Topic 5

Managing Employee
Performance
and
Appraisal

The performance of an organization-whether measured by its

profitability, productivity or by any other methods.
An employee performance management system (EPMS) is a means
to ensure that every employee works in a manner which is aligned with
organizational goals and which ensures that the employee reaches his
maximum potential on the job.
EPMS must take into account :
(a) recruitment of workers-as only workers with right attitude and
abilities can perform well
(b) training which ensures employees have the skill, knowledge they
need to do a good job.
(c) reward system-which encourage workers to continue to perform
well, month after month ,year after year.
Managing the performance of individual employees is the job of
managers and supervisors.

FACTORS INFLUENCING AN
EMPLOYEES PERFORMANCE

 KNOWLEDGE AND SKILLS

The first factor, which encompasses an
employees knowledge and skills, can be
developed with proper training.
Employees knowledge, expertise, and skills
are central to success on the job, and they
require specific attention in the performanceappraisal process. When appraising your
employees in this area, you may be tempted to
focus on the amount of information theyve
amassed, and then appraise them solely on
this factor. However, such appraisals are more
appropriate for computer chips than for human
beings.

Three Skills in Great Demand In the Logistics industry :

1.

Critical and Analytical Thinking: Being able to solve problems and think on your feet is
necessary of logistics employees. The logistics industry is ever-changing and is heavily
influenced by outside and unpredictable factors, so being able to respond to these road
bumps in a professional and efficient matter is key. Having the ability to rationally think
through a situation examining it from all possible viewpoints and coming to a final
decision or answer in a reasonable time frame is essential whether youre a truck driver,
supply chain manager, logistics coordinator or any other title.

2.

Effective Communication: No matter what sector or level of the logistics industry you
work in, you will need to possess sufficient communication skills. Because success in
logistics depends on coordination, you must be able to communicate to vendors and
employees to ensure that everything runs smoothly. The logistics industry isnt a stressfree industry, so being able to keep your cool and remain polite when things go wrong is a
key driver of success.

3.

Broad Industry Knowledge: In some fields, being conversant in the industry you work
for isnt always necessary, but in the logistics industry it is essential to stay up to date
with trends, technologies and news. When an employee has knowledge in the industry, it
shows that they are dedicated to their position, making them more likely to stay up to
date with trends and/or make suggestions to improve their companys workplace. Having
a broad understanding of logistical strategy, planning, sales, customer services and
technology can help a logistics worker see the bigger picture and where their job fits in it.

 MOTIVATION
Second factors which is the employees motivation or
willingness to perform the job for which he is being paiddepends on a variety of factors including the style of
management in the organization ,his perception of the
remuneration package he receives, whether his social needs
are met at the workplace and many more
To get the best performance from employees, there needs to
be some sort of motivation beyond the weekly pay check.
Motivation can come in the form of financial incentives, the
opportunity to get involved in company projects, a career
path that leads to management and direct involvement from
management into the daily tasks. Effective motivation can
create a productive work force, but a lack of motivating
factors can leave employees searching for reasons to give
their maximum effort.

5 Ways To Motivate Your Employees

1.

Communicate Better

If youre nothing more than a face on a newsletter or a name on an

email, what motivation will your employees have to meet your

goals?

The importance of employee communications is often overlooked.

You should communicate with them frequently, and actually speak

with them face-to-face.

Your staff needs to know they are valued, and communicating in

person with them is the best way to show your appreciation for their hard
work.

5 Ways To Motivate Your Employees

2.

Be An Example

You cant expect your employees to work hard or behave

the way you want them to if you dont lead by example.

If you show your excitement about the companys goals,

your employees will get on-board and work to achieve

those

goals.

Good moods are always infectious especially in the

workplace.

5 Ways To Motivate Your Employees

3.

Empower Them

Give your employees more of a say in how they do their job.

Ask for their input and get suggestions on how they can improve their

performance.

Most employees have ideas about how they can be more efficient, but

they may not

share them with you unless you specifically ask them.

Use regular employee reviews to discuss these improvements, but dont just

ask.

If you really want to empower and motivate your employees, you need to take

their

advice and implement it.

You should also give them the authority to make their own decisions, such as

providing service for a client up to a certain point without needing to get prior

approval.

5 Ways To Motivate Your Employees

4.

