1. Performance appraisal

2. Meaning & definition
“Performance appraisal is a systematic evaluation of individual with respect to his/her performance on the job and his/her potential for development.”

3. Need for performance appraisal
Identify developmental needs.
To plan training based on feedback
To recognize potential/promising employee.

4. Components of performance appraisal
Who of appraisal
Immediate supervisors
Other supervisor
Peers or colleagues
Self
Subordinates
Personnel manager
External consultant

5. What of appraisal Human beings time frame Personal traits
Achieved results
Specifics
Current performance

6. When of appraisal Formal Annually Semi annually Quarterly Informal
Weekly
Daily
Continuously

7. Why of appraisal Maintain workforce
Determine organizational training needs.
Determine personal development opportunities.
Basis for promotion, transfers etc..
Basis for pay increase & in recruitment, selection.
Feedback & communication mechanism.

8. Where of appraisal on the job Bosses office
Subordinate’s place of work
Everywhere
of the job
Consultants office
Social or recreational settings

9. Benefits of performance appraisal
Human resource planning
Motivation & Satisfaction
Training & Development
Recruitment & Induction
Employee Evaluation
Legal Compliance

10. Persons involved are- Why is it done?
Employees
Superior
Division head
Peers & colleagues
Why is it done?
A systematic presentation of roles & responsibilities of the position
To understand why the position is existing
Helps in individual objective setting, performance review & effectiveness mapping

11. What is it used for? Performance – objective setting review
Competency mapping
Recruitment & transfer
Position evaluation
Performance – objective setting review
This module ensures that the corporate objectives are laid down & individual objectives are simultaneously are laid down in line with corporate goals. All this is done in the form of dialogue between superior & the employee.

12. Why is it done?
To fix objective & give weightage to it.
To review objectives
To determine the performance related pay & increment
To ensure that the objectives are also as may be applicable for consumer, employee, finance & processes.
To give overall performance rating.

13. Process of Performance Appraisal Step 1
Establish and communicate expectations for performance.
List three to five major responsibilities of each position.
Focus the appraisal on these responsibilities.
Be sure employees know and understand what is expected of them.
Employee are most likely to understand and be committed to objectives they helped develop.
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14. Step 2 Establish and communicate standards for measuring performance.
Each expectation should be measurable.
A supervisor’s task includes deciding how to measure employees’ performance and then making sure employees know what will be measured.
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15. Step 3 Observe and measure individual performance against standards.
A supervisor should continuously gather information about each employee’s performance.
When preparing a performance appraisal, a supervisor compares this information with the standards for the employee being appraised.
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16. Step 4 Reinforce performance or provide remedies.
Point out to employees where they have performed well.
Asking an employee to help solve a problem is often more effective than the supervisor simply stating a remedy.
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© 2006 The McGraw-Hill Companies, Inc. All rights reserved.

17. Individual Evaluation Methods
Graphic rating scale
The rater is presented with a set of traits
The employee is rated on the traits
Ratings are assigned points, which are then computed
Raters are often asked to explain each rating with a sentence or two

18. Forced choice:
Was developed because graphic rating scales allowed supervisors to rate everyone high
The rater must choose from a set of descriptive statements about employee
Supervisors check the statements that describe the employee, or they rank the statements from most to least descriptive
Forced choice can be used by superiors, peers, subordinates, or a combination of these

19. Essay Evaluation
The rater is asked to describe the strong and weak aspects of the employee’s behavior
It can be used by superiors, peers, or subordinates
Essay evaluations are flexible; an evaluator can specifically address the ratee’s skill in any area
Comparing essays is difficult
Skilled writers can paint a better picture

20. Critical Incident Technique
Raters maintain a log of behavioral incidents that represent effective and ineffective performance for each employee
Two factors determine the success of this technique:
The supervisor must have enough time to observe subordinates during the evaluation period
The supervisor must record incidents as they are seen
Logs can help avoid common rating errors and facilitate discussions about performance improvement

21. Checklists
In its simplest form, the checklist is a set of objectives or descriptive statements
If the rater believes that the employee possesses a listed trait, the item is checked
A rating score equals the number of checks

22. Behaviorally Anchored Rating Scales
Smith and Kendall developed the behaviorally anchored rating scale (BARS), or the behavioral expectation scale (BES)‏
The BARS approach uses critical incidents to anchor statements on a scale
The rater reads the anchors and places an X at some point on the scale for the ratees
These scales rate employee performance in several areas.
The supervisor selects the statement that best describes how the employee performs.
Each job title in the organization has a different set of rating statements.

