differences.

The disadvantages of committee rating are that it diminishes the role of the immediate supervisor in the area of training and development. e. In self –appraisal employee himself or herself evaluates his or her own performance. Indian Telephone Industries has been following the selfappraisal system for executives in grade I to IV. Hewlett-Packard and Texas Instruments too ask their performance to prepare their own appraisal. On the positive side it may be stated that in self-appraisal there is an opportunity to participate in evaluation particularly if it is combine with goal setti9ng and this should be improve the mangers motivation.

Managers are less defensive in self-evaluation than when supervisors tell them what they are. Self-appraisal is best suited where executive development is the main purpose of evaluation as the approach enablers’ managers to clearly assess their areas of differences. Unfortunately selfappraisal falls short almost by any criterion. They tend to be more lenient compared to other sources of evaluation, even that of peers who are more lenient than their superiors. Self-appraisal is also more likely to be less biased and less in agreement with judgment of others.

In practice a combination of methods is followed for employee. For example evaluation by self may be followed by a superior, the personal department or the HR department (following diagram). – 20 – Specially Uploaded for ProjectsParadise. com Different Raters of Performance- L, Bangalore works PROCEDURE AND SCHEDULE FOR PERFORMANCE APPRAISL PROCESS Action by/Date Form/Section Brief description of Activities Annual Performance Review Form 2 Sec: Employee by 15. 4. 1999 • • • Describes actual results against objectives set earlier.

Not more than five Carries out self-review highlighting significant contributions and factors influencing performance Keeps himself or herself ready for appraisal interview by analyzing his performance, strengths and weakness and development needs. Form 2 Sec: B, C • • • • • • From 3 From 1 From 2 Sec C Sec D – 21 – Prepares for the appraisal interview by analyzing results against objectives, strengths and weakness and recalling significant incidents. Related to critical attributes. Discusses with the employees and provides feedback on critical attributes and rate on performance and attributes.

Carries out development planning with the employee Carries out performance planning for 1994-1995 with employee, selects and describes role related attributes. Describes strengths and weakness and comments on potential areas for growth Records training needs and apecific developments plans. Specially Uploaded for ProjectsParadise. com • From 2 Sec E Next superior(s) By 15. 6. 1994 • • Comments on specific developments plans Makes overall observations on the employee’s performance Forwards the forms if necessary to his superior to ensure: 1. Covenants are reviewed by a superiors at least at DGM level 2.

Superiors/ executives are reviewed by covenanted officers. Immediate superior(s) By 15. 6. 1994 From 2 • • Notes the comments by the next superiors and conveys significant observations to employee Forwards for convents to HRD depts. and for superiors/executives to Analyses rating and comments and furnishes data to all concerned for necessary actions Co-ordinates Development Action Proposals at Respective Group/ unit level Plans training programme and other actions Complies Pa data for aggregate analysis Comments on Pa exercise and send report to GMs and corporate management

From 2 Personnel/ HRD dept. By 15. 7. 1994 • • HRD dept. By 30. 7. 1994 From 2 • • • Immediate Superior From 1 • • From 3 Reviews performance and objectives and writes comments as necessary Reviews development action taken and records status. – 22 – Specially Uploaded for ProjectsParadise. com 2. PERIODIC REVIEW (during the year) Whoever may be the rater two requisites must be fulfilled. First the rater must be free from bias. Second the rater must have an opportunity to observe the full spectrum of activities and behavior of the rate over an extended time period. ] 4.

Problems of Rating: – Performance appraisals are subject to a wide variety of inaccurate and biases referred to as rating errors. These errors occur in the rater’s observations, judgments and information processing and can seriously affect assessment result. The most common rating errors are leniency or severity, central tendency, halo effect, primary and recency effects, perceptual set, performance dimension behavior, spill over effect and status effect. 5. Leniency or Severity: – Leniency or severity on the part of the rater makes the assessment subjective. Subjective assessments defeat the very purpose of performance appraisal.

