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Human Resource Planning
and Human Resource Audit

Topic: Performance     Appraisal
Submitted to: Mr. Ravi Poonacha
Submission date: 07/09/2011




                                  Submitted by:
                                  Siddhesh Vijay Lakhan
                                  MMS 3rd Semester (HR)
                                  Roll No. 13
                                  SIBM, Mumbai
PERFORMANCE APPRAISAL

People differ in their abilities and their aptitudes. There is always some difference between
the quality and quantity of the same work on the same job being done by two different
people. Performance appraisals of Employees are necessary to understand each employee’s
abilities, competencies and relative merit and worth for the organization. Performance
appraisal rates the employees in terms of their performance.

Performance appraisals are widely used in the society. The history of performance appraisal
can be dated back to the 20th century and then to the second world war when the merit rating
was used for the first time. An employer evaluating their employees is a very old concept.
Performance appraisals are an indispensable part of performance measurement.

Performance appraisal is necessary to measure the performance of the employees and the
organization to check the progress towards the desired goals and aims

Meaning and definition:

Definition of Performance appraisal

Performance appraisal, also known as employee appraisal, is a method by which the job
performance of an employee is evaluated (generally in terms of quality, quantity, cost and
time). Performance appraisal is a part of career development.

Definition of Performance appraisal of Washington University:

Any system of determining how well an individual employee has performed during a period
of time, frequently used as a basis for determining merit increases.

The latest mantra being followed by organizations across the world being – "get paid
according to what you contribute" – the focus of the organizations is turning to performance
management and specifically to individual performance. Performance appraisal helps to rate
the performance of the employees and evaluate their contribution towards the organizational
goals. If the process of performance appraisals is formal and properly structured, it helps the
employees to clearly understand their roles and responsibilities and give direction to the
individual’s performance. It helps to align the individual performances with the
organizational goals and also review their performance.

Performance appraisal takes into account the past performance of the employees and focuses
on the improvement of the future performance of the employees.
Objectives of performance appraisal
• Improve performance effectiveness and feedbacks: the whole company.

• Plan human resources: promotion, especially in management, overtaking.

• Recruitment and selection: Score tabulation allows forecasting employee’s
work accomplishment possibility and measuring the effectiveness of tests.

• Development of human resources: Show the demand for training, education and
development; identify employee’s imperfections to be corrected.

• Career plan and development: Identify employee’s potential imperfections; help them to
carry out the plan.

• Salary and treatment: Decision of salary increase, bonus increase.

• Inferior personnel tie: Promotion, reduction in grade, contract termination, work suspension,
transfer.

• Employee potential appraisal: Based on employees’ work accomplishment, examine past
activities to forecast future performance. Common mistake is made when one of high
professional capacity is promoted lacking leading capacity. The evaluated object needs to be
specified so that an objective appraisal is guaranteed.

Purpose of performance appraisal

Why you do performance appraisal? Purpose of performance appraisal include elements as
follows:

1. Career Development

• This provides an opportunity for discussion of career objectives, and creation of a strategy
designed to maximize career potential.
• To provide an opportunity for career counseling
• To help in succession planning.
• To assess training needs
• To plan for career development
• To assess and develop individual abilities
• To provide an objective basis on which to base decisions about training and promotion

2. Feedback
• As well, feedback is encouraged in both directions: as such, employees are encouraged to
prepare ratings of their supervisors.
• To provide constructive feedback to the individual regarding how their performance is seen.
• This provides a structured format for the discussion of performance issues
• on a regular basis.
• Feedback either reinforces performance strengths, or provides the opportunity to discuss
resolution of performance deficiencies.

3. Administrative Uses of Performance appraisal

• Salary
• Promotion
• Retention/termination
• Recognition of performance
• Layoffs
• Identification of poor performers

4. Performance History

• This provides a performance history which is not dependent upon human memory, and
which may be useful in the full range of personnel decisions, including compensation
decision-making.
• To review past and present performance, identifying strengths and weaknesses.

5. Organizational Goals

• To clarify, for the individual, organizational expectations
• This provides an opportunity to view one’s performance in the context of broader
organizational goals.
• To assess future promotion prospects and potential
• To set objectives for the next period

6. Job Standards

This provides an opportunity for clearer articulation and definition of performance
expectations.

