ASSIGNMENT ON PERFORMANCE APPRAISAL SYSTEM

Performance appraisal may be understood as the assessment of an individuals performance being measured against such factors as job knowledge ,quality and quantity of output ,initiative leadership abilities, supervision ,dependability ,co- operation , judgment , versatility and health .

DEFINITION:IT IS THE SYSTEMATIC EVALUATION OF THE INDIVIDUAL WITH RESPECT TO HIS OR HER PERFORMANCE ON THE JOB AND HIS OR HER OTENTIAL FOR DEVELOPMENT.

Objectives of Performance Appraisal

Data relating to performance assessment of employees are recorded ,stored and used for seven purposes. The main purposes of employee assessment are : 1. To effect promotions based on competence and performance .
2.

To confirm the services of probationary employees upon their completing Their probationary period satisfactorily.

3. To assess the training and development needs of employees. 4. To decide upon a pay raise where ( as in the unorganized sector) regular pay scales have not been fixed. 5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development . 6. To improve communication .Performance appraisal provides a format for dialogue between the superior and subordinate , and improves understanding of personal goals and concerns .This can also have the effect of increasing the trust between the rater and the rate. 7. Finally ,performance appraisal can be used to determine whether HR programs such a selection ,training ,and transfers have been effective or not .

Broadly ,performance appraisal serves four objectives I. II. III. Development uses Administrative uses/decisions Organizational maintenance /objectives and

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IV.

Documentation purposes

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General Applications Development Uses

Specific Purpose Identification of individual needs Performance feedback Determining transfers and job assignment Identification of individual strengths and development needs.

Administrative Uses

Salary Promotion Retention or termination Lay-offs Identification of poor performance

Organizational Maintenance

HR planning Determining organizational needs Information for goal identification Evaluation of HR systems Evaluation of organizational goal

Documentation

Criteria for validation research Documentation for Hr decisions Helping to meet legal requirements

How Performance Appraisal can contribute to firms Competitive Advantage? pg.

Strategy and Behaviou

Improving performan ce

Making correct decisions

Competit ive Advanta ge

Values and Behaviour

Minimizing dissatisfaction and turnover

Ensuring legal Complianc

Process of Performance Appraisal

1. ESTABLISHING PERFORMANCE STANDARDS The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.

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2. COMMUNICATING THE STANDARDS Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

3. MEASURING THE ACTUAL PERFORMANCE The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.

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4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance. 5. DISCUSSING RESULTS The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. 6. DECISION MAKING The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the pg.
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related HR decisions like rewards, promotions, demotions, transfers etc.

METHODS OF PERFORMANCE APPRAISAL

There are many types of performance appraisal methods. Some of them are : 1) job results/outcome 2) essay method 3) Ranking 4) Forced Distribution 5) Graphic Rating Scale 6) Behavioral Checklist 7) Behavioral Anchored Rating Scales (BARS) 8) Management by Objectives (MBO)

1) Job Results Though not an appraisal method per se, job results are in themselves a source of data that can be used to appraise performance. Typically, an employee's results are compared against some objective standard of performance. This standard can be absolute or relative to the performance of others. Results indexes are often used for appraisal purposes if an employee's job has measurable results. Examples of job results indexes are dollar volume of sales, amount of scrap, and quantity and quality of work produced. When such quantitative results are not available, evaluators tend to use appraisal forms based on employee behaviors and/or personal characteristics. In some cases, appraisals may focus on results rather than behaviors. This is especially true where job content is highly variable, as in many managerial pg.
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positions, thus making it difficult to specify appropriate behaviors for evaluative purposes. Results indexes such as turnover, absenteeism, grievances, profitability, and production rates can be used to evaluate the performance of organization units.

2) Essay Method

The essay method involves an evaluator's written report appraising an employee's performance, usually in terms of job behaviors and/or results. The subject of an essay appraisal is often justification of pay, promotion, or termination decisions, but essays can be used for developmental purposes as well. Since essay appraisals are to a large extent unstructured and open-ended, lack of standardization is a major problem. The open-ended, unstructured nature of the essay appraisal makes it highly susceptible to evaluator bias, which may in some cases be discriminatory. By not having to report on all job-related behaviors or results, an evaluator may simply comment on those that reflect favorably or unfavorably on an employee. This does not usually represent a true picture of the employee or the job, and content validity of the method suffers.

3) Ranking Ranking methods compare one employee to another, resulting in an ordering of employees in relation to one another. Rankings often result in overall assessments of employees, rather than in specific judgments about a number of job components. Straight ranking requires an evaluator to order a group of employees from best to worst overall or from most effective to least effective in terms of a certain criterion. Alternative ranking makes the same demand, but the ranking process must be done in a specified manner (for example, by first selecting the best employee in a group, then the worst, then the second-best, then the second-worst, etc.). Comparative evaluation systems such as ranking are rarely popular. No matter how close a group of employees is in the level of their performance, and no matter how well they perform on the job, some will rank high and some will end pg.
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up at the bottom. Evaluators are often reluctant to make such discriminations. Also, rankings are unable to compare employees across different groups. For example, it is difficult to say whether the second-ranked employee in unit A is as good as or better than the second-ranked employee in unit B. Despite the problems of ranking methods, if an organization has a very limited number of promotions or dollars to allocate, rankings can be very useful in differentiating among employees.

