Module-7 Performance Management & Appraisal
Performance Appraisal :
Performance Appraisal (PA) refers to all those procedures and standards that are used to evaluate the personality, performance, potential, of members and groups. It is an objective assessment of performance against well defined benchmarks. Builds employee database It is directional ,evaluative ,periodical and formal. Appraisal data is archived and used for organizational development.
Performance Management
Performance management involves designing and executing a set of HR activities to assess and improve performance. It is ongoing ,facilitative and less formal. It improves and employee performance and development.
Nature of Performance Performance Management Management
Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance
Provide information to employees about their performance. Clarify organizational performance expectations. Identify the development steps that are needed to enhance employee performance. Document performance for personnel actions. Provide rewards for achieving performance objectives. 114
Performance Management Linkage
Figure 111
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Components of Effective Performance Management
Figure 112
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Difference Between Performance Management and Performance Appraisals
Performance Management
Performance Appraisal
Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance.
The process of evaluating how well employees perform their jobs and then communicating that information to the employees.
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Relationship between job analysis and performance appraisal:
Job analysis performance standards Translate job Into levels of To acceptable Or unacceptable performance performance appraisal Describes the Job relevant strengths and weakness of Each individual
Describes work & Personnel Requirement Of a particular job
Characteristics
It is a step by step process It examines the employee strengths and weaknesses Scientific and objective study Ongoing and continuous process Secures information for correct employee related decision-making.
Needs and Objectives:
Provides feedback about employees Helps in building performance database Diagnose the Strengths & Weaknesses of individuals Provides coaching, counseling, career planning to subordinates Develop positive relation building and reduces grievance Facilitates research in personnel management
Appraisal Benefits
Appraisals offer employees:
Direction Feedback Input Motivation
Appraisal Benefits(Contd.)
Appraisals offer the company:
Documentation Employee Feedback Legal
Development
protection Motivation system
Why Appraisals Are Important
Recognize accomplishments Guide progress Improve performance
Why Important (cont.)
Review performance Set goals Identify problems Discuss career advancement
Steps in performance appraisal
Establishing job standards Designing an appraisal programme Appraise performance Performance interview Use appraisal data For appropriate purpose
Process of PA
Taking corrective measures Setting performance standards Communicating standards
Discussing results Comparing standards
Measuring standards
Uses of Performance Appraisal
organizational planning Human Resource Planning Organizational Effectiveness Compensation Management Placement adjustment decisions To identify training and development needs of the employees For Career planning and development
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Conflicting Uses for Performance Appraisal
Figure 114
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Developmental Uses of Performance Appraisal
Performance Appraisal
Administering Wages and Salaries
Giving Performance Feedback
Identifying Strengths and Weaknesses
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Typical Division of HR Responsibilities: Performance Appraisal
Figure 115
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Issues in appraisal system
Formal and informal What methods? Whose performance?
When to evaluate? Appraisal Design
Who are the raters?
What to evaluate? How to solve?
What problems?
How PA contribute to firms competitive advantages
Improving performance Values and behavior Competitive advantage Minimizing dissatisfaction And turnover Ensuring legal competence Making correct decision
Problems in performance appraisal
1.
Errors In rating
Halo effects Stereotyping Central tendency Leniency and Strictness/severity error Contrast error Personal bias Recency effect False attribution
Problems in performance appraisal (Contd)
2. 3. 4. 5. 6.
Incompetence Negative approach Multiple objectives Resistance Lack of knowledge
Essentials of an effective appraisal system
Mutual trust Clear objectives Standardizations Training Job relatedness Documentation Feedback and participation Individual differences Post appraisal review Review and appeal
Appraisals and Discrimination
Appraisal Discrimination Act and other fair employment Laws are applicable to PA on Failure to communicate standards Failure to give timely feedback Failure to allow employees to correct performance Inconsistency in measuring performance Failure to document performance objectively
Appraisal Forms
Define performance expectations Describe measurement tools Use a rating system Cover specific examples Set measurable goals
Measure Performance
Measurement systems need to be: Specific Fair Consistent Clear Useful
Measure Performance (cont.)
Systems can be: Numerical Textual Management by Objective (MBO) Behavior oriented
Set Goals.
Based on job requirements Realistic Measurable Observable Challenging Prioritized
Types of feedback
Formal appraisals Informal appraisals Open communication
Recognize Good Performance
Verbal Public Tangible Monetary
Identify Poor Performance
Act early Take the right approach Deal with employee reaction Handle continued poor performance
Discipline Poor Performance
Recognize problems Talk with employee Follow company policy
Performance Appraisal Methods
1 .Individual Evaluation Methods Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale MBO
Methods of Performance Appraisal
Traditional Methods
1. 2. 3.
