CHAPTER-SIX

PERFORMANCE APPRAISAL

12/12/2014

6.1 meaning of performance

appraisal
A performance appraisal is a process
of evaluating an employees performance
of a job in terms of its requirements.
Performance appraisal or employee
appraisal is the systematic process of
measuring and evaluating employees with
respect to their performance on the jobs
and their potential for development.
12/12/2014

Continued
Performance appraisal is the process
of evaluating how well employees perform
their jobs when compared to a set of
standards and then communicating that
information to those employees.
Such appraisal also has been called
employee rating, employee evaluation,
performance
review,
performance
evaluation and results appraisal.
12/12/2014

6.2 Purposes of Appraisal

Organizations usually conduct appraisals
for administrative and/or developmental
purposes.
Performance measurements are used
administratively whenever they are the
basis for a decision about the employees
work conditions, including promotions,
terminations and rewards.

12/12/2014

 Performance appraisal is the basis for

decisions about:
Employee work condition
Promotions
Terminations
Rewards

12/12/2014

 Generally appraisal has the following

purposes
It can serve as a basis for job change or
promotion.
Employees
usually
promoted or transferred based on
performance appraisal results.
Employee development: By identifying
the strengths and weaknesses of an
employee it serves as a guide for
formulating a suitable training and
development programming to improve
his quality.
12/12/2014

 It serves as a feedback to the employee.

The existence of a regular appraisal system
tends to make the supervisors and executives
more observant of their subordinates.
Compensations, rewards and punishments:
performance appraisal results provide a basis
for decisions regarding compensation,
rewards, and punishments. Performance
appraisal can be base as employees who
receive favorable evaluation, tends to receive
organizational rewards, such as merit pay
increases, incentives, higher commissions,
better pay scales, increments, etc., while
those with unfavorable evaluations receive
warning, delayed promotions, demotions, etc.
12/12/2014

 Performance appraisal serves as a means for

evaluating the effectiveness of devices used
for the selection and classification of workers.
Criteria of performance Appraisal
There are two major criteria used to measure
the proficiency of an employee;
Objective criteria
Subjective criteria
Amount or quality of production, work
sample tests, length of service, amount of
training necessary, absenteeism, accidents
etc are all examples of objective criteria.
12/12/2014

 Rating of employees proficiency by their

superiors, peers and subordinates, extent
of upward communication of ideas, degree
of knowledge about corporate goals,
contribution to socio-cultural values etc
are all examples of subjective criteria.

12/12/2014

6.3 PROCESS OF PERFORMANCE

APPRAISAL
1. Establish Performance Standards:
Establishment
of
performance
standards in accordance with the
organizations strategic goals. These
should evolve out of the companys
strategic
directionand,
more
specifically, the job analysis and the job
description
12/12/2014

10

2. Measure Actual Performance:

Four common sources of information
frequently used by managers address
how to measure actual performance:
personal observation,
statistical reports,
oral reports, and
written reports.

12/12/2014

11

3. Compare Actual Performance with

Standards:
This step notes deviations between
standard
performance
and
actual
performance.
4. providing feed back to the employee
with the aim of motivating that person to
eliminate deficiencies or to continue to
work above par.

12/12/2014

12

6.4 PERFORMANCE APPRAISAL

METHODS
The different types of performance appraisal methods are:
A. Traditional methods
Ranking method,
Man to man comparison
Paired comparison method
Grading method
Rating scale method (Graphic)
Forced choice description method
Forced distribution method
Check list method
Free essay method
Critical incident technique
Group appraisal method
12/12/2014
Field review method, and Confidential report

13

B. Modern methods
Assessment centre
Appraisal by Results or MBO
Human Asset Accounting method.
BARS (Behaviorally Anchored Rating
Scales.)

12/12/2014

14

A. Traditional Methods
1. Ranking method
It is the oldest and the simplest method of
performance appraisal.
The ranking of a man in a work group is done
against that of another.
The relative position of each man is tested in
terms of his numerical rank.
Method requires the evaluator to list employees
in order from highest to lowest. In this process,
only one employee can be rated best. If the
evaluator must appraise thirty individuals, this
method assumes that the difference between the
first and second employee is the same as that
between the twenty-first and the twenty-second.
Individual
ranking:
Ranking
employees
performance from highest to lowest.
12/12/2014
15

2. Man to man comparison method

This technique was used by the US Army
during the First World War.
By this method, certain factors are selected
for the purpose of analysis e.g. leadership,
dependability, initiative, etc. and a scale is
designed by the rater for each factor.
A scale of man is also created for each
selected factor. Then each man to be rated
is compared with the man in the scale, and
certain scores for each factor are awarded
to him.
12/12/2014

16

3. Paired comparison technique

By this method, each employee is compared
every trait with all other persons in pairs one
at a time.
With this technique, judgment is easier, and
simpler than with the ordinary ranking
method.
Selects one job trait, and then compares each
employee in a group with the others. A score
is obtained for each employee by simply
counting the number of pairs in which the
individual is superior at the job trait, ranking
each individual in relationship to all others
on a one-on-one basis
12/12/2014

17

12/12/2014

18

 In the paired comparisons, five employees

are being compared for their innovation
and creativity on the job. The plus (+)
means the employee being rated is better
than the comparison employee, the minus
() means the employee being rated is
worse than the comparison employee. The
employee receiving the most (+)s will be
the highest ranked employee. In this chart,
Admir is ranked highest with the most
(+)s.
12/12/2014

19

4. Grading method
Under this system, the rater considers
certain features and marks them
accordingly to a scale.
The selected features may be analytical
ability, cooperativeness, dependability, job
knowledge, organizing ability etc.
They may be: A-outstanding, B-very good
C-good or average D-poor etc. The actual
performance of an employee is then
compared with these grade definitions.
12/12/2014

