1. PERFORMANCE MANAGEMENT & APPRAISAL
UNIT -III
PERFORMANCE MANAGEMENT & APPRAISAL

2. Meaning Of Performance Management
Performance management is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee.
It is a philosophy which values and encourages employee development through a style of management which provides frequent feedback and fosters teamwork.

3. It focuses on adding value to the organization by promoting improved job performance and encouraging skill development.
Performance Management involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

4. Process of Performance Management

5. Why Performance Management
Performance management is considered a process, not an event.
It follows good management practice in which continual coaching, feedback and communication are integral to success.
The Performance Management Plan is primarily a communication tool to ensure mutual understanding of work responsibilities, priorities and performance expectations.

6. Elements for discussion and evaluation should be job specific
The major duties and responsibilities of the specific job should be defined and communicated as the first step in the process.  
Performance standards for each major duty/ responsibility should be defined and communicated.   
Employee involvement is encouraged in identifying major duties and defining performance standards.

7. Performance appraisal
Evaluating an employees current & past performance relative to his performance standard.
According to Flippo- “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job”
It is a powerful tool to reward the performance of the employee.
L& T was the first company in India to use a systematic performance appraisal system in India.

8. Performance Appraisal
The process by which an employee’s contribution to the organization during a specified period of time is assessed.
Lets employees know how well they have performed in comparison with the standards of the organization
Performance Feedback

9. Objectives Of Performance appraisal:
To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control.
To provide feedback to the employees regarding their past performance. Provide information to assist in the other decisions in the organization like training needs, transfers, promotion
To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

10. Uses of P.A P A Training & Carrer Development Recruitment Compensation
Selection
Promotion
& transfer

11. Mgr not taking PA seriously Ineffective discussion
Why PA May Fail
Unclear Language
Mgr not taking PA seriously
Mgr not prepared
No on-going feedback
Mgr not honest or
sincere
Ineffective discussion
Lack appraisal skills
Mgr Lacks Infor.
Insuff. Rewards

12. Alternative Sources of Appraisal
SUPERIOR
CUSTOMERS
TEAM
PEERS
SELF
SUBORDINATES

13. Errors in PA byAppraisers
Common Appraisal Errors to Address in Training
Error of Central Tendency
Recency Error
One weakness in many performance appraisal programs is that managers and supervisors conducting the appraisal are not adequately trained for that task. Appraisal training, at the least, should focus on eliminating the subjective errors made by managers in the rating process. Common types of errors include:
Error of Central Tendency. A type of distributional error that involves a group of ratings given across various employees (occurs when all employees are rated about average).
Leniency or Strictness Error. Another distributional error, in which the appraiser tends to give employees either too high or too low a rating.
Recency Error. Recency is a performance-rating error in which the appraisal is largely based on the employee’s most recent behavior rather than on behavior throughout the appraisal period.
Contrast Error. Contrast error occurs when an employee’s evaluation is biased either upward or downward because of another employee’s performance who was just evaluated previously.
Teaching Tip: This tendency is explained in part by Sherif’s Social Judgment Theory in which positions similar to our own are believed to be closer to what we believe than they actually are (assimilated) and those different from our own are believed to be even more different from what they actually are (contrasted). By extension, a manager either improves or depresses an appraisal becasue of the similarity or difference of a particularly salient appraisal recently given another employee.
Similar-to-Me Error. This occurs when appraisers inflate the evaluations of people with whom they have something in common.
Teaching Tip: Again, Social Judgment Theory applies, as does Balance Theory.
Leniency or Strictness Error
Contrast Error
Similar-to-Me Error

15. METHODS of PERFORMANCE APPRAISAL

16. Confidential Report Descriptive report Prepared at the end of the year
Prepared by the employee’s immediate supervisor
The report highlights the strengths and weaknesses of employees
Prepared in Government organizations
Does not offer any feedback to the employee

17. Essay Evaluation
The rater is asked to express the strong as well as weak points of employee’s behavior
The rater considers the employee’s :
Job knowledge and potential
Understanding of company’s programs, policies, objectives etc
Relation with co-workers and supervisors
Planning, organizing and controlling ability
Attitude and perception

18. Essay Evaluation This method has the following limitations:
Highly subjective
Supervisor may write biased essay
Difficult to find effective writers
A busy appraiser may write the essay hurriedly without assessing properly the actual performance of the worker
If the appraiser takes a long time it becomes uneconomical from the view point of the firm

19. Critical Incident Technique
Manager prepares lists of statements of very effective and ineffective behavior of an employee
These critical incidents represent the outstanding or poor behavior of the employees
The manager periodically records critical incidents of employee’s behavior

20. Critical Incident Technique
Example:
July 20 - Sales clerk patiently attended to the customers complaint. He is polite, prompt, enthusiastic in solving the customers’ problem
July 20 - The sales assistant stayed 45 minutes beyond his break during the busiest part of the day. He failed to answer store manager’s call thrice. He is lazy, negligent, stubborn and uninterested in work

21. Critical Incident Technique
Limitation of this technique are:
Negative incidents may be more noticeable than positive incidents.
Results in very close supervision which may not be liked by the employee.
The recording of incidents may be a chore for the manager concerned who may be too busy or forget to do it.

