CHAPTER : 7

PERFORMANCE APPRAISAL

OBJECTIVES OF THE CHAPTER

Concept of Performance Appraisal
Need for Performance Appraisal
The Appraisal Process
Performance Appraisal Methods and types
The Appraisal Interview
Problems and solutions in Performance
Appraisal
Uses of Performance Appraisal
Managerial career
Role of counseling in HRM

CONCEPT OF
PERFORMANCE APPRAISAL
Performance appraisal can be defined as
process of evaluating the performance of
employee and communicating the results of
evaluation to him/her for the purpose
rewarding or developing the employee.

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OBJECTIVES OF
PERFORMANCE APPRAISAL
Facilitates optimization of employee
performance
Helps taking administrative decisions relating to
payment of incentives, promotions etc.
Helps identify training needs

THE APPRAISAL PROCESS

Determining the standards for
Performance appraisal

Measuring performance against

pre-determined standards

Actual process of
measurement

Communicating the results to the

employee concerned

Implementation

THE APPRAISERS
Different appraisers

Self-Appraisal

Supervisors

Peers

Customers/
Clients

Subordinates

PERFORMANCE APPRAISAL METHODS

Traditional Methods
Management by Objectives
Graphic rating scale
Work standards approach
Essay appraisal
Critical incident method
Forced choice rating
Point allocation method
Ranking methods
Checklist

Modern Methods
Behaviorally Anchored
Rating Scale (BARS)
360 degree
performance appraisal
Team Appraisals
Balanced scorecard
method

TRADITIONAL METHODS
Management by Objectives (MBO)
The main aspects of MBO are clear and well-defined
goals, a definite time-span to achieve the goals, an
action plan and finally, timely and constructive feedback.

Graphic Rating Method

In this method, the rater rates the employees on factors
like quantity and quality of work, job knowledge,
dependability, punctuality, attendance etc.

Work Standards Approach

In this method, work standards are set based on the
average output of a typical employee or by
benchmarking against the work standards of a
competitor in a similar business.

Essay Appraisal
In the method, the appraiser prepares a document
describing the performance of an employee.

Critical Incident Method

The appraiser makes note of all the critical incidents
that reflect the performance or behavior of the employee
during the appraisal period.

Forced Choice Rating Method

The appraiser assigns ranks to different attributes of the
employee and later the HR department, applies the
weights and arrives at a score which is the final
appraisal score.

Point Allocation Method

In this method, the appraiser has to allocate points to
different members in his team and the best performer
gets the highest score.

Checklist
The rater has to respond Yes or No to a set of
questions which assess the employee's performance
and behavior.

Ranking Methods

Alternation:
The appraiser ranks
all his employees
from the most valuable
to the least valuable.

Paired comparison:
Every employee in the
group is compared with
every other employee in
the group. The Employee
who is rated better in
each pair the maximum
times is the best
employee .

Forced Distribution:
In this method,
employees are
categorized as Top,
Standard and
Bottom. This method
helps the organization
get rid of
non-performers.

MODERN METHODS
Behaviorally Anchored Rating Scales (BARS)
BARS concentrates on the behavioral traits demonstrated
by the employees instead of his actual performance. It
combines the benefits of critical incidents and graphic rating scale
by anchoring a scale with specific behavioral examples of good or
poor performance.

It is time consuming and expensive method. The

behaviors used are more activity oriented than result
oriented.

360 degree Performance Appraisal

In a 360 degree appraisal system, the employee's
performance is evaluated by his supervisor, his peers, his
internal/external suppliers and his subordinates. It is a
systematic collection of performance data on an individual
or group, derived from a number of stakeholders, team
members, customers, peers, and self.
It provides a broader perspective about an employees
performance by facilitating self-development of
employees.
This appraisal is effective in identifying and measuring
interpersonal skills, customer-satisfaction and teambuilding skills.

Team Appraisals
In the team appraisal method, the individual team
members evaluate their colleagues in the team and
provide feedback.

Balanced Scorecard
The implementation of balanced scorecard involves
formulating a strategy, and deciding what each
employee needs to do to achieve the objectives based
on the strategy.
In the HR Scorecard, individual responsibilities are
assigned based on the strategy and the achievements
are tracked.

THE APPRAISAL INTERVIEW

Challenges of Appraisal Interview
The organizational culture
The relationship between the employee and his boss
The maturity level of the individuals
An apprehensive employee
A wary appraiser
A biased appraiser
Inexperience

PITFALLS IN
PERFORMANCE APPRAISAL
Halo effect
The appraiser appraises the employee based on one
single characteristic.

