UNIT -4

PERFORMANCE MANAGEMENT
 PERFORMANCE APPRAISAL
 TRAINING AND DEVELOPMENT

Performance Management : Performance management is the process of planning and appraising

performance, giving feedback and counselling to an employee to improve his performance.
Sub process of performance Management
1. Planning performance
2. Appraisal
3. Feed back

Performance Appraisal Or Performance Evaluation

Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in
matters pertaining to his present job and to his potentialities for a better job.
Performance appraisal goes by various names such as performance evaluation, progress rating, merit
rating, merit evaluation etc.
Dale S. Beach, "Performance appraisal is systematic evaluation individual with respect to his or her
performance on the job and his or her potential for development".
Scott, Clothier and Spriegel have defined merit rating or performance appraisal as the process of
evaluating the employee’s performance on the job in terms of requirements of the job.

Purpose of Performance Appraisal

1. Define the specific job criteria against which performance will be measured.
2. Accurately measure job performance.
3. Justify the rewards given to individuals, thereby discriminating between high and low
performance.
4. Define the development experiences the employee needs to both enhance performance in the
current job and prepare for future responsibilities.

IMPORTANCE OF PERFORMANCE APPRAISAL

1. It provides a scientific basis for judging the merit or worth of employees.
2. It is a sound basis for promotion, demotion, transfer or termination of employees.
3. It helps in distinguishing between efficient and inefficient workers.
4. It helps the supervisors to evaluate the performance and know the potentials of their subordinates
systematically.
5. It also helps supervisors to assign work to individuals for which they are best suited.
6. Performance ratings help in guiding the employees.
7. If the performance appraisal is done scientifically and systematically it will prevent employee
grievances.
 Difference Between Performance Evaluation And Job Evaluation

S.NO. PERFORMANCE EVALUATION JOB EVALUATION

1. It identifies the differences among the It is the analysis of various jobs to know
employees in terms of their performance. the demands.
2. The chief purpose of it is to appraise the The purpose of it is to determine the
performance of individuals to take decisions worth of the job on the basis of
like increase in pay, transfer, promotion etc. demands made by it on the average
workers.
3. It rates the man and not the job. It rates the jobs in the organization in
order to determine their worth and fix
the wage or salary level.
4. It is used to taking personnel decisions such It is generally used as a basis of wage
as promotion, demotion, transfer etc. structure in the organization.
Use of Performance Appraisals
1. Promotions
2. Confirmations
3. Training and Development
4. Compensation reviews
5. Competency building
6. Improve communication
7. Evaluation of HR Programs
8. Feedback & Grievances

TECHNIQUES OF PERFORMANCE APPRAISAL

PERFORMANCE APPRAISAL

TRADITIONAL METHODS MODERN METHODS

1. Essay Appraisal Method 1. Management By Objectives
2. Straight Ranking Method 2. 360 Degree Appraisal
3. Paired Comparison 3. Assessment Centre
4. Critical Incidents Methods 4.Behaviorally Anchored Rating
5.Check List Method Scale
6. Graphic Ratings Scale 5. Human Resources Accounting
7. Forced Distribution

1. Essay appraisal method:- This traditional form of appraisal also known as “Free From Method”
involves a description of the performance of an employee by his superior. The description is an
evaluation of the performance of any individual based on the facts and often includes examples
and evidences to support the information.
2. Straight ranking method:- Simplest and oldest method of merit rating. It considers the
employee and his performance as a whole and assigns him a suitable rank in the organization.
 3. Paired comparison: - under this every employee in a job family is compared with every other
employee to determine which is better. The rater is provided with a little booklet containing two
names on each page. The number of rank order would be n (n-1)/2, where n is the total number of
persons to be compared. In this way every employee is compared with every other employee in
the same job family.
4. Critical incidents methods:- A critical incident is a significant act by an employee exceeding or
failing any of requirements of his job. The examples of such incidents are:
i. Helped in implementing new work method.
ii. Become upset over work.
iii. Refused to help a fellow worker.
iv. Suggested an improvement in the work method.

5. Field review: - This is an appraisal done by someone outside employees’ own department
usually from corporate or HR department.

