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Chapter 01
Introduction
1.1 Introduction
This chapter briefly describes about the title of the study, research problem, background
of the study, objectives of the study, Theoretical or Conceptual Model/Framework and
the hypotheses to be tested, the research methodology and data analysis.
1.2 Title
The achievement of performance evaluation purposes through the performance
evaluation system in National Water Supply and Drainage Board.
1.3 Research Problem
Nowadays Performance Evaluation is done almost in every organization, but they might
not concentrate with the general purposes of performance evaluation. The research
focuses on the achievement of performance evaluation purposes through the
Performance Evaluation System in National Water Supply and Drainage Board.
1.4 Background of the study
According to wikipedia (2010), performance appraisal, employee appraisal,
performance review, or (career) development discussion is a method by which the job
performance of an employee is evaluated (generally in terms of quality, quantity, cost,
and time) typically by the corresponding manager or supervisor. A performance
appraisal is a part of guiding and managing career development. It is the process of
obtaining, analyzing, and recording information about the relative worth of an employee
to the organization. Performance appraisal is an analysis of an employee's recent
successes and failures, personal strengths and weaknesses, and suitability for promotion
or further training. It is also the judgment of an employee's performance in a job based
on considerations other than productivity alone.
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Opatha (2002) demonstrates that performance evaluation is a process that collects
evidence and uses such evidence against determined norms, standards to judge the
degree of goodness or worth in performance of an employee or a group of employees
being evaluated for various types of decision making. It is the systematic evaluation of
individual performance linked to workplace behavior and/or specific criteria. (Prowse &
Prowse, 2009).As per Saad (2001), Performance evaluation is the most powerful
management tool for strategic deployment. Performance evaluation is a process, which
includes some steps such as Establish objectives, formulate policies, establish criteria
and standards, select methods, design evaluation form and procedure, train evaluators,
appraise, discuss results, make decisions and store and review and renewal (Opatha,
2002).Several tools exist to help employers effectively evaluate their employees in a
constructive and effective manner. Among them are clear job description and corporate
structure, followed by a review of performance by both functional and project
managers. Additionally, peer evaluations can prove to be constructive and contribute
positively to the development of the employee (Appelboum, et.al, 2008).
The purposes of performance evaluation can be divided in to two main categories and
three sub-categories. The main categories are the Management Purposes and
Informative Purposes. Management Purposes are further divided as Administrative
Purposes and Development Purposes. The information needed for management of an
organization is provided by the Administrative purposed performance evaluation
system. That information can be used for functions such as, Human Power Planning,
Reward Management, Management of promotions, and Administration of transfers,
Discipline administration, Selection, Hiring and Management of labour-management
relationship. Development purposed performance evaluation systems provide
information for training, to assess success of training programs, for proper direction and
for better productivity. Informative purpose facilitates communication. The expectations
of the organization from the employee and vise versa can be known, informs employees
about their weaknesses and strengths, employees get to know that they are appreciated
and make them prepare for future promotions (Opatha, 2002).
According to Wells, et.al, (2007), two basic purposes for conducting performance
appraisals in general have been referred to as administrative and developmental. The
administrative or evaluative purpose for performance appraisal is also described as
making possible between-individual comparisons such as salary administration,
2
promotion, retention decisions, performance recognition, discipline and layoffs. The
developmental purpose for performance appraisal involves within-individual
comparisons, such as performance feed back, training needs, transfers, job assignments
and identification of strengths and weaknesses. Performance appraisal has
administrative purposes, developmental purposes as well as role definition purposes.
The purposes are commonly focus on differentiate among individuals or within
individuals (Youngcourt, et.al, 2007).
The purposes include areas such as performance assessment and improvement,
providing a basis for individual remuneration, identifying training needs, assessing
suitability for promotion and probationary review (Rees & Porter, 2003). The
purpose of traditional performance evaluation systems was largely to
ensure that the minimum standards for the job were being
maintained and that some measure of control was being exerted over
the employee. Now it has moved away from being primarily control
and maintenance based and has moved towards an approach more
concerned with motivational and developmental issues to be
congruent with the culture and principles that guide the conduct of
the organizations (Soltani, et.al, 2004).
According to Schwelger & Summers (1994), the judgmental or personnel purpose
focuses on differentiating between auditors and on assessing the relative value of each
employee to the department in order to make sound administrative decisions. These
decisions entail salary increases, promotions, probations and lay-offs. The
developmental or coaching purpose focuses on providing feedback to the auditor on past
performance, discussing strengths and weaknesses, clarifying future performance
expectations, establishing future goals and assessing training needs. Effective coaching
can result in increased employee trust in the manager and improve the communication.
The ultimate goal of the evaluation exercise is to improve the employee’s future
performance.
This may be particularly so in professional and public sector organizations where the
presentation of appraisal by management, as being about development and growth, can
be thought by staff to be a cover for less noble intentions. This is concerned with
whether the appraisal is to be focused on accountability or development. The 3
development orientation is concerned with behavior while accountability deals with
results achieved and resources expended (Fisher, 1994).
