hrm unit-5 performance appraisal

7/28/2019 HRM Unit-5 Performance Appraisal

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UNIT-5PERFORMANCE APPRAISALSYSTEMS-MBO APPROACH,PERFORMANCE COUNSELLING&CAREER PLANNING

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PERFORMANCE APPRAISAL

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MEANINGPerformance Appraisal is a method of evaluating the behavior ofemployees in the work spot , including both quantitative &

qualitative aspects of job performance.

Performance refers to the degree of accomplishment of the tasks

that make an individuals job. It is how well an individual is

fulfilling the job demands.

Performance appraisal is a process of judging the value , excellent

qualities or status of a person. It is a process of collecting , analyzing and

evaluating data relative to job behavior and results of individual.

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DEFINITIONSPerformance Appraisal is an objective assessment of anindividuals performance against well defined benchmarks.

Performance Appraisal is the systematic evaluation of theindividual with respect to his or her Performance on the job and

his or her potential for development.

Performance Appraisal is the systematic evaluation of present &potential capabilities of personnel and employees by thesuperiors, superiors superior or a professional from outside.

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DEFINITIONS Performance appraisal is a process of evaluating

work performance of the personnel so as facilitate

individual and organizational effectiveness.

"Performance appraisal is the process of assessing

quantitative and qualitative aspects of an employee's

job performance."

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Six criterion on which the value of Performance Appraisal

is assessed-

QualityQuantity

Timeliness

Cost-Effectiveness

Need for Supervision

Interpersonal Impact

The other terms used for Performance Appraisal are-Performance Rating

Employee Assessment

Employee Performance ReviewPersonnel Appraisal

Performance Evaluation

Employee Evaluation and Merit Rating


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Copyright (c) 2005 Prentice Hall7

BENEFITS OF

PERFORMANCE APPRAISALAppraisal provides information about the performance ofindividuals employed in an organization. Such

information is useful for any purpose like administration,

placement, financial rewards, and determination of

grades, incentives, or compensation

Performance Appraisal is the assessment of an

individual's performance in a systematic way, theperformance being measured against factors such as:-

JOBKNOWLEDGEQUALITY &QUANTITY OF OUTPUT INITIATIVE

LEADERSHIPABILITIES

SUPERVISION &DEPENDABILITY LEADERSHIP


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Performance Appraisal is not

done in

isolation. It is linked to JobAnalysis.

Job Analysis Performance Standards Performance Appraisal

Describes work and personnel

Requirement of a particular job

Translates job requirements

Into levels of acceptable or

unacceptable performance.

Describe the job relevant

Strengths and weaknesses

Of each individual


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OBJECTIVES OF PERFORMANCEAPPRAISAL To help the employees to overcome his weakness & improve his strengths so

as to enable him to achieve the desired performance.

To generate adequate feedback & guidance from the immediate superior.

To effect promotions based on competence and performance.

To assess the training and development needs of employees.

To decide upon a pay scale where regular pay scales have not been fixed.

To let the employees know where they stand in so far as their performance is

concerned and assist them with constructive criticism and guidance for the

purpose of their development.


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OBJECTIVES OFPERFORMANCE APPRAISALTo help in creating a desirable culture & tradition in the organization.

To generate significant , relevant & valid information aboutemployees.

To facilitate fair & equitable compensation based on performance.

To improve communication- Performance Appraisal provides aformat for dialogue between the superior and the subordinate, andimproves understanding of personal goal and concerns.

PA is used to determine whether HR programs such as selection,training and transfers have been effective or not .

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PERFORMANCE

APPRAISAL

Copyright (c) 2005 Prentice Hall11

OBJECTIVES

OFPERFORMANCE

APPRAISAL


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USES OF PERFORMANCEAPPRAISALIt serves as a basis for improving the quality andquantity of performance of the executives in theirpresent work.

It helps to identify the strengths and weaknesses andto introduce methods to make the best use of thestrength and to overcome weaknesses.

It enables to locate the problems which may stand onthe way of performances so that corrective action canbe taken to improve the performance.

Appraisal provide the basis for promotion.

Helps in compensating grade and incentives.