Ratings are lenient for the following reasons. • • • • • • The rater may feel that anyone under his or her jurisdictions who is rated unfavorably will reflect poorly on his or her own worthiness. He or she may feel that anyone who could have been rated unfavorably has already been discharged from the organization He or she may feel that a derogatory rating will be revealed to the rate to the determinant of the relations between the rater and rate. He or she may rate leniently in order to win promotions for the subordinates and therefore indirectly increase his or her hold over them.

He or she may be projecting He or she feels it necessary to always approve of others in order to gain approval for him or herself. – 23 – Specially Uploaded for ProjectsParadise. com • • He or she may be operating on the premise, “whoever associates with me is meritorious therefore, and I am meritorious”. He or she may rate leniently because there exists, in the culture, a response set approve rather than disapprove. WC according to a Severe rater WC according to a lenient rater True amount WC LOW written communication Skills (WC) HIGH 4.

Central tendency: – this occurs when employees are incorrectly rated near the average or middle of the scale. The attitude of the rate is to play safe. This safeplaying attitude stems from certain doubts and anxieties which the raters have while assessing the ratees. Such doubts and anxieties are : • • • • • • “Do I know the man sufficiently well to be able to give a fair assessment of him? “If I rate him the way I think I should what will be its influence on his relations with me and on his performance in the future? “If I rate him the way I think I should what will be its effect on my relations with the others subordinates? “If I rate him the way I think I should what will be its effect on his relationship within the group or subordinates? ” “Will I able to be objective in view of pressures from peers, subordinates and trade union? ” “If I rate him the way I think I should will be accused to being partial? ” – 24 – Specially Uploaded for ProjectsParadise. com • • “How will my boss view the appraisal I make and how will that influences the way he appraises the man? ” “What standards will my peers adopt to appreciate their subordinates? And in view of this am I likely to affect adversely the future of my subordinates? Naturally the rates use such expressions as satisfactory and average to describe the performance of the rates. For example the principal of a college while giving character certificates to the outgoing students describe the character of each student as satisfactory. Obviously it’s become difficult to distinguish between excellent performance and poor performance. In small organization it is common to label all employees as an average. But in large companies errors of this type tend to obviate the value of evaluations. Close to error of central tendency is the problem of range restriction.

Range restriction may involve clustering all employees around any point on a scale, often in combination with leniency errors at very top. What is distinctive in the error of central tendency and the error of range restriction is a failure to note real performance differences, either intentionally or due to insufficient attention. Halo Error – it takes place when one aspect of an individual performance influences the evaluation of the entire performance of the individual just as the assessment of the performance of a student in his or her examination being influence by the opening paragraph of every answer.

If the introductory paragraph is poorly written the chances of scoring high marks in that answer are diminished however good the subsequent portion of the essay may be In an organization a halo error occurs when an emplopuee who work late constantly might be rated high on productivity and quality of output as well as on motivation. Similarly an attractive or popular employee might be given a high overall rating. Rating employees separately can each of a number of performance and encouraging raters to guard against the halo effect are two ways to reduce halo effect.

Rater effect: this includes favoritism, stereotyping and hostility. Excessively high or low scores are given only to certain individual or groups based on the rater’s attitude towards – 25 – Specially Uploaded for ProjectsParadise. com the rate, not on actual outcomes or behavior. Sex, age, race and friendship biases are example of this type of error. Primary and recency effects: – the rater’s ratings are heavily influenced either by behavior exhibited by the rate during the early stage of the review period or by outcomes or behavior exhibited by the rate near the end of the review period (recency).

For example if a salesperson captures an important contract/ sales just before the completion of the appraisal the timing of the incident may inflate his or her standing even though the overall performance of the salesperson may not have been encouraging. Likewise a blunder committed just before the appraisal period may diminish chance of securing a favorable rating even if the performance is good. One way of guarding against such an error is to ask rater to consider the composite performance of the ratee and not to be influenced by one incident or own achievement.

