Performance appraisal
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Performance appraisal (PA) is used to evaluate employee performance and potential. It involves both quantitative and qualitative assessments of an employee's job performance over a period of time. PA helps identify employee strengths and weaknesses, set goals, determine training needs, and inform compensation and promotion decisions. Effective PA systems include clear objectives, standardized processes, training for managers, job-related evaluations, documentation, feedback opportunities, and post-appraisal reviews. Traditional methods include graphic rating scales, rankings, and checklists. Modern methods include behavioral anchored rating scales, 360-degree feedback, and management by objectives.
Performance appraisal
- 2. PA is the method of evaluating the behaviour of the employees in the workplace, normally including both quantitative and qualitative aspect of the job. How the employee is performing How the employee can develop What the superior can do to make it happen How the job is going What is Performance Appraisal
- 3. Performance Appraisal :Performance Appraisal : Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality, performance, potential, of its group members
- 4. The system of basic HRM practicesThe system of basic HRM practices Selection Job Design / Work organization Performance Appraisal Rewards / Pay Development (Employer Branding) (HR planning) (Recruitment) Training Job rotation Challenging Assignments “Talent development” Career planning & development Succession planning Evaluation Feedback Objective setting (Outplacement) Promotion Employee well-being Requirements Job Security Corporate Social responsibility?
- 5. Performance AppraisalPerformance Appraisal ‘Higher-level’ strategies and objectives Evaluation of period’s performance & feedback Agreeing on performance objectives Deciding on training and development plans Performance-based compensation Career Planning & Counceling SMART GOALS • Specific • Measurable • Agreed • Realistic • Timed Key issues: Procedural and distributive justice, focus & effectiveness of incentives
- 6. Expectancy theory & Performance AppraisalExpectancy theory & Performance Appraisal Expectancy Theory Expectancy “Goal can be reached” Instrumentality ”Behavior leads to rewards” Performance Evaluation Goal Setting Valence ”Reward is desired” Motivation Effort Reward Tangible & Intangible Performance appraisal
- 7. • Provide information about the performance ranks. Decision regarding salary revision, confirmation, promotion and demotions. • Provide feedback about level of achievement and behaviour of the subordinate. • Provide information which helps to counsel the employees. • Provide information to diagnose the deficiency of the employees. • Provide training and development needs of the WHY conduct a Performance Appraisal
- 8. • The performance review must occur atleast once in a year. Some companies review twice in a year. • However, as a part of Performance Management, the performance review is a continuing, ongoing activity. WHEN to conduct a Performance Appraisal
- 9. • Establish a more effective two way communication • Set performance objectives • Help improve current performance • Assess past performance • Provide feedback on performance • Identify training & development needs • Allocate rewards • Identify staff with promotional possibilities • Assist in career planning decisions OBJECTIVES of Performance Appraisal
- 10. CharacteristicsCharacteristics • It is a step by step process • It examine the employee strengths and weaknesses • Scientific and objective study • Ongoing and continuous process • Secure information for making correct decisions on employees
- 11. Needs and Objectives:Needs and Objectives: • Provide feedback about employees • Provide database • Diagnose the S & W of individuals • Provide coaching, counseling, career planning to subordinates • Develop positive relation and reduce grievance • Facilitates research in personnel management
- 12. • The Appraisee • The Appraiser • HR Department WHO are involved in Performance Appraisal
- 13. • Regularity of the Attendance. • Ability to work individually or in group. • Leadership skills. • Initiative, Technical skills. • Ability to grasp new things. • Area of interest. • Attitude. • Job Knowledge. Content of Performance Management • Judgmental Skills. • Area of improvement. • Past Achievement. • Honesty and sincerity. • Innovativeness • Cost & Time consciousness • Communication
- 14. Appraisal Benefits (cont.)Appraisal Benefits (cont.) • Appraisals offer employees: –Direction –Feedback –Input –Motivation
- 15. Appraisal BenefitsAppraisal Benefits • Appraisals offer the company: –Documentation –Employee Development –Feedback –Legal protection –Motivation system
- 16. Why Appraisals Are ImportantWhy Appraisals Are Important •Recognize accomplishments •Guide progress •Improve performance
- 17. Why ImportantWhy Important (cont.)(cont.) • Review performance • Set goals • Identify problems • Discuss career advancement
- 18. Steps in performanceSteps in performance appraisalappraisal Establishing job standards Designing an appraisal programme Appraise performance Performance interview Use appraisal data For appropriate purpose
- 19. Process ofProcess of PAPA Setting performance standardsTaking corrective standards Discussing results Comparing standards Measuring standards Communicating standards
- 20. Issues in appraisal systemIssues in appraisal system Appraisal Design? Formal and informal Whose performance? Who are the raters? What problems? How to solve? What to evaluate? When to evaluate? What methods?
