Performance appraisal

THE APPRAISAL PROCESS

1. Identify The goals of the organization 2. Identify the criteria for performance appraisal 3. Decide about the frequency of the appraisals4. Decision about who will be the performance appraiser5. Choosing the most appropriate methods of

Performance appraisal. 6. Communicating appraisals to the employees7. Post appraisal interview with the employees, and 8. Evaluation of the appraisal process.

Challenges of PA

• Integrating evaluation into corporate objectives• Developing and implementing goal setting startegies for

employees• Designing appraisal system that also measures

employees potential • Assessing the methods and managing styles of

employees• Making appraisal objective by including multiple point of

views.• Creatinf a mechanism for feedback on evaluation

• Devising a system for assessing and rewarding performance.

• Rewarding superior performance of individuals.

• Ensuring internal and external equity in compensation.

• motivating through monetary and non monetary rewards.

• Top CEO’S pay is linked to performance• Middle mangers are underpaid • Junior managers : • short term : want to earn as much as possible long term: want to learn as much as possible .

OBJECTIVES OF PA

• Set mutually accepted goals linked to corporate objectives

• Departmental level • Managerial level • Individual level

Appraisal Performance

Step 1 : job analysis

Setting standards

Developing rating plans

Developing scoring procedure

Developing training programme for rater and ratee

Potential

Training and coaching / career development

Forces of change

• Flatter structure • Customer evaluation • Team work

Evaluation

• Boss • peers• Subordinates• Self appraisal • Customers

Feedback

• communication tool • Motivation tool • diagnostic tool

PAY REVIEW : FACTORS OF INFLUENCE

MARKET LEVELS

INFLATION RATE

PERFORMANCE

REWARDS PROMOTION

LATERAL MOVE

TASK FORCE ASSIGNMENT

OVERSEAS ASSIGNMENT

CASH REWARD ( INCREMENT / INCENTIVES: LUMPSUM/ STOCK OPTIONS )

NONMONETARY REWARD

1. Performance Appraisal

• Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired in the next session. It is a process by which a manager or consultant

• Aims at examining and evaluating the employee's performance at the work and his consequent behavior by comparing it with preset standards,

• Documents the results of the comparison, and • Uses the results to provide feedback to the employee to

show where improvements are needed and why.

METHODS OF PERFORMANCE APPRAISAL

Traditional Methods

•Rating Scales •Essay Appraisal•Ranking Method•Paired Comparison•Critical Incident•Confidential Reports•Checklists•Graphic Rating Scales•Forced Distribution.

Modern Methods

•Assessment Centers•BARS•Human Resource Accounting(HRA)•M.B.O.•Customer Feedback•360 Degree Feedback.

Modern Methods1. ASSESSMENT CENTRES

Intellectual Capability

Planning And Organizing Capabilities

Motivation Career Orientation

Interpersonal Skills

2.BEHAVIORALLY ANCHORED RATING SCALES (BARS)

• Exhibit 1: An Example Of Behaviorally Anchored Rating Scale (BARS)

• Extremely good• 7• Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country.• Good• 6• Can expect to initiate creative ideas for improved sales.• Above average• 5• Can expect to keep in touch with the customers throughout the year.• Average• 4• Can manage, with difficulty, to deliver the goods in time.• Below average• 3• Can expect to unload the trucks when asked by the supervisor.• Poor• 2• Can expect to inform only a part of the customers.• Extremely poor• 1• Can expect to take extended coffee breaks and roam around purposelessly.•

3.HUMAN RESOURCE ACCOUNTING METHOD (HRA)

• Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization.

• HRA is the process of Assigning, budgeting, reporting the cost of human resources incurred in an

organization, including wages and salaries and training expenses.

HRA: Cost of Human Resources

ASSIGNING

BUDGETING

REPORTING

4.MANAGEMENT BY OBJECTIVES (MBO): PETER DRUCKER

5.CUSTOMER FEEDBACK METHOD

Customer feedback is directly linked with employee

performance. This method of assessment could be unbiased and reliable since customers who are outsiders may give correct judgment about employee performance than the insiders who are superiors.

Companies like Cognizant and Wipro software solutions are using customer feedback method to assess the performance of their sales staff in order to hike salaries.

6.THE 360 EVALUATION FEEDBACK METHOD: (Google )

TRADITIONAL METHODS1. ESSAY APPRAISAL METHOD

• Job knowledge and potential of the employee;• Employee’s understanding of the company’s

programmes, policies, objectives, etc.;• The employee’s relations with co-workers and

superiors;• The employee’s general planning, organizing and

controlling ability;• The attitudes and perceptions of the employee,

in general.

2.RANKING METHOD

• The manager compares an employee to other similar employees, rather than to a standard measurement.

3.PAIRED COMPARISON

• A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time.

• After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

4.CRITICAL INCIDENTS METHODS

• This technique of performance appraisal was developed by Flanagan and Burns.The manager prepares lists of statements of very effective and ineffective behavior of an employee.

• These critical incidents or events represent the outstanding or poor behavior of employees on the job.

• The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.

This method suffers however from the following limitations:

• Negative incidents may be more noticeable than positive incidents.

• The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.

• It results in very close supervision which may not be liked by the employee.

• The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it.

5.CONFIDENTIAL REPORT SYSTEM • Character and conduct of an employee• Absenteeism of an employee• Knowledge of an employee• His nature and quality of work• Punctuality of employee• Unauthorized absenteeism or leave without permission• Behavior of an employee with colleagues, superiors and with

public• Ability of supervision and controlling • His/her integrity and honesty• If any complaints against employee

6. CHECKLIST METHOD

• Is the employee really interested in the task assigned? Yes/No

• Is he respected by his colleagues (co-workers) Yes/No

• Does he give respect to his superiors? Yes/No

• Does he follow instructions properly? Yes/No

• Does he make mistakes frequently? Yes/No

7.FORCED DISTRIBUTION

POTENTIAL APPRAISAL

• Identification of the hidden talents and skills of a person.

• The person might or might not be aware of them.

• Potential appraisal is a future – oriented appraisal whose main objective is to identify and evaluate the potential of the employees to assume higher positions and responsibilities in the organizational hierarchy.

Techniques of potential appraisal

• Self appraisals,• Peer appraisals• Superior appraisals• Management by objectives• Psychological and psychometric tests• Management games like role playing

Leadership exercises etc

Potential appraisal can serve the following purposes

• To advise employees about their overall career development and future prospects

• Help the organization to chalk out succession plans

• Motivate the employees to further develop their skills and competencies.

• To identify the training needs.

Philips model of potential appraisal: measures performance( y axis ) and potential ( x axis ) on the

matrix , low and high Problem children

Stars

Planned separation

Solid citizens

Performance / potential

Techniques of potential appraisal:

• Self appraisals,• Peer appraisals• Superior appraisals• Management by objectives• Psychological and psychometric tests• Management games like role playing

Leadership exercises etc.