Performance Appraisal Final

PERFORMANCE APPRAISAL LOCATING PERFORMANCE APPRAISAL IN HRM PROCESS

JOB ANALYSIS JOB DESCRIPTION AND JOB SPECIFICATION

ESTABLISHING STANDARDS OF PERFORMANCE

COMMUNICATING PERFORMANCE STANDARDS TO EMPLOYEES

MEASURING ACTUAL PERFORMANCE

COMPARING ACTUAL PERFORMANCE WITH STANDARDS AND DISCUSS WITH EMPLOYEES

INITIATING CORRECTIVE ACTION, IF NECESSARY

Definition: “Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job” - Flippo

“Performance appraisal is a formal, structured system of measuring and evaluating an employee’s job, related behaviours and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organisation and society all benefit” – R.S. Schuler THE PERFORMANCE APPRAISAL PROCESS

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purposes

 Objectives of Performance Appraisal APPROACHES TO PERFORMANCE APPRAISAL

Traditional

Guiding value Primary goals

Attribution to individual Control, documentation

Systems

Attribution to system Development, problem solving

Leadership practices

Directional, evaluative

Facilitative, coaching

Appraisal frequency

Occasional

Frequent

Degree of formality

High

Low

Reward practices

Individual orientation

Group orientation

 Establish Job Expectations This includes informing employee what is expected of him or her on the job.

 Design an Appraisal Programme Designing an appraisal programme poses several questions which need answers. They are, (i) Formal versus informal appraisal; (ii) Whose performance is to be assessed? (iii) Who are the raters? (iv) What problems are encountered? (v) How to solve the problems? (vi) What should be evaluated? (vii) When to evaluate? (viii) What methods of appraisal are to be used?

Formal versus informal appraisal Whose Performance should be Rated: To the question as to whose performances should be rated, the answer is obvious-employees. When we say employees, is it individuals or teams? Specifically, the ratee may be defined as the individual, work group, division or organisation. It is also possible to define the ratee at multiple levels. For example, under some conditions, it may be desirable to appraise performance both at the work-group level for merit-pay increases and at the individual level to assess training needs. Who are Raters? Raters can be immediate supervisors, specialists from the HR department, subordinates, peers, committees, clients, self-appraisal or a combination of several. Problems of Rating: Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as “rating errors”. These errors occur in the rater’s observations, judgment and information processing and can seriously affect assessment results. The most common rating errors are leniency or severity, central tendency, halo effect, rater effect, primacy and recency effects, perceptual set, performance dimension behaviour, spill over effect and status effect. Solving Rater’s Problems: Rater’s should be trained to improve his or her accuracy in connection with following factors:  The rater has observed and is familiar with behaviors to be appraised.  The rater has documented behaviors to improve the recall  The rater has a checklist to obtain and review job-related information What Should be Rated? Evaluation Criteria : 1. Quality 2. Quantity 3. Timeliness 4. Cost effectiveness 5. Need for supervision 6. Interpersonal impact Timing of Evaluation : Organisations conduct performance appraisal once a year. Newly hired employees are rated more frequently than the older ones. Frequent evaluation gives constant feedback to the ratee, thus enabling him or her to improve performance if there is any deficiency.

 METHODS OF APPRAISAL: TRENDS IN PERFORMANCE APPRAISAL

Item

Former Emphasis

Present Emphasis

1. Terminology

Merit Rating, Performance Evaluation and Control

Employee Appraisal/Performance Appraisal

2. Purpose:

Determine the basis for wage increase, transfer, promotion layoff, etc.

Employee development, team building

3. Application:

Four hourly paid/casual/temporary workers

For technical, professional and managerial employees

4. Factors rates:

Heavy emphasis on personal traits

Emphasis on results, accomplishment, performance

5. Techniques:

Rating scales with emphasis on scores. Statistical manipulation of data for comparison purpose

Management by objectives, mutual goal setting, critical incidents, groups appraisal, mutual consultation. Performance analysis and human resource development, more qualitative standards.

