PERFORMANCE EVALUATION
WHAT IS PERFORMANCE EVALUATION?
Previously most of the organisations use to access only how well employees performed the task
listed on a job description. But in recent days the organisations are less hierarchical and more
service oriented and so they require more. Researchers these days recognise 3 major types of
behaviour that constitute performance at work.
1. Task performance - It is performing the duties and responsibilities that contribute to the
production of a good or service or administrative work. This includes most of the tasks in a
conventional job description.
2. Citizenship - Actions that contribute to the psychological environment of the organisation-
such as helping others even when not required, supporting organisational objectives, treating
coworkers with respect, making constructive suggestions and saying positive things about the
workplace.
3. Counterproductivity - Actions that actively damage the organisation. These behaviours include
stealing, damaging company property, behaving aggressively towards co workers and taking
avoidable absences.
Most organisational managers believe that good job performance means doing well on the first
two dimensions and avoiding the third one. A person who does the job very well but is rude and
aggressive towards coworkers is not going to be considered a good employee, on the other hand
a person who is very polite and respectful but cannot do his job properly is not a good employee
either.
PURPOSE OF PERFORMANCE EVALUATION
Performance evaluation serves a no of purposes -
1. To help management take general human resource decisions such as promotions, transfers and
termination.
2. Secondly, this evaluation also identifies training and development needs. Performance
evaluation can pinpoint employee’s skills and competencies for which remedial programs can be
developed.
3. Finally, Performance evaluation provides feedback to employees on how the organisation
views their performance and it also serves as the basis of reward allocation.
CRITERIA OF PERFORMANCE EVALUATION ( what do we
evaluate)
The criteria management choose to evaluate will have a major influence on what employees do.
The three most popular sets of criteria ar as follows :-
1. Individual task outcomes - If the result is more important than the pathway the management
should evaluate an employee’s task on outcomes such as quantity produced, scrap generated,
cost per unit for a plant manager or on overall sales volume in the territory as well as the number
of new accounts established for a sales person.
2. Behaviours - It is difficult to attribute specific outcomes to the actions of employees who are
working in groups or in support positions. We may easily evaluate the whole groups
performance but it is hard to identify the contribution of individual group members. In such a
situation management will often evaluate the employee’s behaviour. A plant manager might be
evaluated on his punctuality in submitting monthly reports or his leadership style. On the other
hand a sales person would be evaluated on average number of contact calls made per day or sick
days used per year.
Measured behaviours by evaluated behaviours need not be limited to those directly related to
individual productivity. Helping others, making suggestions for improvements and volunteering
for extra duties are aimed at making the organisation more effective and as a result often are
incorporated into evaluations of employee performance.
3. Traits - The weakest criteria, because they are probably conceptually the farthest criteria from
the actual job performance. For example, having a good attitude, showing confidence, being
dependable, looking busy, or possessing a wealth of experience may or may not be highly
correlated with positive outcomes. However, sadly many organisations still use such traits to
assess job performance.
WHO ARE THE EVALUATORS?
Traditionally the task of performance evaluation has fallen to the managers because they are held
responsible for their employees’ performance but others may do the job better.
Since many organisation of todays are using tele communication and other communicating
devices the bosses are now at distant from their employees. Often it is seemed that peers,
subordinates, and even employees are participating in their own evaluation as a result the ratings
are erroneous.
So, in most situations it is highly advisable to use multiple sources of ratings any individual
performance rating may say as much about the rater as about the person being evaluated. So, by
averaging across raters we can obtain a more reliable, unbiased, and accurate performance
evaluation.
Another popular approach to performance evaluation is 360° evaluation. These provide
performance feedback from the employees full circle of action - Information from mail room
contacts to customers to bosses even peers. The number of appraisals can be as few as three or
four to as many as twenty five. By this approach the organisation is relying on feedback from
coworkers, customers, superiors and subordinates with the hope to give everyone a sense of
participation in the review process and also to gain more accurate readings on employee
performance.
