PERFORMANCE

APPRAISAL
MEANING OF PERFORMANCE
APPRAISAL
Performance appraisal is the process of
measuring quantitatively and qualitatively an
employers past or present performance against
the background of his expected role performance,
the background of his work environment, and
about his future potential for an organisation.
Evaluation of the performance and personality of
each employee is done by his immediate superior
or some other person trained in the techniques of
merit rating.
 DEFINITIONS OF PERFORMANCE
APPRAISAL
According to Randall S. Schuler, "Performance
appraisal is a formal, structured system of measuring
and evaluating an employee's job related behaviour
and outcomes to discover how and why the employee
is presently performing on the job and how the
employee can perform more effectively in the future so
that the employee, organisation and society will
benefit.“
According to Dale S. Beach, "Performance appraisal
is the systematic evaluation of the individual with
respect to his or her performance on the job and his or
her potential for development.”
 FEATURES OF PERFORMANCE
APPRAISAL
1.Performance appraisal is a systematic process
involving three steps:
-Setting work standards
-Assessing employee’s actual performance
relative to standards.
-Offering feedback to the employee so that he
can eliminate
deficiencies and improve performance in
course of time.
2. It is a systematic and objective description of
3. The appraisal is an ongoing and continuous process
where the evaluations are arranged periodically
according to a definite plan. It is not a one-shot deal.

4.The performance appraisal seeks to secure

information necessary for making objective and
correct decisions on employees.

5. Performance appraisal may be formal or informal.

The formal system is more fair and objective since it
is carried out in a systematic manner using printed
appraisal forms.
OBJECTIVE OF PERFORMANCE APPRAISAL
Performance appraisal can be carried out with various objective in
mind and these objective can be classified under the following four
points :-
(a) WORK-RELATED OBJECTIVE:- 1. To assess the work of employees in
relation to job requirements.
2. To improve efficiency
3. To carry out job evaluation
4. To help management in fixing employees
according to their capacity , interest etc.
(b)Career development objective :-1. To determine career potential.
2. To plan promotions, transfer, lay offs etc. of the employees
3. To plan career goals .
c) Communication:- (1)To provide feedback to employees so that they come
to know where they stand and can improve their job performance
(2) To clearly establish goals ie., what is expected of the employee in terms of
performance and future work assignments
(3) To provide coaching, counseling, career planning and motivation to
employees
(4)To develop positive superior-subordinate relations and thereby reduce
grievances.
d) Organisational Objectives :-
• (i) To serve as a basis for promotion or demotion
• (ii) To serve as a basis for wage and salary administration and
considering pay increases and increment

• (ii) To serve as a basis for planning suitable training and

development programmes.
• (iv) To serve as a basis for transfer or termination in case of
reduction in staff strength,
 -:BENEFITS AND USES OF PERFORMANCE
APPRAISAL :-
• The important benefits and uses which justify the existence of a system
of performance appraisal in an organisation are as follows:-
(1) An effective system of performance appraisal helps the supervisor to
evaluate the performance of his employees systematically and
periodically, it helps in the placement of the employees on the jobs for
which they are best suited.
(2) The results of performance appraisal may be used by the supervisor
in constructively guiding the employees in the efficient performance of
their jobs.
(3)Performance appraisal provides the management an objective basis
for discussing salary increases and special increments of the staff.
 (4) Performance appraisal can be used for transfer and promotions of
employees, if the performance of an employee is better than others, he can
be recommended for promotion, but if he is not doing well, he may be
transferred to some other job for which he is bestsuited.
(5) Appraisals can be used to analyse the training and development needs
and evaluate the effectiveness of existing training programmes. Weaknesses
of the employees revealed through performance appraisals can be removed
through further training.
(6) Performance appraisal facilitates human resource planning, career
planning and succession planning.
(7) When achievements are recognised and rewarded on the basis of
objective performance measures, there is improvement in work environment
 (8) Performance appraisal provides an incentive to the employees to
better their performance in a bid to improve their rating over others.
(9) Systematic appraisal of performance helps to develop confidence
among employees. It will prevent grievances, if the employees are
convinced of the impartial basis of the evaluation.

