2. PA is the method of evaluating the
behaviour of the employees in the
workplace, normally including
both quantitative and qualitative
aspect of the job.
How the employee is performing
How the employee can develop
What the superior can do to make it
happen
How the job is going
What is Performance Appraisal
3. Performance Appraisal :Performance Appraisal :
Performance Appraisal (PA) refers
to all those procedures that are used
to evaluate the personality,
performance, potential, of its group
members
4. The system of basic HRM practicesThe system of basic HRM practices
Selection
Job Design /
Work organization
Performance Appraisal
Rewards /
Pay
Development
(Employer Branding)
(HR planning)
(Recruitment)
Training
Job rotation
Challenging Assignments
“Talent development”
Career planning & development
Succession planning
Evaluation
Feedback
Objective setting
(Outplacement)
Promotion
Employee
well-being
Requirements
Job Security
Corporate Social responsibility?
5. Performance AppraisalPerformance Appraisal
‘Higher-level’
strategies and
objectives
Evaluation of
period’s performance
& feedback
Agreeing on
performance
objectives
Deciding
on training and
development
plans
Performance-based
compensation
Career
Planning &
Counceling
SMART
GOALS
• Specific
• Measurable
• Agreed
• Realistic
• Timed
Key issues: Procedural and
distributive justice, focus &
effectiveness of incentives
6. Expectancy theory & Performance AppraisalExpectancy theory & Performance Appraisal
Expectancy Theory
Expectancy
“Goal can be
reached”
Instrumentality
”Behavior leads
to rewards”
Performance
Evaluation
Goal Setting
Valence
”Reward is
desired”
Motivation
Effort
Reward
Tangible &
Intangible
Performance appraisal
7. • Provide information about the performance ranks.
Decision regarding salary revision, confirmation,
promotion and demotions.
• Provide feedback about level of achievement and
behaviour of the subordinate.
• Provide information which helps to counsel the
employees.
• Provide information to diagnose the deficiency of
the employees.
• Provide training and development needs of the
WHY conduct a Performance
Appraisal
8. • The performance review must occur atleast
once in a year. Some companies review twice
in a year.
• However, as a part of Performance
Management, the performance review is a
continuing, ongoing activity.
WHEN to conduct a Performance
Appraisal
9. • Establish a more effective two way communication
• Set performance objectives
• Help improve current performance
• Assess past performance
• Provide feedback on performance
• Identify training & development needs
• Allocate rewards
• Identify staff with promotional possibilities
• Assist in career planning decisions
OBJECTIVES of Performance
Appraisal
10. CharacteristicsCharacteristics
• It is a step by step process
• It examine the employee strengths and
weaknesses
• Scientific and objective study
• Ongoing and continuous process
• Secure information for making correct
decisions on employees
11. Needs and Objectives:Needs and Objectives:
• Provide feedback about employees
• Provide database
• Diagnose the S & W of individuals
• Provide coaching, counseling, career planning
to subordinates
• Develop positive relation and reduce grievance
• Facilitates research in personnel management
12. • The Appraisee
• The Appraiser
• HR Department
WHO are involved in Performance
Appraisal
13. • Regularity of the
Attendance.
• Ability to work
individually or in group.
• Leadership skills.
• Initiative, Technical skills.
• Ability to grasp new things.
• Area of interest.
• Attitude.
• Job Knowledge.
Content of Performance Management
• Judgmental Skills.
• Area of improvement.
• Past Achievement.
• Honesty and sincerity.
• Innovativeness
• Cost & Time consciousness
• Communication
18. Steps in performanceSteps in performance
appraisalappraisal
Establishing job standards
Designing an appraisal programme
Appraise performance
Performance interview
Use appraisal data
For appropriate purpose
20. Issues in appraisal systemIssues in appraisal system
Appraisal Design?
Formal and informal
Whose performance?
Who are the raters?
What problems?
How to solve?
What to evaluate?
When to evaluate?
What methods?
