Hrm Lecture 8

7/30/2019 Hrm Lecture 8

1/10


2/10

Leniency or severity: Leniency or severity on the part of the rater makes the assessment

subjective. Subjective assessment defeats the very purpose of performance appraisal.

Central Tendency: This occurs when employees are incorrectly rated near the average or middle

of the scale. The attitude of the rater is to play safe.

Halo Error: A halo error occurs when aspect of an individuals performance influences the

evaluation of the entire performance of the individual, just as the assessment of a student in his

or her examination being influenced by the opening paragraph of every answer.

Rater Effect: This includes favoritism, stereotyping and hostility

Primacy and recency effects: The raters ratings are highly influenced either by behavior

exhibited by the rate during the early stages of the review period (primacy) or outcomes, or

behavior exhibited by the rate near the end of the review period (recency).

Perceptual Set: This occurs when the raters assessment is influenced by previously held beliefs.If the supervisor, for example, has a belief that employees hailing from one particular region are

intelligent and hard working, his subsequent rating of an employee hailing from that region tends

to be favorably high.

Performance Dimension order: Two or more dimensions on a performance instrument follow or

closely follow each other and both describe or rotate to a similar quality. The rater rates the first

dimension accurately and then rates the second dimension similar to the first because of their

proximity.

Spillover effect: This refers to allowing past performance appraisal ratings to unjustifiably

influence current ratings.

Status effect: It refers to overrating of employees in higher-level job or jobs held in high esteem,

and under-rating employees in lower-level job or jobs held in low esteem.

The difference between Performance Appraisal and Performance Management is as listed below:

Performance appraisal is but only one part of the bigger process of performance

management. So, the short answer is that performance appraisal (annual review,

employee review) fits under performance management.

What's critical to understand is that performance appraisal, on its own, doesn't result in

great gains in performance or productivity. In fact, it's probably the least important part

of the larger performance management enterprise.

Hence, we have discussed the performance appraisal system with its objectives, sources of errors

in the appraisal process and the difference between performance Appraisal & Performance

management Systems in an organization.


3/10

Performance management and Performance appraisal are two terms that are often used in thefield of the evaluation of employee efficiency. These two procedures differ in terms of their

concept and connotations.

Performance appraisal consists in the setting of job standards and evaluation of the pastperformance. It is understood that the evaluation is carried out based on the job standards that

have earlier been set. On the other hand performance management concentrates on managing the

performance in state time so that the performance can reach the expected level. This is one of the

main differences between performance management and performance appraisal.

In short it can be said that both are two methods of evaluation of the performance of employee in

a firm or in an organization. Between the two it can be said that performance management is the

older and traditional approach. On the other hand performance appraisal is a sort modern method

or approach of evaluating the performance of an employee of a firm or an organization.

It is interesting to note that both these types are employed by the company or a firm in a bid to

evaluate the performance skills of its employees especially in the present scenario characterized

by competitive nature of economy and rapid changes in the environment.

Performance appraisal is a limited function in the sense that it concentrates only on theevaluation of the past performances and it is usually done once or at the most two times in a year.

In other words it can be said that performance appraisal is all about distinct staff activity.

On the other hand performance management is a continuous function in the sense that it is done

in an on-going fashion to ensure that the employees discharge their capabilities in such a way

that targets are achieved in real-time basis. Hence it is often said that performance managementis continuous in purpose whereas performance appraisal is occasional in purpose.

Both the methods differ in terms of their methodology too. Performance appraisal is more formal

and structural in nature. On the other hand performance management is more casual and flexiblein nature. This is also an interesting difference between the two methods of evaluation.

Performance management is more customized for employees work. On the other hand

performance appraisal is more standardized based on the designation of the employee of the

firm.

Q. 2) 360o appraisal mostly can do away with biased approach while assessing an employee.

Do you agree with the above statement? Give your views. (20M)

Factors Linked to Success


4/10

Organizations who experience success with the 360-degree feedback methods have many

environmental attributes present. Some of these are:

Organizational climate fosters individual growth

Criticisms are seen as opportunities for improvement (Randel, A., 2004)

Proper framing of feedback method by management

Assurance that feedback will be kept confidential

Development of feedback tool based on organizational goals and values

Feedback tool includes area for comments (Hoffmanner, A., 2004)

Brief workers, evaluators and supervisors about purpose, uses of data and methods of

survey prior to distribution of tool

Train workers in appropriate methods to give and receive feedback

Support feedback with back-up services or customized coaching

Advantages of 360 Degree Feedback

It is an effective medium for improving customer service and the inputs quality to the

internal customers.

It encourages participation of all and thus makes HR decisions more qualitative.

It pinpoints the favoritism and biases of the supervisors present in conventional appraisal

systems.

The employees find 360 degree feedback more acceptable than the traditional feedback

approaches.

360 degree feedback is more impartial and objective than a one-to-one assessment of

employee traits.

It concentrates and stresses upon internal customer satisfaction.

It broadens the scope for employees to get various says for enhancing their job role,

performance, and views.

