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Performance Management and
Appraisal
Prof. Hiteshwari Jadeja

A process of goal-setting, communication, observation
and evaluation to support, retain and develop exceptional
employees for organizational success.
Performance Management
Communicate
Observe
Evaluate
Set Goals

Why Performance Management?
Total Quality
Appraisal Issues
Strategic Focus
The
Performance
Management
Approach

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

Performance Management and Performance
Appraisal
• Performance management:
 Dynamic, continuous process.
 Improves organizational effectiveness.
 Strategic goals.
• Performance appraisal:
 Periodic (usually annual) event.
 Formal review.
 Last step in performance management
process.

Defining the Employee’s Goals
and Work Standards
Assign
Specific
Goals
Encourage
Participation
Assign
Measurable
Goals
Assign
Challenging
but Doable
Goals
Guidelines for
Effective Goal Setting

Setting Goals
• SMART Goals:
 Specific, and clearly state the desired results.
 Measurable in answering “how much.”
 Attainable, and not too tough or too easy.
 Relevant to what’s to be achieved.
 Timely in reflecting deadlines and milestones.

An Introduction to Appraising Performance
Performance Appraisal is an objective
assessment of an individual’s performance
against well defined benchmarks.

Definitions
According to Edwin Flippo, "Performance Appraisal is the
systematic, periodic and impartial rating of an employee's
excellence, in matters pertaining to his present job and his
potential for a better job.“
According to Dale Beach, "Performance Appraisal is the
systematic evaluation of the individual with regards to his or her
performance on the job and his potential for development."

An Introduction to Appraising Performance
1
Is useful in career planning.
Plays an integral role in performance management.
Why Appraise Performance?
Is basis for pay and promotion decisions.
Helps in correcting deficiencies and reinforcing good
performance.
2
3
4

Objectives of Appraisal
• 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 (as in the
unorganised sector) regular pay scales have not been
fixed.

• 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. Performance appraisal
provides a format for dialogue between the superior and
the subordinate, and improves understanding of
personal goals and concerns.
• Finally, performance appraisal can be used to
determine whether HR programmes such as selection,
training, and transfers have been effective or not.
Objectives of Appraisal (contd..)

Classroom
Teaching
Appraisal by
Students

The Performance Appraisal Process
Objectives of
Establish Job
Expectations
Design an Appraisal
Programme
Appraise Performance
Performance Interview
Use Appraisal Data for
Appropriate Purposes

Performance Appraisal Methods
Traditional Methods (Past-
Oriented)
1. Graphic Rating Scale Method
2. Alternation Ranking Method
3. Paired Comparison Method
4. Forced Distribution Method
5. Critical Incident Method
6. Narrative Forms
7. Annual Confidential Report
(ACR)
Modern Methods ( Future-
Oriented)
1. Behaviorally Anchored Rating
Scales (BARS)
2. Management by Objectives
(MBO)
3. Computerized and Web-
Based Performance Appraisal
4. Merged Methods
5. Assessment Centres
6. 360- Degree Feedback

Graphic Rating Scale Method
• A scale that lists a number of traits and a range
of performance for each. The employee is then
rated by identifying the score that best
describes his or her level of performance for
each trait.

Sample
Graphic Rating
Performance
Rating Form

Sample
Performance
Rating Form
(continued)

Alternation ranking Method
• Ranking employees from best to worst on a
particular trait, choosing the highest, then
lowest, until all are ranked.

Scale for alternate ranking of Appraiser

Paired Comparison Method :
In this method, each employee is compared with the other on
one-to-one basis. This method makes judgement easier as
compared to ranking method.. The total number of comparison
can be ascertained by the following formula :
Maximum no. of pairs = [n(n-1)]/2
• where N stands for number of employees to be evaluated.
Example:
If the following five students Ashok (A), Bina (B), Chitra (C),
Dinesh (D), Eillen (E) have to be evaluated for the best student
award, the total number of comparison would be = 10
• A with B
• A with C B with C
• A with D B with D C with D
• A with E B with E C with E D with E
• The number of times a student gets a better score, would be the
basis for selecting the Best Student. This method is not
appropriate if a large number of students are required to be
evaluated. 24

FIGURE 9–6 Ranking Employees by the Paired Comparison Method
Note: + means “better than.” – means “worse than.” For each chart, add
up the number of +’s in each column to get the highest-ranked employee.

