THEORETICAL BACKGROUD INTRODUCTION The history of performance appraisal is quite brief. Its roots in theearly 20th century can be traced to Taylor’s pioneering Time and Motionstudies. But this is not very helpful, for the same may be said about almosteverything in the field of modern human resourced management. As a distinct and formal management procedure used in theevaluation of work performance, appraisal really dates from the time of theSecond World-War not more than 60 years ago. Yet in a broader sense, the practice of appraisal is a very ancient art.In the scale of things historical, it might well lay claim to being the world’ssecond oldest profession. Performance appraisal, two rather simple wordsthat often arouse a raft of strong reactions, emotions, and opinions whenbrought together in the organizational context of a formal appraisalprocedure. Most organizations throughout the world regardless of whetherthey are large or small, public or private, service or manufacturing, useperformance appraisal, with varying degrees of success, as a tool to achievea variety of human resource management objectives. DEFINITIONS: Performance appraisal as “an evaluation and grading exerciseundertaken by as organization on all its employees either periodically orannually, on the outcomes of performance based on the job requirementand personal behavior in the position” -Prof. Yong
“Performance appraisal is a systematic / periodic evaluation of anindividual / someone in position to observe his performance”. - RogerBello PERPOSE OF PERFORMANCE APPRAISAL 1. It assists in management for management of work force planning, for developing successive plans and for preparing training schedules. 2. To decide upon a pay increase where regular pay scales has not been fixed. 3. To effect promotion based on competence and performance of employees. 4. Relationships between management and subordinate are improved because of two way communication reinforced by regular appraisal interviews. 5. Appraisal enables the manager to identify the training needs. 6. Helps to strengthen weak areas. 7. To let the employees know where they stand so for as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.Performance AppraisalPerformance appraisal: It is the process of obtaining, analyzing andrecording information about the relative worth of an employee. The focusof the performance appraisal is measuring and improving the actualperformance of the employee and also the future potential of theemployee. Its aim is to measure what an employee does. This is necessaryto evaluate the contribution of the employee during the past year and to
provide feedback for improvement. Performance appraisal is also a vital todeciding the appropriate compensation decision. It also helps decide onpromotions and helps the supervisor determine the appropriate trainingthat may be necessary to enhance the employee performance. According to Flippo, a prominent personality in the field of Humanresources, "performance appraisal is the systematic, periodic and animpartial rating of an employee’s excellence in the matters pertaining to hispresent job and his potential for a better job". Performance appraisal is asystematic way of reviewing and assessing the performance of an employeeduring a given period of time and planning for his future.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. Helps to strengthen the relationship and communication between superior – subordinates and management – employees. To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future. To provide feedback to the employees regarding their past performance. Provide information to assist in the other personal decisions in the organization. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. To reduce the grievances of the employees.Performance evaluation also helps build confidence as the employee has anopportunity to voice his opinions and his grievances to his superior. Theremust be number of methods of performance appraisal. No single methodcan be considered ideal in all circumstances. This method of performanceappraisal can be broadly classified into two categories: traditional andmodern methods.Traditional methods are the relatively older methods of performanceappraisal. These methods are based on the studying the personal qualitiesof the employees. These may include knowledge, initiative, loyalty,leadership and judgment.KEY BENEFITS OF PERFORMANCE MANAGEMENTPM FOCUSES ON RESULTS, RATHER THAN BEHAVIORS AND ACTIVITIES A common misconception among supervisors is that behaviors andactivities are the same as results. Thus, an employee may appearextremely busy, but mot be contributing at all toward the goals of theorganization. An example is the employee who manually reviewscompletion of every form and procedure, rather than supportingautomation of the review. The supervisor may conclude the employee isvery committed to the organization and works very hard, thus, deserving avery high performance rating.
ALIGNS ORGANIZATIONAL ACTIVITIES AND PRODESSES TO THE GOALS OFTHE ORGANIZATION: PM identifies organizational goals, results needed to achieve thosegoals, measures of effectiveness or efficiency (outcomes) toward the goals,and means (drivers) to achieve the goals. This chain of measurement isexamined to ensure alignment with overall results of the organization.CULTIVATES A SYSTEM-WIDE, LONG-TERM VIEW OF THE ORGANIZATION: An effective performance improvement process must follow asystems-based approach while looking at outcomes and drivers. Otherwise,the effort produces a flawed picture. For ex: laying off people will likelyproduce short-term profits. However, the organization may eventuallyexperience reduced productivity, resulting in long-term profit loss.PRODUCES MEANINGFUL MEASUREMENTS: These measurements have a wide variety of useful applications. Theyare useful in benchmarking, or setting standards for comparison with bestpractices in other organizations. They provide consistent basis forcomparison with best practices in other organizations. They provideconsistent basis for comparison during internal change efforts. Theyindicate results during improvement efforts, such as employee training,management development, quality programs, etc. they help ensureequitable and fair treatment to employees based on performance.
