CHAPTER SIX

Performance
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Appraisal
WHAT IS PERFORMANCE ?
 It is the accomplishment of a given task
measured against preset known standards of
accuracy, completeness, cost, and speed.
 Employees are performing well when they are
productive.
 Productivity implies both concern for
effectiveness and efficiency.
 Performance also includes personnel data such as
measures of accidents, turnover, absences,
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and tardiness.
WHAT IS APPRAISAL?
 Appraisals are judgments of the characteristics,
traits and performance of others.

What is Performance appraisal?

 is the logical evaluation of the employees'
performance so as to understand their abilities
for further growth and developments.
 maintain records with an aim of determining
compensation packages, salaries raises,
wage structures etc.
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Cont….
 It is a systematic and periodic process that assesses
an individual employee’s job performance and
productivity in relation to certain pre-established
criteria and organizational objectives.
 Performance appraisals are widely used for
administering wages and salaries, giving
performance feedback, and identifying individual
employee strengths and weaknesses.
 They are used to assess an employee’s performance
and provide a platform for feedback about past,
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current, and future performance expectations.
 OBJECTIVES/GOALS OF PERFORMANCE APPRAISAL

i. Providing basis for promotion/transfer/termination

ii. Enhancing employees’ effectiveness:-

Helping employee identify his strengths and
weaknesses

iii. Identifying employees’ training and

development needs

iv. Removing discontent: - helps in identifying

and removing factors responsible for workers’
discontent 5
Cont…..

v) Developing interpersonal relationship:

superior-subordinate is dependent on the other for
better performance and success.

vi) Aiding wage administration

vii) Exercising control: encourage managers to

think carefully about the general factors that
influences the performance of their employees

viii) Improving communication: - it serves as a

mechanism for communication between superiors
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and subordinates
THE PERFORMANCE APPRAISAL PROCESS

1. Establishment of performance standards

2. Communicate performance standards

3. Measurement of performance

4. Comparing actual performance with

standards.

5. Initiation of corrective action when

necessary

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1. Establishment Performance Standards
 performance standards should be clear and
objective enough to be understood and measured
2. Communicate performance standards
 It should not be part of the employees’ job to
guess what is expected of them

3. Measurement of Performance
 To determine what actual performance is, it is
necessary to acquire information about it.
 We should be concerned with how we measure
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and what we measure.

Cont…
 Four common sources of information used by
mangers to measure actual performance:
 personal observation
 statistical reports
 oral reports and
 written reports.

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4. Comparing actual performance with
standards.
 To note deviations between standard
performance and actual performance
 One of the most challenging tasks facing
managers is:
 to present an accurate appraisal to the
subordinate and
 have the subordinate accept the appraisal in a
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constructive manner.
Cont….
 The impression that subordinates receive
about their assessment has a strong impact on
their self-esteem and, very important, on their
subsequent performance.
 conveying good news is considerably less
difficult than conveying the bad news that
performance has been below expectations.

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5. INITIATION OF CORRECTIVE ACTION WHEN NECESSARY

Corrective action can be of two types

1. Immediate
 Deals Mainly/predominantly with symptoms,
“putting out fires”,
 corrects something right now and gets things back
on track

2. Basic and delve

 gets to the source of deviation and seeks to
adjust the differences permanently. 12
PERFORMANCE APPRAISAL METHODS

1. Critical Incident Method

2. Checklist

3. Graphic Rating Scale

4. Paired Comparison

5. Management by Objectives

6. 360 degree appraisal

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1. CRITICAL INCIDENT METHOD
 focuses the rater’s attention on those critical or
key behaviors that make the difference between
doing a job effectively and doing it ineffectively
 specific behaviors are cited, not vaguely defined
personality traits.
 A behaviorally based appraisal is more valid than trait-
based appraisals because it is clearly more job
related
 a list of critical incidents on a given employees
provides which behaviors are desirable and which
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ones call for improvement

Example
 July 20 – The sales clerk patiently attended to the
customers complaint. He is polite, prompt,
enthusiastic in solving the customers' problem.
 On the other hand the bad critical incident may
appear as under:
 July 20 – The sales assistant stayed 45 minutes
over on his break during the busiest part of the
day. He failed to answer the store manager's call
thrice. He is lazy, negligent and uninterested in
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work.
2. CHECKLIST
 In the checklist, the evaluator uses a bit of
behavioral descriptions and checks of those
behaviors that apply to the employee.
 The evaluator merely/only goes down the list and
gives “yes” or “no” responses.
 The rater does not actually evaluate the
employee’s performance; he/she merely records
it.

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Cont…..
 The final evaluation can then be returned to the
rating manager for discussion with the
subordinate, or someone from the personnel
department can provide the feedback to the
subordinate
The following are typical checklist statements:
 ________ can be expected to finish work on time

 ________ seldom/rare agrees to work overtime

 ________ is cooperative and helpful

 ________ accepts criticism

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 ________ strives for self-improvement
3. GRAPHIC RATING SCALE
 One of the oldest and most popular methods of
appraisal.
 They are used to assess factors such as quantity
and quality of work, job knowledge,
cooperation, loyalty, dependability,
attendance, honesty, integrity, attitudes, and
initiative etc.
 In the design of the graphic scale, the challenge is
to ensure that both the factors evaluated and the
scale points are clearly understood and18
unambiguous to the rater.
Quantity of work: Volume Unsatisf Fair Satisfa Good Outstand
of work under normal actory ctory ing
working conditions
Quality of work: Neatness,
thoroughness and
accuracy of work
Knowledge of job
A clear understanding of
the factors connected with
the job
Attitude: Exhibits
enthusiasm and
cooperativeness on the job
Dependability:
Conscientious, thorough,
reliable, accurate, with
respect to attendance,
reliefs, lunch breaks, etc.
Cooperation: Willingness 19
and ability to work with
others to produce desired
4. PAIRED COMPARISON
 The paired comparison method is calculated by
taking the total of [n (n-1)]/2 comparisons.
 It ranks each individual in relationship to all
others on a one-on-one basis.
 The method can become unwieldy when large
numbers of employees are being compared.