The rater must also be aware of tendency on the part of the rates to improve odds in their favors or suppress weak points during the rating period. Perceptual Set: – this occurs when the rater’s assessment is influenced by previously held beliefs. If the supervisors for example have a belief that employee hailing from 1 particular region is intelligent and hard working his subsequent rating of an employee hailing from that region tends to be favorably high. Performance Dimension order: 2 or more dimensions on a performance instrument follows or closely follow each other and both describe or rotate to a similar quality.

The rater rates first dimension accurately and then rates the second dimension similar to the first because of their proximity. If the dimension had been arranged in a significant different order the rating might have been different. Spillover effect: This refers to allowing past performance appraisal ratings to unjustifiably influence current ratings. Past ratings, good or bad result for the period although the demonstrated behavior does not deserve the rating good or bad. – 26 – Specially Uploaded for ProjectsParadise. om Status effect: – it refers to overrating of employee in higher-level jobs held in high esteem, and underrating employees in lower-level-job or jobs held in low esteem. It is not the rater’s errors alone that are barriers to accurate and valid measurement of employee performance. Barriers lie deep within the genetic and acquired make-up of all people concerned with performance appraisal. A wide variety of emotional, psychological, intellectual and physical factors that at first glance may appear to be separate and irrelevant may combine in any numbers of ways during the appraisal process.

Exhibit 10. 2 Here is a bizarre case of performance appraisal. A pulp making unit located at Harihae in Karnataka, hired 40 engineers in 1994, as management trainees. The new hires were fresh from, REC, Suratkal, and other prestigious institutions. Obviously they were toppers in their respective branches and institutions. The management of the plant adopted a freakish policy with regard to performance appraisal – 10 percent of all the employees were to be rated below average. The management did not want all the employees to be ranked high, notwithstanding their excellent performance.

The axe fell on the trainees. The raters rated all the 40 trainees below average. Humiliated, these 40 put in their papers even before their training period expired. Solving Rater’s Problems the best way to overcome the problems is to provide training to the raters. At HewlettPackard, a 2 day training course is organized every year to prepare managers to handle appraisals better. Not that training is a ‘cure-all’ for all the ills of appraisal systems. From a practical point of view, several factors, including the extent which pay is related to performance ratings, union pressure, turnover rates, time onstraints and the need to justify ratings may be more important than training, influencing the ratings they actually give. This means that improving rating systems involves not just training the raters but remedying outside factors such ass union pressure. And it means that rater training, to be effective, should also add real life problems such as the fact that union representatives will try to influence supervisors to rate everyone high. – 27 – Specially Uploaded for ProjectsParadise. om But training can help improve the appraisal system to the extent of distortion that occurs due to the rater’s error such as halo, leniency, central tendency and bias. In a typical training, raters are shown a video-tape of jobs being performed and are asked to rate the workers. Ratings made by each participant are then placed on a flip chart and the various charts are explained. For e. g. , a trainee is rated on all criteria (such as quantity and quality) about the same, the trainer might explain that halo error had occurred.

If, on the other hand, a trainer rated all video-taped workers very high, this might be explained as a leniency error. Typically, the trainer gives the correct rating and then illustrates the rating errors made. In effect, training of raters must help strengthen the factors that tend to improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement. Factors that help improve accuracy: 1. The rater has observed and is familiar with behaviors to be appraised. 2. The rater has documented the behaviors to improve the recall. 3. The rater has a checklist to obtain and review job-related information. . The rater is aware of personal biases and is willing to take action to minimize their effect. 5. Rating scores by raters of one group or organization are summarized and compared with those by other raters. 6. The rater focuses attention on performance-related behaviors over which the rater has better control than in other aspects of evaluation. 7. Higher levels of management are held accountable for reviewing all ratings. 8. The rater’s own performance ratings are related to the quality of rating given and the performance of units. 9. Performance factors are properly defined.

