Human Resource Management Notes 7

7/28/2019 Human Resource Management Notes 7

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Unit 7: Performance Appraisal

Structure:

7.1 Introduction

Objectives7.2 Concept and Need of Employee Review

SAQs

7.3 Concept of Performance Appraisal

SAQs

7.4 Types of Appraisal Method

7.4.1 Individual evaluation Methods

7.4.2. Multiple-person Evaluation Methods

7.4.3. 360 Degree Appraisal7.4.4. MBO

SAQs

7.5 Benefits of Performance Appraisal

7.6 Summary

7.7 TQs

7.8 Answers to SAQs and TQs

7.1 Introduction

In many organizations, two evaluation systems exist side by side: the formal and the

informal. Supervisors often think about how well employees are doing this is the informal

system. It is influenced by political and interpersonal processes so that employees who are

liked more than others have an edge. Formal performance evaluation is a system set up by

the enterprise to regularly and systematically evaluate employee performance. This unit deals

with the methods and techniques of evaluating the performance of employees and the

significance of rewards and incentives.

Objectives:

After studying this unit, you will be able to:


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Understand performance evaluation and recognition.

Techniques and methods of evaluation.

Significance of rewards and incentives, promotions.

Concept of 3600

Appraisal.

7.2 Concept and need of Employee Review

Performance evaluation is the personnel activity by means of which the enterprise determines

the extent to which the employee is performing the job effectively. Generally speaking, the

personnel specialists design the performance evaluation system, train the line managers in

the use of the systems, and maintain the records. The line managers do the evaluation of the

employees and, in many cases, communicate the results to their employees. For performance

evaluation to be more than a yearly paper-work exercise, top management must encourage its

use and use it to make reward decisions such as promotions.

Self Assessment Questions I

7.3 Concept of Performance Appraisal

Research shows that performance management, when done correctly, can affect corporate

performance and the bottom line. Despite the importance of performance appraisal, few

organizations clearly define what it is that they are trying to measure. To design a system for

appraising performance, it is important to first define what is meant by the term work

performance. Although a persons job performance depends on some combination of ability,

effort and opportunity, it can be measured in terms of outcomes or results produced.

Performance is defined as the record of outcomes produced on a specific job function or

activity during a specific time period. For example a trainer working for the World Bank was

evaluated on her organization of presentation, which was defined as the presentation of

1. _____________________is the personnel activity by means of which the enterprise

determines the extent to which the employee is performing the job effectively.

2. The _______________do the evaluation of the employees

3. ______________________must encourage its use and use it to make reward decisions

such as promotions


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training material in a logical and methodical manner. They extent to which she was able to

make such orderly presentation would be one measure of outcomes related to that function.

A Sales representative could have some measure of sales as an outcome for a primary function

of that job. Customer service would have very different outcome measures for defining

performance. Collage professor that typically were evaluated on three general work function:

teaching, research and service. Performance in each of these three areas is defined with

different outcome measures.

Performance on the job as a whole would be equal to the sum (or average) of the performance

on the job functions or activities. For example, the World Bank identified 8 job functions for

its trainers (example, use of relevant examples, participant involvement, and evaluation

procedures). The function has to do with the work that is to be performance and not the

characteristics of the person performing. Unfortunately many performance- appraisal systems

confuse measures of performance with measures of the person. The definition of performance

refers to a set of outcomes produced during a certain time period it does not refer to the traits,

persona characteristics or competencies of the performer.

Self Assessment Questions II

7.4 Types of Appraisal Methods

When it has been decided who will evaluate, when, and on what basis, the technique to be

used will be selected. A number of approaches will be described here. There are several

ways to classify these tools. The three categories used here will be individual evaluation

methods multiple person evaluation methods and other methods.

7.4.1 Individual evaluation Methods

There are five ways to evaluate an employee individually. In these systems, employees are

evaluated one at a time without directly comparing them with other employees.

Graphic rating scale: The most widely used performance evaluation technique is a graphic

rating scale. In this technique, the evaluator is presented with a graph and asked to rate

1. To design a system for appraising performance, it is important to first define what ismeant by the term_____________________.

