PPT on performance appraisal

1. PERFORMANCE
APPRAISAL

2. ▶ According to Flippo, a prominent personality
in the field of Human resources,
"performance appraisal is the systematic,
periodic and an impartial rating of an
employee’s excellence in the matters
pertaining to his present job and his potential
for a better job."
DEFINITION

3. NEED OF PERFORMANCE EVALUATIONS
▶ Provide a review of past work performance.
▶ Establish lines of communication.
▶ Create an opportunity to discuss professional development
goals and objectives.
▶ Document employee performance.
▶ Document corrective action necessary to improve work
performance.

4. AIMS OF PERFORMANCE APPRAISAL
▶ Give employee feedback.
▶ Identify employee training need
▶ Document criteria.
▶ Form a basis for personnel: salary increases, promotions, disciplinary
actions, bonuses, etc.
▶ Provide the opportunity for organizational diagnosis and development
▶ Facilitate communication
▶ Validate selection techniques and human resource policies.

5. PURPOSES OF PERFORMANCE APPRAISAL
▶ To review the performance of the employees.
▶ To judge the gap between the actual and the desired performance.
▶ To help the management in exercising organizational control.
▶ To diagnose the training and development needs of the future.
▶ Provide information to assist in the HR decisions like promotions,
transfers etc.
▶ Provide clarity of the expectations and responsibilities of the functions
to be performed by the employees.
▶ To judge the effectiveness of the other human resource functions.
▶ To reduce the grievances of the employees.
▶ Helps to strengthen the relationship and communication between
superior – subordinates and management – employees.

6. OBJECTIVES OF PERFORMANCE APPRAISAL
▶ To provide a control for work done
▶ To improve efficiency
▶ To help in assigning work and plan future work assignment
▶ To carry out job evaluation
▶ To identify strong and weak points and encourage finding remedies for
weak points through training
▶ To determine career potential
▶ To plan developmental( promotional or lateral) assignments
▶ To plan career goals
▶ To provide adequate feedback on performance
▶ To clearly establish goals, i.e what is expected of the staff members in
terms of performance and future work assignments
▶ To provide counseling and job satisfaction through open discussion on
performance and
▶ To let employees assess where they stand within the organization in terms
of their performance.
▶ To serve as a basis for promotion or demotion
▶ To serve as a basis for allocating incentives
▶ To serve as a basis for determining transfers
▶ To serve as a basis for termination in case of reduction of staff.

7. USE OF PERFORMANCE APPRAISAL
▶ Hike, Merit Pay, Bonuses
▶ Personnel Decisions( e.g. promotion, transfer, dismissal)
▶ Identification of training needs Research purposes

8. PROCESS OF PERFORMANCE APPRAISAL
▶ Setting performance goals and objectives
▶ Determining key competencies
▶ Measurement of performance against the goals and
objectives
▶ Measurement of performance against key competencies
▶ Feedback of results
▶ Amendment to goals and objectives

9. METHODS OF APPRAISING PERFORMANCE

10. TRADITIONAL METHOD
▶ Ranking Method: It is the oldest and simplest formal systematic method of performance
appraisal in which employee is compared with all others for the purpose of placing
order of worth. The employees are ranked from the highest to the lowest or from the
best to the worst.
▶ Paired Comparison: In this method, each employee is compared with other employees
on one- on one basis only. The rater is provided with a bunch of slips each coining pair
of names, the rater puts a tick mark against the employee whom he considers the better
of the two.
▶ Grading Method: In this method, certain categories of worth are established in advance and
carefully defined. There can be three categories established for employees: outstanding,
satisfactory and unsatisfactory. The employee is, then, allocated to the grade that best
describes his or her performance.
▶ Forced Distribution Method: This method assumes that employees performance level
confirms to a normal statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful
for rating a large number of employees’ job performance and promo ability. It tends to
eliminate or reduce bias.