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PERFORMANCEAPPRAISAL : AS AMANAGEMENT TOOLEssential for the Effective Management

Evaluation of Staff

Conducted annually

Each individual's performance againstobjectives and standards for the tradingyear

Career and Succession Planning

Staff motivation, attitude and behaviordevelopment

Vital for managing the performance ofpeople and organizations.

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APPRAISALPROCESSEstablish Performance Standard

Communicate Performance Expectations to Employees

Measure Actual Performance

Compare Actual Performance with Standards

Discuss the Appraisal with the Employees

If Necessary ,Initiate Corrective Action


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APPRAISAL OF POTENTIAL ATPHILIPSSandoz , Philips and P&G etc. today all the

companies are using various Performance

Appraisal methods.

At Philips a two by two matrix is used to

assess performance and potential of

employees. The vertical axis measurespotential while the horizontal axis measures

the actual performance.


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Problem

children

stars

?

Plan Separation

Solid

citizens

Lo

w

POTENTIAL

Hig

h

Low PERFORMANCE High


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Low potential-low performance- The employees are considered asquestion marks.

High potential-low performance- These are problem children

High potential-high performance- These are the star performers.

Low potential-high performance- These are called the solid citizens.


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Appraisal Methods- The Journey

How management can actually establish

performance standards and devise

instruments that can be used to measure

and appraise an employees

performance?


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TRADITIONALPERFORMANCE RATINGCompletion of a form by the immediate superior/ committee of

supervisors of the individual who is being evaluated.

Criticism:

Traditional Performance Rating emphasis on personality traits

instead of job performance.

There is a divergence of opinion among raters as what is meant by

standards such as (unsatisfactory, good)

There may be divergent perceptions and accordingly different

standard of judgment among raters.The raters may be susceptive to excessive lienency/ strictness

error/central tendency/halo error

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NEWER RATINGMETHODSThree different approaches exists for doing appraisals. Employee

can be appraised against:

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Absolute Standards

Relative Standards

Objectives


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Absolute Standards

Essay Appraisal

Critical Incident Appraisal

Checklist

Graphic Rating Scale

Behaviorally Anchored Rating System

(BARS)


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ESSAY APPRAISAL

Rater write a narrative

describing an employees

strength, weakness, pastperformance, potential and

suggestion for improvement.

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CRITICAL INCIDENT


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CRITICAL INCIDENT

APPRAISAL

Raters give attention on those critical or key behaviors that

make the difference between doing a job effectively or

ineffectively.

Drawbacks:

Appraisers are required to regularly write these incidents

(daily/weekly)---- Time Consuming/ Boring.

Suffer from same comparison problem which is their in

Essay Appraisal.

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CHECKLIST

Evaluator uses a list of behavioral description and checks off

these behaviors that apply to the employee.

In this method Rater (Manager) & Scorer (Staff Personnel

Dept.) are different

Reduces biasness

If job categories are more, than this method is insufficient.

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GRAPHIC RATING SCALE

This is the oldest and widely used techniques. This method is alsoknown as linear rating scale or simple rating scale. In this method

there is Performance factors and a scale to evaluate performance.

The appraisers are supplied with printed forms, one for each

employee. These forms contain a number of objectives, behavior

and trait-based qualities and characters to be rated like quality ofwork, quantity of work, dependability, initiative, attitude etc. in the

case of workers and analytical ability, creative ability, initiative,

leadership qualities, emotional stability in the case of managerial

personnel.

Comparability with other individuals in diverse job categories is

possible.

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BEHAVIORALLY ANCHORED

RATING SYSTEM (BARS)

These scales combine major elements from the Critical Incident &

Graphic Rating Scale approaches.

The appraiser rates the employees based on items along a

continuum, but the points are examples of actual behavior on the

job rather than general description or traits.BARS specify definite, observable, & measurable job behavior.

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BARSIndividuals/Participants

give specific illustrations

of effective/ineffective

behavior regarding each

particular dimension

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These Performance

Dimensions are translated

intoAppropriate

Performance

Dimensions

Anchor

Evaluatio

n


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Relative Standards

Group Order Ranking

Individual Ranking

Paired Comparison


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RELATIVE STANDARDS

Individuals are compared against other individuals.

Group Order Ranking: Evaluators are asked to rank the participants in the

top 5 % , the next 5 %, the next 15 % and so forth.

Individual Ranking: Evaluator list the employees in an order from highest to

lowest.

