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7/28/2019 HRM Unit-5 Performance Appraisal
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UNIT-5PERFORMANCE APPRAISALSYSTEMS-MBO APPROACH,PERFORMANCE COUNSELLING&CAREER PLANNING
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PERFORMANCE APPRAISAL
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MEANINGPerformance Appraisal is a method of evaluating the behavior ofemployees in the work spot , including both quantitative &
qualitative aspects of job performance.
Performance refers to the degree of accomplishment of the tasks
that make an individuals job. It is how well an individual is
fulfilling the job demands.
Performance appraisal is a process of judging the value , excellent
qualities or status of a person. It is a process of collecting , analyzing and
evaluating data relative to job behavior and results of individual.
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DEFINITIONSPerformance Appraisal is an objective assessment of anindividuals performance against well defined benchmarks.
Performance Appraisal is the systematic evaluation of theindividual with respect to his or her Performance on the job and
his or her potential for development.
Performance Appraisal is the systematic evaluation of present &potential capabilities of personnel and employees by thesuperiors, superiors superior or a professional from outside.
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DEFINITIONS Performance appraisal is a process of evaluating
work performance of the personnel so as facilitate
individual and organizational effectiveness.
"Performance appraisal is the process of assessing
quantitative and qualitative aspects of an employee's
job performance."
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Six criterion on which the value of Performance Appraisal
is assessed-
QualityQuantity
Timeliness
Cost-Effectiveness
Need for Supervision
Interpersonal Impact
The other terms used for Performance Appraisal are-Performance Rating
Employee Assessment
Employee Performance ReviewPersonnel Appraisal
Performance Evaluation
Employee Evaluation and Merit Rating
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Copyright (c) 2005 Prentice Hall7
BENEFITS OF
PERFORMANCE APPRAISALAppraisal provides information about the performance ofindividuals employed in an organization. Such
information is useful for any purpose like administration,
placement, financial rewards, and determination of
grades, incentives, or compensation
Performance Appraisal is the assessment of an
individual's performance in a systematic way, theperformance being measured against factors such as:-
JOBKNOWLEDGEQUALITY &QUANTITY OF OUTPUT INITIATIVE
LEADERSHIPABILITIES
SUPERVISION &DEPENDABILITY LEADERSHIP
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Performance Appraisal is not
done in
isolation. It is linked to JobAnalysis.
Job Analysis Performance Standards Performance Appraisal
Describes work and personnel
Requirement of a particular job
Translates job requirements
Into levels of acceptable or
unacceptable performance.
Describe the job relevant
Strengths and weaknesses
Of each individual
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OBJECTIVES OF PERFORMANCEAPPRAISAL To help the employees to overcome his weakness & improve his strengths so
as to enable him to achieve the desired performance.
To generate adequate feedback & guidance from the immediate superior.
To effect promotions based on competence and performance.
To assess the training and development needs of employees.
To decide upon a pay scale where regular pay scales have not been fixed.
To let the employees know where they stand in so far as their performance is
concerned and assist them with constructive criticism and guidance for the
purpose of their development.
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OBJECTIVES OFPERFORMANCE APPRAISALTo help in creating a desirable culture & tradition in the organization.
To generate significant , relevant & valid information aboutemployees.
To facilitate fair & equitable compensation based on performance.
To improve communication- Performance Appraisal provides aformat for dialogue between the superior and the subordinate, andimproves understanding of personal goal and concerns.
PA is used to determine whether HR programs such as selection,training and transfers have been effective or not .
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PERFORMANCE
APPRAISAL
Copyright (c) 2005 Prentice Hall11
OBJECTIVES
OFPERFORMANCE
APPRAISAL
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USES OF PERFORMANCEAPPRAISALIt serves as a basis for improving the quality andquantity of performance of the executives in theirpresent work.
It helps to identify the strengths and weaknesses andto introduce methods to make the best use of thestrength and to overcome weaknesses.
It enables to locate the problems which may stand onthe way of performances so that corrective action canbe taken to improve the performance.
Appraisal provide the basis for promotion.
Helps in compensating grade and incentives.
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PERFORMANCEAPPRAISAL : AS AMANAGEMENT TOOLEssential for the Effective Management
Evaluation of Staff
Conducted annually
Each individual's performance againstobjectives and standards for the tradingyear
Career and Succession Planning
Staff motivation, attitude and behaviordevelopment
Vital for managing the performance ofpeople and organizations.