4)Forced Distribution Forced distribution is a form of comparative evaluation in which an evaluator rates subordinates according to a specified distribution. Unlike ranking methods, forced distribution is frequently applied to several rather than only one component of job performance. Use of the forced distribution method is demonstrated by a manager who is told that he or she must rate subordinates according to the following distribution: 10 percent low; 20 percent below average; 40 percent average; 20 percent above average; and 10 percent high. In a group of 20 employees, two would have to be placed in the low category, four in the below-average category, eight in the average, four above average, and two would be placed in the highest category. The proportions of forced distribution can vary. For example, a supervisor could be required to place employees into top, middle, and bottom thirds of a distribution. Forced distribution is primarily used to eliminate rating errors such as leniency and central tendency, but the method itself can cause rating errors because it forces discriminations between employees even where job performance is quite similar. For example, even if all employees in a unit are doing a good job, the forced distribution approach dictates that a certain number be placed at the bottom of a graded continuum. For this reason, raters and ratees do not readily accept this method, especially in small groups or when group members are all of high ability.

4) Graphic Rating Graphic rating scales are one of the most common methods of performance appraisal. Graphic rating scales require an evaluator to indicate on a scale the pg.
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degree to which an employee demonstrates a particular trait, behavior, or performance result. Rating forms are composed of a number of scales, each relating to a certain job or performance-related dimension, such as job knowledge, responsibility, or quality of work. Each scale is a continuum of scale points, or anchors, which range from high to low, from good to poor, from most to least effective, and so forth. Scales typically have from five to seven points, though they can have more or less. Graphic rating scales may or may not defie their scale points. Acceptable rating scales should have the following characteristics: 1. Performance dimensions should be clearly defined. 2. Scales should be behaviorally based so that a rater is able to support all ratings with objective, observable evidence. 3. Abstract trait names such as "loyalty," "honesty," and "integrity" should be avoided unless they can be defined in terms of observable behaviors. 4. Points, or anchors, on each scaled dimension should be brief, unambiguous, and relevant to the dimension being rated. For example, in rating a person's flow of words, it is preferable to use anchors such as "fluent," "easy," "unimpeded," "hesitant," and "labored," rather than "excellent," "very good," "average," "below average," and "poor." Carefully constructed graphic rating scales have a number of advantages: 1. Standardization of content permitting comparison of employees. 2. Ease of development use and relatively low development and usage cost. 3. Reasonably high rater and ratee acceptance. A disadvantage of such rating scales is that they are susceptible to rating errors which result in inaccurate appraisals. Possible rating errors include halo effect, central tendency, severity, and leniency. The halo effect occurs when a rating on one dimension of an appraisal instrument substantially influences the ratings on other dimensions for the same employee. As a result of the halo effect, an employee is rated about the same across all performance dimensions. Central tendency is a lack of variation or difference among ratings of different subordinates, wherein most employees tend to be rated as average. Leniency refers to an evaluator's tendency to rate most employees very highly across performance dimensions, whereas severity refers to the tendency to rate most employees quite harshly.

5) Mixed Standard Scales pg.

Mixed standard scales are a relatively recent innovation in rating scales. They contain statements representing good, average, and poor performance based on behavioral examples obtained from knowledgeable persons, usually supervisors. An evaluator's task is to indicate whether an employee either fits the statement, is better than the statement, or worse than the statement. In a mixed standard scale, each performance dimension has three statements relating to it: one illustrating good performance, one average, and one poor. Thus, this mixed standard scale has nine statements, three for each of the three dimensions used. Statements in mixed standard scales are randomly mixed, tending to reduce rater errors by making it less obvious which statements reflect effective or ineffective performance.

6) Behavioral Checklist A behavioral checklist is a rating form containing statements describing both effective and ineffective job behaviors. These behaviors relate to a number of behavioral dimensions determined to be relevant to the job. 1. Calls on customers immediately after hearing of any complaints 2. Discusses complaints with customer 3. Gathers facts relevant to customers' complaints 4. Transmits information about complaints back to customers and resolves problems to their satisfaction 5. Plans each day's activities ahead of time 6. Lays out broad sales plans for one month ahead 7. Gathers sales information from customers, other salesmen, trade journals, and other relevant sources Behavioral checklists are well suited to employee development because they focus on behaviors and results, and use absolute rather comparative standards. An advantage of behavioral checklists is that evaluators are asked to describe rather than evaluate a subordinate's behavior. For this reason, behavioral checklists may meet with less evaluator resistance than some other methods. An obvious disadvantage of behavioral checklists is that much time and money must be invested to construct the instrument.

7) BARS - Behaviorally Anchored Rating Scales

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Behaviorally anchored rating scales (BARS) are rating scales whose scale points are defined by statements of effective and ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a continuum of descriptive statements of behaviors ranging from least to most effective. An evaluator must indicate which behavior on each scale best describes an employee's performance. BARS differ from other rating scales in that scale points are specifically defined behaviors. Also, BARS are constructed by the evaluators who will use them. There are four steps in the BARS construction process: 1. Listing of all the important dimensions of performance for a job or jobs 2. Collection of critical incidents of effective and ineffective behavior 3. Classification of effective and ineffective behaviors to appropriate performance dimensions 4. Assignment of numerical values to each behavior within each dimension (i.e., scaling of behavioral anchors)

8) Management by Objectives Management by objectives (MBO) involves setting specific measurable goals with each employee and then periodically discussing his/her progress toward these goals. The term MBO almost always refers to a comprehensive organization-wide goal setting and appraisal program that consist of six main steps: 1. Set the organization?s goals. Establish organization-wide plan for next year and set goals. 2. Set departmental goals. Here department heads and their superiors jointly set goals for their departments 3. Discuss and allocate department goals. Department heads discuss the department's goals with all subordinates in the department (often at a department-wide meeting) and ask them to develop their own individual goals; in other words, how can each employee contribute to the department's attaining its goals? 4. Define expected results (set individual goals). Here, department heads and their subordinates set short-term performance targets.

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5. Performance review and measure the results. Department heads compare actual performance for each employee with expected results. 6. Provide feedback. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate progress in achieving expected results.

THANK YOU
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