Graphic Rating Scales(GRS)-Individual performance is compared to an absolute standard and is recorded on a scale.This method is also known as linear /simple rating scale. Ranking Method(RM)-Under this method employees are ranked as best or worst on the basis of some characteristics. Paired Comparison Method(PCM)-It is a simple method under which appraiser compares one employee in the group with other employees one at a time. Forced Distribution Method(FDM)-Under this method the raters spread their employee evaluations in a prescribed distribution on a bell-shaped curve. Checklist Methods (Simple,Weighted or forced)-Under this method the rater checks the checklist consisting of a number of statements concerning employee behaviour. In a simple checklist the employee performance is rated on the basis of the number of positive checks while negative checks are ignored. Weighted checklist involves assigning different weightage to different items in the checklist in accordance of their importance in comparison to each other Forced choice/checklist It involves preparation of a large number of statements in groups,each group consisting of four descriptive statements(tetrad) concerning employee behaviour.Two are favourable and the remaining two are unfavourable statements.The rater will not be informed about the favourable and unfavourable statements to avoid appraiser prejudice
Methods of Performance Appraisal
Critical incident method records the critical incidents of exceptional or poor performance of the employees in comparison with the preset standards Essay or free form appraisal Under this method managers write short essays describing the performance of the employees during the rating period. Group appraisal Under this method employee is appraised by a group of appraisers consisting of supervisor of the employee and other supervisors who have close contact with the working of the employee. Confidential Reports Under this method the superior ,confidentially appraises the subordinates based on his observations,judgment and intuitions .
360 Degree Performance Appraisal System
360 degree PA system is a multi-source appraisal system under which employees are appraised by
Superiors subordinates Team members/peers Employees self-appraisal 1138 Outside sources rating employees
Multisource Appraisal
Figure 117
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Critical Incident method
Ex: A fire, sudden breakdown, accident Workers A B C D E reaction informed the supervisor immediately Become anxious on loss of output tried to repair the machine Complained for poor maintenance was happy to forced test scale 5 4 3 2 1
Checklist method
Simple checklist method Weighted checklist method Forced choice method
Simple checklist method:
Is employee regular Is employee respected by subordinate Is employee helpful Does he follow instruction Does he keep the equipment in order Y/N Y/N Y/N Y/N Y/N
Weighted checklist method
weights Regularity Loyalty Willing to help Quality of work Relationship 0.5 1.5 1.5 1.5 2.0 performance rating (scale 1 to 5 )
Forced choice method
Criteria 1.Regularity on the job Always regular Inform in advance for delay Never regular Remain absent Neither regular nor irregular Most Rating Least
Graphic Rating Scale
Continuous Rating Scale Discontinuous Rating Scale Employee name_________ Deptt_______ Raters name ___________ Date________ -----------------------------------------------------------------------Exc. Good Acceptable Fair Poor 5 4 3 2 1 _ Dependability Initiative Overall output Attendance Attitude Cooperation Total score Continuous Rating Scale
Indifferent
Attitude
Enthusiastic
No Interest
Interested
Very enthusiastic
Discontinuous Rating Scale
BARS( Behaviorally Anchored Rating Scale) Step 1. Step 2. Step 3. Step 4. Step 5. Identify critical incidents Select performance dimension Retranslate the incidents Assign scales to incidents Develop final instrument
MBO Process
Set organizational goals Defining performance target Performance review feedback
Performance Appraisal Methods
2.Group Appraisal
Ranking Paired comparison Forced distribution Performance tests Field review technique
Ranking method
Employee A B C D E Rank 2 1 3 5 4
Paired comparison method
A B C D E A + + B + C D + + + E Final Rank + 3 + + + 2 1 4 5
No of Positive evaluation Total no. of evaluation
Forced Distribution method
No. of employees 10% 20% 40% 20% 10% Excellent
poor Below average good average Force distribution curve
Field review method
Performance Dimension Leadership Communication Interpersonal skills Decision making Technical skills Motivation subordinate peers superior customer ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
3 .Assessment Center
Under this method performance of the individuals is appraised using several techniques like in basket, role playing,case studies,simulation exercises ,structured in sight, transactional analysis,etc.
4 . Human Resource Accounting
This deals with the cost of the employees and their contributions to the organizations.Cost of the employees includes cost of manpower planning,recruitment , selection , induction ,placement ,training ,development, wages and benefits ,etc. and contribution is the money value of employee service measured in terms of labour productivity.
5. Psychological Appraisal
This is conducted to appraise the employees potential.It consists of in-depth interviews, psychological tests, consultations and discussions with employees,supervisors,sub-ordinates and peers ,reviews of other evaluations
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
Performance Appraisal System or Process
Establish Performance Standards Communicate standards/expectations to the employees Measure actual performance Adjust actual performance to the environmental influence Compare the adjusted performance with that of previous performances Find deviations Communicate actual performance to employees concerned Suggest changes in job analysis and standards Follow-up performance appraisal report.