Offer Opportunities For Advancement

Your employees are more motivated when they know theyre working towards

something.

If they think theres no opportunity for advancement, they dont have much to

work for.

Nobody wants to work a dead-end job. Motivate your employees by offering

training that gives them the skills they need to climb their career ladder.

Grooming young employees to move on to better opportunities is valuable to

you as well because it enables you to build your companys reputation as a

place to work.

great

5 Ways To Motivate Your Employees

5.

Provide Incentives

Incentives are always motivation boosters and they dont have to

be

expensive.

You can offer incentives like an extra paid day off, gift cards, tickets
the movies, or other low-cost ways to show your appreciation.

Of course, cash rewards are always good incentives as well.

to

 Work Environment
Third factor, which is the work environment, relates to the
machinery, tools and equipment available to do work, and is
largely beyond the control of the individual employee who must
do the best with whatever he has.
The Major challenge of the corporate in current scenario is to
create a healthy environment that influence and motivate its
employees for maximization of productivity. This responsibility
lies with the management and governance at various levels of
an organization. What are the paramount imperatives needed in
order to create a healthy environment.

The Impact of
Work Environment on Employee Performance
1.

Unique culture Identity

Everything that related to Culture includes the organization's vision, values, norms,
systems, symbols, languages, assumptions, beliefs, and habits must unique
from others in terms of approach towards work process and relationship with
employees and society.
2.

Ambitious Team Building

Now-a-days, leaders often assume that all team members know what the leaders
know. Consistent communication and flow between team members is the most
important trait of a successful group. Without communication, none of the other
traits can occur. A good team with same level of sprit brings you anything which
organization wanted to achieve in future.

The Impact of
Work Environment on Employee Performance
3.

Welfare facilities

Providing better physical and mental health to workers and thus

promote a healthy work environment. Facilities like housing schemes,
medical benefits, and education and recreation facilities for worker's
families help in raising their standards of living. This makes workers
to pay more attention towards work and thus increases their
productivity.

The Impact of
Work Environment on Employee Performance
4.

Freedom to express themselves

In this modern business world voice of employees is essential in

developing the organizations productivity. Voice is about both culture
and structure, First you need to get the culture right and then provide
process and channels through which the voice can be expressed.
When they feel safe and their opinions are valued, they get
motivated to act on.

Performance Management?
OBJECTIVE SETTINGS:
Is about managing an employees output.
Focuses on what the employee does & how he does it.
Other relevant terms;
1.Accountabilities / main tasks / main duties
2.Key result areas (KRAs)
3.Targets
4.Goals / objectives / work norms / performance standards
5.Competencies

Notes:

Target,goals,objective or key performance indicators can be

set for organizations, department and individuals. All three
sets of planned output must be aligned with the overall
mission and vision of the organization.

Performance Management

Performance management is a strategic and integrated

process that delivers sustained success to organization

by

improving the performance of people who work in them and

developing the capabilities of individual contributors and teams
(Armstrong, 1994).

Performance management is a ubiquitous term in todays

business environment, being embedded in the

of various disciplines and being used
(Brudan, 2010).

body of knowledge

it at all organizational levels

Importance Of Performance Management

Performance management is very important to both employers and
employees.
From the employers prospective, it is vital to understand how your
employees contribute to the objectives of the organization. A good
performance management system enables the organization to
understand how its employees are currently performing. It allows
organizations to undertake a thorough assessment of the training
needs of its employees, set development plans and gives them the
option of using the result of the performance management process to
influence an individual remuneration.

Importance Of Performance Management

From the employees prospective, the performance
management process provides transparency over performance
at workplace and can be used to assess future career
development requirements

Model Of Performance Management

Benefit of effective employee performance

management
1.

Improved productivity - Improvement in both the way employee

work and outcome they produce.

2.

Improved employee morale - Resulting from one time

performance appraisals and reward commensurate with employee
contribution. The employee morale has direct effect on
organizational productivity. To recognise the value of employee is
key to success of any organization. A few words of sincere
admiration for a job well done will help increase moral among
employees.

3.

Retention of top performers - Employees who feel accomplished

in their work becomes loyal employees.

4.

Increased profitability - Loyal employees deliver higher levels of

service that result in customer loyalty. It is very important to create
an effective team of people which help to increased profitability.

