Performance Appraisal PDF

**Performance Appraisal** Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development. Performance appraisal is generally done in systematic ways which are as follows: 1. The supervisors measure...

**Performance Appraisal** Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development. Performance appraisal is generally done in systematic ways which are as follows: 1. The supervisors measure the pay of employees and compare it with targets and plans. 2. The supervisor analyses the factors behind work performances of employees. 3. The employers are in position to guide the employees for a better performance. **Objectives of Performance Appraisal** Performance Appraisal can be done with following objectives in mind: 1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc. 2. To identify the strengths and weaknesses of employees to place right men on right job. 3. To maintain and assess the potential present in a person for further growth and development. 1. To provide a feedback to employees regarding their performance and related status. 2. To provide a feedback to employees regarding their performance and related status. 3. It serves as a basis for influencing working habits of the employees. 4. To review and retain the promotional and other training programmes. **Advantages of Performance Appraisal** It is said that performance appraisal is an investment for the company which can be justified by following advantages: 1. **Promotion:** Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case. 2. **Compensation:** Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority. 3. **Employees Development:** The systematic procedure of performance appraisal helps the supervisors to frame training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmes. 4. **Selection Validation:** Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard. 5. **Communication:** For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways: a. Through performance appraisal, the employers can understand and accept skills of subordinates. b. The subordinates can also understand and create a trust and confidence in superiors. c. It also helps in maintaining cordial and congenial labour management relationship. d. It develops the spirit of work and boosts the morale of employees. All the above factors ensure effective communication. 6. **Motivation:** Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a person's efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future. **Traditional Methods**  performer.  **Modern Methods**  5. **720-Degree Feedback**: In line with the 360-Degree feedback system, here the feedback is collected from the stakeholders within the company as well as the people linked from outside the organization. The customers, suppliers, investors and other financial groups provide feedback about the performance of the employee. **Advantages of Performance Appraisal** - It helps the supervisors to chalk out the promotion for performing employee and dismiss the inefficient workers. - It helps the organization to decide the compensation of the employee. Also, based on the performance and the additional efforts put by the employee the extra benefits and allowances can be decided using records of performance appraisal. - Special actions can be taken for the development of the employees. The performance appraisal system will highlight the weakness of the employee based on which the training program arrangement can be carried out by the organization. - The performance appraisal further suggests the changes in the selection process which will help to hire better employees. - Performance review is a effective way to communicate the status of the performance of the employee. It is a way to provide feedback about how the employees are doing on their job. - The evaluation of the performance can act as a motivational tool. It provides a picture about efficiency of the employee and motivates the individual to improve the performance. **Disadvantages of Performance Appraisal** - Performance appraisal is totally depends on the factors used for the evaluation of the performance. The use of incorrect or irrelevant factors can lead to failure of performance appraisal.  - Sometimes the vital factors responsible for the performance are ignored during performance appraisal. - The factors like attitude, abilities and initiative are very vague and difficult to gauge. - Sometimes the managers who carry out the performance appraisal are not qualified enough to properly assess the abilities of the employees. Thus, it leads to irrelevant data collection and failure of performance appraisal. ### What is a balanced scorecard (BSC)? **A Balanced Scorecard---often abbreviated as "BSC"--- is a strategy management framework that includes four perspectives of your strategy: Financial, Customer, Internal aProcess, and Learning and Growth** The balanced scorecard (BSC) is a [strategic planning and management system.](https://balancedscorecard.org/strategic-planning-basics/) Organizations use BSCs to: - Communicate what they are trying to accomplish - Align the day-to-day work that everyone is doing with strategy - Prioritize projects, products, and services - Measure and monitor progress towards strategic targets The name "balanced scorecard" comes from the idea of looking at strategic measures in addition to traditional financial measures to get a more "balanced" view of performance. The concept of balanced scorecard has evolved beyond the simple use of perspectives and it is now a holistic system for managing strategy. A key benefit of using a disciplined framework is that it gives organizations a way to "connect the dots" between the various components of strategic planning and management, meaning that there will be a visible connection between the projects and programs that people are working on, the measurements being used to track success (KPIs), the strategic objectives the organization is trying to accomplish, and the mission, vision, and strategy of the organization. The [business performance management framework ](https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2)was laid out in a 1992 paper published in the Harvard Business Review by Robert S. Kaplan and David P. Norton, who are widely credited with having developed the balanced scorecard system. **What are the four balanced scorecard perspectives?