Module - 4

Performance Appraisal
 Meaning
Performance Appraisals is the assessment of individual’s
performance in a systematic way. It is a developmental tool
used for all round development of the employee and the
organization.

The performance is measured against such factors as job

knowledge, quality and quantity of output, initiative,
leadership abilities, supervision, dependability, cooperation,
judgment, versatility and health.

Pavithra S, NHCE, MBA Dept

Definition
Definition1: Systematic Evaluation
“It is a systematic evaluation of an individual with
respect to performance on the job and individual’s
potential for development.”
Definition2: Formal System, Reasons and Measures
of future performance
“It is formal, structured system of measuring, evaluating
job related behaviors and outcomes to discover reasons
of performance and how to perform effectively in future
so that employee, organization and society all benefits.”

Pavithra S, NHCE, MBA Dept

Significance
Provide info about the performance ranks based on
which decision regarding salary fixation, confirmation,
promotion, transfer and demotion are taken.

Provide feedback info about the level of achievement

and behavior of emp, which helps to review the
performance of the emp, rectify if any deficiencies are
there and to set new standards of work if necessary.

Pavithra S, NHCE, MBA Dept

Significance
Provide info which helps to counsel the emp.

Provide info to determine T&D needs and to prescribe

the means of emp growth.

To prevent grievances and in disciplinary activities.

Pavithra S, NHCE, MBA Dept

Process of Performance Appraisal
Establishing performance
standards

Communicating the
standards

Measuring the actual

performance

Comparing the actual with

the desired performance

Discussing results

Decision making
Pavithra S, NHCE, MBA Dept
Process of Performance Appraisal
Establishing performance standards
This will be used as base to compare the actual
performance
Set the criteria to judge the performance
Standards should be clear, easily understandable and
measurable
Communicating the standards
Management has to communicate the standards to all
emp
It will help them to understand their roles
Standards should be communicated to appraisers

Pavithra S, NHCE, MBA Dept

Process of Performance Appraisal
Measuring actual performance
Measure actual performance of emp during specified
periods of time
Should take care personal bias do not affect the outcome
and provide assistance rather than interfering in emp
work
Comparing actual with desired performance
Tell the deviations
It includes recalling, evaluating and analysis of data
related to emp performance

Pavithra S, NHCE, MBA Dept

Process of Performance Appraisal
Discussing results
Discuss with emp one to one basis
Problems and possible solutions are discussed
Feedback should be given in positive attitude so that it
can effect on emp future performance
Solve problem faced and motivate emp to perform better
Decision making
Decisions are taken to improve performance or take
corrective actions
HR related decisions like rewards, promotions,
demotions, transfers
Pavithra S, NHCE, MBA Dept
Methods of Performance Appraisal
MBO Future-oriented

Rating
Scales
Cost
Accounting Checklists

360 Degree Appraisal

Essay
Forced
Assessment Centres

Choice
ACRS Appraisal
Methods
Forced
Tests and Distribution
Observations

Critical
Field Review Incident

BARS

Psychological Past-oriented
Appraisals

Pavithra S, NHCE, MBA Dept

METHODS OF PERFORMANCE
APPRAISALS
Numerous methods have been devised to measure the
quantity and quality of performance appraisals.
Each of the methods is effective for some purposes for
some organizations only.
Two different categories.
Past Oriented Methods
Future Oriented Methods

Pavithra S, NHCE, MBA Dept

Past oriented methods
Rating Scales: Rating scales consists of several
numerical scales representing job related performance
criterions such as dependability, initiative, output,
attendance, attitude etc.
Each scales ranges from excellent to poor.
The total numerical scores are computed and final
conclusions are derived
The number of points scored may be linked to salary
increases, whereby so many points equal a rise of
some percentage

Pavithra S, NHCE, MBA Dept

Rating scale
Advantages
Adaptability
easy to use
low cost
every type of job can be evaluated
large number of employees covered
no formal training required.
Disadvantages
Rater’s biases

Pavithra S, NHCE, MBA Dept

Checklist
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared.
Here the rater only does the reporting or checking and
HR department does the actual evaluation.
Advantages – economy, ease of administration,
limited training required, standardization.
Disadvantages – Raters biases, use of improper
weights by HR, does not allow rater to give relative
ratings

Pavithra S, NHCE, MBA Dept

Forced Choice Method
In this, the rater is given a series of statements arranged in
the blocks of two or more, are given and the rater indicates
which statement is true or false.( least or most descriptive).

