Concept of Human Resource Development (HRD) · HRD embodies with techniques and processes such as performance appraisal, training, management development, career planning, counseling,

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Concept of Human Resource Development (HRD)

Coined by Leonard Nadler in his book “Developing Human Resources”

published in 1970, the term Human Resources Development (HRD) may

be understood as a framework for the expansion of human capital within an

organization through the development of both the organization and the

individual. It may also be defined as a systematic approach to proactively

deal with issuesrelated to individual employees, teams, organizations and a

movement to develop organizational capability to manage change and

challenge.

The only animate andactive resource of an organization is the human

resource. Other resources remain inactive unless there are competent

people to utilize the available resources for the production of goods and

services. A human brain has limitless energy to think and act in a

productive way. Hence, competent and qualified human resource is a key

factor of organizational success. In this regard, the emergence of human

resource development (HRD) plays a vital role in enhancing the

entrepreneurial skill of people.

Human Resource Development (HRD) is a process of developing skills,

competencies, knowledge, and attitudes of people in an organization. The

people become human resource only when they are competent to perform

organizational activities. Therefore, HRD ensures that the organization has

such competent human resource to achieve its desired goals and

objectives. HRD imparts the required knowledge and skill in them through

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an effective arrangement of training and development programs. HRD is an

integral part of Human Resource Management (HRM) which is more

concerned with training and development, career planning and

development and the organization development. The organization has to

understand the dynamics of HR and attempt to cope with changing the

situation in order to deploy its HR effectively and efficiently. And HRD helps

to reach this target.

Hence, HRD is a conscious and proactive approach applied by employers

which seek to capacitate employees through training and development to

give their maximum to the organization and to fully use their potential to

develop themselves.To summarize it can be said that Human Resource

Development refers to an organization’s focus on improving the knowledge,

ability, skills, and other talents of their employees. It is the integrated use of

training, organization and career development efforts to improve individual,

group, and organizational effectiveness.

Definitions of HRD

1. Human Resource Development (HRD) is the process of helping

people to acquire competencies and skills so as to ensure their

usefulness to the organization in terms of both present and future

organizational conditions.

2. Human Resource Development may also be defined as fostering long-

term work related learning capacity at individual, group and

organizational level.


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3. The American Society for Training and Development defines HRD as

the process of increasing the capacity of the human resource through

development. It is thus the process of adding value to individuals,

teams or an organization as a human system.

HRM Vs HRD

Human resource development is not the same thing as Human resources

management. These concepts are easy to confuse. Management is geared

towards maintenance while development focuses on education

Human Resource Management (HRM) is a branch of management; that is

concerned with making best possible use of the enterprise’s human

resources, by providing better working conditions, to the employees. It

involves those activities that arrange and coordinate the human resources

of an entity. Further, it aims at maintaining good relations at various levels

of management.

On the other extreme, Human Resource Development (HRD) is a wing of

HRM that keeps focusing on the growth and development part of the

organization’smanpower. There are many people, to whom HRM and HRD

convey the same meaning, but this is not true.

Comparison Chart

BASIS FOR

COMPARISON HRM HRD


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BASIS FOR

COMPARISON HRM HRD

Meaning Human Resource

Management refers to

the application of

principles of

management to

manage the people

working in the

organization.

Human Resource

Development means a

continuous development

function that intends to

improve the performance of

people working in the

organization.

What is it? Management function. Subset of Human Resource

Management.

Function Reactive Proactive

Objective To improve the

performance of the

employees.

To develop the skills,

knowledge and competency

of employees.

Process Routine Ongoing

Dependency Independent It is a subsystem.

Concerned

with

People only Development of the entire

organization.


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Features of HRD

1. Systematic Approach

HRD is a systematic and planned approach through which the

efficiency of employees is improved. The future goals and objectives

are set by the entire organization, which are well planned at individual

and organizational levels.

2. Continuous Process

HRD is a continuous process for the development of all types of skills of

employees such as technical, managerial, behavioral and conceptual.

Till the retirement of an employee sharpening of all these skills is

required.

3. Multi-disciplinary Subject

HRD is a multi-disciplinary subject which draws inputs from behavioral

science, engineering, commerce, management, economics, medicine,

etc.

4. All pervasive

HRD is an essential subject everywhere, be it a manufacturing

organization or service sector industry.

5. Techniques


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HRD embodies with techniques and processes such as performance

appraisal, training, management development, career planning,

counseling, workers’ participation and quality circles.

Objectives of HRD

The prime objective of human resource development is to facilitate an

organizational environment in which the people come first. The other

objectives of HRD are as follows:

1. Equity

Recognizing every employee at par irrespective of caste, creed, religion

and language, can create a very good environment in an organization.

HRD must ensure that the organization creates a culture and provides

equal opportunities to all employees in matters of career planning,

promotion, quality of work life, training and development.

2. Employability

Employability means the ability, skills, and competencies of an

individual to seek gainful employment anywhere. So, HRD should aim

at improving the skills of employees in order to motivate them to work

with effectiveness.

3. Adaptability


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Continuous training that develops the professional skills of employees

plays an important role in HRD. This can help the employees to adapt

themselves to organizational change that takes place on a continuous

basis.

