Performance appraisal

Hey Chris, what happened?
Why are you so tense?
Michael, I am hoping I get the
promotion to the Senior
Manager position that has
opened in my department.

Of Course! You will! Why not?
Who knows?
Maybe they would choose Tom
instead.

Why him of all the people?
It’s just that he is so good at
impressing people.
He is forever being sweet and
nice and doing sweet talking.

Yes, that’s true.
But, he doesn’t have anything
to show as far as work goes.
You’re the best!
I hope they remember that he
just sweet talks.
I just hope they see that I am
the one who has brought them
their best projects.

Of Course! They will!
Did you forget ‘Performance
Appraisals’?
Oh yes! Now, I am feeling a lot
better hearing that!

What is Michael talking about?
Why is Chris feeling better hearing about
‘Performance Appraisals’?

› What is performance appraisal
› Purpose of performance appraisal
› Goals and work efforts
› Performance criteria
› Steps in performance appraisal process
› Who should do the appraising
› Various methods of performance appraisal
› Importance of appraisal interview
› Requirements of an effective appraisal system
› Errors of performance appraisal

‘Performance Appraisals’
will help Chris’s
management to record
and measure the
performance of each of
its employees.

When the decision of
choosing the new Senior
Manager has to be taken,
they can rely on the
results of the
‘Performance Appraisals’
to choose the most
suitable candidate

Performance Appraisal (PA) is the process
that is used to evaluate
Personality
Performance &
Potential
of employees

Performance Appraisal (PA) It is a process of
Evaluating & Communicating
to an employee how he or she is
Performing the job
and
Establishing an Improvement
Plan
for of employees

Purpose of Performance Appraisal –
For Employee
1. Offering direction
2. Giving feedback about their performance
3. Providing inputs for improvement
4. Offering motivation for future level of effort and task
direction
5. Clarifying task perception of the employee
6. Helping to identify employee’s strengths and weaknesses
7. Providing coaching, counselling, career planning to
subordinates
8. Helping to achieve work satisfaction
9. Helping in personal development

Purpose of Performance Appraisal
For the Organization/Management
1. Ensures proper documentation of performance
2. Assessment of employee potential and performance
3. Helps to identify employee’s strengths and weaknesses
4. For decisions relating to promotions, firings, layoffs, and merit
pay increases
5. Provides input for training and development needs
6. Input to validation of selection procedures
8. Input to human resource planning
9. To take measures for employee improvement
10.Helps to focus employees’ efforts to achieve company’s strategic
goals

Defining Goals and Work Efforts
› The main purpose of any
organization is to make
sure that all the employees
work towards the strategic
goal of the company.
› For this purpose, it is
crucial that the company
should define well-defined
and clear goals and work
efforts to each employee.

Performance Criteria
Performance Criteria helps to translate
job requirements
into levels of acceptable or
unacceptable
employee
behavior

Performance Criteria
It is essential to define
‘Performance Criteria’ for
conducting a performance
appraisal

Cont. …
› Performance criteria play a critical role in the job analysis-
performance appraisal linkage.
› It is critical to define performance criteria as it is important
to have a standard by which to compare “good” behavior.
› ‘Predictors’ are what a company looks for in an individual
while hiring and ‘criteria’ is the “evidence” of a good
employee
› It is important to note here that there is always a gap
observed between the theoretical (ideal criteria) versus the
actual criteria

Anticipate & Consider
• Problems in Performance
Appraisal
• Effective Performance Appraisal
System
Management Support
• Coaching
• Training and Development
Plan the Performance
• Identify & Communicate
Performance Goals
• Establish Performance Criteria
Determine
• Appraisal Period and Methods
• Responsibilities for Appraisal
Examine Work Performed
Appraise the Results
Conduct Appraisal
Interview
• Discuss Goals for next Period
Setting &
Communicating
Performance Standards
Measuring Standards
Comparing Standards
Discussing Results
Taking Corrective
Standards

Who Should Do the Appraising?
› Generally, the supervisor or the reporting manager is the
best person to observe and evaluate subordinate’s
performance and is also responsible for that person’s
performance
› Relying solely on supervisor’s ratings is not always advisable
› This is due to the fact that an immediate supervisor may be
biased for or against the employee
› It is essential that the appraisal may be done by some other
person or people