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APPRAISALPROCESSEstablish Performance Standard
Communicate Performance Expectations to Employees
Measure Actual Performance
Compare Actual Performance with Standards
Discuss the Appraisal with the Employees
If Necessary ,Initiate Corrective Action
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APPRAISAL OF POTENTIAL ATPHILIPSSandoz , Philips and P&G etc. today all the
companies are using various Performance
Appraisal methods.
At Philips a two by two matrix is used to
assess performance and potential of
employees. The vertical axis measurespotential while the horizontal axis measures
the actual performance.
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Problem
children
stars
?
Plan Separation
Solid
citizens
Lo
w
POTENTIAL
Hig
h
Low PERFORMANCE High
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Low potential-low performance- The employees are considered asquestion marks.
High potential-low performance- These are problem children
High potential-high performance- These are the star performers.
Low potential-high performance- These are called the solid citizens.
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Appraisal Methods- The Journey
How management can actually establish
performance standards and devise
instruments that can be used to measure
and appraise an employees
performance?
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TRADITIONALPERFORMANCE RATINGCompletion of a form by the immediate superior/ committee of
supervisors of the individual who is being evaluated.
Criticism:
Traditional Performance Rating emphasis on personality traits
instead of job performance.
There is a divergence of opinion among raters as what is meant by
standards such as (unsatisfactory, good)
There may be divergent perceptions and accordingly different
standard of judgment among raters.The raters may be susceptive to excessive lienency/ strictness
error/central tendency/halo error
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NEWER RATINGMETHODSThree different approaches exists for doing appraisals. Employee
can be appraised against:
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Absolute Standards
Relative Standards
Objectives
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Absolute Standards
Essay Appraisal
Critical Incident Appraisal
Checklist
Graphic Rating Scale
Behaviorally Anchored Rating System
(BARS)
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ESSAY APPRAISAL
Rater write a narrative
describing an employees
strength, weakness, pastperformance, potential and
suggestion for improvement.
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CRITICAL INCIDENT
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CRITICAL INCIDENT
APPRAISAL
Raters give attention on those critical or key behaviors that
make the difference between doing a job effectively or
ineffectively.
Drawbacks:
Appraisers are required to regularly write these incidents
(daily/weekly)---- Time Consuming/ Boring.
Suffer from same comparison problem which is their in
Essay Appraisal.
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CHECKLIST
Evaluator uses a list of behavioral description and checks off
these behaviors that apply to the employee.
In this method Rater (Manager) & Scorer (Staff Personnel
Dept.) are different
Reduces biasness
If job categories are more, than this method is insufficient.
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GRAPHIC RATING SCALE
This is the oldest and widely used techniques. This method is alsoknown as linear rating scale or simple rating scale. In this method
there is Performance factors and a scale to evaluate performance.
The appraisers are supplied with printed forms, one for each
employee. These forms contain a number of objectives, behavior
and trait-based qualities and characters to be rated like quality ofwork, quantity of work, dependability, initiative, attitude etc. in the
case of workers and analytical ability, creative ability, initiative,
leadership qualities, emotional stability in the case of managerial
personnel.
Comparability with other individuals in diverse job categories is
possible.
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BEHAVIORALLY ANCHORED
RATING SYSTEM (BARS)
These scales combine major elements from the Critical Incident &
Graphic Rating Scale approaches.
The appraiser rates the employees based on items along a
continuum, but the points are examples of actual behavior on the
job rather than general description or traits.BARS specify definite, observable, & measurable job behavior.
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BARSIndividuals/Participants
give specific illustrations
of effective/ineffective
behavior regarding each
particular dimension
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These Performance
Dimensions are translated
intoAppropriate
Performance
Dimensions
Anchor
Evaluatio
n
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Relative Standards
Group Order Ranking
Individual Ranking
Paired Comparison
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RELATIVE STANDARDS
Individuals are compared against other individuals.
Group Order Ranking: Evaluators are asked to rank the participants in the
top 5 % , the next 5 %, the next 15 % and so forth.
Individual Ranking: Evaluator list the employees in an order from highest to
lowest.
