Concept of Performance Management and Appraisal

Performance Management is the mechanism that ensures that the employee achieves the objectives set by the organization and the organization thereby achieves the objectives that it has set itself in its strategic plan. Performance Appraisal is a part of staffing processes, like recruitment, selection, placement, & indoctrination. It is a process of evaluation an employees performance of a job in term of its requirements. Heyel observe, It is the process of evaluation the performance & qualification of the employees in terms of requirements of the job for which he is employed, for purpose of administration including placement, selection for promotion, providing financial reward and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally. In short, Performance Appraisal is a process of evaluating an employees past and current performances relative to the persons performance standards in terms requirements of the job for purpose of placement of selection of promotion & providing financial rewards.

Performance management is a goal-oriented system to ensure that organizational processes exist to maximize the productivity of employees, teams and, ultimately, the organization. A performance appraisal is a formal system of review and evaluation of individual or team performance. Performance management is an ongoing organizational process that is conducted to maximize the productivity of employees with the overall intention of improving the organizations effectiveness. It is strategic in nature and involves every person and all HR processes in the organization. All are directly tied to achieving the organizations goals. The performance appraisal is a periodic event to reflect and evaluate past performance with the intent to identify strengths and weaknesses of an employees performance and to identify developmental goals. A performance appraisal is just one part of a performance management system.

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Why Appraisal performance

There are several reasons to appraise subordinates performance. At first appraisals play or should play an integrated role in the employees performance management process it does little good to translate the employees strategic goals into specific employees goals and then train the employees if you dont periodically review your employees performance. Second, the appraisal lets the boss and subordinate develop a plan any deficiencies the appraisal might unearthed and to reinforce the things the subordinate does correctly. Thirdly, appraisals should serve a useful career planning purpose by providing the opportunity to review the employees career plans in light of his or her exhibited strength and weaknesses. And last but not least, the appraisal almost always affects the employees salary raise and promotion decisions. There are other reasons for doing performance appraisal. If its done right, performance appraisals tell us whos a good candidate for promotion and whos properly placed in their current job (and whos in over his head). They tell us where we need to intensify our development efforts. And the truth is, performance appraisal tells us who the people are whod be better off working somewhere else. The standards and expectations of some companies are just too high for some people to meet and performance appraisal identifies who those misplaced folks are. But all those reasons are secondary. The real reason organizations have a

performance appraisal system is to fulfill an ethical obligation. We answer the first question, what do you expect of me, at the start of the year when we talk about goals and projects and key job responsibilities. We answer the second question, How am I doing, at performance appraisal time. About the Author Dick Grote has been a management consultant for almost thirty years, specializing exclusively in the field of employee performance appraisal and management. As a consultant, he has created employee performance management systems for several hundred of the worlds best known and most respected companies, including Texas Instruments, JCPenney, Miller Brewing Company, American Airlines, Macys, Raytheon, Burlington Northern Santa Fe Railroad, and Herman Miller. His company, Grote Consulting, specializes in employee performance appraisal, employee improvement and talent management.

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The Supervisors Role

Appraising performance is both a difficult and an essential supervisory skill. Supervisors must therefore be familiar with basic appraisal technique, understand and avoid problems that can cripple appraisals, and know how to conduct appraisals fairly. The HR department serves a policy-making and advisory role. Generally, the HR department provides advice and assistance regarding the appraisal tool to use, but leaves final decisions on procedure to operating division heads. In some firms, HR prepares details forms and procedure and insists that all departments use them. The supervisor is responsible for completing the annual Performance Planning and Evaluation Process for each employee.The process is a means for ensuring continuous, open communication between the supervisor and employee. It should clarify expectations and help to strengthen a culture of accountability, recognition, continuous improvement and continuous learning. The process begins at the time of hire, when an employee transfers to a new job, or at the beginning of the annual review period. The performance evaluation should be based on the performance expectations as outlined in the employees job description. The process includes the following Set performance expectations based on the employees job description Develop a Learning and Self-Development Plan Observe and document performance Provide feedback on performance; recognize accomplishments and identify gaps in performance; develop action plans to address gaps Provide on-going coaching and development Gather 360 degree feedback Employee completes self-evaluation Manager reviews the employees accomplishments, gaps and development and selfevaluation Manager completes evaluation and plans for meeting with employee Manager meets with employee and discusses past years performance, next years performance goals and self development plan