360 Degree Feedback
› A few of the suitable people who
can carry out the appraisals are
as follows:
› In 360 Degree Feedback, all of
the above listed people carry out
the appraisal
360-
Degree
Feedback
Immediate
supervisor
Peers
Rating
committee
s
Self-
ratings
Sub-
ordinates

Performance Appraisal Methods
› There are many formats or methods that are used to
measure whether the performance criteria is met or not.
› Some of the methods used for performance appraisal are as
follows:

Performance Appraisal Methods
1. Critical Incidents
2. Graphic Rating Scale
3. Behaviourally Anchored Rating Scales (BARS)
4. Management by Objectives (MBO)
5. Multi-Rater Assessment or 360 Degree Feedback
6. Essay Appraisal
7. Checklist
8. Forced-Choice Rating
9. Ranking Methods
10. Alternation Ranking
11. Paired Comparison Ranking
12. Forced Distribution

Critical Incidents
Description
› In this method, the supervisor focuses on specific or critical
behaviours that help him to differentiate effective from
ineffective performance.
› A few examples of critical incidents may be when the
employee;
1. Refuses to accept instructions
2. Refuses to help fellow employees
3. Has low performance in difficult tasks

Cont. …
Methodology
› The rater has to keep a written record of incidents involving
job behaviours that illustrate both positive and negative
employee behaviours.
› He then uses these records of incidents as a basis for
evaluating the employee’s performance.

Cont. …
› Advantages
1. It ensures that the supervisor thinks about the subordinate’s
appraisal all during the year.
› Disadvantages
1. It requires the rater to jot down incidents regularly, which can be
burdensome and time-consuming.
2. It is difficult to clearly define a ‘critical incident’ and hence, it may be
interpreted in different ways by different people.
3. It may lead to the employee’s perception of the manager that the
manager is keeping a “book” on him.

Graphic Rating Scale
Description
› This method uses a scale that lists a number of traits and a
range of performance for each that is used to identify the
score that best describes an employee’s level of performance
for each trait.
› The rating scales include both numerical ranges and written
descriptions.

Cont. …
Methodology:
› The rater is required to indicate on a scale where the
employee rates on factors such as
1. Productivity
2. Quality of work
3. Dependability
4. Job knowledge
5. Cooperativeness

Cont. …
› Advantages
1. It is easy to use.
2. It is very easy to complete.
3. It is relatively low cost.
› Disadvantages
1. It focuses more on the person instead of on performance.
2. The raters may not be able to interpret written descriptions in the
same manner due to their differences in background, experience,
and personality.
3. The categories chosen for rating may have little relationship to job
performance.

Behaviourally
Anchored Rating
Scales (BARS)

Behaviourally Anchored Rating Scales
(BARS)
› Behaviourally Anchored Rating Scales (BARS) is an appraisal
method that combines the benefits of narrative critical
incidents and quantitative ratings.
› This is done by using a quantified scale with specific
narrative examples of good and poor performance.
› In this method the supervisor rates employees according to
items on a numerical scale.

(BARS)
› BARS helps to overcome errors in performance appraisals
that occur while using a graphic rating scale
› It helps to determine an employee’s level of performance
based on whether or not certain specifically described job
behaviours are present.
› BARS focuses on functional behaviours demonstrated on the
job rather than on performance outcomes.
› It is assumed that these functional behaviours will result in
effective job performance.

(BARS)
Few terms associated with this method are:
› Job dimensions:
– This means the broad categories of duties and responsibilities that
make up a job.
– Each job is likely to have several job dimensions, and separate scales
must be developed for each.
› Scale values:
– This defines the specific categories of performance.
› Anchors:
– These are the specific written statements of actual behaviours that,
when exhibited on the job, indicate the level of performance on the
scale opposite that particular anchor

(BARS)
BARS are normally developed using the following steps:
› Step 1: Generate critical incidents:
– Job experts specify effective and ineffective job-related behaviors.
› Step 2: Develop performance dimensions:
– Experts group incidents into clusters
› Step 3: Reallocate incidents:
– Different experts group incidents into same clusters. They retain similar
incidents that are assigned twice
› Step 4: Scale the incidents:
– Incidents are arranged from effective to ineffective behaviour
› Step 5: Develop final instrument:
– There are 6-7 incidents used as behavioural anchors for each
performance dimension