Factors that may lower accuracy: 1. The rater rates ratees only when administrative actions are contemplated. 2. The rater tends to inflate ratings when the ratees receive scores and results of appraisals. – 28 – Specially Uploaded for ProjectsParadise. com 3. The rater tends to recall more behaviours known to be of particular interest to higher level managers, whether or not they are pertinent, when his or her ratings are reviewed by such authorities. 4. The rater is unable to express him or herself honestly and unambiguously. 5. Appraisal systems, processes and instruments fail to support the rater. 6.

The rater has to rate employees on factors that are poorly defined. 7. Finally, the supervisor/rater must be trained to conduct the appraisal interview. For many raters, this is a difficult task, especially when the appraisal is unfavorable to the rater. Favorable or unfavorable rating, it is the job of the rater to convince the ratee about the appraisal, and advise him or her about the future course of action the rate should take. What should be rated? One of the steps in designing an appraisal programme is to determine the evaluation criteria. It is obvious that the criteria should be related to the job.

The six criteria for assessing performance are: 1. Quality: The degree to which the result or process of carrying out an activity approaches perfection in terms of either conforming to some ideal way of performing the activity, or fulfilling the activity’s intended purpose. 2. Quantity: The amount produced, expressed in monetary terms, number of units, or number of completed activity cycles. 3. Timeliness: the degree to which an activity is completed or a result produced, at the earliest time desirable from the standpoints of both co-coordinating with the outputs of others and of maximizing the time available for other activities. . Cost Effectiveness: the degree to which the use of the organization’s resources (e. g. human, monetary, technological and material) is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource. 5. Need for supervision: the degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome. 6. Interpersonal impact: the degree to which as performer promotes feeling of selfesteem, goodwill and co-operation among co-workers and sub-ordinates. 29 – Specially Uploaded for ProjectsParadise. com These criteria relate to past performance and behavior of an employee. There is also the need for assessing, as was pointed out earlier, the potential of an employee for future performance, particularly when the employee is tipped for assuming greater responsibilities. Exhibit 10. 3 Appraisal of Potential at Philips More and more number of organizations are trying to assess potential of their employees, particularly at the managerial level.

Cadbury India, Sandoz, Pfizer, Mafatlal, Philips, National Organic Chemical Industries, Glaxo and P are a few of the companies which seek to top managerial potential. At Philips a 2 by 2 matrix is used to assess performance and potential to perform. The vertical axis measures potential while the horizontal, actual performance. Both are further subdivided into parameters – high and low – resulting in 4 quadrants of classification. High Potential Low Problem Children Problem Separation Low Performance Stars Solid Citizens High The Philips Model Low Potential-Low Performance: these employees are categorized as question marks.

The company asks such employees to improve their performance levels. Failure to improve would result in their planned separation. High Potential-Low Performance: these are the problem children. In order to help them improve their performance, these employees are shifted to new locations to work and are closely monitored. If performance levels do not improve, these employees are reclassified as question marks and the separation process initiated. – 30 – Specially Uploaded for ProjectsParadise. com High Potential-High Performance: these are the star performers.

They have to be kept engaged with complex assignments all the time and groomed to take up the top positions. Otherwise, they might leave. Low Potential-High Performance: these are called as solid citizens and constitute 70 to 75 % of the total number of employees in any organization. They have skills but lack the potential to grow beyond their current job-profile. The organization has to constantly recognize their limitations and take care of their needs. In order to assess employee potential, Philips has adopted the system that prevails at Philips NV, Holland.

The system at Philips NV uses 4 broad attributes – conceptual effectiveness, operational effectiveness, interpersonal effectiveness and achievement effectiveness and achievement motivation. Each attribute has a 5-point grading scale – excellent, very good, good/adequate, weak and insufficient. Coming to the six criteria, it may be stated that the first 4 – quality, quantity, timeliness and cost effectiveness – are objective in nature; and the last 2 – need for supervision and interpersonal impact – are subjective. Objective measures are quantifiable and are therefore highly useful in measuring the performance of an employee.

