Performance Appraisal

and Management
 TEXT BOOK

Kohli, A. S., & Deb, T. (2012). Performance

Management. Oxford University Press.
CHAPTER- ONE
 Performance Management

Performance
Performance is often defined simply in output terms – the achievement of
quantified objectives. But performance is a matter not only of what people
achieve but how they achieve it. The Oxford English Dictionary confirms this
by including the phrase ‗carrying out‘ in its definition of performance: ‗The
accomplishment, execution, carrying out, working out of anything ordered or
undertaken.‘ High performance results from appropriate behaviour, especially
discretionary behaviour, and the effective use of the required knowledge,
skills and competencies.
Performance Management
Performance management can be defined as a systematic process
for improving organizational performance by developing the
performance of individuals and teams. It is a means of getting better
results from the organization, teams and individuals by understanding
and managing performance within an agreed framework of planned
goals, standards and competence requirements.
 Performance management must examine how results are attained
because this provides the information necessary to consider what needs to
be done to improve those results.
AIMS OF PERFORMANCE MANAGEMENT

 The overall aim of performance management is to establish a high

performance culture in which individuals and teams take responsibility for
the continuous improvement of business processes and for their own skills
and contributions within a framework provided by effective leadership.
Specific Aims

 Empowering, motivating and rewarding employees to do their best

 Focusing employees‘ tasks on the right things and doing them right.
 Aligning everyone‘s individual goals to the goals of the organization
 Proactively managing and resourcing performance against agreed
accountabilities and objectives
 Linking job performance to the achievement of the corporate strategy
 The alignment of personal/individual objectives with team,
department/divisional and corporate plans. The presentation of objectives with
clearly defined goals/targets using measures, both soft and numeric. The
monitoring of performance and tasking of continuous action as required
 All individuals being clear about what they need to achieve and expected
standards, and how that contributes to the overall success of the organization;
receiving regular, fair, accurate feedback and coaching to stretch and
motivate them to achieve their best
 Systematic approach to organizational performance aligning individual
accountabilities to organizational targets and activity
 The process and behaviours by which managers manage the performance
of their people to deliver a high-achieving organization
 Maximizing the potential of individuals and teams to benefit themselves
and the organization, focusing on achievement of their objectives
CHARACTERISTICS/ ELEMENTS OF
PERFORMANCE MANAGEMENT
 Performance management is a planned process of which the primary
elements are agreement, measurement, feedback, positive reinforcement
and dialogue.
 it is also concerned with inputs and values. The inputs are the knowledge,
skills and behaviors required to produce the expected results.
Developmental needs are identified by defining these requirements and
assessing the extent to which the expected levels of performance have
been achieved through the effective use of knowledge and skills and
through appropriate behavior that upholds core values.
 DEVELOPMENTS in PERFORMANCE
MANAGEMENT

 an emphasis on front-end planning rather than back-end review;

 a broader definition of performance that focuses on more than narrowly

defined job responsibilities

 an emphasis on ongoing dialogue rather than forms and rating scales;

 the recognition that there are many factors contributing to performance

outcomes
 CONCERNS Of PERFORMANCE
MANAGEMENT
 Concern with outputs, outcomes, process and inputs
 Concern with planning
 Concern with measurement and review
 Concern with continuous improvement
 Concern with continuous development
 Concern for communication
 Concern for stakeholders
 Concern for fairness and transparency
GUIDING PRINCIPLES OF PERFORMANCE
MANAGEMENT
Most employees want direction, freedom to get their work done, and
encouragement not control. The performance management system should be
a control system only by exception.

The solution is to make it a collaborative development system in two ways:

 the entire performance management process – coaching, counselling,
feedback, tracking, recognition, and so forth should encourage
development. Ideally, team members grow and develop through these
interactions.
 when managers and team members ask what they need to be able to do
to do bigger and better things, they move to strategic development
CHAPTER-TWO
Performance Management Process

 Plan – decide what to do and how to do it.

