PERFORMANCE MANAGEMENT & APPRAISAL SYSTEM

2 Marks Questions:

1. What's the purpose of our performance management system?

2. How often are performance reviews conducted?
3. Who participates in the appraisal process?
4. Do employees have input in their own performance evaluations?
5. Are there consequences for poor performance?
6. How are promotions and raises tied to performance?
7. Who has access to performance data?
8. How do we ensure fairness in the appraisal process?
9. How do we ensure consistency in performance evaluations across departments
or teams?
10. What are the various steps individuals undertake to determine the KRAs for
their roles?
11. What are the four areas that must be identified in a performance plan?
12. What are the various components of performance planning?
13. What are the characteristics of an effective performance management system?
14. What is e-performance management?

7 Marks Question:

15. How are strengths and areas for improvement identified?

16. What training or development opportunities are available based on
performance?
17. How do we track progress towards goals throughout the year?
18. Discuss few of the common rating errors..

19. What are the various methodologies of Performance Planning?

he key methodologies for setting up performance criteria:

1. Key Performance Areas (KPAs): These are broad areas of responsibility or

objectives that employees are accountable for. They define the major areas
where performance is expected and provide a framework for evaluating
performance.
2. Key Results Areas (KRAs): These are specific, measurable outcomes or
results that employees are expected to achieve within their key performance
areas. KRAs help to further clarify expectations and provide clear targets for
performance evaluation.
 3. Task and Target Identification: Identify specific tasks and targets that
contribute to achieving organizational goals and individual performance.
4. Goal Setting Exercises: Engage in exercises to set clear and achievable goals
aligned with organizational objectives.
5. Organizational Objectives and Strategy: Align performance criteria with the
broader objectives and strategies of the organization to ensure coherence and
focus.
6. Assessment of Organizational Performance Needs: Assess the performance
needs of the organization to determine areas requiring improvement or
development.
7. Setting Organizational Performance Expectations: Clearly define
expectations for performance at the organizational level, providing a
framework for individual goal setting.
8. Establishing Performance Management Process: Establish a structured
process for managing performance, including setting objectives, monitoring
progress, providing feedback, and evaluating results.
9. Measuring Effectiveness of Performance Management: Continuously
evaluate the effectiveness of the performance management system to
identify areas for improvement and ensure alignment with organizational
goals.

20. What are the various implications of Performance Linked Reward System?

21. What are the various factors affecting PM Implementation?

The factors affecting effective use of performance management are listed here.
1. Corporate culture: The implementation of a performance management system
depends on the culture of the organisation. Corporate culture should be such that it
encourages team working, ownership of problems, risk taking or entrepreneurship,
and orientation towards continuous improvement.
2. Skilled Staff: Staff that dedicated, knowledge and skilled in performance
management.
3. Leadership and Commitment: Leadership that actively supports and sustains
performance management throughout the organization.
4. Alignment: The alignment of individual goals and strategies with the
organisational goals helps in effective implementation of performance
management system.
5. Ongoing Monitoring and Mentoring: A continuous review of the strategy, the
performance is important. The performance management should be used for
improvement and learning, rather than control.
6. Effective Communication and Reporting: Communication and reporting of
performance and feedback on an ongoing basis is essential.
7. Employees Participation: Employees participation plays an important role in
implementation of PM system. Involvement in the selection and defi nition of
measures can reduce the employees’ and the manager’s resistance to performance
management, and increase their usage level of performance measures.
8. Reward link Pay: The reward link pay improves the employee motivational level
and affects the performance of employees.

22. Discuss the process of formulating Competency-based PMS. Also mention

some key competencies for teamwork.

15 Marks Question:

23. Discuss the process of Performance Planning along with the barriers to it.

The following are the key components of performance planning:

