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Performance Appraisal
Compiled by
Dr. M.Venkatesan
Performance Appraisal
Systematic assessment and descriptions of an employee’s accomplishments in the assigned tasks and assessment of job related strengths and weaknesses.
Why appraisal?
Organization needs to know how an employee has performed just as an employee needs to know how his performance has been viewed by the organization.
Multiple Objectives
It provides inputs to
a. Administration – for pay & promotion decision.
b. Employees on his strengths & weaknesses
c. Training, Counseling, Career Planning and Succession Planning Systems
d. Organization restructuring issues
Appraisal Methods
APPRIASAL METHODS
ObjectivesAbsolute MethodRelative Standards
Absolute Methods
Essay type Critical Incident Appraisal Checklist Graphic Rating Scale Forced Choice Behaviourally Anchored Rating Scales
(BARS)
Relative Standards
Group Order Ranking Top one fifth Second one fifth
Individual Ranking Paired Comparison
by taking total of [n(n-1)]/2
Objectives
MBO Expression of expectations before beginning of
appraisal year Periodic reviews and feedback Year end data collection, final appraisal &
feedback Self Appraisal Appraisal discussion and final appraisals
Objectives
360 Appraisal Inputs from appraisers, peers, subordinates and
customers outside organizations.
Problems in Performance Appraisal1. Relating to System-
a. How to evolve measure to assess managerial tasks.
b. Generate data on performance
c. Understanding of system at the top management level.
d. Reliable technique for measuring comparative merit and performance.
Problems in Performance Appraisal2. Relating to Appraiser-
a. Playing God creates anxiety.
b. Evaluation of personality traits.
c. Bias and halo effect
d. Recency of incidents
e. Central Tendency
f. Too harsh too easy
Problems in Performance Appraisal3. Relating to Appraisee-
His perspective on system depends on how he earns recognition vis-à-vis others. His criteria are rarely explicit.
Some Persistent issues
1. Linkage with
a. Development plans
b. Reward Decisions
2. What gets evaluated: Performance or Person
3. Ethical issues in evaluation – Power Carries obligation
4. Subjectivity – Objectivity
Performance Appraisal :
Performance Appraisal (PA) refers to all those procedures that are used to evaluate the personality, performance, potential, of its group members
Relationship between jab analysis and performance appraisal:Job analysis performanceperformance
standards appraisal
Describes work
& Personnel
Requirement
Of a particular
job
Translate job Into levels of To acceptableOr unacceptableperformance
Describes the Job relevant strengths and weakness ofEach individual
Question arises?
Why do we measure performance? Effective performance appraisal
systems How do we measure performance?
Characteristics
It is a step by step process It examine the employee strengths and
weaknesses Scientific and objective study Ongoing and continuous process Secure information for making correct
decisions on employees
Needs and Objectives:
Provide feedback about employees Provide database Diagnose the S & W of individuals Provide coaching, counseling, career
planning to subordinates Develop positive relation and reduce
grievance Facilitates research in personnel
management
Appraisal Benefits (cont.)
Appraisals offer employees: Direction Feedback Input Motivation
Appraisal Benefits Appraisals offer the
company: Documentation Employee Development Feedback Legal protection Motivation system
Why Appraisals Are Important
•Recognize accomplishments•Guide progress•Improve performance
Why Important (cont.) Review performance Set goals Identify problems Discuss career advancement
Steps in performance appraisalEstablishing job standards
Designing an appraisal programme
Appraise performance
Performance interview
Use appraisal dataFor appropriate purpose
Process of PA
Setting performance
standardsTaking correctivestandards
Discussingresults
Comparing standards
Measuringstandards
Communicatingstandards
Issues in appraisal system
Appraisal Design?
Formal and informal
Whose performance?
Who are the raters?
What problems?
How to solve?
What to evaluate?
When to evaluate?
What methods?