• Thus, performance appraisal is a significant element of information

and control system in organisations. It can be put to several uses
concerning the entire spectrum of human resource management
functions.
LIMITATIONS OF
PERFORMANCE
APPRAISAL
HALO ERROR : It is a tendency to evaluate a person
on the basis of one trait of characteristic. The
appraiser judges a person on the strength of a
specific trait and does not base his inference on his
overall performance.
CENTRAL TENDENCY : It is the most commonly
found error. This error arises when the rater is not
sure about the performance of a person and may
not be well conversant with his work.
LENIENCY/ STRICTNESS: Some evaluators may be
strict or lenient and give rating according to it. The
tendency of giving high rating and low rating is
known as POSITIVE & NEGATIVE LENIENCY ERROR
respectively.
SIMILARITY ERROR: It arises from the mental make
up of an evaluator. He uses his own trait as a basis
for assessing the employees. If the evaluator is
aggressive then he will try to find this trait in
subordinate.
MISCELLANEOUS – BIASES: Bias may exist on the
ground of sex, race, religion, position , etc. The
persons on higher positions may be given higher
ratings.
FAULTY ASSUMPTIONS: These are faulty assumpt.
about the performance appraisal system both by
the superiors and the subordinates. These
assumptions work against the effectiveness of the
system.
  PSYCHOLOGICAL BLOCKS: THE UTILITY OF
APPRAISAL SYSTEM WILL DEPEND UPON THE SKILLS
OF THE USERS LIKE PSYCHOLOGICAL
CHARACTERISTIC OF MANAGERS.
PERFORMANCE APPRAISAL
PROCESS :-
 METHODS OF PERFORMANCE APPRAISAL :-
SEVERAL METHODS AND TECHNIQUES ARE USED FOR EVALUATING EMPLOYEE
PERFORMANCE :
1. TRADITIONAL METHODS 2. MODERN METHODS

TRADIT
 : SUGGESTIONS TO IMPROVE
PERFORMANCE APPRAISAL :
following are some points of performance appraisal :-
Training appraisal :- Training appraisers are
essential for achieving . Better results with
performance appraisal . The training should
be designed to improve appraised
capabilities to : observe , conduct ,
constructive feedback , listen , support
counsel , set objective and ask appropriate question.
Developing a positive Avoiding unequal
culture :- the Continuously performance standards :-
changing culture needs the managers should avoid
Managers to understanding setting unqual performance
the learning process dynamics appraisal requires equal
and how the learning and standards against which
unlearning of assumption employees are assessed.
beliefs can be manipulated to
modify behaviour.
Providing performance feedback :- there
should be performance feedback provider,
performance feedback lets employees
know how well they have performed in
comparison with the performance standards.

Avoiding multi-purpose programme :- performance

appraisal should be focused . One performance appraisal
programmer should not be designed to serve
a myriad of purposes , administrative
and development , as it can be vague
or difficult &results into failure .
Two –way discussion :- the manager should engage the
employees in a two –way discussion whenever their performance
is the topic. Effective performance appraisals are never a talk by
a manager. If the manager is taking even half the time, the
performance appraisal is not a two –way , its will be a lecture .

Trust employees :-An effective performance appraisal trust

employee to do the right thing, if they know what the right thing
is consequently , setting performance goals is critically
important, but how manger set the goals is the most important
factor of all.
Use the performance appraisal document :- the
performance appraisal document is a useful discussion starter . It
consolidates employee performance information in one spot . It
provider a picture of the employee’s accomplishments and
progress throughout the year.
essentials of
performance appraisal
essentials of performance
appraisal
mutual trust
The existence of an atmosphere of confidence and trust so that both
supervisor and employee may discuss matters frankly and offer suggestions
which may be beneficial for the organisation and for an improvement of the
employee. An atmosphere of mutual trust and confidence should be created
in the organisation before introducing the appraisal system.

clear objectives
The objectives and uses of performance appraisal should be made clear
and specific. The objectives should be relevant, timely and open.
 TRAINING
Evaluators should be given training in philosophy and techniques of
appraisal. They should be provided with knowledge and skills in
documenting appraisals, conducting post appraisal interviews, rating
errors, etc.

individual differences
While designing the appraisal system,
individual differences in organisations
should be recognised. Organisations differ
in terms of size, nature, needs and
environment. Therefore, the appraisal
system should be tailor-made for the
particular organisation.
MUNICATION
. Most employees want to know how well they are performing job.