1. Preparation of Performance Plans: Performance plans are usually prepared at
the beginning of annual review period, or when an employee fi rst starts their new
job. Preparing for the initial planning meeting should be undertaken by both the
supervisor and the employee. Both supervisor and employee should be reviewing
the goals, objectives and needs of the work unit and looking at the current job
description. The supervisor should list the things in the job that they intend to
measure, and the standards you will measure to. The
employee could write down the ways they think each of their tasks could be
measured and
how well each should be performed.
2. Identifi cation of Key Success Factors: Performance objectives and results to be
achieved
should be focused on results and set in order of priority. Measures should be
specifi c to
each task, with clear standards which include dates and times when appropriate.
3. Setting Departmental and Individual Objectives: After setting the
organisational goals and
objectives the departmental goals and objectives are defi ned. The departmental
objectives
are further categorised into individual goals. The individual goals include the key
duties
and responsibilities to achieve the fi nal goals of the organisation.
4. Providing Regular Feedback: The next step in the process is providing regular
feedback.
The supervisor should be maintaining a log of performance facts, which will
ensure that
important issues are given the attention that is required and will help the formal
review
proceed in a more focused and potentially more positive way. The employee
should also
maintain a record of accomplishments and special achievements, or issues that
need to be
resolved. Discussion of these things during scheduled or spontaneous feedback
sessions
will allow resolution of problems in a timely manner.

5. Performance Review: Reviewing performance gives the supervisor and the

employee the
opportunity to look at results that have been achieved in relation to the original
plan and
standards of performance that were established. At this meeting, you should review
all
performance records and assess each task, discussing whether they met the
standards
of performance or not, and whether they exceed those standards. Review any
outside
factors that may have had an effect on performance. At this time, the supervisor
should
be identifying any areas where improvement may be necessary or performance
could be
enhanced. The employee should also have the opportunity to discuss areas where
they
could have used more help.
6. Action Planning: Another important aspect to completing this cycle is action
planning.
This is where the supervisor and employee would plan for any training that needs
to occur,
and could also be where you discuss career planning.
The barriers to performance planning can be categorised as follows:
1. Organisational Barriers: Most of the traditional organisations are not in the
favour of
performance planning. According to these organisations spending time on
performance
planning is just the wastage of time. These organisations believe that they have
strong
implementation strategy.
Example: Indian companies tend to spend 30% time on planning and remaining
70% on implementation whereas MNCs usually spend 70% time on performance
planning
and the remaining 30% time on strategy implementation.
2. Individual Barriers: Lack of commitment in organisation’s employees or
management is
another important barrier to performance planning. Sometimes managers or
employees or
both show less commitment towards the achievement of organisational goals. The
reasons
could be personal, organisational, competitive or any other HR factor.
Example: Organisational politics, workplace bullying or high confl ict causes
employees to show less interest towards their job responsibilities.

24. Discuss the process of performance appraisal.

The planning of a performance appraisal strategy is crucial for ensuring its

effectiveness in benefiting both the employee and the manager. Let's break down
the steps outlined in your process:
Before the Appraisal:
1. Establish key task areas and performance goals: This involves defining
the essential duties and responsibilities of the employee's role and setting
clear objectives for performance within each area.
2. Set performance goals for each key task area: Once the key task areas are
identified, specific performance goals should be established for each area to
provide clarity on expectations.
3. Get the facts: Managers should gather relevant information about the
employee's performance, including data, feedback from colleagues or
clients, and any other relevant metrics.
4. Schedule each appraisal interview well in advance: It's important to give
both the employee and the manager sufficient time to prepare for the
appraisal discussion.
During the Appraisal:
 1. Encourage two-way communication: Both the employee and the manager
should have the opportunity to share their perspectives on performance,
discuss achievements, challenges, and areas for improvement.
2. Discuss and agree on performance goals for the future: Use the appraisal
as a platform to set new performance goals that align with the organization's
objectives and the employee's career development.
3. Think about how you can help the employee to achieve more at work:
Managers should consider ways to support the employee in reaching their
goals, whether through training, resources, or other forms of assistance.
4. Record notes of the interview: Keep a written record of the appraisal
discussion, including key points, agreements, and action items.
5. End the interview on an upbeat note: Close the appraisal on a positive and
encouraging note, emphasizing achievements and expressing confidence in
the employee's abilities.
After the Appraisal:
1. Prepare a formal record of the interview: Document the outcomes of the
appraisal discussion, including agreed-upon goals, areas for improvement,
and any commitments made by both parties.
2. Monitor performance: Regularly assess and track the employee's progress
toward their goals, providing ongoing feedback and support as needed.
3. Feedback session – tell and sale, tell and listen, problem-solving:
Conduct follow-up feedback sessions to discuss progress, address any
concerns or obstacles, and provide guidance on overcoming challenges.
4. Develop need-based training programs: Identify areas where additional
training or development opportunities could benefit the employee's
performance and career growth, and implement relevant training programs
accordingly.
5. Working out reward-based incentives: Recognize and reward employees
for achieving their goals and demonstrating exceptional performance,
whether through monetary incentives, promotions, or other forms of
recognition.