According to Edmonstone (1996), the purposes of performance evaluation are the
improvement in the communication between boss and subordinate through the use of
feedback between them, identification of the scope for performance improvement and
the means to achieve this, identification of individual training and development needs,
identification of the potential of individuals for future promotion, secondment, etc., or
for retention or termination – all for succession planning purposes, as the basis for
remuneration and reward, on the basis of performance as a powerful means of
managerial control, through the setting of objectives in a hierarchical fashion and a
review of success or failure in achieving these.
Rees & Porter (2003) says that most schemes do not work effectively schemes have too
many objectives. This can make them cumbersome and generate conflict between
objectives. There are also recurring problems with regard to the handling of feedback.
Employers often fail to distinguish between the need of employees to receive praise and
their ability to receive constructive criticism about their work. Schemes that were once
appropriate can also become obsolete either in part or completely Appraisal schemes
also need to be congruent with related employer initiatives. The giving of constructive
criticism can be one of the hardest parts of the appraisal.
Based on the human resource management literature, we expect positive relationships
between developmental appraisal and positive appraisee reactions to the workgroup.
Performance appraisal that aims to enhance human capital and provide developmental
support can forge a committed workforce whose goals are closely aligned with the
organization Developmental performance appraisal, including constructive feedbacks
and identification of training needs, are discretionary management practices that imply
an investment of the organization in its employees. Evaluative appraisal is associated
with negative appraisee reactions. Evaluative appraisal, which differentiates and
compares individual performance, can induce competition among employees, and
convey the idea that employees should outperform others to survive in the organization
(Cheng. Wu, & Leung, 2008)
4
1.5 Objectives of the Study
To identify the existing Performance Evaluation system in National Water
Supply and Drainage Board.
To identify the existing performance evaluation purposes in National Water
Supply and Drainage Board.
1.6 Theoretical or Conceptual Model/Framework
According to theory, purposes of performance evaluation can be divided into two
categories. Those are management purposes and Informative Purposes. Management
purposes include Administrative purposes and Development purposes. Administrative
purposes can be defined as using performance evaluation information for management
functions and in the development purpose, information is used for management
development. Performance evaluation details can also be used for communication for
man power improvement. (Opatha, 2002)
In this research, the independent variable is the existing performance evaluation system
at National Water Supply and Drainage Board and the dependent variables would be the
performance evaluation purposes. I assumed that the existing performance evaluation
system in National Water Supply and Drainage Board enhances the achievement of
Administrative Purposes, Development Purposes and informative purposes of
performance evaluation
Performance
evaluation
purposes
Existing performance evaluation system 1. Administrative
in National Water Supply and purposes
Drainage Board 2. Development
purposes
3. Informative
purposes
Figure 1.1
5
Theoretical or Conceptual Model/Framework
There are three hypotheses to be tested.
HYPOTHESES 1. There is a positive relationship between the existing performance
evaluation system in National Water Supply and Drainage Board with the achievement
of Administrative purposes.
HYPOTHESES 2. There is a positive relationship between the existing performance
evaluation system in National Water Supply and Drainage Board with the achievement
of Development purposes.
HYPOTHESES 3. There is a positive relationship between the existing performance
evaluation system in National Water Supply and Drainage Board with the achievement
of Informative purposes.
1.7 Research Methodology
The research was done according to the survey method with the deductive approach. A
cross-sectional survey was done by providing a questionnaire for a sample of 50 clerical
level employees from a population of 100 who employ at the Personnel and
Administration Division of National Water Supply and Drainage Board. Through
questionnaires and interviews, primary data was gathered and through document
analysis and literature survey secondary data was gathered.
1.8 Data Analysis
Gathered data was analyzed through Central Tendency Measurement and other
appropriate measurements. The Statistical Package for Social Science (SPSS) was used
for data analysis.
1.9 Summary
This chapter described about the title of the study, research problem, background of the
study objectives of the study, Theoretical or Conceptual Model/Framework and the
hypotheses to be tested, the research methodology and data analysis.
6
Chapter 02
Literature Review
2.1 Introduction
This chapter includes a brief introduction to performance evaluation, the definitions of
performance evaluation, the purposes of performance evaluation, contribution of
performance evaluation to human resource management functions, performance
evaluation process, essential Characteristics of a performance evaluation system,
methods of performance evaluation, issues regarding performance evaluation systems
and the reasons for unsuccessful performance evaluation systems.