METHODS OF PERFORMANCE EVALUATION
The specific techniques of performance evaluation are as follows -
1. Written essays - Probably the simplest method is to write a narrative describing an employee’s
strengths, weakness, past performance, potential and suggestions for improvement. The written
essay requires no complex forms or extensive training to complete. But in this method a useful
appraisal may be determined as much by the evaluators writing skill as by the employees actual
level of performance.
It is also difficult to compare essays for different employees (or for the same employee written
by different managers) because there is no standardised scoring key.
2. Critical incidents - Critical incidents focus on the evaluators attention on the difference
between executing a job effectively and executing it ineffectively. The appraisers describe what
the employee did that was especially effective or ineffective in a situation, citing only specific
behaviours. A list of such critical incidents provides a rich set of examples to show the employee
desirable behaviours as well as those behaviours that call for improvement.
3. Graphic rating scale - One of the oldest and most popular methods of evaluation is graphic
rating scale. The evaluators go through a set of performance factors such as quantity and quality
of work, depth of knowledge, cooperation, attendance, and initiative. The evaluator then rates
each performance factor on incremental scale. The scale is generally 5 point rating scale where
rating 1 might be indicating of poor performance and rating 5 for mastery in performance. For
example, the performance factor like job knowledge might be rated 1 (poorly informed about
work duties) 2 rating 5 ( has complete mastery of all phases of the job ). Although they don't
provide the depth of information that essays or critical incidents do, graphic rating scales are less
time consuming to develop and to administer and it also allows for quantitative analysis and
comparison.
4. Behaviourally anchored rating scale (BARS) - BARS combine major elements from the
critical incidents and graphic rating scale approaches. The appraiser or evaluators rates
employees on items along a continuum, but the items are examples of actual behaviour on the
job rather than general description or traits. To develop the BARS participants first contribute
specific illustrations of effective and ineffective behaviour, which are then translated into a set of
performance dimensions with various levels of quality.
5. Forced comparisons - This method evaluates one individual’s performance against the
performance of another individual or other individuals. It is a relative rather than an absolute
measuring device. The two most popular comparison methods are group order ranking and
individual ranking.
Group order ranking requires the evaluator to place employees on a particular classification, such
as in the top 1/5th or the second 1/5th. For example if a rater has 20 employees, 4 employees can
fit in every 1/5th division, so, there will be 4 employees can be fit in the top 5th, 4 employees in
the second 1/5th and there will also be bottom 4 employees.
This method is often used in recommending students to graduate schools.
6. The Individual ranking approach rank order employees from best to worst. If the manager is
required to evaluate 30 employees, the difference between the first and the second employee is
assumed to be the same as that between the 21st and 22nd. So basically the Individual are
arranged in rank where the rank are equally distance. Some employees may be closely grouped
but no ties are permitted or allowed. The result of such ranking is a clear ordering from the
highest performer to the lowest performer.
There can also be a paired comparison method where all the employees’ performances are
compared with other employees but comparison is made with only 1 member at a time. The no.
of times each member of a pair is preferred over the other is recorded. These number determine
the ranks of members and obviously the top performers will be those with highest ranks for more
number of times.
7. The checklist method - in this method the evaluators start with a list of factors in there
checklist such as does the employee cooperates with others, do they keep their workplace neat
and clean, do they follow their supervisors instructions closely, are they punctual, and are they
able to achieve the work targets properly.
Each factor or item receives a numerical value based on its perceived importance to successful
job performance.
Factors with high importance get higher numerical values. Then the actual job performance of
all the employees is measured and compared against the checklist. Their scores on the appraisals
are determined by summing the scores of the factors checked by the rater.
