Performance

Appraisal and
Remuneration
Wage and Salary
Learning Objectives
 At the end of this module, students will:
 Relate individual performance appraisal to the organizationwide
performance management process.
 Identify a variety of appraisal methods.
 Explain HR’s role in the performance management process.
 Revise performance appraisal statements.
 Practice performance appraisal interviewing techniques.
 Have the skills necessary to use the performance appraisal process
as a positive enhancement to employee performance.

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A performance appraisal (PA), also referred to as a performance review,
performance evaluation, (career) development discussion, or employee
appraisal is a method by which the job performance of an employee is
documented and evaluated.

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Performance Management and Performance Appraisal

 Performance management:
 Dynamic, continuous process.
 Improves organizational effectiveness.
 Strategic goals.

 Performance appraisal:
 Periodic (usually annual) event.
 Formal review.
 Last step in performance management process.

Mondy, R. (2008). Human resource management, 10th ed. New Jersey:

Pearson Prentice Hall, 224-225.

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Who’s Involved? What Are
Their Needs?
 Organization:
 Information.
 Documentation.
 Supervisor:
 Documentation.
 Motivation.
 Employee:
 Feedback.
 Support for career growth.
 Increased compensation.

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Performance Management
Goals

 Communication between supervisor and

employee.
 Feedback on performance.
 Documentation.
 Development Goals.
 Alignment with strategic planning goals.

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HSS,Jaypee University,Anoopshahr
HR’s Role in Performance
Management
 Participate in strategic planning.
 Conduct job analysis.
 Support performance management.
 Design appraisal system.
 Train and support managers.
 Maintain documents.
 Provide employee due process.
 Ensure integrity of the system.
 Ensure compliance with nondiscrimination laws.

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 Performance Management Process

1. Prerequisites.
2. Performance planning.
3. Performance execution.
4. Performance assessment.
5. Performance review.
Planning
6. Performance renewal and re-contracting.
Renewal Execution

Review Assessment
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 1. Prerequisites

 Prerequisites:
 Strategic planning.
 Job analysis.

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2. Performance Planning
 Employees must have thorough knowledge of the
performance management system.
 Meeting between employee and manager.
 Set SMART goals and measurement standards:
 Results.
 Behavior.
 Developmental plans.

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Writing SMART Performance
Objectives
 Practice writing SMART performance objectives:
 S – Specific.
 M – Measurable.
 A – Attainable.
 R – Realistic.
 T – Timely.

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 3. Performance Execution
 Shared responsibility
 Employee responsibility:
 Commitment to established goals.
 Communication and update with manager.
 Manager responsibility:
 Feedback, coaching and reinforcement.
 Resource support.
 Accurate observation and documentation.

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4. Performance Assessment
and Appraisal
 Who should appraise?
 Supervisors.
 Peers and team members.
 Subordinates.
 360 degree feedback.

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What About the Employee?

Should employees do self-

appraisals?

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Performance Appraisal
Methods
 Graphic rating scale.
 Ranking method.
 Forced distribution method.
 Critical incident method.
 Essay method.
 BARS–behaviorally anchored rating scale.
 MBO–management by objectives.

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HSS,Jaypee University,Anoopshahr
Confidential report: It is mostly used in government
organizations. It is a descriptive report prepared, generally at
the end of every year, by the employee's immediate superior.
The report highlights the strengths and weaknesses of the
subordinate. The report is not databased. The impressions of
the superior about the subordinate are merely recorded there.
It does not offer any feedback to the appraisee. The appraisee
is not very sure about why his ratings have fallen despite his
best efforts, why others are rated high when compared to him,
how to rectify his mistakes, if any; on what basis he is going to
be evaluated next year, etc. Since the report is generally not
made public and hence no feedback is available, the
subjective analysis of the superior is likely to be hotly
contested. In recent years, due to pressure from courts and
trade unions, the details of a negative confidential report are
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given to the appraisee.

