Performance Appraisal

Performance Appraisal
Sheetal Wagh

 A Performance Appraisal (PA), also referred to as a performance review, performance
evaluation, (career) development discussion, or employee appraisal is a method by
which the job performance of an employee is documented and evaluated.
 Performance appraisals are a part of career development and consist of regular
reviews of employee performance within organizations.
 A performance appraisal is a systematic general and periodic process that assesses
an individual employee's job performance and productivity in relation to certain pre-
established criteria and organizational objectives.
 Other aspects of individual employees are considered as well, such as organizational
citizenship behaviour, accomplishments, potential for future improvement, strengths
and weaknesses, etc.

Performance appraisal is a method of evaluating the behaviour and performance of
employees in the workplace. This includes appraisal of both qualitative and
quantitative aspects of job performance.
 Features of Performance Appraisal:
1. Systematic process of evaluation of an employee.
2. Analysis of the strengths and weaknesses of an employee.
3. To find out how well an employee is performing the job.
4. Appraisal is done periodically.
5. It is based on a definite plan.
6. Performance appraisal is different from job evaluation.

 Need for Performance Appraisal:
There are certain requirements expected from the employees for which performance
appraisal are conducted.
1. Providing information about the performance ranks on which decision regarding
salary fixation, promotion, etc. are taken.
2. Review of the performance of the subordinates.
3. Providing information that helps to counsel the subordinates.
4. Getting information to diagnose deficiency in employees regarding skills, knowledge,
etc.
5. To prevent grievance and in disciplinary activities.

 Objectives of Performance Appraisal:
Performance Appraisal can be done with following objectives in mind:
a) To maintain records in order to determine compensation packages, wage structure,
salaries raises, etc.
b) To identify the strengths and weaknesses of employees to place right men on right
job.
c) To maintain and assess the potential present in a person for further growth and
development.
d) To provide a feedback to employees regarding their performance and related status.
e) To provide a feedback to employees regarding their performance and related status.
f) It serves as a basis for influencing working habits of the employees.
g) To review and retain the promotional and other training programmes.

 Modern Methods/ Future-oriented Methods Of Performance Appraisal:
The modern methods are based on accomplishments of an employee in order
to have evaluation. The accomplishments include sales turnover, the number
of customers served, as well as the relationship with the customers and
dealers.
1. 360-degree appraisal:
• Any person having through knowledge about the job contents can appraise
an employee.
• According to this method all parties related to an organization will be
rating an employee.
• Thus, performance appraisal by supervisors,” peers, subordinates,
customer employees themselves (self appraisal), other users of service,
and consultants is known as 360-degree appraisal. 360-degree appraisal is
a systematic assessment of an employee regarding his present job,
organizational expectations and his potentialities for a better job.

2. Supervisor appraisal:
While appraising the performance, supervisors include superiors of employee from the same
department, departmental head or managers. Usually, immediate superiors appraise the
performance, which in turn is reviewed by the departmental head or manager.
3. Peer appraisal:
Peer appraisal is experimental with military personnel so far. Peer Appraisal is a method of
evaluating the employee performance by his co-employees rather than by his manager as they have
sufficient opportunity to review the performance on a daily basis.
4. Subordinates appraisal:
This is a novel method in which subordinates may be asked to evaluate the superiors. This rating is
quite useful in identifying competent superiors.
5. Self-appraisal:
If individuals understand the objectives, they are expected to achieve the standards by which they
are to be evaluated, they are to a great extent in the best position to appraise their own
performance. Since employees are interested in the self-development, they appraise systematically
and may become highly motivated also.

6. Customer and other related parties:
Employee performance a service organization relating to their behaviour, promptness,
speed in doing the job, and accuracy can be judged by customers and suppliers (related
parties to an organization).
7. Consultants:
Consultants are trained raters who are appointed when employees/employers do not
trust self-appraisal, or peer appraisal, or subordinate appraisal. Consultants observe the
employees at work for a long period before rating.

 Performance Appraisal Process:
The six steps involved in process of performance appraisal are as follows:
1) Establish Performance Standards
2) Communicate Performance Expectation to Employee
3) Measure Actual Performance
4) Compare Actual Performance with Standards
5) Discuss the Appraisal with the Employee
6) Initiate Corrective Actions.

1. Establish Performance Standards:
• The appraisal process begins with the establishment of performance standards.
• The managers must determine what outputs, accomplishments and skills will be evaluated.
• These standards should have evolved out of job analysis and job descriptions.
• These performance standards should also be clear and objective to be understood and measured.
Standards should not be expressed in an articulated or vague manner such as “a good job” or “a
full day’s work” as these vague phrases tells nothing.
2. Communicate Performance Expectations to Employees:
• Once the performance standards are established, this need to be communicated to the respective
employees so that they come to know what is expected of them.
• Past experience indicates that not communicating standards to the employees compounds the
appraisal problem.
• Here, it must be noted that mere transference of information (relating to performance standards,
for example) from the manager to the employees is not communication It becomes
communication only when the transference of information has taken place and has been received
and understood by the employees’.
• The feedback from the employees on the standards communicated to them must be obtained.
• If required, the standards may be modified or revised in the light of feedback obtained from the
employees.
• It is important to note that communication is a two-way street.

