PERFORMANCE

MANAGEMENT
MODULE 2
Contents
• Performance Appraisal Introduction
• Performance Appraisal Methods – Traditional and Modern
• Potential Appraisal
• Documentation
• Appraisal communication - appraisal interview, feedback
• Performance Coaching
• Meaning
• Objectives
• Benefits
• Characteristics
• Uses
• Process
• Limitations and Barriers
• Performance Appraisal is the systematic, periodic and an
important rating of an employee’s excellence in matters
pertaining to his present job and his potential for a better
job.
- EDWIN B FLIPPO
Objectives
• Assessing the performance and progress of an
employee on a given job and for future job.

• Enable the employees to achieve superior standards of

work performance.

• Help the employees to identify the knowledge and skills

required for performing the job efficiently
• Promoting a two way system of communication
• clarifying expectations
• communicating the functional and organizational goals
• providing a regular and a transparent feedback
• continuous coaching
• Identifying the barriers to effective performance and
resolving those barriers through constant monitoring,
coaching and development interventions.
• Administrative decisions strategic planning, succession
planning, promotions and performance based payment.

• Promoting personal growth and Advancement in the

career of the employees by helping them in acquiring the
desired knowledge and skills

• Encouraging employee empowerment, motivation and

implementation of an effective reward mechanism.
Benefits
• For the Appraisee
• Increased motivation and job satisfaction.
• Clear understanding of what is expected and what needs to be
done to meet expectations.
• Opportunity to discuss aspirations and any guidance, support or
training needed to fulfill these aspirations.
• Improved working relationships with the superior.
• Opportunity to overcome the weaknesses by way of counseling and
guidance from the superior.
• Increased sense of personal value as he too is involved in the
appraisal process
• For the Appraiser
• Opportunity to develop an overview of individual jobs.
• Opportunity to identify strengths and weaknesses of
appraisees.
• Increased job satisfaction.
• Opportunity to link team and individual objectives with
department & organizational objectives.
• Opportunity to clarify expectations that the manager has
from teams and individuals.
• Opportunity to re-prioritize targets.
• Means of forming a more productive relationship with
staff based on mutual trust and understanding.
• Due to all above increased sense of personal value
• For the company:
• Improved performance throughout the organization
due to:
• Increased sense of cohesiveness and loyalty.
• Managers are better equipped to use their
leadership skills and to develop their staff.
• Effective communication of organization’s
objectives and values.
• Improved overview of tasks performed by each
member of a group.
• Identification of ideas for improvement.
• Creation and maintenance of a culture of continuous
improvement.
• Communication to people that they are valued.
CHARACTERISTICS
• Performance appraisal is a process.
• Systematic examination of the strengths and weakness of
an employee in terms of his job.
• Scientific and objective study.
• Formal procedures are used in the study.
• It is an ongoing and continuous process
• The main purpose of performance appraisal is to secure
information necessary for making objective and correct
decision of an employee.
USES OF PERFORMANCE
APPRAISAL
• Performance improvement through performance

feedback

• Compensation adjustments through performance

evaluations

• Placement decisions promotions, transfers and

demotions based on performance .

• Training and development needs are identified

• Career planning and development

• Job design errors

• Equal employment opportunity

• External challenges

• Feedback to human resources

 PROCESS
Establishing
Communicating
performance
the Standards
standards

Comparing
Discussing
the actual Measuring
the
with the Performance
appraisal
standards
Taking
Corrective
Action
GENERAL LIMITATIONS
• Errors in Rating
• Lack of reliability
• Negative approach
• Multiple objectives
• Lack of knowledge
Typical Barriers
1. Faulty Assumptions
• No Fair And Accurate Appraisals
• Particular Appraisal System Forever
• Personal Opinion Is Better Than Formal Appraisal
• Employees Want To Know Frankly
2. Psychological Blocks
• Feeling Of Insecurity,
• Appraisal As An Extra Burden
• Disliking Of Communicating Poor Performance
3. Technical Pitfalls
• Criterion Problem
• The Standard Of Performance Used To Compare
The Actual Performance
• Distortions
• Occurs In The Form Of Biases And Errors In
Making The Evaluation
• Halo Effect
• Central Tendency
• Constant Errors
• Rater's Liking And Disliking
Approaches to performance
Measurement
• Traits approach
• Result approach
• Behavior approach
Trait Approach
• Emphasizes the individual performer rather situation,
behavior and results
• Include abilities or personality
• Limitations
• Traits are beyond the control of an individual
• Presence of traits does not give 100% performance
Behavior approach
• Emphasis on how and what employee will do on the job
• Process oriented approach
• Appropriate where
• The link between behavior and results is not obvious
• Outcome occur in the distant future
• Poor results are due to causes beyond the performers control
Results approach
• Bottom line approach
• Less time to define measuring criteria
• cost effective
• Results of this approach are objective
• Appropriate where
• Workers are skilled in the needed behavior
• Behaviors and results are related
• Results show consistent improvement over time
• There are many ways to do the job right
Different classification heads
• Traditional
• Modern

