Performance Appraisal

indexHistory

What is Performance Appraisal

Objectives

Performance Appraisal Process

Sources of Information

Methods of Performance Appraisal

Performance Criteria at different levels

Implementing Meaningful Performance Appraisals

Common Errors in Appraisal Process

Conclusion: Towards a better PA

History

• Roots in the early 20th century

• The world's second oldest profession

• PA recognized by US government in 1950

• This became evident in the late 1980s

• The UK (consistent with Europe) Employment

Equality (Age) Regulations 2006, made PA

popular world wide

Please Write a

One Sentence Definition of

Performance Management

A Twisty Task . . .

“Researchers found that companies that used performance management programs had greater profits, better cash flow, stronger stock market performance, greater stock value and higher sales per employee (or productivity) than companies that didn’t.”

Quote

“If people know what they are supposed to do, get feedback on how they are or are not doing it, and get rewarded for doing what they are supposed to be doing, companies will be more likely to get the results they desire.”

Quotes

“The function of work is to produce results.”

WHAT IS PERFORMANCE?

• Job performance represents the

contribution that individuals make to the

organization that employs them.

HOW IS PERFORMANCE MEASURED?

• The process of measuring what each

employee contributes, called

performance appraisal.

Definitions

• “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.”

• “OBSERVE and EVALUATE an employee’s

work in relation to PRE-SET performance

standards.”

Definitions (contD…)

• Performance appraisal is the assessment of an individual’s performance in a systematic way( against well defined benchmarks). Assessment should not be confined to the past alone, potentials of the employee for future performance must also be assessed.

• Performance Appraisal (PA) refers to all those procedures that are used in a work activity to evaluate the personality performance potential of its group members.

• Performance Management System (PMS) is a process of establishing performance standards and evaluating performance in order to arrive at objective HR decisions and to provide documentation to support personnel actions.

PA

Objectives

Documentation

Organizational

Maintenance

Promotions

Training and

development

Pay scales & Pay raise

Constructive

criticism and

guidance

Administrativeuses

HR programs

Communication

Performance appraisal Process

Measurement Of Actual

Performance

Compare Actual Prfmnce With Prfmnce Stds

Initiate Corrective

Actions-if any

Establish Performance Standards

Communicate Performance Expectations

THREE AND ONE • WHO ?

SUPERVISORS DO EVALUATIONS

• WHAT ?

COMPLETION OF JOB TASKS

• WHEN ?

NEW EMPLOYEES; 3-6 MONTHS

• HOW ?

WITH SPECIAL CARE & RESPECT

The different sources of appraisal

Sources of Information

1) Supervisors (most common)

• Role Conflict (e.g., judge and trainer/teacher)

• Motivation

• Time availability

• Friendship

2) Co-Workers (Peers)

• Friendship bias

• Leniency

• High level of accuracy

• Best used as a source of feedback

Sources of Information (contd…)

3) Self

• Lots of knowledge

• Leniency effect

• Good preparation for performance appraisal

meeting (conducive for dialog)

4) Subordinates

• Biases (e.g., view of subordinates, type of job,

expected evaluation from supervisor)

5) Client

• Good source of feedback

• Negativity bias

Methods Of Appraisal

Traditional Methods

1. Rating Scale2. Checklist3. Forced Choice4. Forced Distribution5. Confidential Reports

(ACRs)6. Critical Incident

Method7. Essay Method.

Modern Methods

1. Written essay2. Critical incidents3. Graphic rating scales4. Behaviourally Anchored

Rating Scale5. Multi-person6. 360 Degree Application

system7. Mgmt By Objectives

Individual vs. Team Appraisal

• Most of the performance appraisals are done on an individual basis. However, modern day organizations have brought the idea of team appraisals to evaluate the performance of a team as a whole instead of appraising performance of individual employees.

• This development is due to the fact that organizations are assigning work to teams rather than individuals.

• Companies following TQM principles follow team appraisals as TQM sets for the team assignment of the work rather than individual assignments.

Performance Appraisal Methods

• Individual Evaluation Methods

– Confidential report

– Essay evaluation

– Critical incidents

– Checklists

– Graphic rating scale

– Behaviorally anchored rating scale

– MBO

confidential report

• Evaluation of Characteristics e.g. loyalty, potential,

attendance

• Traditional Method

• Prepared without employee’s notice

• Performance briefing in different criteria on a

regular basis

• Characteristics should be easily understandable

• Rating scale of report should be maintained as a

qualitative reporting

Essay Method

Employee is described in a number of

broad categories like:

• Overall impression

• Strengths and weakness

The strength of this method lies in the

writing skills and analytical skills of the

rater.