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PAIRED COMPARISON
The paired comparison method is calculated by taking the total of
[n(n-1)]/2 comparisons. A score is obtained for each employee by
simply counting the number of pairs in which the individual is the
preferred member. It ranks each individual in relationship to all
others on a one-on one basis. If ten people are being evaluated,the first person is compared, one by one , with each of the other
nine pairs is tabulated. Each of the remaining nine persons, in
turn, is compared in the same way, and a ranking is evolved by the
greatest number of preferred victories. This method ensures that
each employee is compared against every other, but the methodcan become unwieldy when large numbers of employees are
being compared.
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RESULT ORIENTED APPRAISAL
OR
MANAGEMENT BY
OBJECTIVES (MBO)
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RESULT ORIENTEDAPPRAISAL/MBOResult Oriented Appraisal are based on the concrete
performance targets which are established by superior and
subordinates jointly.
MBO is a process whereby the superior and subordinate
managers of an organization jointly identify its commongoals, define each individuals major area of responsibility in
term of results expected of him and use these measures as
guides for operating the unit and assessing the contribution
of each of its members.
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MBOThe principle behind Management by Objectives (MBO) is to
make sure that everybody within the organization has a clear
understanding of the aims, or objectives, of that organization,
as well as awareness of their own roles and responsibilities
in achieving those aims.
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MBOS FOUR STAGESJointly determine the goals and the
objectives to be achieved in the KRA (Key Result Area)
Jointly formulate the action plan
Jointly implement the plan
Jointly evaluate or reviews their
performance
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STEPS OF MBOMBO consists of four steps: Goal Setting, Action
Planning, Self-Control and Periodic Reviews
1. Goal Setting : Organizations overall objectives are used
as guidelines from which departmental and individualobjectives are set.
2. Action Planning: The means are determined for achieving
the ends establishing in goal setting.(The realistic plans are
developed.)
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STEPS OF MBO3.Self-Control: It refers to systematic monitoring and
measuring performance.(Individual review their own
performance)
4.Periodic Review: Corrective actions are initiated when
behavior deviates from the standards established in the goal
setting phase.
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MBO OFFERSSubordinates are motivated
Better relationship between managers andsubordinates
Focuses in the results and not on means
Minimize unnecessary formalities andprocedures.
Focuses on KRA
helps to analyze the role of the managersand the subordinates
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ADVANTAGES OFMBOPromote objectivity : Provides a way for measuring
objectively the performance of subordinates
Improved superior-subordinate relationship
Stimulate Self-Motivation /Self-Discipline/Self-ControlAdds in overall Effective Planning
Fosters increased competence , personal growth and
opportunity for career growth.
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LIMITATIONSMBO is unlikely to effective in an environment where
management has little trust in its employees
(Autocratically decisions are preferred)
The amount Time needed to implement, maintain an MBO
process cause problems.
Involves lot of paper work, meetings and discussions
Not useful for arriving at emergency decisions
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360 APPRAISAL
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360 APPRAISALWhich is the most effective appraisal method ?
If performance appraisal is conducted properlyand clearly explained to all the employees it
becomes effective360 degree appraisal involve the appraisereceiving feedback from various people
Respondents can be the up-linemanagers/executives, subordinate staff, teammembers, other staff, customers, suppliers -anyone
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FEATURES OF EFFECTIVE360 APPRAISALDo not restrict feedback to peers and managers
Feedback system can be developed by running a half-day or full
day workshop depending on extent and complexity
It is advisable that no aspects of 360 feedback should ever bemandatory
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360 APPRAISALAppraisals help develop individuals,
improve organizational performance, and
feed into business planning.
When designing or planning and
conducting appraisals, the objective should
be to help the 'whole-person' to grow
360 degree appraisals are a powerfuldevelopmental method.
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FACTORS
THAT CAN DISTORT
APPRAISALCOMPLETELY ERROR FREEPERFORMANCE APPRAISAL IS ANIDEALIZED MODELWITH ALL ACTUAL APPRAISALSBEING SOMETHING LESS THANTHIS OPTIMUM LEVELTHE NUMBER OF FACTORS THATSIGNIFICANTLY IMPEDE OBJECTIVEEVALUATION ARE THE FACTORSTHAT DISTORT APPRAISAL.