. A good appraisal system provides the needed feedback on a

continuing basis.
. The appraisal interviews should permit both parties to learn about gaps a
prepare themselves for future.

. To this end, managers should clearly

explain their performance Expectations to
their subordinates in advance of the
appraisal period. Once this is know , it
became easy for employees to learn about
the standards and, if possible, try to improve
their performance in future
Strength and weakness
The raters should be required to justify their ratings.
The supervisor should try to analyse the strength and
weaknesses of an employee and advise him on
correcting die weakness.
employee access to results
Employees should receive adequate feedback on their performanc
If performance appraisal are meant for improving employee
performance then with holding appraisal result would not serve an
purpose.
Employees simply cannot perform better
without having access to this information.
Permeeting employees to review the
results of their appraisal allows them to
detect any error that may have been made.
If the disagree with the evaluation, they
can even challenge the same through
formal channels.
 Home Servic About Us Contac
e t

LEGAL AND ETHICAL

ISSUES INPERFORMANCE
APPRAISAL
 LEGAL DEFENSIBLE
APPRAISAL PROCEDURE

Means Creating a fair

and honest system for
evaluating employees
that follows the law
and can be trusted in
case of any legal
issues.
 KEY
PRINCIPLES -
1. Follow
Legal Guidelines
. - Comply with labor laws and company policies.
. - Avoid discrimination based on race, gender, age,
etc.

2. Use clear and Fair criteria

. -Set measurable and job-related
performance standards.
. - Ensure all employees understand the
evaluation process.

3. Maintain Objectivity
. °Base appraisals on facts, not personal
opinions.
° Use multiple sources of feedback when
possible.
4. Keep proper Documentation
. ° Record performance data, feedback and decisions.
. ° Document reasons for promotions, raises or
terminations.

5. Ensure consistency
. ° Apply the same standards to all
employees.
. ° Train all managers to conduct fair
appraisals.
LEGALLY DEFENSIBLE
APPRAISAL CONTENT

A Legally Defensible appraisal is a

fair and well- documentated
employee evaluation that follows
the law and company policies.
 KEY PRINCIPLES
-
1. Clear and job related criteria
. ° Set specific work goals and
expectations.
. ° Use measurable standards (e.g.
sales, deadlines, teamwork).

2. Fair and unbiased Evaluation

. ° Base ratings on actual performance,
not personal opinions.
. ° Treat all employees equally
without discrimination.

3. Proper Documentation
. ° Write down feedback, ratings and
key points from discussions.
° Keep records for future and
reference( promotions, warings, legal
safety.)
4. Consistency for everyone
. ° Use the same process and rules for all
employees.
. ° Train managers to apply appraisals fairly.

5. Employees Participation
. ° Let employees discuss their performance
review.
. ° Allow them to give feedback or ask questions.
 LEGALLY
DEFENSIBLE
DOCUMENTATION
OF APPRAISAL
RESULTS

Legally Defensible documentation

means keeping clear, accurate and fair
record of employee performance
reviews. This helps protect the
company from legal issues and
ensures fair treatment of employees.
 KEY
PRINCIPLES-
1.Objective and Fair.
. ° Base the review on actual work, not
personal feelings.
. ° Avoid bias and treat everyone equally.
2. Standard Format.
. ° Use the same review form and process
all the employees
3. Employee Acknowledgement
. °Have employees sign the review( even if they
don't agree).
. ° Let them add comments or requests a meeting.
4. Action plan for improvement
. ° List steps for growth( e.g. " Attend customer
service training by June").
LEGALLY Legally Defensible appraisars are people who evaluate

DEFENSIBLE employees fairly and correctly . Following company rules

and legal guidelines. Their appraisals are hoenst,

APPRAISERS unbiased and well- documentated, so they can stand up

in court if needed.
 KEY
PRINCIPLES -
1.Fair and unbiased
• . ° Rates employees based on facts not
personal opinions.
• . ° Treats everyone equally without any
discrimination.