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PAIRED COMPARISON

The paired comparison method is calculated by taking the total of

[n(n-1)]/2 comparisons. A score is obtained for each employee by

simply counting the number of pairs in which the individual is the

preferred member. It ranks each individual in relationship to all

others on a one-on one basis. If ten people are being evaluated,the first person is compared, one by one , with each of the other

nine pairs is tabulated. Each of the remaining nine persons, in

turn, is compared in the same way, and a ranking is evolved by the

greatest number of preferred victories. This method ensures that

each employee is compared against every other, but the methodcan become unwieldy when large numbers of employees are

being compared.

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RESULT ORIENTED APPRAISAL

OR

MANAGEMENT BY

OBJECTIVES (MBO)

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RESULT ORIENTEDAPPRAISAL/MBOResult Oriented Appraisal are based on the concrete

performance targets which are established by superior and

subordinates jointly.

MBO is a process whereby the superior and subordinate

managers of an organization jointly identify its commongoals, define each individuals major area of responsibility in

term of results expected of him and use these measures as

guides for operating the unit and assessing the contribution

of each of its members.

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MBOThe principle behind Management by Objectives (MBO) is to

make sure that everybody within the organization has a clear

understanding of the aims, or objectives, of that organization,

as well as awareness of their own roles and responsibilities

in achieving those aims.

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MBOS FOUR STAGESJointly determine the goals and the

objectives to be achieved in the KRA (Key Result Area)

Jointly formulate the action plan

Jointly implement the plan

Jointly evaluate or reviews their

performance

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STEPS OF MBOMBO consists of four steps: Goal Setting, Action

Planning, Self-Control and Periodic Reviews

1. Goal Setting : Organizations overall objectives are used

as guidelines from which departmental and individualobjectives are set.

2. Action Planning: The means are determined for achieving

the ends establishing in goal setting.(The realistic plans are

developed.)

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STEPS OF MBO3.Self-Control: It refers to systematic monitoring and

measuring performance.(Individual review their own

performance)

4.Periodic Review: Corrective actions are initiated when

behavior deviates from the standards established in the goal

setting phase.

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MBO OFFERSSubordinates are motivated

Better relationship between managers andsubordinates

Focuses in the results and not on means

Minimize unnecessary formalities andprocedures.

Focuses on KRA

helps to analyze the role of the managersand the subordinates

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ADVANTAGES OFMBOPromote objectivity : Provides a way for measuring

objectively the performance of subordinates

Improved superior-subordinate relationship

Stimulate Self-Motivation /Self-Discipline/Self-ControlAdds in overall Effective Planning

Fosters increased competence , personal growth and

opportunity for career growth.

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LIMITATIONSMBO is unlikely to effective in an environment where

management has little trust in its employees

(Autocratically decisions are preferred)

The amount Time needed to implement, maintain an MBO

process cause problems.

Involves lot of paper work, meetings and discussions

Not useful for arriving at emergency decisions

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360 APPRAISAL

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360 APPRAISALWhich is the most effective appraisal method ?

If performance appraisal is conducted properlyand clearly explained to all the employees it

becomes effective360 degree appraisal involve the appraisereceiving feedback from various people

Respondents can be the up-linemanagers/executives, subordinate staff, teammembers, other staff, customers, suppliers -anyone

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FEATURES OF EFFECTIVE360 APPRAISALDo not restrict feedback to peers and managers

Feedback system can be developed by running a half-day or full

day workshop depending on extent and complexity

It is advisable that no aspects of 360 feedback should ever bemandatory

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360 APPRAISALAppraisals help develop individuals,

improve organizational performance, and

feed into business planning.

When designing or planning and

conducting appraisals, the objective should

be to help the 'whole-person' to grow

360 degree appraisals are a powerfuldevelopmental method.

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FACTORS

THAT CAN DISTORT

APPRAISALCOMPLETELY ERROR FREEPERFORMANCE APPRAISAL IS ANIDEALIZED MODELWITH ALL ACTUAL APPRAISALSBEING SOMETHING LESS THANTHIS OPTIMUM LEVELTHE NUMBER OF FACTORS THATSIGNIFICANTLY IMPEDE OBJECTIVEEVALUATION ARE THE FACTORSTHAT DISTORT APPRAISAL.


