1. Appraising and Managing Performance

2. Process of Performance Appraisal
Objectives of performance appraisal
Establish job expectations
Design appraisal program
Appraise performance
Performance interview
Adopted from: Aswathappa, Human Resource Management,
Text and Cases, 2008, p. 241
Performance |Management
Archival appraisal data
Use appraisal data

3. Performance Appraisal Process
Designing Appraisal Program
What methods?
Formal vs informal
When to evaluate?
Appraisal Design
Whom to evaluate?
How to solve?
Who are the raters?
What problems/errors?
What to evaluate?

4. Designing Appraisal Program
1 Formal vs Informal
Formal appraisal normally occur at specific time (six month or one year)
Informal regular when supervisor feels need
Whom to Evaluate
Individual or team performance
Who Should be the rater?
a) Immediate supervisor
b) Subordinates
c) Peers
d) Clients
e) Self appraisal

5. 4 Performance Appraisal Errors
S. No.
Performance Appraisal Error
Description 1
Leniency Error
Extreme rating either on high or low side 2
Similarity Error
Bias appraisal because of personal affiliation 3
Recency Error
Recent behavior evaluation instead of entire performance appraisal period 4
Contrast Error
Rating in comparison to other members 5
Central Tendency Error
Average rating for all employees 6
Spill-Over Effect
Past performance or standing dominate recent evaluation 7
Hallo Error
One characteristic or aspect of performance dominate entire performance appraisal rating 8
Perceptual Error
The previous held believe of perception influence appraisal

6. Designing Appraisal Program
Solving Rater’s Error
Training and Practice
What to evaluate
a) Traits
b) Behaviors
c) Results/Goals
Other dimensions
a) Quality
b) Quantity
c) Timeliness
d) Cost effectiveness
e) Independent working
f) Interpersonal and cohesiveness effect

7. Designing Appraisal Program
When to Evaluate?
To decide the appraisal period (three months, six months or year)
Methods of Performance Appraisal
No.
Appraisal Method
Description 1
Rating Scale
Typical numerical rating ranging from poor to excellent of job related performance criteria such as initiative, honesty, attendance, cooperation etc.
The rater rate each statement and then sum up numbers. 2
Check List
The rater has to tick Yes or No against the statements defining personality characteristics. Then HR department calculate the numbers of only Yes statement

8. Performance Appraisal Methods
No.
Appraisal Method
Description 3
Forced Distribution Method
Compel raters to evaluate performance and distribute ratees on all points given in rating scale
For example: Excellent 20 %, Good 20 %, Average 15 Below average 25 % and Unsatisfactory performance 20 % 4
Critical Incident Technique
All critical behaviors that contributed to job success are recorded by supervisor. These behaviors actually differentiate between effective an ineffective employee
Behaviorally Anchored Rating
Also called behavioral expectation scale. It contains descriptive statements of behavior from least to most effective
Performance Test
With few jobs for evaluation performance test to check the knowledge and skills of employee can be conducted
Cost Accounting Method
Performance is evaluated on monetary benefits employee has given to organization. Cost benefit analysis of employee
Ranked Method
Supervisor rate his subordinates on ranking

9. Performance Appraisal Methods
No.
Appraisal Method
Description
Comparative Evaluation Method
Supervisor rate his subordinates on ranking from best to worst
a) Ranking Method: The rater rank employees from best to worst
b) Paired Comparison: Each employee is compared and ranked with every employee in a group or team
N (N-1)/2
MBO
The goals/outcomes are established for each employee and then performance is evaluated based on attainment of these goals

10. Performance Appraisal Methods
Advantages
Disadvantages
Rating Scale
Easy to use, time effective, and low cost
All types of job can evaluated
No training required to raters
Biases of raters
Check List
Easy to administer
No specific training required to raters
Use of personality indicators
Less flexibility to assign relative ratings
Forced Distribution Method
Avoid leniency error
What if organization is performing well and all employees contributing outstandingly
Critical Incident Technique
Evaluation is based on behaviors that actually contribute to effective job performance
Recency error can be overcome
Chance of learning for subordinate is greater
In general negative incidents are more highlighted
Behaviorally Anchored Rating
Actual observable job behavior
BARS is tailor made
Problems of rating scale

11. Performance Appraisal Methods
Advantages
Disadvantages
Performance Test
Test can be validated
Test potential instead of actual performance
Cost Accounting Method
Useful to make training/investment decision on employee
Difficult to establish profit contribution
Comparative Evaluation Method
Comparative ranking based on performance
Can be used to decide merit based pay and promotion
Recency, Hallo or perceptual biases
MBO
Not fit for assembly line workers
Good for management jobs
Increase employee involvement and motivation
Employee may not set challenging and high goals if achievement of goals is basis for reward
Set short term goals

12. GOAL-BASED APPRAISAL SYSTEM
Supervisor sets
goals for subordinate
Organizational goals
Agreed goals
and objectives
Department or
Unit goals
Subordinate proposes goals and Objectives
Mid Term Review
(Readjustment in
goals if internal
or external factor
changes)
Annual
Review
Adopted from: Snell, Bohlander & Vohra: Human Resource Management. A South Asian Perspective, (2010, p.337)

13. 360 Degree Performance Appraisal
Supervisor
Client
Peers
360 Degree Performance Appraisal
Team Members
Self
Subordinate

14. 360 Degree Performance Appraisal
Advantages
Disadvantages
1 More comprehensive
2 Quality of information is better
3 Compliments TQM perspective by soliciting external and internal customers
4 Less bias/prejudice
5 increase employee self development
1 More Complex
2 Conflicting opinion
3 Requires extensive training to implement
4 Grouping may make it ineffective
Source: Snell, Bohlander & Vohra: Human Resource Management. A South Asian Perspective, (2010, p. 324)

15. Process of Performance Appraisal
Appraise the Performance
Measure the performance what he does or what he does not do
It should also include potential of employee in addition to his actual performance
From different job different performance criteria should be used
Performance Management
Feedback on performance must be used purposefully
1) Performance Interview
Performance appraisal outcome should be discussed and shared with employee
Three goals of performance interview
a) change behavior of poor performers b) maintain behavior of employee who perform well c) appreciate superior performers

16. Designing Appraisal Program
Archiving Performance Data
Keep record of performance data for future
Use of Performance Data
Use performance data to streamline HR activities and make employee related decisions
Key Message: Performance Appraisal System should be designed with care and organizational goals must linked with personal goals
Performance appraisal must be shared with employees to identify their strength and weaknesses and tell them where they need improvement and how to improve the performance
HR decisions must consider performance appraisal information

17. Summary Performance Appraisal
Relationship between Performance Appraisal and Job Evaluation
Objectives of Performance Appraisal
Multi Purposes of Performance Appraisal
Performance Appraisal and Competitive Advantage
Process of Performance Appraisal
Performance Appraisal Methods
Goal Based Performance Appraisal
360 Degree Performance Appraisal