 Act – carry out the work needed to implement the plan.
 Monitor – carry out continuous checks on what is being
done and measure outcomes in order to assess progress
in implementing the plan.
 Review – consider what has been achieved and, in the
light of this establish what more needs to be done and
any corrective action required if performance is not in
line with the plan
 Pre-requisites of Performance
Management
 Organizational philosophies

 Attitudes and skills of those responsible for its implementation

 Acceptance, commitment, and ownership of managers and employees

 Endorsement of the notions of 'procedural fairness' and 'distributive justice

 Top-management commitment and involvement

 Adequacy of pay level or compensation package

 Availability or access to resources, tools, and skills to employees to do their

job
 Scope for managers to have the power to make decisions and plan on the
basis of needs
 Familiarity of managers and employees with planning tools
 Effectiveness of communications between and within management and
employees
 A culture of accountability and openness prevails
 Financial requirements of the organizations
 Decentralization
 Customer's pressure and quality assurance
 Determinants of Job Performance
Job performance is a critical antecedent of performance
management. A job consists of a number of interrelated tasks, duties,
and responsibilities which a job holder needs to carry out. Whereas
performance is a behavior or action that is relevant for the
organization's goals and that can be scaled (measured) in terms of the
level of proficiency or contribution to goals that is represented by a
particular action or set of actions (John Campbell 1988). This implies
that job performance involves certain functional as well as behavioral
competencies.
Factors impact on job performance:

 Knowledge
 Motivation
 Feedback
 Leadership
 Personality
Personality and Job Performance: The Five-factor
Model
 Elements of Effective Performance
Management
 Process
 People Management Capability
 Motivation
 Measurement and Reward
 Role of HR Professionals
 Learning Organization
 Culture and Clarity of Purpose
Six Sigma
 Designing Performance Management
System

 Organizational objectives and strategy

 Assessment of organizational performance needs

 Setting organizational performance expectations

 Establishing performance management process

 Measuring effectiveness of performance management

CHAPTER-THREE
 Performance Planning
 Performance planning is the first step of performance management

 Performance planning is the process of communication between a

manager and an employee that results in mutual understanding of what
the employee should be doing during the next period of time. It essentially
seeks to:

 Align job expectations with overall strategic plans, departmental goals,

and job description

 Establish and agree upon performance criteria

 Clarify what the employee will be evaluated on

 Identify sources for feedback on the employee's performance

• Set the stage for ongoing feedback and counselling

• Create a mentoring relationship

• Annual stocktaking of performance

Therefore, performance planning entails…..

 Setting performance criteria for employees and documenting them in a

form
 Identifying the help required by employees from their managers to success-
fully carry out job tasks
 Identifying potential barriers to successful achievement of job tasks and the
means of overcoming them
 Developing an understanding of the relative importance of job tasks to
work unit (e.g., division or department) objectives and goals
 Theories of Goal Setting

Goal-setting theory
Expectancy theory
 Goal-Setting Theory

 Goal-setting theory was established by Locke (1981). The theory postulates

that the goals pursued by employees can play an important role in

motivating superior performance. People examine whether their current

behavior is sufficient to achieve the goals or not. If they find that their goals

will not be achieved by their current behavior, they will either modify their

behavior or choose more realizable goals.

 Therefore, managers must ensure the following conditions for the
employees to be a willing performer

■ Goals must be specific

■Goals must be robust yet attainable

■ Goals must be desirable

■ Goals must be tied to feedback mechanism

A Model of Goal Setting
 Expectancy Theory
Expectancy theory was established by Vroom (1964). The theory postulated
that it is the anticipated satisfaction of valued goals which causes individuals
to adjust their behaviour in a way which is most likely to their attaining them.
Therefore, there are three important factors:

 The individual's own assessment of whether performing in a certain way will

result in a measurable result. This factor is called as the 'expectancy"
 The perceived likelihood that such a result will lead to attaining a given
reward. This factor is called as the 'instrumentality".
 The individual's assessment of the likely satisfaction, or 'valence', associated
with the reward.
Objectives of Performance Planning
At Organizational Level

