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M.Zander

Performance
andPotential
Appraisal

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XinXii.comeBooks&documentsfromindieauthors
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Please note that much of this publication is based on personal experience and anecdotal
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achieve complete accuracy of the content in this Guide, they assume no responsibility for
errors or omissions. Also, you should use this information as you see fit, and at your own
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fact, it's likely that they won't be the same, and you should adjust your use of the
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Copyright2011MartinZander.Allrightsreservedworldwide.

Contents
PerformanceandPotentialAppraisal.................................................................................6
Introduction................................................................................................................................6
Whatistobeappraised.............................................................................................................9
Whowillappraise...............................................................................................................9
ThePerformanceAppraisalProcess.........................................................................................12
MethodsofPerformanceAppraisal.........................................................................................16
MBOKeyElements...................................................................................................................27
SuggestionsforimprovingtheeffectivenessofMBO........................................................33
MultiplepersonEvaluationTechniques............................................................................36
AppraisalInterviewandFeedback....................................................................................43
ProblemswithPerformanceAppraisal....................................................................................49
EssentialCharacteristicsofanEffectiveAppraisalSystem......................................................52
PotentialAppraisal...........................................................................................................55
IntroducingaGoodPotentialAppraisalSystem......................................................................56

PerformanceandPotentialAppraisal
Introduction
Afteranemployeehasbeenselectedforajob,hasbeentrainedtodoitandhasworkedon
it for a period of time, his performance should be evaluated. Performance Evaluation or
Appraisalistheprocessofdecidinghowemployeesdotheirjobs.Performancehererefersto
thedegreeofaccomplishmentofthetasksthatmakeupanindividual'sjob.Itindicateshow
wellanindividualisfulfillingthejobrequirements.Oftenthetermisconfusedwithefforts,
whichmeansenergyexpendedandusedinawrongsense.Performanceisalwaysmeasured
in terms of results. A bank employee, for example, may exert a great deal of effort while
preparingfortheCAIIBexaminationbutmanagestogetapoorgrade.Inthiscasetheeffort
expendedishighbutperformanceislow.

Definition
Performanceappraisalismethodofevaluatingthebehaviorofemployeesintheworkspot,
normally including both the quantitative and qualitative aspects of job performance. It is a
systematic and objective way of evaluating both workrelated behavior and potential of
employees. It is a process that involves determining and communicating to an employee
howheorsheisperformingthejobandideally,establishingaplanofimprovement.
PerformanceappraisalisbroadertermthanMeritRating.Inthepastmanagersusedtofocus
on the traits of an employee while ranking people for promotions and salary increases.
Employee's traits such as honesty, dependability, drive, personality, etc., were compared
withothersandrankedorrated.Theattemptwastofindwhatthepersonhas(traits)rather
than what he does (performance); the focus was on the input and not on the output. This
kind of evaluation was open to criticism because of the doubtful relationship between
performanceandmerepossessionofcertaintraits.

Features
Themaincharacteristicsofperformanceappraisalmaybelistedthus:
The appraisal is a systematic process. It tries to evaluate performance in the same
manner using the same approach. A number of steps are followed to evaluate an
employee'sstrengthandweaknesses.
It provides an objective description of an employee's job's relevant strengths and
weaknesses.
Ittriestofindouthowwelltheemployeeisperformingthejobandtriestoestablish
aplanforfurtherimprovement.
Theappraisaliscarriedoutperiodically,accordingtoadefiniteplan.Itiscertainlynot
aoneshotdeal.
Performance evaluation is not job evaluation. Performance appraisal refers to how
well someone is doing an assigned job. Job evaluation, on the other hand,
determineshowmuchajobisworthtotheorganization,andtherefore,whatrange
ofpayshouldbeassignedtothejob.
Performance appraisal may be formal or informal. The informal evaluation is more
likelytobesubjectiveandinfluencedbypersonalfactors.Someemployeesareliked
betterthanothersandhave,forthatreasononly,betterchancesofreceivingvarious
kinds of rewards than others. The formal system is likely to be more fair and
objective, since it is carried out in a systematic manner, using printed appraisal
forms.

Objectives
Performance appraisal could be taken either for evaluating the performance of employees
orfordevelopingthem.Theevaluationisoftwotypes:tellingtheemployeewherehestands
and using the data for personnel decisions concerning pay, promotions, etc. The

developmental objectives focus on finding individual and organizational strengths and

weaknesses; developing healthy superiorsubordinate relations; and offering appropriate
counseling/coachingtotheemployeewithaviewtodevelophispotentialinfuture.
Appraisalofemployeesservesseveralusefulpurposes:
(a) Compensation decisions: It can serve as a basis for pay raises. Managers need
performance appraisal to identify employees who are performing at or above
expectedlevels.Thisapproachtocompensationisattheheartoftheideathatraises
should be given for merit rather than for seniority. Under merit systems, employee
receivesraisesbasedonperformance.
(b) Promotion decisions: It can serve as a useful basis for job change or promotion.
When merit is the basis for reward, the person doing the best job receives the
promotion. If relevant work aspects are measured properly, it helps in minimizing
feelingsoffrustrationofthosewhoarenotpromoted.
(c) Traininganddevelopmentprograms:Itcanserveasaguideforformulatingasuitable
training and development program. Performance appraisal can inform employees
about their progress and tell them what skills they need to develop to become
eligibleforpayraisesorpromotionsorboth.
(d) Feedback:Performanceappraisalenablestheemployeetoknowhowwellheisdoing
onthejob.Ittellshimwhathecandotoimprovehispresentperformanceandgoup
theorganizationalladder'.
(e) Personal development: Performance appraisal can help reveal the causes of good
and poor employee performance. Through discussions with individual employees, a
line manager can find out why they perform as they do and what steps can be
initiatedtoimprovetheirperformance.