Performance Appraisal

Performance Appraisal
● Performance appraisal, also
known as employee appraisal,
is a method by which the job
performance of an employee is
evaluated (generally in terms of
quality, quantity, cost and time).

● Performance appraisal is a part

of career development.

● Performance appraisals are

regular reviews of employee
performance within
organizations.
 Objectives of Performance
Appraisal
Review the performance .

Judge the gap between actual and the desired performance.

Strengthen the relationship and communication between
superior – subordinates and management – employees.
Diagnose the strengths and weaknesses of the individuals so
as to identify the training and development needs of the
future.

Provide feedback to the employees regarding their past

performance.

Provide clarity of the expectations.

Main Purposes of Performance Management

● Individual Rewards
● Feedback for Sub-Ordinate
● Recognition of Superior Performance
● Documentation of Weak Performance
● Personnel Decision-Making
● Future Goal Commitments (Planned
Achievements)
Who Performs the Appraisal?
● Immediate Supervisor ● Evaluation Teams
● Higher Management ● Customers
● Self-Appraisals ● “360° Appraisals”
● Peers (Co-Workers)
 Performance Appraisal Methods
● Critical Incidents. The supervisor's attention is focused on
specific or critical behaviors that separate effective from
ineffective performance.

● Graphic Rating Scale. This method lists a set of

performance factors such as job knowledge, work quality,
cooperation that the supervisor uses to rate employee
performance using an incremental scale.

● Behaviorally Anchored Rating Scales (BARS). BARS

represent a range of descriptive statements of behavior
varying from the least to the most effective.
– In this a rater is expected to indicate which behavior on
each scale best describes an employee’s performance
Critical Incident method :Example
Ex: A fire, sudden breakdown, accident

Workers reaction scale

A informed the supervisor immediately 4

B Become anxious on loss of output 3
C tried to repair the machine 2
D Complained for poor maintenance 1
 BARS: Example
Performance Points Behavior

Extremely 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 and roam around
purposelessly.
 Contd..
● Management by Objectives. MBO evaluates how
well an employee has accomplished objectives
determined to be critical in job performance.
– This method aligns objectives with quantitative
measures such as sales, profits, zero-defect units
produced.

Common ingredients: MBO

Goal specificity
Explicit time period
Performance feedback
Participation in decision making
MBO
First step: MBO emphasizes collectively set goals that are tangible,

verifiable, and measurable

Second step: setting the performance standard for the subordinates

Third step: the actual level of goal attainment is compared with the

goals agreed upon

Final step: involves establishing new goals and possibly new

strategies for goals not previously achieved

360 Degree Performance Appraisal
360 - Degree Appraisal is a system or process in
which employees receive confidential, anonymous
feedback from the people who work around them..
What are 3600 Measures ?
● 360 degree measures behaviors and competencies.

● 360 degree addresses skills such as listening, planning,

and goal-setting.

● 360 degree focuses on subjective areas such as teamwork

character, and leadership effectiveness.

● 360 degree provides feedback on how others perceive an

employee.
360 has Four Components..
● Self Appraisal Self appraisal gives a chance to the
employee to look at his/her strengths and
● Superior’s weaknesses, his achievements, and judge
his own performance.
Appraisal
● Subordinate’s

Appraisal
● Peer Appraisal
360 has Four Components..
● Self Appraisal

● Superior’s
Superior’s appraisal forms the traditional
Appraisal part of the 360 degree appraisal where the
employees’ responsibilities and actual
performance is rated by the superior.
● Subordinate’s

Appraisal
● Peer Appraisal
360 has Four Components..
● Self Appraisal

● Superior’s

Appraisal
● Subordinate’s Subordinates appraisal gives a chance to
judge the employee on the parameters like
Appraisal communication and motivating abilities,
superior’s ability to delegate the work,
leadership qualities etc.
● Peer Appraisal
360 has Four Components
● Self Appraisal

● Superior’s

Appraisal
● Subordinate’s

Appraisal
● Peer Appraisal feedback given by peers can help to find
employees’ abilities to work in a team,
co-operation and sensitivity towards
others.
720 Degree Performance Appraisal
● Considered an “all-round”
appraisal, the 720 degree
performance appraisal gives
an employee more than
feedback from one person.

