Methods of Appraising Performance

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Objective Measures

Subjective Measures

Management by objective

Production Measures Dollar Sales Personnel Data Performance Tests Business unit performance measures Overall Value objective measure

Objective Measures

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Production Measures:Counting the number of items produced Quantitative index of production. used when employee produces a measurable, physical product.

Dollar Sales: Sales performance is usually measured by the amount of

sales made in a given period of time.Personnel Data:

Absenteeism or Timing in the workplace. Reprimands or disciplinary actions taken against the individual.

Objective Measures (contd.)

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Business Unit Performance Measures•Stock Price•Return on Equity •Market share of the business unit

Overall value of Objective MeasuresEach objective measures has it own strength and weakness.Free from biasesDeficient in that way ignore cooperation or willingness

Objective Measures

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Methods of Appraising Performance (Contd.)

Comparative Procedures: Subjective comparison of the overall work performance of individual employees can yield a rank ordering of employees from best to worst. There are three types of techniques for doing comparative procedures, they are:

Ranking Paired – Comparison Ranking Forced Distribution

Ranking: Can be named straight ranking. Compared directly against one another. Easy to explain, understand and use. Not time consuming, less expensive. Evaluator just arranges from best to worst.

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Subjective Measures (Contd.)

Paired comparisons : For all possible pairs of employees, subjectively decide which employee is

better

# Paired comparisons = (N^2 − N)/2Example: N = 4 (4^2 − 4)/2 = 6 paired comparisons:

Paired-comparison ranking is more complicated than straight ranking, but the process is believed to result in more consistent, reliable ranks than the straight-ranking approach.

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Subjective Measures (Contd.)

Forced Distribution:Also called forced ranking methodEvaluator must place a fixed percentage of employees in each performance category. Forced distribution judgment are usually based on overall assessment of an employees performance. For an example

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Subjective Measures (Contd.)

Performance Level Distribution target

Level1:Employee is below acceptable performance standards.Level2:Employee meets acceptable performance standard but has room for improvement Level3:Employee Shows a uniformly good level of performanceLevel 4:Employee Shows a very high level of performance.Level 5:Employee consistently shows outstanding performance

5% of unit15% Unit50% of Unit20% of Unit10% of Unit

Advantages of Comparative Procedures: Easy to explain and use Help in making layoff, promotion and merit raise decisions. Serve as controls for central tendency errors.

Disadvantages of Comparative Procedures: Employees are evaluated according to their overall performance rather

than on a number of distinct aspects of performance. It is not possible to compare across work groups. The person ranked

third in a good group may be better than the person ranked first in a weaker group.

Judge each participants performance perfectly is hard task for an evaluator in a group.

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Subjective Measures (Contd.)