CHAPTER 1 INTRODUCTION

INTRODUCTION

The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for sssthe same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War not more than 60 years ago. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. It was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time. Modern Appraisal Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations - but not all - appraisal results are used, either directly or In directly, to help determine reward outcomes. That is, the appraisal results are used to Identify the better performing employees who should get the majority of available merit Pay increases, bonuses, and promotions.

By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay). Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.
Performance Appraisal

Performance appraisal (PA) is one of the important components in the rational and systemic process of human resource management. The information obtained through performance appraisal provides foundations for recruiting and selecting new hires, training and development of existing staff, and motivating and maintaining a quality work force by adequately and properly rewarding their performance. Without a reliable performance appraisal system, a human resource management system falls apart, resulting in the total waste of the valuable human assets a company has. There are two primary purposes of performance appraisal: evaluative and developmental. The evaluative purpose is intended to inform people of their performance standing. The collected performance data are frequently used to reward high performance and to punish poor performance. The developmental purpose is intended to identify problems in employees performing the assigned task. The collected performance data are used to provide necessary skill training or professional development. The purpose of performance appraisal must be clearly communicated both to raters and rates, because their reactions to the appraisal process are significantly different depending on the intended purpose. Failure to inform about the purpose or misleading information about the purpose may result in inaccurate and biased appraisal reports .
Critical Criteria of Developing a PA system

In order for performance appraisal information to be useful, the PA system must be able to consistently produce reliable and valid results. Measurement items in the performance appraisal system must be designed in such a way that the results of rating are consistent regardless of the raters and the timing of the assessment. Another critical criterion in developing a PA system is the validity of the measurements. It is important to make sure that the appraisal items are really measuring the intended performance or target behavior. If they are not, the PA system encourages the wrong kind of work behaviors and produces unintended, frequently negative, organizational outcomes. For instance, if the number of traffic violation tickets issued is an item in performance appraisal of police officers, it encourages them to sit on a corner of a street and pull over as many Violators as possissble during heavy traffic hours. The true purpose of a police force, which is public safety, may become secondary to issuing a large number of tickets for many officers. Basis of Evaluation

The first important step in developing a PA system is to determine which aspects of performance to evaluate. The most frequently used appraisal criteria are traits, behaviors, and task outcomes.
Traits.

Many employees are assessed according to their traits, such as personality, Aptitudes, attitudes, skills, and abilities. Traits are relatively easy to assess once a rater Gets to know rates. But traits are not always directly related to job performance. TraitBased assessment lacks validity and thus frequently raises legal questions.
Behaviors.

For many jobs, performance is so broadly defined or so conceptual in nature Such as ensuring public safety in the police departmentthat it is hard to come up With reliable performance measures. In such cases, desirable behaviors can be identified and assessed in the belief that such behaviors lead to successful performance. Such behavior-focused assessment encourages employees to adopt desirable behavioral Patterns in the workplace.
Task outcomes.

When information about task outcomes is readily available, it is the Most appropriate factor to use in evaluating performance. When an organization has a Clear and measurable goal as in the case of a sales force, this approach is recommended. However, it has its own pitfalls. There is a problem if employee behaviors are not directly related to the task out-come. Too narrow a focus on measuring out-come only sometimes results in unintended negative consequences. When sales staff narrowly focuses on target sales figures to increase their performance measure, for example, they are encouraged to help a few large-volume customers and to ignore many smaller buyers. This may result in poor customer service on the floor.
Evaluation is done by

The most common raters of performance are employees' immediate supervisors, who are usually in the best position to know and observe the employees' job performance. They are also responsible for employees' work. Their evaluation is a powerful tool in motivating employees to achieve successful and timely completion of tasks. However, as a result of working together over a long time with the same employees, the immediate supervisor may build up a fixed impression about each employee and use it every time he or she has to evaluate performance. Some companies find that subordinates are in an excellent position to observe and evaluate their managers' performance, especially when it comes to measuring effective management of their department. While there is merit in asking subordinates to evaluate how they are managed, such evaluation may turn into a popularity contest. Accurate and objective assessment may not be obtained if employees are fearful of

possible retaliation from their supervisors. Anonymity of the evaluators is key to the successful use of subordinates for objective evaluation. Other raters who are frequently used in some companies include peers, customers, and the employees themselves. Peer evaluation is particularly useful when teamwork and collegiality are important to successful task performance. Peer pressure is sometimes a powerful motivator in encouraging teamwork among members. Customer satisfaction is vital to a company's success and can be used in performance appraisal. Many companies systematically collect performance information from customers, typically through anonymous surveys and interviews. Self-assessment is also a useful means, especially when the performance appraisal is intended to identify the training and development needs of potential employees. Each of these raters contributes to assessing certain aspects of performance. Since job performance is multidimensional in nature, it is important to use different raters or a combination of multiple raters depending on the goal of a performance appraisal system. This multilayer evaluation, or so-called 360-degree feedback system, is becoming increasingly popular among many American corporations, including general electric.
PROCESS OF PERFORMANCE APPRAISAL Establishi ng standards

Taking Corrective

Communicat e the

Compare actual with standards and discuss appraisal

Measure actual performance

Establishing performance standards:

Appraisal systems require performance standards, which serve as a benchmark against which performance is measured. To be useful, standards should relate to the desired results of each job. Performance standards must be clear to both the appraiser and the appraise. These standards should be set after thorough analysis of job. Goals must be written down. They must be measurable within certain time and cost consideration. For example, the regional sales office may be asked: The sales of color

television sets in Ghaziabad must increase by 1000 per month in the next 6 months and the budget toward promotion expenses would Rs.5000 per month.
Criteria for identifying and writing good performance goals

1. 2.

