PERFORMANCE APPRAISAL

PERFORMANCE APPRAISAL
 Performance Appraisal:  process through 
which an organization gets information about 
how well an employee is doing his/her job; also 
called Performance Evaluation
 Performance  appraisal is the systematic, 
periodic and impartial rating of an employees 
excellence in matters pertaining to his present 
job and his potential for a better job.
 Process of obtaining, analyzing and recording 
information about the relative worth of an 
employee
2
 FEATURES OF PA
  under stand the difficulties of the employees and to 
remove the difficulties at workplace.
 Understand the strength ad weakness of the 
employee 
 Help the employees to aware of their positive 
contribution
 Encourage employee to accept more responsibilities 
and challenges.
 Help employees to acquire new capabilities 

 Plan effective utilization of the talent of employees
3
Objectives of Performance Appraisal
To provide feedback to employees so that they come 
to know where they stand and can improve their job 
performance.

To provide a valid database for personnel decisions 
concerning placements, pay, promotion, transfer,……

To diagnose the strengths and weaknesses of 
individuals so as to identify further training needs.

To provide coaching, counseling, career planning and 
motivation to subordinates.

To test the effectiveness of recruitment, selection,  4
placement and induction programmers.
FACTORS THAT INFLUENCE
PERFORMANCE

5
WHO: SOURCE FOR PERFORMANCE
MEASURES

6
USES OF PERFORMANCE APPRAISAL –
PERSONAL VIEW

Performance
Performance
Appraisal
Appraisal

Identifying
IdentifyingStrengths
Strengths
Wages
Wagesand
andSalaries
Salaries Performance
PerformanceFeedback
Feedback and
andWeaknesses
Weaknesses

7
USES OF PERFORMANCE­ 
ORGANIZATION VIEW

8
PERFORMANCE APPRAISAL
PROCESS

9
METHODS OF PERFORMANCE APPRAISAL

Traditional methods  Modern methods

 Confidential report – Assessment centers
 Free Form/Essay – Human resource
 Straight Ranking accounting
 Paired Comparison 
– Behaviorally Anchored
 Forced Distribution rating scales
 Graphic Rating Scales
– Management by objectives
 Checklist Method
– 360 degree PA
 Critical Incident Method
 Group Appraisal 10
Traditional Methods

11
 CONFIDENTIAL REPORT
 Used in government and pubic enterprises.
 Report prepared by the employee’s immediate 
superior.
 It covers the strengths and weaknesses, main 
achievements and failure, personality and behavior of 
the employee.
 Descriptive appraisal used for promotions and 
transfers.
 No feed back is provided to the employee being 
appraised and, therefore, its credibility is very low.
 Focus on evaluating rather than developing.
 The employee who is appraised never knows his 
weaknesses and the opportunities available for  12

overcoming them.
 FREE FORM/ESSAY
METHOD
 The evaluator writes a short essay on the employee’s 
performance on the basis of overall impression.

 An essay can provide a good deal of information about 
the employee especially if the evaluator is asked to give 
examples of each one of his judgments.

13
 FREE FORM/ESSAY METHOD
 It involves bias since no criteria for appraisal.
 Quality of appraisal depends on the writing ability of 
the evaluator rather than on employee performance.
 Very time consuming method of appraisal.

 It is not possible to compare two essay appraisals due to 
variations in their length and contents.

14
 STRAIGHT RANKING
METHOD
 Simplest and oldest method of performance 
appraisal.

 Employees are ranked from the best to the 
poorest on the basis of overall performance.

 The ‘wholeman is compared with the wholeman’ 
without analyzing performance.

 The relative position of an employee is reflected 15
in his numerical rank.
STRAIGHT RANKING METHOD

Employee Rank
Anil 2

Bindhu 1

Chinju 5

Don 4

Elizebath 3 16
 PAIRED COMPARISON

 Every person is compared trait wise with other persons 
one at a time.
 The no. of times one person is compared with other is 
tallied on a piece of paper.
 Comparison is made on the basis of overall performance.

 n(n­2) determines no. of comparisons to be made; where n 
is the no. of persons to be compared.

17
PAIRED COMPARISON METHOD

As compared to A B C D E Final
Rank
A + - - - 4
B - + - + 3
C + - + + 2
D - - - - 5
E + + + + 1 18
 Graphic or Linear Rating Scales
  Attitude
0 5 10 15 20

No interest Careless: Interested in Enthusia Enthusiasti

In work: In- work: stic about c opinions
consistent different Accepts job & & advice
complainer Instructio opinions & fellow- sought by
ns advice of workers others
others
Decisivenes
s 0 5 10 15 20
Slow to Take Takes Take Take
take decisions decisions decisions in decisions
decisions after careful promptly consultation without
consideration with others consultation
whose views
he values
 Forced distribution method

No.
of 40% 20%
employees 10% 20% 10%
poor Below average good Excellent
average

Force distribution curve

 Critical Incident method

Ex: A fire, sudden breakdown, accident

Workers Reaction scale

A Informed the supervisor immediately 5

B Become anxious on loss of output 4
C Tried to repair the machine 3
D Complained for poor maintenance 2
E Was happy to forced test 1
MODERN METHODS OF 
PERFORMANCE 
APPRAISAL

22
ASSESSMENT CENTERS

 Assessment center is a central location where 
the managers come together to participate in 
job related exercises evaluated by trained 
observers.

 Measures interpersonal skills, communication 
skills, ability to plan and organize, self 
confidence, resistance to stress, mental 
alertness.

