RATIONALE OF THE STUDY
Performance Appraisal is the important aspect in the
organization to evaluate the employees performance. It helps in
understanding the employees work culture, involvement, and
satisfaction. It helps the organization in deciding employees
promotion, transfer, incentives, pay increase.
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INTRODUCTION TO HUMAN RESOURCE
MANAGEMENT
Human Resource (or personnel) management, in the sense of
getting things done through people, is an essential part of every
manager’s responsibility, but many organizations find it
advantageous to establish a specialist division to provide an
expert service dedicated to ensuring that the human resource
function is performed efficiently.
“People are our most valuable asset” is a cliché, which no
member of any senior management team would disagree with.
Yet, the reality for many organizations are that their people
remain under valued, under trained and under utilized.
The market place for talented, skilled people is competitive and
expensive. Taking on new staff can be disruptive to existing
employees. Also, it takes time to develop ‘cultural awareness’,
product / process / organization knowledge and experience for
new staff members.
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
Following are the various functions of Human Resource
Management that are essential for the effective functioning of
the organization:
1. Recruitment
2. Selection
3. Induction
4. Performance Appraisal
5. Training & Development
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Recruitment
The process of recruitment begins after manpower requirements
are determined in terms of quality through job analysis and
quantity through forecasting and planning.
Selection
The selection is the process of ascertaining whether or not
candidates possess the requisite qualifications, training and
experience required.
Induction
a) Induction is the technique by which a new employee is
rehabilitated into the changed surroundings and introduced
to the practices, policies and purposes of the organization.
WHAT IS “PERFORMANCE APPRAISAL”?
Performance Appraisal is defined as the process of assessing the
performance and progress of an employee or a group of
employees on a given job and his / their potential for future
development. It consists of all formal procedures used in
working organizations and potential of employees. According to
Flippo, “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.”
CHARACTERISTICS
1. Performance Appraisal is a process.
2. It is the systematic examination of the strengths and
weakness of an employee in terms of his job.
3. It is scientific and objective study. Formal procedures are
used in the study.
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4. It is an ongoing and continuous process wherein the
evaluations are arranged periodically according to a
definite plan.
5. The main purpose of Performance Appraisal is to secure
information necessary for making objective and correct
decision an employee.
PROCESS
The process of performance appraisal:
1. Establishing performance standards
2. Communicating the Standards
3. Measuring Performance
4. Comparing the actual with the standards
5. Discussing the appraisal
6.Taking Corrective Action
LIMITATIONS
1. Errors in Rating
2. Lack of reliability
3. Negative approach
4. Multiple objectives
5. Lack of knowledge
METHODS OF PERFORMANCE APPRAISAL
The foregoing list of major program pitfalls represents a
formidable challenge, even considering the available battery of
appraisal techniques. But attempting to avoid these pitfalls by
doing away with appraisals themselves is like trying to solve the
problems of life by committing suicide. The more logical task is
to identify those appraisal practices that are (a) most likely to
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achieve a particular objective and (b) least vulnerable to the
obstacles already discussed.
Before relating the specific techniques to the goals of
performance appraisal stated at the outset of the article, I shall
briefly review each, taking them more or less in an order of
increasing complexity.
The best-known techniques will be treated most briefly.
ESSAY APPRAISAL
In its simplest form, this technique asks the rater to write a
paragraph or more covering an individual's strengths,
weaknesses, potential, and so on. In most selection situations,
particularly those involving professional, sales, or managerial
positions, essay appraisals from former employers, teachers, or
associates carry significant weight.
.
GRAPHIC RATING SCALE
This technique may not yield the depth of an essay appraisal, but
it is more consistent and reliable. Typically, a graphic scale
assesses a person on the quality and quantity of his work (is he
outstanding, above average, average, or unsatisfactory?) and on
a variety of other factors that vary with the job but usually
include personal traits like reliability and cooperation. It may
also include specific performance items like oral and written
communication.
