Why Do We Need Performance Appraisals

8/8/2019 Why Do We Need Performance Appraisals

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Why Do We Need Performance Appraisals?

Performance Appraisal is an objective system to judge the ability of an individual employee to

perform his tasks. A good performance appraisal system should focus on the individual and hisdevelopment, besides helping him to achieve the desired performance. This means that while the

results are important the organization should also examine and prepare its human capital toachieve this result. This holds true even for new inductees.

There is a strong linkage between induction, training and appraisal. In a large number of firms

worldwide, a new recruit is expected to discuss his schedule of work in achieving his inductionobjective. This schedule of work becomes a part of his job for the next few months.

Objectives of Appraisal

Almost all organizations practice performance appraisal in one form or another to achieve certain

objectives. These objectives may vary from organization to organization or even within the same

organization from time to time. It has been found that there are two primary objectives behindthe use of this methodology. One is to use it as an evaluation system and second, to use it as afeedback system.

The aim of the evaluation system is to identify the performance gap. This means that it helps

determine the gap between the actual performance of the employee and that required or desiredby the organization.

The aim of the feedback system is to inform the employee about the quality of his work or

performance. This is an interactive process by which the employee can also speak about hisproblems to his superior.

An effective performance appraisal system should emphasis individual objectives, organizationalobjectives and also mutual objectives. From the viewpoint of individual objective the

performance appraisal should talk about

a) What task the individual is expected to do?b) How well the individual has done the task?

c) How can his performance be further improved?d) His reward for doing well.

From the organizational view point a performance appraisal should generate manpower

information, improve efficiency and effectiveness serve as a mechanism of control and provide arational compensation structure. In short the appraisal system establishes and upholds the

principle of accountability in the absence of which organization failure is the only possibleoutcome.

Finally, talking about mutual goals, the emphasis is on growth and development, harmony,effectiveness and profitability.


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Methods of Performance Appraisal

In order to achieve the objectives, a variety of performance appraisal methods have beendeveloped. The choice of method depends on organizational ethos, its objectives, size, product

and technology.

The most traditional method is the Confidential Report method where the supervisor makes an

evaluation of his subordinate on the basis of certain characteristics like loyalty, intelligence,conduct, character etc. In some other methods like Graphic Rating scale and the RankingMethods though the process is simple it is plagued with subjectivity. In the Critical Incidents

method a balance sheet of on-job-behavior for each employee is generated which can then beused at the end of the year to see how well the employee has performed.

In 1961 Peter Drucker popularized the Management by Objectives (MbO) method. In thismethod the subordinate in consultation with the supervisor chalks out short term objectives

followed by specific actions that he has to carry out. The goals are finally set and are actionoriented. The goals set should be specific, measurable, achievable, review able and time bound

and most importantly it should be aligned with the goal of the organization. At the end of a

specified time period, the activities are jointly reviewed by both the subordinate and hissupervisor. Depending on the performance of the subordinate, the goals are modified orredesigned for the next period of time.

The MbO is thus a performance oriented system. A well thought out MbO system provides

multiple benefits. It establishes a link between the performance of the individual and theorganization. It is easy to implement because those who carry out the plan also participates in

setting it up. Each employee becomes aware of the task he has to perform. This leads to betterutilization of capacity and talent. It promotes better communication and information sharing. It

provides guidelines for self evaluation as well as evaluation by the superior against set tasks andgoals. It facilitates guidance and counseling.

But most organizations engage in a retrospective performance appraisal. In this process some

objectives that were agreed upon in the beginning of the year are dragged out and the appraiseeand the manager discuss and debate about how well each of these objectives was achieved.

This procedure has many flaws. It does not address the basic human needs in the motivationprocess. Feedback should be as immediate as possible, it should focus on actual things and the

individual involved should be given the opportunity to correct his behavior. But the traditionalprocedure is too late. It is difficult to remember events a month old let alone events that had

occurred over ten months ago.