Advantage: Useful for managerial level promotions, when comparable information is needed.
Disadvantage: outsider is generally not familiar with employees work environment,
observation of actual behaviors not possible.
6. Check list method:-A list of specific statements describing the performance and behavior of
employees is prepared and the rater is asked to tick those statements which correctly describe the
actual behavior of each employee.

Example – Check list for mechanics

S. NO. CHARACTERISTICS TRUE FALSE
1. He is regular on the job.
2. He can anticipate need for repairs.
3. He has complete knowledge of job.
4. He is reliable.

7. Graphic ratings scale:- under this method , the rater places a checkmark on a form next to the
word or phrase describing the degree of merit for each of several traits such as quality of work,
quantity of work, dependability, attitude and so forth.
Merits of Graphic rating scale:
a. It is easy to understand and operate.
b. It shows the degree of each trait and hence is more mathematical.
c. It permits the statistical tabulation of scores.
8. Forced Distribution: - The individuals to be rated are distributed along the given scale and fixed
percentages of employees are assigned to the best and worst ends of the scale and to the middle
bracket. In this system, a five point scale for job performance is used. One end of the scale
represents best job performance and the other end poorest job performance. The supervisor is
asked to allocate approximately 10%of the men to the best end of the scale, 20%in the next
category,40%in the middle category, 20%in the bracket next to low end and 10%in the low
bracket as follow:

10% 20% 40% 20% 10%

Poorest Poorer than Average Better than Best
average average

CRITICISM OF TRADITIONAL METHODS

 1. Scope and objectives: - The scope and objectives of traditional performance appraisal system are
very limited. They are applicable to the operative workers, not applicable to technical,
professional and managerial personnel.
2. Personal judgment of rater: - The general criticism of traditional performance appraisal system
is that they are too subjective in nature because all of them are based on personal judgment of the
rater.
3. Post –appraisal interview:- The traditional methods of performance appraisal do not give much
emphasis to the post- appraisal interview.
Rating errors in traditional methods:
1. Use of abstract words:- Problems of evaluation standards might arise because of the use of very
common words for grading viz. good, adequate, satisfactory and excellent which mean differently
to different evaluators.
2. Halo error:- It occurs when the rater allows one aspect of a man’s character or performance to
influence his entire.
3. Central tendency:-This error occurs when the rater is in doubt about the subordinates or has
inadequate information about them. So he may rate them “averages”.
4. Leniency or strictness:- Some supervisors have a tendency to be easy raters and others to be
harsh in their ratings.
5. Personal bias:- Evaluator’s bias towards some employees can influence their evaluation. Some
studies reveal that sexual and racial stereotype can creep into evaluation.
6. Recent behavior bias:- Often some raters value persons on the basis of their performance in
recent few weeks, average constant behavior is not checked.

MANAGEMENT BY OBJECTIVES (MBO)

Concept of MBO: - It means management by objectives and the performance is rated against the
achievement of objectives stated by the management. MBO is known by different names such as
“management by results”, “Accountability management”, “Performance results and individual
development evaluation(PRIDE)”, “Work planning and review” etc.
The system of management by objectives can be described as a process whereby the superior and
subordinate manager of an organization jointly identify common goals, define each individual’s
major areas of responsibility in term of results expected of him and use these measures as guides
for operating the unit.
Steps in MBO:-
1. Setting of Objectives: - The process of MBO revolves around the setting up of organizational
goals and the goals of various divisions and sub divisions. The goals of individuals are derived
from the divisional or departmental goals.
2. Developing an action plan: - After the targets for the subordinate have been approved by the
superior, both of them should meet to develop an action plan.
3. Establishing check points: - MBO ensures periodic meetings between the superior and the
subordinate to review the progress towards the accomplishment of targets of the subordinate. For
this, the superior must establish check points or standards of performance for evaluating the
progress of the subordinate.
4. Review of performance:- The performance of every individual is evaluated in terms of the
standards or end-results clearly agreed to by the superior and the subordinates. The performance
review is aimed to assist the subordinate to improve his performance in the future. It also helps in
setting fresh goals for the next period.
Merits of MBO
1. Better planning
2. Better organization
3. Self-Control
4. Higher Productivity
 5. Better Appraisal of Performance
6. Executive Development
Limitations of MBO
i. Hesitation in shedding traditional thinking
ii. Poor planning
iii. Lack of training
iv. Limited application
v. Inflexibility
vi. Costly process

