PERFORMANCE APPRAISAL

Performance Appraisal Performance appraisal is the systematic evaluation of the individual with respect to his performance on the job and his potential for development. It is a process of evaluating an employees performance on the job in terms of its pre-established requirements/standard. Performance appraisal is variously known as employee evaluation, employee efficiency rating, performance rating, merit rating, employee developing program, development report, personnel development or progress record or report, personnel performance record, employee progress report, employee service rating, personnel rating, employee ability rating and they all mean the same thing. As per Dale Yoder, - Performance Appraisal includes all formal procedures used to evaluate contributions, potentials and personalities of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees. Performance appraisal is also considered as a process of establishing or judging the value, excellence, qualities or status of some object or thing especially person to make employee future decision. It is a systematic, orderly and objective method of evaluating the present and potential usefulness of the employees to the organization. Objectives / uses of Performance Appraisal Performance appraisal essentially helps to identify employees who are performing their assigned tasks well and those who are not done so and also the reasons for such performance. Todays appraisals are believed to have three basic objectives: the amount of annual increment; promotion; and training. Broadly speaking, the objectives of performance appraisal could be described as: 1. Judgmental 2. Developmental
Judgmental objectives focus on evaluation

Providing feedback to employees to know where they stand Developing valid data for administrative decisions covering placement, pay, promotion, punishment, etc.

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Developmental objectives focus on helping

Diagnosing individual and organizational strengths and weaknesses. Counseling, coaching, career and succession planning, employee morale and motivation. Developing positive superior - subordinate relationships. In short, the objectives of performance appraisal could be: To prevent grievances To improve job performance To increase analytical abilities of supervisors To assist management in promotion, demotion, and transfer problems To reveal areas where training is needed.

Approaches to Performance Appraisal There great degree of variation in the approaches, design and use of performance appraisal system and also in the formats. In general, there are three approaches to performance appraisal practices / procedures:
A Casual Approach

This is an unsystematic use and often haphazard appraisal system which was frequently used in the beginning and which has subsequently given place to more formal methods. It has been largely based on seniority or quantitative standards of output for rank and file employees.
A Traditional Approach

This approach is highly systematic and takes into account the measurement of employee characteristics and/or employee contribution (or both). In this system all employees are rated in the same manner utilizing the same approach so that the rating of separate personnel can be compared.
A Behavioral Approach

This approach is based on the behavioral value of fundamental trust in the goodness, capability and responsibility of human beings. It lays emphasis on providing mutual goal setting and appraising of progress made by both the appraiser and the appraisee. A systematic appraisal process is considered to be superior to a casual, intuitive and at times haphazard evaluation. The fundamental value of systematic performance appraisal is that it provides information of great assistance in making and enforcing administrative decisions about such matters as promotions, pay increases, lay off and transfers. It provides this information in advance of the time when it may be needed, thereby avoiding spot judgment when a decision may be made. Ethics aspects in Appraisal Ethics in performance appraisal is such an important factor that if it is ignored there arise several problems and organizational morale issues. And thereby, the basic purpose of evaluation gets defeated. Marion S. Kellog suggests the following ten points as ethics of performance appraisals:

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1. 2. 3. 4. 5. 6. 7.

Dont appraise without knowing why the appraisal is needed. Appraise on the basis of representative information. Appraise on the basis of sufficient information. Appraise on the basis of relevant information. Be honest in your assessment of all the facts you obtain. Dont write one thing and say another. In offering an appraisal, make it plain that this is only your personal opinion of the facts as you see them. 8. Pass along appraisal information only to those who have good reasons to know it. 9. Dont imply the existence of an appraisal that hasnt been made. 10. Dont accept anothers appraisal without knowing the basis on which it was made. The Process of Performance Appraisal Informal appraisals may be conducted whenever the supervisors or the HR managers feel it is necessary. However, systematic appraisals are conducted on a regular basis, say, for example, annually or half-yearly. However, appraisals are most often conducted once a year. Recent research suggests that more frequent feedback correlates positively with improved performance. The appraisal process may be shown diagrammatically as under: Establishment of performance standards

Mutually set measurable goals

Measurement of performance

Comparison of actual performance with standards set Discussion of the appraisal with the employees

Identification and initiation of action Figure: The process of performance appraisal