 To clearly define and communicate to employees the organization's

mission, objectives, strategies, and performance goals

 To provide appropriate resources, support, and training to employees in

order to achieve goals and targets

 To ensure that employees receive feedback on a continuous basis

 To align job descriptions with organizational objectives and strategy

 To boost motivation and self-concept (self-worth) of the employees

At Manager Level

 To provide opportunity to employees for joint goal setting for greater

ownership and accountability
 To clearly articulate performance metrics used to measure employee's
success in meeting agreed goals and targets
 To provide training, wherever required, to equip the employee to perform
as planned
 To provide an ongoing 'on-the-job' feedback
At Employee Level

 To determine performance goals and targets with the manager

 To view manager as a counsellor or mentor rather than someone who

passes judgement

 To become receptive to feedback

 To develop self-efficacy for providing information on self-performance

Process of Performance Planning
Competency Mapping and It’s Linkage
to Performance Planning
 Competency Mapping:

Competency mapping is the process of identifying key competencies for a

particular position in an organization and then using it for job evaluation,

recruitment, training and development, performance management,

succession planning which results in talent induction, management

development, appraisals, and in identifying training needs.

Competency Mapping and It’s Linkage
to Performance Planning
 It provides structured and documented procedures which aid in
recruitment of competent personnel with desired skill sets, attributes, and
training thereby reducing the cost and time of subsequent performance
failures.

 It reduces the cost of performance development programs as the

organization has a ready inventory of requisite skill sets.

 It helps in benchmarking higher levels of performance.

 It helps in creating individual learning plans.

 It helps in assignment of the right job to the right person for better

performance as the employee with required skill sets and training shall be

handling it.

 It provides the management input for gap analysis for improving

performance of the employee in the requisite business areas.

Competency-performance planning
Linkage Model
CHAPTER-FOUR
 Performance Managing

 Performance managing may be defined as the process of working towards

the performance expectations established in the performance planning
stage, analyzing progress achieved on continual basis, and counselling for
improving results.

 Thus, performance managing pertains to analyzing the ongoing

performance of employees. reinforcing good efforts, and helping to
remove the deficiencies in performance.
Objectives of Performance Managing

1. Defining mutual expectations of managers/organization and employees

2. Actualizing the performance plans of all the employees by improving

employee performance on a continuous basis

3. Analyzing the ongoing efforts of the employees in order to remove

performance deficiencies

4. Managing performance as a relationship

5. Keeping employees focused on their performance objectives and

standards

6. Creating challenging and satisfying developmental plans

Performance Managing Process
CHAPTER-FIVE
What is Performance Appraisal…

 Performance Appraisal means evaluating an

employee‘s current or past performance relative to his
or her performance standards.
 In broader sense, ―Any procedure that involves: 1.
setting work standards; 2. assessing the employee‘s
actual performance relative to those standards; and 3.
providing feedback to the employee with the aim of
motivating that person to eliminate performance
deficiencies or to continue to perform above par‖.
 Performance appraisal also called performance review,
employee appraisal, performance evaluation, merit
evaluation, merit rating, efficiency rating, service rating,
and personnel rating.
Purposes of Performance Appraisal

 For Administrative purposes

1. Basis for salary adjustment
2. Placement
3. Training needs
4. Validation of selection methods
5. Basis for reduction
6. Better communication
7. Manpower Planning
Purposes of Performance Appraisal

 For Development Purposes

1. Information about supervisor‘s expectation
2. Identification of skills and weaknesses
3. Feedback
4. Direction
5. Career planning
6. Reward
 For motivational purposes
1. Develop sense of responsibility
2. Know the work expected of them
3. Increase employees‘ efforts toward achieving personal and
organizational goal
In this way their motivation to improve their current performance
increases when they receive feedback.
Performance Appraisal and
Competitive Advantage
 Improving performance: It can help contribute to competitive
advantage by improving employee performance in two ways—
1. directing employee behavior toward organizational goal
2. monitoring that behavior to ensure that the goals are
accomplished.