But performance of employees should not always be evaluated against the amount of deposits mobilized for his or her bank. The effort put in by him/her, the contacts he/she has established, the image about the bank he/she has created in the eyes of public, and if relationships he/she has maintained with subordinates speak more reliably about the manager’s performance. Here comes the relevance of the subjective criteria. However, as subjective measures are dependent upon human judgments, they are prone to the kinds of errors we noted earlier – leniency or severity, central tendency, halo and the like.

To be useful, subjective measures must be based on a careful analysis of the behaviors viewed as necessary and important for job performance. Of late, there has been a shift in focus of appraisals. This shift is from performance of the individual to the systems approach. As stated earlier, in the systems approach the emphasis is on improving one’s performance. Work performance of an individual depends on organizational factors in addition to his or her abilities. The focus in the systems approach is, therefore, the entire organization. – 31 – Specially Uploaded for ProjectsParadise. om Timing of Evaluation How often should an employee be assessed? The general trend is to evaluate once in 3 months, or six months, or once in a year. According to a survey conducted in 1997 by Arthur Anderson, 70 percent of the organizations conduct performance appraisal once a year. Newly hired employees are rated more frequently than the older ones. Frequent assessment is better than phased evaluation. Feedback in the latter is delayed and the advantage of timely remedial measures by the employee is lost. Frequent evaluation gives constant feedback to the rate, thus enabling him or her to improve performance if there is any deficiency.

The performance of trainees and probationers should be evaluated at the end of respective programmes. METHODS OF APPRAISAL The last to be addressed in the process of designing an appraisal programme is to determine methods of evaluation. Numerous methods have been devised to measure the quantity and quality of employee’s job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or of a particular type of employees.

Broadly, all the approaches to appraisal can be identified into (i) past-oriented methods, and (ii) future-oriented methods. Each group has several techniques as shown in the figure below: – 32 – Specially Uploaded for ProjectsParadise. com Appraisal Methods Past-Oriented Methods Rating Scales: This is the simplest and most popular technique for appraising employee performance; the typical rating-scale system consists of several numerical scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude, co-operation, and the like.

Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, then computes the employee’s total numerical score. The number of points scored may be linked to salary increases, whereby so many points equal a rise of some percentage. RATING SCALE Instructions: For the following performances factors, please indicate on the rating Scale your evaluation of the employee named below: Employee’s Name: Rater’s Name Department Date. – 33 – Specially Uploaded for ProjectsParadise. com Excellent 5 Good 4 Acceptable 3 Fair 2 Poor 1 1.

Dependability 2. Initiative 3. Overall Output 4. Attendance 5. Attitude 6. Co-Operation ———————————————- ————————————————— ————————————————— —————————————– —————————————– 20. Quality of Work —— TOTAL + + TOTAL SCORE + + Rating scales offer the advantages of adaptability, relatively easy use and low cost. Nearly every type of job can be evaluated in a short time, and the rater does not need any training to use the scale.

The disadvantages of this method are several. The rater’s biases are likely to influence evaluation, and the biases are particularly pronounced on subjective criteria such as cooperation, attitude and initiative. Furthermore, numerical scoring gives an illusion of precision that is really unfounded. Checklist: Under this method a checklist of statements on the traits of the employee and his or her job is prepared in 2 columns – viz. , a ‘Yes’ column and a ‘No’ column. All that – 34 – Specially Uploaded for ProjectsParadise. om the rater (immediate superior) should is tick the ‘Yes’ column if the answer to the statement is positive and in column ‘No’ if the answer is negative. A typical checklist is given in the table below. After ticking off against each item, the rater forwards the list to the HR department. The HR department assigns certain points to each ‘Yes’ ticked. Depending upon the number of ‘Yes’ the total score is arrived at. When points are allotted to the checklist, the technique becomes a weighted checklist. The advantages of as checklist are economy, ease of administration, limited training of rater, and standardization.