** The balanced scorecard approach examines performance from four perspectives. - **Financial analysis**, which includes measures such as operating income, profitability and [return on investment](https://searchcio.techtarget.com/definition/ROI). The financial health of any enterprise is critical to long-term survival. Typical measures used by for-profit companies include revenue growth, operating income, return on equity, and other measures of interest to owners. - **Customer analysis**, which looks at investment in customer service and retention. The customer perspective compares the enterprise's service to the competition's service. Specific metrics vary by industry but most focus on time, quality, and service levels. Metrics common to most industries include customer satisfaction and enterprise responsiveness. Other metrics are more industry-specific. Cellular telephone companies track customer growth and churn. Manufacturing companies track on-time delivery, and percent of orders delivered as ordered (i.e. without back order or substitution). Consumer products companies monitor percent of repeat customers and percent of sales from products introduced in the past five years. - **Internal analysis**, which looks at how [internal business processes](https://searchcio.techtarget.com/definition/business-process) are linked to strategic goals. This perspective helps the enterprise understand the efficiency and effectiveness of internal business processes and supporting technologies. Many companies focus on the time to take an order, on-board a new hire, or complete other internal processes. Manufacturing companies often track setup time, cycle time, first pass yield, and the time to introduce a new product. Companies attempting to streamline internal processes track the percent of paperless processes and the number of self-service processes. - **The learning and growth perspective/Organization capacity** assesses employee satisfaction and retention, as well as [information system](https://whatis.techtarget.com/definition/IS-information-system-or-information-services). This perspective was initially called "Learning and Growth" and is sometimes called "People" by enterprises that believe that humans are the most important part of an enterprise's capacity to improve. This perspective considers the degree to which the enterprise can evolve and improve the way it supports its goals. Organization capacity monitors people, culture, organization, and the infrastructure to support them. Typical measures include employee satisfaction/engagement, time to hire, first-year turnover, regretted (sometimes unwanted) turnover, and training/education received. **Why use the balanced scorecard?** Kaplan and Norton cited two main advantages to the four-pronged balanced scorecard approach. 1. First, the scorecard brings together disparate elements of a company\'s competitive agenda in a single report. 2. Second, by having all important operational metrics together, managers are forced to consider whether one improvement has been achieved at the expense of another.  The four-pronged balanced scorecard approach for translating strategic goals into a set of performance objectives. \"Even the best objective can be achieved badly,\" the authors stated in their 1992 treatise. Faster time to market, for example, can be achieved by improving the management of new product introductions. It can also be accomplished, however, by making products that are only incrementally different from the existing ones, thus diminishing the company\'s [competitive advantage](https://searchcio.techtarget.com/definition/competitive-advantage) in the market long term. **Elements of a balanced scorecard** In their 1993 paper, Kaplan and Norton offered guidance on how to build a balanced scorecard. The process they discussed applies to business units and describes what they refer to as \"a typical project profile\" for developing balanced scorecards. In brief, here are the eight actionable steps they list. 1. **Preparation.** The organization identifies the business unit for which a top-level scorecard is appropriate. Broadly defined, this is a business unit that has its own customers, [distribution channels](https://searchitchannel.techtarget.com/definition/distribution-channel), production facilities and financial goals. 2. **The first round of interviews.** A balanced scorecard facilitator interviews senior managers for about 90 minutes each to obtain input on strategic goals and performance measures. 3. **First executive workshop.** Top management convenes with the facilitator to start developing the scorecard by reaching a consensus on the mission and strategy and linking the measurements to them. This can include video interviews with shareholders and customers. 4. **The second round of interviews. **The facilitator reviews, consolidates and documents input from the executive workshop and interviews each senior executive to form a tentative balanced scorecard. 5. **Second executive workshop.** Senior management, their subordinates and a larger number of middle managers debate the vision, strategy and the tentative scorecard. Working in groups, they discuss the measures, start to develop an implementation plan and formulate \"stretch objectives for each of the proposed measures.\" 6. **Third executive workshop. **Senior executives reach a consensus on the vision, objectives and measurements hashed out in the prior two workshops and develop stretch performance targets for each measure. Once this is complete, the team agrees on an [implementation plan](https://searchcustomerexperience.techtarget.com/definition/implementation). 7. **Implementation.** A newly formed team implements a plan that aims to link performance measures to databases and IT systems, to communicate the balanced scorecard throughout the organization and to encourage the development of second-level metrics for decentralized units. 8. **Periodic reviews.