Performance Appraisal Overview

Performance Appraisal

• Performance appraisal is a formal process where organizations evaluate employees' contribution to achieving objectives. It assesses strengths and weaknesses in relation to meeting organizational goals.
• Appraising performance involves defining expectations, measuring performance against expectations, recording findings, and providing feedback.
• Every manager informally evaluates employees, but this isn't enough for a rigorous assessment.
• A good evaluation system helps employees become more valuable to the company.
• Understanding employee habits, aptitudes, skills, and work records is important for effective evaluation.
• Performance evaluation considers the different activities employees perform and the various skills required. Organizations need a strong appraisal system.
• Performance appraisal establishes standards and compares observed performance against those standards. This indicates how employees contribute to corporate profits.

Objectives of Performance Appraisals

• Appraisal relies on clear, established standards, using actual performance compared with goals.
• Organizations need a transparent system, with known goals and expectations for high performance.
• Fair appraisal systems reduce the need for subjective judgment, relying on objective standards.
• Appraisal should be based on values and sound, clear expectations.
• Employees' value judgments—without transparent, objective criteria—lead to discouragement.
• A reliable system considers the tasks employees were assigned, resources they had, and promises made.
• The goal is to reveal employee strengths, how they can improve, and how they can perform better.

Importance of Performance Appraisals

• Evaluating employees is complex, requiring specific skills depending on tasks performed.
• Evaluations are important for productivity, contribution to profits, and overall company growth.
• Managers need to actively oversee operations and ensure they don't rely on chance for success.
• Performance appraisals help assess managerial capacity and suitability for a particular position or job.
• Identifying employees appropriate to a specific role is crucial. "Right man for the right job".
• If the wrong person is put in a role, it creates challenges and problems throughout the organization.
• Organizational restructuring is facilitated through sound performance evaluations.
• Evaluation provides valuable feedback and communication between managers and employees.

Approaches to Performance Appraisal

• Informal approach: Continuous, day-to-day feedback on performance; helping employees understand performance expectations and adjust behavior, leading to identification and prevention of mistakes.
• Formal approach: Regularly scheduled appraisals that evaluate performance against specific criteria; provides a basis for promotion decisions and performance improvement.

Persons Responsible for Appraisal

• Immediate superiors: Common method of conducting appraisals.
• Groups of superiors: A committee approach, involving multiple superiors for evaluating an employee; it helps reduce bias and perspectives while creating a more comprehensive evaluation.

Methods of Performance Appraisal

• Graphic scales: Methods of performance evaluation that involve ratings based on pre-determined criteria, using a standardized scale (e.g., outstanding, above average, etc).
• Behaviourally Anchored Rating Scales (BARS): Expansion of graphic scales, specifying degrees of performance, ranging from extremely poor to excellent, offering more precision than generic categories.
• Straight ranking: Comparing employees and ranking them from best to worst based on overall performance, commonly used to determine employee priority or potential promotion candidates.
• Alternation Ranking: Picking the best performer, then the worst, continuing until all employees are ranked, a less time-consuming alternative to full ranking.
• Forced-distribution method: Dividing employees into categories based on pre-determined percentages rather than assessing each person individually; useful in evaluating numerous employees efficiently.
• Forced-choice method: Evaluators assess employees by comparing performance to another employee in a similar position to determine differences, fostering more objective ratings.
• Essay evaluation: Detailed written description of employee performance, useful for in-depth analysis.
• Management by Objectives (MBO): Employees agree on objectives at the outset of a period, with performance measured against pre-determined goals.

Essentials of a Good Appraisal System

• System must be easily understood, adaptable to the organization's structure and needs.
• The system needs to align appropriately with the organization's priorities.
• The system should be well-defined in responsibilities.