11. TRADITIONAL METHOD
⮚ Forced-Choice Method: Under this method, the rater is forced to answer the ready-made
statements as given in the blocks of two or more, about the employees in terms of true or
false. Once he is done with the list, it is forwarded to the HR department for the final
assessment of the employee.
⮚ Check-List Method: The basic purpose of utilizing check-list method is to ease the
evaluation burden upon the rater. In this method, a series of statements, i.e., questions
with their answers in ‘yes’ or ‘no’ are prepared by the HR department. The check-list is,
then, presented to the rater to tick appropriate answers relevant to the appraise. Each
question carries a weight-age in relationship to their importance.
⮚ Critical Incidents Method: The critical incident method requires the rater to record statements
that describe extremely good or bad behavior related to job performance. The statements are
called critical incidents and are usually recorded by the supervisor during the evaluation period
for each subordinate. Recorded incidents include a brief explanation of what happened.
⮚ Graphic Rating Scale Method: The graphic rating scale is one of the most popular and simplest
techniques for appraising performance. It is also known as linear rating scale. In this method,
the printed appraisal form is used to appraise each employee.

12. TRADITIONAL METHOD
⮚ Essay Method: Essay method is the simplest one among various appraisal methods
available. In this method, the rater writes a narrative description on an employee’s
strengths, weaknesses, past performance, potential and suggestions for improvement.
Its positive point is that it is simple in use. It does not require complex formats and
extensive/specific training to complete it.
⮚ Field Review Method: This is an appraisal done by someone outside employees, own
department usually from corporate or HR department. Advantages: Useful for
managerial level promotions, when comparable information is needed. Disadvantages:
Outsider is generally not familiar with employees work environment, Observation of
actual behaviors not possible.
⮚ Confidential Report: It is the traditional way of appraising employees mainly in the
Government Departments. Evaluation is made by the immediate boss or supervisor for
giving effect to promotion and transfer. Usually a structured format is devised to collect
information on employee’s strength weakness, intelligence, attitude, character,
attendance, discipline, etc

13. MODERN METHOD
⮚ 360 – Degree Appraisal: In 360-degree appraisal system, an employee is appraised
by his supervisor, subordinates, peers, and customers with whom he interacts in
the course of his job performance. All these appraisers provide information or
feedback on an employee by completing survey questionnaires designed for this
purpose.
⮚ Human Resource Accounting: Human resource method attaches money values to
the value of a firms internal human resources and its external customer good will.
Under this method, performance is judged in terms of costs and contributions of
employees. Difference between the cost and contribution will reflect the
performance of the employees.

14. MODERN METHOD
⮚ Management by Objectives (MBO): The concept of MBO can be described as a
“process whereby the superior and subordinate managers of an organization jointly
identify its common goals, define each individual’s major areas of responsibility in
terms of results expected of him, and use these measures as guides for operating
the unit and assessing the contribution of each its members”.
⮚ Behaviourally Anchored Rating Scales (BARS): Behaviourally Anchored Rating
Scales (BARS) are designed to bring the benefits of both qualitative and quantitative
data to the employee appraisal process. BARS compare an individual’s
performance against specific examples of behaviour that are anchored to numerical
ratings.
⮚ Assessment Centers: An assessment center is not a location where the managers
may come together to participate in job related exercises evaluated by trained
observers. The principle idea is to evaluate managers over a period of time, by
observing and evaluating their behaviour.

15. RATING ERRORS
▶ Central Tendency
▶ Halo Effect
▶ Rater Effect
▶ Leniency or Severity
▶ Primacy & Recency Effects
▶ Contrast Effect
▶ Attribution Error
▶ Spill over Effect
▶ Status Effect
▶ Similar to me effect
▶ Stereotyping

16. RATING ERRORS
▶ Central Tendency: • The inclination to rate people in the middle scale even when the
performance clearly warrants a substantially higher or lower rating. • The attitude of
the rater is to play safe.
▶ Halo Error/Effect: • Inappropriate generalizations from one aspect of an individual’s
performance to all areas of that person’s performance. Here, one negative aspect
might influence an employee’s overall performance assessment.
▶ Rater Effect: • Includes favoritism, stereotyping, and hostility to influence the
evaluation. • Evaluation determined by rater’s attitude towards the subject and not
on actual outcome or behaviour.