7. Documentation use of of Performance appraisal

• Documentation for HR decisions
• Helping to meet legal requirements
Performance appraisal methods

(Tools of ) Performance appraisal methods include 11 appraisal methods / types as follows:

1. Critical incident method

This format of performance appraisal is a method which is involved identifying and
describing specific incidents where employees did something really well or that needs
improving during their performance period.

2. Weighted checklist method

In this style, performance appraisal is made under a method where the jobs being evaluated
based on descriptive statements about effective and ineffective behavior on jobs.

3. Paired comparison analysis

This form of performance appraisal is a good way to make full use of the methods of options.
There will be a list of relevant options. Each option is in comparison with the others in the
list. The results will be calculated and then such option with highest score will be mostly
chosen.

4. Graphic rating scales

This format is considered the oldest and most popular method to assess the employee’s
performance.

In this style of performance appraisal, the management just simply does checks on the
performance levels of their staff.

5. Essay Evaluation method

In this style of performance appraisal, managers/ supervisors are required to figure out the
strong and weak points of staff’s behaviors. Essay evaluation method is a non-quantitative
technique. It is often mixed with the method the graphic rating scale.

6. Behaviorally anchored rating scales

This formatted performance appraisal is based on making rates on behaviors or sets of
indicators to determine the effectiveness or ineffectiveness of working performance. The
form is a mix of the rating scale and critical incident techniques to assess performance of the
staff.

7. Performance ranking method

The performance appraisal of ranking is used to assess the working performance of
employees from the highest to lowest levels.
Managers will make comparisons of an employee with the others, instead of making
comparison of each employee with some certain standards.

8. Management By Objectives (MBO) method

MBO is a method of performance appraisal in which managers or employers set a list of
objectives and make assessments on their performance on a regular basis, and finally make
rewards based on the results achieved. This method mostly cares about the results achieved
(goals) but not to the way how employees can fulfill them.

9. 360 degree performance appraisal

The style of 360 degree performance appraisal is a method that employees will give
confidential and anonymous assessments on their colleagues. This post also information that
can be used as references for such methods of performance assessments of 720, 540, 180…

10.Forced ranking (forced distribution)

In this style of performance appraisal, employees are ranked in terms of forced allocations.

For instance, it is vital that the proportions be shared in the way that 10 or 20 % will be the
highest levels of performances, while 70 or 80% will be in the middle level and the rest will
be in the lowest one.

11. Behavioral Observation Scales

The method based on the scales of observation on behaviors is the one in which important
tasks that workers have performed during their working time will be assessed on a regular
basis.
Process of Performance Appraisal

  ESTABLISHING PERFORMANCE STANDARDS
  The first step in the process of performance appraisal is the setting up of the standards
  which will be used to as the base to compare the actual performance of the employees.
  This step requires setting the criteria to judge the performance of the employees as
  successful or unsuccessful and the degrees of their contribution to the organizational
  goals and objectives. The standards set should be clear, easily understandable and in
  measurable terms. In case the performance of the employee cannot be measured, great
  care should be taken to describe the standards.

  COMMUNICATING THE STANDARDS
  Once set, it is the responsibility of the management to communicate the standards to all
  the employees of the organization.

This will help them to understand their roles and to know what exactly is expected from
them. The standards should also be communicated to the appraisers or the evaluators and if
required, the standards can also be modified at this stage itself according to the relevant
feedback from the employees or the evaluators.




*Figure: Process of performance appraisal (Flowchart)
MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of time. It is a continuous process which involves monitoring the performance
throughout the year. This stage requires the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not affect the outcome of the process and
providing assistance rather than interfering in an employees work.



COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data related
to the employees’ performance.

DISCUSSING RESULTS

The result of the appraisal is communicated and discussed with the employees on one-to-
one basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and
reaching consensus. The feedback should be given with a positive attitude as this can have an
effect on the employees’ future performance. The purpose of the meeting should be to solve
the problems faced and motivate the employees to perform better.

DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR
decisions like rewards, promotions, demotions, transfers etc.
Latest Changes in Performance Appraisal:


Performance Appraisals as Career Development




  Performance appraisal is a part of career development. The latest mantra being
  followed by organizations across the world being – "get paid according to what you
  contribute" – the focus of the organizations is turning to performance management and
  specifically to individual performance. Performance appraisal helps to rate the
  performance of the employees and evaluate their contribution towards the
  organizational goals. Performance appraisal as Career Development leads to the
  recognition of the work done by the employees, many a times by the means of rewards
  and appreciation etc. It plays the role of the link between the organization and the
  employees’ personal career goals.



 Potential appraisal, a part of Performance appraisal, helps to identify the hidden talents
 and potential of the individuals. Identifying these potential talents can help in preparing
 the individuals for higher responsibilities and positions in the future. The performance
 appraisal process in itself is developmental in nature.

 Performance appraisal is also closely linked to other HR processes like helps to identify
 the training and development needs, promotions, demotions, changes in the compensation
 etc. A feedback communicated in a positive manner goes a long way to motivate the
 employees and helps to identify individual career developmental plans. Based on the
 evaluation, employees can develop their career goals, achieve new levels of competencies
 and chart their career progression. Performance appraisal encourages employees to
 reinforce their strengths and overcome their weaknesses.



Approaches to Performance Development


  Performance appraisal - Traditional approach
  Traditionally, performance appraisal has been used as just a method for determining
  and justifying the salaries of the employees. Than it began to be used a tool for
  determining rewards (a rise in the pay) and punishments (a cut in the pay) for the past
  performance of the employees.

  This approach was a past oriented approach which focused only on the past
  performance of the employees i.e. during a past specified period of time. This approach
  did not consider the developmental aspects of the employee performance i.e.
histraining and development needs or career developmental possibilities. The primary
   concern of the traditional approach is to judge the performance of the organization as a
   whole by the past performances of its employees

 Therefore, this approach is also called as the overall approach. In 1950s theperformance
 appraisal was recognized as a complete system in itself and the Modern Approach to
 performance appraisal was developed.

 Performance appraisal - Modern approach

 The modern approach to performance development has made the performance appraisal
 process more formal and structured. Now, the performance appraisal is taken as a tool to
 identify better performing employees from others, employees’ training needs, career
 development paths, rewards and bonuses and their promotions to the next levels.




Appraisals have become a continuous and periodic activity in the organizations. The results
of performance appraisals are used to take various other HR decisions like promotions,
demotions, transfers, training and development, reward outcomes. The modern approach to
performance appraisals includes a feedback process that helps to strengthen the relationships
between superiors and subordinates and improve communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is
developmental in nature. This recognizes employees as individuals and focuses on their
development.



Performance Management

Performance management is the systematic process by which an agency involves its
employees, as individuals and members of a group, in improving organizational effectiveness
in the accomplishment of agency mission and goals.

                                      Employee performance management includes:

                                              planning work and setting expectations,
                                              continually monitoring performance,
                                              developing the capacity to perform,
                                              periodically rating performance in asummary
                                              fashion, and
                                              rewarding good performance.
1. Planning
   In an effective organization, work is planned out in advance. Planning means setting
   performance expectations and goals for groups and individuals to channel their efforts
   toward achieving organizational objectives. Getting employees involved in the
   planning process will help them understand the goals of the organization, what needs
   to be done, why it needs to be done, and how well it should be done.
   The regulatory requirements for planning employees' performance include
   establishing the elements and standards of their performance appraisal plans.
   Performance elements and standards should be measurable, understandable,
   verifiable, equitable, and achievable. Through critical elements, employees are held
   accountable as individuals for work assignments or responsibilities. Employee
   performance plans should be flexible so that they can be adjusted for changing
   program objectives and work requirements. When used effectively, these plans can be
   beneficial working documents that are discussed often, and not merely paperwork that
   is filed in a drawer and seen only when ratings of record are required

2. Monitoring
   In an effective organization, assignments and projects are monitored continually.
   Monitoring well means consistently measuring performance and providing ongoing
   feedback to employees and work groups on their progress toward reaching their goals.
   Regulatory requirements for monitoring performance include conducting progress
   reviews with employees where their performance is compared against their elements
   and standards. Ongoing monitoring provides the opportunity to check how well
   employees are meeting predetermined standards and to make changes to unrealistic or
   problematic standards. And by monitoring continually, unacceptable performance can
   be identified at any time during the appraisal period and assistance provided to
   address such performance rather than wait until the end of the period when summary
   rating levels are assigned.