22. Checklist
A checklist is a set of objectives or descriptive statements about the employee and his behavior.
Under weighted checklist, value of each question may be weighted.
Example:
Is the employee really interested in the task assigned?
Yes / No
Is he respected by his colleagues? Yes / No

23. Graphic rating
Graphic rating scales are one of the most common methods of performance appraisal. Graphic rating scales require an evaluator to indicate on a scale the degree to which an employee demonstrates a particular trait, behavior, or performance result. Rating forms are composed of a number of scales, each relating to a certain job or performance-related dimension, such as job knowledge, responsibility, or quality of work. Each scale is a continuum of scale points, or anchors, which range from high to low, from good to poor, from most to least effective, and so forth. Scales typically have from five to seven points, though they can have more or less.
Graphic rating scales may or may not define their scale points.

24. Forced Distribution Methods
Forced distribution is a form of comparative evaluation in which an evaluator rates subordinates according to a specified distribution.
Use of the forced distribution method is demonstrated by a manager who is told that he or she must rate subordinates according to the following distribution: 10 percent low; 20 percent below average; 40 percent average; 20 percent above average; and 10 percent high. In a group of 20 employees, two would have to be placed in the low category, four in the below-average category, eight in the average, four above average, and two would be placed in the highest category.

25. The proportions of forced distribution can vary
The proportions of forced distribution can vary. For example, a supervisor could be required to place employees into top, middle, and bottom thirds of a distribution.
Forced distribution is primarily used to eliminate rating errors such as leniency and central tendency, but the method itself can cause rating errors because it forces discriminations between employees even where job performance is quite similar. For example, even if all employees in a unit are doing a good job, the forced distribution approach dictates that a certain number be placed at the bottom of a graded continuum. For this reason, raters and ratees do not readily accept this method, especially in small groups or when group members are all of high ability.

26. New inputs are then provided
PA under a MBO Program
Step 5a:
Inappropriate
goals/metrics
deleted
Step 1:
Org. goals
Step 5b:
New inputs are then provided
Step 2:
Dpt. Goals
Step 3:
Spvr lists
goals .
Step 4:
Mutual
agreement
Step 3:
Sbt. proposes
Goals
Step 7:
Review org.
performance
Step 6:
Final
review
Step 5:
Interim
review

27. Management by Objectives
Management by objectives (MBO) involves setting specific measurable goals with each employee and then periodically discussing his/her progress toward these goals. The term MBO almost always refers to a comprehensive organization-wide goal setting and appraisal program that consist of six main steps:
1. Set the organizations goals. Establish organization-wide plan for next year and set goals.
2. Set departmental goals. Here department heads and their superiors jointly set goals for their departments

28. Discuss and allocate department goals
Discuss and allocate department goals. Department heads discuss the department's goals with all subordinates in the department (often at a department-wide meeting) and ask them to develop their own individual goals; in other words, how can each employee contribute to the department's attaining its goals
4. Define expected results (set individual goals). Here, department heads and their subordinates set short-term performance targets.
5. Performance review and measure the results. Department heads compare actual performance for each employee with expected results.
6. Provide feedback. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate progress in achieving expected results.

29. Multiple Person Evaluation Methods
Ranking method
The evaluator rates the employee from highest to lowest on some overall criteria
Paired comparison method
Each worker is compared with all other employees in a group
For several traits paired comparisons are made, tabulated and then rank is assigned to each worker
This method is not applicable when the group is large

30. 360o Appraisal System
360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity towards others.

31. 360 DEGREE
CUSTOMER
SUPERVISOR
SENIOR
PEERS
SUBORDIBATES
SELF
ANY OTHER

32. Example Communication Leadership Personal Development Adaptability
of Others
Relationships
Production
Task
Management

33. Appraisal Interview and Feedback - Let the Employee Know Where He Stands
To help employees do a better job by clarifying what is expected of them
To plan opportunities for development and growth
To strengthen the superior-subordinate working relationship by developing mutual agreement of goals
To provide an opportunity for employees to express themselves on performance related issues