23
ASSESSMENT CENTERS­ 
IMPORTANCE
o Helps to determine training and 
development needs  of  employees.

o  This method is also used to select 
students for entry   level positions.

o Candidates are evaluated by a team of 
trained evaluators under similar 
conditions and so rater’s bias is reduced
24
ASSESSMENT CENTERS­ 
LIMITATION 
 Time consuming and expensive method.

 The candidates who receive  a negative report 
from the assessment center may feel 
demoralized.

 Difficult to conduct the tests frequently.

 Create strong and unhealthy sense of 
competition among the employees.
25
BEHAVIORALLY ANCHORED RATING SCALE
(BARS)
 Combines critical incidents and graphic rating scales.
 BARS are description of various degrees of behavior 
relating to specific performance dimensions.
 Critical areas of job performance and the most 
effective behavior for getting results are determined 
in advance.
 The rater records the observable job behavior of an 
employee and compares these observations with 
BARS

26
BEHAVIORALLY ANCHORED
RATING SCALE (BARS)
Advantage .  Demerits 
 BARS helps to clarify what is  
Time consuming and 
meant by extremely good  expensive method.
performance, average 
performance …..
 The technique is not biased   Several appraisal 
by the experience and  forms are required to 
evaluation of the rater. accommodate 
 BARS evaluations seem to be  different types of jobs 
relatively consistent and  in an organization
reliable in that different 
raters’ appraisals of the same 
person tend to be similar. 27
 Behavioral Anchored Rating Scales
Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions
for increased sales and to have positive
relationships with customers all over the
country.
Good 6 Can expect to initiate creative ideas for improved
sales.
Above average 5 Can expect to keep in touch with the customers
throughout the year.
Average 4 Can manage, with difficulty, to deliver the goods
in time.
Below average 3 Can expect to unload the trucks when asked by
the supervisor.
Poor 2 Can expect to inform only a part of the
customers.
Extremely poor 1 Can expect to take extended coffee breaks &
roam around purposelessly.
APPRAISAL BY RESULTS OR MBO
 Refers to a comprehensive org wise goal setting and 
appraisal programme.
  MBO can be applied with great success if the 
performance appraisal programme consists of the 
following elements:
 Detailed job descriptions should be available to help 
setting of goals for different positions.
 Superiors should have trust in subordinates to 
establish reasonable goals.
 Emphasis should be on problem solving rather than 
criticism of the performance of the subordinates.

29
PROCESS OF MBO

30
MBO

Advantages  Disadvantages 
 Role Clarity  Difficulty in goal setting

 Objective Appraisal  Problem of Participation

 Motivation and   Lack of Understanding
Commitment  Time Consuming
 Management Development 
Expensive
 Coordination

31
 HUMAN RESOURCE ACCOUNTING

 This method attaches money values 
    to the value of a firm’s internal 
    human resources and its external 
    customer goodwill.
 When competent and well trained employees leave 
an organization the human asset is decreased.
 Performance is judged in terms of costs and 
contribution of employees.
 Cost: HRP, recruitment, selection, induction, 
training, compensation
 Contribution: money value of labor productivity or 
value added by HR 32
360 DEGREE PERFORMANCE APPRAISAL

 Involves a systematic collection of performance 
data on an individual or group, derived from a no. 
of stake holders.

 Provides a broader perspective about an employee’s 
performance.

33
 3600
SUPERIOR
SUPERIOR
Feedback
PEERS
PEERS CUSTOMERS
CUSTOMERS

TEAM
TEAM

SELF
SELF

SUBORDINATES
SUBORDINATES
34
 ADVANTAGE AND DEMERIT OF 360-
DEGREE APPRAISAL
 Advantage 
Demerits
 The system is more   The system is complex in 
comprehensive in that 
responses are gathered from  combining all the responses.
multiple perspectives.  The system requires training 
 Quality of information is  to work effectively.
better. 
 Employees may collude or 
 It may lessen bias/prejudice 
since feedback comes from  “game” the system by giving 
more people, not one  invalid evaluations to one 
individual. another.
 Feedback from peers and   Appraisers may not be 
others may increase employee 
self­development.
accountable if their  35
evaluations are anonymous.
 LIMITATIONS OF PERFORMANCE APPRAISAL

1. Errors in Rating
a) Halo Effect : tendency to rate the employee 
consistently high or low on the basis of overall 
impression.
b) Stereotyping : forming a mental picture of a person 
on the basis of his age, sex, caste or religion.
c) Central Tendency : assigning average ratings to all 
the employees in order to avoid commitment or 
involvement.
36
 LIMITATIONS OF PERFORMANCE APPRAISAL

d) Constant Error : some evaluators tend to be lenient 
while others are strict in assessing performance. In 
the first case performance is overrated(leniency error) 
while in the second type it is underrated(strictness 
error).

e) Personal Bias : performance appraisal may become 
invalid because the rater dislikes an employee.

f) Spill Over Effect : this arises when past 
performance affects assessment of present 
performance. 37
 LIMITATIONS OF PERFORMANCE APPRAISAL

2. Lack of Reliability : lack of consistency over time and 
among different raters may reduce the reliability of 
performance appraisal.

3. Incompetence : raters may fail to evaluate 
performance accurately due to lack of knowledge and 
experience.

38
Disadvantages
ESSENTIALS OF AN EFFECTIVE
PERFORMANCE APPRAISAL
SYSTEM
 Mutual Trust
 Clear Objectives

 Standardization 

 Training to Evaluators

 Job Relatedness

 Post Appraisal Interview

40