3. Developing
   In an effective organization, employee developmental needs are evaluated and
   addressed. Developing in this instance means increasing the capacity to perform
   through training, giving assignments that introduce new skills or higher levels of
   responsibility, improving work processes, or other methods. Providing employees
   with training and developmental opportunities encourages good performance,
   strengthens job-related skills and competencies, and helps employees keep up with
   changes in the workplace, such as the introduction of new technology.
   Carrying out the processes of performance management provides an excellent
   opportunity to identify developmental needs. During planning and monitoring of
   work, deficiencies in performance become evident and can be addressed. Areas for
   improving good performance also stand out, and action can be taken to help
   successful employees improve even further.

4. Rating
   From time to time, organizations find it useful to summarize employee performance.
   This can be helpful for looking at and comparing performance over time or among
   various employees. Organizations need to know who their best performers are.
   Within the context of formal performance appraisal requirements, rating means
   evaluating employee or group performance against the elements and standards in an
   employee's performance plan and assigning a summary rating of record. The rating of
record is assigned according to procedures included in the organization's appraisal
      program. It is based on work performed during an entire appraisal period. The rating
      of record has a bearing on various other personnel actions, such as granting within-
      grade pay increases and determining additional retention service credit in a reduction
      in force.
      Note: Although group performance may have an impact on an employee's summary
      rating, a rating of record is assigned only to an individual, not to a group.
   5. Rewarding
      In an effective organization, rewards are used well. Rewarding means recognizing
      employees, individually and as members of groups, for their performance and
      acknowledging their contributions to the agency's mission. A basic principle of
      effective management is that all behavior is controlled by its consequences. Those
      consequences can and should be both formal and informal and both positive and
      negative.
      Good performance is recognized without waiting for nominations for formal awards
      to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot
      of the actions that reward good performance — like saying "Thank you" — don't
      require a specific regulatory authority. Nonetheless, awards regulations provide a
      broad range of forms that more formal rewards can take, such as cash, time off, and
      many nonmonetary items. The regulations also cover a variety of contributions that
      can be rewarded, from suggestions to group accomplishments.



Managing Performance Effectively

In effective organizations, managers and employees have been practicing good performance
management naturally all their lives, executing each key component process well. Goals are
set and work is planned routinely. Progress toward those goals is measured and employees
get feedback. High standards are set, but care is also taken to develop the skills needed to
reach them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and supporting each
other achieve natural, effective performance management.



Role of HRP in Performance appraisal:

HRP make performance appraisal more meaningful. Since            feedback is provided in
performance appraisal and employee is informed about his future chances in same company,
the employee is motivated to work better. Information for all this is collected from HRP
process.