PerformanceManagement and Performance Appraisal

Many people mistake performance appraisal for performance management. Actually,

performance management is a much bigger system, and is much more valuable to managers andcompanies (and employees) than performance appraisal. The essential components or parts of an

effective performance management system include:

y Performance Planning (includes employee goal setting / objective setting)


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y Ongoing Performance Communicationy Data Gathering,Observation and Documentationy Performance Appraisal Meetingsy Performance Diagnosis and Coaching

Performance Management is an ongoing process of measuring and adjusting performancecontinually focusing on behaviors throughout the year. It is a continuous process not an event. It

is not the same as performance appraisal, which is an assessment of the employees performanceby both the employee and his superior jointly, with the purpose of allocating a score that may be

used for both development and salary or promotion purposes.

Performance Management includes Performance Appraisal as one of its elements. Performance

Management should became part of day to day workplace behavior. Some organizations haveadopted an online Performance Management system. Going online with performance

management puts ownership of the process in the hands of the individual as opposed to thetraditional manager driven system. It allows direct communication between the individual and

the manager via online journals at times convenient to both. It links performance with theindividuals learning and development plans and also to the organizational goals, values and

competencies.

In fact performance appraisal is the least important component of a performance managementsystem. To quote Robert Bacal Ifall you do is appraisal -- if you don't do planning and have

ongoing communication, collect data, and diagnose problems, you are wasting your time. Infact it's even worse than that. If all you do is performance appraisal, you will almost be

guaranteed that morale will suffer, performance problems will increase, and the manager's jobwill become much harder.

Modern Trends

A growing number of front running organizations like Ford, Microsoft and Sun Microsystems,have adopted a performance appraisal model in which best-to-worst ranking methods are used toidentify poor performers. The identified poor performers are then given a time period during

which they have to show an improvement in their performance. In cases where the employeefails to improve his performance he is asked to leave the organization gracefully and a severance

package is offered to him. If the employee refuses to leave then his service is terminated and nocompensation is offered. This system is called rank and yank strategy. Advocates of this

system feel that it continually motivates employees to better their performance since nobodywould like to be included in the poor performance band. But the flip side of this strategy is that

employees become too competitive and team spirit is not nurtured.

Effective organizations are not build merely on investment and returns but more on the quality ofthe workforce, its commitment to the organizational goals and investments made to attract train

and retain superior human capital. An integrated Performance Management system is essential toget the best out of its people. Employee performance is linked to company performance. This

helps in achieving the organizational goal and creates a performance culture in the company.Invention, creativity, diversity of perspectives is fostered. Employees act as one company one

brand.


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Elements in the performance appraisal process

February 20, 2006

in Human Resource Management

ELEMENTS IN THE PERFORMANCE APPRAISAL PROCESS.

At one stage performance appraisal relied mainly on assessment of personality characteristics.Subordinates were being appraised by their superiors on the extent to which they exhibited

characteristics like tact, willingness, enthusiasm, and maturity. Managers were being put in theposition of psychologists and required to make subjective ratings without any point of reference

except their own opinion. More recent thinking has resulted in an approach which says that thereare two important aspects in performance appraisal namely inputs and outputs

1. Inputs: What the individual brings to the job in terms of attributes, behavior, skills and

knowledge are inputs.

2. Outputs: The results achieved in terms of outputs or outcomes are referred to as outputs.

Expectations are expressed in terms of objectives, standards, standards, targets or competence

and appraisal is made on the basis of inputs and outputs.

Methods Used in Appraisal

Three different approaches exist for appraisals. Employees can be appraisal against absolutestandards, relative standards and objectives. In cases where absolute standards are used, the

employees are not compared with any other person while in the second category of appraisalmethods using relative standards, individuals are compared with other individuals. The third

approach makes use of objectives. Employees are evaluated by how well they accomplish aspecific set of objectives that have been determined to be critical in the successful completion of

the job.

When Appraisals should Take Place

Most large organizations hold formal appraisal discussions annually, while some fast moving

organizations prefer to have them twice a year. When employees are working on projects, theremay be an appraisal after each assignment has been completed.

Ensuring that Appraisal is a continuous Process

To ensure that appraisal is not just seen as a once-a-year event to be got over as quickly aspossible it is necessary to emphasis the continuing nature of the process on briefing and training.

Performance appraisal should not be imposed on managers as something special they have to do.It should be treated as a natural process which all managers carry out.