The rater is forced to make a choice and select statements

which are readymade.
 HR department does actual assessment.
Advantages – Absence of personal biases because of forced
choice.
Disadvantages – Statements may be wrongly framed.

Pavithra S, NHCE, MBA Dept

Forced Distribution Method
Here employees are clustered around a high point on a
rating scale.
Rater is compelled to distribute the employees on all
points on the scale.
It is assumed that the performance is conformed to
normal distribution.
Advantages – Eliminates error of leniency
Disadvantages – Assumption of normal distribution,
unrealistic, errors of central tendency.

Pavithra S, NHCE, MBA Dept

Critical Incidents Method
The approach is focused on certain critical behaviors of
employee that makes all the difference in the performance.
Supervisors as and when they occur record such incidents.
Advantages – Evaluations are based on actual job
behaviors, ratings are supported by descriptions, feedback is
easy, chances of subordinate for improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback may
be too much and may appear to be punishment.

Pavithra S, NHCE, MBA Dept

Behaviorally Anchored Rating Scales
(BARS)
Statements of effective and ineffective behaviors
determine the points.
They are said to be behaviorally anchored in that the
scales represent a range of descriptive statements of
behavior varying from the least to the most effective.
 The rater is supposed to say, which behavior describes
the employee performance.
Advantages – helps overcome rating errors.
Disadvantages – Suffers from distortions inherent in
most rating techniques.

Pavithra S, NHCE, MBA Dept

5 — Exceptional performance: Accurately completes
and submits all status change notices within an hour of
request.
4 — Excellent performance: Verifies all status change
notice information with requesting manager before
submitting.
3 — Fully competent performance: Completes status
change notice forms by the end of the workday.
2 — Marginal performance: Argues when asked to
complete a status change notice.
1 — Unsatisfactory performance: Says status change
notice forms have been submitted when they haven’t.
Field Review Method
This is an appraisal done by someone outside
employees’ own department usually from corporate or
HR department.
Advantages – Useful for managerial level promotions,
when comparable information is needed
Disadvantages – Outsider is generally not familiar
with employees work environment, Observation of
actual behaviors not possible.

Pavithra S, NHCE, MBA Dept

Performance Tests & Observations
This is based upon the test of knowledge or skills.
The tests may be written or an actual demonstration of
skills.
Tests must be reliable and validated to be useful.
Advantage – Tests may be apt to measure potential
more than actual performance.
Disadvantages – Tests may suffer if costs of test
development or administration are high.

Pavithra S, NHCE, MBA Dept

Confidential Records
Mostly used by government departments, however its
application in industry is not ruled out.
Here the report is given in the form of Annual
Confidentiality Report (ACR) and may record ratings
with respect to following items
attendance, self expression, team work,
leadership, initiative, technical ability,
reasoning ability, originality and resourcefulness etc.

Pavithra S, NHCE, MBA Dept

Confidential Records
The system is highly secretive and confidential.
Feedback to the emp is given only in case of an
adverse entry.
Disadvantage is that it is highly subjective and ratings
can be manipulated because the evaluations are linked
to HR actions like promotions etc.

Pavithra S, NHCE, MBA Dept

Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like,
 overall impression of performance,
 promote ability of employee,
 existing capabilities and qualifications of performing jobs,
 strengths and weaknesses and training needs of the employee.
Advantage – It is extremely useful in filling information gaps
about the employees that often occur in a better-structured
checklist.
Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers. They
may get confused success depends on the memory power of
raters.
Pavithra S, NHCE, MBA Dept
Cost Accounting Method
Here performance is evaluated from the monetary
returns yields to his or her organization.
Cost to keep employee, and benefit the organization
derives is ascertained.
Hence it is more dependent upon cost and benefit
analysis.

