Lecture Six - Performance Appraisal PDF

**INDUSTRIAL PSYCHOLOGY: PSY 205** **PERFROMANCE APPRAISAL** **INTRODUCTION** From the first few days on the job, you have wondered, "How am I doing?" Are you performing at an acceptable (or better) level? How are you performing in comparison to others in a similar position or compared to what yo...

**INDUSTRIAL PSYCHOLOGY: PSY 205** **PERFROMANCE APPRAISAL** **INTRODUCTION** From the first few days on the job, you have wondered, "How am I doing?" Are you performing at an acceptable (or better) level? How are you performing in comparison to others in a similar position or compared to what your supervisor expects? You wait for some assessment of your job performance with a mixture of eager anticipation and trepidation. The evaluation of employees' job performance is a vital personnel function and of critical importance to the organization. **WHAT IS PERFORMANCE APPRAISAL?** Performance Appraisals the formalized means of assessing worker performance in comparison to certain established organizational standards. 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. **PURPOSE OF PERFORMANCE APPRAISAL** 1. **Providing Employee Training and Feedback:** By far, the most important use of performance evaluation is to improve employee performance by providing feedback about what employees are doing right and wrong. Even though employee training should be an ongoing process, the semiannual performance appraisal review is an excellent time to meet with employees to discuss their strengths and weaknesses. But more important, it is the time to determine how weaknesses can be corrected. 2. **Determining Salary Increases:** A job's worth is determined by many factors, including the degree of responsibility and level of education required to perform the job. But the difference in compensation between two individuals within the same job is a function of both tenure and job performance. That is, it would not seem fair to pay a poor-performing employee the same amount as an excellently performing one. Thus, one important reason for evaluating employee performance is to provide a fair basis on which to determine an employee's salary increase. 3. **Making Promotion Decisions:** Another reason for evaluating performance is to determine which employees will be promoted. Although it would seem only fair to promote the best employee, this often does not occur. The best employee at one level is not always the best at the next level. Promoting the best or most senior employee often results in the so-called **Peter Principle**---the promotion of employees until they reach their highest level of incompetence. If performance evaluations are used to promote employees, care should be taken to ensure that the employee is evaluated well on the job dimensions that are similar to those of the new position. 4. **Making Termination Decisions:** Unfortunately, providing feedback, counseling, and training to employees does not always increase performance or reduce discipline problems. When performance management techniques are not successful, the results of a performance review might suggest that the best course of action is to terminate the employee. 1. **Appraisal by supervisor:** By far, the most common source of performance appraisal is the supervisor rating. Though supervisors may not see every minute of an employee's behavior, they do see the end result. A supervisor may not actually see a teller sign up customers for Visa cards but will review the daily sales totals. Likewise, a professor does not see a student actually research and write a paper but infers the levels of these behaviors by viewing the results---the finished term paper 2. **Appraisal by Peers:** Whereas supervisors see the results of an employee's efforts, peers often see the actual behavior. Peer ratings usually come from employees who work directly with an employee; a bank teller could be rated by other bank tellers. However, other employees in the organization, those who often come in contact with the employee, can also provide useful information. For example, our teller could be rated by employees from the loan support or Visa card departments. 3. **Appraisal by Subordinates:** Subordinate feedback (also called upward feedback) is an important component of feedback, as subordinates can provide a very different view about a supervisor's behavior. However, with the exception of students rating teachers, formal methods are neither common nor well regarded by managers. Subordinate ratings can be difficult to obtain because employees fear a backlash if they unfavorably rate their supervisor, especially when a supervisor has only one or two subordinates. For example, when the supervisors at one mental health facility gave poor performance ratings to their boss, each was "called on the carpet" for having the audacity to rate the boss poorly. After such a browbeating, what do you think is the probability the subordinates will be honest in the future? a. If supervisors appear open to employee comments b. If the ratings are made anonymously c. If the ratings are used for developmental purposes and d. If the employee feels competent to make the rating, feels there will be no retaliation for making honest ratings, and will somehow benefit by providing honest ratings 4. **Self-appraisal:** Allowing an employee to evaluate her own behavior and performance is a technique used by an increasing number of organizations. a. the self-appraisal will not be used for such administrative purposes as raises or promotions. b. They are also more accurate when employees understand the performance appraisal system and c. employees believe that an objective record of their performance is available with which the supervisor can compare the self-appraisal. **PERFORMANCE APPRAISAL TECHNIQUES** 1. **Ranking Method** The ranking system requires the rater to rank his subordinates on overall performance. This consists in simply putting a man in a rank order. Under this method, the ranking of an employee in a work group is done against that of another employee. The relative position of each employee is tested in terms of his numerical rank. It may also be done by ranking a person on his job performance against another member of the competitive group. **Advantages of Ranking Method** i. Employees are ranked according to their performance levels. ii. It is easier to rank the best and the worst employee. **Limitations of Ranking Method** iii. The "whole man" is compared with another "whole man" in this method. In practice, it is very difficult to compare individuals possessing various individual traits. iv. This method speaks only of the position where an employee stands in his group. It does not test anything about how much better or how much worse an employee is when compared to another employee. v. When a large number of employees are working, ranking of individuals become a difficult issue. vi. There is no systematic procedure for ranking individuals in the organization. The ranking system does not eliminate the possibility of snap judgements. 2. **Forced Distribution method** This is a ranking technique where raters are required to allocate a certain percentage of rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10 percent, bottom 20 percent etc). Both the number of categories and percentage of employees to be allotted to each category are a function of performance appraisal design and format. The workers of outstanding merit may be placed at top 10 percent of the scale, the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 % fair. **Advantages of Forced Distribution** vii. This method tends to eliminate rater's bias viii. By forcing the distribution according to pre-determined percentages, the problem of making use of different raters with different scales is avoided. **Limitations of Forced Distribution** I. The limitation of using this method in salary administration, however, is that it may lead low morale, low productivity and high absenteeism. II. Employees who feel that they are productive, but find themselves in lower grade(than expected) feel frustrated and exhibit over a period of time reluctance to work. III. **Critical Incident techniques** Under this method, the manager prepares lists of statements of very effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees or the job. The manager maintains logs of each employee, whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the worker's performance. Example of a good critical incident of a Customer Relations Officer is : March 12 - The Officer patiently attended to a customers complaint. He was very polite and prompt in attending the customers problem. **Advantages of Critical Incident techniques** a. This method provides an objective basis for conducting a thorough discussion of an employees performance. b. This method avoids recency bias (most recent incidents are too much emphasized) **Limitations of Critical Incident techniques** c. Negative incidents may be more noticeable than positive incidents. d. The supervisors have a tendency to unload a series of complaints about the incidents during an annual performance review sessions. e. It results in very close supervision which may not be liked by an employee. f. The recording of incidents may be a chore for the manager concerned, who may be too busy or may forget to do it. IV. **Checklists and Weighted Checklists** In this system, a large number of statements that describe a specific job are given. Each statement has a weight or scale value attached to it. While rating an employee the supervisor checks all those statements that most closely describe the behaviour of the individual under assessment. The rating sheet is then scored by averaging the weights of all the statements checked by the rater. A checklist is constructed for each job by having persons who are quite familiar with the jobs. These statements are then categorized by the judges and weights are assigned to the statements in accordance with the value attached by the judges. **Advantages of Checklists and Weighted Checklists** g. Most frequently used method in evaluation of the employees performance. **Limitations of Checklists and Weighted Checklists** h. This method is very expensive and time consuming i. Rater may be biased in distinguishing the positive and negative questions. j. It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employees characteristics, contributions and behaviours.