PERFORMANCE MANAGEMENT AND
APPRAISAL
BY
PROF. JYOTI VERMA
CIMP
PERFORMANCE APPRAISAL
It is an objective assessment of an individuals’ performance
against well defined benchmarks (such as job knowledge,
quality and quantity of output, leadership abilities,
dependability, co-operation, initiative, creativity etc. ).
It is linked to job analysis at one end and training and
development at the other.
Performance Performance
Job Analysis
Standards Appraisal
PMS
Performance Management System (PMS)- automated means
of continuously monitoring performance. It includes:
1. Setting work standards,
2. Assessment of employees’ actual performance relative to
those standards and
3. Providing feedback (motivate/remove perf. deficiencies)
4. Archiving performance data
5. Using appraisal data
6. Taking required actions
Apollo tyres, L&T, TCS, Wipro and Infosys, where PMS is formal
and structure and an important tool for transformation and
culture change.
PM VS PA
Elements Appraisal Performance
Primary Assessing performance Improve employee
Focus as well as potential performance and
development
Activities Designing appraisal Set of HR activities designed
Involved programmes and executed to assess and
improve performance
Leadership Evaluative Facilitative
Frequency Usually yearly Often, can be ongoing
Degree of High Low
formality
SETTING GOALS AND WORK STANDARDS
Specific- who have specific goals usually perform better
Measurable- always try to express goals in terms of number,
include target dates or deadlines.
Challenging but doable- not so difficult that they appear
impossible or unrealistic.
Encourage participation- involvement of all produce higher
performance.
Set SMART goals: specific, measurable, attainable, relevant
and timely.
WHY APPRAISE PERFORMANCE
Main reasons:
1. For pay and promotional decisions
2. For developing a plan to remove perf. deficiencies and
reinforcing the right behaviours and actions
3. For career planning purposes in lights of employee’s
strengths and weaknesses.
Appraisals are more important than appraisal tools or forms.
DESIGNING APPRAISAL PROGRAMME
What Problems?
What RATING
Methods? ERRORS, affect
Traditional/ assessment
Modern results
When to How to solve?
Evaluate? Training-
Timing of accuracy of
evaluation ratings
Appraisal
Design
Whose
What to Performance?
evaluate? (Individual/T
productivity, eams)
Who are the
timeliness, raters?
quality, quantity,
need of Supervisors, Formal/
supervision etc. peers, self,
committees, Informal/
combination of Mixed
raters etc.
METHODS FOR APPRAISAL- TRADITIONAL
1) Graphic Rating Scale-
Simplest most popular method
Lists of traits
Circling the score that best describes the performance of
subordinate for each trait
2) Alternation Ranking Method-
Ranking employee from best to worst on a particular trait,
choosing highest, then lowest until all are ranked.
3) 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.
METHODS FOR APPRAISAL- TRADITIONAL
4) Forced Distribution Method-
Similar to grading on a curve, predetermined percentages
of ratees are placed in various performance categories.
All proportions in each category need not be symmetrical
Best method to avoid appraisal problems
Eg. Microsoft and GE (top 20%, middle 70% and bottom 10%)
5) Critical Incident Method-
Keeping a record of employees’ positive and negative
work-related behaviour and discussing it with the
employee at predetermined times.
Eg. May 1st- Mr. X listened patiently to the customer’s
complaint, answered the women’s questions, he was
polite, prompt and interested in customer’s problem.
METHODS FOR APPRAISAL
Eg. Mr. X stayed eight minutes over on his break during the
busiest part of the day.
Advantage- It makes the supervisor thinks about the
subordinate’s appraisal all during the year.
Disadvantage- without numerical rating, not useful for
employee comparisons or salary decisions.
6) Narrative Forms/Essay Methods-
Includes open ended questions
Actual performance and how to improve
METHODS FOR APPRAISAL- MODERN
1) Behaviorally Anchored Rating Scale (BARS)-
aims at combining the benefits of narrative critical
incidents and quantified ratings by anchoring a quantified
scale with specific narrative examples of good or poor
performance. (critical incident method + graphic rating
scale)
5-10 perf. dimensions are identified and defined
The dimensions are anchored with positive and negative
critical incidents
Each ratee is then rated on the dimensions
METHODS FOR APPRAISAL- MODERN
Behaviorally Anchored Rating Scale (BARS)- Eg.
Most to least effective behaviour
Nurse would be expected to put in extra time and care to
ensure patient’s comfort.