** A quarterly or monthly \"blue book\" on the balanced scorecard measures is prepared and viewed by managers. The balanced scorecard metrics are revisited annually as a part of the strategic planning process. **Transfer** **Transfer involves a change in the job (along with it change in the place of the job) without change in position, pay or responsibilities. Transfers are frequent but not [promotions](https://www.timesdarpan.com/what-is-promotion/).** **Organisation resort to another type of mobility of employees in order to place the right employee in the right job.** **This type of mobility which is restricted to movement of an employee fro one job to another in the same level of organisational hierarchy is termed to transfer.** **Reasons of Transfer** **Transfers are basically of three categories:-** - **Employee Initiated Transfer** - **Company Initiated Transfer** - **Public Initiated Transfer** **1. Employee Initiated Transfer** **These transfers are also known as personal transfers. These transfers are primarily in the interest of the employee and according to his convenience and desire.** **These transfers can be temporary and permanent.** **Employee initiated transfer must have been following reason:-** - **Due to ill health or involvement of employees in accidents.** - **Due to family problems like taking care of old parents** - **Due to other adhoc problems like pursuing higher education.** - **With a view to correct his wrong placements.** - **To avoid conflicts with his superiors.** - **With a view to search for challenging and creative job.** - **With a view to search for higher level job, opportunities for financial gains etc.** **2. Company Initiated Transfer** **Transfers are also at the initiative of the company. These transfers also can be temporary and permanent.** **Mostly have below reason for Company Initiated Transfer.** - **Due to temporary absenteeism of employees.** - **Due to fluctuations in quality of production and thereby in work load.** - **Due to short vacations.** - **To improve the versatility of employees** - **To improve the employee's job satisfaction.** - **To minimize bride or corruption.** - **Change in the quality of production, lines of activity, technology, organisational structure as discussed earlier.** **3. Public Initiated Transfer** **Public also initiate the transfers generally through the politicians/government for the following reasons.** - **If an employee's behavior in the society is against the social norms or if he indulges in any social evils.** - **If the functioning of an employee is against the public interest.** **Some employees may be transferred frequently because of political victimization and company initiated transfers of some employees may be stopped due to political favoritism. This type transfers mostly seen in governments departments and public sector units.** **Types of Transfer:** **The Following are The Various Types of Transfers:** **(A) Production Transfers:** In order to stabilise the employment in the company and avoidance of lay off, an employee may be transferred from one department to another department. Such a transfer is known as production transfer. **(B) Replacement Transfers:** An employee with a long service may be transferred in some other department to replace a person with a shorter service. **(C) Versatility Transfers:** **versatility transfers are made for the purpose of preparing the employees for production and replacement transfer. An employee is trained on different jobs so as adjust him on a different job when there is no work at his seat or job.** **(D) Shift Transfers:** **In case of manufacturing concerns, there are normally three shifts. Usually these shifts are rotating. In case shift assignments are not rotating, an employee may be transferred from one sift to another shift.** **(E) Remedial Transfers:** **In case an employee does not feel comfortable on his job, he may be transferred to some other job. His initial placement might be faulty; his health might have gone down; he may not be getting along with his supervisor or workers i.e., he might have developed personal friction with his boss or fellow employees.** **(F) Miscellaneous Transfers:** **Transfers may also be classified as temporary or permanent transfers. If a transfer is from one department to another, it is known as departmental transfer. If a transfer is made within the department, such a transfer is known as sectional transfer. An employee may be transferred from one plant to another plant. Such a transfer is known as inter-plant transfer.** **Purpose of Transfer** **Purpose \# 1. For Fulfilling the Organisational Requirements:** **Transfers are required for filling the vacancies created in the organisation due to the following changes:** \(i) Change in volume of production \(ii) Change in technology \(iii) Production schedule \(iv) Quality of product \(v) Product line \(vi) Job pattern \(vii) Fluctuations in market conditions \(viii) Reallocation or reduction in workforce **Purpose \# 2. For Meeting Employees' Requests:** Transfers are made in the organisations for meeting the requests made by the employees in order to satisfy their desire to work under a different superior, different department/region where prospects of growth are high or the place is near to their hometown. **Purpose \# 3. Proper Utilisation of Employees:** Sometimes, management feels that the capacities of employees can be better utilised at some other place or he is not performing satisfactorily or adequately at the present place, and he can perform better at the other place. **Purpose \# 4. Making Employees more Versatile:** Transfers are made by the management for expanding the capabilities of the employees. They can be prepared for more important assignments for future through job rotation. Transfer of the employees to different jobs widens their knowledge and skills. **Purpose \# 5. To Accommodate Family Related Issues:** Especially among women employees, family- related issues are the main reasons for transfer. On most occasions, after marriage, women like to join a job in the city of their husband. This fact necessitates the transfers or resignations. **Purpose \# 6. To Maintain a Tenure System:** In government or administrative