PERFORMANCE APPRAISAL

Performance Appraisal – Meaning

“Performance Appraisal is a systematic evaluation of an individual with respect to performance on the job and individual’s potential for development.”

 “Performance Appraisal is formal, structured system of measuring, evaluating  job related behaviors and outcomes to discover reasons of performance and how to perform effectively in future so that employee, organization and society all benefits.”

After reading the above definition we can say that Performance Appraisals is the assessment of individual’s performance in a systematic way. It is a developmental tool used for all round development of the employee and the organization. The performance is measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility and health. Assessment should be confined to past as well as potential performance also. The second definition is more focused on behaviors as a part of assessment because behaviors do affect job results.

Concept of Performance Appraisal

Performance appraisal is a management tool which is helpful in motivating and effectively utilizing human resources. Assessment of human potential is difficult, no matter how well designed and appropriates the performance planning and appraisal system is.

The performance appraisal system should:

·          be correlated with the organizational mission, philosophies and value system;

·         cover assessment of performance as well as potential for development;

·          take care of organizational as well as individual needs;

·          help in creating a clean environment by

Linking rewards with achievements,

 Generating information for the growth of the employee as well as of the organization,

Suggesting appropriate person-task matching and career plans.

Feedback is an important component of performance appraisal. While positive feedback is easily accepted, negative feedback often meets with resistance unless it is objective, based on a credible source and given in a skilful manner.

Objectives of Performance Appraisals

1.    Promotions

2.    Confirmations

3.    Training and Development

4.    Compensation reviews

5.    Competency building

6.    Improve communication

7.    Evaluation of HR Programs

8.    Feedback & Grievances

Six Steps Approach of Performance Appraisal

Performance appraisals are one of the least liked and most dreaded responsibilities that any manager has to endure.  A six-step approach (use the acronym PARADE to remember it) that can alleviate much of the worry and dread associated with performance management.

Step one: Preparation.

The key to success in any endeavor is preparation. In this case, preparation means sitting down and creating objectives for the performance period. We've got to ensure that people know what's expected of them if we ever expect them to achieve it.

Think of setting objectives as a road map with a set of directions. The roadmap is your organization, or your industry, and the directions lead employees to their goal. If people feel that they have a voice in their assignments, they will frequently work harder toward the success of those assignments.

Step two: Assessment.

A critical manager responsibility is assessing and giving timely feedback to your staff on their performance. There are many benefits to doing this. Feedback on performance that is given as soon as possible has proven to be the most effective.

This also addresses two of the most common fears that managers have about performance appraisals: confrontations and surprises. Many managers avoid delivering performance reviews because they fear confrontation. They see it as an "us versus them" event. This is usually a result of a lack of communication between the manager and staff.

Step three: Reviewing documents.

Before you actually do sit down with the employee, review all your documentation from the year. Take a look again at the objectives that you and the employee agreed to and documented at the beginning of the year. Look for any commendations or letters you may have received about the employee during the year.

Review your notes from the meetings that you've had with the employee. Then sit down and write the first draft of the performance review. Some organizations offer the employee the opportunity to create a first draft as well. Then the manager and the employee sit down to review the employee's progress before the actual review. This keeps the employee involved in the process and makes him feel that he's getting a fair evaluation. It's another great technique for reducing or eliminating surprises.

Step four: Appropriate setting.

Make sure that you have an appropriate setting in which to deliver the appraisal. The most commonly used location, a manager's office, is often the worst place.  A conference room is often best, but if that's not available, fined some other place.

Consider meeting in the employee's office if it has a door, or borrowing a colleague's office. Meeting somewhere other than your office also makes it easier to end the meeting. Getting someone out of your office when the review is completed, particularly if the person thinks there is more to discuss, can be particularly onerous.

Step five:  Deliver it clearly.

Deliver the appraisal in simple language. This advice on clarity goes for both good news and bad! When it comes to good news, some managers avoid it because they're afraid to tell an employee to he has done a good job.  More often, managers feel a need to hide the bad news. They're afraid to hurt the employee's feelings, they fear an argument, or they just don't like to talk about someone's shortcomings. Many managers feel that if the employee hasn't done as well as expected or hoped, this is a poor reflection on the manager.

