Performance Appraisal
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In this presentation, we will understand the importance and methods of performance evaluation and appraisal. We will also discuss about Management by Objective Process, its objectives, benefits and......

In this presentation, we will understand the importance and methods of performance evaluation and appraisal. We will also discuss about Management by Objective Process, its objectives, benefits and disadvantages of MBO.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html

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  • 1. Chapter5 Performance Appraisal Objectives:• Understand the importance of Performance Appraisal.• Understand why an organization needs Performance Appraisal.• Understand the evaluation process.• Understand various methods of Performance Appraisal.• Understand what Career Planning is all about.
  • 2. Chapter5 Performance Appraisal Structure:5.1 Introduction5.2 Evaluation Process5.3 Performance Appraisal Methods5.4 Career Planning5.5 Summary
  • 3. Chapter5 Performance Appraisal5.1 Introduction• Performance Appraisal is a process of evaluating the performance of the employee on the job that he is employed to do.• Performance Appraisal was initially said to have been done during the First World War, and focused on the operational people only.• Later on, Performance Appraisal was employed in areas of work like technical, professional and managerial performance.
  • 4. Chapter5 Performance Appraisal•Performance Appraisal has three needs to fulfill:a) Promotions, transfers, rewards and motivation of the employee.b) Feedback to the employee on his performance and scope for improvementc) Understand the gap between his actual performance and standards and counsel., coach or train him to reduce the gap.
  • 5. Chapter5 Performance Appraisal5.2 The Evaluation Process It follows the following steps:1. Establishment of performance standards2. Communicate the standards to all concerned.3. Measurement of performance4. Comparison of actual performance with standards. Determining the ‘gap’5. Results of appraisal discussed with the employees periodically.6. Initiation of corrective action to minimize the ‘gap’
  • 6. Chapter5 Performance Appraisal5.3 Performance Appraisal Methods• Strauss & Styles have classified performance appraisal methods into traditional methods and modern methods.• The traditional methods lay emphasis on the rating of the individaul’s personality traits such as initiative, dependablity, drive, drive, etc.• The modern methods place more emphasis on the evaluation of work results.
  • 7. Chapter5 Performance Appraisal Methods of Appraisal & Career Development• Most traditional methods emphasize either on task or the worker’s personality while making appraisal.• In order to bring about a balance between the two, modern methods have been developed. Of such methods the most important are:1. Management by Objectives (MBO)2. Assessment Center Method3. Human Asset Accounting Method4. Behaviorally Anchored Rating Scales (BARS)
  • 8. Chapter5 Performance Appraisal1. Management By Objectives (MBO)• Evolved by Peter Drucker, MBO is an effective, unique process that minimizes external control and maximizes internal motivation.• This is achieved through joint goal-setting between manager and subordinate and increasing the subordinate’s control over his work through active participative management.
  • 9. Chapter5 Performance Appraisal• MBO could be described as a process whereby:1. A system’s approach in which those accountable for managing the organization first determine where they want to take the organization.2. A process requiring and encouraging all key management personnel to contribute their maximum to achieving the overall objectives.3. An effort to blend and balance the individaul and the organizational goals.4. An evaluation mechanism
  • 10. Chapter5 Performance Appraisal Objectives of MBO:• The objective of MBO is to change behaviors and attitudes towards getting the job done. It is a result-oriented process steered by personal growth.• It is a philosophy that stresses on goals rather than methods.• It provides responsibility and accountability and recognizes that employees have the need for achievement and self fulfillment.• It meets these needs by providing opportunities for participation in goal-setting process. Subordinates get involved in planning their own careers.
  • 11. Chapter5 Performance Appraisal MBO Process: There are five basic steps in the MBO process:a) Setting organizational Goals- clearly communicatedb) Joint Goal setting- short-term goals to be set between senior and subordinate.c) Performance reviews-frequent reviews to ensure that the path is correctd) Establish checking points- self monitored controle) Feedback- specific, relevant and timely for corrective actions
  • 12. Chapter5 Performance Appraisal• Summing up, the foundations of MBO are:a) Goal-settingb) Feedbackc) Participation• Through these steps, MBO emphasizes the present and future rather than the past.• It focuses attention on the results that are accomplished and not on personal traits or operational methodology.
  • 13. Chapter5 Performance Appraisal Benefits of MBO:• Increases employee motivation through active participation and personal commitment with inner drivenness.• Employees compete with oneself and not with others, thus reducing conflicts.• The whole organization is working towards the same objective without ambiguity. There is a congruence, leading to effectiveness.• Provides objective appraisal criteria without making it “inhuman”• Addresses individual and organizational goals, harmoniously.• Identifies performance deficiencies well in advance and enables timely corrective actions.• Promotes personal growth and managerial and leadership development.
  • 14. Chapter5 Performance Appraisal Disadvantages of MBO:• It takes a lot of time to create, test and implement. Moreover lot of resources need to be invested, in terms of executive efforts and time and manpower and money.• It operates effectively only in a space of trust and open communication.• Since it is based on human behavior and changes, it gets difficult to take off. People don’t change behaviors so easily.• Targets may be manipulated to suit an alliance between senior and subordinate.• Promised rewards may be denied, resulting in distrust and feeling of betrayal.
  • 15. Chapter5 Performance Appraisal5.4 Career Planning• Individual Career Planning is important for employee motivation and retention.• It gained importance due to technology, human needs, increase in training facilities, aspirations, organizational growth, etc.
  • 16. Chapter5 Performance Appraisal Meaning of Career Planning• Career pertains to all the jobs held by an employee meaningfully during one’s working life.• Edwin Flippo defines career as a sequence but related work activities that provides continuity and order in a person’s life.• Career Planning is the process by which one selects career goals and the path to those goals.
  • 17. Chapter5 Performance Appraisal Need for Career Planning• To attract competent people and to retain them• To provide suitable promotional opportunities.• To enable self development of employees• To increase the utilization of managerial resources• To reduce employee dissatisfaction & attrition• To boost morale and increase motivation.
  • 18. Chapter5 Performance Appraisal Process of Career Planning There are steps in Career Planning as follows:a) Analysis of skills, knowledge, competencies, etc.b) Analysis of career opportunities both within and outside the organization.c) Analysis of career demands like skills, experience, etcd) Relating jobs with career opportunitiese) Establishing realistic goals.f) Formulating Career strategyg) Preparing and implementing action plan.
  • 19. Chapter5 Performance Appraisal Summary:• An important function of HRM, Performance Appraisal was discussed in this chapter• The Evaluation Process was studied in a step-by- step manner.• The methods of Performance Appraisal, the traditional and the modern methods were studied.• MBO process was dealt with in detail• We discussed about Career Planning, its meaning, the need, and process.
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