8. Management by objective methods (MBO method)- It is a comprehensive management
approach which is used for conducting performance appraisals. It is considered as one of the
most scientific and objective method as a said procedure is followed. The Primary focus in this
method is on developing asset of objectives which are to be realised by the employee. These
objectives are later used as criteria for measuring the performance of the employees. So, In this
method the first step is to set detailed clear objectives for the employees. Then at the time of
performance appraisal a supervisor will measure the actual performance of the employee on the
job and how far the employees are able to realise the objectives set earlier. If objectives are
realised successfully, the employees are rewarded and if employees have failed, reasons for their
failure are identified. MBO is considered as a very objective approach because goals for the
employees are clearly determined before the appraisal begins.
9. Potential appraisal - This is done to predict whether an employee is capable of checking on
more demanding work and the speed at which he or she is capable of advancing. This appraisal
method tries to judge the potential of employees for being promoted to higher position. This
aspect of employee/ performance evaluation is considered as a highly positive and motivating
one because this tries to give an employee the incentive to work as they can look forward to
grow up in their career part. The assessment of potential requires an analysis of the existing
skills, qualities and how they can be developed to the mutual advantage of the company and the
employee. The potential appraisal can be achieved with the help of any of the methods
mentioned above and results are generally reviewed by the manager.
PERFORMANCE EVALUATION MEANING AND DEFINITION
After placed and trained as an employee in the job the next important step in the management of
human resources is to evaluate the performance of an employee on the job. The management
must be able to recognize the level of an employee’s job performance and then they can be
rewarded on the basis of their contributions to organizational goals. So, performance evaluation
is the process of deciding how employees do their jobs and if any problems are there what steps
to be taken to rectify them.
According to C Heyel 1973 - "performance appraisal is a process of evaluating the performance
and qualifications of the employees in terms of the requirements of the job for which he is
employed, for the purposes of administration including placement, selection for promotions,
providing financial rewards, and other actions which require differential treatment among the
members of a group as distinguished from actions affecting all members equally."
In the early 50's performance evaluation used to be done on technical, professional & managerial
personnel. According to Oberg (1972), common descriptions included in performance evaluation
were - merit rating, behavioral assessment, employee evaluation, progress report, staff
assessment & fitness report.
So performance evaluation is a systematic evaluation of the employee's present job capabilities
& also his potential for growth & by the superior. The evaluation can either be formal or
informal. However formal appraisals are most widely used as it reduces the chance of bias.
NEEDS FOR JOB EVALUATION
Monappa et Al, 1957, proposed three needs for performance evaluation-
1. They provide systematic judgements to backup salary increment, transfers, demotion, and
termination.
2. They are means of telling a subordinate how he is doing and suggesting needed changes in his
behaviour, attitudes, skills and job knowledge.
3. They are used a base for coaching and counselling the individual by the superior.
BASIC CHARACTERISTICS OF PERFORMANCE EVALUATION
1. It should be simple and understandable by the employees.
2. It should be suitable to be used for evaluation at a regular interval.
3. It should create an atmosphere of mutual understanding and confidence.
4. The system should be capable of giving equal justice to all employees, which means it should
be objective and free from personal bias.
5. The employees should be taken in confidence while preparing the performance evaluation.
6. The method should be suitable to the organisation from the points of its structure, needs and
chances of growth.
7. It should be able to fulfil the desired purpose by locating potential for promotion, increment,
placement, transfers, etc.
8. Negative appraisal of any employee should be immediately to be communicated to him so that
he can take necessary measures for improvement.
9. The performance evaluation system should not be aimed at harassing the employees rather it
should be aimed at improving performance, improving organisational effectiveness and to
accomplish organisational goals.
MAIN OBJECTIVES OF PERFORMANCE EVALUATION IN HRM
1. To identify employee weakness and strength
2. To identify and meet training need aspirations
3. To generate significant, relevant and valid information about employees
4. To provide inputs to increment of rewards, transfers, promotion and salary administration.
5. To help in improving employees performance.
6. To create a desirable culture and tradition in the organization
7. To help in planning career development and human resources planning based on potentials.
EFFECTIVENESS OF A PERFORMANCE EVALUATION
PROGRAM
Such program may be a failure if it lack structure and guideline.A constructive program the
following elements.