 Making correct decisions: decisions about pay raise, promotion,

transfer, training, discharges and completion of probationary
periods. Correct decisions on these issues can contribute to
competitive strength.
 Ensuring legal compliance: If decisions are taken basing on the
standard appraisal process, personnel managers can avoid legal
complexities.
 Minimizing Job dissatisfaction and turnover: Eliminate unfair and
inaccurate rating system.
 Consistency between organizational strategy and behavior:
Strategy-behavior fit.
 Consistency between organizational values and job behavior
Methods of Performance Appraisal

 By comparing against established work standards

Raters rates each person against several items concerning traits, attitudes, skills
and knowledge, behaviors and work results.
1. Graphic Rating Scale:
a) Both numerical ranges and written descriptions
b) Assess two types of factors: Job-related and Personal characteristics
1. Behaviorally anchored rating scales (BARS)
2. Forced-choice rating method
3. Management by objectives (MBO)
Performance Appraisal Process

1. Identifying specific appraisal goals

2. Defining performance expectations

3. Choosing an appropriate appraisal method

4. Appraising performance

5. Providing feedback
Performance Appraisal Criteria

 What aspect of a person‘s performance should be evaluated…

1. Traits: attitude, appearance, initiative.
2. Behaviors: For example: Appropriate behavior to evaluate for a manager
might be leadership style.
3. Task outcomes: Quality, Quantity, Timeliness
4. Cost Effectiveness
5. Need for supervision
Performance Appraisal Responsibility

 Immediate supervisor
 Subordinates
 Peers
 Self appraisal
 Clients
 Committees
 360 degree
 Team appraisal
Performance Appraisal Complexities

 Factors distorting appraisal/ rating errors

1. Bias
2. Halo and Horn effect
3. Central tendency
4. Leniency (Inflated ratings)
5. Strictness
6. Recency and primacy
7. Perpetual set
Solutions to Appraisal Problems

 Focus on mainly two areas: the appraisal system and training.

1. Multiple raters
2. Different timing
3. Job standards
4. Feedback
5. Training the appraisers: Need training in (a) developing results-oriented
performance standards (b) doing the evaluating, and (c) Conducting the
appraisal interview.
How should appraisal be done…

 By comparing with other employees

When appraisal data are used for administrative purposes, it is better to
compare one employee‘s performance against the performance of others.
 Disadvantages: As this system measures only overall, not specific behaviors,
so it is not helpful for development purposes. By this process, it is not possible
for employees to know how well or poorly they are doing relative to job
standards.
The usual methods under this system are-
1. Simple Ranking
2. Paired Comparison
3. Forced Distribution
How should appraisal be done…

 By comparing against established work standards

Raters rates each person against several items concerning traits, attitudes, skills
and knowledge, behaviors and work results.
1. Graphic Rating Scale
a) Both numerical ranges and written descriptions
b) Assess two types of factors: Job-related and Personal characteristics
2. Behaviorally anchored rating scales (BARS)
3. Forced-choice rating method
4. Management by objectives (MBO)
How should appraisal be done…

 Other methods:
1. Critical incidents
2. Essay
3. Checklist
4. Annual review
5. Appraisal/ Evaluation interviews
Conducting the Formal Appraisal
Interview
 Ask for a self-assessment
 Invite participation
 Express appreciation
 Minimize criticism
 Change the behavior, not the person
 Focus on solving problems
 Be supportive
 Establish goals
 Potential Appraisal

 Potential appraisal refers to the identification and evaluation

of hidden talents and underlying skills of a person. The
potential appraisal could be a future-oriented assessment
done by organizations to relieve potentialities of the
employees to assume a higher position and responsibility in
the organizational hierarchy. It helps in determining the
strength and weakness of individuals with a view of
predicting their future performance. It helps to estimate the
promotability of an individual in the organizational hierarchy
and help chalk out employee's career plan. In simple terms,
performance assessment reveals how an employee did work
while potential appraisal estimates how well the employee
might do.
 Potential Appraisal Vs. Performance
Assessment
 Potential appraisal and Performance assessment are the two
terms that go hand in hand. The former is a forward-oriented
process and the latter a backward oriented process that gives
an employer a well-refined outlook of the possibilities of the
employees. Performance assessment points out the pros and
cons of the present conduct of employees while potential
appraisal shows his flexibility in carrying out works on a future
date. The potential appraisal is a part and parcel of
Performance assessment as it helps to view the future and
thereby guides and directs the organization towards achieving
its goal and growth.
Potential Appraisal Process