(BARS)
› The method of using BARS for performing appraisal is as
follows:
– Rater should first read list of anchors on each scale to find the group
of anchors that best describe the employee’s job behaviour during the
period being reviewed
– Rater then selects and checks the scale value opposite the group of
anchors. This process is followed for all the identified dimensions of
the job
– Total evaluation combines the scale values checked for all job
dimensions

(BARS)
› Advantages
1. It is a relatively more accurate method of measure.
2. It has very clear defined standards.
3. It helps in providing specific constructive feedback to employees.
4. It is independent of dimensions.
5. It is a consistent method.
6. It is developed through active participation of both managers and
job incumbents.
7. It has a greater chance of acceptance as both managers and
incumbents are involved in its development
› Disadvantages
1. It takes considerable time and commitment to develop.
2. There are separate forms that have to be developed for different
jobs

Management
by Objectives
(MBO)

Management by Objectives (MBO)
Description
› Management by Objectives (MBO) method involves setting
specific measurable goals with each employee and then
periodically reviewing the progress made.

Cont. …
› In this method quantitative measures such as sales, profits,
zero-defect units produced are aligned with the objectives
› MBO evaluates how well an employee has accomplished
objectives determined to be critical in job performance.
› It is generally used with professional and managerial
employees.

Cont. …
Methodology:
The following are the steps to be followed in MBO:
1. Set the organization’s goals
2. Set departmental goals
3. Discuss departmental goals
4. Define expected results
5. Conduct performance reviews and measure the results
6. Provide feedback

Cont. …
Advantages
1. It sets objectives that are quantifiable and measurable.
2. It includes the employee participation in objective-setting
process.
3. It also involves employee’s active participation in developing
the action plan.
4. It provides an opportunity for manager and employee to
discuss progress and modify objectives when necessary
Disadvantages
1. It is time consuming.
2. It may result in a tug-of-war or to and fro discussions
between manager and employee for setting the objectives,
action plan etc.

Multi-Rater
Assessment or 360
Degree Feedback

Multi-Rater Assessment or 360 Degree
Feedback
Description
› This method employs a multi-source feedback method which
provides a comprehensive perspective of employee
performance by utilizing feedback from the full circle of
people with whom the employee interacts:
1. Supervisors
2. Subordinates
3. Co-workers

Cont. …
Methodology
› There is a specific questionnaire that should be completed by
employee being assessed and his;
1. Managers
2. Peers
3. Customers
4. Suppliers
5. Colleagues
› The HR department provides results to the employee.
› The results help the employee to understand how his opinion
differs from those of the group doing the assessment

Cont. …
› Advantages
1. It is effective for career coaching.
2. It helps to identify the employees’ strengths and weaknesses.
› Disadvantages
1. The questionnaires are generally lengthy.
2. The amount of paperwork involved is extremely large due to the
involvement of multiple people in the appraisal process of a single
individual.

Essay Appraisal
Description
› In this method a rater prepares a written statement
describing an individual’s strengths, weaknesses, and past
performance.
› The evaluation of the employee’s performance is described in
a written narrative form

Cont. …
Methodology
› Generally, the topics to be covered in the statement are
given to the rater.
› A few examples of typical essay appraisal questions may be
such as:
– “Describe, in your own words, this employee’s performance, including
quantity and quality of work, job knowledge, and ability to get along
with other employees.”
– “What are the employee’s strengths and weaknesses?”

Cont. …
› Advantages
1. The advantage of this method is that it is a great method for
providing specific feedback if evaluator is a good writer
› Disadvantages
1. The length and content of the essay may vary considerably
depending on rater.
2. Essay appraisals are difficult to compare.
3. The appraisal may be affected by the writing skills of the appraiser

Checklist
Description
› In this method, the rater answers a series of questions about
the behaviour of the employee with a yes-or-no

Cont. …
Methodology
› A checklist can also assign varying weights to each question
› Generally, the scoring key for the checklist method is kept by
the HR department and the evaluator is generally not aware
of weights associated with each question

Cont. …
› Advantages
1. It is easy to use.
2. It is less time consuming
› Disadvantages
1. There is a chance of biased appraisals as the raters can see positive
or negative connotation of each question.
2. It is required to develop separate listing of questions for each job
category.
3. The checklist questions may have different meanings for different
raters

Forced-Choice Rating
Description
› This method requires that a rater has to rank a set of
statements.

