LESSON:: 30 LESSON 30 Activity: Organisation wise comparison of performance appraisal systemsAppraisal Process:Now let us discuss about the Performance Appraisal Process, each step in the process is crucialand is arranged logically. The process as shown below is somewhat idealized. Manyorganizations make every effort to approximate the ideal process, resulting in first-rateappraisal systems. Unfortunately, many others fail to consider one or more of the stepsand, therefore, have less-effective appraisal system. 1. Objectives of Appraisal: 2. Establish job Expectation 3. Design Appraisal programme 4. Appraise performance 5. Performance review 6. Use appraisal Data for appropriate purposesLet us discuss each step in detail 1. Objectives of Appraisal: Objectives of appraisal, as stated above, include effecting promotions and transfers, assessing training needs, awarding pay increases, and the like. The emphasis in all these is to correct the problems. These objectives are appropriate as long as the approach in appraisal is individual. Appraisal, in future, would assume systems orientation .In the systems approach, the objectives of appraisal stretch beyond the traditional ones. In the systems approach, appraisal aims at improving the performance, instead of merely assessing it. Towards this end, appraisal system seeks to evaluate opportunity factors. Opportunity factors include the physical environment such a s noise, ventilation and lightings, available resources such as human and computer assistance; and social process such as leadership effectiveness. These opportunity variables are more important than individual abilities in determining work performance. 2. Establish Job Expectations: The second step in the appraisal process is to establish job expectations. This includes informing the employee what is expected of him or her on the job. Normally, a discussion is held with his or her superior to review the major duties contained in the job description. Individuals should not be expected to begin the job until they understand what is expected of them. 3. Design appraisal Programme:
Designing an appraisal programme poses several questions which nee answers. Theyare, i) Formal versus informal appraisal; ii) whose performance is to be assessed? Iii)Who are the raters? iv) What problems are encountered? V) How to solve theproblems? Vi) What should be evaluated? Vii) When to evaluate? Viii) Whatmethods of appraisal are to be used?Formal versus Informal Appraisal:The first step in designing an appraisal programme is to decide whether the appraisalshould be formal or informal. Formal appraisals usually occur at specified timeperiods- once or twice a year. Formal appraisals are most often required by theorganization for the purpose of employee evaluation. Informal performance appraisalcan occur whenever the supervisor feels the need for communication. For example, ifthe employee has been consistently meeting or executing standards, and informalappraisal may be in order to simply recognize this fact. Discussions can take to beensuring that the discussion in held in private.Many organizations encourage a mixture of both formal and informal appraisals. Theformal appraisal is most often used as primary evaluation. However, the informalappraisal is very helpful for more performance feedback. Informal appraisals shouldnot take the place of formal performance evaluation.Appraisee performance and performance review:Answering the following questions can look into these two aspects:Whose performance should be rated? To the question whose performance should be rated, the answer is obvious-employees. When we say employees, is it individuals or teams? Specifically, the rateemay be defined as the individual, work group, division, or organization. It is alsopossible to define the ratee at multiple levels. For example, under some conditions, itmay be desirable to appraise performance both at the work-group level for merit payincreases and at the individual level tosses training needs.Who are Raters?Raters can be immediate supervisors, specialists from the HR department,subordinates, peers, committees, clients, self-appraisals, or a combination of several.Immediate Supervisor is the fit candidate to appraise the performance of his or hersubordinates. There are three reasons in support of this choice. No one is morefamiliar with the subordinate’s performance than his or her superior. Another reasonis that the superior has the responsibility of managing a particular unit. When the taskof evaluating a subordinate a given to another person, the superior authority may beundermined seriously. Finally, training and development of subordinates is an
important element in every supervisor may be the logical choice to conduct theperformance evaluation.Subordinates can assess the performance of their superiors. The use of this choicemay be useful in assessing an employee’s ability to communication, delegate work,allocate resources, disseminate information, resolve intra-personal conflict, and dealwith employees on a fair basis. But the problem with subordinate evaluation is thatthe supervisors tend to become more popular, not effective leadership, but by meregimmicks.Peers are in a better position to evaluate certain facts of job performance that thesubordinates or supervisors cannot do. Such facts include contribution to workgroupprojects, interpersonal effectiveness, communication skills, reliability and initiative.Unfortunately, friendship or animosity may result in distortion of evaluation.Further, when reward allocation is based on peer evaluation, serious conflicts amongco-workers may develop. Finally all peers may join together to rate each other high.Although clients are seldom used for rating employee performance, nothing preventsand organization from using this source. Clients may be members within theorganization who have direct contact with the rate and make use of an output (goodand services) this employee provides. Interest, courtesy, dependability andinnovativeness are but few of the qualities for which clients can offer ratinginformation. Clients, external to the organization, can also offer similar kinds ofinformation.Where superiors, peers, subordinates and