2.2 Performance Evaluation
As per Saad (2001), Performance evaluation is the most powerful management tool for
strategic deployment. Performance evaluation is a process, which includes some steps
such as Establish objectives, formulate policies, establish criteria and standards, select
methods, design evaluation form and procedure, train evaluators, appraise, discuss
results, make decisions and store and review and renewal (Opatha, 2002). A variety of
human resource performance evaluation systems are in contemporary use, and although
application of performance evaluation practices in most organisations is high, the
average level of its impact on successful implementation to achieve performance
evaluation purposes is low. (Coelho & Moy, 2003). A performance appraisal system
that does its job well is the result of hard work, careful thinking, and serious planning;
especially so when the integration of the administrative, developmental, and strategic
needs of the firm. (Caruth & Humphreys, 2008). According to Coelho & Moy, (2003),
most performance evaluation systems,
1. Disregards the existence of a system.
2. Disregards variability in the system.
3. Holds workers responsible for errors that may be the results of faults
within the system.
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4. Undermines teamwork.
2.3 Definitions of Performance Evaluation
Performance appraisal is the systematic appraisal of the individual’s performance on the
job and of potential development. (Beach, 1975). It is a process of assessing human
performance and influencing/developing human performance. (Gary,
1988).Performance evaluation is a process that collects evidence and uses such evidence
against determined norms, standards to judge the degree of goodness or worth in
performance of an employee or a group of employees being evaluated for various types
of decision making. (Opatha, 2002). As per Prowse & Prowse (2009), Performance
appraisal is the systematic evaluation of individual performance linked to workplace
behavior and/or specific criteria.
It is the process of obtaining, analyzing, and recording information about the relative
worth of an employee to the organization. Performance appraisal is an analysis of an
employee's recent successes and failures, personal strengths and weaknesses, and
suitability for promotion or further training. It is also the judgment of an employee's
performance in a job based on considerations other than productivity alone. (Wikipedia,
2010)
2.4 Performance evaluation purposes
Performance evaluation purposes
Management Purposes Informative Purposes
1. Administrative Purposes
2. Development Purposes
Figure 2.1
8
Performance evaluation purposes
Source: (Opatha, 2002)
1. Management purposes
Administrative purposes give the information needed for management of an
organization. That information can be used for functions such as, human power
planning (to develop skill inventories and management inventories), reward
management (to prepare wages, salaries and increments), management of promotions(to
identify their employees’ competency which can be considered in promotions),
administration of transfers, discipline administration (when determining the degree of
severity of disciplinary action.), selection (for validation of the methods used to select
employees), hiring (to evaluate the new employee during the probationary period) and
for management of labour management relationship.
Development purposes are used for training (to identify the training needs), to assess the
success of training programs, for proper direction and for better productivity. Objective
and fair performance evaluation helps motivation of employees to achieve results and
also the labour management relationship will be enhanced. The final result will be the
improved productivity.
2. Informative purposes
a) Facilitates communication.
b) The expectations of the organization from the employee and vice versa can be known
.
c) Informs employees about their weaknesses and strengths.
d) Employees get to know that they are appreciated and make them prepare for future
promotions. (Opatha, 2002)
These three purposes namely administrative, development and informative purposes
will be studied by this research.
9
According to Schwelger & Summers (1994), the judgmental or personnel purpose
focuses on differentiating between auditors and on assessing the relative value of each
employee to the department in order to make sound administrative decisions. These
decisions entail salary increases, promotions, probations and lay-offs. The
developmental or coaching purpose focuses on providing feedback to the auditor on past
performance, discussing strengths and weaknesses, clarifying future performance
expectations, establishing future goals and assessing training needs. Effective coaching
can result in increased employee trust in the manager and improve the communication.
The ultimate goal of the evaluation exercise is to improve the employee’s future
performance.
the purposes of performance evaluation are the improvement in the communication
between boss and subordinate through the use of feedback between them, identification
of the scope for performance improvement and the means to achieve this, identification
of individual training and development needs, identification of the potential of
individuals for future promotion, secondment, etc., or for retention or termination – all
for succession planning purposes, as the basis for remuneration and reward, on the basis
of performance as a powerful means of managerial control, through the setting of
objectives in a hierarchical fashion and a review of success or failure in achieving these
(Edmonstone, 1996).
Rees & Porter, (2003) say the purposes include areas such as performance assessment
and improvement, providing a basis for individual remuneration, identifying training
needs, assessing suitability for promotion and probationary review. The purpose of
traditional performance evaluation systems was largely to ensure that
the minimum standards for the job were being maintained and that
some measure of control was being exerted over the employee. Now
it has moved away from being primarily control and maintenance
based and has moved towards an approach more concerned with
motivational and developmental issues to be congruent with the
culture and principles that guide the conduct of the organizations
(Soltani, et.al, 2004).
Two basic purposes for conducting performance appraisals in general have been
referred to as administrative and developmental. The administrative or evaluative 10
purpose for performance appraisal is also described as making possible between-
individual comparisons such as salary administration, promotion, retention decisions,
performance recognition, discipline and layoffs. The developmental purpose for
performance appraisal involves within-individual comparisons, such as performance
feedback, training needs, transfers, job assignments and identification of strengths and
weaknesses. (Wells, et.al, 2007). According to Youngcourt, et.al, (2007), performance
appraisal has administrative purposes, developmental purposes as well as role definition
purposes. The purposes are commonly focus on differentiate among individuals or
within individuals.