Performance Coaching and Counselling
Performance Coaching is a form of directive or nondirective coaching. Directive Coaching involves the busy Manager who sometimes acts as a Coach: telling, instructing, giving advice, offering guidance, giving feedback, making suggestions etc. Non-Directive Coaching involves helping someone to solve their own problems. The directive style of coaching has been adopted as the model for coaching for performance, such as; helping provide people with direction, guiding them in how to master new skills, procedures, tasks and meet performance goals etc
Career Planning and Development
Career is a sequence of separate but related work activities that provide continuity , order and meaning in a persons life. Career planning is the process by which one selects career goals and path to these goals. Career development refers to the improvements one undertakes to achieve a personal career plan. Career management is the process of designing and implementing goals, plans and strategies to enable the organization to satisfy employee needs while allowing individuals to achieve their career goals.
Process of Career Planning and Development
Analysis of individual skills,knowledge, abilities,aptitudes,etc. Analysis of career opportunities both within and outside the organization. Analysis of career demands on the incumbent in terms of skills,knowledge,abilities,aptitude,etc.and in terms of qualifications, experience and training received,etc.
Need for Career Planning
To attract competent persons and to retain them in the organization To provide suitable promotional opportunities To ensure employee development in order to facilitate them to meet future challenges To increase utilization of managerial reserves within an organization To correct employee placement To reduce employee dissatisfaction and turnover To boost the morale of the employees and to motivate them
Steps involved in Career Development
Assessment of Training needs Linking the career needs with the organizational vision. Preparing an action plan to achieve the vision Career development programme should be integrated with the organizational MDPs in order to achieve results
Advantages of CP&D
Individuals get career guidance. It facilitates employees to choose a career to suite their life-style,family environment and scope of development Helps organizations in identifying internal employees who can be promoted. CD boosts the morale of the employees resulting in increased job satisfaction. Secures employee commitment and loyalty. Improves employees performance by fulfilling his esteem needs.
Career Management through Internal Mobility
Promotions-It involves advancement of the employees to a better job with greater responsibility,more prestige or status,greater skill and increased pay. Transfer- It is a lateral shift causing movement of individuals from one position to another usually without involving any marked change in duties, responsibilities, skills needed or compensation. Demotion is reassignment of an employee to a lower level job with delegation of responsibilities and authority required to perform that lower level job with a lower pay.
Types of Promotion
Vertical promotion/Dry PromotionUnder this method employee is moved to higher level in the organizational hierarchy with greater responsibility , authority ,pay and status. Up gradation- Under this, job is upgraded in the organizational hierarchy offering employees more salary, higher authority and responsibility. Bases of Promotion Merit-Based on skill knowledge, ability, efficiency and aptitude and is measured on the basis of educational training and past employment record. Seniority- Based on length of service in the same job in the same organization.
Advantages and Disadvantages of Merit System
Advantages
Disadvantages
Resources of higher order Difficult to judge merit of employees can be better utilized. Competent employees are motivated to contribute to organizational efficiency and effectiveness. Golden hand-cuff to stop employee turnover Facilitates all-round development of the employee May involve personal bias or prejudice
Techniques of measurement are subjective Merit denotes past achievement and does not ensure future success.
Merits and Demerits of Seniority as a basis of Promotion
Merits
Measuring length of service is relatively easy Trade Unions support this system and it reduces grievances and conflicts No scope for favoritism and judgment There is an element of certainty regarding promotions
Demerits
Demotivates young and more competent employees It kills zeal and interest to develop as everybody will get promoted
Un dynamic and old blood diminishes organizational effectiveness Distinguishing between job seniority ,company seniority,zonal senioriy ,etc becomes difficult.
Benefits of Promotion
Promotions facilitate better utilization of the skills and knowledge of the employees It secures employee commitment It boosts the morale of the employees thereby increasing their job satisfaction It improves organizational health
Problems with Promotion Some employees refuse promotion Promotions disappoint some employees when favoritism is involved.
Principles of Promotion
Promotion policy should be uniform It should be fair and impartial It should be systematic Should provide equal opportunities to all It should contain clear cut norms for judging criteria,merit, length of service,etc Appropriate authority should be entrusted with the task of making a final decision Favoritism should not be taken as a basis for promotion. It should contain promotional counselling,encouragement,guidance and follow-up regarding promotional opportunities,etc.
Types of Transfers
Production Transfer-due to changes in production Replacement Transfer-due to replacement of long standing employees in the same place. Rotation Transfer- In order to increase the versatility of the employees Shift Transfer-Transfer of an employee from one shift to another. Remedial Transfer-To correct wrong placements Penal Transfer-initiated as a punishment or in disciplinary action
Reasons for Transfer
To meet organizational requirements To satisfy employees needs To utilize employee skill,knowledge,etc. To correct inter-personal conflicts To give relief to employees who are indulged in overburdened work for sometime. As a measure of punishment to erring employees To minimize fraud or bribery which will result due to permanent stay and contact of an employee with customers
Principles of Demotions
Specifying circumstances under which employees will be demoted like reduction in operations , in disciplinary cases ,etc.