It can act as a supplement and not replacement to the conventional appraisal system.

It can be motivating for the employees who undervalue themselves.

It encourages teamwork.

It is more credible as various people give almost same feedback from various sources.

It brings into limelight the areas of employee development as it confirms the employeestrengths and identifies his weaknesses on which he can work upon.


5/10

It creates an environment of trust and loyalty in an organization.

The use of 360-degree feedback has grown dramatically in recent years. According to HR

consulting firm William M. Mercer, 40 percent of the companies used 360-degree feedback in

19995; by 2000, this figure jumped to 65 percent.

The premise behind 360-degree feedback is logical: The people who work most closely with an

employee see that persons behavior in settings and circumstances that a supervisor may not.

And, in theory, the more complete insight into an employees performance, the more likely he or

she will understand what needs to be improved and how.

The theory is very promising. The reality, on the other hand, is another matter.

Watson Wyatts 2001 HCI report revealed that companies using 360-degree feedback have lower

market value. According to the study, companies that use peer review have a market value that is

4.9 percent lower than similarly situated companies that dont use peer review. Likewise,

companies that allow employees to evaluate their mangers are valued 5.7 per cent lower than

similar firms that dont.

Taken together, these practices are associated with a 10.6 percent decline in shareholder value.

The HCI study is not the only indicator that 360-degere feedback programmes may be failing to

match their promise. Researchers and formerly strong advocates of 360-degree feedback have

begun to raise questions. Jai Ghorpade, a professor of management at San Diago State

University, wrote in the Academy of Management Executive that, while it delivers valuable

feedback, the 360-degree concept has serious problems relating to privacy, validity andeffectiveness.

Ghorpade also reported that out of more than 600 feedback studies, one-third found

improvements in performance, one-third reported decreases in performance and the rest reported

no impact at all.

John Sullivan, professor of Humana resource management at San Francisco State University ,

says there is no data showing that [360-degree feedback] actually improves productivity,

increases retention, decreases grievances or is superior to forced ranking and standard

performance appraisal systems. It sounds good, but there is no proof it works.

Why is 360-degree feedback failing to live up to its potential? For starters, giving effective

appraisals is a difficult task. Unless every one participating in a 360-degree programme is trained

on the art of giving and receiving feedback, the process can lead to uncertainty and conflict

among team members.


6/10

Another issue is that here may be a gap between an organizations business objectives and what

360-degree feedback programme measures. Typical 360-degree feedback programme assesses

competencies that are not directly related to business results or are so broad that they arent

relevant to the average employee.

The time and cost associated with 360-degree feedback also are stumbling blocks. By trying tocapture every nuance of a workers performance, many 30-degree feedback programmes have

become so complex that they require a much greater investment in time and money that they can

return.

Another common problem: Reviewers and those being reviewed fail to follow up after feedback.

When there are no consequences for poor performance which often is the case with 360-degree

reviews performance wont change.

Thus, although it may do away with biased approach, performance may or may not change.

Q. 3) Write a short note on Assessment centre (10 M)

The Assessment centre concept was initially applied to military situations by Simoniet in the

German Army in the 1930s and the War office Selection Board of the British Army in the 1960s.

The purpose of this method was and is to test candidates in a social situation, using a number of

assessors and a variety of procedures. The most important feature of the assessment centre is job-

related simulations. Assessment centres are used for the following purposes:

1. To measure potential for first level supervision, sales and upper management positions; and

also for higher levels of management for development purposes.

2. To determine individual training and development needs of employees.

3. To select recent college students for entry level positions.

4. To provide more accurate human resource planning information.

5. To make an early determination of personnel.

6. To assist in implementing affirmative action goals.

Procedure: First, a leadership group is established; each member supporting a predefined

position, but the group must arrive at a consensus. Then a task-force is used with an appointed

leader, who decides on a course of action. Simulation games and in-basket exercises are used to

test organizational and planning abilities. Oral report is made by the candidate, which tests his

communication skills and straight into his present position. Personal interviews and projective


7/10

tests are used to assess work motivation, career orientation, and dependence on others. Paper and

pencil tests measure intellectual ability.

The duration of Assessment centre programme varies with the persons. For example, centres

designed for selection of first-line supervisors, sales personnel, and management trainees

generally last for a day or less; while those used for higher-level managers may run for two orthree days or longer if used for developmental and not for selection purposes.

Assessment centre ratings are said to be strongly influenced by the participants interpersonal

skills, judges tend to evaluate the quality of the individuals social skills rather than quality of the

decisions themselves.

Q. 4) Write a short note on Ethics of Appraisal.(7M)

In any performance appraisal, due consideration must be given to the ethics of appraisal, failingwhich many organizational problems may crop up and the very purpose of appraisal may be

defeated. In this connection, M.S. Kellogg has suggested the following dos and donts.

i. Dont appraise without knowing why the appraisal is needed;

ii. Appraise on the basis of representative information;

iii. Appraise on the basis of sufficient information;

iv. Appraise on the basis of relevant information;

v. Be honest on your assessment of all the facts you have obtained;

vi. Dont write one thing and say another;

vii. In offering an appraisal, make it plain that this is only your personal opinion of the facts as

you see them;

viii. Pass on appraisal information only to those who have good reason to want it;

ix. Dont imply the existence of an appraisal that has not been made;

x. Dont accept anothers appraisal without knowing the basis on which it was made.