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Establishment of performance standard: The appraisal process starts with the establishment of performance standard in accordance with the goals set, job analysis and description. These standards should also be clear and objective enough to be understood and measured. Mutually set measurable goals: After the performance standards are established, it is necessary to communicate them to employees so that goals, which are not vague but well understood by all concerned and are also measurable, are established. Measurement of performance: It is the third step in the evaluation process. A manager should be very much concerned with how they measure and what they measure. To do so the managers have to acquire information. There are four sources of information regarding how to measure actual performance: personal observation, statistical reports, oral reports, and written reports. Comparison of actual performance with standards: This is the fourth step in the appraisal process. The purpose of this step is to note deviations between standard performance and actual performance so that we can proceed to the fifth step in the process. Discussion of the appraisal with the employee: It is the most challenging task facing the appraiser. It may touch on one of the most emotionally charged activities- the evaluation of another individuals contribution and ability. Of course conveying good news is considerably less difficult for both the appraiser and the employee than conveying the bad news that performance has been below expectations. Identification of corrective action where necessary: This is the final step in the appraisal process. Corrective action, however, can be of two types- one is immediate and deals predominantly with symptoms and the other is basic and delves into causes. Who Should Do The Appraising? The appraiser may be any person who has the skill to appraise and also thorough knowledge about the job contents to be appraised. The appraiser should be capable of determining what is more important and what is relatively less important. He should prepare reports and make judgments without bias. Typical appraisers are- supervisors, peers, employees themselves, consultants, etc. Supervisors: They include superiors of the employee, other superiors having knowledge about the work of the employee and departmental manager. The general practice is that immediate superiors appraise the performance, which in turn, is reviewed by the departmental head / manager. This is because supervisors are responsible for managing their subordinates and they have the opportunity to observe, direct and control the subordinates continuously. Moreover, they are accountable for the successful performance of their subordinates. Peers: Peer appraisal may be reliable if the work group is stable over a reasonably long period of time and performs tasks that require interaction. However, in business organizations if employees were to be evaluated by their peers, the whole exercise may degenerate into a popularity contest, paving the way for the impairment of work relationships.

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Self-appraisal: If individuals understand the objectives they are expected to achieve and the standards by which they are to be evaluated, they are to a great extent, in the best position to appraise their own performance. Also, since employee development means self-development, employees who appraise their own performance may become highly motivated. Consultants: Consultants may be engaged for appraisal when employees or employers do not trust the supervisory appraisal and management does not trust the self-appraisal or peer appraisal. In this situation consultants are hired and they observe the employee at work for sufficiently long periods for the purpose of appraisal. Rating Committees: Many employers use rating committees. These committees usually contain the employees immediate supervisor and two or three other supervisors. The composite ratings tend to be more reliable, fair, and valid. Appraisal by Subordinates: Many employers let subordinates anonymously rate their supervisors performance. It is also called a process of upward feedback. The process helps top managers diagnose management styles, identify potential people problems, and take corrective action with individual managers as required. Subordinate ratings are especially valuable when used for developmental rather than evaluative purposes. In view of the limitations associated with each and every method discussed above, several organizations follow a multiple rating system wherein several superiors separately fill out rating forms of the same subordinate. The results are then tabulated. Ensuring Effective Performance Appraisal 1. Prepare for and schedule the appraisal in advance: Before meeting with employees, the manager has to review employee job descriptions, goals of the enterprise, and performance data on employee. Moreover, he has to schedule the appraisal well in advance to give employees the opportunity to prepare their data for the meeting. 2. Create a supportive environment to put employees at ease: Every effort should be taken to make employees feel comfortable during the meeting. 3. Describe the purpose of the appraisal to employees: The appraiser has to make sure that the employees know precisely what the appraisal is to be used for. 4. Involve the employee in the appraisal discussion based on self-evaluation: Employees should have ample opportunity to discuss their performance, raise questions about the facts appraiser raises, and add their own data about their work. The employees should also be encouraged to carry on self-evaluation. 5. Focus discussion on work behavior, not on employees: One way of creating emotional difficulties is to attack the employee. Being such, the appraiser should keep his discussion on the behaviors he has observed. 6. Support evaluation with specific examples: Specific performance behaviors help clarify to employee, the issues manager raises. Rather than saying, something was not good, the manager should be as specific as possible.

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7. Give both positive and negative feedback: Positive as well as negative feedback help employees to gain a better understanding of their performance because no one employee should be thought of having everything negative.

