CHAPTER 6: Appraising Employee Performance

DISCUSSANT: JOY B. SALDAŇA

Ed. D. Student

CHAPTER 6: Appraising Employee Performance

6.1. Objectives of Performance Appraisal 6.2. Need to Evaluate Employee Performance 6.3. Methods Used in Performance Appraisal 6.4. Management by Objectives 6.5. Developing An Appraisal Program

What is a performance appraisal?

What is a performance appraisal?

performance appraisal (PA), also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal is a method by which the job performance of an employee is documented and evaluated. Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations.

According to Newstrom, “It is the process of evaluating the performance of employees, sharing that information with them and searching for ways to improve their performance’’.

General Definition

The Appraisal System. Concepts of Appraisal & Appraisal

Methods

6.1. Objectives of Performance Appraisal

6.1. Objectives of Performance Appraisal

Measuring the efficiencyMaintaining organizational control.

Concrete and tangible particulars about their workAssessment of performance

Mutual goals of the employees & the organization.Growth & developmentIncrease harmony & enhance effectiveness

Personal development Work satisfaction Involvement in the organization.

Employee OrganizationAccording to:

Aims at:

6.2. Need to Evaluate Employee Performance

Performance management/program involves more than simply providing an annual review for each employee. It is about working together with that employee to identify strengths and weaknesses in their performance and how to help them be a more productive and effective worker.

6.3. Methods Used in Performance Appraisal

1. Paired comparison 2. Graphic Rating scales3. Forced choice Description

method4. Forced Distribution Method5. Checks lists6. Free essay method7. Critical Incidents8. Group Appraisal9. Field Review Method 10.Confidential Report11.Ranking

1. Assessment Center2. Appraisal by Results or

Management by Objectives

3. Human Asset Accounting

4. Behaviorally Anchored Rating scales

Traditional Methods Modern Methods

6.3. Methods Used in Performance Appraisal

Paired Comparison Method Ranking employees by making a chart of all

possible pairs of the employees for each trait and indicating which is the better employee of the pair.

It is useful where priorities are not clear This method is not appropriate if a large

number of employee are required to be evaluated.

As compared to A B C

A + - +

B - + -

C + - +

For the Trait “Quality of work”

A - + +

B + - +

C + + -

As compared to A B C

For the Trait “Creativity”

+

+

++

+

+

+

+ +-

-

-

--

- +

- -

Person rated Person rated

Ranking employees by paired comparison Method

Graphic or Linear Rating Scales A scale that lists a number of traits and a range

of performance for each. The employee is then rated by identifying the score that best describes his or her performance for each trait.

It includes the employee characteristics and employee contribution

Graphic or Linear Rating Scales Attitude

No interestIn work: consistentcomplainer

Careless: In-differentInstructions

Interested in work: Accepts opinions & advice of others

Enthusiastic about job & fellow-workers

Enthusiastic opinions & advice sought by others

Decisiveness

Take decisions in consultation with others whose views he values

Slow to take decisions

Take decisions after careful consideration

Takes decisions promptly

Take decisions without consultation

0 5 10 15 20

0 5 10 15 20

Criteria Rating

1.Regularity on the job Most Least

Forced choice method

• Always regular• Inform in advance for delay• Never regular• Remain absent• Neither regular nor irregular

No. of employees

10% 20% 40% 20% 10%poor Below

averageaverage good Excellent

Force distribution curve

Forced distribution 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

Critical Incident method

Staff AppraisalName . . . . . . . Job Title . . . . . . . Department . . . . . . . . . . . . Date of Review . . . . . . . Age . . . . . .. . Years in present jobSection I Appraisal Of PerformanceNote to Appraiser1. Appraisal must cover the period of the preceding 12 months2. Consideration to every function & responsibility of the job3. An objective factual assessment of an employee’s improvement or

deteriorationSection II Promotability & PotentialPromotability1. Promotion now2. Within 2 years3. Within 5 years4. Unlikely to qualify for promotionSection III Career DevelopmentSection IV Notes on Interview with employee

Section V Comments on & Endorsement by Reviewing Authority

Specimen of Staff Assessment Form [Descriptive Essay Type]

Performance subordinate peers superior customerDimension

Leadership ^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^

Field review method

Modern Methods of Performance Appraisals

(a) BARS (Behaviorally Anchored Rating Scale) : In order to overcome the problem of judgmental

evaluation, this method was conceived by some organizations. This method combines the benefits of Essay Method, Critical Incident and Rating scales.

In this method the employee's behavior and performance dimensions are analyzed and used for evaluating the performance of the employee. The HR department is involved in the process of preparing the BARS. Based on the Employee's performance and behavior, employees are anchored in different slots of good, average and poor. The rater is required to give corresponding ratings to the employee.

(b) Assessment Centres : This method was used to appraise army

officers in Germany way back in 1930s. The concept was adapted from army to business arena in 1960s.

This method is mainly used to evaluate executive and supervisory potential. Here employees are taken to a place away from work and a series of tests and exercises are administered. For example, assesses are asked to participate in; in-basket exercise, simulations, group exercise and role plays. Performance of the employee is evaluated in each of these tests and feedback is provided to the ratee, in terms of strengths and weaknesses.

(c) 360 Degrees Appraisal Method : Where multiple raters are involved in

evaluating performance, the technique is called 360-degree appraisal.

The 360-degree technique is understood as systematic collection of performance data on an individual or a, group derived from a number of stakeholders—the stakeholders being the immediate, team members customers peers and self.