• Past oriented
• Future oriented

• Result oriented
• Traits oriented
• Behavior oriented
Types of PA
Traditional Modern
• Management by objective
• Essay appraisal method
• 360 degree appraisal
• Straight ranking methods
• Assessment centers
• Paired comparison • Behaviorally Anchored Rating
• critical incident method scale (BARS)
• Behavior observation scale
• Field review
(BOS)
• Check list method • Human resource accounting
• Graphical rating scale • Competency models
• Forced distribution • PCMM
• BSC
• HR Score Card
Past Oriented vs Future oriented
Trait vs Behaviour vs Result based
Methods
Behavior observation scale (BOS)
• Similar to BARS
• Based on critical incidents
• Measure how frequently behavior has been observed
• Appraiser as an observer than a Judge
• Constructive feedback
BSC – Balance Scorecard
• In 1992, Drs. David P. Norton and Robert S. Kaplan started a working
group to examine the challenge of reporting only on financial
measures.

• In for-profit organizations, financial measures provided a lagging

report (i.e. they told you what happened last month, quarter, or year),
but they were not able to look forward.

• Norton and Kaplan wanted to specifically look at what measures that

look forward in time and act as leading indicators might look like and
how that could affect an organization’s strategy.
A Balanced Scorecard is a scientific method of Performance
Measurement System. As the name suggests, a 'Balanced
Scorecard' needs to have four main perspective that is the key to
a balanced growth of an organization:
1) Financial
2) Customer
3) Process
4) Capability
The BSC (Balanced Scorecard) contains objective or close to
objective KRA (Key Result Area) / KPI (Key Performance
Indicators) with Targets & Weightages assigned to the Individual
KRA / KPI.
Now, the art here is to set the correct / objective KRAs / KPIs
that would help in the growth of the organization.
Potential Appraisal
• Potential of a person refers to his abilities which are not
being utilized.
• It is the latent capability to discharge higher obligations
and responsibilities in future roles.
• Potential appraisal helps in career planning, succession
planning etc.
• Potential can be judged by
• Past performances
• Present performance appraisal
• Analyzing personality traits
• Age and qualifications
• Unused knowledge and skills
Documentation
• Performance appraisal forms
• Appraisers have to make appraisal in writing
• Simple, clear language in appraisal documents
Merits of documentation
• Can be referred to when necessary in a later date
• Basis of pay hike and promotions
• Can be communicated in a standard and objective
manner
• Form the basis of feedback interview
Contents of performance appraisal
document
• Performance expectations
• Duties and responsibilities
• Performance standards
• Measured performance
• Accomplishment and failures
• Strengths and weakness
• Plans for employee development
• Training needs
• An overall rating
• Satisfactory/Unsatisfactory
Performance interview
• Performance review meeting
• Mutually agreed conclusions about performance, areas
for improvement, and how to achieve improvement
• Free-flowing open meeting
• Three key elements
• Feedback
• Measurement
• Exchange of views
Problems in conducting review meetings
• Relationship between manager and the individual
• Mutual trust and understanding between both parties
• Skills of supervisor
• Communication skills, interpersonal skills
• Meeting procedure
• Agenda, supporting documents, schedules
• Improper balance of issues
• More emphasis on performance improvement
• Lack of clarity and bias in discussions
• Factual evidence, favoritism, defensive behavior
• Improper focus on outcomes
• Equal attention to all rather than to extreme performers
Guidelines for effective appraisal
interviews
• Be prepared
• Have and agenda
• Create right atmosphere
• Use time productively
• Balance past performance against future potential
• Balance criteria
• Encourage analysis of performance
• Invite self-assessment
• Provide good feedback
• Agree to measurable objectives and a plan of action
Feedback
• PMS is effective when feedback is given on employee
performance
• Intellectual activity requiring balanced and positive
approach towards evaluation and communication
How to make feedback effective
• Build feedback into the job
• Progress charts, estimates of revenues and expenses
• Select key issues
• Key result areas
• Collect evidence
• No assumptions about behavior, only factual information
• Be specific
• No general feelings or impressions
• Describe, not judge
• Vivid description, no judgmental comment
• Make helpful inquiries
• Reframe questions in a constructive manner
• Focus on controllable factors
• Never concentrate on peripheral things leaving the core ones
• Give it in time
• Immediate and timely feedback
• Provide positive feedback
• Encourage subordinates to grow as a good performer
Performance Coaching
• Interactive communication and relationship building
process between leaders to team members, peers to
peers, or even team members to leaders
• Enhances awareness, motivation, behavior change,
performance and development of a person
• Coaching is given to reduce supervisor intervention and
increase self-control and self-direction
Analyze ways to improve employee
performance and capabilities
• Observe employee behavior on a day to day basis
• Talk with the employee about different approaches to do
the task
• Show genuine interest in the individual and identify unique
personal characteristics
• Listen to the employee
Create supportive climate
• Reduce barriers and develop encouraging climate
• Free and open exchange of ideas
• Give guidance and assistance when needed
• Be positive. Don’t threat
• Focus on mistakes as learning opportunities
• Express the value of his or her contribution
• Take responsibility, but give credit.
Influence employees to change their
behavior
• Encourage continual improvement. No absolute upper
limits
• Recognize and reward small improvements
• Use collaborative style
• Break difficult tasks into simpler ones
• Model the qualities expected from employees