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What is performance appraisal Performance appraisal is the process of obtaining,

analyzing and recording information about the relative worth of an employee.

The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee.

Its aim is to measure what an employee does.

Objectives of performance appraisal To effect promotion based on competence and performance To confirm the services of probationary employees upon their

completing the probationary period satisfactorily. To assess the training and development needs of employees To decide upon a pay raise where ( as in the unorganized

sector ) regular pay scales have not been fixed. To let the employees know where they stand in so far as their

performance is concerned and to assist them with constructive criticism and guidance for the purpose o their development

To improve communication. It provides a format for dialogue between the superior and the subordinate.

It improves the understanding of personal goals and concerns. It can be used to determine whether HR programs such as

selection, training and transfer have been effective or not

Traditional approach

Traditionally, performance appraisal has been used as just a method for determining and justifying the salaries of the employees.

After it is used as a tool for determining rewards and punishments for the past performance of the employees

This approach did not consider the developmental aspects of the employee performance.

The primary concern of the traditional approach is to judge the performance of the organization as a whole by the past performances of its employees

In 1950s the performance appraisal was recognized as a complete system in itself and the Modern Approach to performance appraisal was developed.

Modern approach

The modern approach to performance development has made the performance appraisal process more formal and structured.

the performance appraisal is taken as a tool to identify better performing employees from others, employees training needs, career development paths, rewards and bonuses and their promotions to the next levels.

Now appraisals have become a continuous and periodic activity in the organizations.

The results of performance appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and development, reward outcomes

It also includes feedback.

Techniques of performance appraisal

Traditional method 

Straight line method This is one of the oldest and simplest

techniques of performance appraisal. In this method, the appraiser ranks the

employees from the best to the poorest on the basis of their overall performance.

It is quite useful for a comparative evaluation No feedback is given This method is subject to hallow and recency

effect.

PAIRED COMPARISON

A better technique of comparison than the straight ranking method

this method compares each employee with all others in the group, one at a time.

After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. 

Modern methods

360 Degree Performance Appraisals

It is known as 'multi-rater feedback‘. It is the most comprehensive appraisal where the

feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. 

360 degree appraisal has four integral components:

1. Self appraisal2. Superior’s appraisal3. Subordinate’s appraisal4. Peer appraisal

MANAGEMENT BY OBJECTIVES The concept of ‘Management by Objectives’

(MBO) was first given by Peter Drucker in 1954. It is a process where o employees and the superiors come together to

identify common goals,o the employees set their goals to be achieved,o the standards to be taken as the criteria for

measurement of their performance and contribution and deciding the course of action to be followed

Performance appraisal in Coca Cola Ltd

Performance appraisal in COCA-COLA LTD. is done annually.

For appraisal in Coca-Cola Ltd. a SELF-APPRAISAL form is given to the staff members and they fill it up.

Then after according to their self-observation and through the appraisal form filled by the staff members rating is given to the members.

Accordingly then incentives and promotions are granted. In COCA-COLA LTD. at the majority senior staff

members submit all the information timely to their superiors.

Old Performance Appraisal System

The appraisal occurred once a year. It required employees to document

their accomplishments. The manager would assess these

accomplishments in writing and assign numerical ratings.

The appraisal included a summary written appraisal and a rating from 1 (unsatisfactory) to 5 (exceptional).

Merit increases were tied to the summary rating level.

Merit increase information and performance

appraisals occurred

in one session.

DRAWBACKS

Inequitable ratings Employee dissatisfaction All employees given merit

raises irrespective of their performances.

New Performance Appraisal System

The absence of a numerical rating system.

The presence of a half-year feedback session.

The provision for development planning. Prohibition in the appraisal guidelines of

the use of subjective assessments of performance.

Three stages

FIRST STAGE Occurs at the beginning of the year. Written agreement on the employee’s

goals, objectives, plans, and tasks for the year.

Standards of satisfactory

performance

SECOND STAGE

Mid-year Mandatory feedback Progress toward objectives performance strengths and

weaknesses Objectives sheet

THIRD STAGE

Takes place at year’s end. Written document Feedback and improvement. Training, education, or development

experiences Merit raise amount

SURVEY 81 percent better understood work group

objectives 84 percent considered the new appraisal fair 72 percent said they understood how their

merit raise was determined 70 percent met their personal and work

objectives 77 percent considered the system a step in the

right direction

CONCLUSION Improvement Employees satisfaction Better co ordination Employees are objective specific Achievement of set

targets and standards.