Performance Appraisal or Performance Management

1. Definition: Meaning of PA:

Performance can be viewed as a combination of several variables such as ability,
motivation, working conditions and expectations, Where as performance appraisal refers
to a formal structured way to measuring, evaluating and influencing an employee whether
PCN, TCN and HCN.

 Any system of determining how well an individual employee has performed during a
period of time, frequently used as a basis for determining merit increases.
 PA is a systematic review of a person’s work and achievements over a recent period,
usually leading to plans for the future.
 The evaluation of an individual's work performance in order to arrive at objective
personnel decisions.
 PA is a formal process in an organization where by each employees is evaluated how
he or she is performing. ((Robbins and Decenzoo)

2. Why PA or purposes of PA:

 To facilitate employees development

 To determine appropriate rewards and compensations
 To enhance employee motivation
 To facilitates legal compliance
 To asses the training and development needs of employees
 To improve communication network

3. Who should do the apprising?

 The immediate supervisor
 Peers
 Ratting committee
 Self appraisal
 Subordinates
4. What to evaluate?
 Traits
 Behaviors
 The result or outcomes they achieve
5. Steps or stages of PA:
S1 Establishment of performance standard
S2 Communicate performance expectation to the employees
S3 Design an appraisal program
S4 Measure actual performance
S5 Compare actual performance with performance standard
S6 Discuss the appraiser with concerned employees

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S7 Initiation of correcting action when necessary
S8 Rewarding the best performers
6. Performance Appraisal process:

JA Goal Setting PA Feedback

Effort Performance Individual and organizational goal

Figure: Performance Appraisal process

7. Benefits of PA:

 Employers’ perspective
 Employees’ perspective

8. Methods/ Measures/ how to measure performance?

 Graphic rating
 Weighted Checklists
 Behaviorally –anchored rating scale (BARS)
 Critical incidents measures
 Objective-based measures

9. Factors that can be distort PA:

 Leniency error
 Halo error
 Similarity error
 Low appraiser motivation
 Central tendency
 Inflationary pressures
 Inappropriate substitutes for performance
 Attribution theory

10. Key elements of effective PA system:

 It must be candid (frank) and honest

 It should be presented in writing
 The appraisal form should be simple
 The comment should be as specific as possible
 The full board should be involved in the process
 The focus of AP should be the future not the past