Cont. …
Methodology
› These statements describe how an employee carries out the
duties and responsibilities of the job.
› The statements are normally weighted and the rater usually
does not know the weights.
› After all the forced-choice statements are ranked by the
rater, the HR department applies weights and computes a
score.

Cont. …
› Advantages
1. It is a relatively low cost method
2. It is easy to use
› Disadvantages
1. It is difficult to explain the results of forced-choice appraisal to
employees.
2. It may irritate the raters as they feel that they are not being trusted
with the weights associated with the questions

Ranking Methods
› In Ranking Method, the performance of an employee is
ranked relative to the performance of others.
› There are three commonly used ranking methods, which are
:
1. Alternation Ranking
2. Paired comparison
3. Forced distribution

Alternation Ranking
Description
› Employees are ranked from best to worst on a particular
trait, choosing highest, then lowest, until all are ranked

Cont. …
Methodology
› The following steps are performed for ranking the
employees:
1. The names of employees to be rated are listed on the left side of a
sheet of paper
2. The most valuable employee on the list is chosen by the rater. He
then crosses that name off the left-hand list, and puts it at the top of
the column on the right-hand side of the paper
3. The rater then selects and crosses off name of least valuable
employee from left-hand column. He puts this name at the bottom of
right-hand column
4. This process is repeated by the rater for all names on the left-hand
side of the paper
5. The resulting list of names in right-hand column gives a ranking of
employees from most to least valuable

Paired Comparison Ranking
Description
› This method involves ranking employees by making a chart
of all possible pairs of the employees for each trait and
indicating who the better employee of the pair is.
› Thus, on each and every trait, every subordinate to be rated
is paired with and compared to every other subordinate

Cont. …
Methodology
› The following steps are performed for ranking the employees:
1. Suppose a rater is to evaluate seven employees. The names of these
employees are listed on the left side of a sheet of paper
2. The rater then compares first employee with second employee on a
chosen performance criterion, such as quantity of work
3. If he believes the first employee has produced more work than second
employee, a check mark is placed beside the first employee’s name
4. Then, the rater compares the first employee to the third, fourth, fifth,
sixth and seventh employee on the same performance criterion. Again a
check mark is placed beside the name of employee who produced most
work in each paired comparison
5. This process is repeated until each employee has been compared to
every other employee on all of the chosen performance criteria
6. The employee with most check marks is considered to be best performer
7. The employee with fewest check marks is lowest performer

Forced Distribution
Description
› This method requires that the rater compares performance
of employees and places a certain percentage of employees
at various performance levels.
› Here, it is assumed that the performance level in a group of
employees will be distributed according to a bell-shaped, or
“normal” curve

Cont. …
Methodology
› This ranking method is unique from other methods because
here one employee’s performance evaluation is a function of
performance of other employees in the job
› The major drawback of this method is that for small groups
of employees, a bell-shaped distribution of performance may
not be applicable
› Also, a normal curve is probably not a perfect curve; hence,
this implies that some employees are probably not rated
accurately

Cont. …
› An example of a force distribution result is:
1. 10% high performers
2. 25% high-average performers
3. 40% average performers
4. 10% low-average performers
5. 15% low performers

Importance of Appraisal Interview
› Depending upon the type of appraisal of the employee, there
are three types of appraisal interview scenario that can arise
such as:
Performance is
satisfactory; employee
is not promotable
Performance is
unsatisfactory, but
correctable
Performance is
satisfactory; employee is
promotable

Cont. …
› There are a few key points that an appraiser should keep in
mind for conducting an appraisal interview, such as:
1. He should be direct and specific
2. He should never get personal
3. He should encourage the employee to talk as well
4. He should develop an action plan from the information gathered