By glossing over employees' performance deficits or inflating their ratings to spare their feelings, managers are actually exposing the company and themselves to great liability. If managers have been doing the assessment and feedback throughout the year, there is little likelihood that there will be any confrontation or conflagration at the review meeting. Tell people straight out what they've done well and where they need to improve.

Step six:  Encouragement.

At the conclusion of the performance appraisal meeting, which also marks the end of one performance appraisal cycle and the beginning of the next, your job is to encourage. You want to motivate the employee to continue doing that which he does well and to improve in the areas where there is room for growth. This is the best way to make these meetings productive and positive. Even if the person's appraisal has not been as high as he might have hoped, remind the employee that he is still valued and that you'll support him in his development.

Methods/Technique of Performance Appraisal

Numerous methods have been devised to measure the quantity and quality of performance appraisals. Each of the methods is effective for some purposes for some organizations only. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or an employee.

Broadly all methods of appraisals can be divided into two different categories.

• Past Oriented Methods

• Future Oriented Methods

Past Oriented Methods

1.    Rating Scales: Rating scales consists of several numerical scales representing job related performance criterions such as dependability, initiative, output, attendance, attitude etc. Each scales ranges from excellent to poor. The total numerical scores are computed and final conclusions are derived.

2.    Checklist: Under this method, checklist of statements of traits of employee in the form of Yes or No based questions is prepared. Here the rater only does the reporting or checking and HR department does the actual evaluation.

3.    Forced Choice Method: The series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment.

4.    Forced Distribution Method: here employees are clustered around a high point on a rating scale. Rater is compelled to distribute the employees on all points on the scale. It is assumed that the performance is conformed to normal distribution.

5.    Critical Incidents Method: The approach is focused on certain critical behaviors of employee that makes all the difference in the performance. Supervise as and when they occur record such incidents.

6.    Behaviorally Anchored Rating Scales: statements of effective and ineffective behaviors determine the points. They are said to be behaviorally anchored. The rater is supposed to say, which behavior describes the employee performance.

7.    Field Review Method: This is an appraisal done by someone outside employees’ own department usually from corporate or HR department.

8.    Performance Tests & Observations: This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful.

9.    Confidential Records: Mostly used by government departments, however its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR) and may record ratings with respect to following items; attendance, self expression, team work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness etc. The system is highly secretive and confidential.

10.  Essay Method: In this method the rater writes down the employee description in detail within a number of broad categories like, overall impression of performance, promote ability of employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses and training needs of the employee.

11.  Cost Accounting Method: Here performance is evaluated from the monetary returns yields to his or her organization. Cost to keep employee, and benefit the organization derives is ascertained. Hence it is more dependent upon cost and benefit analysis.

12.  Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.

• Ranking Methods: Superior ranks his worker based on merit, from best to worst. However how best and why best are not elaborated in this method. It is easy to administer and explanation.

• Paired Comparison Methods: In this method each employee is rated with another employee in the form of pairs. The number of comparisons may be calculated with the help of a formula as under.

N x (N-1) / 2

Future Oriented Methods

1.    Management by Objectives: It means management by objectives and the performance is rated against the achievement of objectives stated by the management. MBO process goes as under.

• Establish goals and desired outcomes for each subordinate

• Setting performance standards

• Comparison of actual goals with goals attained by the employee

• Establish new goals and new strategies for goals not achieved in previous year.

2.    Psychological Appraisals: These appraisals are more directed to assess employee’s potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance.

3.    Assessment Centers: This technique was first developed in USA and UK in 1943. An assessment center is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviors across a series of select exercises or work samples.

4.    360-Degree Feedback: It is a technique which is systematic collection of performance data on an individual group, derived from a number of stakeholders like immediate supervisors, team members, customers, peers and self. In fact anyone who has useful information on how an employee does a job may be one of the appraisers. This technique is highly useful in terms of broader perspective, greater self-development and multi-source feedback is useful. 360-degree appraisals are useful to measure inter-personal skills, customer satisfaction and team building skills.