The document discusses performance management systems and performance appraisals. It defines performance as the degree of accomplishment of job tasks. Performance is determined by effort, abilities, and role perceptions. Effective performance management systems include regular performance appraisals that provide feedback, set improvement goals, and inform decisions like promotions. Several appraisal methods are described, like management by objectives and 360-degree feedback, with their strengths and weaknesses. Common errors in appraisals like leniency and halo effects are also outlined.

1. Human Resource Management
Class level: BBA (4th)
Topic: Performance Management System
University of Education, Vehari Campus

2. What is Performance
Management System
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3. What is Performance
Performance refers to the degree of
accomplishment of the tasks that make up an
employee’s job.
Efforts
Results
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4. Determinants of Performance
 Effort
 Abilities
 Role (task) perception
Job performance is the net effect of an
employee’s effort as modified by abilities and
role (or task) perceptions.
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5. Determinants of Performance
 Effort which results from being motivated,
refers to the amount of energy (physical and/or
mental) an individual uses in performing a
task.
 Abilities are personal characteristics used in
performing a job. Abilities usually do not
fluctuate widely over short periods of time.
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6. Determinants of Performance
 Role (task) perceptions refer to the
direction(s) in which individuals believe they
should channel their effort on their jobs.
 The activities and behaviors people believe
are necessary in the performance of their jobs
define their role perceptions.
 Relationship?
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7. Determinants of Performance
 To attain an acceptable level of performance, a
minimum level of proficiency must exist in
each of the performance components.
 If employees put forth tremendous effort and have
excellent abilities but lack a clear understanding of their
roles.
 An employee who puts forth a high degree of effort and
understands the job but lacks ability.
 A final possibility is the employee who has a good ability
and understanding of the role but is lazy and expends little
effort. 7

8. Environnemental Factor as
Performance Obstacles
Other factors beyond the control of the employee
can also stifle performance.
 Sometimes used merely as excuses
 Employee’s lack of time
 Conflicting demands
 Inadequate work facilities
 Restrictive policies
 Lack of cooperation from others
 Type of supervision
 Temperature, lighting, noise, machine or equipment pacing, shifts, and
even luck
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9. Environnemental Factor as
Performance Obstacles
Environmental factors should be viewed not as
direct determinants of individual performance
but as modifying the effects of effort, ability,
and direction.
 For example, poor ventilation
 Unclear policies or poor supervision
 Lack of training
 Inadequate working conditions
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10. Responsibilities of the Human Resource
Department
in Performance Management
Generally, the responsibilities of the human
resource department are to:
1. Design the performance management system and select the
methods and forms to be used for appraising employees.
2. Train managers in conducting performance appraisals.
3. Maintain a reporting system to ensure that appraisals are conducted
on a timely basis.
4. Maintain performance appraisal records for individual employees.
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11. Responsibilities of the Human Resource
Department
in Performance Management
The responsibilities of managers in performance
appraisals are to:
1. Evaluate the performance of employees.
2. Complete the forms used in appraising employees and return them
to the human resource department.
3. Review appraisals with employees.
4. Establish a plan for improvement with employees.
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12. How should an effective
performance management system?
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13. How should an effective
performance management system?
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14. PERFORMANCE
APPRAISAL
Process of evaluating and communicating to an
employee how he or she is performing the job
and establishing a plan for improvement.
 Positive reinforcement
 Future improvements
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15. USE OF PERFORMANCE
APPRAISAL
One of the most common uses of performance
appraisals is for making administrative decisions:
 promotions
 firings
 layoffs
 merit pay increases
Note: Performance appraisals do provide some predictive information
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16. USE OF PERFORMANCE
APPRAISAL
Performance appraisal information can also
provide needed input for determining both
individual and organizational training and
development needs.
 For example, this information can be used to identify
an individual employee’s strengths and weaknesses.
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17. USE OF PERFORMANCE
APPRAISAL
Another important use of performance appraisals
is to encourage performance improvement.
 In this regard, performance appraisals are used as a
means of communicating to employees how they
are doing and suggesting needed changes in
behavior, attitude, skills, or knowledge.
 Clarifies expectations
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18. USE OF PERFORMANCE
APPRAISAL
Finally, two other important uses of information
generated through performance appraisals are
(1)input to the validation of selection procedures
(2) input to human resource planning
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19. PERFORMANCE
APPRAISAL METHODS
 Whatever method of performance appraisal an
organization uses, it must be job related.
 Therefore, prior to selecting a performance
appraisal method, an organization must conduct
job analyses and develop job descriptions.
 After this, one or more of the following
performance appraisal methods can be used.
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20. PERFORMANCE
APPRAISAL METHODS
 Each method of performance appraisal has its
strengths and weaknesses may be suitable for one
organization and non-suitable for another one.
 As such, there is no single appraisal method accepted
and used by all organizations to measure their
employees’ performance.
 All the methods of appraisal devised so far have been
classified differently by different authors.
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21. PERFORMANCE
APPRAISAL METHODS
Traditional Modern
Paired Comparison Method 360 Degree Method
Critical Incident Method Management by Objective
Checklist Method Assessment Centers
Forced Distribution Method Behaviorally Anchored Rating Scales
Graphic Scale Method
Confidential Report
Field Review Technique
Essay Method
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22. Traditional Methods
 Paired Comparison Method It compares
each employee with every individual present
in the same team and depending on their
comparative performance to the employee
who has performed the best, appraisals are
given.
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23. Traditional Methods
 Checklist Method Under this method,
checklist of statements of traits of employee
in the form of Yes or No based questions is
prepared. Here the rater only does the
reporting or checking and HR department
does the actual evaluation.
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24. Traditional Methods
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25. Traditional Methods
 Critical Incident Method
 Critical incident method or critical incident technique in which
analyses the behavior of employee in certain events in which
either he performed very well and the ones in which he could
have done better.
 In Critical incident method, the manager of the employee
gives all the details of the incident. This method is quite
subjective in nature as compared to other methods which may
be very objective and would require just ratings out of 5/10
etc.
 On a particular day one Salesperson stayed 60 minutes beyond his break during the busiest part of the
day. Whereas another salesperson fails to answer store manager’s call thrice.
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26. Traditional Methods
 Forced distribution is a method of employee
performance appraisal that many companies use.
We also call it the forced distribution
method, stacked ranking, or bell-curve rating. It
is a rating system that employers use to evaluate
their workers. Managers must evaluate each
employee, usually into one of three categories, i.e.,
poor, good, or excellent. There may be more
categories.
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27. Traditional Methods
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28. Traditional Methods
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29. Traditional Methods
 Graphic Scale Rating
 In this method traits or behaviors that are important
for effective performance are listed out and each
employee is rated against these traits. The rating
helps employers to quantify the behaviors displayed
by its employees.
Some of these behaviors might be:
 Quality of work
 Teamwork
 Sense of responsibility
 Ethics etc.
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30. Traditional Methods
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31. Traditional Methods
Confidential Report
 It is mostly used in government organization.
 It is a detailed report prepared by the employee’s
immediate boss at the end of every year.
 This report highlights the strengths and weaknesses
of the subordinate.
 In this report the impression of the subordinate in
superiors mind is recorded.
 It does not offer any feedback to the employee.
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32. 32

