Performance Appraisal

• Formal system of review and evaluation of

individual or team task performance

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 Types of Performance Information

• Behavior-based: focuses on specific behaviors

related to job success.
– Verbal communication skills for sales personnel.
– Timeliness of responses.

• Results-based: focuses on employee’s

accomplishments
– Sales made during rating period.
– Reduction of grievances
Conflicting Roles for Performance Appraisal

Figure 11–3
 Basic Concepts in Performance
Management and Appraisal
Comparing
Performance Appraisal
and
Performance Management

Performance Appraisal: Performance Management:

Setting work standards, assessing
performance, and providing
feedback to employees to motivate,
correct, and continue their
performance.
An integrated approach to
ensuring that an employee’s
performance supports and
contributes to the organization’s
strategic aims.

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Performance Appraisal Process
Identify Specific Performance
Appraisal Goals

Establish Performance Criteria

(Standards) and Communicate
Them To Employees

Examine Work Performed

Appraise the Results

Discuss Appraisal with

Employee
 Who Conducts Appraisals
• Supervisors
• Subordinates
• Team members who rate each other
• Outside sources( clien
• Employees’ self-appraisal
• Multisource (360° feedback) appraisal
 Graphic Rating Scales
(Category Ratings)

Graphic Rating Scales - performance is

rated along a Likert scale.
Makes Sound Decision:

1 2 3 4 5
Poor Below Average Average Above Average Outstanding

Problem:
What does “outstanding” mean?
Terms Defining Standards on One Company

Figure 11–2
Cons:
• Use of same format in every dept. may include
ratings on factors quite irrelevant to his or her
job profile

• Use of double negatives leads to confusion

e.g. “never goes beyond the time limits” and
“come on time”
Example: Graphic Rating Scale (Cleanup)
Child’s Name:
Date:
Circle One: Indoors/outside (playground)
Rate child on each of the following by marking appropriate spot on line next to each
numbered phrase.
Always* Often* Occasionally** Seldom*** Never

1. blocks efforts to clean up __|______|________|_________|_______|__

2. does not stop playing unless
teacher (T) requests firmly __|______|________|_________|_______|__
3. does not participate __|______|________|_________|_______|__
4. cleans up only with T supervision__|______|________|_________|_______|__
5. cleans up w/o T supervision __|______|________|_________|_______|__

*Often: at least four times for period observed

**Occasionally: two or three times for period observed
***Seldom: only one time for period observed

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 Critical Incident Method

– record of highly favorable and unfavorable

employee actions.

– Observes and records the subordinates effective

and ineffective behaviors throughout the
appraisal period
 Critical Incident Method
(Narrative )

Critical Incident
Date__________
Name________________________
Location &
Time_________________________________
___________________________
Description of
Incident________________________
______________________________________
______________________________________
____________________
Corrective Action_______________________
Pros:

• Provides factual records for subsequent discussions and

decision making
• For developmental purpose, discussion about the
corrective actions
• No recency effect
Cons:
• Time involved in documenting employee actions
• Impossible to catch all employee actions
• no quantification is done
• No compensation
 Alternative Ranking method
– Listing of all employees from highest to lowest in
performance

– Drawbacks:

• Does not show size of differences in

performance between employees
• Implies that lowest-ranked employees are
unsatisfactory performers.
• Becomes a difficult process if the group to be
ranked is large.
 Forced Distribution
– Performance appraisal method in which ratings of
employees are distributed along a bell-shaped curve

– Drawbacks:
• Assumes a normal distribution of performance.
• Creates team equities (high and low performing
teams)
• Organization with w good selection process
• Is not readily applicable to small groups of
employees.
Forced Distribution on a Bell-Shaped Curve

Figure 11–9
 Paired Comparison method
• No. of comparisons = N(N-1)/2

Where N is no. of employees to be compared

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 Annual Confidential report method
• by immediate supervisor

• for promotion and transfer purpose

• Generally maintained in Govt. Departments

• Four point grade: Excellent, good, fair, poor

• High secrecy
 Cons:
• Not data based

• Impressionistic

• No feedback is given to the ratee

• Greater stress is given on evaluation rather development

 Management by Objectives

• Concept given by Peter F. Drucker,1954

• Introduced in 1970 in India by Madura Coats

– Specifying the performance goals that an individual

and his or her manager agree to try to attain within
an appropriate length of time.
 Steps in MBO
• Set the organizational goals
• Set the departmental goals
• Discuss departmental goals with all the subordinates and
ask them to develop their individual goals
• Define the expected results (Dept. head and their
subordinates set short term perfo. Targets)
• Performance reviews: measure the results, compare
with the expected results
• Provide feedback via periodic meetings
Pros:

• Performance based method of appraisal

• Enhances superior-subordinate relationships

• Improve communication between them

• High top management commitment

• Increased individual commitment

Cons:

• Difficult to compare the level of performance of different

employees

• Setting objectives jointly with subordinates (tug of war)

• Emphasis on target may neglect the other interpersonal

trait measurement

• No emphasis on employee’s development

• Time consuming method

 Behaviorally Anchored Rating Scales (BARS)
Step 1. Collect critical incidents (effective and ineffective
behaviors related to job dimension)
Step 2. Identify the job/performance dimension (Inventory
control, also called anchors)

Step 3. Reclassification of critical incidents (developing

various level of performances)
Step 4. Assigning scale values to the incidents (1 to 7 or 1
to 9 depending upon how well it represents the
performance dimension, called vertical point scales)

Step 5. Producing the final instrument (BARS instrument)

Pros:
• Accurate

• Clear standards: the critical incidents along with the

scales help to clarify what is very good, good and
poor performance

• Automatic feedback through critical incidents

• Problems:

– Expensive.
– Time consuming and requires considerable effort
– Must be customized to each job.
– Cumbersome in firms with numerous positions.
 360 degree feedback

Obtaining feedback from the manager's key

contacts. These would normally include:

o The manager him/herself

o Subordinates (employees who work for
the manager)
o Peers (fellow managers)
o Managers (senior management)
o Customers
o Suppliers
 Pros:

• more acceptable feedback to the employee

• A good tool to enhance customer service and quality of
service
• Multiple inputs to the individual
• More participative
• Facilitates employees to compare self appraisal with
others’ perception
• Less biased method
 Cons:
• Consume a lot of time (raters, designing questionnaires,
data analysis)

• Source of confusion (Conflicting opinions)

• Requires a lot of training in implementing the process

• Costly process
 Self Appraisal
• Development is self-directed
• Identifying their own developmental needs
• Can record his own success and failures while performing
different functions
• Helps in preparing his own developmental plans

Cons:
• Usually rate higher than they are rated by supervisors
• More biased
 Problems in Performance Appraisal

• Halo/horn error
• Leniency/strictness
• Central tendency
• Recent behavior bias
• Personal bias
• Contrast effect
• Manipulating the evaluation
• Similar to me/dissimilar to me
• Constant error
 The Appraisal Interview

• Scheduling interview
• Interview structure (discuss the performance)
• Use of praise and criticism
• Employees’ role
• Concluding interview (mutually agreed action
plan )
 The Appraisal Interview

Satisfactory—Promotable

Satisfactory—Not Promotable
Types of Appraisal
Interviews
Unsatisfactory—Correctable

Unsatisfactory—Uncorrectable

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 The Appraisal Interview (cont’d)

Guidelines for
Conducting an Interview

Talk in terms Encourage

Don’t get
of objective the person to Action Plan
personal.
work data talk.

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