21. What to evaluate? (Philip Model)What to evaluate? (Philip Model)
Problem
children
Planned
separation
stars
Social
citizen
H
L H
L
Potential
Performance
22. How PA contribute to firm’sHow PA contribute to firm’s
competitive advantagescompetitive advantages
Improving
performance
Making correct
decision
Ensuring legal
competence
Minimizing dissatisfaction
And turnover
Values and behavior
Competitive
advantage
23. Problems in performanceProblems in performance
appraisalappraisal
1. Errors In rating
– Halo effects
– Stereotyping
– Central tendency
– Constant error
– Personal bias
– Spill over effect
24. 2. Incompetence
3. Negative approach
4. Multiple objectives
5. Resistance
6. Lack of knowledge
Problems in performanceProblems in performance
appraisal (Cont’d)appraisal (Cont’d)
25. Essentials of an effective appraisalEssentials of an effective appraisal
systemsystem
• Mutual trust
• Clear objectives
• Standardizations
• Training
• Job relatedness
• Documentation
• Feedback and participation
• Individual differences
• Post appraisal review
• Review and appeal
26. DiscriminationDiscrimination
• Failure to communicate standards
• Failure to give timely feedback
• Failure to allow employees to correct
performance
• Inconsistency in measuring
performance
• Failure to document performance
objectively
27. Appraisal FormsAppraisal Forms
• Define performance expectations
• Describe measurement tools
• Use a rating system
• Cover specific examples
• Set measurable goals
29. Measure Performance (cont.)Measure Performance (cont.)
Systems can be:
• Numerical
• Textual
• Management by Objective (MBO)
• Behavior oriented
30. Document PerformanceDocument Performance
• Make sure documentation is objective
• Document performance of all
employees
• Provide complete and accurate
information
• Document performance on a regular
basis
31. Set Goals….Set Goals….
• Based on job requirements
• Realistic
• Measurable
• Observable
• Challenging
• Prioritized
32. EmployeeEmployee
InputInput
• Employees take an active role:
– Setting goals
– Designing action plans
– Identifying strengths and weaknesses
– Employees participate in the PA meeting
35. Start the MeetingStart the Meeting
• Lay out agenda
• Talk about money
• Encourage input
• Give good news
first
36. During the MeetingDuring the Meeting
Review performance:
• Based on previous goals
• Noting strengths and
accomplishments
• Identifying areas for improvement
37. Presentation TipsPresentation Tips
• Focus on the professional
• Give objective examples
• Invite response
• Listen actively
• Create “we” mentality
38. During the Meeting (cont.)During the Meeting (cont.)
• Set goals: Based on company goals
• Building on areas that need
improvement
39. End the MeetingEnd the Meeting
• Encourage good performance
• Lay out action plan
• Communicate outcome of goals not
met
• Confirm understanding
42. Identify Poor PerformanceIdentify Poor Performance
• Act early
• Take the right approach
• Deal with employee reaction
• Handle continued poor
performance
48. Performance Appraisal Methods
Modern methods
1. Assessment centre
2. Human resource accounting –
costs & contribution
3. Behaviorally anchored rating scale
4. MBO
5. 360º performance apparaisal
49. Traditional Methods ofTraditional Methods of
Performance Appraisal.Performance Appraisal.
• Graphic Rating Scales: This is the oldest and
most widely method used for performance
appraisal. The scales may specify five points, so
a factor such as job knowledge might be rated 1
(poorly informed about work duties) to 5 (has
complete mastery of all phases of the job).
50. Quantity of work: Volume of work
under normal working
conditions
Unsatisfactory
(1)
Fair
(2)
Satisfacto
ry
(3)
Good
(4)
Out
Standi
ng
(5)
Quality of work: Neatness,
thoroughness and accuracy of
work Knowledge of job
A clear understanding of the
factors connected with the job
Attitude: Exhibits enthusiasm and
cooperativeness on the job
Table: Typical Graphic Rating Scale
Employee Name................... Job
title .................
Department ......................... Rate ...............
Data ..................................
51. Ranking MethodRanking Method
• This is one of the oldest and simplest
techniques of performance appraisal. In
this method, the appraiser ranks the
employees from the best to the poorest on
the basis of their overall performance. It is
quite useful for a comparative evaluation.
52. Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for
increased sales and to have positive relationships with
customers all over the country.
Good 6 Can expect to initiate creative ideas for improved sales.
Above average 5 Can expect to keep in touch with the customers throughout
the year.
Average 4 Can manage, with difficulty, to deliver the goods in time.
Below average 3 Can expect to unload the trucks when asked by the
supervisor.
Poor 2 Can expect to inform only a part of the customers.
