Performance Appraisal
Performance Appraisal
Performance Appraisal
An organizations goals can be achieved only when people put in their best efforts. How to ascertain whether an employee has shown his or her best performance on a given job? The answer is performance appraisal. Employee assessment is one of the fundamental jobs of HRM. But not an easy one though.
Job Analysis
Describes work personnel requirement of a particular job and
Performance Standards
Performance Appraisal
Translate job requirements I into levels of acceptable or I' unacceptable performance Describes the job-relevant strengths and weaknesses of each individual
Developmental Uses
Administrative Uses/Decisions
Documentation
PERFORMANCE ADVANTAGE
APPRAISAL
AND
COMPETITIVE
The objectives of performance appraisal, listed above, point out the purpose which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm's competitive strength. Besides encouraging high levels of performance, the evaluation system helps identify employees with potential, reward performance equitably and determine employee's need for training. Specifically, performance appraisal helps an organization gain competitive edge in the following ways (see Fig below)
Improving Performance
Competitive Advantage
Improving Performance
An effective appraisal system can contribute to competitive advantage by improving employee job performance in two ways-by directing employee behaviour towards organizational goals, as was done by the second beekeeper (see opening case), and by monitoring that behaviour to ensure that the goals are met.
METHODS OF APPRAISAL
The last to be addressed in the process of designing an appraisal programme is to determine methods of evaluation. Numerous methods have been devised to measure the quantity and quality of employees job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or of a particular type of employees. Broadly, all the approaches to appraisal can be identified into (i) Past-oriented methods, and (ii) Future-oriented methods.
Past-Oriented Methods
Rating Scales: This is the simplest and most popular technique for appraising employee performance; the typical rating-scale system consists of several numerical scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude, co-operation, and the like. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, and then computes the employees total numerical score. The number of points scored may be linked to salary increases, whereby so many points equal a rise of some percentage. Rating scales offer the advantages of adaptability, relatively easy use and low cost. Nearly every type of job can be evaluated in a short time, and the rater does not need any training to use the scale. The disadvantages of this method are several. The raters biases are likely to influence evaluation, and the biases are particularly pronounced on subjective criteria such as cooperation, attitude and initiative. Furthermore, numerical scoring gives an illusion of precision that is really unfounded.
RATING SCALE
Instructions: For the following performances factors, please indicate on the rating Scale your evaluation of the employee named below: Employees Name: Raters Name Excellent 5 1. 2. 3. 4. 5. 6. Dependability Initiative Overall Output Attendance Attitude Co-Operation ---------------Good 4 --------------------------------------------------Acceptable 3 --------------------------------------------------2 -------------------------------------------------------------------Department Date. Fair 1 ------------------------------------------------Poor
Checklist: Under this method a checklist of statements on the traits of the employee and his or her job is prepared in 2 columns viz., a Yes column and a No column. All that the rater (immediate superior) should is tick the Yes column if the answer to the 7
statement is positive and in column No if the answer is negative. A typical checklist is given in the table below. After ticking off against each item, the rater forwards the list to the HR department. The HR department assigns certain points to each Yes ticked. Depending upon the number of Yes the total score is arrived at. When points are allotted to the checklist, the technique becomes a weighted checklist. The advantages of as checklist are economy, ease of administration, limited training of rater, and standardization. The disadvantages include susceptibility to raters biases (especially the halo effect), use of personality criteria instead of performance criteria, misinterpretation of checklist items, and the use of improper weights by the HR department. Another disadvantage of this approach is that it does not allow the rater to give up relative ratings.
Forced Choice Method: In this, the rater is given a series of statements about an employee. These statements are arranged in blocks of 2 or more, and the rater indicates which statement is most or least descriptive of the employee. Typical statements are : 1. Learns fast _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ works hard 2. Work is reliable_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ performance is a good example for 3. Absents often_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ others usually tardy. As in the checklist method, the rater is simply expected to select the statements that describe the rate. Actual assessment is done by the HR Department. This approach is known as the forced choice method because the rater is forced to select statements, which are readymade. The advantage of this method is the absence of 8
personal bias in rating. The disadvantage is that the statements may not be properly framed they may not be precisely descriptive of the ratees traits.