3. Measure Actual Performance:
• This is the third step involved in the appraisal process.
• In this stage, the actual performance of the employee is measured on the basis of information
available from various sources such as personal observation, statistical reports, oral reports, and
written reports.
• Needless to mention, the evaluator’s feelings should not influence the performance measurement
of the employee.
• Measurement must be objective based on facts and findings.
• This is because what we measure is more critical and important to the evaluation process than
how we measure.
4. Compare Actual Performance with Standards:
• In this stage, the actual performance is compared with the predetermined standards.
• Such a comparison may reveal the deviation between standard performance and actual
performance and will enable the evaluator to proceed to the fifth step in the process, i.e., the
discussion of the appraisal with the concerned employees.

5. Discuss the Appraisal with the Employee:
• The fifth step in the appraisal process is to communicate to and discuss with the employees the
results of the appraisal.
• This is, in fact, one of the most challenging tasks the manager’s face to present an accurate
appraisal to the employees and then make them accept the appraisal in a constructive manner.
• A discussion on appraisal enables employees to know their strengths and weaknesses.
• This has, in turn, impact on their future performance. Yes, the impact may be positive or negative
depending upon how the appraisal is presented and discussed with the employees.
6. Initiate Corrective Action:
• The final step in the appraisal process is the initiation of corrective action when it is necessary.
• The areas needing improvement are identified and then, the measures to correct or improve the
performance are identified and initiated.
• The corrective action can be of two types.
• One is immediate and deals predominantly with symptoms. This action is often called as “putting
out fires.”
• The other is basic and delves into causes of deviations and seeks to adjust the difference
permanently.
• This type of action involves time to analyse deviations.
• Hence, managers often opt for the immediate action, or say, “put out fires”.
• Training, coaching, counselling, etc. is the common examples of corrective actions that managers
initiate to improve the employee performance.

 Advantages of Performance Appraisal:
It is said that performance appraisal is an investment for the company which can be justified by
following advantages:
 Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes
for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
 Compensation: Performance Appraisal helps in chalking out compensation packages for
employees. Merit rating is possible through performance appraisal. Performance Appraisal tries
to give worth to a performance. Compensation packages which includes bonus, high salary rates,
extra benefits, allowances and pre-requisites are dependent on performance appraisal. The
criteria should be merit rather than seniority.
 Employees Development: The systematic procedure of performance appraisal helps the
supervisors to frame training policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for efficient employees. It also helps
in framing future development programmes.
 Selection Validation: Performance Appraisal helps the supervisors to understand the validity and
importance of the selection procedure. The supervisors come to know the validity and thereby
the strengths and weaknesses of selection procedure. Future changes in selection methods can
be made in this regard.

 Communication: For an organization, effective communication between employees and
employers is very important. Through performance appraisal, communication can be sought for
in the following ways:
a) Through performance appraisal, the employers can understand and accept skills of
subordinates.
b) The subordinates can also understand and create a trust and confidence in superiors.
c) It also helps in maintaining cordial and congenial labour management relationship.
d) It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
 Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance
of employees, a person’s efficiency can be determined if the targets are achieved. This very well
motivates a person for better job and helps him to improve his performance in the future.

 Significance Or Importance Of Performance Appraisal
Performance appraisal provides important and useful information for the assessment of employee's
skill, knowledge, ability and overall job performance. The following are the points which indicate the
importance of performance appraisal in an organization:
1. Performance appraisal helps supervisors to assess the work performance of their subordinates.
2. Performance appraisal helps to assess the training and development needs of employees.
3. Performance appraisal provides grounds for employees to correct their mistakes, and it also
provides proper guidance and criticism for employee's development.
4. Performance appraisal provides reward for better performance.
5. Performance appraisal helps to improve the communication system of the organization
6. Performance appraisal evaluates whether human resource programs being implemented in the
organization have been effective.
7. Performance appraisal helps to prepare pay structure for each employee working in the
organization.
8. Performance appraisal helps to review the potentiality of employees so that their
future capability is anticipated.

 Limitations of Performance Appraisal:
Some of the major limitations of performance appraisal are:
1. Bias of Appraiser
2. Ambiguity in Standards
3. Insufficient Evidence
4. Several Qualities Remain Without Appraisal
5. Leniency or Strictness Tenancy
6. Average Rating Problem
7. Influence of Man’s Job
8. Similarity Error

1. Bias of Appraiser:
The presence of ‘Halo Effect’ in evaluation of employees is the biggest weakness of this
method.
A high rate is given to favoured employees whereas unfriendly employees are rated low.
2. Ambiguity in Standards:
If the standards are not clear, the supervisors may follow different standards for different
employees.
3. Insufficient Evidence:
An employee who can impress the boss may get a positive evaluation though his
impression in his own department may be very poor. In such cases, the performance
appraisal will be superfluous.
4. Several Qualities Remain Without Appraisal:
Through performance appraisal, only few qualities of employees can be measured. All
individuals differ from each other in terms of background, values and behaviour.

