Performance appraisal (HRM)BBA 3rd sem
- 2. Performance Appraisal Systematic assessment and descriptions of an employee’s accomplishments in the assigned tasks and assessment of job related strengths and weaknesses. Why appraisal? Organization needs to know how an employee has performed just as an employee needs to know how his performance has been viewed by the organization.
- 3. Performance Appraisal: • It is an objective assessment of an individual’s performance against well defined benchmarks. • PA is a formal, structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organisation and society all benefit. • Evaluating factors includes job knowledge, quality and quantity of output, leadership qualities, supervision, co-operation, dependability, judgment, versatility, health, etc.
- 4. Relationship of PA and job analysis: Job Analysis Performance Standards Performance Appraisal Describes work and personnel requirement of a particular job Translate job requirements into levels of acceptable or unacceptable performance Describes the job- relevant strengths and weaknesses of each individual
- 5. Main Purpose of Employee Assessment: To effect promotions based on competence and performance. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To assess the training and development needs of employees. To decide upon a pay raise where pay scales have not been fixed.
- 6. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To improve communication. For determining whether HR programes such as selection, training, and transfers have been effective or not.
- 7. Multiple Purposes of PA: General Purpose Specific Purpose Developmental Issues Identification of individual needs Performance Feedback Determining Transfers and Job Assignments Identification of Individual Strengths Administrative Uses/ Decisions Salary Promotion Retention or Termination Identification of poor performers Organizational Maintenance/ Objectives HR Planning Determining Organization Training Needs Evaluation of Organizational Goal Achievement Evaluation of HR systems Documentation Criteria for Validation Research Documentation for HR Decisions Helping to Meet Legal Requirements
- 8. What is the purpose of performance appraisals? Performance appraisals permit you and your employee to review the employee’s accomplishments of the year. Performance appraisal sets the foundation of the goals and objectives for your employee for the upcoming year.
- 9. Q. How should I use the self-evaluation process? After your employee completes his/her performance evaluation, review it with him/her, come to an agreement on the self-assessment and , if appropriate, incorporate the employee’s comments along with your own. The evaluation should not be 100% the employee’s self-appraisal.
- 10. Q. Is there a special formula to use to reach the overall rating? No, there is not. Supervisors/managers must look objectively at the employee’s competencies and responsibilities and ask yourself, “On the whole, how did this employee do?”.
- 11. Performance Appraisal contributes to firm’s Competitive Advantage: Values And Behavior Minimizing Dissatisfaction and Turnover Improving Performance Strategy And Behavior Making Correct Decisions Competitive Advantage Ensuring Legal Compliance
- 12. Appraisal Process: Objectives of Performance Appraisal Establish Job Expectations Design an Appraisal Program Appraise Performance Performance Interview Use Appraisal Data for Appropriate Purposes
- 13. 1. Objectives of Appraisal: It includes effecting promotions and transfers, assessing training needs, awarding pay increases, etc. Appraisal in future would assume systems orientation from traditional way, which aims at improving the performance instead of assessing it. Towards end, appraisal system seeks to evaluate opportunity factors including physical environment such as noise, ventilation and lightings, available resources as human and computer assistance and
- 14. Multiple Objectives It provides inputs to a. Administration – for pay & promotion decision. b. Employees on his strengths & weaknesses c. Training, Counseling, Career Planning and Succession Planning Systems d. Organization restructuring issues
- 15. Performance Appraisal Systems: Traditional Systems System oriented Guiding Value Attribution to individual Attribution to system Primary Goals Control, documentation Development, problem solving Leadership practices Directional, Evaluative Facilitative, coaching Appraisal Frequency Occasional frequent Degree of formality High Low Reward Practices Individual Orientation Group Orientation
- 16. 2. Establish Job Expectations: The second process in job appraisal process which includes informing the employee what is expected from him/her on the job. Normally a discussion is held with the superior to review the major duties contained in the job description. Individuals are not expected to begin the job until they understand what is expected of them.
- 17. 3. Design Appraisal Program: Appraisal Design Who Are the Raters? When To Evaluate? Formal Vs Informal How To Solve? What Methods? Whose Performanc e? What Problems? What To Evaluate?
- 18. 4. Performance Interview It has 3 goals: To change behavior of employees whose performance does not meet organizational requirements or their own personal goals. To maintain the behavior of employees who perform in an acceptable manner. To recognize superior performance behaviors so that they will be continued.
- 19. 5. Use of Appraisal Data: Data and information outputs of a performance-appraisal program can critically influence the coveted employer- employee reward opportunities. It could be useful in following areas of HRM: I. Remuneration administration II. Validation of selection programs III. Employee training and development programs IV. Promotion, transfer and lay-off decisions
- 20. What should be Rated? There are six criterion for assessing performance: Quality: The degree to which the performance of an activity conforms with the ideal way of performing that activity. Quantity: The amount produced, expressed in monetary terms, no. of units, or no. of completed activity cycles. Timeliness: The degree to which an activity is completed or a result is produced, at the earliest time desirable from the standpoint of both coordinating with the output of others and of maximizing the time available for other activities.