What to evaluate? (Philip Model)
Problem children
Plannedseparation
stars
Socialcitizen
H
L H
L
Potential
Performance
How PA contribute to firm’s competitive advantages
Improving performance
Making correct decision
Ensuring legal competence
Minimizing dissatisfactionAnd turnover
Values and behavior
Competitive advantage
Problems in performance appraisal1. Errors In rating
Halo effects Stereotyping Central tendency Constant error Personal bias Spill over effect
2. Incompetence
3. Negative approach
4. Multiple objectives
5. Resistance
6. Lack of knowledge
Problems in performance appraisal (Cont’d)
Essentials of an effective appraisal system Mutual trust
Clear objectives Standardizations Training Job relatedness Documentation Feedback and participation Individual differences Post appraisal review Review and appeal
Appraisals and Discrimination Title VII ADA Other fair employment Laws
Discrimination (cont.) Failure to communicate standards Failure to give timely feedback Failure to allow employees to
correct performance Inconsistency in measuring
performance Failure to document performance
objectively
Appraisal Forms
Define performance expectations Describe measurement tools Use a rating system Cover specific examples Set measurable goals
Measure Performance
Measurement systems need to be: Specific Fair Consistent Clear Useful
Measure Performance (cont.)
Systems can be: Numerical Textual Management by Objective (MBO) Behavior oriented
Document Performance
Make sure documentation is objective Document performance of all
employees Provide complete and accurate
information Document performance on a regular
basis
Set Goals…. Based on job requirements Realistic Measurable Observable Challenging Prioritized
Employee Input
Employees take an active role: Setting goals Designing action plans Identifying strengths and
weaknesses Employees participate in the PA
meeting
Preparation
Employees: Review performance Think about new goals
Preparation (cont.)
Supervisors: Review performance Complete written appraisal Think about new goals Schedule time and place
Start the Meeting Lay out agenda Talk about money Encourage input Give good news
first
During the MeetingReview performance: Based on previous goals Noting strengths and
accomplishments Identifying areas for improvement
Presentation Tips
Focus on the professional Give objective examples Invite response Listen actively Create “we” mentality
During the Meeting (cont.) Set goals: Based on company goals
Building on areas that need improvement
End the Meeting
Encourage good performance Lay out action plan Communicate outcome of goals not
met Confirm understanding
Continuous Feedback
Formal appraisals Informal appraisals Open
communication
Recognize Good Performance Verbal
Public Tangible Monetary
Identify Poor Performance
Act early Take the right approach Deal with employee reaction Handle continued poor
performance
Discipline Poor Performance Recognize problems Talk with employee Follow company policy
Handle Hard Cases
Reviewing highly emotional employees
Rating former peers
Key Points to Remember You must conduct objective appraisals on a
scheduled basis.
Appraisals tell employees how they’re doing and how they can improve.
Appraisals help create a system of motivation and rewards based on performance.
Performance Appraisal Methods Individual Evaluation Methods
Confidential report Essay evaluation Critical incidents Checklists Graphic rating scale Behaviorally anchored rating scale MBO
Critical Incident method
Ex: A fire, sudden breakdown, accident
Workers reaction scale
A informed the supervisor immediately 5B Become anxious on loss of output 4C tried to repair the machine 3D Complained for poor maintenance 2E was happy to forced test 1
Checklist method
•Simple checklist method•Weighted checklist method•Forced choice method
Simple checklist method:Is employee regular Y/NIs employee respected by subordinate Y/NIs employee helpful Y/NDoes he follow instruction Y/NDoes he keep the equipment in order Y/N
Weighted checklist method
weights performance rating(scale 1 to 5 )
Regularity 0.5Loyalty 1.5Willing to help 1.5Quality of work 1.5Relationship 2.0
Forced choice method
Criteria Rating
1.Regularity on the job Most Least•Always regular•Inform in advance for delay•Never regular•Remain absent•Neither regular nor irregular
Graphic Rating Scale• Continuous Rating Scale• Discontinuous Rating Scale
Employee name_________ Deptt_______Rater’s name ___________ Date________------------------------------------------------------------------------
Exc. Good Acceptable Fair Poor 5 4 3 2 1 _
DependabilityInitiativeOverall outputAttendanceAttitudeCooperationTotal score Continuous Rating Scale
Discontinuous Rating Scale
Attitude
NoInterest
Indifferent
Interested
Enthusiastic
Veryenthusiastic
BARS( behaviorally Anchored rating scale)
Step 1. Identify critical incidents
Step 2. Select performance dimension
Step 3. Retranslate the incidents
Step 4. Assign scales to incidents
Step 5. Develop final instrument
MBO Process
Set organizational goals Defining performance target Performance review feedback
Group Appraisal Ranking Paired comparison Forced distribution Performance tests Field review
technique
Performance Appraisal Methods
Ranking methodEmployee Rank
A 2
B 1
C 3
D 5
E 4
Paired comparison method
A B C D E Final RankA - - - + + 3
B + - - + + 2
C + + - + + 1
D - - - - + 4
E - - - - - 5No of Positive evaluation Total no. of evaluation * 100 = employee superior evaluation
Forced Distribution method
10% 20% 40% 20% 10%
poor Belowaverage
average good Excellent
No. of employees
Force distribution curve
Field review methodPerformance subordinate peers superior customerDimension
Leadership ^ ^
Communication ^ ^
Interpersonal skills ^ ^
Decision making ^ ^ ^
Technical skills ^ ^ ^
Motivation ^ ^ ^
Performance criteria for executives For top managers
Return on capital employed Contribution to community development Degree of upward communication from middle-
level executives Degree of growth and expansion of enterprise.
