PERFORMANCE MANAGEMENT SYSTEM3

This system lays down a target setting process where by the organization/ Business goals are
cascaded down to unit/ function/ department and individuals to Organizational/ functional
goals. Achievements of individual targets would lead to attainment of Organizational/
functional goals, which is the driving force behind the Performance Management System.
The frequency of appraisal system may be quarterly, half yearly or annually. Coaching and
counseling given to the employees after report given by the assessor. The system will help
individual establish their targets. Processes are laid down for assessors to provide integral
and important part of system. The system also provides for targets realignment during midyear.
In order to attain objectivity in the appraisal process, individuals would have six to ten targets
in their broad areas with clear measurement indicators agreed in the beginning of the year
would lead to creditability of this process.
This system is an on going interactive process, which uses the multiple sources of feedback
from the supervisors, colleagues and sometimes-self appraisal. Sometimes there is direct
involvement of the customer. It is of flexible format and not static like performance appraisal.
The team participation of the entire employee is necessary everybody should take active
participation in performance management system to make it a success. It is linked to strategic
priorities. After the performance management system has taken place the results are being
measured following different methods. It is a process, which is retrospective and prospective
in nature. Performance appraisal is an annual event, which is done annually. It is done
according to hierarchy of the organization and that to from top to bottom. There is no
involvement of the customer for the appraisal. The most static format is being followed in the
performance appraisal. It is individual oriented and doesnt involve all the employees of the
organization. It is fully based on the activities, which only focus on the job description. Only

results are achieved without any qualitative and quantitative analysis. It is retrospective in
nature.

PERIODICITY OF THE PERFORMANCE MANGEMENT SYSTEM:5

The maximum period for the measurement of the Performance Appraisal is one year. It depends
on the organization when it wants to calculate the performance of the company, it may
differ from company to company. The company chooses the period on the benefits of the
organizations system.

DIFFERENCE BETWEEN PERFORMANCE APPRAISAL AND

PERFORMANCE MANAGEMENT SYSTEM:6
Performance Appraisal
No customer involvement

Performance management
Direct customer involvement

Static format

Flexible Format

Activities Based

Objective/ Competencies Based

Results Only

Result/ process Measurement

Job Description Focus

Linked To Strategic Priorities

Annual Event

Team Participation

Top Down Evaluation

On Going Interaction

Retrospective Evaluation

Multiple Resources of feedback

Retrospective and Prospective

Performance Appraisal is related to the targets assigned to the employee.

Performance Management is related to development of the employees.

PERFORMANCE APPRAISAL1

Performance appraisal is a tool for development of an employee. The purpose of Performance

Appraisal to assess a persons performance against set goals and targets, Identifying his strengths
and areas requiring improvement. Data generated through Performance Appraisal may be sued
to: Determine increments
Reward a manager , it may be monetary or non monetary reward
Identify training need assessment and development requirements
Career progression
Promotion

PERFORMANCE APPRAISAL
Performance appraisal is one of the most important processes of personnel management. It helps
in appraising and judging the performance of the workers. The purpose of performance appraisal
is to improve the organizations performance through the enhanced performance of the
individuals. It is a process of management not merely a small function. It is not a Scheme
devised by the personal department for managers to use in accordance with the directives of that
department and generating completed forms, which are stowed away in employees dossiers and
then forgotten.
Acc to Dale Yoder, 7 Performance Appraisal refers to all format procedures used in a work
organization to evaluate personalities and contribution and potential of group members.
Acc to flippo,3 Performance appraisal is the systematic, periodic and an impartial rating of an
employees excellence in matters pertaining to his present job and his potential for a better job.

Performance appraisal is a natural process of management, it basically

comprises of three functions:1.
2.
3.