● This appraisal gives the

employee a lot of feedback
generally from anywhere
from 5 to 8 people, to
provide the employee with
an all round assessment of
his or her on the job
performance.
720 Degree Performance Appraisal
Cont..

● 720 degree as the name

suggests is 360 degree
twice

● It provide for two round

of feedback (a pre and
post ) or a feedback
approach which is done
again after nine to twelve
months.
Needs for 720 System..
Assessment system should be 360 degrees.
Assessment should be done twice a year.
Different assessments should be tabulated and
compared for a given period.
Ensure that the rating instruments are relevant, valid
and reliable
Treat employees with sensitivity and respect
WHY USE 720….
● This system is more development focused than
performance alone, and supplements training and
development functions in a better way

● Without these critical competencies, executives and

managers are less likely to be able to lead these
organizations toward successful implementation of
strategic changes.

● A powerful developmental tool because when conducted at

regular intervals it helps to keep a track of the changes,
others’ perceptions about the employees
 Advantages
● Improved Feedback From More Sources
● Performance Development
● Responsibility for Career Development
● Improved Customer Service
● Training Needs Assessment
 Disadvantage
● Exceptional Expectations for the Process
● Insufficient Training and Process Understanding
● Focus on Negatives and Weaknesses
● Rater Inexperience and Ineffectiveness
● Requires commitment of top management and the
Human resources (time, financial resources etc)\
Types of Rating Errors
● Leniency/Strictness Error
● Halo Effect
● Stereotyping Error
● Central Tendency
● Recency Error
● Similar-To-Me Error/Projection Error
● Contrast Error
Error of Central Tendency
● Performance-rating error in which all
employees are rated about average.
Leniency or Strictness Error
● Performance-rating error in which the
appraiser tends to give employees either
unusually high or unusually low ratings.
Recency Error
● Performance-rating error in
which the appraisal is based
largely on the employee’s
most recent behavior rather
than on behavior
throughout the appraisal
period.
Similar-To-Me Error/Projection Error

● Performance-rating error in which an

appraiser inflates the evaluation of an
employee because of a mutual personal
connection.
 Rating Errors Example
Job Rating Scale
Halo EXCELLENT
on all factors

Job Rating Job Rating Job Rating

Job Rating Scale
Scale Scale Scale Employee
Leniency Employee A
Employee B Employee C D
EXCELLENT
EXCELLENT SUPERIOR EXCELLENT
Job Rating Job Rating Job Rating
Job Rating Scale
Central Scale Scale Scale Employee
Employee A
Tendency Employee B Employee C D
AVERAGE
AVERAGE AVERAGE AVERAGE

Recency Job rating scale behavior during

Bias the last month has been POOR.
S. Performance Appraisal Error Description
No.
1 Leniency Error Extreme rating either on high or low side

2 Similarity Error Bias appraisal because of personal

affiliation
3 Recency Error Recent behavior evaluation instead of
entire performance appraisal period

4 Contrast Error Rating in comparison to other members

5 Central Tendency Error Average rating for all employees

6 Spill-Over Effect Past performance or standing dominate
recent evaluation
7 Hallo Error One characteristic or aspect of performance
dominate entire performance appraisal
rating
8 Perceptual Error The previous held believe of perception
influence appraisal
 Assessment Centres

Introduced in the US and UK in 1943

An assessment center typically involves the use of methods like
social/informal events, tests and exercises, assignments being given
to a group of employees to assess their competencies to take higher
responsibilities in the future. Generally, employees are given an
assignment similar to the job they would be expected to perform if
promoted. The trained evaluators observe and evaluate employees
as they perform the assigned jobs and are evaluated on job related
characteristics.
In India, some organizations are also using this technique such as:
Eicher, Crompton Greaves, Modi Xerox, the RBI (Reserve Bank of
India) etc.
the major competencies that are judged in assessment centers are
interpersonal skills, intellectual capability, planning and
organizing capabilities, motivation, career orientation etc.
The Potential Appraisal
● Potential appraisal may thus be defined as a process of
determining an employee’s strengths and weaknesses, and
hidden talents with a view to use this as a predictor of his future
performance. This would help determine the promotability of an
individual to a higher position and help chalk out his career
plan.
● The techniques of potential appraisal are as follows:
Self Appraisal, Peer Appraisal, Supervisor Appraisal,
MBO, Psychological and Psychometric Tests,
Management Games like Role Playing, Leadership
exercises etc.