20

5. Graphic or rating scale

This is the most commonly used method of
performance appraisal.
The factors usually analyzed are employee
characteristics and employee contribution.
(Employee characteristics include initiative,
leadership,co-cooperativeness, dependability,
loyalty, attitude etc. Employee contribution
includes quantity and quality of work,
responsibility assumed, goals achieved etc.)
The traits are then evaluated on a continuous
scale, wherein the rater marks the place on
the scale.
12/12/2014

21

12/12/2014

22

6. Forced choice description method

It attempts to correct a raters tendency to
give consistently high or consistently low
ratings to all the employees.
Under this method, the rating elements are
several set of pair phrases or adjectives
relating to job proficiency or personal
qualifications.
The rater is asked to indicate which of the
phrases is most and least descriptive of the
employee.
12/12/2014

23

e.g.
1. Makes little effort and individual
instruction.
2. Organizes the work well.
3. Is punctual and careful
4. Is a hard worker and co-operative etc.

12/12/2014

24

 For instance, students evaluating their

college instructor might have to choose
between
(a)keeps up with the schedule identified in the
syllabus,
(b)lectures with confidence,
(c) keeps interest and attention of class,
(d) demonstrates how concepts are practically
applied in todays organizations, or
(e) allows students the opportunity to learn
concepts on their own.
12/12/2014

25

7. Forced distribution method

This method requires the rater to appraise
an employee according to a predetermined
distribution scale.
Under this system, it is assumed that it is
possible and desirable to rate only two
factors i.e., job performance and
promotability.
For this purpose, a five point scale is used
without any descriptive statement.
12/12/2014

26

Employees are placed between the

two extremes of good and bad job
performances.

12/12/2014

27

8. Checklist method
In this method, the rater does not evaluate
employee performance.
He supplies the report and the final rating
is done by the personnel department.
A series of questions are presented
concerning an employee to his behavior.
The rater, then checks to indicate if the
answer to a question about an employee is
positive or negative.
12/12/2014

28

12/12/2014

29

9. Free essay method

Under this method, the supervisor makes

a free form, open ended appraisal of an
employee in his own words and puts down
his impressions about the employee.
He takes care of factors like
relations with supervisors and others
General organization and planning
ability
Job knowledge and potential
Employee characteristics and attitudes
Physical conditions
Development needs for future etc.
12/12/2014

30

10. Critical incident method

A performance evaluation that focuses on key
behaviors that differentiates between doing a
job effectively or ineffectively.
This method attempts to measure workers
performance in terms of certain events or
episodes that occur in the performance of an
employee.
These incidents are called critical incidents.
The supervisor keeps a written record of the
events (either good or bad) that can easily be
recalled and used in the course of a periodical
or formal appraisal.
12/12/2014

31

11. Group Appraisal method

Under this method, employees are rated
by an appraisal group consisting of their
supervisor and three or four other
supervisors who have some knowledge of
their performance.
The supervisor explains to the group the
nature of his subordinates duties.
The group then discusses the standards of
performance for that job, the actual
performance of the job holder and offer
suggestions.
12/12/2014

32

12. Field Review method

Under this method, a trainer employee from
the personnel department interviews line
supervisors to evaluate their respective
subordinates.
The supervisor is required to give his opinion
about the progress of his subordinates, the
level of performance of each subordinate, his
weaknesses, good points etc.
The appraiser takes detailed note of the
answers, which are then approved by the
supervisor and placed in the employees
personal file.
12/12/2014

33

13. Confidential report

A confidential report by the immediate
supervisor is still a major determinant of a
subordinates promotion or transfer.
The format and pattern of this report
varies with each organization.
In this method each employee is rated
confidentially by one or more senior
officers for his performance.

12/12/2014

34

B. Modern methods of performance

appraisal
1. Assessment centre method
The evaluators observe and evaluate participants
as they perform activities commonly found in
higher level jobs.
Under this method, many evaluators join
together to judge employee performance in
several situations with the use of a variety of
criteria.
It is used mostly to help select employees for the
first level supervisory positions.
Assessments are made to determine employee
12/12/2014
35
potential for purposes of promotion.

2. Appraisal by results or MBO

A performance appraisal method that includes mutual
objective setting and evaluation based on the attainment
of the specific objectives.
The organizations overall objectives are translated into
specific objectives for each succeeding leveldivisional,
departmental, and individualin the organization.
Because lower-unit managers participate in setting their
own goals, MBO works from the bottom up as well as
from the top down. The result is a hierarchy that links
objectives at one level to those at the next level. For the
individual employee, MBO provides specific personal
performance objectives. Each person, therefore, has an
identified specific contribution to make to his or her
units performance. If all the individuals achieve their
goals, the unit will meet its goals. Subsequently, the
12/12/2014
organizations overall objectives will become a reality. 36

3. Human asset Accounting Method

This method refers to activity devoted to attaching
money estimates to the value of a firms internal
human organization and its external customer
good will.
The current value of a firms human organization
can be appraised by developed procedures, by
undertaking periodic measurements of key causal
and intervening enterprise variables.
Causal Variables include: Management policies,
business leadership, strategies, skills and behavior.
Intervening enterprise variables include: Loyalties,
attitudes, motivations, communication and
decision making.
12/12/2014

37

4. Behaviorally Anchored Rating

scales (BARS)
This is a new appraisal technique which
has recently been developed.
It provides better, more equitable
appraisals as compared to other
techniques.
This method is based on critical incidents
and graphic scale rating and is analyzed by
rating these incidents on a 7 or a 9 point
scale.
12/12/2014

38

12/12/2014

39