2.5 Contribution of performance evaluation to human resource management
functions
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PerformanceEvaluation
Human Power Planning
Selection
Hiring
Training
Promotions
Reward Management
Transfers
Discipline Administration
Figure 2.2
Source: (Opatha, 2002)
To develop skill inventories and management inventories, information in performance
evaluation is important. That is the contribution of a performance evaluation system to
human power planning. For validation of the methods used to select employees,
performance evaluation information can be used so it is contributed to selection. In the
hiring stage, to evaluate the new employee during the probationary period, performance
evaluation information can be used. To identify the training needs also the performance
evaluation is contributed. Through performance evaluation, employers can identify their
employees’ competency which can be considered in promotions. To prepare wages,
salaries and increments information in performance evaluation is used so it is
contributed to rewards management. Performance evaluation information can be used
for fair transfer process. When determining the degree of severity of disciplinary action,
performance evaluation information is contributed.
2.6 Performance evaluation process
Establish objectives.
Formulate policies.
Establish criteria and standards.
Select methods.
Design evaluation form and procedure.
Train evaluators.
Appraise.
Discuss results.
Make decisions and store.
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Review and renewal.
Figure 2.3
Source: (Opatha, 2002)
Establishing objectives is an essential part of a successful performance evaluation
system. Objectives are the targets to be achieved through the performance evaluation
system. The objectives should be clear, understandable and achievable. As an example,
to provide a fair and objective rational in order to reward employees is an objective of a
performance evaluation system. Establishing well defined policies as solutions to some
issues should be done. This process should address whose performance should be
evaluated, when and how often performance evaluation should be done and who should
do performance evaluation. Then the performance criteria and standards should be
identified, selected and established. This is essential for a systematic and a fair
evaluation. Criteria are the factors use to evaluate the job performance at a relevant time
period. Standards are the rating scales.
A method of performance evaluation should be selected considering the nature of job,
purpose of evaluation, cost etc. When designing an evaluation form and procedure, a
common form for all the employees or separate forms for various jobs can be prepared.
After that the evaluators should be properly trained in order to evaluate the job
performance accurately. This is a must for a successful performance evaluation system.
Then, evaluating the actual job performance of the employee by the evaluator is done.
The evaluator should try to achieve the performance evaluation objectives according to
the policies, criteria, method and form and procedure. After the evaluation, the
employee should be given a feed back by the evaluator. For this purpose a performance
feedback interview will be held as tell and sell. Tell and listen, problem solving and as a
mixed one. Decisions are taken by the authorities to achieve performance evaluation
objectives and the evaluated forms will be kept as reference documents. The
performance evaluation system should be renewed as per the changes of the jobs,
policies, objectives etc. it should also be checked whether the system gives intended
results or if not improvements should be made. (Opatha, 2002)
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2.7 Essential Characteristics of a performance evaluation system
According to Caruth & Humphreys, (2008), there are eleven essential characteristics of
a performance evaluation system as follows.
1. Formalization
The first requirement for any effective performance appraisal system is that it be
formalized. There should be definite written policies, procedures, and instructions for its
use and such written guidance should be furnished to all appraisers. General information
about the system should be given to all employees through an employee handbook if
one exists or by a separate memorandum if an organization has no handbook.
2. Job relatedness
All factors used to evaluate performance must flow from the jobs that are being
appraised. As performance appraisal is an employment test, general traits, personality
characteristics, and tenuously related job factors should be scrupulously avoided. Only
appraisal factors that account for success or lack of success in performing a job should
be used. These factors must be susceptible to standardized definition and uniform
interpretation by all appraise. Such standardization enhances the reliability of the
system.
3. Standards and measurement
Standards are expectations, norms, desired results, or anticipated levels of
accomplishment that express an organization’s concept of acceptable performance. To
set standards an organization must carefully examine each of its jobs and determine
reasonable expectations that are acceptable to both the institution and the employees
performing the jobs.
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4. Validity
A test is valid if it measures what it purports to measure. As far as performance
appraisal is concerned, the system employed or the method used is valid if it measures
what it is designed to measure: actual job performance as compared with the established
standards. Establishing the validity of performance appraisal begins during job analysis,
the process wherein job performance factors are clearly identified.
5. Reliability
Reliability refers to the ability of any test or measurement to produce consistent results.
A performance appraisal system that does not consistently measure work performance
accurately cannot be considered an effective one. High performance must consistently
receive a high rating, just as low performance must consistently receive a low rating for
the measurement system to be considered reliable.
6. Open communication
All employees have a need to know how well they are performing. An effective
performance appraisal system assures that feedback is provided on a continuous basis,
not in the form of a written annual evaluation, but in the form of daily, weekly, and
monthly comments from an employee’s supervisor or manager. For any performance
appraisal system to be effective this ongoing aspect of its nature must be emphasized to
appraisers and the necessity of providing continuous feedback information on job
performance must be underscored.