25. Discuss The Performance Management Cycle.

Performance management is a process, not an event. It operates as a continuous
cycle, as shown
in
1. Plan: This stage involves setting clear objectives, goals, and expectations
for performance. Managers and employees collaborate to establish
individual performance plans aligned with the organization's overall
objectives. This may include defining key performance indicators (KPIs),
 outlining specific tasks and responsibilities, and establishing timelines for
achievement.
2. Act: Once the performance plans are in place, employees begin to execute
their tasks and work towards their goals. Managers provide support,
resources, and feedback to help employees perform at their best. This stage
focuses on taking action to accomplish the outlined objectives and tasks.
3. Monitor: Throughout the performance period, managers continuously
monitor and track the progress of employees towards their goals. This
involves regularly reviewing performance metrics, observing behaviors, and
providing feedback to ensure that performance stays on track. Monitoring
allows managers to identify any issues or obstacles early on and take
corrective action as needed.
4. Review: At the end of the performance period or at regular intervals,
managers and employees come together to review progress and evaluate
performance. This stage involves assessing whether objectives were met,
analyzing performance data, discussing strengths and areas for
improvement, and providing feedback. Reviews may also include
discussions about career development, training needs, and adjustments to
performance plans for the future cycle.

26. What are the various characteristics of Performance Management?

The following are the key characteristics of performance management:

1. Performance management is an important organizational tool to clarify
performance
objectives, standards, critical dimensions, and competencies to enhance individual
performance.
2. Performance management works best when an employee’s work is planned and
goals for
achievement are communicated.
3. It emphasizes the development of capability and capacity of employees to
perform
consistently, coupled with the agility to respond to a changing dynamic business
and work
environment.
4. Performance management is a ‘systematic’ and ‘holistic’ approach to identify
critical
dimensions of performance.
5. It helps in integrating performance management process with other critical
organizational
systems including leadership development, succession planning, and talent
management
efforts.
6. Performance management is a multidimensional concept and includes imputes,
processes,
outputs and outcomes.
7. Performance management transforms organizational objectives and strategy into
a
measurable action plan by getting the right information to and from the right
people at the
right time and in the right format.

27. Discuss the various principles of Performance Management.

1. Continuous Process: Performance management isn't a one-time thing; it's
ongoing. Managers should regularly coach, give feedback, and communicate
with employees to help them succeed.
2. Communication Tool: It's a way for both managers and employees to
understand what's expected in terms of work responsibilities and
performance.
3. Job-Specific Focus: Evaluations should focus on the tasks and duties of the
job, not on general personality traits. Employees need clear definitions of
what their job entails.
4. Clear Performance Standards: Standards for each task should be set and
communicated so everyone knows what's expected.
5. Employee Involvement: Employees should be involved in setting their
goals and standards, ensuring they have a say in their own performance.
6. Professional Development: Plans should include ways for employees to
grow and improve in their roles.
7. Sufficient Evaluation Period: Evaluations should cover enough time to
accurately assess performance. Typically, this is a year.
8. Regular Documentation: Keep records of performance discussions
between managers and employees.
9. Fair Ratings: If ratings are used, they should reflect how well the employee
meets the performance standards set for their job.
10.Supervisor Evaluation: Managers should also be evaluated on how well
they manage performance and support their employees.
 11.Training Support: Both supervisors and employees should be offered
training to help them understand and implement the performance
management process effectively.

28. Elaborate on Tata’s Performance Management System.

29. Elaborate on various Traditional & Modern methods of Performance Rating.

Also discuss about the people involved in 360-degree feedback in context to the
same.
Traditional rating systems involve supervisors completing evaluation forms for
employees. Sometimes, a committee may be involved, including the immediate
supervisor, their superior, and other company officers familiar with the employees
being rated. While committee ratings offer multiple viewpoints and can help
overcome bias, they can also be time-consuming.

The rating form typically covers various factors like job knowledge, judgment,
dependability, leadership, etc. Supervisors mark these factors horizontally, often
using descriptive phrases to guide their evaluation. This method is straightforward
and easy to use. It helps identify areas where employees need improvement, and
the scores on specific factors can be added up to get an overall performance score.