PERFORMANCE APPRAISAL FEEDBACK TOOLS: 1. Job Results / Outcome Though not an appraisal method per se, job results are in themselves a source of data that can be used to appraise performance. Typically, an employees results are compared against some objective standards of performance. This standard can be absolute or relative to the performance of others. 2. Essay Method: The essay method involves an evaluators written report appraising an employees performance, usually in terms of job behaviors or results. The subject of an essay appraisal is often justification of pay, promotion, or termination decisions, but essays can be used for developmental purposes as well. 3. Ranking: Ranking method compare one employee to another, resulting in an ordering of employees in relation to one another. Rankings often result in overall assessments of employees, rather than in specific judgments about a number of job components. 4. Forced 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.
5. Graphic Rating Scale: 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.6. Behavioral Checklist: Behavioral checklists are well suited to employee development because they focus on behavior and results, and use absolute rather comparative standards. An advantage of behavioral checklists is that evaluators are asked to describe rather than evaluate a subordinates behavior. For this reason, behavioral checklists may meet with less evaluator resistance than some other methods. An obvious disadvantage of behavioral checklists is that much time and money must be invested to contract the instrument.7. BARS – Behaviorally Anchored Rating Scales:There are 4 steps: *Listing of all the important dimensions of performance for a job or jobs. *Collection of critical incidents of effective and ineffective behavior. *Classification of effective and ineffective behaviors to appropriate performance dimensions. *Assignment of numerical values to each behavior within each dimension.
8. MBO – Management by objectives: MBO consist of six main steps: *Setting the organizations goals. *Setting of departmental goals. *Discussing and allocating department goals. *Defining expected results ( set individual goals ). *Performance review and measurement of results. *Providing feedback.The traditional methods are: Unstructured methods: In this method, the appraisal process does not follow any specific structure. It is based on the description of the employee by the superior. The unstructured nature of this method makes this extremely subjective. Straight ranking method: In this method, the superior is asked to rate all the employee during a specific job from best to the poorest based on specification criteria. While it is easy to select the best and the worst employee, selection of employees who are mediocre is difficult. This model also suffers from subjectivity. Paired comparison method: The paired comparison method involves comparing each employee with every other employee in the group. Based on the comparison a ranking system is developed. This ranking system is considered more reliable as it is based on systematic method of comparison and evaluation. Man to man analysis: In this method, the performance of the employee is based on certain factors that are selected. The factors can include
initiative, leadership etc. a scale is developed for each factor and eachindividual is evaluated according to the scale. However, there isconsiderable difficulty in developing a scale.Grading method: In this method, the performance of the employee aredetermined in advance and defined as categories. The categories can beGrade ‘A’ for an outstanding performance, Grade ‘B’ for excellentperformance; ‘C’ can be for average and ‘D’ for poor etc.Checklist method: In this method a checklist consisting of objectivestatement in prepared such as; 1. Is the worker regular at work 2. Does the employee command respect among his subordinates 3. Is the employee helpful to his peersQuestions such as these are used in rating: The superior has to say ‘yes’or ‘no’ to each question. The difficulty lies in this method lies inconstructing such a checklist.Critical incidents method: This method uses critical incidents such asaccidents, major lapses on the employee to rate his performanceField review method: In this method a human resource specialistconducts the appraisal by asking a series of questions about employee tothe superior. After the session in over the specialist makes notes basedon his interaction with his superiors. These notes are approved by thespecialist and are placed in the employee’s file.Confidential report: This method involves preparation of a confidentialreport by the supervisor on the employee’s performance. Thedisadvantage of this method is the obvious subjectivity and secrecywhich results in low credibility of these methods.
Forced Distribution method: Under this system it is assumed that it ispossible and desirable to rate only two factors viz. job performance andpromotability. For this purpose, a fine point performance scale is usedwithout any statement. Employees are placed between the twoextremes of ‘good’ and ‘bad’ job performance. This forced distributionmethod assumes that of the total personnel. Certain percentage of therate is distributed in the five grades. In addition to job performance,employees are rated for promotability.A three point scale is often used for this purpose Very likely promotional material May or may not be promotional material Very unlikely to be promotional material Checklist Method Under this method, the rater does not evaluate employee performance. He supplies report about it and the personnel department does the final rating. A series of questions are presented concerning an employee on his behavior. The rater, then checks to indicate if the answer to the question about an employee is positive or negative. The value of each question may be weighted equally or certain question may be weighted more heavily than others may. Free Essay Method: Under this method, the supervisor makes a free form, open ended appraisal of an employee in his own words and put down his impression about the employee. The description always as factual and concrete as possible no attempt is made. Evaluation is done of an employee in a quantitative manner.