clients, make appraisal it is called the360-degree system of appraisal. First developed at General Electric, Us in 1992, thesystem has become popular in our country too. Most of the companies like GB(India), reliance Industries, crompton Greaves, Godrej soaps, Wipro, Infosys,Thurman and Thomas Cook etc are using the method with greater benefits.Many employers use rating committees to evaluate employees. These committees areoften composed of the employee’s immediate supervisor and three or four othersupervisors who come in contact with the employee. This choice is welcome when anemployee, in the course of his or her job, perform a variety of tasks in differentenvironments.In self-appraisal, the employee himself for herself evaluates his or her ownperformance. Indian Telephone industries (ITI), has been following the self-appraisalsystem for executives. Texas Instruments too ask their employees to prepare theirown appraisals. On the positive side, it may be stated that in self-appraisal there isand opportunity to participate in evaluation, particularly if Objectives or MBOcombines it) about this should improve the managers motivation.Problems of Rating:
Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as ‘rating errors’. These errors occur in the rater’s observation; judgment, information procession and can seriously affect assessment results. The most common rating errors are leniency or severity, central tendency, halo effect, rater effect, primacy and regency effects, perceptual set, performance dimension behaviour, spill over effect and status effect. Leniency or severity: Leniency or severity on the part of the rater makes the assessment a subjective. Subjective assessment defeats the very purpose of performance appraisal. Ratings are lenient for the following reasons. 1. The rater may feel that anyone under his jurisdiction who is reacted unfavorably will reflect poorly on his or her own worthiness. 2. He or she may feel that anyone who could have rated unfavorably has already been discharged from the organization. 3. He or she may feel that a derogatory rating will be revealed to the rate to the detriment of the relations between the rater and the rate. 4. He or she may be projecting 5. He or she may be feeling it necessary to always approve of others in order to gain approval for him or herself. 6. He or she may be operating on the premise,” whoever associate with me is meritorious, therefore i am meritorious:. 7. He or she may rate leniently because there exists, in culture, a response set to approve rather that disapprove.Central tendency:This occurs when employees are incorrectly rated near the average or middle of the scale.The attitude of the rater is to play safe. This safe-playing attitude stems from certaindoubts and anxieties are: 1. “Do I know the man sufficiently well to be able to give a fair assessment of him?” 2. If I rate the way I think I should, what will be its influence on his relations with me and on his performance in the future. Close to the error of central tendency is the problem of range restriction. Range restriction may involve clustering all employees around any point on a scale, often in combination with leniency errors at the very top. What is distinctive in the error of central tendency and the error of range restriction is failure to note real performance differences, either intentionally or due to insufficient attention. Halo error: A halo effect takes place when one aspect of an individual’s performance influences the evaluation of the entire performance of the individual, just ass the assessment of the performance of a s student in his or her examination being influenced by the
opening paragraph of every answer. If the introductory paragraph is poorly written,the chances of scoring high marks in that answer are diminished, however good thesubsequent portion of the essay may be.In an organization halo error occurs when an employee who works late constantlymight be related high on productivity and quality of output as well as on motivation.Similarly, an attractive or popular employee might be given a high overall rating.Rating employees separately on each of a number of performance measures andencouraging raters to guard against the halo effect are two ways to reduce the haloeffect.Rater effect: This includes favoritism, stereotyping, and hostility. Excessively high orlow scores are given only to certain individuals or groups based on the rater’s attitudetowards the rate, not on actual outcomes or behaviours. Sex, age, race and friendshipbiases are examples of this type of error.Primacy and Regency Effects:The rater’s ratings are heavily influenced either by behaviour exhibited by the rateduring the early stages of the review period (primacy) or by outcomes, or behaviorsexhibited by the ratee near the end of the review period (recently). For example, if asales person captures an important contractor/sale just before the completion of theappraisal, the timing of the incident may inflate his or her standing, even though theoverall performance of the sales-person may not have been encouraging. Like-wise, ablunder committed just before the appraisal period may diminish chances of securinga favorable rating, even if the overall performance is good.Perceptual set:This occurs when the rater’s assessment in influenced by previously held beliefs. Ifthe supervisor, for example, has a belief that employees hailing from one particularregion are intelligent and hard working, his subsequent rating of an employee hailingfrom that region tends to be favorably high.Performance Dimension Order:Two or more dimension on a performance instrument follow or closely follow eachother and both describe or rotate to a similar quality. The rater rates the firstdimension accurately and then rates the second dimension similar to the first becauseof their proximity. If the dimensions had been arranged in a significantly differentorder, the ratings might have been different.Spillover Effect:This refers to allowing past performance appraisal ratings to unjustifiably influencecurrent ratings. Past ratings, good or bad, result in similar rating for current periodalthough the demonstrated behaviour does not deserve the rating, good, or bad.