Measuring Performance
Improving Performance
Exercising Leadership

 Measuring Performance:- Measuring performance is in accordance with the edge if you

cant measure it you cant manage it. The purpose of measuring performance is to indicate
not only where things are not going acc to plan but also to identify where things are going
well so that steps can be taken to built on success. Performance is a means for creating and
maintaining a : Climate and success in the organization.
Improving Performance:- Building a climate of success involves taking specific steps to
improve the performance of individuals or teams. Because managers depend on the
performance, they have a major and continuing responsibility to take whatever action is
necessary to improve it. This is entirely a natural process of management and whenever any
one completes a task or project good managers will consciously or unconsciously ask
themselves.
How well was that done?
Could it have been done better?
Did I pick the right person?
Did I brief that person properly?
In what ways, if any, does this person need to improve?
What guidance or help can I provide this person to ensure that better results are achieved
next time?
Performance appraisal aims to provide for more systematic and thought through conclusion by
reference to specific facts and behaviors, which have produced identifiable results.

Exercising Leadership:- Leadership is about encouraging and inspiring individuals and

teams to give their best to achieve a desired result. Managers as leaders have to achieve the
task. Achieving the task involves leaders tin getting answers to the following questions:

What needs to be done and why?

What results have to be achieved?
What problems have to be overcome?
Is the solution to these problems straightforward or is there a measure of ambiguity?
Is this a crisis solution?
What is the time-scale for completing the task?

These functions have their specific importance in process of performance

appraisal. The

essential feature of performance appraisal is to provide a flexible mean for managers, and those
whom they manage, to operate a partners but within a framework that describes how they can
best work together.

Contents of Performance Appraisal :7

The contents of Performance appraisal needs to be examine under four main headings:
What is to be appraised-the factors to be taken into account by appraisers and appraises.
How appraisal will take place- the methods to be used.
When formal appraisal will be carried out-at yearly, half yearly or even quarterly.
What needs to be done to ensure the appraisal is continuing process, to use counseling and
coaching skills to improve skills and performance.

What is to be appraised?
It is very important for a manager to know what all things are to be appraised; he should be very
clear about the things to appraise. In effect there are four things managers need to look at when
he is appraising performance.
Inputs What the job holders bring to the job in the shape of their knowledge and skills i.e.
attributes which are defined as what people need to know and be able to do to perform their
job effectively.
Process: The behaviors of jobholders in applying their knowledge and skills to the delivery
of results. These are sometimes referred to as competencies. These described the behavior
required of people to carry out their job effectively.
Outputs: The measurable or at least observable results of the behavior exhibited by
jobholders.
Outcomes: The ultimate impact of the jobholders on the result of their teams or departments
and their overall contribution to achieving the objectives of the organization.

 How should appraisal take place?

The foundation of performance appraisal is provided by what the jobholder is expected to
do in a job description and by reference to agreed objectives the performance appraisal
process built on this foundation can be described as a cycle consisting of
1.
2.
3.

Preparation for the appraisal discussion

The formal appraisal discussion
Informal reviews.

Discussion

Informal Review
Preparation

THE PERFORMANCE APPRAISAL CYCLE8

The preparation section of the cycle covers the pre-meeting work of the appraiser and the
appraise who both review results in the light of previously agreed objectives and decide on any
matters they want to raise at the appraisal discussion.

The formal appraisal section of the cycle is concerned with:8

Conducting the appraisal discussion

Overcoming any problem emerging during the appraisal.

Concluding the appraisal by recording the results, agreeing action plans and, as necessary,
obtaining another view from the appraisers manager to ensure that a fair and thorough
appraisal has taken place.

The information review section of the cycle consists of:

Information discussions that take place as and when required and may involve updating
objectives or performance plans;
The process of coaching and counseling, which help to implement the development and
performance improvement programme.
When appraisal should take place?
Formal appraisal discussions are often held annually but some fast moving organizations
prefer to have them twice a year or even more frequently, say at quarterly intervals. When
employees are working on some projects, as in a consultancy firm, there may be an
appraisal after every assignment.
Ensuring that appraisal is a continuing process
To ensure that appraisal is not just seen as a one- a-year event to be got over as quickly as
possible it is necessary to emphasize the continuing nature of the process in briefing and
training. Appraiser & appraiser should understand that feedback & appraisal are in effect
everyday occurrences.