Forced Distribution Method
 Similar to grading on a curve; predetermined
percentages of ratees are placed in various
performance categories.
 Example:
 15% high performers
 20% high-average performers
 30% average performers
 20% low-average performers
 15% low performers
26

Critical Incident Method
• This method evaluates an employee on the basis of
certain `events' or `episodes' known as critical incident.
• The underlying principle of this method is "there are
certain significant acts in each employee's behavior and
performance, which can make all the difference
between success and failure on the job.“
• Thus, in this method the rater focuses his attention on
all those factors, that can make a difference between
performing a job in a noteworthy manner.
28

Examples of Critical Incidents for
an Assistant Plant Manager

Narrative Forms
• All or part of the written appraisal may be in
narrative form.
• Here, the person’s supervisor is responsible for
providing an assessment of the employee’s
past performance and required areas of
improvement.

Annual Confidential Report (ACR)
• This is a traditional method of evaluating an employee's
performance. It is normally used in Government
departments and small business units. Here, the
evaluation is done by the immediate boss or supervisor.
• The main limitation of this method is the ratings are
generally not discussed with the ratee (only in case of
adverse remark).
32

BARS (Behaviourally Anchored Rating
Scale)
• In order to overcome the problem of judgmental evaluation, this
method was conceived by some organisations. This method
combines the benefits of Essay Method, Critical Incident and
Rating scales.
• In this method the employee's behaviour and performance
dimensions are analysed and used for evaluating the performance
of the employee. The HR department is involved in the process of
preparing the BARS. Based on the Employee's performance and
behaviour, employees are anchored in different slots of good,
average and poor. The rater is required to give corresponding
ratings to the employee. 33

Behaviorally Anchored Rating Scale (BARS)
Developing a BARS
1. Generate critical
incidents
2. Develop performance
dimensions
3. Reallocate incidents
4. Scale the incidents
5. Develop a final
instrument
Advantages of BARS
 A more accurate
gauge
 Clearer standards
 Feedback
 Independent
dimensions
 Consistency

Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship
Skills

Management by Objectives (MBO)
• A comprehensive and formal organizationwide
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.

Using MBO
Problems with
MBO
Setting unclear
objectives
Conflict with
subordinates over
objectives
Time-consuming
appraisal process

Computerized and Web-Based
• Performance appraisal software programs
 Keep notes on subordinates during the year.
 Electronically rate employees on a series of
performance traits.
 Generate written text to support each part of the
appraisal.
• Electronic performance monitoring (EPM)
 Having supervisors electronically monitor the
amount of computerized data an employee is
processing per day, and thereby his or her
performance.

Assessment Centres :
• This method was used to appraise army officers in Germany
way back in 1930s. The concept was adapted from army to
business arena in 1960s. In India, the concept has been
adopted by organisations such as Crompton Greaves,
Eicher, Hindustan Lever and Modi Xerox recently.
• This method is mainly used to evaluate executive and
supervisory potential. Here employees are taken to a place
away from work and a series of tests and exercises are
administered. For example, assesses are asked to
participate in; in-basket exercise, simulations, group exercise
and role plays. Performance of the employee is evaluated in
each of these tests and feedback is provided to the ratee, in
terms of strengths and weaknesses.
40

360o Appraisal Method :
• Where multiple raters are involved in evaluating performance, the
technique is called 360-degree appraisal.
• The 360-degree technique is understood as systematic collection
of performance data on an individual or a, group derived from a
number of stakeholders—the stakeholders being the immediate,
team members customers peers and self.
• In this method an employee's performance is evaluated by his
supervisor, subordinates, peers and customers (or an outside
expert).
• All these appraisers provide information or feedback by completing
a questionnaire designed for this purpose.
41

42
• The 360-degree degree appraisal provides a broader
perspective about an employee’s performance.
• In addition, the technique facilitates greater self-
development of the employee.
• It enables an employee to compare his evaluation about
self with perceptions of others
• Though this method was developed to bring about a
degree of objectivity, it still suffers from subjectivity.