Forced Distribution Method: One of the errors in rating is leniency clustering a large number of employees around a high point on a rating scale. The forced distribution method seeks to overcome the problem by compelling the rater to distribute the ratees on all points on the rating scale. The method operates under an assumption that the employee performance level conforms to a normal statistical distribution. Generally, it is assumed that employee performance levels conform to a bell shaped curve. For example, the following distribution might be assumed to exist excellent 10 %, good 20 %, average 40 %, below average 20 %, and unsatisfactory 10 %. The major weakness of the forced distribution method lies in the assumption that the employee performance levels always conform to a normal distribution. In organizations that have done a good job of selecting and retaining only the good performers, the use of forced distribution approach would be unrealistic, as well as possibly destructive to the employee morale. The error of central tendency may also occur, as the rater resists from placing an employee in the lowest or in the highest group. Difficulties also arise for the rater to explain to the rate why he or she has been placed in a particular group. One merit of this approach is that it seeks to eliminate the error of leniency. However, the forced choice method is not acceptable to raters and ratees, especially, in small groups or when group members are of high ability.
Critical Incidents Method: The critical incidents method of employee assessment has generated a lot of interest these days. The approach focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective performance of a job. The supervisors as and when they occur record such incidents. Examples of critical incidents of a plant manager are given in the following table:
One of the advantages of the critical incidents methods is that the evaluation is based on
10
This is an appraisal by someone outside the, assessors own department. Usually someone from the corporate office or the HR department. The outsider reviews Employee records and holds interviews with the ratee and his or her superior. This method is primarily used for making promotional decision at the managerial level. Field reviews are also useful when comparable information is needed from employees in different units or locations. Two disadvantage of this method are:1. An "outsider" is usually not familiar with conditions in an employees work environment which may affect the employee's ability or motivation to perform. 2. An 'outsider' review dose not have the opportunity to observe employee behavior of performance over a period of time and in a variety of situations. But only in an artificially structured interview situation which extends over a very short period of time.
11
By knowing the price of items. This checker would be expected to look for mismarked and unmarked items. You can expect this checker to be aware of items that constantly fluctuate in price.
6 5
When in doubt. This checker would ask the other clerk if the item is taxable. This checker can be expected to verify with another checker a discrepancy between the shelf and the marked price before ringing up that Item.
When operating the quick check. If the lights are flashing this checker can be expected to check out a customer with 15 items. You could expect this checker to ask the customer the price of an Item that he or she does not know. In the daily course of personal relationships, he or she may be expected to linger in long conversations with a customer or with another checker.
2 1
In order to take a break. this checker can be expected to block off the check stand while people wait in line.
12
A BARS Scale for the Knowledge and Judgement Dimension of a Grocery Checker's Job.
Raters, making field reviews normally receive training on how to conduct the interview and develop their writing skills. Being independent of the work scene they normally have less bias for or against the ratee than docs the immediate supervisor. Even when a supervisor or others concerned supply biased information the rater may he able to pinpoint areas requiring training and development assistance.
Ranking Method
In this, the superior ranks his or her subordinates in the order of their merit, starting from the best to the worst. All that the HR department knows is that A is better than B. The, 'how' and 'why' are not questioned, nor answered. No attempt is made to fractionalize what is being appraised into component elements. This method is subject to the halo and recency effects, although rankings by two or more raters can be averaged to help reduce biases. Its advantages include ease of administration and explanation.
Paired-comparison Method
Under this method the appraiser compares each employee with every other employee one at a time. For example there are five employees named A, B. C. D and E. The performance of A is first compared with the performance of B and a decision is made about whose performance is better. Then A is compared with C. D and E in that order. The same procedure is repeated for other employees. The number of comparisons may be calculated with the help of a formula which reads thus: N (N-1)/ 2 where N stands for the number of employees to be compared. If there are 10 employees, the number of comparisons will be 10(10-1)/2 = 45. After the completion of comparison, the results can be tabulated and a rank is created from the number of times each person is considered to be superior.