PROCESS OF PERFORAMNCE APPRAISAL2

Performance Planning

 Managing Performances
Reviewing Performances
Rewarding Performances
The process can be shown through a figure, which would make the process more clear;
Strategic Planning

Performance Planning

Rewarding Performance

Managing Performance

Reviewing Performance

Process of Performance Appraisal2

Performance Planning: - A performance standard setting is the key task. These should have
been defined in outcome terms in the why part of the accountability/ task definition. Standards
should preferably be quantified in terms, of level of service or speed of response.
A performance standard should take the form of a statement that performance will be up to
standard if a desirable, specified and observable result happens.
Measuring Performance: Measurement is the key aspect of performance appraisal on the
ground that If you cant measure it you cant improve it. It is pointless to define
objectives or performance standards unless there is agreement and understanding on how
performance in achieving these objectives or standards will be measured.
Reviewing Performance: Reviewing the performance means comprising the actual performance
with the target settings or performance standards as set up by the organization policies. It is very

important part of performance appraisal process as it also forms the basis for rewarding the
performance.
Rewarding Performance: Rewarding the performance is the last step by giving the employees
incentives according to the work done by them. The incentives may be monetary or nonmonetary. Monetary incentives are in form of increments in wages, bonus and many others. Nonmonetary incentives provided are appreciation of work, level of trust and faith of employees.

Objectives of Performance appraisal10

Objectives mean something which ahs to be accomplished a point to be aimed at. There are
two main types of objectives of performance appraisal.
(1)

Work/ Operational Objectives

(2)

Development/ Personal or Learning Objectives.

Operational Objectives:
Consistency: with the values0 of the organization and departmental and organizational
objectives.
Precise: clear and well defined, using positive words.
Challenging: to stimulate high standards of performance and to encourage progress.
Measurable: they can be related to quantified or qualitative performance measures.
Achievable: within the capabilities of the individual- account should be taken of any
constraints which might affect the individuals capacity to achieve the objectives.
Agreed: by the manager and the individual concerned- the aim is to provide for the
ownership, not the imposition, of objectives, although there may be situations where
individuals have to be persuaded to accept a higher standard than they believe themselves to
be capable of attaining.
Time related: achievable within a defined time scale.
Teamwork oriented emphasizes team work as well as individuals achievement.
Some specific positive objectives of performance appraisal are:
To review past performances.
To assess training needs.

 To help develop individuals.

To audit the skills within an organization.
To set targets for future performance.
To identify potential for promotion.
Acc to Alan Fowler in P.M. Flur
Staff works best when they know what they have to do, how well they have to do it, and how ell
are thought to have done, so they need to talk to their managers at least once a year about this
and their managers need to take their staffs views into account when setting work goals and
deciding who needs what training.
All types of objectives are equally important for the organization, if the objectives set are
inappropriate all the organizational work would be mislead.

Aims & Principals of Performance Appraisal9

Aims:
To increase mutual understanding of preferential requirements.
To note and recognize achievements.
To note and analyze any problem in meeting requirements.
To provide the opportunity to discuss aspirations and concern about career prospects and
present job.
To definite and redefine future objectives.
To agree action plans.
To agree self-development and training needs.
Principles: 9
Concentrating on developing strengths as well as addressing performance problems.
Based on open and constructive discussions.
An everyday and natural management process, not just one a year event and not just a
form filling exercise.

Benefits of Performance appraisal:4

For the organization:
The organization comes to know the true position of the employees
working capacities and the problems they face while working in the organization. This
performance appraisal system also acts as a motivating factor for the employees, which helps the
organization to get better results.
For the appraise:
The appraise fells themselves an important part of the organization, they get a
chance to express their views in front of their superiors; they get a platform to express their
ideas. The employee comes to know the truth about:
To what extent they have achieved their objectives.
IN what respect their work has been most successful.
Are their any aspects of their work, which they have not completed?
Are many other question, which make them assess rightly

Performance Barriers:26
There are many barriers in performance these may differ from individual to individual; these are:
Lack of applause
Unfinished business
Lack of environment
Envy

 Lack of applause: Applause means appreciation, it is very important for the effective
performance expected from the employees, if they doesnt exist a proper level of
applause this hinders the performance of the employees.
Unfinished Business: Unfinished business is also barrier in the performance of the
employees; they do not get all the necessary requirements that they need to work up to
their optimum capacity.
Lack of environment: Environment is the most important factor for the performance. If
there doesnt exist the healthy work environment in the organization if directly hinders
the performances of the employees in the Organization Environment is one of the most
effective barriers in the path of performance.
Envy: Envy in the most critical barrier regarding performance, it occurs when anybody
gives high performance. This is just because due to the capacity to work or the speed of
doing the work but still is very critical barrier in the path of performance.