Essay evaluation: Under this method, the rater is asked to
express the strong as well as weak points of the employee's
behavior. This technique is normally used with a combination of
the graphic rating scale because the rater can elaborately present
the scale by substantiating an explanation for his rating. While
preparing the essay on the employee, the rater considers the
following factors: (i) Job knowledge and potential of the employee;
(ii) Employee's understanding of the company's programmes,
policies, objectives, etc.; (iii) The employee's relations with co-
workers and superiors; (iv) The employee's general planning,
organizing and controlling ability; (v) The attitudes and perceptions
of the employee, in general.

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Critical incident technique: Under this method, the manager

prepares lists of statements of very effective and ineffective

behavior of an employee. These critical incidents or events

represent the outstanding or poor behavior of employees on the

job. The manager maintains logs on each employee, whereby he

periodically records critical incidents of the workers behavior. At

the end of the rating period, these recorded critical incidents are

used in the evaluation of the workers' performance

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An example of a good critical incident of a sales assistant is the
following:

July 20 – The sales clerk patiently attended to the customers

complaint. He is polite, prompt, enthusiastic in solving the
customers' problem.

On the other hand the bad critical incident may appear as under:

July 20 – The sales assistant stayed 45 minutes over on his break

during the busiest part of the day. He failed to answer the store
manager's call thrice. He is lazy, negligent, stubborn and
uninterested in work.

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Checklists and weighted checklists: Another simple type of

individual evaluation method is the checklist. A checklist

represents, in its simplest form, a set of objectives or descriptive

statements about the employee and his behavior. If the rater

believes strongly that the employee possesses a particular listed

trait, he checks the item; otherwise, he leaves the item blank. A

more recent variation of the checklist method is the weighted list.

Under this, the value of each question may be weighted equally

or certain questions may be weighted more heavily than others.

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The following are some of the sample questions in the checklist.

l Is the employee really interested in the task assigned?

Yes/No

l Is he respected by his colleagues (co-workers)

Yes/No

l Does he give respect to his superiors?

Yes/No

l Does he follow instructions properly?

Yes/No

l Does he make mistakes frequently?

Yes/No

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Graphic rating scale: Perhaps the most commonly used
method of performance evaluation is the graphic rating scale. Of
course, it is also one of the oldest methods of evaluation in use.
Under this method, a printed form, as shown below, is used to
evaluate the performance of an employee. A variety of traits
may be used in these types of rating devices, the most common
being the quantity and quality of work. The rating scales can
also be adapted by including traits that the company considers
important for effectiveness on the job. A model of a graphic
rating scale is given below.

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Table: Typical Graphic Rating Scale
Employee Name................... Job title .................

Department ......................... Rate ...............

Data ..................................
Quantity of work: Volume of work under Unsatisfacto Fair Satisfactor Good Outstandin
normal working conditions ry          y g

Quality of work: Neatness, thoroughness          

and accuracy of work Knowledge of job

A clear understanding of the factors          

connected with the job

Attitude: Exhibits enthusiasm and          

cooperativeness on the job

Dependability: Conscientious, thorough,          

reliable, accurate, with respect to
attendance, reliefs, lunch breaks, etc.

Cooperation: Willingness and ability to

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work with others to produce desired
goals.
Behaviorally anchored rating scales: Also known as the

behavioral expectations scale, this method represents the latest

innovation in performance appraisal.  It is a combination of the

rating scale and critical incident techniques of employee

performance evaluation. The critical incidents serve as anchor

statements on a scale and the rating form usually contains six to

eight specifically defined performance dimensions. The following

chart represents an example of a sales trainee's competence and

a behaviourally anchored rating scale.

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 Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for
increased sales and to have positive relationships with
customers all over the country.

Good 6 Can expect to initiate creative ideas for improved sales.

Above average 5 Can expect to keep in touch with the customers throughout
the year.
Average 4 Can manage, with difficulty, to deliver the goods in time.

Below average 3 Can expect to unload the trucks when asked by the
supervisor.
Poor 2 Can expect to inform only a part of the customers.