2. Performance is defined as the record of outcomes produced on a specific job function or

activity during..............

3. Performance on the job as a whole would be equal to the sum (or average) ofthe............................................


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primarily in quantitative terms. The evaluation consists of a joint review of the degree of

achievement of the objectives. This approach combines the superior and self-evaluation

systems.

Critical incident technique: In this technique, personnel specialists and operating managers

prepare lists of statements of very effective and very ineffective behaviour for an employee.

These are the critical incidents. The personnel specialists combine these statements into

categories, which vary with the job. Once the categories are developed and statements of

effective and ineffective behaviour are provided, the evaluator prepares a log for each

employee. During the evaluation period, the evaluator "records examples of critical

(outstandingly good or bad) behaviours in each of the categories, and the log is used to

evaluate the employee at the end of the period. It is also very useful for the evaluation

interview, since the evaluator can be specific in making positive and negative comments, and

it avoids recency bias. The critical incident technique is more likely to be used by superiors

than in peer or subordinate evaluations.

Checklists and weighted checklists: Another type of individual evaluation method is the

checklist. In its simplest form, the checklist is a set of objectives or descriptive statements. If

the Rater believes that the employee possesses a trait listed, the Rater checks the items if not,

the Rater leaves it blank. A rating score from the checklist equals the number of checks.

A more recent variation is the weighted checklist. Supervisors or personnel specialists familiar

with the jobs to be evaluated prepare a large list of descriptive statements about effective and

ineffective behaviour on jobs, similar to the critical incident process. Judges who have

observed behaviour on the job sort the statements into piles describing behaviour that is scaled

from excellent to poor (usually on a 7-11 scale). When there is reasonable agreement on an

item (for example, when the standard deviation is small), it is included in the weighted

checklist. The weight is the average score of the Raters to the checklist's use.

The supervisors or other Raters receive the checklists without the scores, and they check the

items that apply, as with an un-weighted checklist. The employee's evaluation is the sum of

the scores (weights) on the items checked. Checklists and weighted checklists can be used by

evaluators who are superiors, peers, or subordinates, or by a combination.

Behaviourally anchored rating scales: Another technique which essentially is based on the

critical incident approach is the behaviourally anchored rating scale (BARS). This technique is


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also called the behavioural expectation scale (BES). This is a new, relatively infrequently used

technique.

Supervisors give descriptions of actually good and bad performance, and personnel specialists

group these into categories (five to ten is typical). As with weighted checklists, the items are

evaluated by supervisors (often other than those who submitted the items). A procedure

similar to that for weighted checklists is used to verify the evaluations (outstandingly good, for

example) with the smallest standard deviation, hopefully around 1.5 on a 7-point scale. These

items are then used to construct the BARS.

Self Assessment Questions III

7.4.2 Multiple-person Evaluation Methods

The techniques described above are used to evaluate employees one at a time. Three

techniques that have been used to evaluate an employee in comparison with other employees

being evaluated are discussed in this section.

Ranking: In ranking method, the evaluator is asked to rate employees from highest to lowest

on some overall criterion. This is very difficult to do if the group of employees being

compared number over 20. It is also easier to rank the best and worst employees than it is to

evaluate the average ones. Simple ranking can be improved by alternative ranking. In this

approach the evaluators pick the top and bottom employees first, then select the next highest

and next lowest, and move towards the middle.

Paired comparison: This approach makes the ranking method easier and more reliable. First,the names of the persons to be evaluated are placed on separate sheets (or cards) in a

predetermined order, so that each person is compared to all others to be evaluated. The

evaluator then checks the person he feels is the better of the two on a criterion for each

comparison. Typically the criterion is overall ability to do the present job. The number of

1. In_______________, the evaluator must choose from a set of descriptive statements

about the employee

2. In the ________________of evaluation, the evaluator is asked to describe the strongand weak aspects of the employee's behaviour.

3. In________________, personnel specialists and operating managers prepare lists of

statements of very effective and very ineffective behaviour for an employee.


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times a person is preferred is tallied, and this develops an index of the number of preferences

compared to the number being evaluated.

These scores can be converted into standard scores by comparing the scores to the standard

deviation and the average of all scores. This method can be used by superiors, peers,

subordinates, or some combination of these groups.