Goals of HRD

The goals of HRD are to develop

The capabilities of each employee as an individual

The capabilities of each individual in relation to his or her present role

The capabilities of each employee in relation to his or her expected

future role(s)

The dyadic relationship between each employee and his or her

supervisor

The team spirit and functioning in every organizational unit

Collaboration among different units of the organization

The organization’s overall health and self-renewing capabilities

which, in turn, increase the enabling capabilities of individuals, dyads,

teams, and the entire organization.


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HRD Functions

HRD functions include the Following

1. Employee training and development,

2. Career planning and development,

3. Succession planning,

4. Performance appraisal,

5. Employee’s participation in management,

6. Quality circles,

7. Organization change and organization development.


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Benefits of HRD

Organizations that place great emphasis on HRD tend to see the

rewards. These can be in profits, but they go far beyond just this one

aspect.

Activities of human resources development teach necessary on-the-

job skills for employees across departments thus tending to improve

output.

It also helps to make the employees feel that the organization is

invested in them, along with their growth. This creates a more loyal

and productive workforce.

In addition, workers are more accepting of change when they are

exposed to HRD activities on a regular basis. They see that

improvements can come from new practices instead of feeling

threatened or worried.

When efforts are made to provide growth opportunities for

employees, team spirit, and work atmosphere are also improved.

People simply feel better when they are given positive opportunities

and an interest is taken in them. Staff members feel pride in their jobs

and organizations for this reason, as well.

When proper training is continuously provided, efficient workflow

occurs, increasing productivity. Customer service is also made better

through regular training and by employees who are more satisfied.

HRD is an integral part of any successful organization. This arm of the

Human Resources department reaches all aspects of a business, company


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or agency to ensure better working conditions, enhanced staff

development, and higher productivity, among so many other advantages.

Human resource development provides benefits that pay the employer

back in a multitude of ways

Following techniques may be used for the development of Human

Resources in an organization:

Performance Appraisal

It helps employees in self-appraisal and they can review their performance

in relation to the objectives and other behaviors. It must be checked by

superiors and send summary information for central storage and use.

Potential Appraisal

It is to be done through a thorough appraisal of the employee functioning

once in three years.

Career Planning and Development

It is necessary to make employees familiar with the general phases of their

development in the company. For this Plan should be made with senior

employees’ career path.

Employee Training


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Having assessed training needs of different groups of employees, it must

be developed in the organization strategy including pre-training and post-

training activities. Training packages and modules should be prepared.

With the help of own and outside resources the organization should

organize specific programmes as well as general development

programmes. After that evaluation work is to be done.

Social and Cultural Programmes

Social and culturalprogrammes make employees strong and fulfill their

social needs. These programmes have impact on efficiency of employees.

Team spirit

Team work spirit should be inspired among employees this will result good

impact on productivity of company.

Workers’ Participation in Management

Workers’ Participation in Management enables both the management’s and

workers’ representatives to share and exchange their ideas and viewpoints

in the process of joint decision-making. This collaborative decision-making

process creates a platform for mutual learning and development. Thus,

Human Resource Development managers should encourage the workers’

to participate in management

Monetary Rewards


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Monetary Awards should be attractive because these awards motivate the

employees to improve their performance further. This results in self-

commitment of the employees to learn further, acquire latest skills and

knowledge and to develop their human resources.

Grievance Mechanism

Strong industrial Relation Machinery should be formed for prompt

settlement of employee grievances.It would lead to job satisfaction and

satisfied employees are encouraged to enrich their resources with a view to

enhance their contributions to the organization.

Apart from the above mentioned main HRD techniques, several other

techniques as per the suitability to the organization can be adopted.

Performance Appraisal

Performance Appraisal is the systematic evaluation of the performance of

employees and to understand the abilities of a person for further growth

and development. Performance appraisal is generally done in systematic

ways which are as follows:

1. The supervisors measure the pay of employees and compare it with

targets and plans.

2. The supervisor analyses the factors behind work performances of

employees.


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3. The employers are in position to guide the employees for a better

performance.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages,

wage structure, salaries raises, etc.

2. To identify the strengths and weaknesses of employees to place right

men on right job.

3. To maintain and assess the potential present in a person for further

growth and development.

4. To provide a feedback to employees regarding their performance and

related status.

5. To provide a feedback to employees regarding their performance and

related status.

6. It serves as a basis for influencing working habits of the employees.

7. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company

which can be justified by following advantages:

1. Promotion


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Performance Appraisal helps the supervisors to chalk out the

promotion programmes for efficient employees. In this regards,

inefficient workers can be dismissed or demoted in case.

2. Compensation

Performance Appraisal helps in chalking out compensation packages

for employees. Merit rating is possible through performance appraisal.

Performance Appraisal tries to give worth to a performance.

Compensation packages which include bonus, high salary rates, extra

benefits, allowances and pre-requisites are dependent on

performance appraisal. The criteria should be merit rather than

seniority.

3. Employees Development

The systematic procedure of performance appraisal helps the

supervisors to frame training policies and programmes. It helps to

analyses strengths and weaknesses of employees so that new jobs

can be designed for efficient employees. It also helps in framing future

development programmes.

4. Selection Validation

Performance Appraisal helps the supervisors to understand the

validity and importance of the selection procedure. The supervisors

come to know the validity and thereby the strengths and weaknesses


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of selection procedure. Future changes in selection methods can be

made in this regard.