DIFFERENT TYPES OF APPRAISAL SYTEMS24

Feedback system is designed to build up confidence to reinforce desired behavior, clarify
problems, improve self-awareness and give recognition and ultimately to improve performance.
Different types of feedback or appraisal system are as follows:

In these areas their actual performances are compared with their actual performance acc to the
above mentioned scales
90-degree appraisal system
180-degree appraisal system
360-degree appraisal system
Self Appraisal

90-degree appraisal system:

This is the appraisal system in which the superiors of an employee appraise the
performance. The superiors are the persons who inspect their work and know how well are they
fulfilling your responsibilities. In simple words it is a systematic evaluation of the individual
with respect to his performance on the job and his potential for development. This system is
concerned with determine the differences of the performance among the individuals working in
the organization.

180-degree appraisal system:

This is the appraisal system in which the peers or the people working at same level
appraisal the performance of the employee. This system is not practiced much in the
organization, as the people working at same level dont want others to rise so they do not
appraise the performances of other truly. They discard the performance of each other and
appraise themselves. Due to all these reasons this in not an effective system of appraisal.

360-degree appraisal system:

This is a multirater feed back process; it is one of the most modern and powerful
appraisal systems. It is sued by a number of organizations worldwide. Mutlirater appraisal or
360-degree-performane appraisal is a powerful method to identify the employees strengths and
weaknesses fro the feedback of an individual.

This system is called mutlirater as the feedback is taken from multiple individual who interact
with the appraised in the terms of work and hierarchy. The people who work with the appraised
are requested to provide a feedback and this is then evaluated. It involves not only the superior
but also the peer and subordinate also, not to forget self appraisal as well. This is thus a more
complete and accurate appraisal system.
Multi rating involves the following steps:
1.

Questionnaire Building is the first carried out to create the questionnaire that will be
used to accurately measure various competencies.

2.

Collecting of feedback from the relevant quarters i.e. superior, peers, self, subordinates
is carried out next.

3.

Normalization of values is then carried out to remove the anomalies introduced by

lenient or stringent appraisers.

4.

Number Crunching is done once the responses are received so as to extract reports
based on the weights given to the responses of the employee.

5.

Report Analysis is them done to analyze the implication of the contents of each report.

Self Appraisal
Self-appraisal means getting individuals to analyze and assess their own performance as a
basis for discussion. This appraisal process is likely to generate less inhabited and more
positive discussion to provide a better climate for identifying problems, that are mostly
considering solutions and helping individuals to realize their potential and develop their career
prospects. Self appraisal can reduce defensiveness by encouraging appraises to take the lead in
reviewing their own performance, rather than having an assessment imposed on them, and it
focuses their attention on the key performance and development issues with which they should
be concerned.

This is an effective system of appraisal and is followed in large number of organization

worldwide. Some of the advantages of Self appraisal can be summed as follows : It overcomes many of the traditional problems of performance appraisal by improving the
flow of relevant accurate information to appraisers.
It assists in resolving uncertainties about criteria for job success.
It is likely to reduce defensive behavior.
It can have a positive effect on employee motivation by involving employees in an active
way in the appraisal process.
It encourages better preparation for appraisal interviews.
It helps to develop more positive attitudes to performance appraisal.
It generates a proactive approach to development.

90-degree Vs Multirater System

90-degree system depends on the feedback of one person, the superior. This often leads to
employee complaints about bias and nepotism. Also feedback from only one person is rarely
comprehensive, since it gives only one view of the whole picture. Also, comments fly one way,
with employees never having an opportunity to comment on or compliment their superiors. All
this leads to low employee motivation.
On the other hand. Multi rater system, if carried out intelligently, can handle these issues.
Due to the number of people who give feedback, most bias issues are averaged out. Feedback
thus gathered would give a more complete picture sine it includes all views. Employees can also
motivate since each one feels that their views are considered and respected.