Group Appraisal Method Under this method, employees are rated by an appraisal group. Consisting of their supervisor and three or four other supervisors, who have some knowledge of their performance. The group discuss the standard of performance for a job and the actual performance of the jobholder; the cause of their particular level of performance and offers suggestion for future improvements. Modern methods: Modern methods were devised to improve upon the traditional methods. Modern methods attempt to remove the shortcomings of the old methods such as subjectivity, bias etc.Some of the modern methods are: BARS (Behaviorally anchored rating scales): In this system scales are devised based on aspects of the employees’ behavior. The superior is asked to rate the performance of the employees on the bases of these scales. MBO: MBO stands for management by objectives. MBO appraisals are based on predetermined objectives which are decided and agreed upon by the superior and the employee. It is a process of goal setting and feedback. This process introduces greater objectivity in the evaluation process. The employee is aware of what is expected of him and is able to focus attention towards the goals. Psychological appraisal: These appraisal involves assessment of the intellectual abilities, emotional stability, reason and analytical skills, sociability etc. these methods can be useful when talking decision about placement of employees, development and training 360 degree feedback: this method enables the employee to receive feedback from the superior, his peers and his subordinates. This
feedback provides information about the skills and behavior of an individual. The information is based assessment from different angles and is more objective Assessment Center Method: Under this method, many evaluators jointly judge employee performance is several simulated situations with the use of a variety of criteria. The assessment is done with the help of a couple of employees to measure interpersonal skills, interpersonal competence, planning and organizing ability stress resistance and communication skills, with the aim of selecting employees for supervisory positions. The most important features of this method are job related simulationsIMPORTANCE OF APPRAISAL SYSTEM IN POLYHYDRON Performance appraisal is mainly applied in the organization so as toappraise the employee performance, try to understand his needs anddifficulties and help to overcome them. This is one of the best ways to knowthe employee in the organization. Thus Polyhydron Pvt. Ltd. has stronglyadopted this system to appraise the employees. A different methodology isapplied in this case where the appraisal system is connected with theincrement provided to the employee in the firm. According to this appraisal system the employee is evaluated to knowhis efficiency level and his contribution to the organization and incrementsare given according to his efficiency. It means that a highly efficient personis paid high increments and the employee who performs low is given theminimum increment which is set by Government of Karnataka. Theincrement for labor depends on the percentage increase per year. Full
increment is given to key person who contributes maximum to theorganization; the person who is considered to be above average person, heis provided with an increment of 3/4th of full increment; the person who isconsidered to be average person, he is provided with 1/2 of full increment;the person who is considered to be below average person gets the leastwith 1/4th of full increment. Therefore a key person who has lessexperience and fewer wages per hour may get more increments than anemployee with experience and having more wages per hour. From the increment given we can see that one who performs highgets more increment than the minimum. As we have see, the employeecategory is divided into four groups of below average, average, aboveaverage and key person. The person who does not perform at all comesunder employee who is termed as below average and thus he is providedwith least increment. This provision of minimum wages is very important toappraise the employee under this category. The person coming under thiscategory is very greedy and works only to obtain things which comforts himand is also greedy towards money. Thus to get more increment he will tryto appraise himself.The time he achieves or attains a higher level he will not only find change inhim but also we can see that he will set principles for himself and also willimprove in nature, character and work. Therefore he moves from darknesstowards light, from unprincipled person to principled person. Thus we cansee changes in many aspects like attitude, work and values. The people coming under below average have to strive lot to improvethemselves whereas an average person need not strive as much as belowaverage person does. Similarly it is applied for above average person who
may not require much effort to be a key person. Therefore in this process ofappraising employees will help them to lead a quality life and grow theirpersonal values too. This difference can also be seen in the work theyperform in the organization which is noticeable and be measured. The wages per hour of the employee goes on increasing as and whenthe employee provides more years of service to the organization. Thereforeit means that as the year passes and the status of the employee movesfrom trainee to probation to confirmation, the wages increase accordingly.Thus appraisal system is applied for the people who earn wages abovecertain level of Rs 14 per hour. From the calculations done, the increment isminimum up to certain level even though the person is found to be a keyperson. This mainly happens with the employee who is earning very lesswages and it is as low as Rs 12/hr, Rs 13/hr, Rs 14/hr, Rs 16/hr and Rs 17/hr.This mainly occurs since the person earning these wages is non SSLC or aSSLC student and he requires time for his personality development and alsoit is obtained from calculations done. Therefore increments will be seenincreasing after certain level which also means that as the employeedevelops, he becomes more and more eligible to get an increasedincrement.
SIGNIFICANCE OF PERFORMANCE APPRAISAL Performance management systems provide an in-depth look at anorganizations overall performance in several different areas. Three mainreasons for utilizing this system are motivating employees to perform,fostering ethics in administrative action and defining organizational goals. Increased Motivation to Perform: When an employee receives quality feedback about his performance,he can develop and increase his skills over time. This can provide anincreased sense of confidence, which is necessary to performing well. Beingrecognized and valued is a basic human need, so it is critical to an effectiveperformance management system. Ethical Administrative Actions: Administrative actions include promotions, raises, terminations andtransfers. It is important to make sure that such decisions are handled inthe most ethical way possible. Performance management systems canprovide accurate information about the companys performance to reducethe amount of administrative errors and increase trust and productivity. Well-Defined Organizational Goals:Goals are made clearer due to the understanding of how the employeesjob relates to the organizations overall success. Performance managementsystems clearly define and communicate each employees role to make surethat all employees conform to what the organization wants to accomplish.This helps create goals that are both well-designed and realistic