7. Trained appraisers
Essential to the effectiveness of a performance appraisal system is thorough training, as
well as periodic updating and retraining, of all individuals in the organization who
conduct evaluations. Classroom training is especially important when a new or revised
15
system is being installed; classroom training is also indispensable for all new managers
and supervisors. An organization should never assume that, because performance
appraisal information is contained in a supervisory or managerial handbook or is
included in the company personnel policy manual, supervisors and managers will
automatically learn how to conduct effective appraisals.
8. Ease of use
A performance appraisal system does not have to be complex to be effective. In fact, the
simpler the system, the easier it is to use, the more readily it can be understood by
evaluators, the more likely it is to be used in the manner intended. If the system is
firmly based on standards and measurements, it will probably be not only easier to use
but also more valid and reliable, than many of the performance appraisal approaches in
use today.
9. Employee access to results
Employees must be given access to their personnel records, including all files or other
data pertaining to their performance appraisals. Presently, this requirement does not
apply to employees in the private sector at large, but there are several reasons that
suggest the necessity of allowing employees to examine any records relative to their job
performance. First, secrecy may breed suspicion about the fairness of the system in the
minds of employees. Second, concern about the fairness of the system could
conceivably lead to discrimination charges and raise motivational issues related to
perceived inequity. Third, the concept of fairness in dealing with employees suggests
that employees have implicit rights to certain kinds of information that directly affects
them on their jobs.
10. Review procedures
To eliminate any problems of bias, discrimination, favoritism, or the like, a performance
appraisal system needs to include a review mechanism. The next higher level of
management, usually the evaluator’s immediate supervisor, should automatically review
all evaluations of employees made by subordinate managers. The purpose of this
managerial review is not to have the higher level manager perform a second appraisal;
16
rather, it is for the purpose of auditing the evaluation for fairness, consistency, accuracy,
and assuring that the evaluator has carried out his or her function objectively. While a
secondary review increases the amount of time devoted to the performance appraisal
process, such action tends to protect both the employee and the organization by making
an effort to assure fairness and consistency in all employee evaluations.
11. Appeal procedures
A fundamental principle is the right of due process. Unfortunately, in some
organizations there is no procedure whereby an employee can appeal what he or she
considers an unfair or inaccurate performance appraisal. The employee is simply stuck
with the immediate supervisor’s evaluation. In such situations, the employee has few
options other than living with the unfavorable review or possibly leaving the
organization for employment elsewhere. There have even been instances where
employees whose performance was acceptable for years were summarily discharged on
the basis of one bad performance appraisal.
2.8 Performance evaluation methods
1. Graphic rating scales
Most popular and the oldest method of performance evaluation. In this, the evaluator
provides a subjective evaluation of an employee’s performance along a scale from very
poor to excellent or from very low to very high. This method is easy to understand and
administrate, little training for the evaluators is enough and applicable to a large number
of employees. But this method concentrates on traits only, rating is subjective and it
tends for evaluator errors such as central tendency.
2. Checklist method
Here the evaluator is given an evaluation form, which includes a list of statements
representing the characteristics and performance of the employee and is required to
choose the statements applicable to the employee. This method can be used for a large
number of employees, easy to administer, cost effective, evaluators need a little training
and has a weighting system. But it does not use results, misinterpretation of the
17
statements by the evaluator, evaluator may resent the method as he does not know the
weights given to different statements and the statements may not cover all the levels of
employee performance. .
3. Multiple choice method
This method has four or five statements under each criterion and the evaluator is
supposed to select the statement which is the best to describe the employee. This is like
a multiple choice question paper. This method is easy to understand and administrate,
little training for the evaluators is enough and applicable to a large number of
employees. But this method concentrates on traits only, rating is subjective, it tends for
evaluator errors such as central tendency and the evaluation form becomes longer.
4. Self evaluation and discussion method
Employees are supposed to complete their evaluation forms by themselves. Then the
employee will meet his/her superior with the form and the superior will do changes if
required. This method is accurate comparing with mere evaluation by the superior and
final evaluation will be fairer. But there may be arguments and some superiors may not
like to discuss with subordinates. Poor recording of the performance of subordinates by
the superior and the superiority complex may interrupt this method.
5. Essay appraisal method
The evaluator writes down an essay about the subordinate’s strengths, weaknesses etc.
this method is simple and easy to use. But it is difficult to compare essay evaluations of
different employees, tends to be more subjective and the evaluators may be weak in
essay writing skills.
6. Examination system
Large organizations use this and the job holders are given a questionnaire relating to
knowledge, intelligence, skills etc. a large number of employees can be evaluated the
probability of occurring individual partialities of superiors/evaluators is low. But this
18
method does not evaluate actual job results of the employees and it does not encourage
the employee’s commitment to the job.