5. Communication

For an organization, effective communication between employees and

employers is very important. Through performance appraisal,

communication can be sought for in the following ways:

a) Through performance appraisal, the employers can understand

and accept skills of subordinates.

b) The subordinates can also understand and create a trust and

confidence in superiors.

c) It also helps in maintaining cordial and congenial labour

management relationship.

d) It develops the spirit of work and boosts the morale of

employees.

All the above factors ensure effective communication.

6. Motivation

Performance appraisal serves as a motivation tool. Through

evaluating performance of employees, a person’s efficiency can be

determined if the targets are achieved. This very well motivates a

person for better job and helps him to improve his performance in the

future.


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One of the most important things to remember about performance

appraisals is that its effectiveness will be highly influenced by its purpose.

For example, a programme, which is developed, to focus on employee

development and training needs may not be suitable for making major

decisions about salaries. Likewise, it is possible that the organization,

management and employee may all have different goals for the

performance appraisal process. Performance appraisal involves

‘identifying, evaluating and developing employees’ work performance with

the dual purpose of achieving the organization’s goals and objectives whilst

also ensuring that the employee receives recognition, feedback and

development’.

The process of performance appraisal starts with employee planning and

ends with an evaluation of employee progress. The process of performance

appraisal consists of two steps. First, complete the performance appraisal

form; secondly, participate in a performance appraisal interview and

discussion. These two stages comprise the following levels in the

appraising process:

1. Establish Performance Standards or Goals– The appraisal process

begins with the establishment of performance standards. The

evaluators must determine what outputs, accomplishments and skills

will be evaluated. These standards should have evolved out of job

analysis and job description. These performance standards should be

clear and objectives are to be understood and measured.


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2. Communicate Performance Expectations to Employees– Once the

performance standards are established, this need to be

communicated to the respective employees so that they come to know

what expected of them. Past experience indicates that not

communicating standards to the employees compounds the appraisal

problems. Here, it must be noted that mere transference of

information from the evaluator to the staff is not communication. It

becomes communication only when the transference of information

has taken place and has been received and understood by the staff.

The feedback from the staff on the standards communicated to them

must be obtained. If required, the standards may be modified or

revised in the light of feedback obtained from the employees.

3. Measure Actual Performance – This is the third step involved in the

appraisal process. In this stage, the actual performance of the

employees is measured on the basis of information available from

various sources such as personal observation, statistical reports, oral

reports, and written reports. The evaluator’s feeling should not

influence the performance measurements of the staff. Measurement

must be objective based on facts and findings. This is because what

we measure is more critical and important to the evaluation process

than bow we measure.

4. Compare Actual Performance with Standards – In this stage, the

actual performance is compared with the predetermined standards.

Such a comparison may reveal the deviation between standard


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performance and actual performance and will enable the evaluator to

proceed to the fifth step on the process i.e. Review and discussion of

the appraisal with the concerned staff.

5. Discuss and Review the Appraisal with the Staff – The fifth step in

the appraisal process is to communicate to and discuss with the

employees the results of the appraisal. This is one of the most

challenging tasks the evaluators face to present an accurate appraisal

to the staff and then make them accept the appraisal in a constructive

manner. A discussion on appraisal enables employees to know their

strengths and weaknesses. This has, in turn, impact on their future

performance. The impact may be positive or negative depending upon

how the appraisal is presented and discussed with the employees.

6. Initiate Corrective Action – The final step in the appraisal process is

the initiation of corrective action when it is necessary. The areas

needing improvement are identified and then, the measures to correct

or improve the performance are identified and initiated.


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Performance Appraisal Tools and Techniques

A more widely used classification of appraisal methods into two categories,

viz., traditional methods and modern methods, is given by Strauss and

Sayles. While traditional methods lay emphasis on the rating of the

individual’s personality traits, such as initiative, dependability, drive

,creativity, integrity, intelligence, leadership potential, etc.; the modern

methods, on the other hand, place more emphasis on the evaluation of

work results, i.e., job achievements rather than the personal traits. Modern

methods tend to be more objective and worthwhile. The various methods

included in each of the two categories are described briefly.

Traditional Methods


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Ranking Method

It is the oldest and simplest formal systematic method of performance

appraisal in which employee is compared with all others for the purpose of

placing order of worth. The employees are ranked from the highest to the

lowest or from the best to the worst.

In doing this the employee who is the highest on the characteristic being

measured and also the one who is L lowest, are indicated. Then, the next

highest and the next lowest between next highest and lowest until all the

employees to be rated have been ranked. Thus, if there are ten employees

to be appraised, there will be ten ranks from 1 to 10.

However, The Greatest Limitations Of This Appraisal Method Are

That:

1) It does not tell that how much better or worse one is than another,

2) The task of ranking individuals is difficult when a large number of

employees are rated, and

3) It is very difficult to compare one individual with others having varying

behavioral traits. To remedy these defects, the paired comparison

method of performance appraisal has been evolved.

Paired Comparison

In this method, each employee is compared with other employees on one-

on one basis, usually based on one trait only. The rater is provided with a


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bunch of slips each coining pair of names, the rater puts a tick mark against

the employee whom he insiders the better of the two. The number of times

this employee is compared as better with others determines his or her final

ranking.