The disadvantages include susceptibility to rater’s biases (especially the halo effect), use of personality criteria instead of performance criteria, misinterpretation of checklist items, and the use of improper weights by the HR department. Another disadvantage of this approach is that it does not allow the rater to give up relative ratings. Table: – Checklist for Operators SR. NO. 1. 2. 3. 4. 5. 6. Is the employee really interested in the job? Does he or she possess adequate knowledge about the job Is his or her attendance satisfactory? Does he/she maintain his/her equipment in good condition?

Does he/she co-operate with co-workers? Does he/she keep his/her temper? QUESTIONS YES NO – 35 – Specially Uploaded for ProjectsParadise. com 7. 8. 9. 10. Does he/she obey orders? Does he/she observe safety precautions? Does he/she complete what he/she commences? Does he/she evade responsibility? – Forced Choice Method: In this, the rater is given a series of statements about an employee. These statements are arranged in blocks of 2 or more, and the rater indicates which statement is most or least descriptive of the employee. Typical statements are : 1.

Learns fast _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ works hard 2. Work is reliable_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ performance is a good example for 3. Absents often_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ others usually tardy. As in the checklist method, the rater is simply expected to select the statements that describe the rate. Actual assessment is done by the HR Department. This approach is known as the forced choice method because the rater is forced to select statements, which are readymade. The advantage of this method is the absence of personal bias in rating.

The disadvantage is that the statements may not be properly framed – they may not be precisely descriptive of the ratee’s traits. Forced Distribution Method: One of the errors in rating is leniency – clustering a large number of employees around a high point on a rating scale. The forced distribution method seeks to overcome the problem by compelling the rater to distribute the ratees on all points on the rating scale. The method operates under an assumption that the employee performance level conforms to a normal statistical distribution. Generally, it is assumed that employee performance levels conform to a bell shaped curve.

For example, the following distribution might be assumed to exist – excellent 10 %, good 20 %, average 40 %, below average 20 %, and unsatisfactory 10 %. The major weakness of the forced distribution method lies in the assumption that the employee performance levels always conform to a normal distribution. In organizations that have done a good job of selecting and retaining only the good performers, the use of – 36 – Specially Uploaded for ProjectsParadise. com forced distribution approach would be unrealistic, as well as possibly destructive to the employee morale.

The error of central tendency may also occur, as the rater resists from placing an employee in the lowest or in the highest group. Difficulties also arise for the rater to explain to the rate why he or she has been placed in a particular group. One merit of this approach is that it seeks to eliminate the error of leniency. However, the forced choice method is not acceptable to raters and ratees, especially, in small groups or when group members are of high ability. Critical Incidents Method: The critical incidents method of employee assessment has generated a lot of interest these days.

The approach focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective performance of a job. The supervisors as and when they occur record such incidents. Examples of critical incidents of a plant manager are given in the following table: Examples of Critical Incidents for an Assistant Plant Manager – 37 – Specially Uploaded for ProjectsParadise. com One of the advantages of the critical incidents methods is that the evaluation is based on CONTINUING TARGETS CRITICAL DUTIES INCIDENTS

Schedule Production for Plant Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by20% last month Supervise procurement of raw Minimize inventory Let inventory storage costs materials and inventory control costs while keeping rise 15% last month; adequate supplies on Over – Ordered parts “A” hand and “B” by 20%; Under – Ordered part “C” by30% Supervise machinery No shutdowns due to Instituted new preventive maintenance faulty machinery maintenance system for plant; Prevented a machine breakdown by discovering faulty part. ctual job behavior. Further, the approach has descriptions in support of particular ratings of an employee. Giving job-related feedback to the ratee is also easy. It also reduces the personal biases, if raters record incidents throughout the rating period. Finally, this approach can increase the chances that the subordinates will improve because they learn more precisely what is expected of them. The method however has significant limitations. These include: 1. Negative incidents are generally more noticeable that positive ones. 2.

The recording of incidents is a chore to the supervisor and may be put off an easily forgotten. 3. Overly close supervision may result. 4. Managers may unload a series of complaints about incidents during an annual performance review session. The feedback may be too much at one time and thus Full Utilization of personnel and machinery in the plant, order delivered on time – 38 – Specially Uploaded for ProjectsParadise. com appearing as a punishment to the rate. More appropriately, the management should use incidents of poor performance as opportunities for immediate training and counseling.

