Performance Appraisal and Potential Appraisal

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<p>Key HR Practices</p> <p>UNIT 15 PERFORMANCE AND POTENTIAL APPRAISALObjectivesAfter going through this unit, you should be able to:l</p> <p>understand different objectives and uses of performance appraisal system in an organisation; develop various approaches to performance appraisal and draw a distinction between traditional and newer rating methods. identify various errors in performance appraisal in practice and the need for periodic performance review and feedback.</p> <p>l</p> <p>l</p> <p>Structure15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 Introduction Objectives of Performance Appraisal Uses of Performance Appraisal Planning the Appraisal</p> <p>Approaches to Performance Appraisal</p> <p>Components of Performance Appraisal Types of Performance Appraisal</p> <p>5 4</p> <p>15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 Case</p> <p>A15.10 15.11 Potential Appraisal Self Appraisal Summary Further Readings</p> <p>Concerns and Issues in Appraisal</p> <p>Steps in the Appraisal Programme</p> <p>Methods of Performance Appraisal Errors in Performance Appraisal</p> <p>Performance Appraisal Assessment Performance Appraisal Guidelines Performance Appraisal in Practice Performance Review and Feedback Strategies to Improve Performance</p> <p>Self-Assessment Questions</p> <p>15.1</p> <p>INTRODUCTION</p> <p>Performance appraisal is a systematic evaluation of present potential capabilities of personnel and employees by their superiors, superiors superior or a professional from outside. It is a process of estimating or judging the value, excellent qualities or</p> <p>LI</p> <p>status of a person or thing. It is a process of collecting, analysing, and evaluating data relative to job behaviour and results of individuals. The appraisal system is organised on the principle of goals and management by objectives. Management decisions on performance utilise several integrated inputs: goals and plans, job evaluation, performance evaluation, and individual history. It connotes a two-dimensional concept - at one end of the continuum lies the goals set by the authority, and at the other end, the performance achieved by the individual or any given group. Performance appraisal can be either formal or informal. Usage of former systems schedule regular sessions in which to discuss an employees performance. Informal appraisals are unplanned, often just chance statements made in passing about an employees performance. Most organisations use a formal appraisal system. Some organisations use more than one appraisal system for different types of employees or for different appraisal purposes. Organisations need to measure employee performance to determine whether acceptable standards of performance are being maintained. The six primary criteria on which the value of performance may be assessed are: quality, quantity, timelineness, cost effectiveness, need for supervision, and interpersonal impact. If appraisals indicate that employees are not performing at acceptable levels, steps can be taken to simplify jobs, train, and motivate workers, or dismiss them, depending upon the reasons for poor performance. The results of appraisal are normally used to: (1) estimate the overall effectiveness of employees in performing their jobs, (2) identify strengths and weaknesses in job knowledge and skills, (3)determine whether a subordinates responsibilities can be expanded, (4) identify future training and development needs, (5) review progress toward goals and objectives, (6) determine readiness for promotion, and (7) motivate and guide growth and development.</p> <p>Performance and Potential Appraisal</p> <p>15.2</p> <p>OBJECTIVES OF PERFORMANCE APPRAISAL</p> <p>Performance appraisal plans are designed to meet the needs of the organisation and the individual. It is increasingly viewed as central to good human resource management. This is highlighted in Cummings classification of performance appraisal objectives. According to Cummings and Schwab (1973), the objectives of performance appraisal schemes can be categorised as either evaluative or developmental. The evaluative purpose have a historical dimension and are concerned primarily with looking back at how employees have actually performed over a given time period, compared with required standards of performance. The developmental performance appraisal is concerned, for example, with the identification of employees training and development needs, and the setting of new targets. The broad objectives of performance appraisal are: 1. 2. 3. 4. To help the employee to overcome his weaknesses and improve his strengths so as to enable him to achieve the desired performance. To generate adequate feedback and guidance from the immediate superior to an employee working under him. To contribute to the growth and development of an employee through helping him in realistic goal setting. To provide inputs to system of rewards (comprising salary increments, transfers, promotions, demotions or terminations) and salary administration.5 5</p> <p>A</p> <p>LI</p> <p>Key HR Practices</p> <p>5. 