However, traditional rating systems face criticism for being unclear, leading to
differing perceptions, being too lenient or strict, having a central tendency to rate
everyone as average, exhibiting the halo effect where one positive trait influences
the rating of other traits, and being influenced by an individual's job rather than
their actual performance. The main criticism is that they focus on personality traits
rather than job performance, making them highly subjective without clear
standards.

These new procedures aim to address the shortcomings of traditional rating scales.
Let's break them down:
1. Rank-Order Procedure: Employees are ranked from first to last based on
their performance or traits. Simple to understand but gets complex with
many employees.
2. Paired-Comparison System: Each employee is compared with every other
employee, and the appraiser marks who they consider better. The final
ranking is based on these comparisons, but it becomes difficult with many
employees.
 3. Critical Incident Method: Superiors track critical incidents in
accomplishing job requirements, building a record of each employee's
performance. Relies on objective evidence rather than subjective ratings.
4. Field Review: An appraisal by someone outside the employee's department,
often from the corporate or HR department. Involves reviewing employee
records and interviews. Useful for managerial promotions and when
comparing employees from different units.
5. Forced Distribution Procedure: Imagine you have a group of employees,
and you want to rate their performance. With forced distribution, you're told
to rate them in a specific way, like saying a certain percentage must be rated
as top performers, a certain percentage as average, and a certain percentage
as needing improvement. This helps prevent biases like being too easy or too
hard on everyone.
6. Forced Choice Technique: In this method, instead of just rating employees
on a scale, you're given pairs of statements about them, and you have to
choose which statement fits them best and which fits them least. Each
statement has a score, but you don't know what that score is. This makes it
harder for you to be biased because you're not just picking the most positive
option. It helps make evaluations more fair and objective.

30. Mention the conditions required for successful Institutionalization of PMS.

31. Elaborate on the linkage of Performance Management with other Sub-systems.

32. What are the various characteristics of an Effective Performance Management

System?
the characteristics of an effective performance management system:
1. Performance Focus: It centers on managing performance effectively.
2. Improvement Orientation: Focuses on enhancing performance for
individuals, teams, and the organization.
3. Continuous Process: Involves regular performance review discussions,
typically quarterly.
4. Comprehensive Approach: Includes planning, analysis, review,
development, and improvement of performance.
5. Rewarding Consideration: May or may not include performance rewards
as part of the system.
6. HR Involvement: Designed by HR but monitored by respective
departments, with line managers owning the process.
7. Key Performance Areas (KPAs) or Key Result Areas (KRAs): Used for
planning and evaluation.
 8. Developmental Focus: Identifies developmental needs based on
competency requirements.
9. Review Mechanisms: Essential for driving performance improvements.
10.Structured System: Involves deadlines, meetings, input, output, and a
defined format.
11.Process-driven: Emphasizes adherence to a structured format.
12.Linkage to Other HR Decisions: Connected to other HR decisions as
needed through performance improvements.
13.Shift in Managerial Style: Represents a change in the way managers
approach their work.
14.Culture Building: Creates and nurtures a culture of high performance.
15.Framework Orientation: Provides a structured framework for managing
performance effectively.

33. Discuss the benefits and pitfalls of 360-degree feedback in an organization.

34. What are the Strategies for Effective Implementation of Performance

Management?
The following are the other key strategies for effective implementation of
performance
management system:
1. Relying on Objective Assessments
2. Adopting Performance Management Policies
3. Honesty and Transparency
4. Encouraging Participation without Punishing Poor Results
5. Incremental Improvements
6. Dedicating Staff and Resources
35. Discuss the key components of performance planning.

36. What is result-oriented appraisal? Elaborate.

37. Discuss the process of formulating Competency-based PMS. Also mention

some key competencies for teamwork.
the steps for designing a competency-based performance management system
1. Categorize Competencies:
 Group competencies into "threshold" (basic skills everyone needs)
and "differentiating" (skills that set high performers apart).
  Example: Basic product knowledge for all salespeople is a threshold
competency, while exceeding sales goals is a differentiating
competency.
2. Map Competencies:
 Identify key competencies needed for each job and integrate them into
various HR processes.
 Use competency-based job descriptions to evaluate performance
objectively.
 Assess where employees excel and where they need development
based on competencies.
3. Build Competency Models:
 Develop models using:
 Behavioral Indicators: Describe behaviors that lead to superior
performance.
 Evaluative Competency Levels: Set standards based on high
performers' competencies.
 Job Requirement Competencies: Tailor competencies to
specific job roles for focused evaluations.
4. Profile Competency Framework for Roles:
 Understand the organization's structure and environment.
 Detail role descriptions and scale specific behaviors for each
competency.
 Align the framework with the company's values, culture, vision, and
mission.
 Validate the framework through workshops with experts and
management.
5. Assess Potential with Competency Mapping:
 Connect competencies to roles through mapping exercises.
 Identify critical behaviors for each role against the competency
framework.
 Assess individuals' potential through an Assessment Centre process:
 Design and conduct the Assessment Centre.
 Map individual competencies and identify gaps.
 Evaluate organizational capabilities and gaps.
Here are some key competencies for effective teamwork:

1. Communication: The ability to express ideas clearly and listen actively to

others, facilitating smooth information exchange and collaboration.
2. Collaboration: Working effectively with others towards a common goal,
sharing responsibilities, and valuing diverse perspectives and contributions.
 3. Adaptability: Being flexible and open to change, able to adjust to different
team dynamics, tasks, and environments.
4. Problem-solving: Analyzing issues, generating solutions, and making
decisions collectively, fostering a problem-solving mindset within the team.
5. Conflict Resolution: Addressing conflicts constructively, managing
disagreements, and finding mutually beneficial resolutions to maintain team
cohesion.
6. Empathy: Understanding and respecting the feelings and perspectives of
team members, creating a supportive and inclusive team environment.
7. Accountability: Taking ownership of tasks and commitments, delivering on
responsibilities, and holding oneself and others answerable for results.
8. Time Management: Effectively managing time and priorities, meeting
deadlines, and balancing individual and team tasks efficiently.
9. Trustworthiness: Building trust through honesty, reliability, and integrity,
fostering a culture of trust within the team.
10.Leadership: Demonstrating leadership qualities such as vision, motivation,
and guidance, while also being willing to follow and support others when
necessary.

38. What is Balanced Scorecard? Discuss its four different measures.

40. Discuss various common rating errors.

Perception and value systems can greatly influence evaluations in the workplace,
leading to various biases that can compromise the credibility of performance
appraisals. Here are some common syndromes related to biases in evaluations:
1. Halo Effect:
 This bias occurs when the assessment of one positive trait of an
employee influences the evaluation of the individual on other traits.
For example, if an employee is perceived as friendly, this may
positively impact how they are rated on other qualities, regardless of
their actual performance.
2. Horns Effect:
 Conversely, the Horns Effect happens when one negative trait of an
employee colors the entire appraisal. If an employee is seen as having
one flaw, such as being occasionally late, this may unfairly lower their
overall rating.
3. Leniency or Strictness:
 Leniency or Constant Error occurs when appraisers consistently rate
employees too highly or too harshly, regardless of their actual
 performance. Lenient raters may give high ratings to all employees,
while strict raters may consistently undervalue performance.
4. Central Tendency:
 This is when appraisers assign middle-range scores to all individuals
under appraisal, avoiding extreme ratings. This can result in average
ratings being given to employees, regardless of their actual
performance.
5. Spill-over Effect:
 The Spill-over Effect happens when past performance influences the
evaluation of present performance. For example, if an employee had a
particularly strong performance in the past, this may influence how
their current performance is evaluated.
6. Personal Bias:
 Personal Bias is perhaps the most significant error and stems from
individuals' values and prejudices influencing their judgments. Few
people can make completely objective judgments independent of their
personal biases.
1. Halo Effect: Imagine you have a friend who's always smiling and friendly. You might assume
they're good at everything, even if you haven't seen them do it. That's the Halo Effect - one good
trait makes you think everything about them is good.
2. Horns Effect: Now, imagine you have a classmate who's often late to class. You might start
thinking they're not good at anything, even if they're great at other things. That's the Horns Effect
- one bad trait makes you judge everything about them negatively.
3. Leniency or Strictness: Some people always give high scores, no matter what. Others are
always tough graders. These biases can make it hard to get a fair evaluation.
4. Central Tendency: Imagine you have a teacher who always gives everyone a "C" grade, no
matter how well they did. That's central tendency - they avoid giving high or low scores, sticking
to the middle.
5. Spill-over Effect: If someone did really well in the past, you might assume they're still doing
great, even if they're not. That's the spill-over effect - past success affects how you see their
current performance.
6. Personal Bias: We all have our own opinions and beliefs. Sometimes, these can sneak into our
judgments, making them unfair. It's important to try to be objective and judge based on facts, not
feelings.