Kellogg maintains that these ethical standards are most certain to be met if appraisals are

accomplished by such qualifiers as:

i. The fact on which an appraisal is based;

ii The time period covered;


8/10

iii. The purpose for which an appraisal is made;

iv. The situational factors which shed light on the facts presented;

v. The nature of the appraisers working relationship with the appraised; and

vi. An explanation of how and where the facts were obtained.

Q. 5) Explain the steps in MBO and assess the strengths & weaknesses. (20M)

It was Peter F. Drucker who first gave the concept of MBO to the world way back in 1954 when

his The Practice of Management was first published. The MBO concept, as was conceived by

Drucker, reflects a management philosophy which values and utilizes employee contributions.

Application of MBO in the field of performance appraisal is a recent thinking.

How MBO works can be described in four steps:

The first step is to establish the goals each subordinate is to attain. In some organizations,superiors and subordinates work together to establish goals for subordinates. The goals typically

refer to the desired outcome to be achieved. These goals can then be used to evaluate employee

performance.

The second step involves setting the performance standard for the subordinates in a previously

arranged time period. As subordinates perform, they know fairly well what there is to do, what

has been done, and what remains to be done.

In the third step, the actual level of goal attainment is compared with the goals agreed upon. The

evaluator explores reasons for the goals that were not met and for the goals that were exceeded.This step helps determine possible training needs. It also alerts the superior to conditions in the

organization that may affect a subordinate but over which a subordinate has no control.

The final step involves establishing new goals and, possibly, new strategies for goals not

previously attained. At this point, subordinate and superior involvement in goal-setting may

change. Subordinates who successfully reach the established goals may be allowed to participate

in the goal-setting process the next time. The process is repeated.

As with other approaches, MBO too has been criticized. One comment made against the

approach is that it is not applicable to all jobs in all organizations. Jobs with little or no

flexibility, such as assembly-line work, are not compatible with MBO. An assembly-line worker

usually has so little job flexibility that the performance standards and objectives are already

determined.

The MBO process seems to be most useful with managerial personnel and employees who have

a fairly wide range of flexibility and self-control in their jobs. Besides, when the results of an

MBO system are to be used to allocate organizational rewards, employees may be less likely to


9/10

establish challenging goals goals they are confident that they can accomplish. Further, the

allocation of merit pay on a semi-annual or annual basis may encourage the setting up of goals

with short term horizons to the disadvantage of important long-term goals.

Benefits of an MBO Programme:

1. MBO helps and increases employee motivation because it relates overall goals to the

individuals goals; and helps to increase an employees understanding of where the organization

is and where it is heading.

2. Managers are more likely to compete with themselves than with other managers. This kind of

evaluation can reduce internal conflicts that often arise when managers compete with each other

to obtain scarce resources.

3. MBO results in a means ends chain. Management at succeedingly lower levels in the

organization established targets which are integrated with those at the next higher level.

4. MBO reduces role conflict and ambiguity. Role conflict results when a person is faced with

conflicting demands from two or more supervisors; and role ambiguity exists when a person is

uncertain as to how he will be evaluated, or what he has to achieve. Since MBO aims at

providing clear targets and their order or priority, it reduces both these situations.

5. MBO provides more objective appraisal criteria the targets that emerge from the MBO process

provide a sound set of criteria for evaluating the managers performance.

6. MBO forces and aids in planning: By forcing top management to establish a strategy and

goals for the entire organization; and by requiring other managers to set their targets and plan

how to reach them.

7. MBO identifies problems better and early. Frequent performance review sessions make this

possible.

8. MBO identifies performance deficiencies and enables the management and the employees to

set individualized self-improvement goals and thus proves effective in training and development

of people.

9. MBO helps the individual manager to develop personal leadership, especially the skills of

listening, planning, counseling, motivating and evaluating.

However, MBO suffers from certain drawbacks, such as:

1. MBO programme takes a great deal of time, energy and form completing on the part of

managers. It requires a great deal of investment of the top managements time and effort before it

arrives at realistic targets and reviews the performance.


10/10

2. MBO is far from panacea. Those executives who have been involved very often find it

difficult to apply MBO concepts to their own work habits.

3. In some areas, such as cutting costs or increasing sales, measuring performance is a straight

forward and more or less objective matter.

4. Many times, neither the managers know the rationale and value of MBO, nor the subordinates

are clear about the goals.

5. There is sometimes a tug of war in which the subordinate tries to set the lowest targets

possible and the supervisor the highest.

MBO can thus be an effective technique for performance evaluation and for motivating

subordinates, by developing communication between executives at all levels.

Documents

Hrm Lecture 8