33. Traditional Methods
 Field review method of performance
appraisal is conducted by the rater who does
not belong to the employees’ department.
The rater is someone from the corporate,
especially from HR department.
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34. Traditional Methods
Essay Method
 In the essay method approach, the appraiser prepares a
written statement about the employee being appraised.
The statement usually concentrates on describing specific
strengths and weaknesses in job performance. It also
suggests courses of action to remedy the identified problem
areas.
The statement may be written and edited by the appraiser
alone, or it be composed in collaboration with the appraisee.
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35. Modern Methods
Management by objectives (MBO)
 Management by objectives (MBO) is the appraisal
method where managers and employees together
identify, plan, organize, and communicate objectives
to focus on during a specific appraisal period.
 After setting clear goals, managers and subordinates
periodically discuss the progress made to control and
debate on the feasibility of achieving those set
objectives.
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36. Modern Methods
 At the end of the review period (quarterly,
half-yearly, or annual), employees are judged
by their results.
 Success is rewarded with promotion and a
salary hike whereas failure is dealt with
transfer or further training.
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37. Modern Methods
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38. Modern Methods
360-Degree Feedback
 360-degree feedback is a multidimensional
performance appraisal method that evaluates
an employee using feedback collected from
the employee’s circle of influence namely
managers, peers, customers, and direct
reports.
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39. Modern Methods
 This method will not only eliminate bias in
performance reviews but also offer a clear
understanding of an individual’s competence.
 This appraisal method has five integral components like:
1. Self-appraisals
2. Managerial reviews
3. Peer reviews
4. Subordinates Appraising manager (SAM)
5. Customer or client reviews
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40. Modern Methods
Assessment Centre Method
 The concept of assessment center was introduced way back
in 1930 by the German Army but it has been polished and
tailored to fit today’s environment.
 The assessment center method enables employees to get a
clear picture of how others observe them and the impact it
has on their performance.
 The main advantage of this method is that it will not only
assess the existing performance of an individual but also
predict future job performance.
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41. Modern Methods
Behaviorally Anchored Rating Scale (BARS)
 Behaviorally anchored rating scale is a measuring
system which rates employees or trainees according to
their performance and specific behavioral patterns.
 BARS is designed to bring the benefits of both
quantitative and qualitative data to employee appraisal
process as it mechanism combines the benefits of
narratives, critical incidents and quantified ratings.
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42. POTENTIAL ERRORS IN
PERFORMANCE APPRAISALS
 Several common errors have been identified
in performance appraisals.
 Leniency is the grouping of ratings at the
positive end instead of spreading them
throughout the performance scale.
 The central tendency occurs when appraisal
statistics indicate that most employees are
appraised as being near the middle of the
performance scale. 42

43. POTENTIAL ERRORS IN
PERFORMANCE APPRAISALS
 Recency occurs when evaluations are based on
work performed most recently—generally work
performed one to two months prior to evaluation.
 Another common error in performance appraisals is
the halo effect. This occurs when a rater allows a
single prominent characteristic of an employee to
influence his or her judgment on each separate
item in the performance appraisal. This often results
in the employee receiving approximately the same
rating on every item.
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44. POTENTIAL ERRORS IN
PERFORMANCE APPRAISALS
 Personal preferences, prejudices, and biases
can also cause errors in performance
appraisals. Managers with biases or
prejudices tend to look for employee
behaviors that conform to their biases.
Appearance, social status, dress, race, and
sex have influenced many performance
appraisals.
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45. OVERCOMING ERRORS IN
PERFORMANCE APPRAISALS
 One approach to overcoming these errors is
to make refinements in the design of
appraisal methods.
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46. OVERCOMING ERRORS IN
PERFORMANCE APPRAISALS
 For example, one could argue that the forced-
distribution method of performance appraisal
attempts to overcome the errors of leniency and
central tendency. In addition, behaviorally
anchored rating scales are designed to reduce halo,
leniency, and central tendency errors because they
provide managers with specific examples of
performance against which to evaluate an
employee.
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