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DISTORT
PERFORMANCE APPRAISAL
Leniency Error
Halo Error
Similarity Error
Central Tendency
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LENIENCY ERROR
WHEN THE EVALUATORS AREPOSITIVELY LENIENT IN THEIRAPPRAISAL, AN INDIVIDUALSPERFORMANCE BECOME OVERSTATED.NEGATIVE LENIENCY ERRORUNDER STATE PERFORMANCE,GIVING THE INDIVIDUAL ALOWER APPRAISAL .
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HALO ERROR
THE HALO EFFECT OR ERROR IS ATENDENCY TO RATE HIGH OR LOW ONALL FACTORS DUE TO IMPRESSION OFHIGH OR LOW RATING ON SOMESPECIFIC FACTOR
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SIMILARITY ERROR
WHEN THE EVALUATORS RATE OTHERPEOPLE IN THE SAME WAY THAT THEEVALUATORS PERCEIVE THEMSELVES,THEY ARE MAKING A SIMILARITYERROR. BASED ON THE PERCEPTION
THAT EVALUATOR HAVE THEMSELVES.
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CENTRAL TENDENCY
CENTRAL TENDENCY IS THE RELUCTANCETO MAKE EXTREME RATING (IN EITHERDIRECTION) THE IN ABILITY TODISTINGUISH BETWEEN AND AMONGRATES; A FORM OF RANGE RESTRICTION.
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CAREER PLANNING
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CAREER PLANNINGCareer planning is the process by which
one selects career goals and the path to
these goals.
Career management is the process of
designing & implementing goals, plans &
strategies to enable the organization tosatisfy employee needs while allowing
individuals to achieve their career goals.
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NEED FOR CAREERPLANNINGTo attract competent persons and to retain
them in the organization.
To provide suitable promotional opportunities.
To enable the employees to develop & makethem ready to meet the future challenges.
To correct employee placement.
To reduce employee dissatisfaction & turnover.
To improve motivation & morale.
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ADVANTAGES OF CAREERPLANNINGThe process of career planning helps the individual
to have the knowledge of various careeropportunities, his priorities etc.
This knowledge helps him select the career whichis suitable to his life styles, preferences, familyenvironment, scope for self-development etc.
Internal promotions, upgradation & transfersmotivate the employees, boost up their morale& also result in increased job satisfaction.
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For Individuals:-
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FOR ORGANIZATIONSEfficient career planning & development ensures the
availability of human resources with required
skill, knowledge & talent.
The efficient policies & practices improve the
organization's ability to attract & retain highly
skilled & talent employees.
Protecting employees interest results in promoting
organizational goodwill. 54
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CAREER STAGESExploration
Establishment
Mid-Career
Late Career
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CAREER STAGESExploration:- Exploration is a career stage that
usually ends in ones mid twenties as onemakes the transition from college to work.This stage has the least relevance from theorganizational point of view as it happensprior to employment.
Establishment:- It is a career stage in whichone begins to search for work. It includesgetting ones first job. Search for a right jobis a difficult task. The problems of this
stage include making mistakes, learningfrom those mistakes & assuming increasedresponsibilities.
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CAREER STAGESMid-career stage:- This stage is marked by a continuous
improvement in performance, leveling off in performance orthe start of deterioration in performance.
Late career:- A career stage in which one is no longer learningabout his or her job. He is also not expected to trying to doout his/her levels of performance from previous years. Thisstage is usually a pleasant stage.
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LIMITATIONS OF CAREER
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PLANNINGDual Career Families:- With the increase in career
orientation among women, number of femaleemployees is on increase. At times it affectsemployee turnover.
Low Ceiling Careers:- Some careers do not have scopefor much advancement. Employees cannot getpromotions despite their career plans &development in such jobs.
Declining career opportunities:- Career opportunities forcertain categories reach the declining stage due tothe influence of the technological or economicfactors.
e.g. career opportunities forStatisticians declined dueto computerization.
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PERFORMANCECOUNSELLING
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COUNSELLINGCounseling is discussion of a problem that usually has
emotional content with an employee in order to help the
employee cope with it better. It seeks to improve employees
mental health.
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CHARACTERISTICSCounseling is an exchange of ideas and feelings between two
people.
It tries to improve organizational performance by helping the
employees to cope with the problems.