FIELD REVIEW
The field review is one of several techniques for doing this. A
member of the personnel or central administrative staff meets
with small groups of raters from each supervisory unit and goes
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over each employee's rating with them to (a) identify areas of
inter-rater disagreement, (b) help the group arrive at a
consensus, and (c) determine that each rater conceives the
standards similarly. .
FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce
bias and establish objective standards of comparison between
individuals, but it does not involve the intervention of a third
party.
MANAGEMENT BY OBJECTIVES
To avoid, or to deal with, the feeling that they are being judged
by unfairly high standards, employees in some organizations are
being asked to set - or help set - their own performance goals.
Within the past five or six years, MBO has become something of
a fad and is so familiar to most managers that I will not dwell on
it here.
RANKING METHODS
For comparative purposes, particularly when it is necessary to
compare people who work for different supervisors, individual
statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons
involve an overall subjective judgment to which a host of
additional facts and impressions must somehow be added. There
is no single form or way to do this.
The best approach appears to be a ranking technique involving
pooled judgment.
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The two most effective methods are alternation ranking and
paired comparison ranking.
1. “Alternation ranking”:
Ranking of employees from best to worst on a trait or traits is
another method for evaluating employees. Since it is usually
easier to distinguish between the worst and the best employees
than to rank them, an alternation ranking method is most
popular. Here subordinates to be rated are listed and the names
of those not well enough to rank are crossed. Then on a form as
shown below, the employee who is highest on the characteristic
being measured and the one who is the lowest are indicated.
Then chose the next highest and the next lowest, alternating
between highest and lowest until all the employees to be rated
have been ranked.
2. “Paired-comparison ranking”:
This technique is probably just as accurate as alternation
ranking and might be more so. But with large numbers of
employees it becomes extremely time consuming and
cumbersome.
Both ranking techniques, particularly when combined with
multiple rankings (i.e., when two or more people are asked to
make independent rankings of the same work group and their
lists are averaged), are among the best available for generating
valid order-of-merit rankings for salary administration purposes.
ASSESSMENT CENTERS
So far, we have been talking about assessing past performance.
What about the assessment of future performance or potential?
In any placement decision and even more so in promotion
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decisions, some prediction of future performance is necessary.
How can this kind of prediction be made most validly and most
fairly?
360 DEGREE FEEDBACK
Many firms have expanded the idea of upward feedback into
what the call 360-degree feedback. The feedback is generally
used for training and development, rather than for pay increases.
Most 360 Degree Feedback system contains several common
features. Appropriate parties – peers, supervisors, subordinates
and customers, for instance – complete survey, questionnaires
on an individual. 360 degree feedback is also known as the
multi-rater feedback, whereby ratings are not given just by the
next manager up in the organizational hierarchy, but also by
peers and subordinates. Appropriates customer ratings are also
included, along with the element of self appraisal. Once
gathered in, the assessment from the various quarters are
compared with one another and the results communicated to the
manager concerned.
Another technique that is useful for coaching purposes is, of
course, MBO. Like the critical incident method, it focuses on
actual behavior and actual results, which can be discussed
objectively and constructively, with little or no need for a
supervisor to "play God."
Advantages
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
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outcomes, and not on their potential for success, or on
someone's subjective opinion of their abilities.
The guiding principle of the MBO approach is that direct results
can be observed easily. The MBO method recognizes the fact
that it is difficult to neatly dissect all the complex and varied
elements that go to make up employee performance.
MBO advocates claim that the performance of employees cannot
be broken up into so many constituent parts, but to put all the
parts together and the performance may be directly observed and
measured.
Disadvantages
This approach can lead to unrealistic expectations about what
can and cannot be reasonably accomplished. Supervisors and
subordinates must have very good "reality checking" skills to
use MBO appraisal methods. They will need these skills during
the initial stage of objective setting, and for the purposes of self-
auditing and self-monitoring.