17. RATING ERRORS
▶ Leniency or Severity: The error caused by the tendency of the rater to rate an
employee higher or lower than what his/her actual performance warrants. •
Influenced by a rater’s style of evaluation either being too easy on the employee or
being overly critical of the employee’s performance.
▶ Primacy & Recency Effect: The rater’s ratings are heavily influenced either by
behaviour exhibited by the subject during the early stages of the review period
(Primacy) or by outcomes or behaviours exhibited near the end of the review period
(Recency). Error caused by drawing judgment of employee performance too soon or
too late in the review period.

18. RATING ERRORS
▶ Contrast Effect: Tendency of a rater to evaluate people in comparison with other
individuals rather than against the standards of the job.
▶ Attribution Error: The tendency to attribute performance failings to factors under the
control of the individual and performance success to external causes/factors.
▶ Spill Over Effect: Refers to allowing past performance appraisal ratings to
unjustifiably influence current evaluation. Past Rating, Good or Bad, result in similar
rating for current period although the demonstrated behaviour does not deserve the
particular rating.

19. RATING ERRORS
▶ Status Effect: It refers to overrating of employees in higher level job or jobs
held/perceived high esteem & underrating employees in lower-level job or jobs
held/perceived in low esteem.
▶ Similar to me Effect: The tendency of the rater to rate employee’s who resemble
themselves more highly than they rate others.
▶ Stereotyping: The tendency to generalize across groups and ignore individual
differences.

20. POTENTIAL APPRAISAL
▶ Potential appraisal is an assessment / appraisal of a person’s capability to perform
job with higher responsibilities. In other words, ascertainment of a person’s latent /
inherent capacity to handle higher job is potential appraisal. So, level of competency,
capability of a person to perform higher cadre / grade job is measured through
potential appraisal system.
▶ So, potential appraisal is measurement/assessment of persons’ capabilities to work in
higher level jobs. People may not have potential of equal degree

21. INDICATORS OF POTENTIAL
▶ Sense of reality
▶ Imagination
▶ Power of analysis
▶ Breadth of vision
▶ Persuasiveness

22. OBJECTIVES OF POTENTIAL APPRAISAL
▶ Identification of employees having capabilities to perform
higher level jobs
▶ Assessment of general potential
▶ Identification of training needs of employee
▶ Implementing succession planning activities
▶ Assisting employee in personal development programme
▶ Helping organisation to decide its strategy
▶ Helping organisation to survive, grow and develop

23. IMPORTANCE OF POTENTIAL APPRAISAL
▶ Evaluation of capabilities
▶ Succession Planning
▶ Career development
▶ Motivate employee
▶ Identify Training need
▶ Organisational Goal

24. EFFECTIVE POTENTIAL APPRAISAL - REQUIREMENT
▶ Top management active support
▶ Corporate policy
▶ Conducive work environment
▶ Healthy organisation culture
▶ Detailed job description
▶ Quality trait for each job role
▶ Existence of practice to conduct feedback programme

25. TECHNIQUE OF POTENTIAL APPRAISAL
▶ Self-Appraisal
▶ Peers Appraisal
▶ Superior Appraisal
▶ MBO
▶ Psychological and Psychometric Tests
▶ Management Games like role playing
▶ Leadership Exercise

26. METHODS OF POTENTIAL APPRAISAL
▶ Philip’s Hi-Lo Model
▶ Philips NV Holland Model
▶ Psychometric Test
▶ Review Appraisal method

27. PHILIP'S HI-LO MODEL

28. PHILIPS NV-HOLLAND MODEL
This system includes a five-point scale, ranging from excellent to insufficient, and provides for evalua-
tion of employees on the following four qualities –
i. Conceptual effectiveness
ii. Operational effectiveness
iii. Interpersonal effectiveness
iv. Achievement motivation.

29. PERFORMANCE
APPRAISAL