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Performance appraisal

  • 1. Human Resource Planning and Human Resource Audit Topic: Performance Appraisal Submitted to: Mr. Ravi Poonacha Submission date: 07/09/2011 Submitted by: Siddhesh Vijay Lakhan MMS 3rd Semester (HR) Roll No. 13 SIBM, Mumbai
  • 2. PERFORMANCE APPRAISAL People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employee’s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. Performance appraisals are widely used in the society. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement. Performance appraisal is necessary to measure the performance of the employees and the organization to check the progress towards the desired goals and aims Meaning and definition: Definition of Performance appraisal Performance appraisal, also known as employee appraisal, is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). Performance appraisal is a part of career development. Definition of Performance appraisal of Washington University: Any system of determining how well an individual employee has performed during a period of time, frequently used as a basis for determining merit increases. The latest mantra being followed by organizations across the world being – "get paid according to what you contribute" – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individual’s performance. It helps to align the individual performances with the organizational goals and also review their performance. Performance appraisal takes into account the past performance of the employees and focuses on the improvement of the future performance of the employees.
  • 3. Objectives of performance appraisal • Improve performance effectiveness and feedbacks: the whole company. • Plan human resources: promotion, especially in management, overtaking. • Recruitment and selection: Score tabulation allows forecasting employee’s work accomplishment possibility and measuring the effectiveness of tests. • Development of human resources: Show the demand for training, education and development; identify employee’s imperfections to be corrected. • Career plan and development: Identify employee’s potential imperfections; help them to carry out the plan. • Salary and treatment: Decision of salary increase, bonus increase. • Inferior personnel tie: Promotion, reduction in grade, contract termination, work suspension, transfer. • Employee potential appraisal: Based on employees’ work accomplishment, examine past activities to forecast future performance. Common mistake is made when one of high professional capacity is promoted lacking leading capacity. The evaluated object needs to be specified so that an objective appraisal is guaranteed. Purpose of performance appraisal Why you do performance appraisal? Purpose of performance appraisal include elements as follows: 1. Career Development • This provides an opportunity for discussion of career objectives, and creation of a strategy designed to maximize career potential. • To provide an opportunity for career counseling • To help in succession planning. • To assess training needs • To plan for career development • To assess and develop individual abilities • To provide an objective basis on which to base decisions about training and promotion 2. Feedback
  • 4. • As well, feedback is encouraged in both directions: as such, employees are encouraged to prepare ratings of their supervisors. • To provide constructive feedback to the individual regarding how their performance is seen. • This provides a structured format for the discussion of performance issues • on a regular basis. • Feedback either reinforces performance strengths, or provides the opportunity to discuss resolution of performance deficiencies. 3. Administrative Uses of Performance appraisal • Salary • Promotion • Retention/termination • Recognition of performance • Layoffs • Identification of poor performers 4. Performance History • This provides a performance history which is not dependent upon human memory, and which may be useful in the full range of personnel decisions, including compensation decision-making. • To review past and present performance, identifying strengths and weaknesses. 5. Organizational Goals • To clarify, for the individual, organizational expectations • This provides an opportunity to view one’s performance in the context of broader organizational goals. • To assess future promotion prospects and potential • To set objectives for the next period 6. Job Standards This provides an opportunity for clearer articulation and definition of performance expectations. 7. Documentation use of of Performance appraisal • Documentation for HR decisions • Helping to meet legal requirements
  • 5. Performance appraisal methods (Tools of ) Performance appraisal methods include 11 appraisal methods / types as follows: 1. Critical incident method This format of performance appraisal is a method which is involved identifying and describing specific incidents where employees did something really well or that needs improving during their performance period. 2. Weighted checklist method In this style, performance appraisal is made under a method where the jobs being evaluated based on descriptive statements about effective and ineffective behavior on jobs. 3. Paired comparison analysis This form of performance appraisal is a good way to make full use of the methods of options. There will be a list of relevant options. Each option is in comparison with the others in the list. The results will be calculated and then such option with highest score will be mostly chosen. 4. Graphic rating scales This format is considered the oldest and most popular method to assess the employee’s performance. In this style of performance appraisal, the management just simply does checks on the performance levels of their staff. 5. Essay Evaluation method In this style of performance appraisal, managers/ supervisors are required to figure out the strong and weak points of staff’s behaviors. Essay evaluation method is a non-quantitative technique. It is often mixed with the method the graphic rating scale. 6. Behaviorally anchored rating scales This formatted performance appraisal is based on making rates on behaviors or sets of indicators to determine the effectiveness or ineffectiveness of working performance. The form is a mix of the rating scale and critical incident techniques to assess performance of the staff. 7. Performance ranking method The performance appraisal of ranking is used to assess the working performance of employees from the highest to lowest levels.
  • 6. Managers will make comparisons of an employee with the others, instead of making comparison of each employee with some certain standards. 8. Management By Objectives (MBO) method MBO is a method of performance appraisal in which managers or employers set a list of objectives and make assessments on their performance on a regular basis, and finally make rewards based on the results achieved. This method mostly cares about the results achieved (goals) but not to the way how employees can fulfill them. 9. 360 degree performance appraisal The style of 360 degree performance appraisal is a method that employees will give confidential and anonymous assessments on their colleagues. This post also information that can be used as references for such methods of performance assessments of 720, 540, 180… 10.Forced ranking (forced distribution) In this style of performance appraisal, employees are ranked in terms of forced allocations. For instance, it is vital that the proportions be shared in the way that 10 or 20 % will be the highest levels of performances, while 70 or 80% will be in the middle level and the rest will be in the lowest one. 11. Behavioral Observation Scales The method based on the scales of observation on behaviors is the one in which important tasks that workers have performed during their working time will be assessed on a regular basis.