1. An effective performance evaluation program must have support from top management.
2. Objectives and standards of performance evaluation must be carefully planned and related to
the company needs.
3. The approach of evaluation should be different for people of differing occupations.
4. Objectivity of the program is very essential because acceptance of the program depends on its
objectivity
5. At the time of performance evaluation estimation of potential, training and developmental
needs should be identified.
6. The post evaluation interview is also very important. Through discussion with the superior the
subordinate will be stimulated to increase the performance
7. The success of such program depends on effective follow-up procedure.
8. Appraisal records must be kept confidential to ensure an honest and objective evaluation.
9. The evaluators must be well trained.
STEPS AND PROCESS OF PERFORMANCE EVALUATION IN
HRM
Performance evaluation is planned, developed and implemented following the general steps
discussed below -
1. Establishing performance standards - The performance standards for each and every job
should be developed and discussed with the superiors after thorough analysis of the job. These
standards should be clear, objective and measurable.
2. Communication of the standards- After the setting the performance standards the next step is
to Communicate these standards to the employee and the evaluator. Both parties must ensure that
the information received and understood clearly.
3. Measurement of actual job performance- Now the next activity is to measure the actual
performance on the job. Generally 4 common sources are used these actual job performance-
personal observations, statistical reports, oral reports and written reports.
4. Comparing actual performance with the standards - The 4th step is the comparison of actual
job performance with the mentioned standards. Any deviation between these two are to be noted
carefully.
5. Providing feedback to the employee in this step the result obtained from step 4 ( the
comparison) are discussed with the employee.
6. Taking corrective action if required. This is the final or last step where two types of corrective
action may be recommended by the evaluator. One is positive ( related to salary increment and
promotion) and the other is negative ( related to coaching, counselling and training). If
necessary termination of the employee might also be a corrective action on the part of the
organisation.
USES OF PERFORMANCE APPRAISAL
The performance appraisal data can be used in the following ways
1. It is serve as a useful basis for promotion and job rotation. On the basis of this the future
requirements can be projected also.
2. It helps in determining salary increase and bonus for workers based on performance measure.
3. It can provide suitable information for formulating training and development programs. If an
employee is not performing up to the expectations, a training program may enable him to correct
the deficiencies.
4. It can motivate employees by showing them where they stand and establishing a data bank for
future use.
5. The data are useful tool for differentiating between good and poor employee performances. On
the basis of this data ranking of the employees can be obtained.
In a nutshell the uses of performance appraisal can be categorised into two broad categories - one
category concerns for administrative uses such as pay increment, promotion, transfer,
termination, discharge, etc and the other use is for employee development including performance
improvement training, coaching and counselling.
SOME COMMON ERRORS IN PERFORMANCE APPRAISAL OR
EVALUATION
Some of the common errors in performance appraisal or evaluation are as follows-
1. First impression - The general saying is the first impression is the last impression. The
evaluators opinion about the rating is based on the first impression and so the evaluation is not
appropriate even if the candidate is doing well.
2. Halo effect - When the evaluator is drawing a general impression on the appraisal based on a
single trait such as sociability, intelligence, attitude, humour, etc., then the halo effect is
operating so it is the tendency to assess an individual based on the influence of one single trait
only while ignoring the others.
For example- when the evaluator rates high performance only on the basis of punctuality of the
employee ignoring the actual job performance characteristics.
The elimination of this error is very difficult only the possibility of minimisation is possible if
the evaluator rates all his subordinates on one trait before proceeding to the next traits and also
the evaluators must receive training before evaluation.
3. Leniency and severity error - In this types of errors the evaluator develop his own value
system which acts as a standard against which the evaluator makes the ratings. In this error some
evaluators might consistently assign high values to all subordinates and at other times they may
assign consistently low values without considering the actual performance the former one is
known as the positively leniency error while the later one is known as the negatively leniency
error.
