2. Performance Management and Appraisal Presented by: Adarsha Das Shrestha Amarnath Prasad Shah Deepika Adhikari Pranita Rajbhandari Sushil Pandit

3. Comparing performance appraisal and performance management  Performance appraisal  Evaluating an employees current and / or past performance relative to his or her standards which involves  Setting work standards  Employees actual performance Vs standard sets  Feedback to employees to motivate them to eliminate deficiencies and perform above par  Performance Management  The process that consolidates goal setting, performance appraisal and development into a single, common system, the aim of which is to ensure employees performance is supporting the company’s goal.

4. (Continue…)  An effective performance management process includes  Direction sharing  Role clarification  Goal setting and planning  Goal alignment  Developmental goal setting  Ongoing performance monitoring  Ongoing feedback process  Coaching and support  Performance appraisal  Rewards, recognition and compensation  Workflow, process control and return on investment management

5. Basic concept in performance management and appraisal  Defining employee’s goals and work standards  Quantify standards by setting measurable standards for each objectives  Assign specific goals  Employees with specific goals usually perform better  Assign challenging but doable goals  Goals should be challenging but not so difficult that they appear impossible of unrealistic  Encourage participation  Encourage employees to participate in setting their goals

6. An introduction to appraising performance  Why appraise performance???  It provides the opportunities to review employees career plans based on their weakness and strength.  It provides information for making decision on promotion and salary.  It provides an opportunities for supervisor and subordinate to review their work related behavior  It helps the company to better manage employees and improve overall performance

7. Continue…  Who should do the Appraising???  The immediate supervisor  Peers  Rating Committees  Oneself  Subordinates  360 0 Feedback

8. Steps in appraising performance 1.Define the job  Make sure that you and your subordinate agree on his or her duties on job standards 2.Appraise performance  Compare your subordinate’s actual performance to the standards that have been set; this usually involves some type of rating forms 3.Provide feedback  Discuss the subordinates performance and progress, and making plans for any developments required.

9. Designing the appraisal tool What to measure?How to measure?  Work output (quality and quantity)  Personal competencies  Goal (objectives) achievement  Graphic Rating scale  Alternation ranking  Paired comparison  Forced distribution  Critical incident  Narrative form  Behaviorally Anchored Rating Scale (BARS)

10. Performance appraisal methods  Graphic rating scale  A scale that lists a number of traits and a range of performance for each that is used to identify the score that best describe an employees level of performance for each trait  Alternation ranking method  Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.  Paired comparison method  Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is better of the pair

11. Continue…  Force distribution method  Similar to grading on a curve; predetermined percentage of grades are placed in various performance categories  Examples –  15% high performers  20% high average performers  30% average performers  20% low average performers  15% low performers

12. Continue…  Critical incident method  Keeps records of uncommonly or undesirable examples of an employees’ work related behaviour and reviewing it with the employees act at predetermined times  Provides actual examples  Numerical rating needed for comparing employees or making salary decisions

13. Continue…  Behaviorally Anchored Rating Scale (BARS)  An appraisal methods that aims at combining the benefits of narrating critical incidents and quantified rating by anchoring a quantified scale with specific narrative examples of good and poor performance  Developing a BARS:  Generate critical incident  Ask people who know the job (job holders and/or supervisors) to describe illustrations (critical incidents) of effective and ineffective performance

14. Continue…  Develop Performance Dimensions:  Have these people cluster of incidents into a smaller set of (5 or 10) performance dimensions, and define each dimension  Reallocate Incidents:  Have another group of people cluster the incidents  Retain a critical incident if 50 – 80 percent of the second group assigns it to the same cluster as the first group  Scale the Incident:  This second group then rates the behavior described by the incident as to how effectively or ineffectively it represents it represents performance on the dimension  7 – to 9 – point scales are typical

15. Continue…  Develop a Final Instrument:  Choose about 6 or 7 of the incidents as the dimension’s behavioral anchors  Advantages of using BARS  A more accurate gauge  Clearer standards  Feedback  Independent dimensions  Consistency