Forced distribution: The forced-distribution system is similar to 'grading on a curve. The

evaluator is asked to rate employees in some fixed distribution of categories, such as 10

percent in low, 20 percent in low average, 40 percent in average, 20 percent in high average,

and 10 percent in high. One way to do this is to type each employee's name on a card and ask

the evaluators to sort the cards into five piles corresponding to the ratings. This should be done

twice for the two key criteria of job performance and promotability. One reason forced

distribution was developed was to try to alleviate such problems as inflated ratings and centraltendency in the graphic rating scale.

7.4.3 360 Degree Appraisal

Typically, performance appraisal has been limited to a feedback process between employees

and supervisors. However, with the increased focus on teamwork, employee development,

and customer service, the emphasis has shifted to employee feedback from the full circle of

sources depicted in the diagram below. This multiple-input approach to performance feedback is

sometimes called "360-degree assessment" toconnote that full circle.

There are no prohibitions in law or regulation

against using a variety of rating sources, in

addition to the employee's supervisor, for

assessing performance. Research has shown

assessment approaches with multiple rating

sources provide more accurate, reliable, and

credible information. For this reason,

Personnel Management supports the use of

multiple rating sources as an effective method

of assessing performance for formal appraisal and other evaluative and developmental

purposes.


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The circle, or perhaps more accurately the sphere, of feedback sources consists of

supervisors, peers, subordinates, customers, and one's self. It is not necessary, or always

appropriate, to include all of the feedback sources in a particular appraisal program. The

organizational culture and mission must be considered, and the purpose of feedback will

differ with each source. For example, subordinate assessments of a supervisor's performance

can provide valuable developmental guidance, peer feedback can be the heart of excellence in

teamwork, and customer service feedback focuses on the quality of the team's or agency's

results. The objectives of performance appraisal and the particular aspects of performance

that are to be assessed must be established before determining which sources are appropriate.

We shall discuss the contributions of each source of ratings and feedback. In addition,

precautions are listed to consider when designing a performance management program that

includes 360-degree assessment.

Superiors: Evaluations by superiors are the most traditional source of employee feedback.

This form of evaluation includes both the ratings of individuals by supervisors on elements in

an employee's performance plan and the evaluation of programs and teams by senior managers.

What does this source contribute?

1. The first-line supervisor is often in the best position to effectively carry out the full cycle

of performance management: Planning, Monitoring, Developing, Appraising, and

Rewarding. The supervisor may also have the broadest perspective on the work

requirements and be able to take into account shifts in those requirements.

2. The superiors (both the first-line supervisor and the senior managers) have the authority to

redesign and reassign an employee's work based on their assessment of individual and

team performance.

3. Most Government employees in a national survey felt that the greatest contribution to their

performance feedback should come from their first- level supervisors.

What cautions should be addressed?

1. Research demonstrates that appraisal programs that rely solely on the ratings of superiors

are less reliable and valid than programs that use a variety of other rating sources to

supplement the supervisor's evaluation.

2. Superiors should be able to observe and measure all facets of the work to make a fair

evaluation. In some work situations, the supervisor or rating official is not in the same


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location or is supervising very large numbers of employees and does not have detailed

knowledge of each employee's performance.

3. Supervisors need training on how to conduct performance appraisals. They should be

capable of coaching and developing employees as well as planning and evaluating their

performance.

Self Assessment: This form of performance information is actually quite common but usually

used only as an informal part of the supervisor-employee appraisal feedback session. Supervisors

frequently open the discussion with: "How do you feel you have performed?" In a somewhat

more formal approach, supervisors ask employees to identify the key accomplishments they feel

best represent their performance in critical and non-critical performance elements. In a 360-

degree approach, if self-ratings are going to be included, structured forms and formal procedures

are recommended.


1. The most significant contribution of self-ratings is the improved communication between

supervisors and subordinates that result.

2. Self-ratings are particularly useful if the entire cycle of performance management involves

the employee in a self-assessment. For example, the employee should keep notes of task

accomplishments and failures throughout the performance monitoring period.