Critical Incident method

Ex: A fire, sudden breakdown, accident

Workers Reaction Scale

A informed the supervisor immediately 5

B Become anxious on loss of output 4

C tried to repair the machine 3

D Complained for poor maintenance 2

E was happy to forced test 1

Checklist method

•Simple checklist method

•Weighted checklist method

•Forced choice method

Simple checklist method:

Is employee regular Y/N

Is employee respected by subordinate Y/N

Is employee helpful Y/N

Does he follow instruction Y/N

Does he keep the equipment in order Y/N

Weighted checklist method

weights performance rating

(scale 1 to 5 )

Regularity 0.5

Loyalty 1.5

Willing to help 1.5

Quality of work 1.5

Relationship 2.0

Forced choice method

Criteria Rating

1.Regularity on the job Most Least

•Always regular

•Inform in advance for delay

•Never regular

•Remain absent

•Neither regular nor irregular

Graphic Rating Scale

• Continuous Rating Scale

• Discontinuous Rating Scale

Employee name_________ Deptt_______

Rater’s name ___________ Date________

------------------------------------------------------------------------

Exc. Good Acceptable Fair Poor

5 4 3 2 1 _

Dependability

Initiative

Overall output

Attendance

Attitude

Cooperation

Total score Continuous Rating Scale

Discontinuous Rating Scale

Attitude

No

Interest

Indifferent

Interested

Enthusiastic

Very

enthusiastic

BARS( Behaviorally Anchored rating scale)

Step 1. Identify critical incidents

Step 2. Select performance dimension

Step 3. Retranslate the incidents

Step 4. Assign scales to incidents

Step 5. Develop final instrument

MBO Process

• Set organizational goals

• Defining performance target

• Performance review

• Feedback

Management By Objectives

• “Management by Objectives (MBO) is a

process of agreeing upon objectives within

an organization so that management and

employees agree to the objectives,

understand what they are, and work hand-to-

hand towards the achievement of the set

objectives.”

• Setting goal is difficult in MBO.

Management By Objectives (MBO)

contd…

• evaluate employee job performance in

terms of the extent to which the employee

achieved each of his or her goals during a

specified period of time

– Goals can be both objective and subjective

– Commonly used for managers and

professionals

Five step MBO process

Organizational

Objectives

Reviewed

Set Employee Objectives

Progress

Monitored

Performance

Evaluated

Achievers

Rewarded

Current Global Trends in PA

• Trend towards a 360-Degree feedback

system

• Problems in implementation are anticipated

and efforts are being made to overcome

them

• Team Performance Appraisal

• Rank and Yank Strategy

• TQM an Performance Appraisal

Challenges

• Determining the evaluation

criteria

• Lack of competence

• Errors in rating and evaluation

• Resistance

–Ranking

–Paired comparison

–Forced distribution

–Performance tests field review

technique

–360º performance appraisal

Group Appraisal

Ranking method

Employee Rank

A 2

B 1

C 3

D 5

E 4

Paired comparison method

A B C D E Final Rank

A - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - + 4

E - - - - - 5

No of Positive evaluation = employee superior evaluation

Total no. of evaluation * 100

Forced Distribution method

10% 20% 40% 20% 10%

poor below

average

average good excellent

No.

of

employees

Completion of work

Field review method

Performance subordinate peers superior customer

Dimension

Leadership ^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^

360º PERFORMANCE

APPRAISAL

A developmental and/or performance

appraisal tool which utilizes multiple-source

feedback from people who work most closely

with the employee.

It is also known as multi-rate feedback, multi-

source feedback & multi-source assessment.

It is done either by interview method or

questionnaire.

Who Does 360º PA?

Why to use 360º PA?

It provides the individual with an opportunity

to learn how different colleagues perceive

them, leading to increase self-awareness.

It encourages self-development.

It increases understanding of the behaviours

required to improve personal and

organisational effectiveness.

Contd…

It promotes a more open culture where

giving and receiving feedback is an

accepted norm.

It increases communication within the

organisation.

It can be a powerful trigger for change.

How to implement 360º PA?