The number of possible pairs for agiven number of employees is

ascertained by the following formula:

N (N-1)/2

Where N = the total number of employees to be evaluated.

Thus, the pairs so ascertained give the maximum possible permutations

and combinations. The number of times a worker is considered better

makes his/her score. Such scores are determined for each worker and

he/she is ranked according to his/her score. One obvious disadvantage of

this method is that the method can become unwieldy when large numbers

of employees are being compared.

Grading Method

In this method, certain categories of worth are established in advance and

carefully defined. There can be three categories established for employees:

outstanding, satisfactory and unsatisfactory. There can be more than three

grades. Employee performance is compared with grade definitions. The

employee is, then, allocated to the grade that best describes his or her

performances.


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One of the major drawbacks of this method is that the rater may rate most

of the employees on the higher side of their performance.

Forced Distribution Method

This method was evolved by Tiffin to eliminate the central tendency of

rating most of the employees at a higher end of the scale. The method

assumes that employees’ performance level confirms to a normal statistical

distribution i.e., 10,20,40,20 and 10 per cent. This is useful for rating a

large number of employees’ job performance and promo ability. It tends to

eliminate or reduce bias.

It is also highly simple to understand and easy to apply in appraising the

performance of employees in organizations. It suffer from the drawback

that improve similarly, no single grade would rise in a ratings.

Forced-Choice Method

The forced-choice method was developed by J. P. Guilford. It contains a

series of groups of statements, and rater rates how effectively a statement

describes each individual being evaluated. Common method of forced-

choice method contains two statements, both positive and negative.

Examples of Positive Statements Are

Gives good and clear instructions to the subordinates.

Can be depended upon to complete any job assigned.


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A Pair of Negative Statements May Be As Follows

Makes promises beyond his limit to keep these.

Inclines to favor some employees.

Each statement carries a score or weight, which is not made known to the

rater. The human resource section does rating for all sets of statements

both positive and negative. The final rating is done on the basis of all sets

of statements. Thus, employee rating in this manner makes the method

more objective. The only problem associated with this method is that the

actual constructing of several evaluative statements also called ‘forced-

choice scales’, takes a lot of time and effort.

Check-List Method

The basic purpose of utilizing check-list method is to ease the evaluation

burden upon the rater. In this method, a series of statements, i.e.,

questions with their answers in ‘yes’ or ‘no’ are prepared by the HR

department .The check-list is, then, presented to the rater to tick

appropriate answers relevant to the appraise. Each question carries a

weight-age in relationship to their importance.

When the check-list is completed, it is sent to the HR department to

prepare the final scores for all appraises based on all questions. While

preparing questions an attempt is made to determine the degree of

consistency of the rater by asking the same question twice but in a different

manner. However, one of the disadvantages of the check-list method is that


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it is difficult to assemble, analyses and weigh a number of statements

about employee characteristics and contributions From a cost stand point

also, this method may be inefficient particularly if there are a number of job

categories in the organization, because a check-list of questions must be

prepared for each category of job. It will involve a lot of money, time and

efforts.

Critical Incidents Method

In this method, the rater focuses his or her attention on those key or critical

behaviors that make the difference between performing a job in a

noteworthy manner (effectively or ineffectively). There are three steps

involved in appraising employees using this method.

First, a list of noteworthy (good or bad) on-the-job behaviour of specific

incidents is prepared. Second, a group of experts then assigns weightage

or score to these incidents, depending upon their degree of desirability to

perform a job. Third, finally a check-list indicating incidents that describe

workers as “good” or “bad” is constructed. Then, the check-list is given to

the rater for evaluating the workers.

The basic idea behind this rating is to apprise the workers who can perform

their jobs effectively in critical situations. This is so because most people

work alike in normal situation. The strength of critical incident method is

that it focuses on behaviors and, thus, judge’s performance rather than

personalities.


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Its drawbacks are to regularly write down the critical incidents which

become time-consuming and burdensome for evaluators, i.e., managers.

Generally, negative incidents are positive ones. It is rater’s inference that

determines which incidents are critical to job performance. Hence, the

method is subject to all the limitations relating to subjective judgments.

Graphic Rating Scale Method

The graphic rating scale is one of the most popular and simplest

techniques for appraising performance. It is also known as linear rating

scale. In this method, the printed appraisal form is used to appraise each

employee.

The form lists traits (such as quality and reliability) and a range of job

performance characteristics (from unsatisfactory to outstanding) for each

trait. The rating is done on the basis of points on the continuum. The

common practice is to follow five points scale.

The rater rates each appraise by checking the score that best describes his

or her performance for each trait all assigned values for the traits are then

totaled.

This method is good for measuring various job behaviours of an employee.

However, it is also subjected to rater’s bias while rating employee’s

behaviourat job. Occurrence of ambiguity in design- mg the graphic scale

results in bias in appraising employee’s performance.

Essay Method


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Essay method is the simplest one among various appraisal methods

available. In this method, the rater writes a narrative description on an

employee’s strengths, weaknesses, past performance, potential and

suggestions for improvement. Its positive point is that it is simple in use. It

does not require complex formats and extensive/specific training to

complete it.