- 21. What to evaluate? (Philip Model)What to evaluate? (Philip Model) Problem children Planned separation stars Social citizen H L H L Potential Performance
- 22. How PA contribute to firm’sHow PA contribute to firm’s competitive advantagescompetitive advantages Improving performance Making correct decision Ensuring legal competence Minimizing dissatisfaction And turnover Values and behavior Competitive advantage
- 23. Problems in performanceProblems in performance appraisalappraisal 1. Errors In rating – Halo effects – Stereotyping – Central tendency – Constant error – Personal bias – Spill over effect
- 24. 2. Incompetence 3. Negative approach 4. Multiple objectives 5. Resistance 6. Lack of knowledge Problems in performanceProblems in performance appraisal (Cont’d)appraisal (Cont’d)
- 25. Essentials of an effective appraisalEssentials of an effective appraisal systemsystem • Mutual trust • Clear objectives • Standardizations • Training • Job relatedness • Documentation • Feedback and participation • Individual differences • Post appraisal review • Review and appeal
- 26. DiscriminationDiscrimination • Failure to communicate standards • Failure to give timely feedback • Failure to allow employees to correct performance • Inconsistency in measuring performance • Failure to document performance objectively
- 27. Appraisal FormsAppraisal Forms • Define performance expectations • Describe measurement tools • Use a rating system • Cover specific examples • Set measurable goals
- 28. Measure PerformanceMeasure Performance • Measurement systems need to be: • Specific • Fair • Consistent • Clear • Useful
- 29. Measure Performance (cont.)Measure Performance (cont.) Systems can be: • Numerical • Textual • Management by Objective (MBO) • Behavior oriented
- 30. Document PerformanceDocument Performance • Make sure documentation is objective • Document performance of all employees • Provide complete and accurate information • Document performance on a regular basis
- 31. Set Goals….Set Goals…. • Based on job requirements • Realistic • Measurable • Observable • Challenging • Prioritized
- 32. EmployeeEmployee InputInput • Employees take an active role: – Setting goals – Designing action plans – Identifying strengths and weaknesses – Employees participate in the PA meeting
- 33. PreparationPreparation Employees: • Review performance • Think about new goals
- 34. Preparation (cont.)Preparation (cont.) Supervisors: • Review performance • Complete written appraisal • Think about new goals • Schedule time and place
- 35. Start the MeetingStart the Meeting • Lay out agenda • Talk about money • Encourage input • Give good news first
- 36. During the MeetingDuring the Meeting Review performance: • Based on previous goals • Noting strengths and accomplishments • Identifying areas for improvement
- 37. Presentation TipsPresentation Tips • Focus on the professional • Give objective examples • Invite response • Listen actively • Create “we” mentality
- 38. During the Meeting (cont.)During the Meeting (cont.) • Set goals: Based on company goals • Building on areas that need improvement
- 39. End the MeetingEnd the Meeting • Encourage good performance • Lay out action plan • Communicate outcome of goals not met • Confirm understanding
- 40. Continuous FeedbackContinuous Feedback • Formal appraisals • Informal appraisals • Open communication
- 41. Recognize Good PerformanceRecognize Good Performance • Verbal • Public • Tangible • Monetary
- 42. Identify Poor PerformanceIdentify Poor Performance • Act early • Take the right approach • Deal with employee reaction • Handle continued poor performance
- 43. Discipline Poor PerformanceDiscipline Poor Performance • Recognize problems • Talk with employee • Follow company policy
- 44. Handle Hard CasesHandle Hard Cases • Reviewing highly emotional employees • Rating former peers
- 45. Performance Appraisal MethodsPerformance Appraisal Methods • Individual Evaluation Methods –Confidential report –Essay evaluation –Critical incidents –Checklists –Graphic rating scale –Behaviorally anchored rating scale –MBO
- 46. • Group Appraisal –Ranking –Paired comparison –Forced distribution –Performance tests Field review technique Performance Appraisal MethodsPerformance Appraisal Methods
- 47. Performance Appraisal Methods Traditional methods 1. Confidential report 2. Essay evaluation 3. Critical incidents 4. Checklists 5. Graphic rating scale 6. Straight Ranking 7. Paired comparison 8. Forced distribution 9. Grading system 10.Field review technique 11.Nominations 12.Work samples
- 48. Performance Appraisal Methods Modern methods 1. Assessment centre 2. Human resource accounting – costs & contribution 3. Behaviorally anchored rating scale 4. MBO 5. 360º performance apparaisal
- 49. Traditional Methods ofTraditional Methods of Performance Appraisal.Performance Appraisal. • Graphic Rating Scales: This is the oldest and most widely method used for performance appraisal. The scales may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the job).