Pavithra S, NHCE, MBA Dept

Comparative Evaluation Method
(Ranking & Paired Comparisons)
These are collection of different methods that compare
performance with that of other co-workers.
The usual techniques used may be ranking methods and
paired comparison method.
Ranking Methods: Superior ranks his worker based on
merit, from best to worst. However how best and why best
are not elaborated in this method. It is easy to administer and
explanation.
Paired Comparison Methods: In this method each
employee is rated with another employee in the form of
pairs. The number of comparisons may be calculated with
the help of a formula as under. N x (N-1) / 2

Pavithra S, NHCE, MBA Dept

Future Oriented Methods
Management By Objectives: It means management by
objectives and the performance is rated against the
achievement of objectives stated by the management.
MBO process goes as under.
 Establish goals and desired outcomes for each subordinate
 Setting performance standards
 Comparison of actual goals with goals attained by the employee
 Establish new goals and new strategies for goals not achieved in previous
year.
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit
pay may result in setting short-term goals rather than important
and long-term goals etc.

Pavithra S, NHCE, MBA Dept

Psychological Appraisals
These appraisals are more directed to assess employees
potential for future performance rather than the past
one.
It is done in the form of in-depth interviews,
psychological tests, and discussion with supervisors
and review of other evaluations.
The psychologist then writes an evaluation of the emp
intellectual, emotional, motivational and other related
characteristics that suggest individual performance and
may predict future performance.

Pavithra S, NHCE, MBA Dept

Assessment Centers
Mainly used for executive hiring.
Assesses are requested to participate in in-basket
exercises, work groups, computer simulations, role
playing and other similar activities which require same
attributes for successful performance in actual job.
The characteristics assessed in assessment center can
be assertiveness, persuasive ability, communicating
ability, planning and organizational ability, self
confidence, resistance to stress, energy level, decision
making, sensitivity to feelings, administrative ability,
creativity and mental alertness etc.
Pavithra S, NHCE, MBA Dept
Assessment Centers
Advantages
well-conducted assessment center can achieve better forecasts of
future performance and progress than other methods of appraisals.
Also reliability, content validity and predictive ability are said to be
high in assessment centers.
The tests also make sure that the wrong people are not hired or
promoted.
Finally it clearly defines the criteria for selection and promotion.
Disadvantages
Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessee’s inter-personal skills.
Solid performers may feel suffocated in simulated situations.
Those who are not selected for this also may get affected.

Pavithra S, NHCE, MBA Dept

360-Degree Feedback
It is a technique which is systematic collection of
performance data on an individual group, derived from
a number of stakeholders like immediate supervisors,
team members, customers, peers and self.
In fact anyone who has useful information on how an
employee does a job may be one of the appraisers.

Pavithra S, NHCE, MBA Dept

360 Degree Appraisal
 360-degree Appraisal is an assessment process
used to improve managerial effectiveness by
providing the manager with a more complete
assessment of their effectiveness, and their
performance and development needs.

Pavithra S, NHCE, MBA Dept

 360 Degree Appraisal

-Advantages:
- Reduces bias & Fits well with TQM initiatives
-Disadvantages:
- Complex
- Raters may not provide fair feedback
- Ganging up
- Disagreements

Pavithra S, NHCE, MBA Dept

 Career Planning
Career – Chosen Profession for your life. Requires a
willingness to get the training needed to build your
skills for the future.

A career is the work a person does. It is the sequence

of jobs that an individual has held throughout his or
her working life E.g. occupation of nursing.

“Career planning consists of activities and actions

that you take to achieve your individual career goals”

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 Significance of career planning
 Attract and retain employees
 Deeper focus on an employee’s aims and aspirations
 Significant motivator & Key retention tool
 Critical human resource strategy
 High-level vision and goals of company are clearly made
known to employees
 Growth of an organization is intrinsically linked with the
growth of an individual
 Matching organization vision & employees aspirations is
must

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 Career stages

40 Pavithra.S, NHCE, MBA Dept

 Exploratory Stage
It is a stage in which a person explores, possible career
options for oneself and it happens usually in mid-
twenties when one makes transition from education to
earn i.e., work.
Experiences suggest that several factors like the
careers of the parents, their interests, their aspirations
for their children, and their financial resources shape
the children’s future career options.