  • 7. Process of Performance Appraisal ESTABLISHING PERFORMANCE STANDARDS The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards. COMMUNICATING THE STANDARDS Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators. *Figure: Process of performance appraisal (Flowchart)
  • 8. MEASURING THE ACTUAL PERFORMANCE The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance. DISCUSSING RESULTS The result of the appraisal is communicated and discussed with the employees on one-to- one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. DECISION MAKING The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.
  • 9. Latest Changes in Performance Appraisal: Performance Appraisals as Career Development Performance appraisal is a part of career development. The latest mantra being followed by organizations across the world being – "get paid according to what you contribute" – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. Performance appraisal as Career Development leads to the recognition of the work done by the employees, many a times by the means of rewards and appreciation etc. It plays the role of the link between the organization and the employees’ personal career goals. Potential appraisal, a part of Performance appraisal, helps to identify the hidden talents and potential of the individuals. Identifying these potential talents can help in preparing the individuals for higher responsibilities and positions in the future. The performance appraisal process in itself is developmental in nature. Performance appraisal is also closely linked to other HR processes like helps to identify the training and development needs, promotions, demotions, changes in the compensation etc. A feedback communicated in a positive manner goes a long way to motivate the employees and helps to identify individual career developmental plans. Based on the evaluation, employees can develop their career goals, achieve new levels of competencies and chart their career progression. Performance appraisal encourages employees to reinforce their strengths and overcome their weaknesses. Approaches to Performance Development Performance appraisal - Traditional approach Traditionally, performance appraisal has been used as just a method for determining and justifying the salaries of the employees. Than it began to be used a tool for determining rewards (a rise in the pay) and punishments (a cut in the pay) for the past performance of the employees. This approach was a past oriented approach which focused only on the past performance of the employees i.e. during a past specified period of time. This approach did not consider the developmental aspects of the employee performance i.e.
  • 10. histraining and development needs or career developmental possibilities. The primary concern of the traditional approach is to judge the performance of the organization as a whole by the past performances of its employees Therefore, this approach is also called as the overall approach. In 1950s theperformance appraisal was recognized as a complete system in itself and the Modern Approach to performance appraisal was developed. Performance appraisal - Modern approach The modern approach to performance development has made the performance appraisal process more formal and structured. Now, the performance appraisal is taken as a tool to identify better performing employees from others, employees’ training needs, career development paths, rewards and bonuses and their promotions to the next levels. Appraisals have become a continuous and periodic activity in the organizations. The results of performance appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and development, reward outcomes. The modern approach to performance appraisals includes a feedback process that helps to strengthen the relationships between superiors and subordinates and improve communication throughout the organization. The modern approach to Performance appraisal is a future oriented approach and is developmental in nature. This recognizes employees as individuals and focuses on their development. Performance Management Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. Employee performance management includes: planning work and setting expectations, continually monitoring performance, developing the capacity to perform, periodically rating performance in asummary fashion, and rewarding good performance.
  • 11. 1. Planning In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of the organization, what needs to be done, why it needs to be done, and how well it should be done. The regulatory requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required 2. Monitoring In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. Regulatory requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. And by monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned. 3. Developing In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology. Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further. 4. Rating From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are. Within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of
  • 12. record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various other personnel actions, such as granting within- grade pay increases and determining additional retention service credit in a reduction in force. Note: Although group performance may have an impact on an employee's summary rating, a rating of record is assigned only to an individual, not to a group. 5. Rewarding In an effective organization, rewards are used well. Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the agency's mission. A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance — like saying "Thank you" — don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments. Managing Performance Effectively In effective organizations, managers and employees have been practicing good performance management naturally all their lives, executing each key component process well. Goals are set and work is planned routinely. Progress toward those goals is measured and employees get feedback. High standards are set, but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All five component processes working together and supporting each other achieve natural, effective performance management. Role of HRP in Performance appraisal: HRP make performance appraisal more meaningful. Since feedback is provided in performance appraisal and employee is informed about his future chances in same company, the employee is motivated to work better. Information for all this is collected from HRP process.