3. The developmental focus of self-assessment is a key factor. The self-assessment instrument

(in a paper or computer software format) should be structured around the performance plan,but can emphasize training needs and the potential for the employee to advance in the

organization.

4. The value of self-ratings is widely accepted. More than half of government employees felt

that self-ratings would contribute "to a great or very great extent" to fair and well-rounded

performance appraisal.

5. Self-appraisals should not simply be viewed as a comparative or validation process, but as a

critical source of performance information. Self-appraisals are particularly valuable in

situations where the supervisor cannot readily observe the work behaviors and task outcomes.


1. Research shows low correlations between self-ratings and all other sources of ratings,

particularly supervisor ratings. The self-ratings tend to be consistently higher. This


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discrepancy can lead to defensiveness and alienation if supervisors do not use good feedback

skills.

2. Sometimes self-ratings can be lower than others'. In such situations, employees tend to be

self-demeaning and may feel intimidated and "put on the spot."

3. Self-ratings should focus on the appraisal of performance elements, not on the summary level

determination. A range of rating sources, including the self-assessments, help to "round out"

the information for the summary rating.

Peers: With downsizing and reduced hierarchies in organizations, as well as the increasing use of

teams and group accountability, peers are often the most relevant evaluators of their colleagues'

performance. Peers have a unique perspective on a co-worker's job performance and employees

are generally very receptive to the concept of rating each other. Peer ratings can be used when the

employee's expertise is known or the performance and results can be observed. There are both

significant contributions and serious pitfalls that must be carefully considered before including

this type of feedback in a multifaceted appraisal program.


1. Peer influence through peer approval and peer pressure is often more effective than the

traditional emphasis to please the boss. Employees report resentment when they believe that

their extra efforts are required to "make the boss look good" as opposed to meeting the unit's

goals.

2. Peer ratings have proven to be excellent predictors of future performance. Therefore, they areparticularly useful as input for employee development.

3. Peer ratings are remarkably valid and reliable in rating behaviors and "manner of

performance," but may be limited in rating outcomes that often require the perspective of the

supervisor.

4. The use of multiple Raters in the peer dimension of 360-degree assessment programs tends to

average out the possible biases of any one member of the group of Raters. (Some agencies

eliminate the highest and lowest ratings and average the rest.)

5. The increased use of self-directed teams makes the contribution of peer evaluations the

central input to the formal appraisal because by definition the supervisor is not directly

involved in the day-to-day activities of the team.

6. The addition of peer feedback can help move the supervisor into a coaching role rather than a

purely judging role.



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1. Peer evaluations are almost always appropriate for developmental purposes, but attempting to

emphasize them for pay, promotion, or job retention purposes (i.e., the rating of record) may

not be prudent. The possible exception is in an award program as opposed to performance

appraisal. Peer input can be effectively used for recognition and awards.

2. There is a difference of opinion about the need for anonymity of the peer evaluators.

Generally, it is advised that the identities of the Raters be kept confidential to assure honest

feedback. However, in close-knit teams that have matured to a point where open

communication is part of the culture, the developmental potential of the feedback is enhanced

when the evaluator is identified and can perform a coaching or continuing feedback role.

3. It is essential that the peer evaluators be very familiar with the team member's tasks and

responsibilities. In cross-functional teams, this knowledge requirement may be a problem. In

these situations, the greatest contribution the peers can make pertains to the behaviors and

effort (input) the employee invests in the team process.

4. The use of peer evaluations can be very time consuming. When used in performance ratings,

the data would have to be collected several times a year in order to include the results in

progress reviews.

5. Depending on the culture of the organization, peer ratings have the potential for creating

tension and breakdown rather than fostering cooperation and support. A very competitive

program for rewarding individuals in the agency will often further compromise the value of

peer rating systems.

6. Employees and their representatives need to be involved in every aspect of the design of

appraisal systems that involve peer ratings.

Subordinates: An upward-appraisal process or feedback survey (sometimes referred to as SAM

for a "Subordinates Appraising Managers") is among the most significant and yet controversial

features of a "full circle" performance evaluation program. Both managers being appraised and

their own superiors agree that subordinates have a unique, often essential, perspective. The

subordinate ratings provide particularly valuable data on performance elements concerning

managerial and supervisory behaviors. However, there is usually great reluctance, even fear,concerning implementation of this rating dimension. On balance, the contributions can outweigh

the concerns if the precautions noted below are addressed.