6. Post Appraisal:

Supervisor communicates his rating to employees and tries to sell his evaluation, seeks to have employee confirm to his views

Supervisor stimulates employee to analyze himself/ herself and set own objectives in line with job requirements. Superior helps and counsels

7. Appraisers:

Only Superiors

Superiors, subordinates, peers, self, users of services (customers) and consultants (3600 performance Appraisal)

8. Degree of openness: Completely confidential

Open appraisal

9. Leadership Style of the Appraiser

Autocratic

Participative and Democratic

10. Subject

Individual

Team

PERFORMANCE APPRAISAL TECHNIQUES

TRADITIONAL METHODS

MODERN METHODS

PAST ORIENTED METHODS

FUTURE ORIENTED METHODS

1. Unstructured Method 2. Straight ranking method 3. Paired comparison method 4. Man to man comparison method 5. Grading method 6. Graphic rating method 7. Forced choice method 8. Check list method 9. Weight check list method 10.Free essay method 11.Critical incidents method 12.Field review method 13.Confidential reports

1. BARS

–

Behavioral

Anchored

Rating Scale method 2. Result Oriented Appraisal or MBO method 3. Assessment centre method 4. Human Resource Accounting method 5. Psychological Appraisal method 6. 360 Degree appraisal

METHODS OF PERFORMANCE APPRAISAL

Trait Methods

Behavioral Methods

Results Methods

Graphic Rating Scales

Behavioral Checklist Method

Productivity Measures

Ranking Methods

Critical Incident Method

Balanced Scorecard

Behaviorally Anchored Rating Scales Behavioral Observation Scales

Human Resource Accounting Management by Objectives

Paired Comparison Method Forced Distribution Method Checklist Methods (a) Simple Checklist (b) Weighted Checklist (c) Forced Choice Method Essay/Free Form Appraisal

Assessment Centre Psychological Appraisal

Group Appraisal Confidential Reports

The Balanced Scorecard The balanced scorecard was developed by Robert Kaplan and David Norton. It brings the linkages among financial, customer, processes and learning. Learning and people management contribute to the enhancement of internal processes. Inter processes (product development, services development etc.) are critical for enhancing customer satisfaction and loyalty. Customer satisfaction leads to customer value creation, which drives financial performance and profitability. The balanced scorecard can be used to appraise employee performance. The following recommendations ensure the successful application of balanced scorecard to performance management. • Translate the strategy into a scorecard of clear objectives.

•

Attach measures to each objective in order to know the details of achievement of objectives.

• Cascade scorecards to the lowest level employees in order to enable all employees to understand how their jobs and duties are aligned with higher level goals and objectives. •

Provide performance feedback based on measures: Employees must be provided with feedback on how they are accountable for achieving goals to what extent they achieved them and the areas and reasons for failure to achieve the unaccomplished portions.

• Empower employees for performance improvements. •

Reassess Strategy: Balanced Scorecard is a continuous loop process. Management should make continuous adjustments to the strategy based on feedback and feed-forward basis.

360 Degree Feedback 360 degree feedback was initiated by the US armed forces was back in the 1940s. However, it caught the attention of the administrator s and HR managers, who were concerned with the authenticity of the feedback coming from a single source. Known as the multi- rater appraisal, it is provided by the immediate supervisor, the employee himself /herself, the peer group and the people reporting to the individual whose appraisal is being conducted. 360 refers to the 360 degrees in a circle. The basic idea is to seek feedback from a variety of sources so that the individual biases in the appraisal are controlled. Sometimes, the appraisal also sought from the customers particularly for those employees who directly deal with the end users of the products and services of the organizations. The value of the 360 degree appraisal lies in generating data that could be relied on for developmental efforts of the employees. It offers the following benefits: 1. It helps in identifying the strengths and weaknesses as well as the potential, of the employees.

2. Hence, relevant training and developmental programmes san be identified

and or developed to overcome weaknesses, reinforce strengths and bring out the potential of the employees. 3. It makes succession planning more realistic as the employees identified for the challenges in higher level positions can be groomed. 4. Due to aggregate appraisal, individual employee reluctance to accept the ratings by the supervisor can be minimized. 5. It also encourages open feedback, which gives new insights regarding the employees. 6. It provides useful feedback to the supervisor in terms of his/her biases,

perceptions and idiosyncrasies. 7. The knowledge about the strength and potential of its workforce can provide valuable support to the organisation to help it market the skill of its employees. Despite these benefits , it is often difficult to get feedback to data from various sources in time .People take their own time in submitting reports .However , with line feedback , the problem , to some extent , can be taken care of.

 PERFORMANCE INTERVIEW:

Once appraisal has been made of employees, the rater should discuss and review the performance with the ratee, so that they will receive feedback about where they stand in the eyes of the superior. Feedback is necessary to affect improvement in performance, especially when it is adequate. Specifically performance interview has three goals; 1. To change behavior of employees whose performance does not meet

organizational requirement or their personal goals.

2. To maintain behavior of employees who perform in an acceptable

manner. 3. To recognize superior performance behaviors so that they will be

continued.

