Performance appraisal is a systematic process of evaluating an employee's work performance and potential. It involves establishing performance standards, communicating them to employees, measuring actual performance against the standards, and providing feedback. The objectives of performance appraisal include making compensation, promotion, training and development decisions. Common methods include essay evaluations, checklists, rating scales, forced choice, and management by objectives. Multiple raters and 360-degree feedback can also be used.

1. Performance appraisal

2. Definition
• Performance appraisal is a systematic and
objective way of evaluating both work related
behaviour and potential of employees.
• Performance appraisal is a method of
evaluating the behaviour of employees in the
work spot, normally including both the
quantitative and qualitative aspects of job
performance.

3. Features
The appraised is a systematic process.
a) The appraisal is carried out periodically, according to a definite plan.It is a
systematic process, essentially involving three steps 1. setting work standards 2. assess
employee actual performance relative to these standards 3. offering feedback to the
employee so that he or she can eliminate deficiencies and improve performance
b)Performance appraisal is not a past-oriented activity.
c) Performance appraisal is not job evaluation
d) Performance appraisal is not limited to ‘calling the fouls’.
e) Performance appraisal may be formal or informal.

4. Objectives
Compensation decisions
Promotion decisions
Training and development programmes
Feedback
Personal development

5. Steps of Performance Appraisal
1) Establish performance standards
– These are benchmarks against which performance is
measured.
– They should relate to the desired results of each job
– They must be clear to both the appraiser and the
appraisee.
– Good performance goals should speak about
• What is the task to be accomplished?
• What will it look like when it is accomplished?
• When must it be completed?
• What are the cost considerations?
• What are the likely payoffs to the employee?

6. 2. Communicate the standards
– The Appraiser should prepare job descriptions
clearly
• Help the appraisee set own goals and targets
• Analyze results objectively
• Offer coaching and guidance
– The Appraisee should be clear about what he is
doing and why he is doing

7. 3. Measure actual performance
• Use reliable and dependable performance measures
These must be easy to use and report on critical
behaviours that determine performance These would
generally include: personal observation, statistical
reports, oral reports and written reports These may be
objective or subjective. Objective measures are
generally quantitative, and include quality of
production, degree of training needed, accidents in a
given period, absenteeism, length of service etc. Such
measures are used for evaluating lower level jobs
Subjective measures are based on opinions of those
doing evaluation and are not verifiable by others;
generally used for evaluating middle level positions.

8. 4. Compare actual performance with
standards and discuss the appraisal
• Not an easy job. Emotional factors to be taken
into account. Affects the self esteem of the
appraisee. Criteria likely to be questioned, if
the appraisal turns out to be negative
5. Take corrective action, if necessary

9. Performance Appraisal Methods
• Individual evaluation methods Multiple-person evaluation methods Other methods
• 1. Confidential report 9. Ranking 12.Group Appraisal
• 2. Essay evaluation 10.Paired comparison 13.HRA
• 3. Critical incidents 11.Forced distribution 14.Assessment centre
• 4. Checklists 15.Field review
• 5. Graphic rating scale
• 6. Behaviourally anchored
rating scales
• 7. Forced choice method
• 8. MBO

10. Performance Appraisal Methods
• Confidential Report:
• Confidential Report or Descriptive report prepared at the end of
the year, prepared by the employee’s immediate supervisor The
report highlights the strengths and weaknesses of employees
Prepared in Government organizations. Does not offer any feedback
to the employee
• Essay Evaluation:
• Essay Evaluation The rater is asked to express the strong as well as
weak points of employee’s behavior. The rater considers the
employee’s : Job knowledge and potential Understanding of
company’s programs, policies, objectives etc .Relation with co-
workers and supervisors Planning, organizing and controlling ability
Attitude and perception

11. • Critical Incident Technique :
• Critical Incident Technique :Manager prepares lists of
statements of very effective and ineffective behavior of
an employee. These critical incidents represent the
outstanding or poor behavior of the employees The
manager periodically records critical incidents of
employee’s behavior
• Checklist
• A checklist is a set of objectives or descriptive
statements about the employee and his behavior.
Under weighted checklist, value of each question may
be weighted. Example: Is the employee really
interested in the task assigned? Yes / No Is he
respected by his colleagues? Yes / No

12. • Graphic Rating Scale:
• Graphic Rating Scale A form is used to evaluate the
performance of the employees A variety of traits may
be used in this device, the most common being quality
and quantity of work. Easy to understand and use.
Permits statistical tabulation of scores of employees.
• ( poor, below avg. , avg. , good, excellent)
• Behaviorally Anchored Rating Scale:
• Behaviorally Anchored Rating Scale Combination of
rating scale and critical incidence Steps: Collect critical
incidents. Identify performance dimensions
reclassification of incidents, assigning scale values to
incidents, producing the final instrument

13. 9–13
Behaviorally Anchored Rating Scale
(BARS)
Developing a BARS
1. Generate critical
incidents
2. Develop performance
dimensions
3. Reallocate incidents
4. Scale the incidents
5. Develop a final
instrument
Advantages of BARS
– A more accurate gauge
– Clearer standards
– Feedback
– Independent
dimensions
– Consistency

14. Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills

15. • Forced Choice Method:
• Forced Choice Method This method uses several sets of
paired phrases, two of which may be positive and two
negative The rater is asked to indicate which of the four
phrases is the most and least descriptive of a particular
worker Favorable qualities earn plus credit and
unfavorable ones earn the reverse
• Management by Objectives (MBO):
• Management by Objectives (MBO) MBO emphasizes
collectively set goals that are tangible, verifiable, and
measurable Focuses attention on goals rather than on
methods Concentrates on Key Result Areas (KRA)
Systematic and rational technique that allows
management to attain maximum results from available
resources by focusing on achievable goals

16. Multiple Person Evaluation Methods
• Ranking method The evaluator rates the
employee from highest to lowest on some
overall criteria.
• Paired comparison method each worker is
compared with all other employees in a group
For several traits paired comparisons are
made, tabulated and then rank is assigned to
each worker This method is not applicable
when the group is large

17. • Forced Distribution Methods:
• Forced Distribution Methods The rater is
asked to appraise the employee according to
predetermined distribution scale. Two criteria
used for rating are: job performance and
promotability. A five point performance scale
is also used without mentioning any
descriptive statements. The worker is placed
between two extremes of “good” and “bad”
performance.

18. Other Methods
• Group Appraisal :
• Group Appraisal Employee is appraised by a group of
appraisers. The group consists of Immediate supervisor
of the employee Other supervisors who have close
contact with the employee’s work. Manager or head of
the departments. Consultants or Clients
• Field Review Technique :
• Field Review Technique The appraiser goes to the field
and obtains the information about work performance
of the employee by way of questioning the said
individual, his peer group, and his superiors

19. • 360o Appraisal System It is a systematic
collection and feedback of performance data
on an individual or group, derived from a
number of stakeholders Data is gathered and
fed back to the individual participant in a clear
way designed to promote understanding,
acceptance and ultimately behavior