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Performance appraisals are an integral part of every organization and if they are properlydeveloped and implemented, they can help the organization achieve its goals by developingproductive employees.

Performance appraisal

July 25, 2006


Performance Appraisal

The meaning of the word appraisal is to fix a price or value for something. This is used in

finance in terms such as project appraisal or financial appraisal where a value is attached to aproject. Similarly performance appraisal is a process in which one values the employee

contribution and worth to the organisation.

The objectives of performance appraisal are:

1.To help better current performances

2. To help in development of the employee.

3.To determine training and development needs.

4. To give employee feedback and counsel them

5. To review performance for salary purposes.

Employees across the entire organisation are appraised of their performance. This could be doneannually, twice a year, periodically depending the need of the organisation

The various kinds of performance appraisal systems are:

1.Personality based performance appraisal system:

Here the appraiser is supposed to rate the personality traits of the person being appraised.

This is not in much in organisations as it very subjective and judgmental. It could also be biased

and prejudiced.

2.Competence based performance appraisal system:

Here the job analysis is used and the employee is appraised for the skills he exhibits. For e.g. ifhis job entails dealing with the clients then he is judged foe his effectiveness in dealing with

them. This enables both the organisation and the employee as to what deficiencies are to beovercome and can be useful in providing training to the employee to better his performance.


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Result based performance appraisal system:

This system concentrates on the final results achieved by the employee irrespective of his

personality or deficiencies. This is totally related to the job and concentrates on the end resultsthat are more important to the organisation.

The performance appraisal system has to be transparent and the employee should be taken into

full confidence. In many cases employees themselves are given a chance to conduct a self-appraisal. Performance appraisal is a case of joint problem solving by the organisation and the

employee. However the organisation must also take care of future potential and not get boggeddown by current performance.

Normally the immediate supervisor does the appraisal. Some organisations also have a peergroup performance appraisal where colleagues rate the performance.

The HR person must also ensure that line managers are properly trained for carrying out the

appraisal including interviewing techniques and on how to give feedback. The managers mustalso be trained to look at the cases objectively outside of their personal opinion of the candidate.

Developing a good appraisal system

October 2, 2007


End of the year appraisals are always a matter of heartburn and disgruntlement among

employees. It is only very rarely that all employees find the appraisal system fair and reflectiveof their real performance. For managements too, conducting such appraisals is a matter of

trepidation. This is more so for companies that are still to develop a strong performanceevaluation system. But appraisals have to be done and they are critical for rewarding and

retaining talent. They are also important for attracting talent as good performance evaluationsystems help to build the employer brand. This article offers a few suggestions as to how you can

develop a sound performance appraisal system.

Here are 10 suggestions for creating and implementing a fair, accurate, and discerning employeereview system:

*Document everything:*

In a good formal appraisal system everything should be written down. A good performance

appraisal system should allow for providing supporting documentation so that when action istaken based on the appraisal, the fairness and relevance of the appraisal can be scrutinized andthe entire process made transparent. There is already a lot of literature on how to develop a soundperformance appraisal system and HR managers would do well to study them before launching

any new system.*Set clear goals:*

The key idea behind a good performance evaluation system is to reward rather than punish ormeet legal requirements, help to lay down and communicate clear performance goals and


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measure progress, help identify laggards and whether they need any specific help in terms oftraining and mentoring that can enable them to improve, help identify bosses who are stiflingtalent or are in some way or the other standing in the way of better realization of an employees

potential and on the whole lay down a solid channel of communication between employees andthe top management. Any good appraisal system should take care of all these goals.

*Make the process user-friendly:*The appraisal system should be simple, easy to understand and easy to use. Since a good

appraisal system almost always require a participatory approach on the part of the boss and hissubordinates, the paper work should be kept to a minimum and as simple as possible. A basic

and standardized form is highly recommended as it would enable an open, transparent anduniform appraisal process for all employees. To take care of specific needs of specific

departments, standardized forms for particular departments may be necessary.*Allow for flexibility:*

Standardized forms and a uniform system can lead to too much rigidity. Hence, allow forflexibility even within the uniform format. This may be especially relevant in small businesses

where one person may have several unique competencies and may be looking after severaldifferent functions of different types. Have a system that can take care of such situations so that

even as it allows flexibility, it also minimizes the risk of arbitrariness.

