Performance Appraisal

What is Performance Appraisal

In simple terms, performance appraisal may be understood as the
assessment of an individual’s performance in a systematic way,
the performance being measured against such factors as job
knowledge, quality and quantity of output, initiative, leadership
abilities, supervision, dependability, co-operation, judgment,
versatility, health and the alike. Assessment should not be
condensed to past performance alone. Potentials of the employee
for future performance must also be assessed.

A formal definition of performance appraisal is:

It is the systematic evaluations of the individual with respect to his
her performance on the job and his or her potential for
development.
Performance Appraisal Comparison
Job Analysis:
Describe work and requirement of a particular job.

Performance Standards:
Translate job requirements into levels of acceptable or
unacceptable performance

Performance Appraisal:
Describe the job-relevant strengths and weaknesses
of each individual
Objectives of Performance
Appraisal
Broadly, performance appraisal serves four
major objectives-
I) Development uses,
II) Administrative uses/decisions,
III) Organizational maintenance/objectives,
and
IV) Documentation purposes.
Performance Appraisal Process:
Various Steps involved into process are as follows

1. Objectives of Appraisal:

2. Establish job Expectation

3. Design Appraisal programme

4. Appraise performance

5. Performance review

6. Use appraisal Data for appropriate purposes

Objectives of Performance
Appraisal
Data relating to performance assessment of employees are recorded, stored, and used for
several purposes. The main purposes of employee assessment are:

1. To effect promotions based on competence and performance

2. To confirm the services of probationary employees upon their completing the probationary
period satisfactorily.

3. To assess the training and development needs of employees.

4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not
been fixed.

5. To let the employees know where they stand insofar as their performance is concerned and to
assist them with constructive criticism and guidance for the purpose of their development.

6. To improve communication. Performance appraisal provides a format for dialogue between the
superior and the subordinate, and improves understanding of personal goals and concerns.
This can also have the effect of increasing the trust between the rater and the rate.

7. Finally, performance appraisal can be used to determine whether HR programmers such as

selection, training, and transfers have been effective or not.
Establish Job Expectations:

The second step in the appraisal process is to

establish job expectations. This includes
informing the employee what is expected of
him or her on the job. Normally, a discussion
is held with his or her superior to review the
major duties contained in the job description.
Individuals should not be expected to begin
the job until they understand what is
expected of them.
Design appraisal Programme:
Formal versus Informal Appraisal:

The first step in designing an appraisal programme is to decide

whether the appraisal should be formal or informal. Formal
appraisals usually occur at specified time periods- once or twice
a year. Formal appraisals are most often required by the
organization for the purpose of employee evaluation. Informal
performance appraisal can occur whenever the supervisor feels
the need for communication. For example, if the employee has
been consistently meeting or executing standards, and informal
appraisal may be in order to simply recognize this fact.
Discussions can take to be ensuring that the discussion in held in
private.
Who are Raters?
Raters can be immediate supervisors, specialists from the HR
department, subordinates, peers, committees, clients, self-
appraisals, or a combination of several.

 Immediate Supervisor is the fit candidate to appraise the

performance of his or her subordinates. There are three reasons
in support of this choice. No one is more familiar with the
subordinate’s performance than his or her superior. Another
reason is that the superior has the responsibility of managing a
particular unit. When the task of evaluating a subordinate a given
to another person, the superior authority may be undermined
seriously. Finally, training and development of subordinates is an
important element in every supervisor may be the logical choice
to conduct the performance evaluation.
Who are Raters? (Conti.)
 Subordinates can assess the performance of their superiors. The
use of this choice may be useful in assessing an employee’s
ability to communication, delegate work, allocate resources,
disseminate information, resolve intra-personal conflict, and deal
with employees on a fair basis. But the problem with subordinate
evaluation is that the supervisors tend to become more popular,
not effective leadership, but by mere gimmicks.

 Peers are in a better position to evaluate certain facts of job

performance that the subordinates or supervisors cannot do. Such
facts include contribution to workgroup projects, interpersonal
effectiveness, communication skills, reliability and initiative.
Unfortunately, friendship or animosity may result in distortion of
evaluation. Further, when reward allocation is based on peer
evaluation, serious conflicts among co-workers may develop.
Finally all peers may join together to rate each other high.
Who are Raters? (Conti.)
 Clients may be members within the organization
who have direct contact with the rate and make use
of an output (good and services) this employee
provides. Interest, courtesy, dependability and
innovativeness are but few of the qualities for which
clients can offer rating information. Clients, external
to the organization, can also offer similar kinds of
information.

Where superiors, peers, subordinates and clients,

make appraisal it is called the 360-degree
system of appraisal.
Problems of Rating:

Performance appraisals are subject to a wide variety

of inaccuracies and biases referred to as ‘rating
errors’. These errors occur in the rater’s
observation; judgment, information procession and
can seriously affect assessment results.
The most common rating errors are leniency or
severity, central tendency, halo effect, rater effect,
primacy and regency effects, perceptual set,
performance dimension behavior, spill over effect
and status effect.
What should be rated?
One of the steps in designing an appraisal programme is to determine the evaluation criteria .It
is obvious that the criteria should be related to the job. The six criteria for assessing
performance are:
1. Quality: The degree to which the process or result of carrying out an activity approaches
perfection in terms of either conforming to some ideal way of performing the activity, or
fulfilling the activity’s intended purpose.

2. Quantity: The amount produced, expressed in monetary terms, number of units, or number
of competed activity cycles.

3. Timeliness: The degree to which an activity is completed or a result produced, at the

earliest time desirable from the standpoints of both coordinating with the outputs of others
and of maximizing the time available for other activities.
4. Cost of Effectiveness: the degree to which the use of the organizations
resources9e.g.human, monetary, technological and material) is maximized in the sense of
getting the highest gain or reduction in loss from each unit or instance of use of a resource.
5. Need for supervision: The degree to which a job performer can carry out a job function
without either having to request supervisory assistance or requiring supervisory intervention
to prevent an adverse outcome.
6. Interpersonal impact: The degree to which a performance promotes feeling of self-esteem,
goodwill and cooperation among co-workers and subordinates.
Methods of Appraisal
Numerous methods have been devised to measure
the quantity and quality of employees’ job
performance. Each of the methods discussed could
be effective for some purposes, for some
organizations. None should be dismissed or
accepted as appropriate except as they relate to the
particular needs of the organization or of a particular
type or employees. Broadly, all the approaches to
appraisal can be classified into

I) Past-oriented methods

II) Future-oriented methods

Past-oriented Methods:
 Rating scales

 Checklists

 Forced choice method

 Critical incident method

 Field review method

 Performance tests and observations

 Annual confidential reports

 Essay method

 Cost accounting approach

 Comparative evaluation approach

Future Oriented tests:

 Management by objective

 360-Degree appraisal

 Psychological appraisals

 Assessment centers
Use of appraisal data:
The final step in evaluation process is the use of appraisal data. The data and
information generated through performance evaluation must be used by the HR
dept. In one way or the other, data and information outputs of performance-
appraisal programme can critically influence these coveted employer-employee
reward opportunities. Specifically, the data and information will be useful in the
following areas in HRM:

 Remuneration administration

 Validation of selection programmes

 Employee training and development programmes

 Promotion, transfer and lay-off decisions

 Grievance and discipline programmes

 HR planning.
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