7. Critical incidents method
In this method, evaluator keeps a log book to write down positive and negative
behaviors of the employee within the period of performance evaluation. The log book
entries are used to evaluate the employees at the end of the period. This method is more
practical and accurate, helps the evaluator to refresh his/her memory and fair assessment
and this method can be used for identifying training needs and for counseling. But the
evaluator needs to note down all the incidents which is very time consuming and
sometimes the employees will steal and hide the log book if they do not want to be
recorded negative things about them.
8. Rank order method (straight ranking)
In this method, employees are rated from the best to the worst for criteria as 1, 2, 3, 4
and 5. The employee who got the least number is the best and vice versa. Through this
method employees can be compared and selections and merit ranking can be done. But
if the organization has a large number of employees implementing of this method is
difficult and costly.
9. Alternative ranking method
Evaluator is required to select the best and worst employee and put the best at the top
and the worst at last. Evaluator continues this for all the employees and the middle
position will be filled last. Through this method employees can be compared and
selections and merit ranking can be done. But if the organization has a large number of
employees implementing of this method is difficult and costly.
10. Paired comparison method
The employees are evaluated in pairs taking an employee at a time and comparing
him/her against every other. When the organization finds it necessary to lay off a part of
19
its work force or to promote an employee, this is suitable. But this is time consuming
when there are a large number of employees.
11. Forced distribution method
Evaluator sorts employees in to different classifications. Grading should be done as best
10%, next 20%, middle 40%, next 20% lowest 10%.from this method the errors such as
central tendency, leniency and harshness can be overcome. But the relative differences
among employees rated coming under one classification are not known.
12. Point allocation method
The evaluator should allocate the total points among employees according to their
relative worth. The employee with the maximum points is the best. By this method it is
possible to ascertain the relative differences among employees. But the halo effect and
recency bias can be seen.
13. Field review method
A personnel management specialist solicits information about job performance of the
employee, whose performance is being assessed, from the immediate superior of the
employee. Performance evaluation regarding the employee is prepared by the specialist
and then it is sent to the immediate superior of the employee for review and
approval. In this method, the degree of accuracy is high but if the superior perceives the
evaluation done by the personnel specialist on his/her subordinates as an infringement
upon his/her managerial authority, this method will be a failure.
14. Management by objectives (MBO)
This method deals with determining objectives to be accomplished by the employee
within a certain period of time and assessing the degree of success in accomplishing
those objectives. This is a result oriented method. This focuses on results but not on
traits and behaviors.
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15. Behaviorally anchored rating scales (BARS)
This is a modern method. It focuses on behaviors or activities of employees rather than
traits and results. It reduces subjectivity in evaluation and minimizes weaknesses owing
to subjective criteria. This minimizes the errors such as leniency, halo effect and central
tendency and this method is appropriate for fulfilling development purposes. But this
method is costly and evaluation dimensions may miss the key components of the job.
16. Behavioral observation scales
In this method, the rater indicates on a scale how often the rater was actually observed
engaging in the specific behaviors. This minimizes the errors such as leniency, halo
effect and central tendency and this method is appropriate for fulfilling development
purposes. But this method is costly and evaluation dimensions may miss the key
components of the job.
(Opatha, 2002)
2.9 Issues regarding performance evaluation systems
1. Systems which have too many objectives make them cumbersome and
generate conflict between objectives.
2. Recurring problems with regard to the handling of feedback.
3. Employers often fail to distinguish between the need of employees to
receive praise and their ability to receive constructive criticism about their
work.
4. Systems that were once appropriate can also become obsolete either in part
or completely.
5. Appraisal systems also need to be congruent with related employer
initiatives.
6. The giving of constructive criticism can be one of the hardest parts of the
appraisal.
21
(Rees & Porter, 2003).
2.10 Reasons for unsuccessful performance evaluation systems
Evaluator errors
1. Halo effect
When an evaluator appraises an employee high or low on many or all criteria because
on one criterion this error occurs. This effect can contribute to the evaluation positively
or negatively.
2. Central tendency
The tendency of the evaluator to rate averagely on many or all performance evaluation
criteria. When there is a need to provide documentation for extremely high or low
ratings this error may occur.
3. Harshness and leniency
When the evaluator is too hard on evaluation it is the error of harshness and when the
evaluator is too easy on evaluation it is the error of leniency. When performance
evaluation standards are ambiguous both errors may occur and when the evaluator is a
highly qualified one the harshness error may happen.
4. Recency effect
When the evaluator’s ratings are influenced by results/behaviours done by the evaluee
near the end of the performance evaluation period this error occurs. Some employees try
to take advantage on tgis error by “apple polishing” their superior.
5. Personal prejudice
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In this error, excessively low or high ratings are given only to a certain evaluee because
of race, age, sex, religion, cast, personal relationship, jealousy and dislike.(Opatha,
2002).
Other errors
1. Failure to involve users in the planning stage.
2. Complexity of evaluation forms provokes resentment in users.
3. Absence of written information explaining the department’s appraisal
philosophy and providing detailed instructions for conducting appraisals.