 Steps in the potential appraisal system---

1. Detailed Job Description
2. Job Specified Quality Traits
3. Rating Mechanism
4. Organizing the system
a) The interest of top management
b)Co-operation from employees
c) Conducive working condition
d)Healthy organizational culture
e) Feedback system
CHAPTER-SIX
 Performance Monitoring
Performance monitoring may be defined as a process of promoting a climate
of continuous learning and development, helping to sustain employee
performance at planned level, enhancing individual competencies and
making employee competitive within the organization for productive
contributions.
Performance monitoring provides:
■ A description of the specific steps to be taken for continuous performance
improvement of the employees on conclusion of performance appraisal
■ The names of those personnel who will assist the employee
■ A record/document of various correction steps taken and result attained
■ The effect of the determination on workload and other employees
■ Effective utilization of resources of the organization and its work units
■ Value creation by the employees
 Monitoring of performance entails the analysis of the following five areas:

1. Results successful achievement of job tasks

2. Effectiveness accuracy of performed job tasks
3. Progress towards improvement areas
4. Methods and procedures : Use of improved work methods and better
procedures
5. Work habits: Cultivation of right work ethics and attitudes
Characteristics of performance monitoring
 It is an aftermath activity of performance appraisal.

 It is a tool to keep employee performance focused as required by the

objectives and goals set in the performance plans.

 It provides opportunities to employees to correct performance regularly by

making use of feedback from managers.

 It provides training and development opportunities to employees.

 It facilitates career development of employees.

 It strengthens relationship between management and employees, based on

principles of Management by Facts
Objectives of performance monitoring
 To provide learning, training, and development opportunities to employees
 To improvise individual job performance as well as methods and techniques
of measuring performance
 To review the ways of defining and agreeing of performance criteria of
teams and individual employees at the performance planning level
 To assess commitment and motivational level to accept and realize
performance feedback in positive perspectives
 To incorporate change necessitated by external environment and affect
overall performance improvement of the organization
DSMC/ATI Performance Improvement
Model
Process of Performance Monitoring
Performance Management Documentation
 Performance management documentation refers to the systematic
process of recording agreed performance targets, support, tools, and
resources needed, measuring actual performance against targets, and
finally providing feedback and agreeing on a performance improvement
plan. It also makes the performance management a formal and
transparent process so that it is not only successful in attaining its objectives,
but is also ethical and legally defensible.
Performance Planning
The performance planning documentation involves the
following:

 Enlisting the key performance indicators (KPI) of the work

unit (e.g., department)
 Determining and enlisting the KPAs for teams
 Identifying, enlisting, and agreeing on KRAS for
individual employees
 Enlisting equipment, tools, and support required
Performance Managing
The performance managing documentation involves the following:

 Tracking performance plans of the individuals, teams, and the department

 Documenting deviations or failures in performance plans

 Enlisting reasons and corrective action plans with the accountability of

individuals clearly recorded

 Writing results achieved as enunciated in corrective action plans

 Enlisting failures in some targets for reasons beyond the control of individual
employees or managers
Performance Appraisal
The performance appraisal documentation involves the following:

 Reviewing performance of employees through a formal appraisal instrument

 Measuring actual performance against targets and recording in the appraisal

instruments.

 Assigning score to individual employees in writing to differentiate between

excellent performers and marginal performers

 Providing feedback to the employees on actual performance assessed against

performance expectations and obtaining the agreements (or disagreements)
of the individual employees in the appraisal instruments by way of signature

 Recommending in writing reward in consonance with performance evaluated

Performance Monitoring
The performance monitoring documentation involves

 Providing feedback on performance concerns to employees.