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Steps in Appraising performance

performance appraisal processs content was carried out in three steps. 1. Identify the job First make sure you define you employees job and performance criteria. Define the job means making sure that you and your subordinate agree on his or her duities and job standards and appraisal method you will use. Identify the job means unity between the personnel and staff. What is companys expectation to employees and The model standard, based on it will proceed to assess job performance of staff. 2. Job Performance Evaluation that is comparing the performance of the work of employees with the standard model. In this step, it can use many methods to assess different job performance such as: Evaluation by transcripts and graphs. (This is simple and most common method in job performance evaluation.) a. Rated rotation. b. Compare the pair. c. Stored critical method. d. Method of narrative form 3. Provide feedback: Can be done once when job performance evaluation ends or can do the job several times throughout the process of evaluating the implementation of the work of employees, this depends on the nature and characteristics of the job. The work is very varied and complex. Evaluation of the job performance of the production workers who employed to work in labor norms is simple, can be based directly on the level of accomplishment of workers. Evaluation of the job performance of other employees is very complex, difficult to accuracy and often uses the necessary methods.

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Behaviorally Anchored Rating Scales

Behaviorally anchored rating scales (BARS) are rating scales whose scale points are defined by statements of effective and ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a continuum of descriptive statements of behaviors ranging from least to most effective. An evaluator must indicate which behavior on each scale best describes an employee's performance.It is an appraisal method that aims to combine the benefits of narratives, critical incidents, and quantified ratings by anchoring a quantified scale with specific narrative examples of good, moderate, and poor performance.This is a new appraisal technique which has recently been developed. Its supports claim that it provides better, more equitable appraisals as compared to other techniques. The procedure for BARS is usually five stepped. 1. Generate Critical IncidentsPersons with knowledge of the job to be appraised (job holders/ supervisors) are asked to describe specific illustrations (critical incidents) of effective and ineffective performance. 2. Develop Performance DimensionsThese people cluster the incidents into a smaller set of performance dimensions. Each cluster is then defined. 3. Reallocate IncidentsAny group of people who also know the job then reallocate the original critical incidents. They are given the cluster's definitions, and critical accidents, and asked to redesign each incident to the dimension it best describes. Typically a critical incident is retained if some percentage of this group assigns it lo the same cluster as the previous group did. 4. Scale of IncidentsThis second group is generally asked to rate the behaviour described in the incident as to how effectively or ineffectively it represents performance on the appropriate dimension. 5. Develop Final InstrumentA subset of incidents are used as "behaviour anchors" for the performance dimensions.

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Management by Objectives
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives. Management by objectives (MBO) involves setting specific measurable goals with each employee and then periodically discussing his/her progress toward these goals. The term MBO almost always refers to a comprehensive organization-wide goal setting and appraisal program that consist of six main steps: 1. Set the organizations goals. Establish organization-wide plan for next year and set goals. 2. Set departmental goals. Here department heads and their superiors jointly set goals for their departments 3. Discuss and allocate department goals. Department heads discuss the department's goals with all subordinates in the department (often at a department-wide meeting) and ask them to develop their own individual goals; in other words, how can each employee contribute to the department's attaining its goals? 4. Define expected results (set individual goals). Here, department heads and their subordinates set short-term performance targets. 5. Performance review and measure the results. Department heads compare actual performance for each employee with expected results. 6. Provide feedback. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate progress in achieving expected results.

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Electronic Performance Monitoring

Electronic performance monitoring (EPM) means using technology to monitor the activities of employees at work, which includes the productivity output and how effectively the employees have utilised the effective work time. Though the emphasis is on higher productivity, which means quantity rather than quality, EPM has often drawn huge flak from the critics, though some studies suggest otherwise. With the installation of EPMs in the companies, the electronic devices keep a tab on how long an individual talks on the phone during the peak performance hours. The monitors also keep an eye on the mails that are sent and received from the official work computer as also the number of personal mails transacted during the official work hours. This is increasingly being used in the United States, Canada and other countries - though it is still at a nascent stage it is catching up fast with the increase in the number of multinational companies. There are, however, contradictory evidences suggesting that the EPM has both positive and negative effects on both the employer as well as the employees. Most critics write the Electronic Performance Monitoring off as it usually suggests a very high level of stress for the employees. Studies in the US and Canada (where the system is largely prevalent) suggest that it has had a negative effect on the employees like: Increased stress levels Physical problems like stiffness in the shoulders and back pain Reduced the job satisfaction in the employees Other psycho-somatic illness complaints include anxiety, fatigue or exhaustion and depression Privacy intrusion (mails of the employee monitored by the employer) Low cost of quality and a low satisfaction rating Workers are always at a pressure to perform better due to the increased feelings of evaluation The surveys done reveal that stress is common in employees who attach more importance to work and that can happen in organisations where EM is not in vogue. Furthermore, people supporting these systems say that monitoring has hardly had any bearing on the employment or on the salary scale of the employees. So employees should not panic.
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Portential Appraisla Problems

