PERFORMANCE

APPRAISAL
 DEFINITION
It is the systematic evaluation of the individual
with respect to his or her performance on the job
and his or her potential for development
 OBJECTIVE
• To effect promotions based on competence and
performance
• To assess the training and development needs of the
employees
• To decide upon a pay rise
• To improve communication
• To assist the employees with constructive criticism and
guidance for the purpose of their development
 THE NEED
• To help each employee have better
clarity as to what is expected of him
during his work year
• To understand the employees
strengths and areas for
improvement

• To identify factors facilitating and hindering for achievement

of goals of the organization

• To establish performance standards in order to enable the

superior and the employee know and understand performance
management criteria.
 PROCESS

• Define the job or setting the

work standards

• Assessing the employee’s

actual performance relative to
these standards

• Providing feedback to the

employee to motivate him to
continue to perform better or
eliminate deficiencies
 METHODS
• Graphic Rating Scale Method
• Alteration Ranking Method
• Paired Comparison Method
• Forced Distribution Method
• Critical Incident Method
• Management By Objectives
• 360-Degree Appraisal
 Contd….
• Graphic Rating Scale Method
• A scale that lists a number of traits such as quality and
reliability and a range of performance for each.The
employee is then rated by identifying the score that best
describes his or her level of performance for each trait.
 Graphic Rating Scale Table
Quality of Work Quantity of Work Dependability

Excellent

Good

Average

Poor
 Contd….
• Alteration Ranking Method
 Ranking the employees from best to worst on a
particular trait ,choosing highest ,then lowest,until
all are ranked
• Paired Comparison Method
 Ranking employees by making a chart of all possible pairs of
the employees for each trait and indicating which is the better
employee of the pair.

1-2 - - -
No. of = N(N-1)
1-3 2-3 - - Comparisons 2

1-4 2-4 3-4 N = Number of subordinates

1-5 2-5 3-5 4-5

 Contd….
• Forced Distribution Method
 It is similar to grading on curve:predetermined
percentages of ratees are placed in various
performance categories

Poor ......Average...... Superior

 Contd….
• Critical Incident Method
 Keeping a record of uncommonly good or
undesirable examples of an employee’s work
related behavior and reviewing it with the
employee at predetermined times.
 Contd….
• Management By Objectives
 Set the organization’s goals
 Set departmental goals
 Discuss departmental goals
 Define expected results
 Performance reviews
 Provide feedback
 Contd…
• 360-Degree Appraisal
• Systematic collection of performance data on an individual
or group derived from all parties
• Involves collecting responses through standard assessment
forms about a manager from his bosses, peers and
subordinates
• Contributes to motivation of employees, provide scope to
express individual views and opinions,etc
• It creates an atmosphere of more openness, improved
interpersonal relations and teamwork
 Softwares used for Performance
Appraisal
• Zigon
• Performance Review
• Performance Management System
• Mindsolve Technologies
• Performance Pro
• Halogen Software
• Goode Enterprise
• Cezanne Software
 PROBLEMS
• Unclear Standards
 An appraisal scale that is too open
to interpretation

• Central Tendency
 A tendency to rate all employees
the same way,such as rating them
all average

• Strictness/Leniency
 The problem that occurs when a
supervisor rates subordinates either
high or low
 Contd..
• Halo Effect
 In performance appraisal ,the problem that occurs when a
supervisor’s rating of a subordinate on one trait biases the
rating of that person on other traits

• Bias
 The tendency to allow individual differences such as
age,race and sex to affect the appraisal ratings employees
receive
 SOLUTIONS
• Understanding the problem can
help in avoiding it
• Use of the right appraisal method
• Train supervisors to reduce
rating errors such as
halo,leniency and central
tendency
• Reducing the effect of outside
factors such as union pressure
and time constraints
• Maintaining important incidents
in a diary
 APPRAISAL INTERVIEW
• Definition
 An interview in which the supervisor and subordinate
review the appraisal and make plans to remedy
deficiencies and reinforce strengths

• Conduct of interview
 Be direct and specific
 Don’t get personal
 Encourage the person to talk
 Don’t tiptoe around
 ALTERNATIVES
• Performance Management Approach
 Managing all elements of an organizational process that
affect how well employees perform
 It encompasses goal setting,worker selection and
placement,performance appraisal,compensation,T&D and
career management.
 Its aim is to improve employee performance relative to the
company’s overall goals
 LEGALLISED APPRAISAL
PROCESS
• Make sure you know the meaning of “successful
performance”
• Use clearly defined job performance dimensions
• Communicate performance standards to employees and
those rating them in writing
• Have more than one supervisor conduct the appraisal and
conduct such appraisals independently
• Base the appraisals on separate ratings for each job
performance dimensions.
 Indian Companies using Performance
Appraisals as their key function …

• General Electric (GE) India

• Reliance Industries Limited (RIL)
• Crompton Greaves
• Godrej Soaps
• Wipro Technologies
• Infosys Technologies
• Thomas Cook
CASE ANALYSIS
 YELLOW FREIGHT SYSTEM
[Yellow Roadway Corp.]

The Company
• Fortune 500 Company
• One of the largest transportation Services provider in the
world
• Headquarter in Kansas, USA
• Employee strength of 70,000 people
• Services include shipment of commercial,industrial and
retail goods across the globe
 THE CASE STUDY

Saving $20million with a performance

appraisal system
 The Problem at hand

Financial Shock to the company owing to

competition with smaller companies on the basis
of price and losing money for the first time in
many years
 The Cause
• Lack of state of the art knowledge and development in
comparison to its smaller competitors

• Inefficient workforce in terms of the new technologies and

realities of the present business environment
 The Cure

Provide latest technical and state of the art

knowledge and development to those employees
who can really put in a lot for the development of
the company.
 The Steps Taken
• Appoint a new manager for the HRD to find out the
potential employees and provide them the knowledge
required.

• Carry out the process in relation to the department’s new

mission “Helping management manage and improve
employee performance”
 The Process
• A needs analysis was conducted to find out the potential
employees

• Needs analysis done by the Graphic Rating Scale Method

• 3 Groups identified-branch managers,sales representatives

and front-line supervisors
 Contd…
• Sample of employees from each of the 3 groups identified
based on functional considerations

• Use of Alteration Ranking Method and Forced Distribution

Method to find out the best ,average and the worst
employees among the selected lot
 Contd…
• Performance standards and measures identified for each of
the 3 groups

• Comparison of the standards of the employees with the

general performance standards was done

• Performance gaps were identified

 Contd…
• Cause For performance gaps

 Inconsistency among the employees in terms of job

location

 Inconsistency among the employees in terms of the nature

of the work
 The Ice Breaker
• Induction of a new performance appraisal system which
was designed
 As a tool for supervisors to use when managing
employee performance
 As a tool for evaluation,recruitment and compensation

“The performance management approach”

 The MGMT Aspect
• Writing performance standards

• Designing feedback systems

• Troubleshooting performance problems

• Reward employees

“Working out the process of appraisal”

 Performance Evaluation
• Positive feedback from all the trainees

• The trainees met the learning objectives & were using the
skills taught at work

• Performance changes grossed over $20million in one year

for Yellow Freight

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