ASSESSMENT CENTRE APPRAISAL

This technique was first developed in USA and UK in 1943. An assessment center is a central location
where managers may come together to have their participation in job related exercises evaluated by
trained observers. It is more focused on observation of behaviors across a series of select exercises or
work samples. Assesses are requested to participate in in-basket exercises, work groups, computer
simulations, role playing and other similar activities which require same attributes for successful
performance in actual job. The characteristics assessed in assessment center can be assertiveness,
persuasive ability, communicating ability, planning and organizational ability, self confidence, resistance
to stress, energy level, decision making, sensitivity to feelings, administrative ability, creativity and
mental alertness etc.
Advantage of assessment centre technique –
I. Well-conducted assessment center can achieve better forecasts of future performance and
progress than other methods of appraisals.
II. Also reliability, content validity and predictive ability are said to be high in assessment centers.
III. The tests also make sure that the wrong people are not hired or promoted.
IV. Finally it clearly defines the criteria for selection and promotion.
Disadvantages –
I. Costs of employees traveling and lodging, psychologists, ratings strongly influenced by
assessor’s inter-personal skills.
II. Solid performers may feel suffocated in simulated situations. Those who are not selected for this
also may get affected.

360 DEGREE APPRAISALS

Developed by The General Electric Co. of the USA in 1992.

In India also, several companies have put into practice the system of 360 degree appraisal. These include
Wipro Corporation, Reliance Industries, Thomas Cook, Godrej Soaps, Thermax, Infosys Technologies
etc.
According to Milliman and others ,“ 360 –degree appraisal is the process of systematically
gathering data on a person’s skills, abilities and behaviors from a variety of sources- the manager,
peers, subordinates and even customers and clients”.
Components of 360 degree appraisal
 1. Self Appraisal: - It is a very important part of the 360 degree appraisal system because it gives
the employee absolute freedom to look at his strength and an opportunity to assess the
performance.
2. Superior Appraisal:- This is the most important component of the 360 degree appraisal. It is the
responsibility of the superior to ensure that employee sets goals not only in the area of business
performance but also in the areas that are vital to the organization.
3. Peer Group Appraisal:- Peers play an important role in the life of an employee in the
organization. They can also provide a deep insight into the personality make up, attitude and style
of working of the employee.
4. Subordinate’s Appraisal:- The most distinctive feature of 360 degree appraisal is the role of
subordinates in appraisal. The purpose of subordinate’s appraisal is to get first hand assessment of
how the subordinates perceive their superior to be in terms of :
a. Delegation of authority
b. Guiding and training of subordinates
c. Motivation of subordinates
d. Team building etc.
Advantages of 360 Degree Appraisal

 It encourages participation of all and thus makes HR decisions more qualitative.

 360 degree feedback is more impartial and objective than a one-to-one assessment of employee
traits.
 It broadens the scope for employees to get various says for enhancing their job role, performance,
and views.
 It can be motivating for the employees who undervalue themselves.
 It encourages teamwork.
 It is more credible as various people give almost same feedback from various sources.
 It brings into limelight the areas of employee development as it confirms the employee strengths
and identifies his weaknesses on which he can work upon.
 It creates an environment of trust and loyalty in an organization.

Essentials of effective appraisal programme

1. Determination of purpose
2. Training of appraiser
3. Establishing standards of performance
4. Frequency of appraisal
5. Preparation of forms

TRAINING AND DEVELOPMENT

TRAINING
“Training is the act of increasing the knowledge and skills of an employee for doing a particular job”.

Training implies enhancing the skills and knowledge of the employees for performing a specific job.
Training tries to improve employees’ performance in current job and prepares them for future job. The
crucial consequence of training is learning.