Performance Appraisal
A performance appraisal is a systematic and periodic process that
assesses an individual employee's job performance and productivity in
relation to certain pre-established criteria and organizational objectives.
Performance Appraisal can be done with following objectives in mind:
1.To maintain records in order to determine compensation packages, wage
structure, salaries raises, etc.
2.To identify the strengths and weaknesses of employees to place right men
on right job.
3.To maintain and assess the potential present in a person for further growth
and development.
4.To provide a feedback to employees regarding their performance and
related status.
5.To provide a feedback to employees regarding their performance and
related status.
6.It serves as a basis for influencing working habits of the employees.
7.To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

1.

Promotion: Performance Appraisal helps the supervisors to chalk out the

promotion programmes for efficient employees. In this regards, inefficient
workers can be dismissed or demoted in case.

2.

Compensation: Performance Appraisal helps in chalking out compensation

packages for employees. Merit rating is possible through performance
appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra
benefits, allowances and pre-requisites are dependent on performance
appraisal. The criteria should be merit rather than seniority.

3.

Employees Development: The systematic procedure of performance

appraisal helps the supervisors to frame training policies and programmes. It
helps to analyse strengths and weaknesses of employees so that new jobs
can be designed for efficient employees. It also helps in framing future
development programmes.

4.

Selection Validation: Performance Appraisal helps the supervisors to

understand the validity and importance of the selection procedure. The
supervisors come to know the validity and thereby the strengths and
weaknesses of selection procedure. Future changes in selection methods
can be made in this regard.

5. Communication: For an organization, effective communication between

employees and employers is very important. Through performance
appraisal, communication can be sought for in the following ways:
a)Through performance appraisal, the employers can understand and
accept skills of subordinates.
b)The subordinates can also understand and create a trust and confidence
in superiors.
c)It also helps in maintaining cordial and congenial labour management
relationship.
d)It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through

evaluating performance of employees, a persons efficiency can be
determined if the targets are achieved. This very well motivates a person for
better job and helps him to improve his performance in the future.

Who is involved in the appraisal process?

The employees manager

Customers/clients / other
parties

The
Employee

The employees companyworkers

The employees
subordinates

*360 degree feedback appraisal system can provide accurate and reliable
data about employees and be a source of useful information which will allow
the employee to improve himself

The employees manager

Manager Job Duties:
Maintains staff by recruiting, selecting, orienting, and training employees;
maintaining a safe, secure, and legal work environment; developing personal growth
opportunities.
Accomplishes staff results by communicating job expectations; planning, monitoring,
and appraising job results; coaching, counselling, and disciplining employees;
developing, coordinating, and enforcing systems, policies, procedures, and
productivity standards.
Establishes strategic goals by gathering pertinent business, financial, service, and
operations information; identifying and evaluating trends and options; choosing a
course of action; defining objectives; evaluating outcomes.
Accomplishes financial objectives by forecasting requirements; preparing an annual
budget; scheduling expenditures; analyzing variances; initiating corrective actions.

Customers/clients / other parties

INDUSTRY
EDUCATION:
UNIVERSITY IPTS OR IPTA
LOGISTICS:
DHL EXPRESS,TNT, POSLAJU
SHIPPING :
MEDITERRANEAN SHIPPING
COMPANY (M) SDN BHD
K LINE MARITIME (M) SDN BHD

ONLINE BUSINESS:
LAZADA
11 STREET
GO SHOP

CUSTOMERS/CLIENTS /
OTHER PARTIES
STUDENT
ONLINE BUSINESS (Lazada,11 street,
Go Shop)

IMPORTER OR EXPORTER

BUYER

Technology and Client/Customer Feedback

(cont.)

The employees company-workers

Lecturer
Courier
Supervisor
Human resource
Executive
Finance Executive
Marketing Executive

employees
subordinates
The
An employee
ranked
below another employee in
terms of seniority or office hierarchy.

THE PERFORMANCE APPRAISAL PROCESS

Performance appraisal is very important to an organization

and is a rational substitute to personal opinion/bias. It is
because, the performance appraisal process follows a set
pattern and involves many steps. The important steps
involved in the performance appraisal process .

Steps In Performance Appraisal Process

The six steps involved in process of performance
appraisal are as follows:
1.Establish Performance Standards
2.Communicate Performance Expectation to Employee
3.Measure Actual Performance
4.Compare Actual Performance with Standards
5.Discuss the Appraisal with the Employee
6.Initiate Corrective Actions.