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21
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5. MANAGEMENT BY OBJECTIVES
 It is a process that converts organizational
objectives into individual objectives.
 Consisting of four steps

i. Goal Setting: departmental and individual objectives

are set from organization’s overall objectives

ii. Action Planning: means are determined for

achieving the ends established in goals setting .
 Realistic plans are developed to attain the
objectives
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.
Cont…..

3. Self-control :- refers to the systematic

monitoring and measuring of performance
 is built on the assumptions that individuals can
be responsible, can exercise self-direction, and
do not require external controls and threats
of punishment

4. Periodic Reviews :- progress reviews, corrective

action is initiated when behavior deviates from
the standards established
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Cont….

It includes:
 identifying the activities necessary to
accomplish the objective,
 establishing the critical relationships between
these activities,
 estimating the time requirement for each
activity, and
 determining the resources required to
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complete each activity
The advantages of MBO:

a) It is result –oriented. It assists the planning

and control functions and provides motivation.

b) Employees know exactly what is expected

of them and how they will be evaluated.

c) Employees have a greater commitment to

objectives that they have participated in
developing than to those unilaterally set by their
bosses.

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6. 360 DEGREE APPRAISAL

 involves collecting perceptions about a

person’s behavior and the impact of
that behavior
 360 degree feedback also called multi-
rater feedback, multi- source
feedback, full-circle appraisal, and
group performance review

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6. 360 DEGREE APPRAISAL…..

 It provides each employee the opportunity

to receive performance feedback from his
or her supervisor and four to eight
peers, subordinates and customers
 allows each individual to understand how
his/her effectiveness as an employee,
co-worker, or staff member is viewed
by others 28
360 DEGREE APPRAISAL …..
 People who are chosen as raters are usually those
that interact routinely with the person receiving
feedback.

The purpose of the feedback is to:

 Assist each individual to understand his or her
strengths and weaknesses.
 Contribute insights into aspects of his or her
work needing professional development.
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FEATURES OF 360 DEGREE APPRAISAL

 Well-managed, well-integrated 360 degree

processes positive features:
 Improved Feedback from more sources
 Team Development: Helps team members learn
to work more effectively together
 Personal and Organizational Performance
Development: it best methods for understanding
personal and organizational developmental
needs
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Features of 360 degree appraisal ….
 Responsibility for Career Development:
provide excellent information to individuals about
what they need to do to enhance their career
 Reduced Discrimination Risk: The judgmental
errors of the supervisors are eliminated

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FEATURES OF 360 DEGREE APPRAISAL ….

 Improved Customer Services: Feedback from

internal or external customer enable the
individual to improve the quality, reliability,
promptness, and comprehensiveness of
these products and services to his/her
customers.
 Training Needs Assessment: provides
comprehensive information about organization
training needs and helps in mounting relevant
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training program
 PROBLEMS IN PERFORMANCE APPRAISAL
 A number of errors that significantly impede
objective evaluation.

i. Leniency Error
 evaluator value system that acts as a standard
against which appraisals are made
 Relative to the true or actual performance an
individual exhibits, some evaluators mark high
and others low
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Problems in Performance Appraisal …..
 Positively lenient overstated individual’s
performance
 Negative lenient error understates individual’s
performance
 To reduce harsh and lenient rating ask raters to
distribute ratings- forcing a normal
distribution

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PROBLEMS IN PERFORMANCE APPRAISAL …..
ii. Halo Effect
 a person who is judged positively based on one
aspect is automatically judged positively on
several others without much evidence.

iii. Horn effect

 a person who is judged negatively on one
aspect is automatically judged negatively on
several other aspects without much evidence.
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 this is the opposite of the halo effect.
Problems in Performance Appraisal …..Low

iv. Appraiser Motivation

 evaluator may be reluctant to give a realistic
appraisal when they knows poor appraisal could
significantly hurt the employee’s future

V. Central Tendency
 the raters’ tendency to avoid making “extreme”
judgments of employee performance resulting
in rating all employees in the middle part of
a scale. 36
PROBLEMS IN PERFORMANCE APPRAISAL……

vi. Recency vs. Primacy Effect

 Recency Effect : the rater’s tendency to allow more
recent incidents (either effective or ineffective) of
employee behavior to carry too much weight in
evaluation of performance over an entire rating
period.
 primacy effect is the initial impression influences the
decision on year end appraisal irrespective of whether
the employee has been able to keep up the initial
impression or not. 37

 First impression is the last impression

Problems in Performance Appraisal……

vii. Similarity Error

 perception that evaluators have of themselves, they
project those perceptions onto others.

viii. Contrast effects

 This occurs when the manager compares an
employee’s performance to other employees
instead of the company standard.
 When employees are ranked in comparison,
someone must end up at the bottom, even if they
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are exceeding the company standard.

Problems in Performance Appraisal……

ix) Stereotyping (Rater’s Bias)

 raters standard mental picture about a person
because of that person’s age, sex, color, race,
religion, style of clothing, political view, etc
 when a rater gives a higher rate because the
worker has qualities or characteristics similar to
the rater.
 such assessments are based on false
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assumptions/feelings, rather than facts.
 HOW TO MINIMIZE APPRAISAL PROBLEMS
1. Improving validity and reliability of
performance criteria

2. Adopting multiple appraisal and different

timing

3. Providing better feedback

4. Training raters

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