- 50. Quantity of work: Volume of work under normal working conditions Unsatisfactory (1) Fair (2) Satisfacto ry (3) Good (4) Out Standi ng (5) Quality of work: Neatness, thoroughness and accuracy of work Knowledge of job A clear understanding of the factors connected with the job Attitude: Exhibits enthusiasm and cooperativeness on the job Table: Typical Graphic Rating Scale Employee Name................... Job title ................. Department ......................... Rate ............... Data ..................................
- 51. Ranking MethodRanking Method • This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.
- 52. Performance Points Behavior Extremely good 7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country. Good 6 Can expect to initiate creative ideas for improved sales. Above average 5 Can expect to keep in touch with the customers throughout the year. Average 4 Can manage, with difficulty, to deliver the goods in time. Below average 3 Can expect to unload the trucks when asked by the supervisor. Poor 2 Can expect to inform only a part of the customers. Extremely poor 1 Can expect to take extended coffee breaks and roam around purposelessly.
- 53. Paired Comparison MethodPaired Comparison Method • A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.
- 54. Forced distribution methodForced distribution method • Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution.
- 55. Checklist MethodChecklist Method • Another simple type of individual evaluation method is the checklist. Is the employee really interested in the task assigned? Yes/No Is he respected by his colleagues (co-workers) Yes/No Does he give respect to his superiors? Yes/No Does he follow instructions properly? Yes/No Does he make mistakes frequently? Yes/No
- 56. Critical Incidence MethodCritical Incidence Method • Under this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job . • July 20 – Mr. Paul patiently attended to the major customers complaint. He is polite, prompt, enthusiastic in solving the customers’ problem. On the other hand the bad critical incident may appear as under: • September 28– Mr. Paul stayed 45 minutes over on his break during the busiest part of the day. He failed to answer the store manager’s call thrice.
- 57. Essay MethodEssay Method • This method asked managers / supervisors to describe strengths and weaknesses of an employee’s behavior.
- 58. Confidential ReportConfidential Report It is mostly used in government organizations. It is a descriptive report prepared, generally at the end of every year, by the employee’s immediate superior. The report highlights the strengths and weaknesses of the subordinate.
- 59. Modern Methods
- 60. MBOMBO A process whereby the superior and subordinates of the organization jointly identify its common objectives, define each individual’s major areas of responsibility. 1. Establishment of Goals 2. Setting the performance standard 3. Actual level of job attainment is compared with the goals agreed upon. 4. Establishing new goals and new strategies for goals not previously attained.
- 61. PSYCHOLOGICAL APPRAISALS:PSYCHOLOGICAL APPRAISALS: When psychologists are used for evaluations, they asses an individual’s potential. The appraisal consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations.
- 62. Assessment CentreAssessment Centre • This not a technique of performance appraisal by itself. In fact, this is a system or organization where assessment of several individual is done by experts by using various techniques. These techniques used role playing, case studies etc.
- 64. What is 360 DF? 360 Degree Feedback is a multi - rater feedback system where an individual is assessed by a number of assessors including his boss, direct reports, colleagues, internal customers and external customers
- 65. Internal Customers “Boss” Peers External Customers Team Members Self Feedback collected from Using a specially designed tool Anonymously What is 360 DF?What is 360 DF?
- 66. 1. Halo/horn effect – employee’s extreme competence in one area “shines” over all others. Conversely, employee does poorly in one area and this overshadows all areas. 2. Bias – own prejudices {race, national origin, gender, appearance, etc.} influence the appraisal 3. Comparison Rating – contrasting one employee with another Common Problems Associated with Conducting the Appraisal
- 67. 3. Central Tendency – rate everyone as average 4. Recency Effect – focusing on recent performance instead of entire year 5. Personal Prejudice – If the rater dislikes one group or employees, he may rate them at the lower end. 6. Favoritism – evaluating friends or those who don’t make waves, etc. more favorably than others Common Problems Associated with Conducting the Appraisal
- 68. Performance criteria for ExecutivesPerformance criteria for Executives • For top managers – Return on capital employed – Contribution to community development – Degree of upward communication from middle-level executives – Degree of growth and expansion of enterprise.
- 69. For middle level ManagersFor middle level Managers • Departmental performance • Coordination among employees • Degree of upward communication from supervisors • Degree of clarity about corporate goals and policies
- 70. For supervisorsFor supervisors • Quality and quantity of output in a given period • Labor cost per unit of output in a given period • Material cost per unit in a given period • Rate of absenteeism and turnover of employees • No of accidents in a given period
- 71. Key Points to RememberKey Points to Remember • You must conduct objective appraisals on a scheduled basis. • Appraisals tell employees how they’re doing and how they can improve. • Appraisals help create a system of motivation and rewards based on performance.