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DISTORT

PERFORMANCE APPRAISAL

Leniency Error

Halo Error

Similarity Error

Central Tendency

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LENIENCY ERROR

WHEN THE EVALUATORS AREPOSITIVELY LENIENT IN THEIRAPPRAISAL, AN INDIVIDUALSPERFORMANCE BECOME OVERSTATED.NEGATIVE LENIENCY ERRORUNDER STATE PERFORMANCE,GIVING THE INDIVIDUAL ALOWER APPRAISAL .


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HALO ERROR

THE HALO EFFECT OR ERROR IS ATENDENCY TO RATE HIGH OR LOW ONALL FACTORS DUE TO IMPRESSION OFHIGH OR LOW RATING ON SOMESPECIFIC FACTOR


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SIMILARITY ERROR

WHEN THE EVALUATORS RATE OTHERPEOPLE IN THE SAME WAY THAT THEEVALUATORS PERCEIVE THEMSELVES,THEY ARE MAKING A SIMILARITYERROR. BASED ON THE PERCEPTION

THAT EVALUATOR HAVE THEMSELVES.


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CENTRAL TENDENCY

CENTRAL TENDENCY IS THE RELUCTANCETO MAKE EXTREME RATING (IN EITHERDIRECTION) THE IN ABILITY TODISTINGUISH BETWEEN AND AMONGRATES; A FORM OF RANGE RESTRICTION.


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CAREER PLANNING

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CAREER PLANNINGCareer planning is the process by which

one selects career goals and the path to

these goals.

Career management is the process of

designing & implementing goals, plans &

strategies to enable the organization tosatisfy employee needs while allowing

individuals to achieve their career goals.

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NEED FOR CAREERPLANNINGTo attract competent persons and to retain

them in the organization.

To provide suitable promotional opportunities.

To enable the employees to develop & makethem ready to meet the future challenges.

To correct employee placement.

To reduce employee dissatisfaction & turnover.

To improve motivation & morale.

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ADVANTAGES OF CAREERPLANNINGThe process of career planning helps the individual

to have the knowledge of various careeropportunities, his priorities etc.

This knowledge helps him select the career whichis suitable to his life styles, preferences, familyenvironment, scope for self-development etc.

Internal promotions, upgradation & transfersmotivate the employees, boost up their morale& also result in increased job satisfaction.

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For Individuals:-


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FOR ORGANIZATIONSEfficient career planning & development ensures the

availability of human resources with required

skill, knowledge & talent.

The efficient policies & practices improve the

organization's ability to attract & retain highly

skilled & talent employees.

Protecting employees interest results in promoting

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CAREER STAGESExploration

Establishment

Mid-Career

Late Career

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CAREER STAGESExploration:- Exploration is a career stage that

usually ends in ones mid twenties as onemakes the transition from college to work.This stage has the least relevance from theorganizational point of view as it happensprior to employment.

Establishment:- It is a career stage in whichone begins to search for work. It includesgetting ones first job. Search for a right jobis a difficult task. The problems of this

stage include making mistakes, learningfrom those mistakes & assuming increasedresponsibilities.

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CAREER STAGESMid-career stage:- This stage is marked by a continuous

improvement in performance, leveling off in performance orthe start of deterioration in performance.

Late career:- A career stage in which one is no longer learningabout his or her job. He is also not expected to trying to doout his/her levels of performance from previous years. Thisstage is usually a pleasant stage.

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LIMITATIONS OF CAREER


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PLANNINGDual Career Families:- With the increase in career

orientation among women, number of femaleemployees is on increase. At times it affectsemployee turnover.

Low Ceiling Careers:- Some careers do not have scopefor much advancement. Employees cannot getpromotions despite their career plans &development in such jobs.

Declining career opportunities:- Career opportunities forcertain categories reach the declining stage due tothe influence of the technological or economicfactors.

e.g. career opportunities forStatisticians declined dueto computerization.

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PERFORMANCECOUNSELLING

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COUNSELLINGCounseling is discussion of a problem that usually has

emotional content with an employee in order to help the

employee cope with it better. It seeks to improve employees

mental health.

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CHARACTERISTICSCounseling is an exchange of ideas and feelings between two

people.

It tries to improve organizational performance by helping the

employees to cope with the problems.

