Performance Appraisal UNIT 4

Introduction to Performance Appraisal

• Performance appraisal assesses employee performance by comparing it to established standards, providing feedback to improve performance as needed by the organization.
• The purpose of performance appraisal is to evaluate employee performance, determine training needs, and decide on promotions with pay increases.
• It helps decide whether an employee should be promoted, demoted, or terminated due to poor performance.
• Performance appraisal is a tool used by every corporate sector to understand employees and make decisions about them.
• It involves traditional and modern methods, which are discussed further in the text.

Defining Performance

• Performance includes productivity, effectiveness, efficiency and personnel data such as incidents, absences and tardiness.
• Appraisal is judging characteristics, traits, and performance to assess worth and identify strengths and weaknesses.
• Performance appraisal is a systematic evaluation of employees by supervisors.
• Employees want to know their position, and appraisals are important for administrative decisions like selection, training, promotion, and salary adjustments, as well as personnel research.
• It is a systematic and objective way to judge an employee's ability and identify areas for improvement.

History of Performance Appraisal

• Performance appraisal's roots are in Taylor's early 20th-century Time and Motion studies.
• As a formal management procedure, it dates back to the Second World War.
• The practice of appraisal has ancient origins, reflecting a basic human tendency to judge others.
• Without a structured system, performance evaluation can be informal and arbitrary.
• Lack of structure can lead to serious motivational, ethical, and legal issues at work.

Evolution of Appraisal Systems

• Performance appraisal systems started as simple methods of income justification.
• These systems were linked to material outcomes, such as pay cuts or raises.
• Early systems gave little attention to developmental possibilities.
• Motivational researchers found that pay alone didn't determine motivation and performance, other issues such as morale and self-esteem played a big part.
• In the 1950s, the U.S. gradually recognized appraisals as tools for motivation and development.

Objectives of Performance Appraisal

• The main objective is to measure and improve employee performance and increase their future value.
• Providing feedback helps employees understand their performance over the past year and improve.
• Ensuring that supervisors' expectations are clearly communicated.
• Performance appraisal helps decide promotions.
• Making decisions about downsizing, retaining the most talented and identifying poor performers.
• Encouraging employees to improve their performance by understanding areas they need to work on.

More Objectives

• Helping people deliver superior performance by clarifying organizational expectations.
• Offering a means to demonstrate superior performance and avoid being seen as inferior.
• Integrating goal setting into the management process.
• Managers will address underperformers.
• Determining fair compensation changes and recognizing better work.
• Coaching and mentoring team members and proteges, by identifying areas that require employee coaching.
• Assessing the organisation's talent pool and identify gaps.
• Identifying the training and development needs of teams that perform well, or are struggling.

Steps in Appraisals

• Determine individual development plans and address the skills and competencies that employees need.
• Deciding how the organization can improve decision-making capabilities with organisation reviews.
• Determining effectiveness of training and development and where to focus efforts.
• Validating the quality of new hires.
• Providing legal defensibility for personnel decisions.
• Improving overall organizational performance by communicating performance expectations and assessing performance.
• Identifying training and development needs to close performance gaps.
• Review employee performance over a period of time.
• The gap between current and desired performance will be evaluated.
• To help management exercise organizational control by providing information and feedback.
• It aims to strengthen communication between superiors, subordinates and management.

The appraisal process

• To diagnose strengths and weaknesses for future training and development.
• To provide past performance feedback.
• Using information to assist personnel decisions.
• Giving employees clarity of responsibilities.
• Judging the efficiency of human resources functions.

Process of Performance Appraisal

• Establishing performance standards is the first step, including setting clear, understandable, and measurable criteria.
• Communication of standards is the responsibility of management to ensure employees understand their roles and expectations.
• Measuring actual performance involves ongoing monitoring throughout the year, requiring appropriate, unbiased techniques.
• Comparing actual performance with desired performance identifies deviations and includes data analysis.
• Discussing results involves one-to-one feedback, addressing problems, and reaching consensus with a positive attitude.

Traditional Methods of Performance Appraisal

• Rating Scales Method: Commonly used to assess employee performance based on traits like attitude, performance, and regularity, rated on a scale.
• Essay Appraisal Method: Performance is described by the supervisor, including facts, examples, and evidence, but may be biased.
• Ranking Method: Manager compares employees to each other; an offshoot is forced distribution, which grades on a curve.
• Paired Comparison: Compares each employee to all others, one at a time, to determine final rankings.
• Critical Incidents Methods: Manager prepares lists of effective and ineffective behaviors, recorded periodically for evaluation.
• Confidential Report System: Used mainly in government, superiors observe subordinates and write confidential reports on behavior and conduct.

Modern Methods of Performance Appraisal

• Management By Objectives (MBO): Superior and subordinate managers jointly identify goals and responsibilities, with four steps, but is time-consuming.
• Behavior Anchored Rating Scales (BARS): Describes degrees of behavior regarding performance, combining narratives, critical incidents, and scales.
• Assessment Centers: Executives and supervisors participate in exercises and are assessed by senior managers, psychologists, and HR specialists.
• 360-Degree Appraisal: An employee is appraised by supervisors, subordinates, peers, and customers.