13
MANAGEMENT BY OBJECTIVES
It was Peter F. Drucker who first gave the concept of MBO to the world way back in 1954 when his The Practice of Management was first published. The MBO concept, as was conceived by Drucker, reflects a management philosophy which values and utilizes employee contributions. Application of MBO in the field of performance appraisal is a recent thinking.
14
Tata Consultancy Services Limited (TCS) is the world-leading information technology consulting, services, and business process outsourcing organization that envisioned and pioneered the adoption of the flexible global business practices that today enable companies to operate more efficiently and produce more value. They commenced operations in 1968, when the IT services industry didnt exist as it does today. Now, with a presence in 34 countries across 6 continents, & a comprehensive range of services across diverse industries, they are one of the world's leading Information Technology companies. Seven of the Fortune Top 10 companies are among our valued customers. They are part of one of Asia's largest conglomerates - the TATA Group - which, with its interests in Energy, Telecommunications, Financial Services, Chemicals, Engineering & Materials, provides us with a grounded understanding of specific business challenges facing global companies. As we move into an era of e-business where IT professionals will interview employers so stringently that 40 percent employers will miss recruitment goals (source: Gartner Group), the role of HR assumes unthinkable proportions and is subject to mammoth challenges. With this sensitive breed of IT professionals, how has TCS grown to and sustained at the number one position is a question which market watchers have asked themselves a thousand times. There is but one answer - passion for excellence in the workforce practices. TCS has developed an unbreakable bond with sound HR practices in an environment that defies traditional roles and responsibilities. The TCS-HR group operates with technical experts to create a synergy which is enviable. Figure 1 illustrates the role of HR, which evidently is that of a facilitator. So whether it is recruitment or even career development, HR is the catalyst which initiates and institutionalizes processes. To manage all the functions for over 14000 employees is a Herculean task but the smoothness of operations is intriguing. The HR structure, which allows flexibility and empowerment, is the solution.
15
A poor performer is not always a poor performer for life, says S Padmanabhan, executive vice president, global human resources, Tata Consultancy Services (TCS). The Rs 9,749-crore InfoTech major has 45,000 employees on its rolls. Close to 90 per cent of the companys income flows in from outside India. And the bulk of its employees work across TCS offices in 34 countries and on-site in more than 50 countries. For most of them, the supervisor changes every time a project changes. Given that no two projects or, for that, matter, no two bosses are alike, performance appraisal must be a nightmare. Or is it?
16
The financial perspective quantifies the employees contribution in terms of revenue growth, cost reduction, improved asset utilisation and so on; The customer perspective looks at the differentiating value proposition offered by the employee; the internal perspective refers to the employees contribution in creating and sustaining value; the learning and growth are self-explanatory. The weightage given to each attribute is based on the function the employee performs. Based on their individual achievements, employees are rated on a scale of one to five (five = superstar). If employees get a low rating (less than two) in two consecutive appraisals, the warning flags go up. If the poor performer continues getting low scores then the exit option may be considered Over the years TCS has found the pattern that leads to the maximum decline in performance boredom. If employees work for more than two years on the same project, typically either their performance dips or they leave the organisation. To avoid that, TCS shuffles its employees between projects every 18 months or so. Performance drops if motivation drops At the heart of an employee's satisfaction lies the fact that his performance is being appreciated and recognised. TCS's performance management system has metamorphosed into one that emphasises objectivity and a system that mandates performance evaluation against pre-determined criteria. What deserve special mention is the active participation of the senior management in the determination of guidelines for the performance appraisal process. The process ensure 17
buy in of the employees since the guidelines for the rating system and its conversion into money terms is not unilaterally decided by HR but is a consensus of a cross functional team with representation from all levels. TCS's performance appraisal system is supported by an online system called the Human Resource Management System- an Oracle Developer 2000 based tool. The system individual right from his biographical details to his projects performance. An employee's performance history at the click of a button and this accurately maintained for 14000 employees! Right from his entry, an employee in TCS get formal performance feedback once very two months till such time that he is confirmed after which the performance feedback is provided twice every year on a formal basis. TCS however widely encourages informal feedback discussions between Project Leaders and Team Members and this concept has found an overwhelming appeal among the people.