It involves both job and personal problems.It is usually confidential in order to have free talk and

discussions.

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NEED FORCOUNSELLINGNeed for employee counseling arises due to various causes-(

Job complexity) negative-emotions,

conflicts, over-work load, and health problems

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FUNCTIONS OF COUNSELLINGAdvice: One of important functions is to

offer advice to the counselee byunderstanding the problem of thecounselee and suggesting a course of

action.Communication: Counseling will improve

both upward and downwardcommunication abilities of the

counselee.

Release of Emotional Tension: People feelemotional release from their frustrationafter counseling.

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TYPES OF COUNSELLINGDirective Counseling: It is full counseling. It is theprocess of listening to an employees problem,

deciding with employee what should be done andtelling and motivating the employee to do it. For e.g.advice, reassurance.

Non Directive Counseling: It is the process of skillfullylistening and encouraging a counselee to explaintroublesome problems, understand them anddetermine appropriate solutions.

Participative Counseling: Participative is a counselor-counselee relationship that establishes acooperative exchange of ideas to help solve anemployees problems. They both mutually applytheir different knowledge, perceptions, and skills to

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CASE STUDY

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YOU GET WHAT YOU PAY FORFRANK HENDERSON IS THE MANAGER OFGENERAL ELECTRICS APPLIANCE DIVISION.

EACH APRIL, HE MUST EVALUATE ALL OF HISSUBORDINATES TO DECIDE WHO IS TORECEIVE A MERIT INCREASE FOR THEUPCOMING FISCAL YEAR. BUT EACH YEARTHESE EMPLOYEES COMPLAIN ABOUT HOWTHEY ARE EVALUATED, HOW MERIT MONEY ISDISPERSED, AND WHAT CRITERIA ARE USED

FOR THE EVALUATIONS. HOWEVER, DURINGTHE PAST TWO YEARS THERE HAS BEEN ATREMENDOUS EMPHASIS ON QUALITY OFPRODUCTION. A REVIEW OF THE MERITRECIPIENTS REVEALS THAT THESE PEOPLEWERE THE ONES WHO HAD THE BESTQUALITY RECORDS. BUT MANY OF THEEMPLOYEES FELT THAT QUALITY SHOULDNOT BE THE DETERMINING FACTOR. AT ANEMPLOYEE FORUM, ONE OF THE SENIORMEMBERS REMARKED

CASE STUDY


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How can frank now reward quality? What has

happened to production numbers? Anotheremployee agreed and stated: This quality gameis okay for some, but what about overallproduction? It seems to me that if I will only be

rewarded for quality, then I should produce afew items but make them perfect. After hearingsuch criticism, Frank was quite upset. He wasnot trying to cause chaos in his evaluations, nor

was he attempting to hurt anyone. Unfortunately,what was originally intended to be an evaluationsystem had just become a nuisance.

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What is the major problem with Franks evaluation system?

Describe a performance evaluation system that you could

recommend to Frank for evaluating a worker on the

production line?

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CHALLENGES OFPERFORMANCE APPRAISALCreate a culture of excellence that inspires

every employee to improve and lend himself or

herself to be assessed.

Align organizational objectives to individualaspirations.

Clear growth plans for talented individuals.

Provide new challenges to rejuvenate careersthat have reached the plateau stage.


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Empower employees to make decisions

without the fear of failing.

Embed teamwork in all operational

processes.

LEGAL ISSUES ASSOCIATED


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WITH PERFORMANCEAPPRAISALPerformance Appraisal data are used to make many important HRdecisions. The Appraisal system is a common target of legaldisputes by employees involving charges of unfairness and bias.

There are several recommendations to assist employees inconducting fair Performance Appraisal and avoiding legal suits.

Legally defensible Appraisal procedure- All personnel


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decisions should be based on a formal standardizedPerformance Appraisal system.

Legally defensible Appraisal content- Any PerformanceAppraisal content should be based on job analysis andAppraisals based on traits should be avoided.

L ll d f ibl d t ti f A i l lt A


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Legally defensible documentation of Appraisal results- Athoroughly written record of evidence leading to terminationdecisions should be maintained.

Legally defensible raters-The raters should be trained howtouse an Appraisal system.


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THE END

hrm unit-5 performance appraisal

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