There are certain cases, where an
employee may be
highly resentful of
their appraisal
results

Cont. …
› The following are a few things that an appraiser should keep
in mind while handling a defensive employee:
1. Defensive behaviour is normal
2. Never attack a person’s defences
3. Understand the need to postpone action
4. Empathize and understand human limitations

Requirements of an Effective Appraisal
System
› There are various components that help to make up an
effective appraisal system.
› The components of an effective performance management
process are as follows:

Cont. …
1. Role clarification:
– The employee as well as the organization should be clear about the
role and responsibilities of each individual in the organization.
2. Standardization:
– The whole performance management process should be standardized
to maintain consistency between all appraisals from one time to the
other.
– Standardization helps to bring the appraisals carried out across
different periods and allows for comparison between them.
3. Specific objectives:
– Each individual’s performance should be measured against specific
laid out objectives which are clear and not vague

Cont. …
4. Developmental goal setting:
– The goals set for each employee should not only look at the present
needs of the individual’s career and the organization’s goals, they
should also be developmental. Such developmental goals will help the
individual to grow in his career and also simultaneously benefit the
company as well.
5. Goal alignment:
– The goals set for each employee should be in direct alignment to the
company’s strategic goals and company’s vision and mission.
6. Documentation:
– The entire performance appraisal should be stringently documented
at various stages including the review, feedback comments, employee
comments etc.

Cont. …
7. Ongoing feedback:
– Continuous performance monitoring helps the organization to provide
ongoing feedback about the individual’s performance and help
improve the performance and bring it in line with the individual’s
goals.
8. Coaching and support:
– Any kind of gaps found in the individual’s job-related knowledge or
performance can be filled by providing coaching and support in the
form of trainings.
9. Ongoing performance monitoring:
– Each individual’s performance should be continuously monitored at
regular intervals by holding performance appraisals at least once or
twice before the annual appraisals. Such appraisals help to get a fair
idea about the progress that the individual is making.

Cont. …
10.Continuous open communication:
– An open communication should be encouraged between the
employees and the management with respect to the appraisal process
as well as any other concerns or suggestion that the employees may
have
11.Trained appraisers:
– The appraisers should be diligently trained in the performance
appraisal process to help them overcome the errors caused in
appraisals
12.Accuracy of the ratings:
– Each performance management system should aim to gather
accurate information about the performance of the employees by
ensuring that the individual’s performance is accurately rated.

Cont. …
13.Reliability:
– The design of the appraisal process should be such that it should give
reliable results that help the management to make the correct
decisions
14.Mutual trust and confidence:
– There should be an air of mutual trust and confidence between the
employees and the management which will ensure that both
understand that each one is working for the other’s benefit and in
other’s favor.
15.Rewards, recognition and compensation:
– Employees should be appropriately rewarded, recognized and
compensated for efforts put in by them in the growth of the company

Cont. …
16.Quality of the rating form:
– The sections of the rating form should be targeted towards rating the
individual on various specific areas and parameters.
17.Review and appeals:
– There should be clearly laid out protocol to accommodate any kind of
individual appeals to the appraisals conducted and review the ratings
given.
18.Post appraisal interview:
– There should be a post appraisal interview conducted to gather
feedback from the employees about the appraisal process as a whole
as well as discuss the individual’s appraisal related concerns and
queries

Factors Influencing Success or Failure of
Performance Appraisals
1. The employees should be allowed to participate more in the
appraisal process as:
a) It will help him to be more satisfied with the appraisal interview.
b) It will help him be more satisfied with the manager.
c) It will make him more likely to accept and meet performance
improvement objectives.
2. A manager should use positive motivational techniques to
keep the employee happy and satisfied with appraisal
interview and with manager.
3. Manager and employee should both participate in mutually
setting specific performance improvement objectives. This
will result in better performance than when managers use a
general discussion or criticism.

Cont. …
4. Manager’s should focus on discussing and then providing
solutions to problems that hamper employee’s current job
performance .
5. Both manager and employee should employ more thought
and preparation before the appraisal interview, which will
lead to greater benefits of the appraisal.
6. The appraisal will be more beneficial if the employee
perceives that performance appraisal results are tied to
organizational rewards.