EXPLAIN THE

PUROSE OF

THE PROCESS

DEFINE SKILL

MODEL

DISCUSS

WITH

EMPLOYEE

PROVIDE FEED

BACK

PROCESS

QUESTIONNARI

ES

COMPLETE

QUESTIONNAI

RES

DISTRIBUTE

QUESTIONNAR

IES

Performance Appraisal MethodsMethod Advantage Disadvantage

Written essay

Simple to use More a measure of evaluator’s writing ability than of employee’s actual performance

Critical incidents

Rich egs behaviorally based

Time consuming; lack quantification

Graphic rating scales

Provide quantitative data; less time-consuming than others

Do not provide depth of job behavior assessed

BARS Focus on specific n measurable job behaviors

Time consuming; diff to dev measures

Multi-person compares employees with one another

Unwieldy with large no. of employees

MBO Focuses on end goals; results oriented

Time consuming

360° apprisl More thorough Time consuming

Performance criteria for executives

• For top managers

–Return on capital employed

–Contribution to community

development

–Degree of upward communication

from middle-level executives

–Degree of growth and expansion of

enterprise.

For middle level managers

• Departmental performance

• Coordination among employees

• Degree of upward communication

from supervisors

• Degree of clarity about corporate

goals and policies

For supervisors

• Quality and quantity of output in a given period

• Labor cost per unit of output in a given period

• Material cost per unit in a given period

• Rate of absenteeism and turnover of employees

• No of accidents in a given period

Implementing Meaningful

Performance Appraisals

I. Gather documentation

II. Develop the written appraisal

III. Conduct the appraisal interview session


Performance Appraisals (cont’d)I. Gather Documentation

a) Personal observationObserve actual performance and judge results

b) Feedback documentationUse performance notes made throughout the year

c) Personnel FileExamine past performance reviews, discipline records, and awards

d) Measurement toolsCheck documents that support performance rating. Examples: Time clock reports for attendance and tardiness, etc.

e) Others’ observationsReview supervisor, manager, co-worker comments


Performance Appraisals (cont’d)II. Develop Appraisal Guidelines for writing appraisals

a) Set aside dedicated timeGather performance documentation and eliminate interruptions

b) Evaluate performance based on expectationsReview established expectations, job description, performance goals

c) Rate how well expectations were met

d) Give honest ratingsAcknowledge strengths and address ongoing problems

e) Provide specific examplesAvoid generalities, note specific contributions and accomplishments

f) Avoid personal and subjective statementsNo exaggerations, no character attacks


Performance Appraisals (cont’d)

III. Conducting the Appraisal Interview session

– Common Mistakes

a) Manager is ill-prepared

b) Employee is not given adequate notice

c) Discussion is rushed or interrupted

d) Employee is not given the opportunity to

comment

e) Manager’s tone is punitive or condescending

Implementing Meaningful Performance Appraisals

(cont’d)

III. Conducting the Appraisal Interview session- Maximizing the review

1) Be prepared

o Determine discussion direction

o Anticipate objectives

o Gather supportive documentation

2) Set the right tone

o Establish a supportive environment

o Private location – Maintain confidentiality

o Quiet and undisturbed – eliminate distractions

o Level playing field – Avoid superiority

o Timing – choose a quiet time

o Demonstrate Respect

o Timeliness – Conduct reviews by due date

o Appointments – Don’t act like the employee’s time is less valuable

o Advance notice – Allow the employee to be prepared

o Icebreaker – Start on a friendly and relaxed note


Performance Appraisals (cont’d)III. Conducting the Appraisal Interview session

- Maximizing the review

o Have the best mindset

o Tone – Professional and supportive

o Focus – Future goals and objectives

o Open-mindedness – Seek explanations

o Emotions – Calm and centered

3) Communicate Effectively

– Avoid communication roadblocks – Vague, evasive,

derisive or derogatory language, poor listening skills,

strong emotions, one-way conversation

– Improve communication skills – be clear and concise,

be honest, not brutal, be an active listener and natural

Appraisal Interviews

Following points are to be noted while

conducting appraisal interviews:

1. Place the employee at ease with small talk.

2. Allow the employee to share his/ her perspectives before

you share yours.

3. Be positive and use action oriented behavioral terms.

4. Use specific and measurable expressions.

5. Avoid comparing the employee to yourself or others.

6. Balance negatives with positives; start with a positive.

7. Spend time planning for improvement.

During the Appraisal Process:

Interview

IV. Potential Emotional Reactions

a) Emotional Distress

b) Hostility

c) Defensiveness

d) Denial


Interview


a) Emotional Distress - employee becomes tearful

or angry, but not aggressive

o How can you handle it?

o Be patient

o Offer privacy

o Suggest rescheduling

o Other ideas?