1. Establish Performance Standards:

The appraisal process begins with the establishment of performance standards. The
managers must determine what outputs, accomplishments and skills will be evaluated.
These standards should have evolved out of job analysis and job descriptions.
These performance standards should also be clear and objective to be understood and
measured. Standards should not be expressed in an articulated or vague manner such
as a good job or a full days work as these vague phrases tells nothing.

2. Communicate Performance Expectations to Employees:

Once the performance standards are established, this need to be communicated to the
respective employees so that they come to know what is expected of them. Past
experience indicates that not communicating standards to the employees compounds the
appraisal problem.
Here, it must be noted that mere transference of information (relating to performance
standards, for example) from the manager to the employees is not communication It
becomes communication only when the transference of information has taken place and
has been received and understood by the employees.
The feedback from the employees on the standards communicated to them must be
obtained. If required, the standards may be modified or revised in the light of feedback
obtained from the employees. It is important to note that communication is a two-way
street.

3. Measure Actual Performance:

This is the third step involved in the appraisal process. In this stage, the actual performance
of the employee is measured on the basis of information available from various sources such
as personal observation, statistical reports, oral reports, and written reports.
Needless to mention, the evaluators feelings should not influence the performance
measurement of the employee. Measurement must be objective based on facts and findings.
This is because what we measure is more critical and important to the evaluation process
than how we measure.
4. Compare Actual Performance with Standards:
In this stage, the actual performance is compared with the predetermined standards. Such a
comparison may reveal the deviation between standard performance and actual performance
and will enable the evaluator to proceed to the fifth step in the process, i.e., the discussion of
the appraisal with the concerned employees.

5. Discuss the Appraisal with the Employee:

The fifth step in the appraisal process is to communicate to and discuss with the employees the
results of the appraisal. This is, in fact, one of the most challenging tasks the managers face to
present an accurate appraisal to the employees and then make them accept the appraisal in a
constructive manner.
A discussion on appraisal enables employees to know their strengths and weaknesses. This
has, in turn, impact on their future performance. Yes, the impact may be positive or negative
depending upon how the appraisal is presented and discussed with the employees.
6. Initiate Corrective Action:
The final step in the appraisal process is the initiation of corrective action when it is necessary.
The areas needing improvement are identified and then, the measures to correct or improve
the performance are identified and initiated.

3. Problem Solving/Troubleshooting
Definition: Uses a logical, step-by step approach to identify and solve process problems
1
4

2
5

Well Below Expectations

Below
Consistently Exceeds
Outstanding
Expectations
Expectations
Fails to understand how
equipment and processes
interrelate
Does not complete
checklists or other
required forms
Is not able to identify
root causes of process
deviations
Does not consistently
meet A2E expectations
Depends on others to
solve problems

3
Meets Expectations

Uses available
resources (e.g.,
drawings, checklists,
forms, people
engineers, data
historian) to
determine the root
cause of problems
Selects and interprets
data to solve problems
Investigates the
nature of equipment
and process
malfunctions on an
ongoing basis
Participates in A2E
efforts

Develops novel, safe

and effective solutions
to current problems
Anticipates problems
before they occur and
suggests solutions
Takes ownership in
problem solving and
sees it through to
completion
Effectively leads
problem solving efforts
(e.g., A2E, handles
complicated analysis
requests on ones own)

Behavioral Examples of
Rating:_____________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________

4. Teamwork
Definition: Strives to build and maintain a good working relationship with ones work
group; shares information with team members; accepts ideas and opinions of others
1
4

Well Below Expectations

Exceeds
Outstanding

Below

Meets Expectations

Consistently

Expectations
Expectations
Does not respond to
work requests from
other team members
Fails to share
information and/or
resources with others
Refuses to help coworkers
Conflicts with coworkers
on 'yours not mine' work
situations, or is known
to say "that's not my
job
Frequently complains or
makes negative or
derogatory remarks
about site initiatives,
leadership, and/or fellow
workers
Is slow to respond to
work requests from
other team members or
management

Considers alternative
solutions provided by
team members
Accepts and provides
feedback to others
Shares information
(e.g., trends, status
updates) and/or
resources with others
when asked
Readily offers to help
other team members
on tasks
Works with support
services and other
areas (e.g.,
maintenance) to
resolve shift problems
in a timely manner

Anticipates other team

members needs (e.g.,
training, tools,
equipment,
information)
Resolves conflicts
between team members
Supports company
objectives and
volunteers for work
duties within and
outside of ones work
area
Sacrifices ones own
needs for the need of
the team
Initiates team building
activities (e.g.,
organizing outside
group activities,
breakfasts)

Bias in the appraisal process

It appears that the most difficult requirement of an effective performance appraisal system
is that it be as free as possible from bias.