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Methods/Techniques of Performance Appraisal There are several methods and techniques for measuring the excellence of employee performance. Different authors have suggested different approaches and have classified the methods accordingly. The most widely accepted categorization comes, from Strauss and Sayles. They have classified performance appraisal methods into traditional and newer/modern methods: A. Traditional methods lay emphasis on rating of an individuals personally traits such as initiative, dependability, drive, responsibility, creativity, integrity, leadership potential, intelligence, judgment, and organizing ability, etc. B. Newer or Modern methods place more emphasis on the evaluation of work results (job achievements) than on personality traits. Methods of Performance Appraisal Traditional Methods 1. Straight Ranking Method 2. Man-to-Man Comparison Method 3. Grading Method 4. Graphic Rating Scales Method 5. Forced Choice Description Method 6. Forced Distribution Method 7. Check List Method 8. Free Form Essay Method 9. Critical Incidents Method 10. Group Appraisal 11. Field Review Method 12. ACR Method Newer/Modern Methods 1. Assessment Centre Method 2. Appraisal by Results or Management by Objectives (MBO) 3. Human Asset Accounting Method 4. Behaviorally Anchored Rating Scales (BARS) 5. 360-Degree Feedback 6. Computerized & web-based performance appraisal

Results oriented appraisals are comparatively of recent origin and tend to be more objective and worthwhile especially for counseling and development purposes. However, it is important to note that these two types are not exclusively separate.

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Limitations / Shortcomings of Performance Appraisal Or Deficiencies / Factors that can Distort Appraisal Distortions

System Distortion

Rater Distortion

Central tendency Inflationary pressure Inappropriate substitutes for performance Lack of Communication Lack of Top Management Support Lack of Motivation Group Characteristic Bias Opportunity bias Inadequate Training & Knowledge Spillover Effect Regency Error Confusing Performance and Potential

Differences among Raters Halo Effect Horns Effect Similarity error Supervisors playing it Safe/
Concern with Self-Protection

Desire to be accepted Personal Bias First Impressions error

F: Factors Distort Appraisal

Measuring performance is a difficult task. Performance appraisals, although very widely used, have well-recognized shortcomings and deficiencies. Performance appraisal systems are subject to many errors. The major ones are discussed below: Differences among Raters Differences among raters in their evaluations of performance lead to several errors. One is dissimilarity in perception. Two raters observe an employee disagreeing with a supervisor. One perceives this negatively as insubordination. The other perceives it positively as a willingness to stand up for what one believes. Different value systems can also play a part in how raters can disagree. One rater may feel that honest and ethical behavior is paramount. No matter what the effect on profits. Another may have a bottom-line orientation that says any behavior including the blatantly dishonest is permissible so long as it shows a profit.

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Another kind of rater difference error is created if raters observe different aspects of behavior. One rater sees the employee on the job where the individual feels comfortable and functions effectively. Another may see the individual only at the staff meetings where the employee is uncomfortable and does not show to best advantage. Leniency error Every evaluator has his or her own value system that acts as a standard against which appraisals are made. Relative to the true or actual performance an individual exhibits, some evaluators mark high, while others mark low. The former is referred to as positive leniency error, and the latter as negative leniency error. When evaluators are positively lenient in their appraisal, an individuals performance becomes overstated. In doing so, the performance is rated higher than it actually should be. On the other hand, a negative leniency error understates performance, giving the individual a lower appraisal. Halo error The halo error or effect is a tendency to rate high or low on all factors due to the impression of a high or low rating on some specific factors. For example, if an employee tends to be regular in attendance, supervisor might become biased toward that employee to the extent that manager will rate him or her positively on many desirable attributes. However, the halo effect is a tendency to let the assessment of an individuals one trait influence the evaluation of that person on other specific traits.

Why Appraisal Techniques Prove Failure? According to A. Zavala, the following are the causes of the failure in maintaining the accuracy, validity and reliability of performance appraisals of employees through various techniques: 1. The supervisor plays a dual and conflicting role of both the judge and the helper. 2. Too many objectives often cause confusion. 3. The supervisor feels that subordinate appraisal is not rewarding. 4. A considerable time gap exists between two appraisal programs. 5. The skills required for daily administration and employee development are in conflict. 6. Poor communication keeps employees in the dark about what is expected of them. 7. There is a difference of opinion between a supervisor and a subordinate, in regard to the latters performance. 8. Feedback on appraisal is generally unpleasant for both supervisor and subordinate. 9. Unwillingness on the part of supervisors to tell employees plainly how to improve their performance.