Appraising Performance:
Problems and Solutions
Unclear
Standards
Leniency or
Strictness
Halo
Effect
Potential Rating
Scale Appraisal
Problems
Central
Tendency
Bias

TABLE 9–2 A Graphic Rating Scale with Unclear Standards
Note: For example, what exactly is meant by “good,” “quantity of work,” and so forth?
Excellent Good Fair Poor
Quality of work
Quantity of work
Creativity
Integrity

Appraising Performance:
Problems and Solutions (continued)
Know
Problems
Control
Outside
Influences
Use the
Right Tool
How to Avoid
Appraisal Problems
Train
Supervisors
Keep
a Diary

TABLE 9–3 Important Advantages and Disadvantages of Appraisal Tools
Tool Advantages Disadvantages
Graphic rating
scale
Simple to use; provides a
quantitative rating for each
employee.
Standards may be unclear; halo
effect, central tendency, leniency,
bias can also be problems.
BARS Provides behavioral “anchors.”
BARS is very accurate.
Difficult to develop.
Alternation ranking Simple to use (but not as simple as
graphic rating scales). Avoids central
tendency and other problems of
rating scales.
Can cause disagreements among
employees and may be unfair if all
employees are, in fact, excellent.
Forced distribution
method
End up with a predetermined number
or % of people in each group.
Employees’ appraisal results depend
on your choice of cutoff points.
Critical incident
method
Helps specify what is “right” and
“wrong” about the employee’s
performance; forces supervisor to
evaluate subordinates on an ongoing
basis.
Difficult to rate or rank employees
relative to one another.
MBO Tied to jointly agreed-upon
performance objectives.
Time-consuming.

Who Should Do the Appraising?
Self-Rating
Subordinates
360-Degree
Feedback
Potential
Appraisers
Immediate
Supervisor
Peers
Rating
Committee

The Appraisal Interview
Satisfactory—Promotable
Satisfactory—Not Promotable
Unsatisfactory—Correctable
Unsatisfactory—Uncorrectable
Types of Appraisal
Interviews

The Appraisal Interview (continued)
Talk in terms
of objective
work data.
Don’t tiptoe
around.
Don’t get
personal.
Encourage
the person to
talk.
Guidelines for
Conducting an Interview

1
Recognize your own limitations.
Never attack a person’s defenses.
How to Handle a Defensive Subordinate
Recognize that defensive behavior is normal.
Postpone action.
2
3
4

1
2
3
4
5
How to Criticize a Subordinate
Criticize in private, and do it constructively.
Do it in a manner that lets the person maintain
his or her dignity and sense of worth.
Give daily feedback so that the review has no
surprises.
Never say the person is “always” wrong.
Criticism should be objective and free of biases.

Checklist
During the
Appraisal
Interview

Formal Written Warnings
• Purposes of a Written Warning
 To shake your employee out of bad habits.
 To help you defend your rating, both to your own
boss and (if needed) to the courts.
• A Written Warning Should:
 Identify standards by which employee is judged.
 Make clear that employee was aware of the
standard.
 Specify deficiencies relative to the standard.
 Indicate employee’s prior opportunity for correction.

Creating the Total Performance
Management Process
• “What is our strategy and what are our goals?”
• “What does this mean for the goals we set for
our employees, and for how we train, appraise,
promote, and reward them?”

PMS in India
Performance evaluation has reached high maturity levels in Indian
organizations.
Successful practices like goal setting, balanced scorecard,
development orientation etc., are being introduced and it mostly
covers managerial employees and employees who are not part of
any union.
ACR system of government is being changed to PMS.
Online appraisal systems are also used.
Initiatives like training, appraisals, multiple levels appraisers,
reviews, etc. are undertaken to improve the quality of PMS.

Let’s Practice Your Performance Appraisal
Skills

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