However, essay method, like other methods, is not free from drawbacks. In

the absence of any prescribed structure, the essays are likely to vary

widely in terms of length and content. And, of course, the quality of

appraisal depends more upon rater’s writing skill than the appraiser’s actual

level of performance.

Moreover, because the essays are descriptive, the method provides only

qualitative information about the employee. In the absence of quantitative

data, the evaluation suffers from subjectivity problem. Nonetheless, the

essay method is a good start and is beneficial also if used in conjunction

with other appraisal methods.

Field Review Method

When there is a reason to suspect rater’s biasedness or his or her rating

appears to be quite higher than others, these are neutralised with the help

of a review process. The review process is usually conducted by the

personnel officer in the HR department.

The Review Process Involves The Following Activities:


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Identify areas of inter-rater disagreement.

Help the group arrive at a consensus.

Ensure that each rater conceives of the standard similarity.

However, the process is a time-consuming one. The supervisors generally

resent what they consider the staff interference. Hence, the method is not

widely used.

Confidential Report

It is the traditional way of appraising employees mainly in the Government

Departments. Evaluation is made by the immediate boss or supervisor for

giving effect to promotion and transfer. Usually a structured format is

devised to collect information on employee’s strength weakness,

intelligence, attitude, character, attendance, discipline, etc. report.

Modern Methods

Management by Objectives (MBO)

Most of the traditional methods of performance appraisal are subject to the

antagonistic judgments of the raters. It was to overcome this problem;

Peter F. Drucker propounded a new concept, namely, management by

objectives (MBO) way back in 1954 in his book “The Practice of

management”. The concept of MBO as was conceived by Drucker, can be

described as a “process whereby the superior and subordinate managers

of an organization jointly identify its common goals, define each individual’s


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major areas of responsibility in terms of results expected of him and use

these measures as guides for operating the unit and assessing the

contribution of each its members”.

In fact, MBO is not only a method of performance evaluation. It may be

viewed as a philosophy of managerial practice because it is a method by

which managers and subordinates plan, organize, communicate, control

and debate.

An MBO programme consists of four main steps: goal setting, performance

standard, comparison, and periodic review. In goal-setting, goals are set

which each individual agrees to attain. The superior and subordinate jointly

establish these goals. The goals refer to the desired outcome to be

achieved by each individual employee.

In performance standards, the standards are set for the employees as per

the previously arranged time period. When the employees start performing

their jobs, they come to know what is to be done, what has been done, and

what remains to be done.

In the third step the actual level of goals attained are compared with the

goals agreed upon. This enables the evaluator to find out the reasons

variation between the actual and standard performance of the employees.

Such a comparison helps devise training needs for increasing employees’

performance it can also explore the conditions having their bearings on

employees’ performance but over which the employees have no control.


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Finally, in the periodic review step, corrective measure is initiated when

actual performance deviates from the slandered established in the first

step-goal-setting stage. Consistent with the MBO philosophy periodic

progress reviews are conducted in a constructive rather than punitive

manner.

Limitation of MBO

MBO is not a cure for all organizationalproblems.Aswith other methods,it

also suffers from some limitations as follows:

(i) Setting Un-measurable Objectives

(ii) Time-consuming

(iii)Tug of War

Setting objectives with the subordinates sometimes turns into a tug of

war in the sense that the manager pushes for higher quotas and the

subordinates push for lower ones. As such, goals so set are likely to be

unrealistic.

(iv) Lack of Trust

Behaviorally Anchored Rating Scales (BARS)

The problem of judgmental performance evaluation inherent in the

traditional methods of performance evaluation led to some organizations to

go for objective evaluation by developing a technique known as

“Behaviorally Anchored Rating Scales (BARS)” around 1960s. BARS are


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descriptions of various degrees of behavior with regard to a specific

performance dimension.

It combines the benefits of narratives, critical incidents, and quantified

ratings by anchoring a quantified scale with specific behavioral examples of

good or poor performance. The proponents of BARS claim that it offers

better and more equitable appraisals than do the other techniques of

performance appraisal we discussed so far.

Developing BARS Typically Involves Five Steps

1. Generating Critical Incidents

Critical incidents (or say, behaviors) are those which are essential for

the performance of the job effectively Persons who are knowledgeable

of the job in question (jobholders and/or supervisors) are asked to

describe specific critical incidents of effective and ineffective

performance. These critical incidents may be described in a few short

sentences or phrases using the terminology.

2. Developing Performance Dimensions

The critical incidents are then clustered into a smaller set of

performance dimensions, usually five to ten. Each cluster, or say,

dimension is then defined.

3. Reallocating Incidents


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Various critical incidents are reallocated dimensions by another group

of people who also know the job in question. Various critical incidents

so reallocated to original dimensions are clustered into various

categories, with each cluster showing similar critical incidents. Those

critical incidents are retained which meet 50 to 80% of agreement with

the cluster as classified in step 2.

4. Scaling Incidents

The same second group as in step 3 rates the behaviour described in

each incident in terms of effectiveness or ineffectiveness on the

appropriate dimension by using seven to nine points scale. Then,

average effectiveness ratings for each incident are determined to

decide which incidents will be included in the final anchored scales.

5. Developing Final BARS Instrument

A subset of the incidents (usually six or seven per cluster) is used as a

behavioral anchor for the final performance dimensions. Finally, a

BARS instrument with vertical scales is drawn to be used for

performance appraisal.