Recognition at TCS
Guaranteed high motivation levels at TCS through competitive compensation packages, stimulating job content, outstanding development opportunities, and, not the least, an innovative recognition mechanism The various ways in which TCS recognizes its people are listed below. Project milestone parties to encourage efficient execution of projects. Recognition of star performers / high fliers to recognize outstanding talent. Nomination to covet training programmes to encourage self-development. Best project award to promote a spirit of internal competition across work groups and to foster teamwork. Best PIP award to encourage innovation and continuous improvement. Best auditor award to acknowledge participation in critical support roles Spot awards to ensure real-time recognition of employees. Recommendations for new technology assignments / key positions to ensure career progression and development of employees' full potential. Performance-based annual increments to recognize high performers Early confirmations for new employees to reward high-performing new employees Long-service awards to build organisational loyalty EVA-based increments to ensure performance-based salaries. On-the-spot recognition to guarantee immediate recognition of good performance.
18
Recruitment Advertisements in various forms. Application processing. Written tests and group discussions. Updated lists for campus recruitments.
Employee benefits details maintenance Tracking changes in salary scales and allowances. Producing appropriate reports. Verifying, registering and updating professional memberships. Allowances and claims processing. Issuing loans and advances.
Attendance management Tracking attendance registers. Tracking late arrivals. Tracking overtime. Maintaining shift rosters. Capturing interface data. Generating interface reports.
19
Tracking budgetary allocations. Tracking internal training programmes. Maintaining details of training institutions. Maintaining training requests and requirement details. Maintaining post-training details. Maintaining post-training work reallocations.
Allocations, transfers and deputation management Allocations, transfers and deputation management. Maintaining deputation details. Generating transfer details.
Performance-appraisal management Maintaining details of timely performance-appraisal reports. Maintaining details of ratings from appraisal officers. Generating details of reminders for performance-appraisal reports.
Promotion-details management Generating lists of eligible candidates. Grading eligible candidates. Maintaining details of promotions.
Leave-details management Crediting leave to employee accounts. Maintaining details of leave availed and required approvals. Maintaining details of leave encashment. Validating details of residual leave.
Separation-details management Updating details of terminal benefits. Registering details of employee benefits. Generating reports of these details.
20
Manpower planning Maintaining transfer details. Maintaining succession details. Generating MIS reports. Generating current human resources details.
processes audited. TCS plans to have an organization wide assessment this year. So HR now in the books of "QUALITY". Developing the HR capabilities has been an imperative. Equipped with the training programmes at TMTC (The TATA Management Training Centre), the extensive Labs at ISABS and ISISD the constant exposure at conferences, the HR team is a formidable one and at the cutting edge of HR technology. The HR team in TCS is transcending from its traditional "maintenance" role to a new developmental role. Designing training modules for Senior Project Leaders on performances management, facilitating the implementation of P-CMM ( being done for the first time in Asia) or designing a Balanced Score Card for the team, the HR group is at the forefront, rubbing shoulders with the technology experts.
22
The People Capability Maturity Model consists of five maturity levels that establish successive foundations for continuously improving individual competencies, developing effective teams, motivating improved performance, and shaping the workforce the
23
organization needs to accomplish its future business plans. Each maturity level is a welldefined evolutionary plateau that institutionalizes new capabilities for developing the organization's workforce. By following the maturity framework, an organization can avoid introducing workforce practices that its employees are unprepared to implement effectively.
24