It involves both job and personal problems.It is usually confidential in order to have free talk and
discussions.
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NEED FORCOUNSELLINGNeed for employee counseling arises due to various causes-(
Job complexity) negative-emotions,
conflicts, over-work load, and health problems
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FUNCTIONS OF COUNSELLINGAdvice: One of important functions is to
offer advice to the counselee byunderstanding the problem of thecounselee and suggesting a course of
action.Communication: Counseling will improve
both upward and downwardcommunication abilities of the
counselee.
Release of Emotional Tension: People feelemotional release from their frustrationafter counseling.
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TYPES OF COUNSELLINGDirective Counseling: It is full counseling. It is theprocess of listening to an employees problem,
deciding with employee what should be done andtelling and motivating the employee to do it. For e.g.advice, reassurance.
Non Directive Counseling: It is the process of skillfullylistening and encouraging a counselee to explaintroublesome problems, understand them anddetermine appropriate solutions.
Participative Counseling: Participative is a counselor-counselee relationship that establishes acooperative exchange of ideas to help solve anemployees problems. They both mutually applytheir different knowledge, perceptions, and skills to
problems and find solutions. 64
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CASE STUDY
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YOU GET WHAT YOU PAY FORFRANK HENDERSON IS THE MANAGER OFGENERAL ELECTRICS APPLIANCE DIVISION.
EACH APRIL, HE MUST EVALUATE ALL OF HISSUBORDINATES TO DECIDE WHO IS TORECEIVE A MERIT INCREASE FOR THEUPCOMING FISCAL YEAR. BUT EACH YEARTHESE EMPLOYEES COMPLAIN ABOUT HOWTHEY ARE EVALUATED, HOW MERIT MONEY ISDISPERSED, AND WHAT CRITERIA ARE USED
FOR THE EVALUATIONS. HOWEVER, DURINGTHE PAST TWO YEARS THERE HAS BEEN ATREMENDOUS EMPHASIS ON QUALITY OFPRODUCTION. A REVIEW OF THE MERITRECIPIENTS REVEALS THAT THESE PEOPLEWERE THE ONES WHO HAD THE BESTQUALITY RECORDS. BUT MANY OF THEEMPLOYEES FELT THAT QUALITY SHOULDNOT BE THE DETERMINING FACTOR. AT ANEMPLOYEE FORUM, ONE OF THE SENIORMEMBERS REMARKED
CASE STUDY
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How can frank now reward quality? What has
happened to production numbers? Anotheremployee agreed and stated: This quality gameis okay for some, but what about overallproduction? It seems to me that if I will only be
rewarded for quality, then I should produce afew items but make them perfect. After hearingsuch criticism, Frank was quite upset. He wasnot trying to cause chaos in his evaluations, nor
was he attempting to hurt anyone. Unfortunately,what was originally intended to be an evaluationsystem had just become a nuisance.
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What is the major problem with Franks evaluation system?
Describe a performance evaluation system that you could
recommend to Frank for evaluating a worker on the
production line?
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CHALLENGES OFPERFORMANCE APPRAISALCreate a culture of excellence that inspires
every employee to improve and lend himself or
herself to be assessed.
Align organizational objectives to individualaspirations.
Clear growth plans for talented individuals.
Provide new challenges to rejuvenate careersthat have reached the plateau stage.
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Empower employees to make decisions
without the fear of failing.
Embed teamwork in all operational
processes.
LEGAL ISSUES ASSOCIATED
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WITH PERFORMANCEAPPRAISALPerformance Appraisal data are used to make many important HRdecisions. The Appraisal system is a common target of legaldisputes by employees involving charges of unfairness and bias.
There are several recommendations to assist employees inconducting fair Performance Appraisal and avoiding legal suits.
Legally defensible Appraisal procedure- All personnel
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decisions should be based on a formal standardizedPerformance Appraisal system.
Legally defensible Appraisal content- Any PerformanceAppraisal content should be based on job analysis andAppraisals based on traits should be avoided.
L ll d f ibl d t ti f A i l lt A
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Legally defensible documentation of Appraisal results- Athoroughly written record of evidence leading to terminationdecisions should be maintained.
Legally defensible raters-The raters should be trained howtouse an Appraisal system.
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THE END