Behaviorally Anchored Rating Scales: Behaviorally Anchored Scales, sometimes called behavioral expectation scales, are rating scales whose scale points are determined by statements of effective and ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a range of descriptive statements of behavior varying from the least to the most effective. A rater must indicate which behavior on each scale best describes an employee’s performance. Behaviorally anchored rating scales (BARS) have the following features: 1.

Areas of performance to be evaluated are identified and defined by people who will use the scales. 2. The scales are anchored by descriptions of actual job behavior that, supervisors agree, represent specific levels of performance. The result is a set of rating scales in which both dimensions and anchors are precisely defined. 3. All dimensions of performance to be evaluated are based on observable behaviors and are relevant to the job being evaluated since BARS are tailor-made for the job. 4. Since the raters who will actually use the scales are actively involved in the development process.

They are more likely to be committed to the final product. BARS were developed to provide results which subordinates could use to improve performance. Superiors would feel comfortable to give feedback to the rates. Further, BARS help overcome rating errors. Unfortunately, this method too suffers from distortion inherent in most rating techniques. – 39 – Specially Uploaded for ProjectsParadise. com Field Review Method This is an appraisal by someone outside the, assessor’s own department. Usually someone from the corporate office or the HR department. The outsider eviews Employee records and holds interviews with the ratee and his or her superior. This method is primarily used for making promotional decision at the managerial level. Field reviews are also useful when comparable information is needed from employees in different units or locations. Two disadvantage of this method are:1. An “outsider” is usually not familiar with conditions in an employees’ work environment which may affect the employee’s ability or motivation to perform. 2. An ‘outsider’ review dose not have the opportunity to observe employee behavior of performance over a period of time and in a variety of situations.

But only in an artificially structured interview situation which extends over a very short period of time. – 40 – Specially Uploaded for ProjectsParadise. com Extremely good 7 performance Good performance Slightly good performance By knowing the price of items. This checker would be expected to look for mismarked and unmarked items. You can expect this checker to be aware of items that constantly fluctuate in price. When in doubt. This checker would ask the other clerk if the item is taxable. This checker can be expected to verify with another checker a discrepancy between the shelf and the marked price before ringing up that Item.

When operating the quick check. If the lights are flashing this checker can be expected to check out a customer with 15 items. You could expect this checker to ask the customer the price of an Item that he or she does not know. In the daily course of personal relationships, he or she may be expected to linger in long conversations with a customer or with another checker. 6 5 Neither poor nor good performance 4 Slightly poor performance Poor performance 3 2 In order to take a break. this checker can be expected to block off the check stand while people wait in line.

Extremely poor 1 performance A BARS Scale for the Knowledge and Judgement Dimension of a Grocery Checker’s Job. Raters, making field reviews normally receive training on how to conduct the interview and develop their writing skills. Being independent of the work scene they normally have less bias for or against the ratee than docs the immediate supervisor. Even when a supervisor or others concerned supply biased information the rater may he able to pinpoint areas requiring training and development assistance. – 41 – Specially Uploaded for ProjectsParadise. com

Performance Tests and Observations With limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may he of the paper-and-pencil variety or an actual demonstration of skills. The test must he reliable and validated to be useful. Even then, performance tests are apt to measure potential more than actual performance. In order for the test to be job related, observations should he made under circumstances likely to be encountered. Practicality may suffer if costs of test development or administration arc high. Con

This essay was written by a fellow student. You may use it as a guide or sample for writing your own paper, but remember to cite it correctly. Don’t submit it as your own as it will be considered plagiarism.

Need a custom essay sample written specially to meet your requirements?

Choose skilled expert on your subject and get original paper with free plagiarism report

Order custom paper Without paying upfront

Objectives of Performance Appraisal Performance. (2018, Mar 05). Retrieved from https://graduateway.com/performance-appraisal/