Sources of Errors in Performance
Appraisals
› There are different ways in which the rating given by the
appraiser to the employee may be prone to error
› Such false ratings and various other errors may adversely
affect the data collected during performance appraisals

Appraisals
1. Unclear Standards
2. Halo Effect
3. Personal preferences,
prejudices, and biases
4. Discrimination
5. First Impressions
6. Central Tendency
7. Leniency/Strictness
8. Recency Effect
9. Actor-observer bias
10.Stereotyping

Appraisals
– If the goals and standards set
are not clear to the appraiser,
then the appraisal may get
affected
2. Halo Effect
4. Discrimination
6. Central Tendency
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
– This occurs when an appraiser
allows a single prominent
characteristic of an employee
to influence his judgment on
each separate item in the
performance appraisal.
– It results in employee receiving
approximately same rating on
every item
4. Discrimination
6. Central Tendency
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
– An appraiser’s personal
preferences, prejudices, and
biases can also cause errors in
performance appraisals.
– Managers with biases or
prejudices tend to look for
employee behaviours that
conform to their biases
4. Discrimination
6. Central Tendency
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
– Employee’s appearance,
social status, dress, race,
and sex can also influence
an appraiser’s objective
performance appraisal
6. Central Tendency
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
– Appraiser may allow first
impressions to influence
later judgments of an
employee.
– People tend to retain these
impressions even when
faced with contradictory
evidence
6. Central Tendency
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
6. Central Tendency
– Tendency of an appraiser to
rate most employees’
performance near the middle
of the performance scale
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
6. Central Tendency
– Leniency occurs when
appraiser’s ratings are grouped
at the positive end instead of
being spread throughout the
performance scale.
– Strictness on the other hand will
group the ratings towards the
lower end of the scale instead of
being spread throughout the
performance scale.
8. Recency Effect
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
6. Central Tendency
8. Recency Effect
– Tendency of an appraiser to
evaluate employees on work
performed most recently,
usually one or two months
prior to evaluation
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
6. Central Tendency
8. Recency Effect
– This occurs due to the
fundamental attribution error.
– Actor “blames” environment
for failures and credits self
for successes.
– Observer does the opposite
10.Stereotyping

Appraisals
2. Halo Effect
4. Discrimination
6. Central Tendency
8. Recency Effect
10.Stereotyping
– The appraiser may have
certain stereotype mind set
about certain people and
may rate and judge the
person based on such
stereotypes

Overcoming Errors in Performance
Appraisals
› There are several efforts that can be made to overcome the
errors that occur in performance appraisals t;
– Remove the errors
– Reduce the errors to the minimum
› Some of the ways to overcome errors are:

Cont. …
1. To make refinements in the design of appraisal methods.
2. To improve the rating skills of appraisers.
3. Use the forced-distribution method of performance appraisal to overcome
errors of leniency and central tendency
4. To refine appraisal instruments
5. To train the evaluators to observe behaviour more accurately and judge it
more fairly
6. To help improve appraiser’s communication skills necessary to provide
feedback to employee
7. To emphasize importance of appraiser’s role in total appraisal process
8. Appraisers should be made aware of the performance appraisal method(s)
used by company
9. Use Behaviourally anchored rating scales which are designed to reduce halo,
leniency, and central tendency errors. These rating scales provide appraisers
with specific examples of performance against which to evaluate

Guidelines For Appraisals
The following are a few guidelines to be followed for an on
overall effective performance management:
1. The standards should be clearly communicated to
employees in advance, and should be job related.
2. Understand that standards are responsive to actual worker
behaviour or effort.
3. Appraisal criteria should be consistently applied across all
employees.
4. It is important to appraise both, the activities performed
and results achieved.
5. The acceptable and unacceptable results should be clearly
identified.

Cont. …
6. The work performance should be consistently observed by
the raters.
7. Raters should be trained in appraisal and how to share
feedback results with employees.
8. It is essential that the feedback given is developmental and
is free from judgemental appraisal.
9. There should be a protocol in place in the appraisal process
for any kind of appeal to resolve judgemental or rating
disputes.

Contact us on;
ossama.motawae@eurekaeg.com
+201023985680

Performance appraisal

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