6. 7.</p> <p>To help in creating a desirable culture and tradition in the</p> <p>organisation.</p> <p>To help the organisation to identify employees for the purpose of motivating, training and developing them. To generate significant, relevant, free, and valid employees. information about</p> <p>In short, the performance appraisal of an organisation provides systematic judgments to backup wage and salary administration; suggests needed changes in ones behaviour, attitudes, skills, or job knowledge; and uses it as a base for coaching and counseling the individual by his superior. Appraising employee performance is, thus, useful for compensation, placement, and training and development purposes.</p> <p>15.3</p> <p>USES OF PERFORMANCE APPRAISAL</p> <p>The appraisal systems do not operate in isolation; they generate data that can contribute to other HRM systems - for example to succession planning and manpower planning. Some of the common uses of appraisals include:</p> <p>l</p> <p>Determining promotions or transfers depending on the demonstration of employee strengths and weaknesses. Determining training needs and evaluation techniques by identifying areas of weaknesses. Promoting effective communication within organisations through the interchange of dialogue between supervisors and subordinates. Motivating employees by showing them where they stand, and establishing a data bank on appraisal for rendering assistance in personnel decisions.</p> <p>l</p> <p>5 6</p> <p>Al l</p> <p>Organisations use performance appraisals for three purposes: administrative, employee development, and programme assessment. Programme appraisal commonly serve an administrative purpose by providing employers with a rationale for making many personnel decisions, such as decisions relating to pay increases, promotions, demotions, terminations and transfers. Valid performance appraisal data are essential to demonstrate that decisions are based on job related performance criteria. An employees performance is often evaluated relative to other employees for administrative purposes, but may be assessed in relation to an absolute standard of performance. Performance appraisal for employee development purposes provide feedback on an employees performance. The intent of such appraisals is to guide and motivate employees to improve their performance and potential for advancement in the organisation. Appraisal data can also be used for employee development purposes in helping to identify specific training needs of individuals. Programme assessment requires the collection and storage of performance appraisal data for a number of uses. The records can show how effective recruiting, selection, and placement have been in supplying a qualified workforce. Performance measures can be used to validate selection procedures and can also be used as before and after measures to determine the success of training and development programmes. In brief, the various uses of performance appraisal can be classified into two broad categories. One category concerns the obtaining of evaluation data on employees for decision-making for various personnel actions such as pay</p> <p>LI</p> <p>l</p> <p>Determining appropriate salary increases and bonuses for workers based on performance measure.</p> <p>increases, promotions, transfers, discharges, and for selection test validation. The other main use is for employee development including performance improvement training, coaching, and counseling.</p> <p>Performance and Potential Appraisal</p> <p>15.4</p> <p>PLANNING THE APPRAISAL</p> <p>A meaningful performance appraisal is a two-way process that benefits both the employee and the manager. For employees, appraisal is the time to find out how the manager thinks they are performing in the job. For a manager, a formal appraisal interview is a good time to find out how employees think they are performing on the job. The planning appraisal strategy has to be done: Before the appraisal 1. 2. 3. 4. Establish key task areas and performance goals. Set performance goals for each key task area. Get the facts. Schedule each appraisal interview well in advance.</p> <p>During the appraisal 1 2. 3. 4. 5. Encourage two-way communication. Discuss and agree on performance goals for the future. Record notes of the interview. End the interview on an upbeat note.</p> <p>Think about how you can help the employee to achieve more at work.</p> <p>After the appraisal 1. 2. Monitor performance.</p> <p>Prepare a formal record of the interview.