TRAINING, DEVELOPMENT AND EDUCATION

‘Training is the process by which attitudes, skills and abilities of employees to perform specific job are
increased’.
But the term ‘development ’means growth of the individual in all respects.
 “Development is a long-term educational process utilizing a systematic and organized procedure by
which managerial personnel learn conceptual and theoretical knowledge for general purpose.”
“Education is a process by means of which knowledge, learning, understanding, and mental outlook of the
employees are improved so as to bring about their better adjustment with the working environment.” .

Objectives (purpose) of Employee Training Programmes

1. To prepare employees to meet the varying and challenging needs of the job and organization.
2. To provide knowledge and skills to new entrants and to help them to perform their role and job
well.
3. To coach employees for more complex and higher level jobs.
4. To educate employees new and innovative ways and techniques of performing job.
5. To improve the attitudes and behavior of employees.

Needs and importance of training:-

1. Training is a total of effective management.
2. Training reduces the need for constant and close supervision.
Value of training to the organization
a. Systematic learning
b. Better performance
c. Recruitment through promotion
d. Better utilization of machines and materials
e. Economical supervision
Value of training to the employees
a. Increased skills and knowledge
b. High productivity
c. Opportunity for promotion
d. Increased mobility
e. High morale
f. Less accidents
TRAINING NEED ASSESSMENT (TNA)
For identifying training needs, three types of analysis is useful:
i. Organization Analysis:- It involves a total analysis of the organization structure objectives,
its human resources and future plans etc.
ii. Task Analysis:- Analysis of the job and its various conditions will indicate the skills and
training required to perform the job according to the standards.
iii. Manpower Analysis: - The total manpower environment of the organization has to be
carefully analyzed.

Learning: - Learning is a change in behavior through education and training, practice and experience.
Principles of learning:-
1. Trainee must be motivated to learn
2. Information must be meaningful
3. Learning must be reinforced
4. Organization of material
5. Distribution of learning periods
6. Feedback on learning
KINDS OF TRAINING PROGRAMMES
i. Induction or orientation training- It is concerned with the problem of orienting a new
employee to the organization and its procedures, rules and regulations.
 ii. Job training- Job training is given in different ways to make the worker proficient in
handling machines, equipment and materials so that operations are smooth and faultless and
accidents are avoided.
iii. Craft training-Training for craftsmanship involves preparation not for a single job but for
the many types of related jobs which can be assigned to a competent craftsman.
iv. Learner Training- Learner training programme is meant for those people who do not have
sufficient vocational background and knowledge about the jobs for which they have been
selected.
v. Internship Training- Under this method the vocational or professional institute enters into
arrangement with a big business enterprise for providing practical knowledge to its students
through actual work experience.
vi. Training for Promotion- The existing talented employees may be given adequate training to
make them eligible for promotion to higher jobs in the organization.
vii. Refresher Training or Retraining- Refresher training is meant for the old employees of the
enterprises. The basic purpose of refresher training is to acquaint the existing work force with
the latest methods of performing their jobs and improve their efficiency further.
METODS OF TRAINING:-
1. Vestibule Training:- The employees are taken through a short course under working conditions
that are similar to actual shop ,sales or office conditions. Vestibule training is suitable where it is
not desired to put the burden of training on line supervisors and where a special coaching is
required. The staff of the vestibule school consists of expert and specialist instructors.
Merits of vestibule training:-
i. It gives more emphasis on teaching skills than on getting production.
ii. Trainees get an opportunity to get accustomed to work-routines and recover from
their initial nervousness before going on the actual job.
iii. It does not interfere with the regular production.
Demerits:-
i. It may create adjustment problems for the trainees when they return to the
place of job.
ii. It is relatively expensive.
2. On-The-Job Training:- Under this method, the worker is trained on the job and at work place.
This enables him to get training under the same working conditions and with the same processes,
materials and equipment that he will be using ultimately. Effective on-the-job training depends
primarily upon qualified trainers.
Forms of on-the-job
i. Coaching- In this, superior teacher job knowledge and skills to the subordinates. The
emphasis is on learning by doing.
ii. Understudy- The purpose of under-study is to prepare someone to fill the vacancy
caused by death, retirement, promotion of the superior.
iii. Position Rotation- The trainee is periodically rotated from job to job so that he
acquires a general background of different jobs and becomes a versatile worker.