*Make it participatory:*A good appraisal system always allows employees to participate in the review process.Employees must be allowed to give their own self-appraisals by giving them an opportunity in

the appraisal form to list their own strengths, weaknesses and goals for the coming year. Duringthe review compare notes and finally try to come up, as often as possible, with an appraisal that

has the employees consent.*Set achievable goals:*

If you own a business it is likely that you will work night and day or for that matter do whateverit takes to make the business successful. But you can hardly expect your employees to have a

similar attitude, although there are people who do show as much commitment. So be realistic andset such goals that are achievable. Try to customize goals to individual employees so that each

have a realistic chance of meeting those goals. Nothing motivates an employee more than beingable to meet goals and being recognized for the success. Goals that are too tough and which most

are almost sure to fail to meet can only help to demoralize your staff instead of egging them onto raise their levels of performance. Instead if you raise the bar gradually and in a way such that

more people succeed in meeting those goals than fail, over a period of time you will be surprisedto find how much people have progressed.

*Adjust your business plan:*A well-designed and well-executed performance appraisal process will enable you and your staff

to arrive at clear and achievable goals that both you and your staff have agreed to achieve. Adjustyour business plan accordingly so that the performance review should end up with giving you a

far more workable business plan which will, more often than not, succeed while helping to retaintalent by keeping employees satisfied.

Managerial ethics in performance appraisal

July 15, 2006



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MANAGERIAL ETHICS IN PERFORMANCE APPRAISAL

Performance appraisal system should be effective as a number of crucial decisions are made on

the basis of score or rating given by the appraiser, which in turn, is heavily based on the appraisalsystem. Appraisal system, to be effective, should possess the following essential characteristics:

Reliability and validity:

Appraisal system should provide consistent, reliable and valid information and data, which canbe used to defend the organization-even in legal challenges. If two appraisers are equally

qualified and competent to appraise an employee with the help of same appraisal technique, theirratings should agree with each other. Then the technique satisfies the condition of inter-rater

reliability. Appraisals must also satisfy the condition of validity be measuring what they aresupposed to measure. For example, if appraisal is made for potential of an employee for

promotion, it should supply the information and data relating to potentialities of the employee totake up higher responsibilities and carry on activities at higher level.

Job Relatedness:

The appraisal technique should measure the performance and provide information in Job related

activities/areas.

Standardization:

Appraisal forms, procedures, administration of techniques, rating etc. should be standardized as

appraisal decisions affect all employees of the group.

Practical Viability:

The techniques should be practically viable to administer, possible to implement and economicalregarding cost aspect.

Legal Sanction:

It should have compliance with the legal provisions concerned of the country.

Training and Appraisers:

Because appraisal is important and sometimes difficult, it would be useful to provide training to

appraisers namely insights and ideas on rating, documenting appraisals, and conducting appraisal

interviews. Familiarity with rating errors can improve rater performance and this may inject theneeded confidence in appraisers to look into performance ratings more objectively.

Open Communication:

Most employees want to know how well they are performing on the job. A good appraisal

system provides the needed feedback on a continuing basis. The appraisal interviews shouldpermit both parties to learn about the gaps and prepare themselves for future. To this end,


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managers should clearly explain their performance expectations to their subordinates in advanceof the appraisals period. Once this is known it becomes easy for employees to learn about theyardsticks and, if possible, try to improve their performance in future.

Employee Access to Results:

Employees should know the rules of the game. They should receive adequate feedback on their

performance. If performance appraisals are meant for improving employees performance,then withholding appraisals results would not serve any purpose. Employees simply could not

perform better without having access to this information. Permitting employees to review theresults of their appraisal allows them to detect any errors that may have been made. If they

disagree with the evaluation, they can even challenge the same through formal channels.

It follows then that formal procedures should be developed to enable employees who disagree

with appraisal results which are considered to be inaccurate or unfair. They must have the meansfor pursuing their grievances and having them addressed objectively.

When management uses it as a whip or fails to understand its limitations, it fails. The key is not

which forms or which method is used. Performance appraisal should be used primarily todevelop employees as valuable resources. Only then it would show promising results.

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Why Do We Need Performance Appraisals