In this method an employee's performance is evaluated by his supervisor, subordinates, peers and customers (or an outside expert).

All these appraisers provide information or feedback by completing a questionnaire designed for this purpose.

The 360-degree degree appraisal provides a broader perspective about an employee’s performance. In addition, the technique facilitates greater self-development of the employee. It enables an employee to compare his evaluation about self with perceptions of others. Though this method was developed to bring about a degree of objectivity, it still suffers from subjectivity.

360 degree performance appraisal

(d) Cost Accounting Method : This method evaluates an employee's

performance in relation to the contribution of an employee in monetary terms. Here the rater evaluates the employee in terms of cost of retaining the employee and the benefits the organization derives from him/her. The following factors are taken into account in this method :

(1) Cost of training the employee. (2) Quality of product or service rendered. (3) Accidents, damages, errors, spoilage,

wastages, etc. (4) The time spent in appraising the

employee.

Performance Points BehaviorExtremely good

7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country.

Good 6 Can expect to initiate creative ideas for improved sales.

Above average

5 Can expect to keep in touch with the customers throughout the year.

Average 4 Can manage, with difficulty, to deliver the goods in time.

Below average 3 Can expect to unload the trucks when asked by the supervisor.

Poor 2 Can expect to inform only a part of the customers.

Extremely poor

1 Can expect to take extended coffee breaks & roam around purposelessly.

Behavioral Anchored Rating Scales

6.4. Management by Objectives

(a) MBO (Management by Objective or Joint Target Setting) :

This method was propounded by Alfred Sloans and Donaldson Brown in 1920s. However, it was further popularised by Peter Drucker in his book "The Practice of Management" in 1954.

According to George S. Odiorne, MBO can be described as "a process whereby the superior and the immediate subordinate of an organization jointly identify the common goals, define each individual's major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."

In this method emphasis is laid on stating objectives for Key Result Areas (KRAs) in Quantifiable terms. For example, in case of Research and Development department, objective is stated in the following terms. i.e. to design a new product by 31st March, 2005.

MBO is used as a performance appraisal technique, as it is easy to measure whether the stated objectives have been achieved or not.

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

MBO ProcessSet organizational goalsDefining performance targetPerformance reviewFeedback

6.5. Developing an Appraisal Program

Learn how to develop a performance management system/appraisal program so that you can help everyone in your organization work to their full potential.

6.5. Developing an Appraisal Program

1.Evaluate your current performance appraisal process. Look at what type of feedback you are providing to your employees. Determine if there is anything you need to change or add to the evaluation itself. You may decide to build on what you already have or to develop a new system altogether.

6.5. Developing an Appraisal Program

2. Identify organizational goals. Performance management systems help rally staff members around your organization's goals because they help staff know how they are to be involved in reaching that goal. Take the time to clarify what your goals are for the next year as a company.

6.5. Developing an Appraisal Program

3. Set performance expectations. As you sit down with each employee, clearly lay out your expectations for them.

• Acknowledge what they are already doing well. Use this to encourage them.

• Share some weaknesses that you have observed in them and in their work habits, and how overcoming those would help their performance in the company.

• Identify specific things you would like them to accomplish over the next year, or whatever time frame works best for you. Prioritize these so the staff member knows which is most important and make sure to give them a deadline for each task.

6.5. Developing an Appraisal Program

4. Monitor and develop their performance throughout the year. As employees begin to work on their performance, keep an eye on how they are doing. If they appear to be struggling to meet performance expectations, talk with them and see if you can offer any support or coaching.

6.5. Developing an Appraisal Program

5. Evaluate their performance. At each performance review, let the employee know how they are doing. It is often helpful to assign a numeric value on a scale, rating the employee from "not meeting expectations" to "meets expectations" to "exceeds expectations." Provide feedback on their performance. Be as specific as possible, noting key examples of when they demonstrated a certain quality.

• Talk about the consequences or rewards of their performance. Let them know if they are on probation, are getting a raise in pay, changes in vacation days, or any other relevant action.

• Discuss any problems they may be having. Listen to their concerns or worries as you talk through potential solutions.

6.5. Developing an Appraisal Program

6. Set new performance expectations for the next year. Some items may be the same. However, since these are also based on organizational goals, you will need to re-examine your goals for the upcoming year.

6.5. Developing an Appraisal Program

1.Evaluate your current performance appraisal process.

2. Identify organizational goals. 3. Set performance expectations. 4. Monitor and develop their performance

throughout the year. 5. Evaluate their performance. 6. Set new performance expectations for the

next year.

Advantages of (Pa)Provide a record of

performance over a period of

time.Provide an opportunit

y for a manager to meet &

discuss performan

ce Provide the

employee with

feedback about their performan

ce

Provide an opportunit

y for an employee to discuss issues and to clarify

expectations

Can be motivational with the support of

a good reward

and compensat

ion

If not done appropriately, can

be a negative experience.Very time consuming,

especially for a managerSubject to rater

errors & biases.If not done right can be a complete waste

of time.Can be stressful for

all involved

Disadvantages of (pa)

Conclusion Because many of the more conventional performance

appraisal  methods have often proved unpopular with  those being appraised and evaluators a like, 360 is gaining popularity with many managers and employees. It offers a new way of addressing the performance issue. When used with consideration and discipline, feedback

recipients will feel that they're being treated fairly. In addition, supervisors will feel the relief of no longer

carrying the full burden of assessing subordinate performance.

The combined effect of these outcomes should result in increased motivation, which in turn improves performance.