- 21. Cost Effectiveness: The degree to which the organization's resources is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource. Need for Supervision: The degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome. Interpersonal Impact: The degree to which a performer promotes feeling of self-esteem, goodwill & co- operation among co-workers & subordinates.
- 22. TIMING OF EVALUATION How often should the employee be assessed? The general trend is to evaluate once in three months, or six months, or once in a year. according to a survey conducted in 1997, 70% of the organization conduct performance appraisal once a year. Newly hired employees are rated more frequently than older ones. Frequent assessment is better than phased evaluation because in former case we get constant feedback enabling a person to improve his/her performance if
- 23. METHODS OF APPRAISAL There are numerous methods to measure the quality & quantity of employee’s job performance. Each of the method is effective for some purpose, for the organizations. Broadly, all the approaches to appraisal can be classified into: Traditional Methods (past oriented) Modern Methods (future oriented)
- 24. Traditional Methods 1. Ranking method 2. Paired comparison 3. Grading 4. Forced distribution method 5. Forced choice method 6. Checklist method 7. Critical incidents method 8. Graphic scale method 9. Essay method 10. Field review method 11. Confidential report Modern Methods 1. Management by Objectives (MBO) 2. Behaviorally anchored rating scales 3. Assessment centres 4. 360-degree appraisal 5. Cost accounting method
- 26. Traditional Methods 1. Ranking method: One employee is compared with all others for the purpose of placing them in a simple rank order of worth. The employees are ranked from the highest to the lowest or from the best to the worst. The employee who is the highest on the characteristics being measured and also the one who is the lowest, are indicated. Then the next highest and the next lowest are chosen , alternating between next highest and lowest until all the employees to be rated have been ranked. Thus, if there are ten employees to be appraised, there will be ten ranks from 1 to 10.
- 27. Limitations 1. It does not tell that how much better or worse one is than another, 2. The task of ranking individuals is difficult when a large number of employees are rated, 3. It is very difficult to compare one individual with others having varying behavioural traits. To remedy these defects, the paired comparison method pf performance appraisal has been evolved.
- 28. 2. Paired-comparison method- The appraiser compares each employee with every other employee, one at a time. The no. of comparisons may be calculated by following formula Where N stands for no. of employees 3. Grading- certain categories of worth are established in advance and carefully defined. There can be three categories established for employees : outstanding, satisfactory, and unsatisfactory. There can be more than three grades. Employee performance is compared with grade definitions. The employee is allocated to the grade that best describes his or her performance. The major drawback of this method is that the rater may rate most of the employees on the higher side of their performance. 2 ) 1 ( N N
- 29. 4. Forced Distribution Method: One of the error in rating is central tendency- clustering of large no. of employees around a high point on a rating scale. Forced distribution helps in overcoming this problem by compelling the rater to distribute the ratees on all points on the rating scale. The method is based on the assumption that the employees performance level conforms to a normal statistical distribution.
- 30. 5. Forced Choice Method: The rater is given a series of statement about the employees. These statements are arranged in blocks of two or more, and rater indicates which statement is most or least descriptive of the employees. In this method the rater if forced to select statements which are readymade. Example: Typical statements are Learns Fast ………....works hard work is reliable……..performance is a good example for Absent often………...others usually tardy Advantages: absence of personal bias in rating Disadvantages: statements may not be properly framed-they may not be precisely descriptive of the ratee’s traits
- 31. 6. Checklist method: Under this method, a checklist of statements on the traits of the employee and his/her job is prepared in two columns-viz, a ‘Yes’ column and ‘No’ column. The rater is just supposed to tick Yes or No in front of those traits being evaluated. When points are allotted to the checklist it becomes a ‘weighted checklist’. Advantages: economy ease of administration limited training of rater standardization Disadvantages: susceptibility to rater’s biases (especially halo effect) use of personality criterion instead of performance use of improper weights by the HR Department
- 32. 7. Critical Incidents Methods: The approach focuses on certain critical behavior of an employees that make all the difference between effective & non effective performance of a job. Such incidents are recorded by superiors as & when they occur. Advantages: evaluation is based on actual job behavior the approach has descriptions in support of particular rating of employee chance that subordinates will improve because they learn, what is expected from them Disadvantages: negative incidences are more noticeable than positive ones Overly close supervision may result
- 33. 9. ESSAY METHOD: The rater must describe the employee of broad categories, such as i. The rater’s overall impression of the employee’s performance ii. The promotability of the employee iii. The jobs that the employee is now able or qualified to problem iv. The strength and weaknesses of the employee v. The training and the development assistant required by the employee The strength of this method depends on the writing skills and analytical ability of the rater.