2.Consistent for everyone

• . °Uses the same standards for
all employees.
• . ° Avoids favouritism or unfair
treatment.
 PERFORMANCE
APPRAISAL OF
EXECUTIVES/MANAG
By GURVINDER
SINGH

ERS
 Introduction
Performance appraisal of managers is just as important as
employee appraisals. However, measuring managerial
performance in quantitative terms is challenging. It involves
evaluating two main aspects:
1.Performance in accomplishing goals – Assessing
whether managers achieve their set targets and to what
extent.
2.Performance as managers – Evaluating how well
managers handle their managerial functions such as
planning, organizing, staffing, directing, and controlling.
 Performance
Criteria for
Top Managers:
•
•
•
Managers
Return on capital employed
Degree of growth and expansion
Labor productivity indices
• Contribution to community development
• Clarity about organizational goals and policies

Middle-Level Managers:
• Departmental/team performance
• Cost per unit
• Coordination among supervisions
 Performance
Criteria for
Managers
Lower-Level Managers:
• Quantity and quality of output
• Labor cost per unit
• Material cost per unit
• Employee turnover and absenteeism
• Number of accidents in a given period
 Additional Factors in
Performance
Appraisal
• Cost per unit – A critical measure of efficiency
• Rational use of equipment and facilities –
Ensuring optimal utilization
• Clarity about organizational goals and policies
– Ensuring alignment with the company’s vision
• Coordination among supervisors – Evaluating
teamwork and communication
 Conclusion
Performance appraisal is a critical tool
for evaluating and enhancing
managerial efficiency. By using
structured criteria, organizations can
ensure their leaders contribute
effectively to overall business success.
POTENTI
AL
APPRAISA
L
 INTRODUCTION TO
POTENTIAL APPRAISAL

◦ Potential appraisal is a method Used by organisations to excess

employees future capabilities and growth potential with in the
company.
 OBJECTIVES OF POTENTIAL
APPRAISAL

1. Identify high potential employee’s.

2. Help in succession planning.
3. Align employee growth with organisation goals.
4. Provide career development opportunities
 PERFORMANCE
APPRAISAL VS.
POTENTIAL APPRAISAL
Basis Performance appraisal Potential appraisal

Evaluate past work Assesses future capabilities

Meaning
and and growth Potential.
Achievements.
Future growth, skills, a n d
Focus Past achievements a n d work
leadership potential.
result.

Outcome Rewards Development

Time frame Short term Long term

 METHODS OF POTENTIAL
APPRAISAL

◦ Psychological Tests
◦ Assessment Centres
◦ 360-Degree Feedback
◦ Career Planning a n d Counselling
◦ Interviews a n d Group Discussion
 KEY COMPONENTS A N D
CRITERIA

1. Leadership ability
2. Communication skills
3. Problem solving skills
4. Learning ability
5. Adaptability a n d initiative
 C H A L L E N G E S A N D BEST PRACTICES

Challenges Best practices

1. Subjectivity a n d bias 1. Train managers for fair evaluations

2. Lack of clear criteria 2. Define clear criteria
3. Limited future visibility 3. Monitor long term progress
4. Overlooking quite performers 4. Encourage self assessment
and feedback
5. Inadequate development plans
5. Ensure transparency
and communication
 CONCLUSIO
N
◦ Potential appraisal helps in talent management and organisational
growth
◦ Organisations should use structured methods for accurate assessment
◦ A well implemented system leads to better career planning and
employee
• engagement