BARS method of performance appraisal is considered better than the

traditional ones because it provides advantages like a more accurate


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gauge, clearer standards, better feedback, and consistency in evaluation.

However, BARS is not free from limitations.

The research on BARS indicates that it too suffers from distortions inherent

in most rating scales. The research study concluded that “it is clear that

research on BARS to date does not support the high promise regarding

scale independence In short, while BARS may outperform conventional

rating techniques, it is clear that they are not a panacea for obtaining high

interpreter reliability”

Assessment Centers

The introduction of the concept of assessment centres as a method of

performance method is traced back in 1930s in the Germany used to

appraise its army officers. The concept gradually spread to the US and the

UK in 1940s and to the Britain in 1960s.

The concept, then, traversed from the army to business arena during

1960s. The concept of assessment center is, of course, of a recent origin in

India. In India, Crompton Greaves, Eicher, Hindustan Lever and Modi

Xerox have adopted this technique of performance evaluation.

In business field, assessment centers are mainly used for evaluating

executive or supervisory potential. By definition, an assessment center is a

central location where managers come together to participate in well-

designed simulated exercises. They are assessed by senior manager’s

supple-mented by the psychologists and the HR specialists for 2-3 days.


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Assesse is asked to participate in in-basket exercises, work groups,

simulations, and role playing which are essential for successful

performance of actual job. Having recorded the assessesbehavior the

raters meet to discuss their pooled information and observations and,

based on it, they give their assessment about the assesse. At the end of

the process, feedback in terms of strengths and weaknesses is also

provided to the assesses.

The distinct advantages the assessment centers provide include more

accurate evaluation, minimum bias, right selection and promotion of

executives, and so on. Nonetheless, the technique of assessment centers

is also plagued by certain limitations and problems. The technique is

relatively costly and time consuming, causes suffocation to the solid

performers, discourages the poor performers (rejected), breeds unhealthy

competition among the assesses, and bears adverse effects on those not

selected for assessment.

360 – Degree Appraisal

Yet another method used to appraise the employee’s performance is 360 –

degree appraisal. This method was first developed and formally used by

General Electric Company of USA in 1992. Then, it travelled to other

countries including India. In India, companies like Reliance Industries,

Wipro Corporation, Infosys Technologies, Thorax, Thomas Cook etc., have

been using this method for appraising the performance of their employees.

This feedback based method is generally used for ascertaining training and

development requirements, rather than for pay increases.


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Under 360 – degree appraisal, performance information such as

employee’s skills, abilities and behaviors, is collected “all around” an

employee, i.e., from his/her supervisors, subordinates, peers and even

customers and clients.

In other words, in 360-degree feedback appraisal system, an employee is

appraised by his supervisor, subordinates, peers, and customers with

whom he interacts in the course of his job performance. All these

appraisers provide information or feedback on an employee by completing

survey questionnaires designed for this purpose.

All information so gathered is then compiled through the computerized

system to prepare individualized reports. These reports are presented to

the employees being rated. They then meet the appraiser—be it one’s

superior, subordinates or peers—and share the information they feel as

pertinent and useful for developing a self-improvement plan.

In 360 – degree feedback, performance appraisal being based on feedback

“all around”, an employee is likely to be more correct and realistic.

Nonetheless, like other traditional methods, this method is also subject to

suffer from the subjectivity on the part of the appraiser. For example, while

supervisor may penalize the employee by providing negative feedback, a

peer, being influenced by ‘give and take feeling’ may give a rave review on

his/her colleague.

Cost Accounting Method


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This method evaluates an employee’s performance from the monetary

benefits the employee yields to his/her organization. This is ascertained by

establishing a relationship between the costs involved in retaining the

employee, and the benefits an organization derives from Him/her.

While evaluating an employee’s performance under this method, the

following factors are also taken into consideration

Unit wise average value of production or service.

Quality of product produced or service rendered.

Overhead cost incurred.

Accidents, damages, errors, spoilage, wastage caused through

unusual wear and tear.

Human relationship with others.

Cost of the time supervisor spent in appraising the employee.

Communicating Performance Appraisals

Performance appraisals enable superiors to know what their team

members are up to, evaluate their performances and also give them correct

feedbacks so that they know where they are lacking and work on their

shortcomings.

The term “Performance Appraisal” generally causes anxiety among

employees. There is definitely a certain way appraisals need to be


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communicated among employees. There are organizations where

management tends to create unnecessary hype about performance

appraisal. In such a scenario, the employees think only about their

appraisals and find it extremely difficult to concentrate on their routine

affairs.

The rating procedure, appraisal form or any other related information ought

to be sent to each and every individual separately. One should not mark a

common mail to everyone. If the appraiser does not want to take the pain of

sending separate mails to everyone, a common login id should be created

where each and every individual can register using their passwords and

pull out the appraisal form. The appraisal form generally has information

about employee’s designation, grade, level in the hierarchy, responsibilities

and thus must be kept confidential.

Counseling needs to be done on a one on one basis. Queries, confusions

should be addressed in private. Appraisal being a very sensitive subject

should be handled gracefully. It is unethical to discuss one’s performance

or salary in public.

Once the appraisals are done, communicating the same to the employees

is another big challenge. The increment letters or appraisal letters should

be handed over to the employees either by the functional head or human

resource team personally.