5. Leniency or Strictness Tenancy:
Every evaluator has his own valuation procedure which is regarded as his own standard for
evaluation. For example, some teachers are strict in evaluation of answer books whereas
others are lenient. The lenient tendency is known as ‘Positive Leniency Error’ whereas
strict tendency is called as ‘Negative Leniency Error’. The rating may be high or low
depending upon the nature of evaluators.
6. Average Rating Problem:
In order to give very low or very high rating, the top managers are required to give reasons
to justify the rating. The most common error committed in performance appraisal is to
give average rating to all employees. Moreover, low rating antagonizes the subordinates.
7. Influence of Man’s Job:
There is a tendency to give a high rating to highly paid jobs. So a senior employee may get
a higher rating than a junior employee.
8. Similarity Error:
The evaluator tries to look those qualities in subordinates which he himself possesses.
Those who show the similar characteristics are rated high.

 Good Practices in Performance Appraisal:
1. Design a legally valid performance review process
• Performance Appraisals be: job-related and valid; based on a thorough analysis of the job;
standardized for all employees; not biased against any race, colour, sex, religion, or nationality; and
performed by people who have adequate knowledge of the person or job.
• Be sure to build in the process, a route for recourse if an employee feels he or she has been dealt
with unfairly in an appraisal process, e.g., that the employee can go to his or her supervisor's
supervisor.
• The process should be clearly described in a personnel policy.
2. Design a standard form for performance appraisals
• Include the name of the employee, date the performance form was completed, dates specifying
the time interval over which the employee is being evaluated, performance dimensions (include
responsibilities from the job description, any assigned goals from the strategic plan, along with
needed skills, such as communications, administration, etc.), a rating system (e.g., poor, average,
good, excellent), space for commentary for each dimension, a final section for overall commentary,
a final section for action plans to address improvements, and lines for signatures of the supervisor
and employee.
• Signatures may either specify that the employee accepts the appraisal or has seen it, depending
on wording on the form.

3. Schedule the first performance review for six months after the employee starts employment
• Schedule another six months later, and then every year on the employee's anniversary date.
4. Initiate the performance review process and upcoming meeting
• Tell the employee that you're initiating a scheduled performance review.
• Remind them of what's involved in the process. Schedule a meeting about two weeks out.
5. Have the employee suggest any updates to the job description and provide written input to the
appraisal
• Have them record their input concurrent to the your recording theirs.
• Have them record their input on their own sheets (their feedback will be combined on the official
form later on in the process).
• You and the employee can exchange each of your written feedback in the upcoming review
meeting. (Note that by now, employees should have received the job descriptions and goals well in
advance of the review, i.e., a year before. The employee should also be familiar with the
performance appraisal procedure and form.)

6. Document your input -- reference the job description and performance goals
• Be sure you are familiar with the job requirements and have sufficient contact with the employee
to be making valid judgments.
• Don't comment on the employee's race, sex, religion, nationality, or a handicap or veteran status.
Record major accomplishments, exhibited strengths and weaknesses according to the dimensions
on the appraisal form, and suggest actions and training or development to improve performance.
• Use examples of behaviours wherever you can in the appraisal to help avoid counting on hearsay.
• Always address behaviours, not characteristics of personalities.
• The best way to follow this guideline is to consider what you saw with your eyes. Be sure to
address only the behaviours of that employee, rather than behaviours of other employees.

7. Hold the performance appraisal meeting
• State the meeting's goals of exchanging feedback and coming to action plans, where necessary.
• In the meeting, let the employee speak first and give their input. Respond with your own input.
• Then discuss areas where you disagree.
• Attempt to avoid defensiveness; admitting how you feel at the present time, helps a great deal.
• Discuss behaviors, not personalities.
• Avoid final terms such as "always," "never," etc. Encourage participation and be supportive.
• Come to terms on actions, where possible.
• Try to end the meeting on a positive note.
8. Update and finalize the performance appraisal form
• Add agreed-to commentary on to the form.
• Note that if the employee wants to add attach written input to the final form, he or she should be able to do so.
• The supervisor signs the form and asks the employee to sign it.
• The form and its action plans are reviewed every few months, usually during one-on-one meetings with the
employee.

9. Nothing should be surprising to the employee during the appraisal meeting
• Any performance issues should have been addressed as soon as those issues occurred.
• So nothing should be a surprise to the employee later on in the actual performance appraisal
meeting.
• Surprises will appear to the employee as if the supervisor has not been doing his/her job and/or
that the supervisor is not being fair.
• It is OK to mention the issues in the meeting, but the employee should have heard about them
before.

Performance Appraisal

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