Advantage:-
 It permits the trainee to learn at the actual equipment and in the environment of the job.
 Relatively cheaper and less time consuming.
Limitation:-
 Expert guidance may not be available to the employee.
 The weakness of the supervisor or worker from whom the new employee learns are passed on to
him.
  There is a disturbance in the production schedules. The supervisor is more interested in getting
work than teaching the skills.
3. Off-The-Job Training(Lecture method):-
 Off-the-job training is provided to the employee away from his job.
 It is generally theoretical in nature and is imparted in a class-room type atmosphere.
 It is associated more with knowledge than with skills.
 The classroom training is used when concepts, theories, problem solving skills and new
attitudes are to be taught.
Merits:-
I. It can be easily used for training large groups.
II. Thus, the cost per trainee is low.
III. Lectures can easily be combined with other techniques.
Demerits:-
I. The learners may be passive.
II. It violates the principle of learning-by-doing and constitutes one-way communication.
Programmed instructions:-
 Programmed instruction was developed in the late 1950’s for both school and industrial
applications.
 The programmed instruction include elaborate teaching machines, films, sound tapes,
programmed books, illustrations, printed material diagrams, whatever may be the method of
programmed instructions, it basically provides feedback to the learner whether his response is
correct or not.
Computer- Assisted Instruction:’- Computer- assisted instruction is based on some of the learning
principles employed in programmed instruction.

EXECUTIVE DEVELOPMENT OR MANAGEMENT DEVELOPMENT

Management or Executive development is an educational process utilizing a systematic and organized
procedure by which managerial personnel learn conceptual and theoretical knowledge for general
purposes.
Management or executive development includes “all those activities and programmes, when
recognized and controlled, have substantial influence on changing the capacity of the individual to
perform his present assignment better and in doing so are likely to increase his potential for future
management assignments”.

Objectives of executive development :-

1) To improve the performance of managers at all levels.
2) To sustain better performance of managers throughout their causes.
3) To encourage and prepare managers to increase their capacity to assume and handle
greater responsibility.
4) To enable the organization to have the availability of required number of managers with
the required skills to meet the present and anticipated (future ) needs of the organization.
5) To prevent managerial obsolescence by providing necessary avenues of updating
knowledge and skills to the managers.
Need and importance of executive development
1) There is a rapid pace of technological development. The manager must have working knowledge
of the uses of new technology.
2) Change in the socio-cultured environment is taking at a fast speed. The manager must have up-to-
date knowledge of these environment to understand the behavior of people in a proper
perspective.
a. To understand the needs of the consumers properly, executive development can be of great help.
 3) For workers satisfaction and motivation.
4) For industrial peace.
5) To impart knowledge to the managerial personnel in the latest management concepts, principles,
techniques and practices.

