L14 performance management and appraisal

Performance
Management/ Appraisal

Basic Concepts in Performance
Management and Appraisal
• Performance Management:
An integrated approach to ensuring that an
employee’s performance supports and
contributes to the organization’s strategic aims.
• Performance Appraisal:
Setting work standards, assessing performance,
and providing feedback to employees to
motivate, correct, and continue their
performance.

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.

The Purpose of Performance Appraisal
• Clarifies objectives
• Motivating employees through feedback and
achievements
• Training needs
• Identification of personal strength and weakness
• Career and succession planning
• Team role clarification
• Resolving confusion

Steps of Performance Appraisal
1) Establish performance standards
2) Communicate the standards
3) Measure actual performance
4) Compare actual performance with
standards and discuss the appraisal
5) Take corrective action, if necessary

Traditional and Modern methods of
performance management
Traditional
• Graphic Rating Scale
Method
• Alternation Ranking Method
• Paired Comparison Method
• Forced Distribution Method
• Critical Incident Method
• Annual Confidential Report
(ACR)
• Narrative Forms
Modern
• Behaviorally Anchored
Rating Scales (BARS)
• Management by
Objectives (MBO)
• Assessment centre
• Cost accounting method
• 360 degree feedback
method

Methods of Rating
• Graphic Rating Scale Method- is the simplest and
most popular performance appraisal technique. A scale
is used to list a number of traits and a range of
performance for each, then the employee is rated by
identifying the score that best describes his/her
performance level for each trait.
Managers must decide which job performance aspects to
measure.
Generic dimensions – communication ,teamwork etc
Actual job duties.
Behaviorally recognizable competencies.

A Graphic Rating Scale
Excellent Good Fair Poor
Quality of work
Quantity of work
Creativity
Integrity

Alternation Ranking Method – is where employees are
ranked from best to worst on a particular trait, choosing
highest, then lowest, until all are ranked.

• Paired Comparison Method – involves ranking
employees by making a chart of all possible pairs of
employees for each trait and indicating which is the
better employee of the pair.

• Forced Distribution Method – is where
predetermined percentages of rates are placed in
various performance categories; similar to
grading on a curve.GE has 20 %(top) 70 % middle
and 10% (bottom).
• Critical Incident Method – is where a supervisor
keeps a record of uncommonly good and/or
undesirable examples of an employee’s work-
related behavior. The supervisor and subordinate
meets to discuss latter's performance and
reviewing it with the employee at predetermined
times may be 6 months.

L14 performance management and appraisal

Examples of Critical Incidents for a Plant Manager
Continuing Duties Targets Critical Incidents
Schedule production
for plant
90% utilization of
personnel and
machinery in plant;
orders delivered on
time
Instituted new production
scheduling system; decreased late
orders by 10% last month; increased
machine utilization in plant by 20%
last month
Supervise machinery
maintenance
No shutdowns due to
faulty machinery
Instituted new preventative
maintenance system for plant;
prevented a machine breakdown by
discovering faulty part

• 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
• Narrative Forms – involve rating the employee’s
performance for each performance factor, writing
down examples and an improvement plan, aiding
the employee in understanding where his/her
performance was good or bad, and summarizing
by focusing on problem solving

Behaviorally Anchored Rating Scales
(BARS)
• Combines the benefits of narratives, critical incidents,
and quantified scales, by anchoring a scale with specific
behavioral examples of good or poor performance.
The five steps in developing a BARS are:
1) Generate critical incidents for effective and ineffective
jobs
2) Develop performance dimensions
3) Reallocate incidents ( with another set of experts,
retain the CI if 50 % to 80% agree )
4) Scale the incidents
5) Develop final instrument.

Advantages of BARS
– A more accurate gauge
– Clearer standards
– Feedback
– Independent dimensions
– Consistency

Management by Objectives (MBO)
• A comprehensive and formal organization wide
goal-setting and appraisal program requiring:
1. Setting of organization’s goals.
2. Setting of departmental goals.
3. Discussion of departmental goals.
4. Defining expected results (setting individual goals).
5. Conducting periodic performance reviews.
6. Providing performance feedback.

Cost Accounting Method
• Cost Accounting Method : This method evaluates an
employees performance in relation to the contribution
of an employee in monetary terms. Here the rater
evaluates the employee in terms of cost of retaining
the employee and the benefits the organisation derives
from him/her.
• The following factors are taken into account in this
method :
(1) Cost of training the employee.
(2) Quality of product or service rendered.
(3) Accidents, damages, errors, spoilage, wastages, etc.
(4) The time spent in appraising the employee.

360 Appraisal System
• 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
fedback to the individual participant in a clear
way designed to promote understanding,
acceptance and ultimately behavior

Problems of Performance Appraisal
Subjective bias and favoritism are real problems.
They focus too much symptoms of poor performance
rather than finding the underlying causes.
Managers and employees dislike the process.
Raters have trouble deciding performance levels.
Employees who are not placed in the top performance
category experience a reverse motivation effect

KRA and KPA
• Key Result Areas refer to general areas of
outputs or outcomes for which the department’s
role is responsible.
• Key Performance Areas are the areas within the
business unit, for which an individual or group is
logically responsible.
• KRA defines the outcome or end result expected
to be delivered while KPA defines all the
activities, not always result oriented, an
individual has to perform being on job.

KEY RESULT AREA
Key Result Area
Key = crucial/main
Result = outcome/end/consequence
Area = space/range
KEY RESULT AREA = crucial outcome space
-KRA is the area identified as important or crucial
where a result will assist in the achievement of the
set objectives or goal.
-KRA defines what a job is expected to accomplish.
-KRA’s might fall within the scope of Key Performance
Areas (KPA)

Key Performance Area
Key = crucial/main
Performance = Achievement/Attainment
Area = space/range/field of operation
KEY PERFORMANCE AREA = Main achievement space
-KPA is the overall scope of activities that an individual
on a job role has to perform.
-KPA is not always result focused.
-KPA’s can be inclusive of KRA’s

Example :
Role – Product Manager
Goal – Ensuring delivery of quality product within schedule.
Key Result Area
Customer Satisfaction.
Product Management.
Operational Cost Control.
Quality Check.
Record keeping.
Key Performance Areas
Maintaining good working condition in plant.
Optimum Resource Utilization.
Process Improvement.
Safety and Prevention planning and control.
Working within the company’s SLA(Service Level Agreement), GRC(Governance,
Risk Management and Compliance) policies

L14 performance management and appraisal

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