What is the task to be accomplished? What will it look like when it is accomplished? When it must be accomplished? What are the cost considerations?

3.
4.

Performance appraisal includes at least two parties; the Appraiser who does the appraisal and the appraise whose performance is being Evaluated. Both are expected to do certain things. The appraiser should prepare job Description clearly; help the appraise set his goals and targets; analyze results Objectively; offer coaching and guidance to the appraise whenever required and reward Good results. The appraise should be very clear about what he is doing and why he is Doing sit. For this purpose performance standards must be communicated to appraise and their reactions should be noted down right away. If necessary these standards must be revised or modified.
Communicate the standards: Measure actual performance: After the performance standards are set and accepted, the next step is to measure actual performance. This require the use of dependable Performance measures, the ratings used to evaluate performance. Performance measures To be helpful must be easy to use, reliable, and report on the critical behaviors that Determines performance. Four common sources of information which are generally used by managers regarding how to measure actual performance are observation, statistical reports, oral reports and written reports. Performance measures may be objective or subjective. Objective performance measures are indications of job performance that can be verified by others and are usually quantitative. objective criteria include quality of production, degree of training needs and accidents in a given period, absenteeism, length of service etc. subjective performance measures are ratings that are based on the personal standards or opinions of those doing the evaluation, and are not verifiable by others. Subjective criteria include rating by superiors, overall goals, and socio-cultural values of the environment. it should be noted here that objective criteria can be laid down while evaluating lower level jobs which are specific and defined clearly. This is not the case with middle level positions that are complex and vague.

Actual Performance may be better than expected and sometimes it may go off the track. Whatever be the consequences there is a way to communicate and discuss the final Outcome. The assessment of another persons contribution and ability is not an easy task. It has serious emotional overtones as it effects the self esteem of the appraise. any
Compare actual performance with standards and discuss the appraisal:

appraisal based on subjective criteria is likely to be questioned by the appraise and leave him quite dejected and unhappy when the appraisal turns out to be negative. Corrective action is of two types: one puts out The fires immediately, while other destroys the root of the problem permanently. Immediate action sets things right and get things back on track whereas the basic Corrective action gets to the source of deviations and seeks to adjust the difference Permanently. Basic corrective steps seek to find out how and why performance deviates.
Taking corrective action, if necessary: Basic Purposes

Effective performance appraisal systems contain two basic systems operating in Conjunction: an evaluation system and a feedback system. The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable. The main aim of the feedback system is to inform the employee about the quality of his or her performance. (However, the information flow is not exclusively one way. The appraisers also receive feedback from the employee about job problems, etc.) One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization.
Employee Viewpoint

From the employee viewpoint, the purpose of performance appraisal is four-fold: (1) Tell me what you want me to do (2) Tell me how well I have done it (3) Help me improve my performance (4) Reward me for doing well. Organizational Viewpoint From the organization's viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability. For decades it has been known to researchers that one of the chief causes of organizational failure is "non-alignment of responsibility and accountability." Non- alignment occurs where employees are given responsibilities and duties, but are not held accountable for the way in which those responsibilities and duties are performed. What typically happens is that several individuals or work units appear to have overlapping roles. The overlap allows - indeed actively encourages - each individual or business unit to "pass the buck" to the others. Ultimately, in the severely non-aligned system, no one is accountable for anything. In this event, the principle of accountability breaks down completely. Organizational failure is the only possible outcome. In cases where the non-alignment is not so severe, the organization may continue to function, albeit inefficiently. Like a poorly made or badly tuned engine, the non-aligned organization may run, but it will be sluggish, costly and unreliable. One of

the principal aims of performance appraisal is to make people accountable. The objective is to align responsibility and accountability at every organizational level.

CHAPTER 2

METHODS OF PERFORMANCE APPRASIAL

METHODS OF PERF OR MA NC E APPR AI SAL

The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress. Advantages The MBO approach overcomes some of the problems that arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured.

1.Results Method Management By Objectives (MBO)

Instead of assuming traits, the MBO method concentrates on actual outcomes.

If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for success, or on someone's subjective opinion of their abilities.

MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts - as one might take apart an engine to study it. But put all the parts together and the performance may be directly observed and measured. 12

Chapter 3 Review of Literature22

REVIEW OF LITERATURE
Gross et al (1993) in her study concludes with a brief discussion of the importance of a well-prepared staff to the library and delineates the essentialness of the performance appraisal conference in a constructive library setting. Roberts (1995) in his study has concluded that the relationship between developmental performance appraisal systems and the generation of effective information for personnel decision making based upon a sample of 240 municipal government personnel lists. The results indicate that high quality performance appraisal information is associated with developmental systems and an emphasis on procedural fairness. Roberts (1996) in his study has concluded that the development, implementation and evaluation of a successful performance appraisal system for probationary police officers for a medium sized (330,000) Mid-Atlantic city. The case study summarizes the factors that contributed to the systems effectiveness. These factors include significant user participation in the systems development; thorough rater training; a clear articulation of the systems rationale, goals, and objectives; a rating format that is compatible with the organizations culture and congruent with the objectives of appraisal system. Leon et al (1997) in his study has concluded that performance appraisal is crucial to effective human resource management, but there is evidence that current processes are not very effective. This study reports on experience with a relatively new appraisal system in the operations office of a large federal agency. The method, multi-source assessment (MSA, or 3600 Feedback) utilizes ratings from peers, direct reports, the supervisor, and the employee Comparison of survey results from before and after implementation of MSA found significant improvement in employee perceptions of the fairness and effectiveness of appraisals, particularly among protected classes. The implications of these findings and suggestions for future research are discussed. 23

Top of Form Bottom of Form