Employee attrition is one of the major problems faced by organizations

after performance appraisal. Employees who work only for money quit after


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a salary hike to negotiate further with any other organization. Individuals

who do not get satisfactory appraisal in any case get demotivated and look

for a change. Any employee who does not agree to his/her appraisal or feel

has not got what he/she deserves needs to be addressed at the earliest.

Empathetic concern with the individual concerned is desirable to make

him/her understand as to why he/she has got a certain rating. Employees

cannot always be wrong. If the appraiser feels that an employee deserves

slightly more than what he has got, kind reconsideration of the decision

should be done. It is always better to give a decent salary hike to talented

employees than losing them. After all, if they leave, the organization will

have to spend time and energy searching for a replacement.

Employees need to be motivated after their appraisals. Appraisers should

congratulate each and every one irrespective of their salary hike or

promotion. Appreciating everyone for being consistent and loyal towards

the organization is a good practice in the long run. It should also be made

sure that no one feels left out. Concerned managers should sit with the

employees, give them new realistic targets and guide them as to how can

they work together, come out with more innovative ideas and show better

performances in the years to come.

Performance appraisal should not be the only method to evaluate or

acknowledge employee’s performance. It is not advisable to be rude to

employees who did not perform well. It is absolutely okay to handhold them

and give a second chance.


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Importance of Performance Appraisals and How to Conduct them

Effectively

People work in organizations for monetary and nonmonetary reasons.

While monetarily, employees look forward to increasing pay and perks,

they also look for job satisfaction and fulfillment in their jobs. Thus, the

motivators that determine whether a particular employee would stick to the

job or leave the organization are based on the monetary and nonmonetary

incentives.

For instance, monetarily, they might be expecting a pay rise every year in

addition to healthy bonuses. In the same manner, they expect recognition

for their work as well as job satisfaction through challenging assignments.

As all these aspects are determined during the appraisal process where not

only the pay and perks but also the chances for promotion and being given

more fulfilling work are decided.

Thus, it is clear that performance appraisals must be taken seriously in

addition to being accorded the importance they deserve. Indeed,

performance appraisals can be thought of the most important time in an

employee’s stint with the organization and hence, they must also be

conducted with care and caution.

In addition, given the fact that managers also share feedback, performance

appraisals can be occasions for letting the employee know where they are

doing well and which aspects they need to improve their performance.


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Why Performance Appraisals Must be Conducted with Care and

Caution

Given these reasons and factors that deem how important performance

appraisals are, most organizations have well-defined processes in place to

conduct and review employee performance. While some organizations

conduct performance appraisals every six months, the others do an annual

review of performance.

Apart from this, the performance appraisals also involve multiple levels of

employees wherein the immediate manager and the manager’s manager

usually take part in the reviews along with the concerned employee.

Further, some organizations also require the Human Resources Manager

to take part in the reviews in addition to the designated people manager for

that particular project. Indeed, while this is not the norm in all organizations,

the presence of the HR manager is required when the employees have to

be told about placing them on performance improvement plans and other

enhancing initiatives so that such programs can be reviewed and their work

monitored for compliance or noncompliance.

Apart from this, performance appraisals usually entail multiple rounds of

discussion wherein the concerned employee first uploads his or her

perceptions about how well he or she did on the HR portal and then, the

manager and the manager’s manager share their feedback which is

followed by face to face discussions and the final closure is given after all

parties agree to the contents of the review.


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Indeed, most multinational organizations have a policy of requiring the

consent of the employee with regards to the rating and the feedback, and

this is the reason, the presence of the HR manager helps in cases where

the employee refuses to give his or her consent.

Moreover, performance appraisals are usually tied to the financial or the

operational year so that pay and bonuses, as well as promotions, can be

linked to these timelines. Indeed, many multinational organizations conduct

performance appraisals in the calendar year-end whereas Indian firms

usually conduct such reviews in the financial year-end.

Apart from this, the other reason why performance appraisals are so

important is that the recognition of employee performance and the

subsequent rewards and incentives system follows the review wherein the

top performers usually are given awards during the organizational In-House

and Town Hall gatherings.

In other words, the review and the ratings are followed by such rewards for

the top performers in addition to placing them on the premium or fast-track

career paths that are usually confidential between the HR manager and the

line manager.

Given these aspects, performance appraisals must be conducted with care

and caution. While good reviews and top performers usually have a

pleasant discussion with their managers, it is the middle ranked employees

who often lead to the most intense and difficult discussions.


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Although performance appraisals can be biased, there are certain

steps that can be taken to improve the evaluations and reduce the

margin of errors through the following:

• Training - Bringing awareness to the potential for bias by training the

Evaluators to be aware of the difference of skills and abilities between

employees and how to subjectively consider these traits.

• Providing Feedback to Raters - Trained raters provide managers

who evaluated their subordinates with feedback, including information

on ratings from other managers. This has the potential to reduce

leniency errors.

Subordinate Participation-By allowing employee participation in the

evaluation process, there is employee-supervisor reciprocity in the

discussion for any discrepancies between self-ratings and supervisor

ratings, thus, increasing job satisfaction and motivation

Professionalism -Performance appraisals form a crucial and critical

part of the employee experience and hence, it is better to conduct

them as professionally and as diligently as possible.