23. A BARS usually contains these features:
Six to 10 performance dimensions identified and defined by raters and ratees
The dimensions are anchored with positive and negative critical incidents
Each ratee is then rated on the dimensions
Ratings are fed back using the terms on the form
It takes two to four days to construct a BARS that is jargon free and closely related to the requirements of the job

24. Behavioral Observation Scales (BOS)‏
Developed by Latham and associates
Like BARS, the BOS uses critical incidents
Instead of identifying which behaviors occurred, the rater identifies how they occurred
The hope was that BARS and BOS would yield more objective ratings than other scale formats
Most researchers find that the format of the rating scale has little effect on the quality of a performance appraisal system

25. Work Standards Approach: A performance appraisal in which the appraiser compares the employee’s performance to objective measures of what an employee should do.
This type of appraisal requires the supervisor to establish objective measures of performance.
A typical work standard would be the quantity produced by an assembly-line worker.
The supervisor then compares the employee’s actual performance with the standards.
This approach works best with production workers.

26. Management by Objectives (MBO)
In organizations where MBO is used to set goals and objectives for
employees, the supervisor will use this approach for performance appraisal also.
The appraisal is based on whether or not the employee has met his or her objectives.
The advantage is that employees know what to expect.
The supervisor focuses on results rather than more subjective criteria.
The MBO approach emerged from the beliefs of McGregor, Drucker, and Odiorne
With MBO, managers and subordinates plan, organize, control, communicate, and debate
The subordinate has a course to follow and a target to shoot for

27. An MBO program follows a systematic process:
Superior/subordinates define tasks and set objectives
The superior, consulting with subordinates, sets criteria for assessing objective accomplishment
Dates to review progress are agreed upon and used
Superior and subordinates make any required modifications in the original objectives
A final evaluation by the superior is made
The superior meets with the subordinate in a counseling, encouraging session
Objectives for the next cycle are set

28. For MBO and other performance management programs to work:
Both the manager and subordinate must be actively involved in objective formulation
They must also agree on what measures will be used to evaluate success and failure

29. Agents by Someone Other than the Supervisor
360-degree Feedback: Performance appraisal that combines assessment from several sources.
Because the supervisor cannot know all of an employee’s behaviors and their impact on others in the organization, the supervisor may combine his or her appraisal with self-assessments by the employee or with appraisals by peers or subordinates.
Combining several sources of appraisals is called 360-degree feedback.
The self-assessment may be done before the interview.
Then the supervisor and employee can compare the employee’s appraisal with his or her own evaluation.

30. Multiple-Person Evaluation Methods
Ranking
A supervisor is asked to rank subordinates in order on some overall criterion
It is easier to rank the best and worst employees than average ones
Alternative rankings can help with this difficulty
Pick the top employee first, then the bottom one
The second best is chosen, then the second worst
Follow this process until everyone has been ranked

31. Paired Comparison
The supervisor reviews a series of cards; each contains two subordinates names
The higher performer in each pair is chosen
Final ranking is made by counting how many times a given employee was chosen as the better performer
A major limitation is the number of paired comparisons that must be made

32. This technique is similar to grading on a curve
Forced Distribution
Employees are rated on a pre-existing distribution of pre-determined categories
The predetermined distribution must be followed, regardless of how well the employees performed
A supervisor with all exceptional subordinates will be forced to rate some poorly
A supervisor with mediocre subordinates must rate some highly
This technique is similar to grading on a curve

33. Point allocation technique (PAT)‏
A variation of forced distribution
Each rater is given a number of points per employee
The points must then be allocated on a criterion basis
The total number of points cannot exceed the number of points per employee times the number of employees evaluated