Many performance appraisal methods have been severely criticized. Many of the problems commonly mentioned are not inherent in the method but, rather, reflect improper usage. 1. Lack of Objectivity: - A potential weakness of traditional methods of performance appraisal is that they lack objectivity. Some subjectivity will always exist in appraisal methods. However, the use of job-related factors does increase objectivity. 2. Halo Error:- Occurs when the evaluator perceives one factor as being of paramount importance and gives a good or bad overall rating to an employee based on this factor. 3. Leniency/Strictness:- The giving of undeserved high or low ratings. 4. Central Tendency:- Occurs when employees are incorrectly rated near the average or middle of the scale. 5. Recent Behavior Bias:- It is only natural to remember recent behavior more clearly than actions from the more distant past. However, performance appraisals generally cover a specified period of time, and an individuals performance should be considered for the entire period. 6. Personal Bias:- Supervisors doing performance appraisals may have biases related to their employees personal characteristics such as race, religion, gender, disability, or age group. 7. Manipulating the Evaluation:- In some instances, supervisors control virtually every aspect of the appraisal process and are therefore in a position to manipulate the system. 8. Ineffective organizational policies and practices:- If the sincere appraisal effort put in by a rater is not suitably rewarded, the motivation to do the job thoroughly finishes off. Sometimes, low ratings given by raters are viewed negatively by management as a sign of failure on the part of rater or as an indication of employee discontent. So, most employees receive satisfactory ratings, despite poor performance. Normally, the rater's immediate supervisor must approve the ratings. However, in actual practice, this does not happen. As a result the rater goes off the hook' and causes considerable damage to the rating process.
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Five Guidelines for holding Effective Appraisals

Its probably safe to say that problems like these can make an appraisal worse than no appraisal at all. Would an employee not better off with no appraisal than with a seemingly objective but actully biased one? however problems like these arent inevtable and yu can minimize them. Do five things more effective appraisal. 1. Know the problems learn and understand the potential appraisal problems. Understanding and anticipating the problem can help you avoid it. 2. Use the right appraisal tool or combination of tool. Each has its own pros and cons. For example the ranking metrhod avoiads central tendency but can cause bad feelings when employees performances are in fact all high. In practice employers choose an apparaisal based on several criteria. Accessibility and ease of use in probably first. That is why graphic rating scales are still so popular even within computerized appraisal package. Ranking produces clearer results, but many employees prefer to aviod the push back from employees that ranking

provokes. For those for whom accuracy is a great concern, BARS are superior but require much more time to develop and use. Critical incedents by themselves are seldom sufficient for making salary raise decision. 3. Keep a Diary whatever else you do keep diary of employees performance over the year. One study involved 112 first-line supervisors. Some attended a secial diary-keeping training program. The conclusion of this and similar studies is that compiling critical incidents as they occur reduces appraisal problem. 4. Get Agreement on plan the overriding aim the appraisal should be to improve unsatisfacotry performance. The appraisals end product should therefore always be a plan for what the employee must do to improve his or her efforts. 5. Be Fair perhaps most important make sure the every appraisal you give is fair. One study found that a number of best practics such as have an appeal mechanism.

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Performance Appraisal Versus Performance Management

In comparing performance management and performance appraisal, the distinction is the contast between a year end event the completion of the appraisal form and a pocess that starts the year withy erformance planning and is integral to the way people are through the year. Performance management is, instead, considered as a management process enabling managers to constantly stay in contact with individuals in order to clarify and eventually modify, according to the business needs and organisational development changes, mutual expectations and putting managers in the position to play the role of individuals coach and guide rather than of judge. Basically PM is, then, a forward-looking process, in contrast with PA which is, instead, a retrospective based system. The distinctive feature of performance management and performance appraisal emerged so far is then linked, first of all, to their different nature: where PA is seen as a system and PM is seen as a process. Moreover, whilst PA is episodic, usually carried out once a year on occasion of the annual performance review meeting, PM is intended to establish a constant link between managers and individuals. Direct consequence of this is that PM actually aims to build between manager and employees a relationship based on mutual respect, trust and understanding, whilst PA is based on a top-down relationship. PM is forward-looking, the aim of the relationship based on it being to coach and to contribute to the development and growth of individuals. PA can, instead, be considered as a retrospective journey in the individuals previous working year, where managers, very often perfunctorily, judge the performance of their staff. So that, whilst PM is inspired to the concept of management by agreement or contract, PA is instead based on the concept of man agement by command. Additionally, whilst PM is intended to establish and nurture a constant relationship between manager and individuals, PA is based on forms designed and developed by the HR function which, in many occasions, are destined to be forgotten in some remote organisations archive. Ultimately PM, differently from PA, aims to combine individuals and organisations needs and objectives and to find a common point where these two different needs can meet.
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Basic Building Blocks of Performance Management