4. Lack of continued commitment by the audit director.
5. Failure to train appraisers.
6. Lack of informal, timely feedback.
7. Failure to plan time for appraisals when planning an audit.
8. Missing incentives to prepare appraisals on time.
9. Failure to verify normal distribution of ratings periodically.
10. Failure to establish a clear link between evaluation results and personnel
and pay decisions. (Schwelger & Summers, 1994).
Evaluative appraisal is associated with negative appraisee reactions. Evaluative
appraisal, which differentiates and compares individual performance, can induce
competition among employees, and convey the idea that employees should outperform
others to survive in the organization (Cheng. Wu, & Leung, 2008).
2.11 Summary
This chapter described about performance evaluation, the definitions of performance
evaluation, the purposes of performance evaluation, contribution of performance
evaluation to human resource management functions, performance evaluation process,
essential Characteristics of a performance evaluation system, methods of performance
evaluation, issues regarding performance evaluation systems and the reasons for
unsuccessful performance evaluation systems.
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Chapter 03
Research Methodology
3.1 Introduction
This chapter includes details about the operationalisation and conceptualization of the
variables and the methodology. Under operationalisation and conceptualization, the
theoretical framework and the operationalisation of the variables would be discussed
and the methodology and the organizational details would be discussed under the
methodology part.
3.2 Operationalization and conceptualization of the variables
As per Prowse & Prowse (2009), performance appraisal system is a process of
systematic evaluation of individual performance linked to workplace behavior and/or
specific criteria. According to theory, purposes of performance evaluation can be
divided into two categories. That is management purpose and Informative Purpose.
Management purposes include administrative purposes and development purposes.
Administrative purposes can be defined as using performance evaluation information
for management functions and the development purpose is the information used for
management development. Informative purpose facilitates communication and informs
employees about their weaknesses and strengths. Performance evaluation details can
also be used for communication for man power improvement (Opatha, 2002).
3.2.1 Theoretical framework
In this research, the independent variable is the existing performance evaluation system
at National Water Supply and Drainage Board and the dependent variables are the
performance evaluation purposes. This study examines whether the existing
performance evaluation system in National Water Supply and Drainage Board enhances 24
the achievement of administrative Purposes, development Purposes and informative
purposes of performance evaluation.
Performance
evaluation
purposes
Existing performance evaluation system 1. Administrative
in National Water Supply and purposes
Drainage Board 2. Development
purposes
3. Informative
purposes
Figure 3.1
Conceptual framework
There are three hypotheses to be tested.
H1. There is a positive relationship between the existing performance
evaluation system and the achievement of Administrative purposes.
H2. There is a positive relationship between the existing performance
evaluation system and the achievement of Development purposes.
H3. There is a positive relationship between the existing performance
evaluation system and the achievement of Informative purposes.
Administrative purposes give the information needed for management of an
organization. That information can be used for functions such as, human power
planning (to develop skill inventories and management inventories), reward
management (to prepare wages, salaries and increments), management of promotions
(to identify their employees’ competency which can be considered in promotions),
administration of transfers, discipline administration (when determining the degree of
severity of disciplinary action.), selection (for validation of the methods used to select
25
employees), hiring (to evaluate the new employee during the probationary period) and
for management of labour management relationship.
Development purposes are used for training ( to identify the training needs), to assess
the success of training programs, for proper direction and for better productivity.
Objective and fair performance evaluation helps motivation of employees to achieve
results and also the labour management relationship will be enhanced. The final result
will be the improved productivity.
Informative purpose facilitates communication, describes the expectations of the
organization from the employee, informs employees about their weaknesses and
strengths, informs that the employees are appreciated and make them prepare for future
promotions. (Opatha, 2002)
3.2.2 Operationalization of the variables
Figure 3.2
Performance Evaluation System
In this research, the independent variable is the existing performance evaluation system
in national water supply and drainage board. In order to derive a general understanding
about the system, it has been divided into four dimensions as the timeliness of the
26
Performance Evaluation System
Timeliness of the system
Importance of the system to employees
Accuracy of the system
Employee satisfaction about the system
Administrative Development Informative
Documentation Training Needs
Superior support
system, employee satisfaction about the system, importance of the system to employees
and the accuracy of the system.
Performance evaluation purposes
Figure 3.3
Performance evaluation purposes
As per the research, the dependent variables are the purposes of the existing
performance evaluation system namely administrative, development and informative.
The administrative purposes will be measured through the questions based on the
documentation of the performance evaluation and on the effect of performance
evaluation to increments, promotions, transfers, disciplinary procedure and to the
probationary period. Questions based on training needs identification, superior
subordinate relationship and the measurement of the success of training through the
performance evaluation system will measure the development purposes. Informative
purposes will be measured based on the measurement of employee contribution,
identification of strengths and weaknesses, duties and responsibilities and superior
support to the performance of the employee through the performance evaluation system.