1. A formalized subordinate feedback program will give supervisors a more comprehensive

picture of employee issues and needs. Managers and supervisors who assume they will


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sufficiently stay in touch with their employees' needs by relying solely on an "open door"

policy get very inconsistent feedback at best.

2. Employees feel they have a greater voice in organizational decision making and, in fact, they

do. Through managerial action plans and changes in work processes, the employees can see

the direct results of the feedback they have provided.

3. The feedback from subordinates is particularly effective in evaluating the supervisor's

interpersonal skills. However, it may not be as appropriate or valid for evaluating task-

oriented skills.

4. Combining subordinate ratings, like peer ratings, can provide the advantage of creating a

composite appraisal from the averaged ratings of several subordinates. This averaging adds

validity and reliability to the feedback because the aberrant ratings get averaged out and/or

the high and low ratings are dropped from the summary calculations.


1. The need for anonymity is essential when using subordinate ratings as a source of

performance feedback data. Subordinates simply will not participate, or they will give

gratuitous, dishonest feedback, if they fear reprisal from their supervisors. If there are fewer

than four subordinates in the rating pool for a particular manager, the ratings (even though

they are averaged) should not be given to the supervisor.

2. Supervisors may feel threatened and perceive that their authority has been undermined when

they must take into consideration that their subordinates will be formally evaluating them.

However, research suggests that supervisors who are more responsive to their subordinates,

based on the feedback they receive, are more effective managers.

3. Subordinate feedback is most beneficial when used for developmental purposes. It also can

be used in arriving at the performance rating of record, but precautions should be taken to

ensure that subordinates are appraising elements of which they have knowledge. For

example, if a supervisor's performance plan contains elements that address effective

leadership behaviors, subordinate input would be appropriate. It may not be appropriate for

the employee to appraise the supervisor's individual technical assignments.4. Only subordinates with a sufficient length of assignment under the manager (at least 1 year is

the most common standard) should be included in the pool of assessors. Subordinates

currently involved in a disciplinary action or a formal performance improvement period

should be excluded from the rating group.


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5. Organizations currently undergoing downsizing and/or reorganization should carefully

balance the benefits of subordinate appraisals against the likelihood of fueling an already

tense situation with distrust and paranoia.

Customers: Setting Customer Service Standards, requires agencies to survey internal and

external customers, publish customer service standards, and measure agency performance against

these standards. Internal customers are defined as users of products or services supplied by

another employee or group within the agency or organization. External customers are outside the

organization and include, but are not limited to, the general public.


1. Customer feedback should serve as an "anchor" for almost all other performance factors.

Combined with peer evaluations, these data literally "round out" the performance feedback

program and focus attention beyond what could be a somewhat self-serving hierarchy offeedback limited to the formal "chain of command."

2. Including a range of customers in the 360-degree performance assessment program expands

the focus of performance feedback in a manner considered absolutely critical to reinventing

Government Employees, typically, only concentrate on satisfying the standards and

expectations of the person who has the most control over their work conditions and

compensation. This person is generally their supervisor. Service to the broader range of

customers often suffers if it is neglected in the feedback process.


1. With few exceptions, customers should not be asked to assess an individual employee's

performance. The value of customer service feedback is most appropriate for evaluating team

or organizational output and outcomes. This feedback can then be used as part of the

appraisal for each member of the team. The possible exceptions are evaluations of senior

officials directly accountable for customer satisfaction and evaluations of individual

employees in key "front line" jobs personally serving internal or external customers.

2. Customers, by definition, are better at evaluating outputs (products and services) as opposed

to processes and working relationships. They generally do not see or particularly care about

the work processes, and often do not have knowledge of how the actions of employees are

limited by regulations, policies, and resources.

3. Designing and validating customer surveys are an expensive and time-consuming process.

The time and money are best spent developing customer feedback systems that focus on the

organization or work unit as a whole.