Extremely poor 1 Can expect to take extended coffee breaks and roam
around purposelessly.
53. Paired Comparison MethodPaired Comparison Method
• A better technique of comparison than the
straight ranking method, this method compares
each employee with all others in the group, one
at a time. After all the comparisons on the basis
of the overall comparisons, the employees are
given the final rankings.
54. Forced distribution methodForced distribution method
• Forced ranking is a method of
performance appraisal to rank
employee but in order of forced
distribution.
55. Checklist MethodChecklist Method
• Another simple type
of individual
evaluation method is
the checklist.
Is the employee really interested in the task assigned? Yes/No
Is he respected by his colleagues (co-workers) Yes/No
Does he give respect to his superiors? Yes/No
Does he follow instructions properly? Yes/No
Does he make mistakes frequently? Yes/No
56. Critical Incidence MethodCritical Incidence Method
• Under this method, the manager prepares lists of
statements of very effective and ineffective behavior of an
employee. These critical incidents or events represent the
outstanding or poor behavior of employees on the job .
• July 20 – Mr. Paul patiently attended to the major
customers complaint. He is polite, prompt, enthusiastic in
solving the customers’ problem.
On the other hand the bad critical incident may appear as
under:
• September 28– Mr. Paul stayed 45 minutes over on his
break during the busiest part of the day. He failed to
answer the store manager’s call thrice.
57. Essay MethodEssay Method
• This method asked managers /
supervisors to describe strengths and
weaknesses of an employee’s behavior.
58. Confidential ReportConfidential Report
It is mostly used in government organizations. It
is a descriptive report prepared, generally at the
end of every year, by the employee’s immediate
superior. The report highlights the strengths and
weaknesses of the subordinate.
60. MBOMBO
A process whereby the superior and
subordinates of the organization jointly
identify its common objectives, define
each individual’s major areas of
responsibility.
1. Establishment of Goals
2. Setting the performance standard
3. Actual level of job attainment is
compared with the goals agreed upon.
4. Establishing new goals and new
strategies for goals not previously
attained.
61. PSYCHOLOGICAL APPRAISALS:PSYCHOLOGICAL APPRAISALS:
When psychologists are used for evaluations, they
asses an individual’s potential. The appraisal consists
of in-depth interviews, psychological tests,
discussions with supervisors and a review of other
evaluations.
62. Assessment CentreAssessment Centre
• This not a technique of performance appraisal
by itself. In fact, this is a system or organization
where assessment of several individual is done
by experts by using various techniques. These
techniques used role playing, case studies etc.
64. What is 360 DF?
360 Degree Feedback is a multi - rater
feedback system where an individual is
assessed by a number of assessors including
his boss, direct reports, colleagues, internal
customers and external customers
66. 1. Halo/horn effect – employee’s
extreme competence in one
area “shines” over all others.
Conversely, employee does
poorly in one area and this
overshadows all areas.
2. Bias – own prejudices {race,
national origin, gender,
appearance, etc.} influence the
appraisal
3. Comparison Rating –
contrasting one employee with
another
Common Problems Associated with Conducting
the Appraisal
67. 3. Central Tendency – rate everyone as average
4. Recency Effect – focusing on recent
performance instead of entire year
5. Personal Prejudice – If the rater dislikes one
group or employees, he may rate them at the
lower end.
6. Favoritism – evaluating friends or those who
don’t make waves, etc. more favorably than
others
Common Problems Associated with Conducting the
Appraisal
68. Performance criteria for ExecutivesPerformance criteria for Executives
• For top managers
– Return on capital employed
– Contribution to community development
– Degree of upward communication from
middle-level executives
– Degree of growth and expansion of
enterprise.
69. For middle level ManagersFor middle level Managers
• Departmental performance
• Coordination among employees
• Degree of upward communication from
supervisors
• Degree of clarity about corporate goals and
policies
70. For supervisorsFor supervisors
• Quality and quantity of output in a given period
• Labor cost per unit of output in a given period
• Material cost per unit in a given period
• Rate of absenteeism and turnover of employees
• No of accidents in a given period
71. Key Points to RememberKey Points to Remember
• You must conduct objective appraisals on a
scheduled basis.
• Appraisals tell employees how they’re doing
and how they can improve.
• Appraisals help create a system of motivation
and rewards based on performance.