For middle level managers
Departmental performance Coordination among employees Degree of upward communication from
supervisors Degree of clarity about corporate goals and
policies
For supervisors
Quality and quantity of output in a given period Labor cost per unit of output in a given period Material cost per unit in a given period Rate of absenteeism and turnover of employees No of accidents in a given period
Performance Appraisal system is a part of ongoing management process, the purposes of which are to:
Provide for systematic planning by allowing the manager to identify critical job elements & objectives.
Conduct a systematic review of employees overall performance & provide constructive feedback.
Provide objective information to guide management decisions on promotions etc.
Establish an objective basis for determining annual performance.
Establishing Performance Standards Communicating Performance Standards to
employees Measuring Actual Performance Comparing Actual Performance with
Standards Discussing appraisal with the employees Taking Corrective Action
The following criteria should be followed to make the performance appraisal more effective:
Make performance appraisal part of an ongoing process
Look at all aspects of an employee’s performance
Make specific and constructive judgments Criticize work habits & behavior, not the person Don’t let marginal employees slide Keep complete written records for all
performance appraisals.
Developing Business Plans Establishing aspects of performance that need
to be measured Setting up Systems to Monitor & Evaluate Defining the General Performance Expectations
of Employees Agreements on Specific Performance Objectives Developing an Internal Communications System Ensuring that the performance Appraisal
System is well understood & is working effectively
Supporting employees to help them perform well
Seeking Performance improvement Recognizing & Rewarding good performance
JobsCapabilities
Technical Managerial Human Conceptual
Skilled workers, operators, clerks, typist, foreman, etc.
Very much essential
Not needed Some desirable Some essential
Not Needed
First level supervisor, junior
Very essential A few are desirable
Some desirable Some essential
Not Needed
Junior & middle level manager
Some important many not essential
Important Some essential
A few are useful
Junior & middle level manager
Some important many not essential
Important Some essential
A few are useful
Senior managers, Head of Dept./Sec
A few are desirable
Very essential
Many are needed Some are important
Desirable
Unit Heads, GM etc.
A few are desirable
Very essential
Many are essential & important
Essential
Chief Executives
Not needed Important Very essential
Most Essential
Traditional Modern
•Graphic Rating Scales•Confidential Report•Straight Ranking Method•Paired Comparison Method•Forced Distribution Method•Grading System•Checklist Method•Critical Incident Method
•HR Scorecard•HR Accounting•Competency Mapping•Assessment & Development Centre•360 degree Appraisal•540 degree Appraisal•Management by Objective (MOB)•Behaviorally Anchored Rating Scale (BARS)
Identifying Job Families Identifying Competencies Defining Competencies Strategizing Competencies Defining Measurement Scale Position Profiling Person Profiling
Development of Reward Strategy
.
Business Strategy
Satisfy need and expectations of stake holdersProvide added value to customers
HR Stratery
Define what the organization wants & is prepared to pay for encourage & support desired behaviorDevelop & maintain competitve pay policies which will attract & retain high quality people.Adopt a total rewards approach which includes a mix of rewards the best meets & individuals needs.
Reward Strategy
Obtain, develop and retain the skilled, motivated & committed people the organization needs
Reward Management Process
Non FinancialRewards
Employee Benefits
MarketSurveys
Business Reward Pay Pay Levels Total ImprovedStrategy Strategy Structures & relativities remuneration performance
Job Evaluation
Performance Pay
Perfomance EmployeeMangement development