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Frequently asked questions and answers about the 360-Degree or Full Circle appraisal.

1. Must an agency or a company use all of the sources of rating information to be

considered using a 360-degree or "full circle" program?

No. These terms (360-degree, full circle, etc.) mean using the variety of sources that provide

the best picture of performance. Therefore, for example, an agency may use supervisor, self,

and customer input to supplement the rating official's appraisal in one division's program.

Another division of the same agency with "self-directed teams" may use peer, self, and

subordinate ratings to obtain the most useful input.

2. Can an agency or company guarantee confidentiality and protect privacy? How should

an agency respond to a RTI Act demand for a specific peer or subordinate rating in a

program that assures anonymity?

If the tool used to collect appraisal input from multiple sources contains the names of theappraisers with their comments, and that information is filed into the Employee Performance

File (EPF), the employee is entitled to see that information, even if the program assures

anonymity. If, however, the tool used does not retain the names of appraisers with data and

only the final, aggregate results are filed into the EPF (e.g., a computerized program is used

that averages appraiser input and provides the results only), anonymity can be guaranteed

because there is no data retained that is identifiable per appraiser.

3. Can employees file a grievance against a peer or subordinate appraiser?

Employees can grieve many aspects of the appraisal process, including the process used to

determine the final rating of record and the appraisal of individual elements. If the tool used

to gather the multiple-source input retains appraiser names with their rating or comments, the

employee can file a grievance against a peer or subordinate. If, however, the data is

anonymous and an average rating is derived from the aggregate rating of all appraisers, the

employee cannot file a grievance against only one of them.

While 360Degree involves reviews by people other than just the immediate manager. It is

important to understand how finally it all ties up. Often the review obtained from the peers,

subordinates, customer and self, all serve as inputs for the manger to use to the final rating.

Sometimes it could also be an average of the rating from all sources to arrive at the final rating

however this is not a very popular method. In fact 360Degree feedbackis more popular where

subjective feedback and comments are invited anonymously on a few general questions

which are made available to the manager to use for rating the employee.


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7.4.4 MBO: Management by Objectives

MBO is a very common industry practice used to review employees at the workplace. At the

beginning of the year clear objectives are laid down for achievement during t he course of the

year. These objectives are popularly called by the following names:

1. KRA-key result areas

2. KPA -key performance areas

3. Targets

4. Commitments

These objectives are designed using the SMART framework as in... Specific, Measurable,

Achievable, Results oriented and Time bound. All objectives must conform to this framework.

Thereafter the objectives are broken up into half yearly, quarterly and maybe monthly

objectives, again keeping in mind the SMART framework. All along the process both the

employee and the manger are in consensus of the objectives and the timelines as well as the

deliverables.

MBO is one of the most effective methods for performance review primarily because it is

identified at the beginning of the review period and is regularly reviewed for achievements

and modified on-going again in consensus between the employee and the manager.

At the end of the review year, the MBOs are reviewed for completion with the SMART

framework.

In case of a new employee or someone moving jobs/assignments between teams after about

6-8 weeks of being in the job this process is undertaken and the objectives are set.

Self Assessment Questions IV

7.5 Benefits of Performance Appraisal

When he does his work well, the employee naturally wants it to be praised and recognised by

his boss and fellow-workers. "Praise seems to have its greatest value when given and received

1. In________________, the evaluator is asked to rate employees from highest to lowest

on some overall criterion.

2. In _______________________approach first, the names of the persons to be evaluated

are placed on separate sheets in a predetermined order, so that each person is compared

to all others to be evaluated.

3. The __________________________is similar to 'grading on a curve.


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as recognition, and is not perceived by either party as an attempt to control the behaviour of

the recipient." Recognition satisfies human need for esteem by others and for self-esteem. This

recognition may be shown in the form of praise, of a pat on the back of the employee or a

recommendation for a pay raise, promotion, or assignment of more interesting tasks. Awards

may be given in the form of articles, banquets honouring certain individuals, certificates and

plaques, too, may be given, or the employee's name may be entered on the Honours Board.