- 34. 10. FIELD REVIEW METHOD: Appraisal by someone from outside the assessee’s own department, usually someone from the corporate office or HR office. The outsider reviews employee records and holds interviews with the ratee and his or her superior. It is used for making promotional decision at the managerial level. Drawbacks: An ‘outsider’ is not usually familiar with conditions in an employee’s work environment. An ‘outsider’ review does not have the opportunity to observe employee behavior of performance over a period of time and in a variety of situations.
- 35. 11. CONFIDENTIAL RECORDS: Maintained mostly in government departments. The report has following 14 items- Attendance, Self-expression, Ability to work with others, Leadership, Initiative, Technical ability, Ability to understand the new material, Ability to reason, Originality and resourcefulness, Areas of work that suits the person best, Judgement, Integrity, Responsibility, Defect ◦ 12 of these are filled on a 4-point grade scale. ◦ Integrity and justification are considered separately. ◦ Overall rating on a 5-point grade scale is separately given. PERFORMANCE TESTS AND OBSERVATIONS: Test of knowledge or skills to measure the potential more than actual performance.
- 36. Modern Methods This technique is used because of following reasons- It is not enough if only the past performance is assessed. Performance in the coming days is equally important. Commonly used techniques: Management by Objectives Psychological Appraisals Assessment Centers 360-Degree Feedback
- 37. MANAGEMENT BY OBJECTIVES MBO is a process that converts Organisational objectives into individual objectives. The MBO philosophy is built on the assumptions that individuals can be responsible, can exercise self-direction and not require external controls and threats of punishments to motivate them to work towards their objectives.
- 38. MANAGEMENT BY OBJECTIVES: 1. Establishment of Goals 2. Setting the performance standard 3. Actual level of job attainment is compared with the goals agreed upon. 4. Establishing new goals and new strategies for goals not previously attained. It is used with managerial personnel and employees who have a fairly wide range of flexibility and self-control in their jobs. Drawbacks: Not applicable for all jobs in all organizations
- 39. PSYCHOLOGICAL APPRAISALS: When psychologists are used for evaluations, they asses an individual’s future potential and not past performance. The appraisal consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations. ASSESSMENT CENTRES: An assessment center is a central location where managers may come together to have their participation in job-related exercises evaluated by trained observers. The characteristics assessed in a typical assessment center include assertiveness, persuasive ability, communicating ability, planning and organizational ability, self-confidence, resistance to stress, energy level, decision-making, sensitivity to the feelings of others, administrative ability, creativity and mental alertness.
- 40. 360-DEGREE FEEDBACK: A systematic collection of performance data on an individual or group, derived from a number of stakeholders (immediate supervisors), team members, customers, peers, and self. It facilitates greater self-development of the employee. It provide formalized communication links between an employee and his or her internal or external customers. Drawbacks: Receiving feedback on performance from multiple sources can be intimidating. The technique take a long time on selecting the rater, designing questionnaires, and analyzing the data.
- 41. Behaviorally Anchored Rating Scales: BARS are rating whose scale points are determined by statements of effective and ineffective behaviors. A rater is expected to indicate which behavior on each scale best describes an employee’s performance. BARS has following features: Area of performance to be evaluated are identified & defined by the peoples who will use the scales. The scales are anchored by descriptions of actual job behavior that supervisor agree, represents specific levels of performance. All dimensions of performance to be evaluated are based on observable behaviors & are relevant to the job being evaluated since BARS are tailor-made for the job. Since the raters who will actually use the scales are actively involved in the development process.
- 42. Construction of BARS (steps) 1. Identification of performance measures (identify those areas on which performance of persons are going to be evaluated) 2. Identification of critical Behaviour (different Behaviour in one situation) 3. Re-classification of critical behaviour 4. Scaling of critical behaviour 5. Development of bars instrument
- 43. Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed. Align organizational objectives to individual aspirations. Clear growth paths for talented individuals. Provide new challenges to rejuvenate careers that have reached the Plateau stage. Forge a partnership with people for managing their careers. (contd…) CHALLENGES OF PERFORMANCE APPRAISAL
- 44. Empower employees to make decisions without the fear of failing. Embed teamwork in all operational processes. Debureaucratise the organization structure for ease of flow of information. CHALLENGES OF PERFORMANCE APPRAISAL
- 45. Performance appraisal data are used to make many important HR decisions (e.g. pay, promotion, training, transfer, and termination). The appraisal system is a common target of legal disputes by employees involving charges of unfairness and bias. (contd…) LEGAL ISSUES ASSOCIATED WITH PERFORMANCE APPRAISAL
- 46. Problems in Performance Appraisal 1. Relating to System- a. How to evolve measure to assess managerial tasks. b. Generate data on performance c. Understanding of system at the top management level. d. Reliable technique for measuring comparative merit and performance.
- 47. Problems in Performance Appraisal 2. Relating to Appraiser- a. Playing God creates anxiety. b. Evaluation of personality traits. c. Bias and halo effect d. Regency of incidents e. Central Tendency f. Too harsh too easy
- 48. Problems in Performance Appraisal 3. Relating to Appraisee- His perspective on system depends on how he earns recognition vis-à-vis others. His criteria are rarely explicit.