The company with an effective performance management system will instead drive its strategic objectives right through the organization down to the shop floor. A solid performance management system will provide the company with a framework in which to insure that strategic targets are part of an intentional plan for continuous improvement in each department.Goals motivate and drive performance improvement because they focus, energize, encourage persistence, and stimulate discovery not only for individuals but also for organizations. We can summarize performance managements basic building blocks or DNAas follow. Direction sharing means communication the companys higher level goals (including its vision, mission and strategy) throughout the company and then translating these into doable department team and individual goals. Goal alignment means having a process that enable any manager to see the link between an employees goals and those of his or her department and company. Ongoing performance monitoring uaually includes using computer based system that measure and then e-mail proogress and exception reports based on the persons progress toward meeting his or her performance. Ongoing feedback includes both face-to- face and computer based feedbacek regarding progress toward goals. Coaching and developmental support should be an integral part of the feedback process. Reward, recognition and compensation all play a arole in providing the consequences needed to keep the employees goal-directed performance on track. An effective performance management system is built like a house. it should have a foundation, supportive pillars and a basic roof. There can easily be upgrades to the roof, though they are not requirements of having solid shelter.

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Recommendations to improve performance Management and Appraisal

The performance appraisal system has to be based on clearly specified and measurable standards and indicators. Goals have to be consistent and mutually decided by the employee and management. But this practice is not available at organization in bangladesh. If necessary, the appraisal system could be directed towards a particular client. The appraisal system has to be reliable and consistent, and should include both objective and subjective ratings. The appraisal format should be practical and simple. The process should be participatoryand open. It should be linked with rewards. Feedback is an important part of appraisal, and has to be timely, impersonal and noticeable. 360 Degree performance appraisal method: The Company may follow 360 Degree performance appraisal method. In this method, employee is evaluated by his/her peers, subordinates, superior, etc. in this method; there is the less scope to be biased. Management by objectives (MOB): Organization may follow this method. In this method the employees are asked to set or help set their own performance goals. This avoids the feeling among employees that they are being judged by unfairly high standards. Work standard approach: This method is very fruitful. Company should follow this approach. In this technique, management establishes the goals openly and sets targets against realistic output standards. These standards are incorporated into the organizational performance appraisal system. Thus each employee has a clear understanding of their duties and knows well what is expected of them. Performance appraisal and interview comments are related to these duties. This makes the appraisal process objective and more accurate.

Assessment problems: It is difficult to observe behavior and interpret it in terms of its causes, effects and desirability. Rating behavior on an appraisal form is quite difficult. The human element plays a significant role in the appraisal process and introduces subjectivity and bias. This can be minimized by documenting performance from time to time basing criteria for evaluation on observable behavior training the supervisors effectively communicating the expectations which management has of staff.

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Conclusion
Performance management is an effective way for a company to achieve their goal also a good way to get better performance from the employees. In any business PM consider some common objectives such as assign the goal, make a plan, train the workers for the specific goal, give them feedback about their job what they have done. PM is the only one process to manage the business in the right way. Business target should be in range, thats should be achievable, also it should be in touch of workers. Another thing is management should give the workers proper payment for their work, they should get more than that what they expect from the company. If companies can come to this decision then they can easily achieve their target. Performance appraisals are one of the most essential supervisory tools to communicate expectations, provide feedback, plan work, acknowledge contributions, and help employees gain the skills to be successful. As an orgnization is committed to do away with disparity and establish justice in the economy, trade, commerce and industry, build socio economic infrastructure and create employment opportunities. So Company should do justice with the employees while appraising them perfectly on the basis of their performance. The appraisal system has to be reliable and consistent, and should include both objective and subjective ratings. The appraisal format should be practical and simple. The process should be participatory and open. It should be linked with rewards. Feedback is an important part of appraisal, and has to be timely, impersonal and noticeable. It should be noted that an appraisal system can be effective only if it is accepted by employees and if management is fully committed.

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Reference
Text book. Human Resource Management by Gary Dessler and Biju Varkkey, 12 Edition www.chainlinkresearch.com www.networkworld.com www.slideshare.net www.scribd.com

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