services, transfer is necessary to provide a wide variety of experiences to the employee. In such jobs, an employee holds the job for fixed tenure and after completing it he is transferred to another job. It also reduces the involvement of the employees in politicising informal groups. **Purpose \# 7. To Penalise the Employees:** Employees indulging in undesirable activities may be transferred to remote places. It is a form of disciplinary action, which is mainly followed in the government offices. Employees who create problems at the workplace are transferred to other places. **Purpose \# 8. To Reduce Conflicts and Incompatibility:** Employees are transferred for reducing conflicts and incompatibilities between employees. Sometimes an employee the finds it difficult to adjust with his colleagues in a particular section or department could be shifted to another place. It will reduce the conflicts in the organisation. **Purpose \# 9. To Provide Relief to the Employees:** Transfers are made in the organisations for relieving the employees who are overburdened or doing risky work for a long period. This breaks the monopoly of the employee. The employee can also make a request for transfer, if the climate of a place is not suitable for him. **Purpose \# 10. To Adjust the Workforce:** Workers or employees are transferred from the place where there is less work to the place of more work. This is the way of adjustment of employees in the organisation, so that they cannot be discharged from their duty if the work at their workplace is less. **What is Promotion?**  **Benefits of promotion** - Promotion places the employees in the position where an employee's skills and knowledge can be better utilized. - It creates and increases the interest of other employees in the company as they believe that they will also get their turn. - It creates among employees a feeling of content with the existing conditions of work and employment. - It increases interest in acquiring higher qualifications, in training and in self-development with a view to meet the requirements of promotion. - Promotion improves employee morale and job satisfaction. - Ultimately it improves organizational health. **What is Demotion?** Demotion is just the opposite of promotion. It refers to the lowering down of the status, salary, and responsibilities of an employee. Demotion is generally used as a punitive measure and is a preliminary step to discharge. The usefulness of demotion as a punitive measure is questioned on many grounds. Losing pay over a period of time is a long-form of constant humiliation. Moreover, a demoted employee will always be dissatisfied, and his dissatisfaction may spread to co-workers, adversely affecting morale, productivity, and discipline of the workforce. **Demotion becomes necessary,** - If a company curtails some of its activities and employees with longer service bump persons in lower jobs with shorter service. - It may be used as a disciplinary weapon. **Types of Demotion** 1. Voluntary Demotion. 2. Involuntary Demotion. **Voluntary Demotion** A permanent employee may request a voluntary demotion to a vacant position in a class with a lower salary rate, provided that the employee has previously achieved permanent status in that class or, the request for demotion is to a related class in the same job series as defined by the Personnel Commission. **Involuntary Demotion** An involuntary demotion is a disciplinary action and, as such, is subject to the disciplinary procedures in these Rules and Regulations. **Reasons of Demotion** Demotions are necessary for the following reasons:- - Unsuitability of the employee to higher levels jobs. - Adverse Business Conditions - New technology and new methods of operation - Demoted on disciplinary grounds. **Reason 1: Unsuitability of the employee to higher levels jobs.** Employees are promoted based on seniority and past performance. But some of the employees promoted on these two bases may not meet the job requirements of the higher jobs. In most cases, employees are promoted to the level of their incompetence. Some employees selected for higher level jobs may prove to be incompetent in doing that job. Such employees may be demoted to the lower level jobs where their skills, [knowledge](https://www.timesdarpan.com/what-is-knowledge/) and aptitude suit the job requirements. **Reason 2: Adverse Business Conditions** Generally adverse business conditions force the organisation to reduce quality of production, withdrawal of some lines of products, closure of certain departments or plants. In addition, organisation resort to economy drives. Consequently, organisations minimize the number of employees. Junior employees will be retrenched and senior employees will be demoted under such conditions. **Reason 3: New technology and new methods of operation** New technology and new methods of operation demand new and higher level skills. If the existing employees do not develop themselves to meet these new requirements, organisations demote them to the lower level jobs where they are suitable. **Reason 4: Demoted on disciplinary grounds.** Employees are demoted on disciplinary grounds. This is one of the extreme steps and as such organisations rarely use this measure. Though the demotion seems to be simple, it adversely effects the employee's morale, job satisfaction etc., It reduces employees status not only in the organisation but also in the society in addition to reduction in responsibility, authority and pay. **Employee Absenteeism**  **Absenteeism is of four types viz.:** \(i) Authorised absenteeism, \(ii) Unauthorised absenteeism, \(iii) Willful absenteeism, and **Type \# 1. Authorised Absenteeism:** If an employee absents himself/ herself from work by taking permission from his superior and applying for leave, such absenteeism is called authorised absenteeism. **Type \# 2. Unauthorised Absenteeism:** If an employee absents himself from work without informing or taking permission and without applying for leave, such absenteeism is called unauthorised absenteeism. **Type \# 3. Willful Absenteeism:** If an employee absents himself from duty willfully, such absenteeism is called willful absenteeism.