</p> <p>15.5</p> <p>APPROACHES TO PERFORMANCE APPRAISAL</p> <p>George Odiorne has identified four basic approaches to performance appraisal. Personality-based systems: In such systems the appraisal form consists of a list of personality traits that presumably are significant in the jobs of the individuals being appraised. Such traits as initiative, drive, intelligence, ingenuity, creativity, loyalty and trustworthiness appear on most such lists. Generalised descriptive systems: Similar to personality-based systems, they differ in the type of descriptive term used. Often they include qualities or actions of presumably good managers: organises, plans, controls, motivates others, delegates, communicates, makes things happen, and so on. Such a system, like the personality-based system, might be useful if meticulous care were taken to define the meaning of each term in respect to actual results. Behavioural descriptive systems: Such systems feature detailed job analysis and job descriptions, including specific statements of the actual behaviour required from successful employees. Results-centred systems: These appraisal systems (sometime called work-centred or job-centred systems) are directly job related.5 7</p> <p>A</p> <p>LI</p> <p>Key HR Practices</p> <p>They require that manager and subordinate sit down at the start of each work evaluation period and determine the work to be done in all areas of responsibility and functions, and the specific standards of performance to be used in each area. When introducing performance appraisal a job description in the form of a questionnaire has to be preferred. A typical questionnaire addressed to an individual would cover the following points:l l l l l l</p> <p>What is your job title? To whom are you responsible? Who is responsible to you? What is the main purpose of your job? To achieve that purpose what are your main areas of responsibility? What is the size of your job in such terms of output or sales targets, number of items processed, number of people managed, number of customers? What targets or standards of performance have been assigned for your job? Are there any other ways in which it would be possible to measure the effectiveness with which you carry out your job? Is there any other information you can provide about your job?</p> <p>l</p> <p>15.6</p> <p>COMPONENTS OF PERFORMANCE APPRAISAL</p> <p>The components that should be used in a performance appraisal system flow directly from the specific objectives of appraisal. The following components are being used in a number of Indian organisations.</p> <p>5 8</p> <p>6. 8. 9. 7.</p> <p>A2. 3. 4. 5. Self appraisal Performance analysis Performance ratings 10. Potential appraisal.</p> <p>1.</p> <p>Key Performance Areas (KPAs) / Key Result Areas (KRAs) Tasks/targets/objectives; attributes/qualities/traits</p> <p>Performance review, discussion or counseling Identification of training / development needs Ratings / assessment by appraiser</p> <p>Assessment / review by reviewing authority</p> <p>15.7</p> <p>TYPES OF PERFORMANCE APPRAISAL</p> <p>There are two types of performance appraisal systems which are normally used in organisations: (i) close ended appraisal system and, (ii) open ended appraisal system. In the close ended appraisal system, commonly used in government organisations and public enterprises, a confidential report is submitted on the performance of the employee. Only where an adverse assessment is made against an individual, the concerned individual is informed about the same. The main shortcoming of this system is that an individual is not informed about his/her inherent strengths and weaknesses and, therefore, is not given an opportunity to respond to the assessment made on him/her. The employees are, therefore, in a constant dilemma as to how their performance is viewed by the management.</p> <p>LI</p> <p>In the open ended appraisal system, unlike in the close ended system, the performance of the individual is discussed with him, and he is ranked in a five or ten point rating scale. The company uses this tool primarily for rewarding a good performer or for other considerations like promotions. The main weakness of this system is that all the employees are ranked in a particular scale, and whereas the good performers are rewarded, there is no concerted effort to motivate the average performers in performing better. Another weakness of the grading system is that the appraisal may turn out to be more subjective in nature due to insufficient data maintained on the individual. This system also leads to unnecessary comparisons made on different individuals performing similar jobs. Performance appraisal can be a closed affair, where the appraisees do not get any chance to know or see how they have been evaluated; or it can be completely open, where the appraisees have the opportunity of discussing with their superiors during the evaluation exercise.</p> <p>Performance and Potential Appraisal</p> <p>15.81. 2. 3. 4. 5. 6. 7. 8. 9.</p> <p>CONCERNS AND ISSUES IN APPRAISAL</p> <p>Identifying job responsibilities and duties and performance dimensions, standards and goals. Determining appropriate methods for appraising performance.</p> <p>Developing suitable appraisal instruments and scoring devices.</p> <p>Establishing procedures that enhance fair and just appraisals of all employees.</p> <p>Relating observed and identified performance to the rewards provided by organisation. Designing, monitoring and auditing processes to ensure proper operation of the system and to identify areas of weakness.</p> <p>10. Training of employees in all phases of the appraisal system. The basic issues addressed by performance apprai...</p>


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