Variable objectives may cause employee confusion. It is also
possible that fluid objectives may be distorted to disguise or
justify failures in performance.
Benefits of Performance Appraisals
Measures an employee’s performance.
Helps in clarifying, defining, redefining priorities and
objectives.
Motivates the employee through achievement and
feedback.
Facilitates assessment and agreement of training needs.
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Helps in identification of personal strengths and
weaknesses.
Plays an important role in Personal career and succession
planning.
Clarifies team roles and facilitates team building.
Plays major role in organizational training needs
assessment and analysis.
Improves understanding and relationship between the
employee and the reporting manager and also helps in
resolving confusions and misunderstandings.
Plays an important tool for communicating the
organization’s philosophies, values, aims, strategies,
priorities, etc among its employees.
Helps in counseling and feedback.
Rating Errors in Performance Appraisals
Performance appraisals are subject to a wide variety of
inaccuracies and biases referred to as 'rating errors'. These errors
can seriously affect assessment results. Some of the most
common rating errors are: -
Leniency or severity: - Leniency or severity on the part of the
rater makes the assessment subjective. Subjective assessment
defeats the very purpose of performance appraisal. Ratings are
lenient for the following reasons:
a) The rater may feel that anyone under his or her
jurisdiction who is rated unfavorably will reflect
poorly on his or her own worthiness.
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b) He/She may feel that a derogatory rating will be
revealed to the rate to detriment the relations between
the rater and the ratee.
c) He/She may rate leniently in order to win
promotions for the subordinates and therefore,
indirectly increase his/her hold over him.
Central tendency: - This occurs when employees are
incorrectly rated near the average or middle of the scale. The
attitude of the rater is to play safe. This safe playing attitude
stems from certain doubts and anxieties, which the raters have
been assessing the rates.
Halo error: - A halo error takes place when one aspect of an
individual's performance influences the evaluation of the entire
performance of the individual. The halo error occurs when an
employee who works late constantly might be rated high on
productivity and quality of output as well ax on motivation.
Similarly, an attractive or popular personality might be given a
high overall rating. Rating employees separately on each of the
performance measures and encouraging raters to guard against
the halo effect are the two ways to reduce the halo effect.
Rater effect: -This includes favoritism, stereotyping, and
hostility. Extensively high or low score are given only to certain
individuals or groups based on the rater's attitude towards them
and not on actual outcomes or behaviors; sex, age, race and
friendship biases are examples of this type of error.
Primacy and Regency effects: - The rater's rating is heavily
influenced either by behavior exhibited by the ratee during his
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early stage of the review period (primacy) or by the outcomes,
or behavior exhibited by the ratee near the end of the review
period (regency). For example, if a salesperson captures an
important contract/sale just before the completion of the
appraisal, the timing of the incident may inflate his or her
standing, even though the overall performance of the sales
person may not have been encouraging. One way of guarding
against such an error is to ask the rater to consider the composite
performance of the rate and not to be influenced by one incident
or an achievement.
Performance dimension order: - Two or more dimensions on a
performance instrument follow each other and both describe or
rotate to a similar quality. The rater rates the first dimensions
accurately and then rates the second dimension to the first
because of the proximity. If the dimensions had been arranged in
a significantly different order, the ratings might have been
different.
Spillover effect: - This refers lo allowing past performance
appraisal rating lo unjustifiably influence current ratings. Past
ratings, good or bad, result in similar rating for current period
although the demonstrated behavior docs not deserve the rating,
good or bad.