3.3 Methodology
27
Increments
Promotions
Transfers
Disciplinary procedure
Probationary period
Superior subordinaterelationship
Measurement of the success
of training
Measurement of employee contribution
Identification of strengths, weaknesses, duties and
responsibilities
The research was done according to the survey method with the deductive approach. A
cross-sectional survey was done by providing a questionnaire for a sample of 50 clerical
level employees from a population of 100 who employ at the personnel and
administration division of National Water Supply and Drainage Board. Through
questionnaires and interviews, primary data was gathered and through document
analysis and literature survey secondary data was gathered. The questionnaire is
prepared to measure the overall system of the national water supply and drainage board
and the three purposes of performance evaluation namely, administrative, development
and informative. The questionnaire has two parts in which the part I contains 04
questions on category scale and part II contains 21 questions on likert scale and finally
there is an open ended question to get their suggestions and ideas about the existing
performance evaluation system. The following table shows the related questions under
each dimension.
Dimension Relevant
question
number
Overall System
Timeliness of the system
Employee satisfaction about the system
Importance of the system to employees
Accuracy of the system
05
06
08
07, 20
Administrative Purpose
Documentation
Increments
Promotions
Transfers
Disciplinary Procedure
Probationary Period
09
10
11
12
13
14
Development Purpose
Training needs
Superior subordinate relationship
Measurement of the success of training
15
16, 18, 19
17
Informative Purpose
28
Measurement of employee contribution
Identification of strengths and weaknesses, duties and
responsibilities
Superior support
21
22, 23, 25
24
Table 3.1
Structure of Questionnaire
The scale to the questions in the questionnaire as follows.
Strongly Agree 05
Agree 04
Neither Agree nor Disagree 03
Disagree 02
Strongly Disagree 01
3.4 About the organization (National Water Supply and Drainage Board)
3.4.1 Introduction
The organization had its beginnings as a sub department under the Public Works
Department, for Water Supply and Drainage. In 1965, it became a division under the
Ministry of Local Government. From 1970, this division functioned as a separate
department under the Ministry of Irrigation, Power and Highways and remained so until
the present Board was established in January 1975 by an Act of Parliament. The
National Water Supply and Drainage Board (NWSDB), which presently functions under
the Ministry of Water Supply and Drainage, is the principal authority providing safe
drinking water and facilitating the provision of sanitation in Sri Lanka. In accordance
with the Board Act No 02 of 1974, several major Urban Water Supply Schemes
operated by Local Authorities were taken over by the National Water Supply and
Drainage Board to provide more coverage and improved service. Consumer metering
and billing commenced in 1982. Rural Water Supply and Sanitation programmes
including deep well programmes are also being implemented by the National Water
Supply and Drainage Board.
3.4.2 Vision29
“To be the most prestigious utility organization in Sri Lanka through industry and
service excellence”
3.4.3 Mission
“Serve the nation by providing sustainable water and sanitation solutions ensuring total
user satisfaction”
3.4.4 Goals
Goal 1 - Increase water supply and sanitation coverage
Goal 2 - Improve operational efficiency
Goal 3 - Increase commercial viability
Goal 4 - Ensure greater accountability and transparency
Goal 5- Promote Institutional Development
Goal 6 - Provide facilities and service support to rural and marginalized communities
3.4.5 Practice of Performance Evaluation by the organization
The Performance Evaluation is done annually by the graphic rating system. There are
two forms of performance evaluation, for employees who are grade nine (09) and above
grade nine (09). The form under grade nine (09) has been divided as clerical, technical
and labour.
Objectives of performance evaluation at National Water Supply and Drainage Board
Enhance the performance in order to increase the overall success of the
organization.
To plan out an effective human resource development.
For human resource planning
30
As a foundation to use in selection, promotion, transfers, termination and
incentives.
Performance Evaluation Procedure at National Water Supply and Drainage Board
Personnel officer assigns the subject clerk to fill the nominal information in the
performance evaluation form from the personal files.
Subject clerk sends performance evaluation forms to sectional heads.
The sectional heads assign the work to subject clerks to fill the details in the
performance evaluation form of the respective employee regarding to leaves, no
pay leaves disciplinary details etc.
Create a three member performance evaluation committee to assign the rank.
The performance evaluation committee assigns the ranks based on the data
filled.
Sectional heads verifies and checks the assigned rankings.
Performance evaluation forms are then sent to employee for agreement and
employee submits the duly filled performance evaluation forms back to the
sectional head.
The sectional head recommends and sends duly filled performance evaluation
forms to personnel and administration Division.
Based on the duly filled performance evaluation file, subject clerk prepares the
increments.
Then it is sent to assistant general manager (personnel and administration) and
from assistant general manager (personnel and administration) to deputy general
manager (personnel and administration) for final approval.
Then sends increment letters employee, Finance Division and to the personal
file.
3.5 Summary
This chapter discussed about the operationalisation and conceptualization of the
variables and the methodology. Under operationalisation and conceptualization, the
31
theoretical framework and the operationalisation of the variables aere discussed and the
methodology and the organizational details were discussed under the methodology part.
32
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