Performance Appraisal Methods

Performance Appraisal process

Establishing standards Communicating Standards to employees Measuring Actual performance Comparing actual with standards Discussing reports with employees Take corrective action

Methods of performance Appraisal

Traditional methods Confidential Reports Graphic Scales Straight Ranking Paired Comparisons Grading system Forced Distribution Check list method Critical Incident Method Free Essay method Group Appraisal Field Review Nominations Work sample tests

Modern Methods Assessment centre Human Resource Accounting Behaviourally Anchored rating scale Management by Objectives 360 degree performance appraisal

Traditional Method
1 confidential Reports It relates to the performance , ability and character of the employee during a year. The report is not databased but subjective No feedback is provided to the employees being appraised and therefore credibility is low. The method focuses on evaluation rather than developing the employees.

Graphic Scales
It is the simplest and most popular method for appraising performance. A rating scale which lists traits and a range of performance values for each trait. The supervisor rates each subordinate by circling or checking the score that best describes his performance for each trait. The Assigned values for the traits are then totalled. Scales can be continuous or discontinuous It imposes a heavy burden upon the supervisor.

Straight Ranking Method

It is the simplest and old method of merit rating Every employee is judged as a whole without distinguishing the rates from his performance. A list is then prepared for ranking the employees in order of their performance on the job An Excellent employee will be at the top and the poor at the bottom. This method is suitable when there are limited persons in an organization

Paired comparison method

In this method every person is compared traitwise with other persons one at a time. The number of times one person is tallied on a piece of paper . This method gives more reliable rating than straight ranking . But it will be suitable only when the number of persons is small.

Grading system
Employees are given grades according to the judgement of the rater. Under this system certain features like analytical ability, cooperativeness, dependability, job knowledge etc are selected for evaluation. A- outstanding , B very good, C- satisfactory D Average, E Below Average etc.

Forced Distribution method

The main idea in this method is to spread ratings in a number of grades. The rater is asked to place 10% of their employees in outstanding group, 20% above average, 40% in average, 20% below average, and 10% in poor category. This method eliminates the subjective judgement on the part of the supervisors.

Check lists Method

It is a list of statements that describes, the characteristics and performance of employees on the job. The rater checks to indicate whether the behaviour of an employee is positive or negative for each statement. The performance of the employee is rated on the basis of numbers of positive checks.

Types of check lists

Simple check lists Eg : Is the employee regular on work yes/No Does he cooperate with his superiors Yes/ No Does he follow instructions well Yes/No Weighted check lists This method is particularly used with the objective of avoiding scope for personal prejudices. Weights are assigned to different statements to indicate their relative importance.

Cont..
The method involves a very lengthy and time consuming procedure. This method is costly in nature Financial burden is increased when diverse jobs are evaluated as a separate procedure must be established in each job.

Critical Incident method

In this method the supervisor is asked to keep a written record of positive and negative work related actions of the employees.

Free Essay Method

The evaluator writes a short description of an employees performance. The evaluator has to provide a narrative of the employees strengths , weaknesses, and potentials. The efficiency of this method depents on the evaluators writing skills and objectivity.

Group Appraisal method

Employees are rated by an appraisal group rather than by an individual. The supervisor explains to the group the nature of the subordinates duties. The group discusses the standards of performance for that job , the actual performance of the employee and the causes of their particular level of performance. A drawback is that it is time consuming.

Modern Methods
Assessment centre It is a central location where the managers may come together to participate in job related exercises evaluated by trained observers. First developed in USA and UK in 1943 Crompton Greaves, Unilever are using the method with high positive results. Earlier it was used for hiring but now they are used for evaluating executive or supervisory potential. It measures interpersonal skills, communication skills, ability to plan and organise, self confidence, resistance to stress, mental alertness.

Human resource accounting

This method attaches money values to the values of a firms internal human resources and its external customer goodwill. When competent and well trained employee leaves the organization, human asset is decreased and vice versa. Under this method performance is judged in terms of costs and contributions of employees. Costs of human resources consists of expenditures on HRP, recruitment , selection, induction, training, compensation etc. Contributions of human resources is the money value of labour productivity or value added by human resources. Difference between the costs and contribution will reflect the performance of employees. This method is still in infancy stage and hence not very popular.

Behaviourally anchored rating scales

It combines the benefit of critical incidents and graphic rating scale. It consists of 5 steps 1 Generate critical incidents 2 Develop Performance measures 3 reallocate incidents 4 scale the incidents 5 Develop the final instrument.

Management by Objectives
Requires the manager to set specific measurable goals with each employee and then periodically discusses his progress towards these goals. MBO refers to a comprehensive , organisation wise goal setting and appraisal programme . Steps involves 1 Set the organisations goals 2 Set the departmental goals 3 discuss Departmental goals 4 Define expected results 5Performance reviews 6 provide feedback