Status Effect:It refers to overrating of employees in higher-level job or jobs held in high esteem,and underrating employees in lower-level job or jobs held in low esteem.It is not the rater’s errors alone that are barriers to accurate and valid measurement ofemployee performance. Barriers lie deep within the genetic and acquired makeup ofall people concerned with performance appraisal. A wide variety of emotional,psychological, intellectual and any number of ways during the appraisal process tocompletely neutralize or nullify any programme designed to measure employeeperformance.Solving Rater’s problems:The best way to overcome the problems is to provide training to the raters. At HP, atwo-day training course is organized every year to prepare mangers to handleappraisals better. Not that training is a “cute-all” for all the ills of appraisal systems.From a practical point of view, several factors, including the extent to while pay isrelated to performance ratings, union pressure, turnover rates, time constraints and theneed to justify ratings may be more important than training, influencing the ratingsthey actually give. This means that improving rating systems involves not justtraining the raters but remedying outside factors. Such as union pressure. And itmeans that a rater training, to be effective, should also address real-life problems suchas the fact that union representatives will try to influence supervisors to rate everyonehigh.But training can help improve the appraisal system to extent of distortion that occursdue to the rater’s errors such as halo, leniency, central tendency and bias. In typicaltraining, raters are shown a videotape of jobs being performed and are asked to ratethe worker. Ratings made by each participant are then placed on a flip chart and thevarious errors are explained. For example, if a trainee is rated on all criteria (such asquantity and quality) about the same, the trainer might explain that halo error hadoccurred. If, on the other hand, a trainer rated all videotaped workers very high, thismight be explained as al iniency error. Typically, the trainer gives the correct ratingand then illustrates the rating errors made.What should be rated?One of the steps in designing an appraisal programme is to determine the evaluationcriteria .It is obvious that the criteria should be related to the job. The six criteria forassessing performance are:1. Quality: The degree to which the process or result of carrying out an activity approaches perfection in terms of either conforming to some ideal way of performing the activity, or fulfilling the activity’s intended purpose.
2. Quantity: The amount produced, expressed in monetary terms, number of units, or number of competed activity cycles.3. Timeliness: The degree to which an activity is completed or a result produced, at the earliest time desirable from the standpoints of both coordinating with the outputs of others and of maximizing the time available for other activities.4. Cost of Effectiveness: the degree to which the use of the organizations resources9e.g.human, monetary, technological and material) is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource.5. Need for supervision: The degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome.6. Interpersonal impact: The degree to which a performance promotes feeling of self-esteem, goodwill and cooperation among co-workers and subordinates.These criteria relate to past performance and behavior of an employee. There is alsothe need for assessing, as was pointed out earlier, the potential of an employee forfuture performance, particularly when the employee is tipped for assuming greaterresponsibilities.Timing of evaluation:How often should an employee be assessed? The general trend is to evaluate once inthree months, or six months, or once in a year. According to a survey conducted in1997 by Arthur Anderson, 70 per cent of the organizations conduct performanceappraisal once a year. Newly hired employees are rated more frequently that the olderones. Frequent assessment is better than phased evaluation. Feedback in the latter isdelayed and the advantages of timely remedial measures by the employee are lost.Frequent evaluation gives constant feedback to the rate, thus enabling him or her toimprove performance if there is any deficiency. The performance of trainees andprobationers should be evaluated at the end of respective programs.The methods of appraisal will be discussed in the next lesson.