Interview


b) Hostility - employee channels his/her

emotions into aggression


o Be patient

o Offer privacy

o Suggest rescheduling

o Other ideas?


Interview


c) Defensiveness - employee makes

excuses


– Listen objectively

– Be compassionate

– Reinforce expectations

– Other Ideas?


Interview


d) Denial - employee insists your evaluation is

incorrect


– Listen objectively

– Investigate as necessary

– Provide supportive documentation

– Other ideas?

Giving Employee Feedback

1. Focus comments on the task rather than the

person.

2. Combine feedback with goals for

improvement.

3. Describe behaviors in an unemotional manner.

4. Focus on what is observed rather than

underlying causes.

5. Remain nonjudgmental.

6. Provide clear examples to support points.

Common

Errors in the

Appraisal

Process

Halo Error/Horn Error

Appraiser

discomfort

Lack of objectivity

Leniency /

Strictness

Recent behavior

bias

Central Tendency

Employee anxiety

Personal bias

Halo / Horn Error

• Halo error - Occurs when manager

generalizes one positive performance

feature or incident to all aspects of

employee performance resulting in

higher rating

• Horn error - Evaluation error occurs

when manager generalizes one

negative performance feature or

incident to all aspects of employee

performance resulting in lower rating

Appraiser Discomfort

• Performance appraisal process cuts into manager’s time

• Experience can be unpleasant when employee has not performed well

Lack of Objectivity

• In rating scales method, commonly used factors such as attitude, appearance, and personality are difficult to measure

• Factors may have little to do with employee’s job performance

• Employee appraisal based primarily on personal characteristics may place evaluator and company in untenable positions

Leniency / Strictness

• Leniency - Giving undeserved high ratings

• Strictness - Being unduly critical of employee’s work performance

• Worst situation is when firm has both lenient and strict managers and does nothing to level inequities

Recent Behavior Bias

• Employee’s behavior often improves and

productivity tends to rise several days or

weeks before scheduled evaluation

• Only natural for rater to remember recent

behavior more clearly than actions from

more distant past

• Maintaining records of performance

Employee Anxiety

• Evaluation process may

create anxiety for

appraised employee

• Opportunities for

promotion, better work

assignments, and

increased compensation

may hinge on results

Central Tendency

• Error occurs when employees are

incorrectly rated near average or middle of

scale

• May be encouraged by some rating scale

systems requiring evaluator to justify in

writing extremely high or extremely low

ratings

Personal Bias (Stereotyping)

• Managers allow individual differences such as gender, race or age to affect ratings they give

• Effects of cultural bias, or stereotyping, can influence appraisals

• Other factors – Example: mild-mannered employees may be appraised more harshly simply because they do not seriously object to results

Reasons Appraisal Programs Sometimes Fail

Lack of top-management information and support

Unclear performance standards

Rater bias

Too many forms to complete

Inadequate preparation on the part of the manager

Employee is not given clear objectives at the beginning of

performance period

Overemphasis on uncharacteristic performance

Organizational politics or personal relationships judgments

Manager may not be trained at evaluation or giving feedback

No follow-up and coaching after the evaluation

Improve Appraisal Formats

Select the Right Raters

Understand Why Raters Make

Mistakes

Strategies to Better Understand

and Measure Job Performance

Training Raters to Rate More

Accurately

Rater-error training to reduce psychometric

errors

Performance dimension training

Performance-standard training

1) Ensure that procedures for personnel decisions do not differ as a

function of the race, sex, national origin, religion, or age of those

affected by such decisions.

2) Use objective and uncontaminated data whenever they are

available.

3) Provide a formal system of review or appeal to resolve

disagreements regarding appraisals.

4) Use more than one independent evaluator of performance.

5) Use a formal, standardized system for personnel decisions.

6) Ensure that evaluators have ample opportunity to observe and rate

performance if ratings must be made.

7) Avoid ratings on traits such as dependability, drive, aptitude, or

attitude.

8) Provide documented performance counseling prior to

performance,-based termination decisions.

Prescriptions for Legally Defensible

Appraisal Systems

Thanks for your attention

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Performance Appraisal

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