34. Which Technique to Use The most commonly used evaluation techniques:
The graphic rating scale
The essay method
Checklists
Used by about 5 percent of firms:
Forced choice, critical incident, BARS, BOS, field review, MBO
Used by 10 to 13 percent of firms:
Ranking, paired comparison

35. Balanced Scorecard The Strategy Financial Perspective
If we succeed, how will we look to our shareholders?
Customer Perspective
To achieve our vision, how must we look to our customers?
Internal Perspective
To satisfy our customers, which processes must we excel at?
Learning & Growth Perspective
To achieve our vision, how must our organization learn and improve?

36. Financial Perspective
In private companies, the financial perspective is the main objective (ultimate goal) – without having to sacrifice the interests of other relevant stakeholders (community, environment, government, etc.)
In the financial perspective, the strategic goal is the long-term shareholder value. This goal is driven by two factors, namely : revenue growth and cost efficiency.

37. Customer Perspective
This perspective is very instrumental, because without customers, how can a company survive?
Customer perspective covers the following elements:
Customer acquisition
Customer retention
Customer profitability
Market share
Customer satisfaction

38. Internal Process Perspective
This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers.
There are four main themes in this perspective, namely:
Operations Management Process
Customer Management Process
Innovation Process
Regulatory and Social Process

39. Learning & Growth Perspective
This perspective reflects the capability that a company should have, namely:
Human Capital
Organization Capital
Information Capital
This perspective shows us that good human resource development system, organizational system and information system forms a solid foundation for improving company performance.

40. The Appraisal Interview
The purpose of holding an appraisal interview is to communicate information about the employee’s performance.
An interview is an appropriate setting because if sets aside time to focus on and discuss the appraisal in private.
It is a two-way communication with the supervisor and employee working together to devise ways to improve performance.

41. The Process of Conducting a Performance Appraisal Interview
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42. Guidelines for Conducting the Interview
Begin the interview session by an attempt to put the employee at ease.
A refreshment and small talk may help break the ice.
Review the employee’s self-evaluation first, if there is one.
Ask for reasons for the various ratings.
Then the supervisor describes his or her evaluation of the employee.
Start with an overall impression, then explain the contents of the appraisal forms.
Most employees are waiting for the “bad news,” so it is probably most effective to describe areas for improvement first.
Then describe the employee’s strengths.

43. Allow time for the employee to respond to the performance appraisal.
The employee should be allowed to agree or disagree with the supervisor’s conclusions, as well as to ask questions.
It is important for the supervisor to keep an open mind and listen to the employee.
After the interview is over, the supervisor continues to appraise performance.
Training and coaching for improvement should ensue.
The follow-up is an ongoing process.

44. Guidelines for Assessing the Effectiveness of an Interview
During the interview:
To what extent did the supervisor really try to understand the employee?
Were broad and general questions used at the outset?
Was the supervisor’s feedback clear and specific?
Did the supervisor learn some new things—particularly about deep feelings and values of the subordinate?
Did the subordinate disagree and confront the supervisor?
Did the interview end with mutual agreement and understanding about problems and goals for improvement?

45. Performance Evaluation Problems
No technique is perfect; they all have limitations

46. Bias in Appraising Performance
Performance appraisals should be free of bias, but this is impossible.
There are several identifiable biases in the performance appraisals by supervisors.
Harshness Bias: Rating employees more severely than their performance merits.
Leniency Bias: Rating employees more favorably than their performance merits.
Proximity bias, or assigning similar scores to items that are near each other on a questionnaire, can result in misleading appraisals.

47. Similarity Bias: The tendency to judge others more positively when they are like oneself.
The halo effect refers to the tendency to generalize one positive or negative aspect of a person to the person’s entire performance, resulting in either a higher or lower rating than the employee deserves.

48. Use of Performance Appraisals
_ Feedback
_ Personnel Training
_ Wage/Salary Allocation (Compensation)
_ Placement
_ Promotions
_ Discharge/Termination
_ Personnel Research
_ Legal Defense