Components of executive development programme

1. Analysis of development needs:- It is necessary to determine how many
and what type of executives are required to meet the present and future
needs of the enterprise.
2. Inventory of executive manpower:- The inventory is prepared to obtain
complete information about each executive. An analysis of this
information will show the strengths as well as deficiencies of executives
in certain functions relative to the future needs of the organization.
3. Appraisal of present managerial talent:- The performance of every
executive is compared with the standard expected of him. His personal
traits are also analyzed to estimate his potential for development.
4. Planning individual development programmes:- Each executive has a
unique set of physical, intellectual and emotional characteristic.
Therefore, development plan should be tailor-made for each individual.
5. Establishing training and development programmes:- The human
resource development prepares comprehensive development
programmes. It identifies development needs and may launch specific
course in fields of leadership, decision-making human relations etc.
6. Evaluating development programmes:- Considerable money, time and
efforts are spent on executive development programmes. It is ,therefore ,
natural to find out to what extent the programme objectives have been
achieved.
Techniques of management development
I. On-the-job methods:-
b. On-the-job coaching:- In this method, the immediate superior guides the
subordinate about various ways and methods and skills to do the job. The
objectives of coaching is not only to teach the subordinate the necessary skills for
doing his assignment but also to provide him with diversified knowledge so that
he may grow and advance.
Merits:-
1. Increased motivation for the trainee.
2. Minimization of the problems of transferring learning from theory to
practice.
Demerit: - The danger in this method is the possible neglect by the guide or
supervisor.
c. Understudy :- In case of understudy, the trainee is prepared to perform the
work or fill the position of his superior. He is a trainee who at a future time will
assume the duties and responsibilities of the position currently held by his
immediate superior when the latter separates from the job because of transfer,
promotion, resignation, retirement, etc..
d. Job rotation :- Job rotation consists of systematic and co-ordinate effort to
transfer an executive from job to job and plant to plant. The executive is given all
the normal duties and responsibilities which go along with the job to which he is
transferred.
 e. Boards of executives or multiple management:- Under this method, permanent
advisory committee of the managers are constituted. These committees study
various problems and make recommendations to the higher management.
f. Committee Assignment:- A committee is a group of persons appointed to
investigate, take action, make recommendations regarding some matter relating
to the organization. The committee studies the problem or issue in accordance
with the terms of reference.
II. Off-the-job methods:-
a. Role planning:- Role playing may be described as a technique of
creating a life situation, usually one involving conflict between people
and then having persons in a group play the parts of roles of specific
personalities. In industry it is used primarily as a technique for modifying
attitudes and interpersonal skills.
Merits:- 1. It generally increases awareness of the other’s problems.
2. Identify and recognize some of their own faults.
3. In a sense, role playing is more than an experience because it permits
observation, discussion and emphasis that are not customarily a part of experience.
Demerit: - some individuals become too involved in the ‘acting’ and loose sight of the purpose of
the exercise.
b. Sensitivity training:- Sensitivity or T-group training is an important
technique of ‘laboratory training’. The main objective of sensitivity
training is the development of awareness and sensitivity to one’s own
behavioral pattern through interactions with others.
c. Syndicate training:- The syndicate method enables an executive to
acquire a proper perspective of his job in relation to the activities in areas
other than his own and to give him practice in skills, techniques and
procedures which he has to use in his day-to-day work as he rises higher
up a ladder of management.
d. Conference training:- A conference is a group meeting conducted
according to an organized plan in which the participants seek to develop
knowledge and understanding by obtaining a considerable amount of oral
participation. Conferences may be of three types (1) The directed or the
guided conference (2) The consultative conference (3) The problem-
solving conference.
e. Simulation techniques which include:- The basic idea behind
simulation is to construct a situation which closely represents the actual
one. It provides an opportunity to conduct trail or test runs under
conditions that are as close to reality as feasible. There are three basic
simulation techniques:-
(1) Business Games (2) In-Basket and (3) Case Study.
1. Business games:- A business or management game has been described
as a dynamic training exercise utilizing a model of business situation.
2. In-basket training:- This technique emphasizes the necessity for skills
in decision making and ability to pick up the significant information. The
trainee is presented with a situation where he must take over for a
manager who is absent. He is provided with a basket full of materials
with which he must deal.
3. Case study method:- The typical case study used for training is a
through description of some events that actually occurred in an
organization. The trainee read the case and present alternative solution or
lines of action.
 DIFFERENCE BETWEEN TRAINING AND DEVELOPMENT

No. BASIS TRAINING DEVELOPMENT

1 Meaning It is a process of increasing the It is a process of learning and
knowledge and skills. growth.
2 Object The aim is to enable an Its main aim is the overall
employee to do a job. growth of the employee.
3 Time Frame Training is related with the It is related with the present
present job. and future jobs.
4 Orientation It is a job centered process. It is a carrier centered
process.
5 Suitability It is suitable to workers and It is more suitable to
employee. managers or executives.
6 I. Scope It is a part of development It is a wide-term and includes
process. learning.

ESSENTIAL FEATURES OF A GOOD TRAINING PROGRAM

1. Its contents should be chalked out after identifying the training needs.
2. It should be flexible.
3. It should be conducted by well qualified and experienced trainers.
4. It should emphasize both theory and practice.
5. It should have the top management’s support.