Extremely poor 1
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Can expect to take extended coffee breaks and roam
around purposelessly.
 Forced choice method: This method was developed to eliminate bias and the

preponderance of high ratings that might occur in some organizations. The

primary purpose of the forced choice method is to correct the tendency of a
rater to give consistently high or low ratings to all the employees. This method
makes use of several sets of pair phrases, two of which may be positive and
two negative and the rater is asked to indicate which of the four phrases is the
most and least descriptive of a particular worker. Actually, the statement items
are grounded in such a way that the rater cannot easily judge which statements
apply to the most effective employee. The following box is a classic illustration
of the forced choice items in organizations.

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able: Forced Choice Items
1.       Least                                                             Most
          A        Does not anticipate difficulties                  A
          B        Grasps explanations easily and quickly        B
          C        Does not waste time                               C
          D        Very easy to talk to                                D
2.       Least                                                             Most
          A        Can be a leader                                       A
          B        Wastes time on unproductive things           B
          C        At all times, cool and calm                         C
          D        Smart worker                                         D

The favourable qualities earn a plus credit and the unfavourable ones
earn the reverse. The worker gets over plus when the positive factors
override the negative ones or when one of the negative phrases is
checked as being insignificantly rated.

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Management by Objectives (MBO): MBO represents a modern method of evaluating
the performance of personnel. Thoughtful managers have become increasingly aware
that the traditional performance evaluation systems are characterized by somewhat
antagonistic judgments on the part of the rater. There is a growing feeling nowadays that
it is better to make the superior work with subordinates in fixing goals. This would
inevitably enable subordinates to exercise self-control over their performance behaviors.
The concept of management by objectives is actually the outcome of the pioneering
works of Drucker, McGregor and Odiorne in management science. Management by
objectives can be described as “a process whereby the superior and subordinate
managers of an organization jointly identify its common goals, define each individuals'
major areas of responsibility in terms of results expected of him and use these measures
as guides for operating the unit and assessing the contributions of each of its members”.
MBO thus represents more than an evaluation programme and process. Practicing
management scientists and pedagogues view it as a philosophy of managerial practice; it
is a method by
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and debate.
Features
•MBO emphasizes participatively set goals that are tangible, verifiable and measurable.
•MBO focuses attention on what must be accomplished (goals) rather than how it is to
be accomplished (methods).
•MBO, by concentrating on key result areas translates the abstract philosophy of
management into concrete phraseology. The technique can be put to general use (non-
specialist technique). Further it is “a dynamic system which seeks to integrate the
company's need to clarify and achieve its profit and growth targets with the manager's
need to contribute and develop himself”.
•MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals. It allows the
subordinate plenty of room to make creative decisions on his own.

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Performance Appraisal
Problems
 Appraiser discomfort.
 Strictness/leniency.
 Bias and lack of objectivity.
 Manipulating the evaluation.
 Halo/horns effect.
 Central tendency error.
 Recent behavior.
 Supervisor unable to observe behavior.

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Writing the Appraisal Review
DocumentAre your comments accurate and
meaningful to the employee or
just clichés?

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 Performance
Management and
Appraisal
Session 2
Getting Ready for the
Interview
Before you start that interview,
what do you need?

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©
SHRM 2009
5. Conducting the
Performance Interview
 Explain the purpose of the interview.
 Discuss self-appraisal.
 Share ratings and explain rationale.
 Discuss development plans.
 Employee summary.
 Rewards discussion (if appropriate).
 Set follow-up meeting.
 Employee signature.
 Supervisor recap.
 Appeals process.

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6. Performance Renewal and
Re-Contracting
 Final step in performance management process.
 Readjust based on insight from completed process.
 Plan for next performance management cycle.

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Problems With
Assessment/Appraisal
 Tied to compensation.
 Employees lack motivation.
 Manager and employee don’t agree on results.
 Management reluctance.
 No performance documentation.

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Issues With Performance
Management
 Legal issues.
 Untrained raters.
 Rater errors.
 Rater distortion.
 No grievance procedure.

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Poorly Implemented PM
Systems
 False and misleading information.
 Increased turnover.
 Wasted time and money.
 Damaged relationships.
 Decreased motivation.
 Job dissatisfaction.
 Risk of litigation.
 Unfair standards.

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Performance Management
Skills
 Communication.
 Coaching.
 Giving feedback.
 Empathy.
 Teamwork.

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Let’s Practice Your
Performance Appraisal Skills

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