4. Central tendency- This is the most common error that occurs when the evaluator assign
average ratings to all his subordinates and avoids using high or low ratings. This kind of flake of
safe rating is almost useless because it fails to distinguishes between good and poor performance.
5. Horn effect- In this type of error the evaluator bias in is the negative direction. The tendency is
to allow one trait of the subordinate to colour/influence the entire appraisal.
6. Contract error- The evaluation of a subordinate is affected by comparisons with other
subordinates who have recently received higher or lower ranks. For example- If the
performances of two workers are actually unsatisfactory and the performance of a third one is
average then the third worker may well be rated outstanding because in contrast of the other two
the relative performance of the third worker has become better.
7. The recency effect - in this case the evaluators assigns rating only on the basis of recent
behaviour or performance. This is possible when appraisals are done over longer periods such as
- one year or more. The evaluator is likely to forget about past behaviour of the subordinate if the
gap is too long. In such cases the evaluator must be trained to remember whole year performance
of the employees during the evaluation to minimise this error.
8. Personal bias error- The personal biases of supervisor also effect when he evaluates the
subordinates. This biasness against the subordinates may be based on sexual identity, race,
religious position and age. However the removal of such types of error is very difficult.
SUGGESTIONS FOR PERFORMANCE IMPROVEMENT IN HRM
1. Behaviourally based measures- many traits often consider to be relative to good performance,
when in fact they have very little or no connection at all. Traits like loyalty, initiative, courage,
reliability, and self expression are desirable traits but the question is are they at all related to
good job performance.
So the measures must be behaviourally derived so that it can deal with these traits objectively.
As behaviourally derived measures are based on specific examples of performance ( both good
and bad) so using of inappropriate substitute behaviours or traits can be avoided.
2. Training of evaluators - the training of evaluators contributes to accurate ratings. Errors can be
minimised through training of workers. Such training workshops are usually intended to explain
to the evaluators the purpose of the procedure, the steps of the procedures, the biases and error
they may encounter and how to overcome them.
Companies generally use video tapes and role playing evaluation sessions to give raters both
experience and insight on the evaluation process. During such training the timing and scheduling
of evaluations are also discussed.
3. Multiple raters/using multiple raters- As the number of raters increase the probability of
attaining more accurate information also increases. For example, if an employee had been rated
excellent on job performance by one supervisor, we can easily disregard the rating of poor
performer by one supervisor.
One of the easiest way to obtain such information is through peer evaluation. The coworkers are
explicitly familiar with the details of job performance and if they are given the opportunity to
provide the management with these feedbacks then the management will have the detailed
information.
4. Fear evaluations- periodically managers may find it difficult to evaluate their subordinates’
performance because they are not directly working with them every day. Unless they have this
information of day to day performance, they won't be able to make an accurate assessment.
5. Evaluation interviews - Evaluation interviews are performance review sessions that give
employees essential feedback about their past performance or future potential. Normally such
interviews include a review of previous appraisals identification of deficient behaviours,
identification of the potentials and need for training and development in the future. Such
interview also provides the employees with chance to explain reasons, express concerns and also
suggestions for improvement.
ADVANTAGES OF PERFORMANCE EVALUATION IN
ENVIRONMENT
1. It helps the supervisor to plan out the promotion programs for efficient employees
2. It helps in planing compensation packages for employees including bonus allowances, etc.
3. It helps the supervisors to frame training policies and programs.
4. It helps the supervisors to understand the validity and importance of the selection procedure.
5. Systematic evaluation helps to identify the abilities of the employees.
6. Performance evaluation serves as a motivation tool. Through evaluating performance of
employees a person can be motivated for better job and improved performance in the future.
DISADVANTAGES OF PERFORMANCE EVALUATION
1. If not done right or correctly performance evaluation can create a negative experience.
2. Performance evaluations are very time consuming and can be overwhelming to managers with
many employees.
3. Performance evaluations are based on human assessment and so can have errors and biases.
4. The process of performance evaluation can be a very stressful experience for everyone
involved.