There are many types of bias which creep into appraisals systems , the most common
being those within the manager himself who is required to implement the system.

Examples of bias in appraisal system:

1.Recency effect
2.Halo effect
3.Central tendency
4.Prejudice
5.And stereotyping
6.Fatigue

Recency Effect
The employees most recent behavior becomes the primary focus of the
review. This can go both ways. A poor performer does something terrific
and their past performance is forgotten. Or an excellent performer makes
a mistake and it weighs down the rest of the review.

Halo Effect

An employee is rated highly in all areas because of one thing they do

really well. Ive seen this happen with sales people. She hits the
numbers and senior leadership loves it. But behind the scenes, she
creates havoc and doesnt have the respect of her co-workers.

Central Tendency
central tendency bias refers to a tendency for raters, or managers to evaluate most
of their employees as "average" when they apply a rating scale. So, for example,
given a scale that runs with points on it that run from one (poor) to seven
(excellent), with four being the average, many managers will refuse to use the
points at either of the ends. There will be a tendency for almost all ratings to fall
within the 3-5 range. This can be problematic since a very poor employee may be
rated slightly above average even though this rating is inaccurate, or, on the other
side, a superior employee may be rated in that same 3-5 range even though he or
she deserves a more excellent rating.
Shorter rating scales (e.g. those with only three points, rather than seven) tend to
cause less central tendency bias, but they also become less exact.
You've probably heard managers say, "I never rate people as excellent." This is an
example of central tendency bias.

Prejudice and Stereotyping

many people are prejudiced whether knowingly or unknowingly. They hold negative
opinions about a particular group of people.
Prejudice can be racial, religious or sex or age based.
Managers without university qualifications may be prejudice against those with
degrees or a supervisors from one state may be prejudiced against people from
another state of the country

Fatigue

when an appraisal system requires a manager to appraise all his

subordinates at the same time, perhaps within 2 week period, fatigue
may blur his judgement.

Management Practices That Can Improve

Employee Productivity and Commitment.
1.

Respect employees as individuals, in addition to the job they do.

Respect can be a simple but powerful motivator, just as its unpleasant
twin, lack of respect, has the opposite effect. When employees feel
genuinely respected (always assuming its warranted), theyre much more
likely to go the extra mile to help a company succeed.

2.

Be sure management at all levels of an organization receives

adequate training. Theres a tendency for companies to invest heavily in
leadership training while focusing far less on supervisors and middle
managers. I can readily speak from experience on this one, having
received considerably more training and development opportunities in the
latter stages of my career than in the early formative stages, when I most
needed it.

4.

Provide meaningful feedback in a constructive manner on a regular basis.

Feedback is a foundational management skill; the ability to provide regular,
helpful feedback to employees in a manner that encourages, not discourages, is
a cornerstone of effective management. Thats not to say feedback is always
positive that wouldnt be management at all but that the communication is
done thoughtfully whether the occasion is encouragement for a job well done,
or that course correction is needed.

5.

Design economic incentives so employees at all levels of an organization

can benefit from them. Theres a natural tendency for management to focus
most heavily on senior-level economic incentives. While this is completely
understandable, its best not to neglect substantive incentives for lower-level
employees that is, if you expect them to be vigorously committed to an
enterprises success. To the argument that this will be unduly costly, a program
has to be carefully structured, of course, so additional payouts reflect clearly
defined revenue and/or earnings targets.

Summary

Organizations have performance management system to ensure

each and every worker performs to the best of his ability.

Appraisal systems must be developed which minimize appraiser

bias, as far as possible.

Manager must be trained to conduct appraisal discussion.

If an employee is not performing satisfactorily, disciplinary action

may have to be taken.

When an employee is appraised as having performed well, he or

she must be appropriately rewarded