 USE OF APPRAISAL DATA: The data thus collected will be useful in the following areas of HRM: 1. Remuneration Administration/Compensation Management 2. Validation of Selection Programme 3. Employee Training and Development Programme 4. Promotion Transfer and Lay of Decision 5. Grievance and Discipline Programme 6. HR Planning

PO TENTIAL APPRAISAL The objective of Potential Appraisal is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. A Potential Appraisal system attempts to generate data about employees and their potential for occupying higher positions from a variety of sources and helps the top management to make decisions about the suitable persons for a given job.

STEPS TO BE FOLLOWED FOR INTRODUCING POTENTIAL APPRAISAL SYSTEM 1. ROLE DESCRIPTIONS A good Potential Appraisal System would be based on the clarity of roles and the functions associated with them in the organization. This requires extensive job descriptions to be available for each job. These job descriptions should spell out the various functions involved in performing the jobs. 2. QUALITIES REQUIRED TO PERFORM THE ROLES These qualities may be broadly divided into three categories: a) Technical knowledge and skills b) Managerial capabilities and qualities and c) Behavioral dimension 3. INDICATOR OF QUALITIES A good Potential Appraisal System, besides listing the functions and qualities, would also have various mechanisms of judging these qualities in a given individual. Some of the mechanisms of judging these qualities are: a) Rating by others b) Psychological tests c) Simulation games and exercises d) Performance appraisal records 4. ORGANIZING THE SYSTEM

Once the functions, the qualities required to perform these functions, indicators of these qualities and mechanisms of generating these indicators are clear, the organization is in a sound position to establish and operate the Potential Appraisal System. Such an establishment of the system requires a clarity in the organizational policies and systematization of its efforts. 5. FEEDBACK ON POTENTIAL APPRAISAL FOR CAREER DEVELOPMENT A good Potential Appraisal System should provide an opportunity for every employee to know the results of this assessment. He should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organizations to appraise his potential and the results of such an appraisal. 6. INTRODUCING POTENTIAL APPRAISAL

CAREER MAN AGE MENT

Career: "Course or progress through life (or a distinct portion of life)".

Oxford English Dictionary The particular occupation for which you are trained. The general progression of your working or professional life. So the basic question involved in one’s career is How any individual’s work life develops over time and how it is perceived by that person? Only the person himself or herself can judge the success in his or her career. Different people use different criteria to make this judgment.

Career management is defined by Ball as: 1. Making career choices and decisions – the traditional focus of careers

interventions. The changed nature of work means that individuals may now have to revisit this process more frequently now and in the future, more than they have done in the past. 2. Managing the organizational career – concerns the career management tasks of individuals within the workplace, such as decision-making, lifestage transitions, dealing with stress etc. 3. Managing 'boundary less' careers – refers to skills needed by workers whose employment is beyond the boundaries of a single organisation. 4. Taking control of one's personal development – as employers take less responsibility, employees need to take control of their own development in order to maintain and enhance their employability.

Career Anchors Edgar Schein at MIT has identified eight themes and has shown that people will have prioritized preferences for these. For example a person with a primary theme of Security/Stability will seek secure and stable employment rather than an employment that is challenging and riskier. People tend to stay anchored in one area and their career will echo this in many ways. Technical/Functional competence This kind of person likes being good at something and will work to become a guru or expert. They like to be challenged and then use their skill to meet the challenge, doing the job properly and better than almost anyone else. General Managerial competence Unlike technical/functional people, these folks want to be managers (and not just to get more money, although this may be used as a metric of success). They like problem-solving and dealing with other people. They thrive on responsibility. To be successful, they also need emotional competence. Autonomy/Independence These people have a primary need to work under their own rules and steam. They avoid standards and prefer to work alone. Security/Stability Security-focused people seek stability and continuity as a primary factor of their lives. They avoid risks and are generally 'lifers' in their job. Entrepreneurial Creativity These folks like to invent things, be creative and, most of all, to run their own businesses. They differ from those who seek autonomy in that they will share the workload. They find ownership very important. They easily get bored. Wealth, for them, is a sign of success. Service/Dedication to a cause Service-oriented people are driven by how they can help other people more than using their talents (which may fall in other areas). They may well work in public services or in such as HR. Pure Challenge People driven by challenge seek constant stimulation and difficult problems that they can tackle. Such people will change jobs when the current one gets boring and their career can be very varied.

Lifestyle Those who are focused first on lifestyle look at their whole pattern of living. They not so much balance work and life as integrate it. They may even take long periods off work in which to indulge in passions such as sailing or traveling.

Career Path A planned, logical progression of jobs within one or more professions throughout working life. A career path can be planned with greater assurance in market conditions of stability and little change. In times of great change and uncertainty, there is no longer such a thing as a planned career path instead experts place greater emphasis on the importance of Career Path Development in order to maintain employability. The development depends on a variety of factors like personal capabilities, skills, experience and the opportunities available for training and advancement.