 Agreeing on a joint action plan for performance improvement and documenting the
same for reference.
 Comparing the progress achieved by employees vis-à-vis joint action plan and noting
down progress report.
 Sharing the report with employees. If the employee does not show the de- sired
improvement, then performance counseling is given to the employee and the
proceedings and commitment noted in a counseling form with the employee's comments
and signature.
 If the employee does not still improve, the defaulting employee may be given warning
either in verbally or in writing, specifying the performance concerns and consistent failure
of the employee to improve in spite of counseling and support rendered by managers.
These warnings are inserted in the personal file of the employee by HR heads.
 The final step is the initiation of disciplinary action for terminating the service of the
employee for non-performance.
CHAPTER-SEVEN
 Implementing Performance Management
critical success factors of performance management
system
 Clear shared strategic vision and objectives supported by business plans
 Translation of the organizational vision into operational realities including
identification of core value drivers, business unit plans, and objectives
 Existence of user-friendly policies and internal business processes that are
integrated with other systems such as recruitment, training, and rewards and
the overall HR plans within the organization
 Existence of requisite knowledge, skills and capabilities of employees, and
management across the organization
 An unerring commitment on the part of the organization's leadership to HRS
development and performance as a strategic imperative
Reasons of failures of performance
management system
 Lack of management commitment

 Lack of performance-oriented culture

 Lack of proper management tools and techniques

 Lack of ownership

 Lack of flexibility of the system

 Strategies for Effective Implementation of
Performance Management
 Top management agreement, commitment and leadership
 Building a performance oriented work culture
 Manager‘s participation and accountability
 Training and feedback
 Benchmarking best practices
 De-linking reward administration system
 Communication and feedback
 Information infrastructure
 Organizational behavior improvement
Factors Affecting Effective Use of
Performance Management
 Corporate culture
 Alignment
 Review and update
 Communication and reporting
 Involvement of employees
 Reward linkage
 Management leadership and commitment
 High Performance Teams
Teams have a vast capacity to drive an organization towards creativity and
innovation, thereby making an organization more adaptive to market forces,
and tap into its intellectual resources to drive to breakthrough results.
A team is said to be a high-performance team if it satisfies the following
criteria:
 Highly adaptive

 Difficult to build

 Expensive to maintain

 Glorious to behold
Characteristics of High-performance Teams
 Participative leadership
 Aligned on purpose and vision
 Task focused
 Shared responsibility
 Innovative
 Problem solving
 Communicative
 Responsive
 Determinants of High Performance Teams
 Commitment
 Trust
 Purpose
 Communication
 Involvement
 Process orientation
 Continuous improvement
 Steps in building and leading high
performance team
 Building commitment

 Making people stakeholders

 Risks and results

 Getting the job done

 Getting the team

To summarize, building and leading high-performance teams requires
emphasis on the following:

 Focus on challenges, not teams Putting together a high-performance

challenge is the catalyst for creating a high-performance team.
 It can start with one person A single leader can be the facilitator of a
challenge that can transform an organization's culture and future.
 Seize setbacks and embrace resistance Organizational cultures typically
reward predictability and avoid risk. Shifts in culture come from embracing
difficulties and leveraging them to achieve results.
 People want to be in winning team Once things begin to happen,
skepticism and resistance give way to human nature people want to be
part of a winning team.
 This is not a one-time event Building a high-performance team begins with
near-term wins, but the returns continue long term. The organization's new
capabilities will outlive the initial team effort.
 Key Team Roles Proposed by Bablin
 Plant
 Shaper
 Co-ordinator
 Implementer
 Team worker
 Resource investigator
 Specialist
 Evaluator
 Completer
CHAPTER-EIGHT
Role of HR Professionals in Performance
Management
 Competency builder
 Linking work goals to performance expectations
 Change agent
 Organizational rejuvenation initiator
 Customer relationship management trainer
 Effective communication facilitator
 Talent farmer
 Strategic recruiter
 Strategic outsourcer
 Ethics custodian
 Effective strategic roles of HR professionals
 Creating an information sharing culture

 Training managers to conduct performance management effectively.

 Training employees to participate effectively in the performance

management system.

 Acting as an ‗Internal Consultant‘ for managers and employees when the

inevitable problems occur.