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ROLES IN THE PERFORMANCE APPRAISAL
PROCESS
a) Reporting Manager
Ø Provide feedback to the reviewer / HOD on the
employees’ behavioral traits indicated in the PMS
Policy Manual
Ø Ensures that employee is aware of the
normalization / performance appraisal process
Ø Address employee concerns / queries on
performance rating, in consultation with the
reviewer
b) Reviewer (Reporting Manager’s Reporting Manager)
Ø Discuss with the reporting managers on the
behavioral traits of all the employees for whom he /
she is the reviewer
Ø Where required, independently assess employees
for the said behavioral traits; such assessments
might require collecting data directly from other
relevant employees
c) HOD (In some cases, a reviewer may not be a HOD)
Ø Presents the proposed Performance Rating for
every employee of his / her function to the
Normalization committee.
Ø HOD also plays the role of a normalization
committee member
Ø Owns the performance rating of every employee
in the department
d) HR Head
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Ø Secretary to the normalization committee
Ø Assists HOD’s / Reporting Managers in
communicating the performance rating of all the
employees
e) Normalization Committee
Ø Decides on the final bell curve for each function
in the respective Business Unit / Circle
Ø Reviews the performance ratings proposed by
the HOD’s, specifically on the upward / downward
shift in ratings, to ensure an unbiased relative
ranking of employees on overall performance, and
thus finalize the performance rating of each
employee
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KEY CONCEPTS IN PMS
In order to understand the Performance Management System at
BHARTI, some concepts need to be explained which play a
very important role in using the PMS successfully. They are:
Ø KRA’S (KEY RESULT AREAS): The performance of
an employee is largely dependent on the KRA score
achieved by the employee during that particular year. Thus,
it is necessary to answer a few basic questions i.e.
o What are the guidelines for setting the KRA’s for
an employee?
o How does an employee write down his KRA’s for a
particular financial year?
o KRA’s: The Four Perspectives.
o How is the KRA score calculated for an employee
on the basis of the targets sets and targets achieved?
Ø BEHAVIORAL TRAITS: Some of the qualitative
aspects of an employees’ performance combined with the
general behavioral traits displayed by the employee during
a year constitutes his behavior traits. An employee is
assigned the rating on the basis of the intensity of the
behavior displayed by him. They play a very important role
in the deciding the final performance rating for an
employee as is even capable of shifting the rating one level
upwards/downwards.
Ø BHARTI 2010 LEADERSHIP COMPETENCY
FRAMEWORK: This competency framework is a simple
and structured way to describe the elements of behaviors
required to perform a role effectively. This framework also
tries to assess the performance of an employee objectively.
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Ø THE PERFORMANCE RATING PROCESS: The
rating process tries to explain the four different types of
rating that an employee can achieve i.e. EC, SC, C and
PC. It also explains the criteria, which is considered for
awarding any of these ratings to the employee.
Ø PROMOTION AND RATING DISRTRIBUTION
GUIDELINES: The promotion and normal distribution
guidelines provide the framework within which the
performance appraisal process has to work. It is very
important that the HR department pays due attention to
these guidelines while preparing the bell curves for various
functions and the consolidated bell curve for all the
functions. These guidelines also help in deciding upon the
promotion cases in a year.
PERFORMANCE RATING PROCESS
EXCEPTIONAL SIGNIFICANT
CONTRIBUTOR (EC) CONTRIBUTOR (SC)
· Performs consistently · Performs above
and substantially above expectations in all
expectations in all areas areas
· Achieves a final · Achieves final
score greater than or score between 100-
equal to 115% 114%
· Consistently delivers Versatile in his/ her
on stretch targets area of operation
· Is proactive
Develops creative
· Spots and anticipates
problems, implements solutions and require
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solutions little / minimal
· Sees and exploits supervision
opportunities
Sets examples for
· Delivers ahead of
time others
· Sees the wider Take ownership of own
picture-impacts across development
business Coaches others
· Focuses on what’s Demonstrates business
good for the business initiative
· Seen as role model
by others Is self motivated
· Recognized as Supportive team player
exceptional by other Leads own team very
functions as well effectively
· Motivates others to Demonstrate functional
solve problems initiative
· Develops others ·
· Provides open and
honest feedback
· Able to establish and
lead cross-functional
teams
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