Leniency effect
The appraiser gives high ratings and only positive
feedback to the appraisee, irrespective of his actual
performance.

Stringency effect
The appraiser being very strict in rating the employees.

Recency effect
This occurs when the recent performance of the
appraisee dominates the appraisal.

Primacy effect
The appraiser tends to be influenced by the behavior
exhibited in the early stages of the appraisal period.

Central tendency effect

It is the tendency of the appraiser to rate most of the
appraisers in the middle of the performance scale.

Stereotyping
It involves judging someone based on the group he
belongs to and the appraiser's perception of the group.

Culture
The culture of the organization or the country can
influence the appraiser to rate the appraisee in a
particular way.

Perceptual set
The appraiser might have an expectation level which
might distort the perception and judgment of actual
performance.

Fundamental attribution error

Here, the appraiser underestimates the influence of
external factors and overestimates the influence of
internal factors while judging the performance.

USES OF
PERFORMANCE APPRAISAL
To determine the training and development
needs
It forms the basis for compensation
management
It forms basis for transfers and promotions
It helps in succession planning

ETHICS IN
PERFORMANCE APPRAISAL
The employees of the organization must be
convinced about the effectiveness
Making the ratings more measurable and
quantifiable
Assuring and maintaining the confidentiality of
the appraisal

Managerial Career
Career development is important for companies to
create and sustain a continuous learning
environment
The biggest challenge companies face is how to
balance advancing current employees careers
with simultaneously attracting and acquiring
employees with new skills
The growing use of teams is influencing the
concept of careers
e.g., project careers

What Is Career Management?

Career management is the process
through which employees:
Become aware of their own interests, values,
strengths, and weaknesses
Obtain information about job opportunities
within the company
Identify career goals
Establish action plans to achieve career goals

Comparison of Traditional Career

and Protean Career:
Dimension

Traditional Career

Protean Career

Goal

Promotions
Salary increase

Psychological success

Psychological contract

Security for commitment

Employability for flexibility

Mobility

Vertical

Lateral

Responsibility for
Management

Company

Employee

Pattern

Linear and expert

Spiral and transitory

Expertise

Know how

Learn how

Development

Heavy reliance on formal

training

Greater reliance on relationships

and job experiences

The career management process:

SelfAssessment

Reality
Check

Goal Setting

Action
Planning

Components of the Career Management

Process: (1 of 2)
Self-Assessment
Use of information by employees to determine
their career interests, values, aptitudes, and
behavioral tendencies
Often involves psychological tests

Reality Check
Information employees receive about how the
company evaluates their skills and knowledge
and where they fit into company plans

Components of the Career Management

Process: (2 of 2)
Goal Setting
The process of employees developing shortand long-term career objectives
Usually discussed with the manager and written
into a development plan

Action Planning
Employees determining how they will achieve
their short- and long-term career goals

Managers Role in Career Management

Roles

Responsibilities

Coach

Probe problems, interests, values, needs

Listen
Clarify concerns
Define concerns

Appraiser

Give feedback
Clarify company standards
Clarify job responsibilities
Clarify company needs

Advisor

Generate options, experiences, and relationships

Assist in goal setting
Provide recommendations

Referral agent

Link to career management resources

Follow up on career management plan

Companys Role in Career

Management
Companies are responsible for providing
employees with the resources needed to
be successful in career planning:
Career workshops
Information on career and job opportunities
Career planning workbooks
Career counseling
Career paths

COUNSELING
COUNSELLING IS A THERAPEUTICPROCESS OF
PROVIDING HELP ANDSUPPORT TO PEOPLE TO
FACE AND SAIL THROUGH DIFFICULT TIMES
INLIFE.
IT HELPS PEOPLE TO SEE THINGS FROM A
DIFFERENT VIEWPOINT AND ENCOURAGE THEM
TO DRAFT THEIR ACTION PLAN

WHEN
Unrealistic Targets
Excessive Workload
Absenteeism and Late Coming
Lack of awareness of policies
&procedures
Performance Issues
Slipping Deadlines
Career Problems

HOW
Listen to problems/Address Issues
Provide Feedback and help counselee to see a
different view point
Investigate problems/matters
Avoid word of mouth and see the root cause with
evidence
Suggest/Recommend solutions
Observe behavior and clarify expectations
Determine right course of action and reach
Draft plan of action and follow up

COUNSELING SKILLS
Active Listening
Appropriate Body Language
Intelligent Questioning
Problem Solving
Connecting & Reflecting Back
Mutual Influencing
Reading Non verbal Behaviors
Not imposing superiority or patronage
Concluding & Recommending