16. Continue…  Management By Objectives (MBO)  Set specific measurable goals with each employee and then periodically review progress  Set the organization’s goals  Set departmental goals  Discuss departmental goals  Define expected results (set individual goals)  Performance reviews  Provide feedback  Three problems using MBO  Unclear objectives  Time consuming  Different expectation

17. Continue…  Mixing Methods  Combining several methods  Allows rater to provide several critical incidents  Critical incidents provide specific examples for developmental discussions  Quantifiable rating  Facilitates comparing employees  Useful for salary, transfer and promotion decisions  Graphic rating scale

18. Continue… ToolAdvantagesDisadvantages Graphic rating scale Simple to use; provides a quantitative rating for each employee Standards may be unclear; Halo effect, central tendency, leniency and bias can also be problems BARSProvides behavioral anchors; accurateDifficult to develop Alternation ranking Simple to use; Avoids central tendency and other problems of rating scales Can cause disagreements among employees; may be unfair if all employees are excellent Forced distribution method End up with a predetermined percentage of people in each group Employees’ appraisal results depend on your choice of cutoff points Critical incident method Helps to specify what is right or wrong about the employees performance; forces the supervisor to evaluate subordinates on an ongoing basis Difficult to rate or rank employees relative to one another MBOTied to jointly - agreed performance objectivesTime consuming

19. Appraising Performance: Problems and Solutions  Potential Rating Scale Appraisal Problems  Unclear Standards  An appraisal that is too open to interpretation  Halo Effect  Occurs when a supervisor’s rating of a subordinate on one trait biases the rating of that of that person on other traits  Central Tendency  A tendency to rate all employees the same way, such as rating them all average

20. Continue…  Leniency or Strictness  Problem when supervisor has a tendency to rate all subordinates either high or low  Bias  The tendency to allow individual differences such as age, race and sex to affect the appraisal ratings employees receive  How to Avoid Appraisal Problems  Learn and understand the potential problems and the solutions for each  Use the right appraisal tool. Each tool has its pros and cons  Train supervisors  Control Outside Influences  Keep a Diary

21. Continue…  Potential Rating Errors  Focusing on one or two critical incidents  Lower rating for less challenge  Nobody can be that good  Similarity  Being influenced by prior performance  Rating for retention  Style differences  Emotional rating  Recent performance only  Friendship

22. Appraisal Interview  An interview in which the supervisors and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strength  May be uncomfortable due to negative feedback  Require adequate preparation and effective implementation  Types of appraisal interviews  Satisfactory – Promotable  Satisfactory – Not promotable  Unsatisfactory – Correctable  Unsatisfactory – Not correctable

23. Continue…  How to conduct appraisal interview  Prepare for interview  Prepare the employee  Choose time and place  Issues in conducting the appraisal interview  Talk in terms of objective work data  Don’t get personal  Encourage the person to talk  Don’t tiptoe around  How to handle a defensive subordinate  Recognize that defensive behavior is normal  Never attack person’s defenses  Postpone actions  Recognize your own limitations

24. Continue…  How to ensure the interview leads to better performance  Don’t make the subordinate feel threatened during the interview  Give the subordinate the opportunity to present his/her ideas and feelings and to influence the course of interview  Have a helpful and constructive supervisor conduct the interview  Offer the subordinate the necessary support for development and change  How to handle a formal written warning  Purposes of the written warning  To shake the employee out of bad habits  Help you defend your rating, both to your own boss and (if needed) to courts  Written warning should  Identify standards by which the employee is judged  Make clear that the employee was aware of the standard  Specify deficiencies relative to the standard  Indicates the employee’s prior opportunities for correction

25. Shell Method of Appraising Potential Power of Analysis (Solve complicate problems) Imagination (Find Useful Alternatives) Sense of Reality (Feel for right course of action) Helicopter Quality (Look at the problem from higher vantage point with attention to details) Key Indicators of Individual Potential

26. Have a Wonderful Day………………..

27. Discussions & Questions???