Nurse would be expected to read nursing journals to
improve his/her skill sets.
Nurse would take extra care to memorize patient names.
Nurse would expected to feel good about being a nurse.
Nurse would not be expected to give patients their
medications on time.
Scale- 1-10
METHODS FOR APPRAISAL- MODERN
2) Management by Objectives (MBO)-
Many use it as primary appraisal methods while some use
it with graphic rating or other appraisal method.
Managers and subordinates plan, organize, control,
communicate and debate to set goals. Eg.
Sales representative of medium firm- Contact six new clients
in West region of Bihar and sell to at least two of these new
clients within the next semiannual cycle.
Product Manager of large firm- Increase market share of
butter by at least 3.5% before next objective meeting (8
months from today) without increasing cost by more than
2%
3) 360 degree Appraisal- it is used for developmental
purposes rather than for pay increase
METHODS FOR APPRAISAL- MODERN
4) Computerized and Web-Based Performance Appraisal-
Using appraisal soft-wares
Keep computerized notes on subordinates during the year
and then to merge these with notes (characteristics and
performance essay) of employees on several performance
traits.
Eg. Infosys, Indian Oil Corporation Limited, Apollo Tyres- have
ePMS
5) Electronic Performance Monitoring- these systems use
computer network technology to allow managers access to
their employee’s computers and telephones.
Disadvantage- increases stress
ADVANTAGES AND DISADVANTAGES TO VARIOUS
PERFORMANCE APPRAISAL TOOLS
Individual Methods Comments
Rating Scales East to use, easy to complete, focus too much on
person instead of on performance
Forced Choice Easy to use, difficult to explain to those evaluated
Essay Good in providing specific feedback, difficult in
making comparisons
Critical Incidents Time consuming, must be disciplined to log in
incidents
Behavioural Scales Difficult to develop, great for providing specific
feedback
Ranking and paired Good for making comparisons, hard to use for
comparisons providing feedback
MBO Focus on results, does not engage in comparisons
among employees.
POTENTIAL APPRAISAL PROBLEMS
Unclear Standards
Halo Effect
Central Tendency
Leniency or Strictness
Primacy or Recency
Biases
REALISTIC APPRAISALS
Why employer’s are soft in employee appraisals:
1. Fear of having new hire and train them
2. The ratee’s unpleasant reaction
3. Company’s appraisal process that is not conducive to
candor.
Note: Poor performances should not be ignored
GE and Apple are famous for hard-hearted performance.
ROLE OF RATERS AND HR
Role of Raters
Don’t give too high or too low or average scores to all
Must be familiar with appraisal techniques
Understand and avoid problems that can cripple
appraisals
Should know how to conduct appraisals fairly
Role of HR
Serves as policy making and advisory role
Prepares detailed forms and procedures to operating
division heads
Train supervisors to improve their appraisal skills, for
monitoring the appraisal system’s effectiveness, for
ensuring that it complies with EEO laws.
CONDUCTING EFFECTIVE APPRAISALS
Know the problems- learn and understand the potential
appraisal problems
Use the right appraisal tool- or combination of tools
Maintain a diary
Aim of appraisal should be developmental
Be fair- not sharing information/providing feedback about
the performance is unfair and unjust as per law.
HOW TO CONDUCT THE APPRAISAL INTERVIEW
1. Talk in terms of objective work data
2. Don’t get personal
3. Encourage the person to talk
4. Get Agreement- how things could be improve and develop
an action plan with targets and dates.
HOW TO HANDLE A DEFENSIVE SUBORDINATE
1. Recognize that the defensive behaviour is normal.
2. Never attack a person’s defenses.
3. Postpone action
4. Supervisor should not try to be a psychologists.
PERFORMANCE MANAGEMENT
PM is the continuous process of identifying, measuring, and
developing the performance of individuals and teams and
aligning their performance with the organizations’ goals.
It includes, PA, archiving performance data and using that data.
Basic building blocks of performance management-
Direction sharing
Goal Alignment
Ongoing performance monitoring
Ongoing feedback
Coaching and developmental support
Rewards, recognition and compensation/dismissals or
terminations
DISCUSSION QUESTIONS
1. What is the purpose of the performance appraisal? Explain
the problems to be avoided in appraising performance?
2. Discuss the pros and cons of any four performance
appraisal tools?
3. How to conduct an appraisal interview? How would you
avoid a defensive subordinate during an appraisal
interview?
THANK YOU