Such recognition may generally be given for good workable suggestions leading to a

reduction in time or cost or in improving the quality of a product for valuable services in an

emergency, as when a fire breaks out, or there is a breakdown, or there are riots or accidents

exceeding sales beyond the set quota, and regularity in attendance on the job. Collective

recognition may be given by the award of a shield or a banner or a certificate, special

privileges or a money bonus to the employees.

An incentive or reward can be anything that attracts a worker's attention and stimulates him to

work. In the words of Burack and Smith, "an incentive scheme is a plan or programmes to

motivate individual or group performance. An incentive programme is most frequently built

on monetary rewards (incentive Ray or a monetary bonus), but may also include a variety of

non-monetary rewards or prizes."

The use of incentives assumes that people's actions are related to their skills and ability to

achieve important longer-run goals. Even though many organisations, by choice, or traditionor contract, allocate rewards on non-performance criteria, rewards should be regarded as a

"pay off" for performance.

An incentive plan has the following important features:

1. An incentive plan may consist of both 'monetary' and 'non- monetary' elements. Mixed

elements can provide the diversity needed to match the needs of individual employees.

2. The timing, accuracy and frequency of incentive are the very basis of a successful

incentive plans.

3. The plan requires that it should be properly communicated to the employees to encourage

individual performance, provide feedback and encourage redirection.

Promotion is a term which covers a change and calls for greater responsibilities, and usually

involves higher pay and better terms and conditions of service and, therefore, a higher status

or rank.


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A promotion may be defined as an upward advancement of an employee in an organization to

another job, which commands better pay/wages, better status/prestige, and higher

opportunities/ challenges, responsibility, and authority, better working environment, hours of

work and facilities, and a higher rank.

A promotion is a vertical move in rank and responsibility. Involved in a promotion may be

some measure of skill and responsibility e.g. it may be from a machinist B grade to a

machinist A grade, or it may involve an entirely different type of work, for example, from

salesman to a Sales Manager or from a Fitter Grade III to a Fitter Grade II, or from a clerk to

the post of a Section in-charge. Promotions are usually given:

1. To put the worker in a position where he will be of greater value to the company and

where he may derive increased personal satisfaction and income from his work

2. To remove a worker from his job as an alternative to avoid the embarrassment of firing or

demoting him

3. To recognize an individual's performance and reward him for his work so that he may have

an incentive to forge ahead. Employees will have little motivation if better jobs are

reserved for outsiders:

4. To increase an employee's organisational effectiveness

5. To build up morale, loyalty, and a sense of belonging on the part of the employees when it

is brought home to them that they would be promoted if they deserve it

6. To promote job satisfaction among the employees and give them an opportunity for

unbroken, continuous service

7. To provide a process of "selective socialization". Employees whose personalities and skills

enable them to fit into an organization's human relations programme tend to stay on while

those whose personalities do not fit well with those of the organization tend to leave

8. To attract suitable and competent workers for the organization

9. To create among employees a feeling of contentment with their present conditions and

encourages them to succeed in the company.

Self Assessment Questions V

7.6. Summary

The personnel specialists design the performance evaluation system, train the line

managers in the use of the systems, and maintain the records.

1. ______________satisfies human need for esteem by others and for self-esteem

2. Awards may be given in the form of.............................

3. The use of ________________assumes that people's actions are related to their skills

and ability to achieve important longer-run goals.


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4. Write short note on:

a. Rewards and incentives

b. Purpose of promotions

5. Explain the concept of 3600

Appraisal.

7.8 Answers to SAQs and TQs

Self Assessment Questions I

1- Performance evaluation, 2- line managers, 3- top management

Self Assessment Questions II

1- Work performance, 2- a specific time period, 3- performance on the job functions or

activities

Self Assessment Questions III

1- Forced choice, 2- essay technique, 3- essay technique

Self Assessment Questions IV

1- Ranking method, 2- Paired comparison, 3- forced-distribution system

Self Assessment Questions V

1. 1- Recognition, 2- articles, banquets honouring certain individuals, certificates and plaques

etc., 3- incentives

Answers to TQs:

1. Refer to 7.4.1

2. Refer to 7.3

3. Refer to 7.42

4. Refer to 7.5

5. Refer to 7.4.3

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Human Resource Management Notes 7

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