Potential Appraisal

Potential appraisal is a part of performance appraisal that helps to identify

the hidden talents and potential of the individuals. Identifying these

potential talents helps in preparing the individuals for higher responsibilities

and positions in the future. It focuses primarily on identifying the

employee’s likely future roles within the organization.Potential Appraisal is


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a future oriented appraisal whose main objective is to identify and evaluate

the potential of the employees to assume higher positions and

responsibilities in the organizational hierarchy. Many organizations

consider and use potential appraisal as a part of the performance appraisal

processes.

What is Potential?

Potential can be defined as ‘a latent but unrealized ability’. Potential

includes the possible knowledge, skills, and attitudes the employee may

possess for better performance There are many people who have the

desire and potential to advance through the job they are in and wanting the

opportunity to operate at a higher level of competence in the same type of

work. The potential is the one that the appraiser should be able to identify

and develop because of the knowledge of the job. This requires an in-depth

study of the positions which may become vacant, looking carefully at the

specific skills that the new position may demand and also taking into

consideration the more subjective areas like ‘qualities’ required. There may

be areas where the employee has not had a real opportunity to

demonstrate the potential ability and there may be areas with which you, as

the appraisers are not familiar.

Indicators of Potential

• A Sense of Reality -This is the extent to which a person thinks and

acts objectively, resisting purely emotional pressures but pursuing

realistic projects with enthusiasm.


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• Imagination - The ability to let the mind range over a wide variety of

possible causes of action, going beyond conventional approaches to

situations and not being confined to ‘This is the way it is always being

done!’

• Power of Analysis - The capacity to break down, reformulate or

transform a complicated situation into manageable terms.

• Breadth of Vision: The ability to examine a problem in the context of

a much broader framework of reference; being able to detect, within a

specific situation, relationships with those aspects which could be

affecting the situation.

• Persuasiveness - The ability to sell ideas to other people and gain a

continuing commitment, particularly when the individual is using

personal influence rather than ‘management authority’.

Potential Appraisal Vs Performance Appraisal

Potential Appraisal is forward looking process whether performance

appraisal is backward looking process. Any good or worse assessment

results of performance appraisal may not be a good factor for potential

appraisal. But current performance of an employee could show evidence

somewhere whether he/she is flexible for new working conditions.

The Purposes of Potential Appraisal are

To inform employees of their future prospects


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To enable the organization to draft a management succession

programme;

To update training and recruitment activities;

To advise employees about the work to be done to enhance

their career opportunities

To help employees to move upwards in the organization

Components of Potential Appraisal System

1. Role Description - A good potential appraisal system would be

based on clarity of roles and functions associated with the different

roles in an organization. This requires extensive job descriptions to

be made available for each job. These job descriptions should spell

out the various functions involved in performing the job.

2. Qualities Required - Besides job descriptions, it is necessary to

have a detailed list of qualities required to perform each of these

functions. These qualities may be broadly divided into four

categories:

Technical knowledge and skills

Managerial capabilities and qualities

Behavioural capabilities

Conceptual capabilities.


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3. Indicators of Qualities - A good potential appraisal system besides

listing down the functions and qualities would also have various

mechanisms for judging these qualities in a given individual. Some of

the mechanisms for judging these qualities are:

Rating by others

Psychological tests

Simulation games and exercises

Performance appraisal records.

4. Organizing the System - Once the functions, the qualities required

performing these functions, indicators of these qualities, and

mechanisms for generating these indicators are clear, the

organization is in a sound position to establish and operate the

potential appraisal system. Such establishment requires clarity in

organizational policies and systematization of its efforts.

5. Feedback - If the organization believes in the development of human

resources it should attempt to generate a climate of openness. Such

a climate is required for helping the employees to understand their

strengths and weaknesses and to create opportunities for

development. A good potential appraisal system should provide an

opportunity for every employee to know the results of assessment.

He should be helped to understand the qualities actually required for

performing the role for which he thinks he has the potential, the


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mechanisms used by the organization to appraise his potential, and

the results of such an appraisal.

A good potential appraisal system provides continuous opportunities for the

employee to know his strengths and weaknesses. These are done through

periodic counseling and guidance sessions by either the personnel

department or the managers concerned. This should enable the employee

to develop realistic self-perceptions and plan his own career and

development.

Techniques of Potential Appraisal

1. Self – appraisals

2. Peer appraisals

3. Superior appraisals

4. MBO

5. Psychological and psychometric tests

6. Management games like role playing

7. Leadership exercises etc.

The advantages of a thoroughly carried out potential appraisal are

many.Some of them may be said to be as follows:

• The organizations are able to identify individuals who can take higher

responsibilities.


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• The organizations can convey the message that people are not

working in static positions and jobs in the organization.

• The organizations can identify employee potential to ensure the

availability of people to do different jobs to serve organizational

needs.

Sources

1. www.whatishumanresource.com/potential-appraisal

2. www.yourarticlelibrary.com/performance-appraisal/performance-

appraisal-methods

3. www.yourarticlelibrary.com/human-resource-

development/human-resource-development.

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Documents

Concept of Human Resource Development (HRD) · HRD embodies with techniques and processes such as performance appraisal, training, management development, career planning, counseling,