41 Pavithra.S, NHCE, MBA Dept

 Establishment Stage
This stage is marked by the first experiences on the
job, acceptance and evaluation by peer groups.
In this stage, one tries to make his/her mark and in the
process commits mistakes, learns from mistakes, and
gradually assumes increased responsibilities.
One does not reach the summit or peak productivity at
this stage. this stage is like going uphill, making lot of
efforts, spending lot of time and energy all the while.

42 Pavithra.S, NHCE, MBA Dept

 Mid Career Stage
This is a stage marked by improved performance, level
off or starting deterioration.
This is the stage when one is no longer seen as a learner.
Hence, mistakes committed are viewed seriously and
invite serious penalties.
At this stage in a career, one reaches to a plateaued-
career and is expected to make moves.
For many, this is a time of reassessment, job changes,
adjustment of priorities, or pursuit of alternative life
styles

43 Pavithra.S, NHCE, MBA Dept

 Late Career Stage
This stage is usually a pleasant stage for those who continued
to grow during the mid-career stage.
 Based on one’s good performance during the earlier stage,
one now enjoys playing the part of the elder statesman and
basks in the respect given by the junior and younger
employees.
During this stage, the people do not have to learn but to
suggest and teach others how to go about in their jobs.
But, for those who have either stagnated or deteriorated during
the mid-career stage, the late career stage brings the reality for
them that they are no longer required in the organization and,
therefore, it is better for them to direct themselves to retire.

44 Pavithra.S, NHCE, MBA Dept

 Decline Stage
This is the final stage in one’s career to retire from
one’s job or career.
On the contrary, decline stage is less painful for
modest performers or failures. Their frustration
associated with work is left behind.
 On the whole, decline stage is a difficult stage for
anyone to confront.
Nonetheless, some planning for retirement can ensure
smooth transition from working life to retired-life..

45 Pavithra.S, NHCE, MBA Dept

 Career anchors
 Your 'career anchor' is what really drives you at work.
It is a mixture of your motives, values and how you
see your own personal competence.
A career anchor is the one thing that a person would
not give up if forced to make a choice.

46 Pavithra.S, NHCE, MBA Dept

 Succession planning
Succession planning is a process whereby an
organization ensures that employees are recruited and
developed to fill each key role within the company.
Through succession planning process, recruit superior
employees, develop their knowledge, skills, and
abilities, and prepare them for advancement or
promotion into ever more challenging roles

47 Pavithra.S, NHCE, MBA Dept

 Significance
 It addresses the needs of the organization as senior
management gets older. 
It prepares an organization for an unexpected,
undesired event. 
It ensures an organization has the right people in place
today, as well as into the future.
It is a means to support the current culture
It ultimately helps define business strategy into
business and organizational goals.

48 Pavithra.S, NHCE, MBA Dept

 Succession Planning Process
Identify critical positions
Identify competencies
Identify succession management strategies
Document and implement succession plans
Evaluate Effectiveness

49 Pavithra.S, NHCE, MBA Dept

 Identify critical positions
Critical positions are the focus of succession planning
efforts.
Workforce projection data or demographic analysis is
essential in identifying risk areas.
 A risk assessment may also be conducted and
compared to current and future vacancies to identify
critical positions within your organization.

50 Pavithra.S, NHCE, MBA Dept

 Identify competencies
A clear understanding of capabilities needed for
successful performance in key areas and critical
positions is essential for guiding learning
It helps in development plans, setting clear
performance expectations, and for assessing
performance.

51 Pavithra.S, NHCE, MBA Dept

 Identify succession management strategies
Choose from a menu of several human resource
strategies, including developing internal talent pools,
on boarding and recruitment to address succession
planning.

52 Pavithra.S, NHCE, MBA Dept

 Document and implement succession plans
Once strategies have been identified, the next step is to
document the strategies in an action plan.
The Succession Planning: Action Plan provides a
mechanism for clearly defining timelines and roles and
responsibilities.

53 Pavithra.S, NHCE, MBA Dept

 Evaluate Effectiveness
To ensure that the department or agency’s succession
planning efforts are successful, it is important to
systematically monitor workforce data, evaluate
activities and make necessary adjustments.

54 Pavithra.S, NHCE, MBA Dept

 End of Module-4

Thank You

Pavithra S, NHCE, MBA Dept