Performance Appraisal:

Once an employee is selected and trained for a job then management would

like to see how he performs his work. It helps in evaluating the performance of

employees and in assessing the hiring and training methods followed in an

organisation. The employees are recruited with some objectives in mind,

whether these have been achieved or not has to be regularly evaluated. Merit

rating is a 'process of evaluating an employee's performance of a job in terms

of its requirements'. The rating of a man by another man is as old as mankind,

but formal merit rating systems are of relatively recent origin. Merit rating is

also termed as Performance Appraisal or Employee Appraisal.

Moreover, people differ in their abilities and aptitudes. Even if the same basic

education and training is given to them, these differences cannot be s

eliminated. There will always be difference in the quantity and quality of work -

done by different employees even on the same job. Thus, it is but imperative for

the management to know these differences so that the employees having

better abilities may be rewarded and the wrong placement of employees may

be rectified through transfers. The individual employees may also like to know

their level of performance in comparison to others, so that they can improve

upon it. All this emphasises the need to have a suitable performance appraisal

system to measure the relative merits of each employee.

MEANING

Performance appraisal is the process of measuring quantitatively and D

qualitatively an employees' past or present performance against the

background N of his expected role performance, the background of his work

environment, and about his future potential for an organisation. The evaluation

of the the calibre of an employee so as to decide salary increment, whereas

performance appraisal focuses on the performance and future potential of the

employee. Merit rating measures what the person is (traits) and performance

appraisal measures what the person does (performance). performance and

personality of each employee is done by his immediate superior or some other

person trained in the techniques of merit rating. Various rating techniques are

employed for comparing individual employees in a group in terms of personal

qualities or deficiencies and the requirements of their respective jobs. A few

important definitions of performance appraisal are as follows:

According to Edward Flippo "Performance appraisal is the systemetic,

periodic and an impartial rating of an employee's excellence in matters

pertaining

to his present job and his potential for a better job."

.

According to Dale Yoder "Performance appraisal includes all formal

procedures used to evaluate personalities and contributions and potentials of

group members in a working organisation. It is a continuous process to secure

information necessary for making correct and objective decisions on

employees."

According to Randall S. Schuler "Performance appraisal is a formal,

structured system of measuring and evaluating an employee's job related

behaviour and outcomes to discover how and why the employee is presently

performing on the job and how the employee can perform more effectively in

the future so that the employee, organisation and society will benefit."

According to Dale S. Beach "Performance appraisal is the systematic

evaluation of the individual with respect to his or her performance on the job.

and his or her potential for development. "

According to C. Heigal "Performance appraisal is the process of

evaluating the performance and qualifications of the employees in terms of

the requirements of the job for which he is employed for purposes of

administration including placement, selection for promotion, providing

financial rewards and other actions which require differential treatment

among the members of a group as distinguished from actions affecting all

members equally."

Performance appraisal is a broader term than merit rating, even though

these two terms are used synonymously. In merit rating, the focus is on judging

the calibre of an employee so as to decide salary increment, whereas

performance appraisal focuses on the performance and future potential of the

employee. Merit rating measures what the person is (traits) and performance

appraisal measures what the person does (performance).

The main characteristics of performance appraisal are as follows:

I . Performance appraisal is a systematic process consisting of a number of

steps to be followed for evaluating an employee's strengths and weaknesses.

2. It is a systematic and objective description of an employee's strengths and

weaknesses in terms of the job.

3. The appraisal is an ongoing and continuous process where the evaluations

are arranged periodically according to a definite plan. It is not a one shot

deal.

4. The performance appraisal seeks to secure information necessary for making

objective and correct decisions on employees.

5. Performance appraisal may be formal or informal. The formal system is more

fair and objective since it is carried out in a systemetic manner using printed

appraisal forms.

OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal can be carried out with various objectives in mind

and these objectives can be classified under the following four heads:

(a) Work-Related Objectives

(i) To assess the work of employees in relation to job requirements

(ii) To improve efficiency

(iii) To help management in fixing employees according to their capacity,

interest, aptitude and qualifications

(iv) To carry out job evaluation

(b) Carreer Development Objectives

(i) To assess the strong and weak points in the working of the employees

and finding remedies for weak points through training

(ii) To determine career potential

(iii) To plan promotions, transfers, lay offs etc. of the employees

(iv) To plan career goals

(c) Communication

(i) To provide feedback to employees so that they come to know where they

stand and can improve their job performance

(ii) To clearly establish goals i.e. what is expected of the employee in terms

of performance and future work assignments

(iii) To provide coaching, counselling, career planning and motivation to

employees

(iv) To develop positive superior subordinate relations and thereby reduce

grievances.

(d) Organisational Objectives

(i) To serve as a basis for promotion or demotion

(ii) To serve as a basis for wage and salary administration and considering pay

increases and increments

(iii) To serve as a basis for planning suitable training and development

programmes

(iv) To serve as a basis for transfer or termination in case of reduction in staff

strength.

BENEFITS AND USES OF PERFORMANCE APPRAISAL

The important benefits and uses which justify the existence of a system of

performance appraisal in an organisation are as follows:

(i) An effective system of performance appraisal helps the supervisor to

evaluate the performance of his employees systemetically and periodically,

it helps in the placement of the employees on the job for which they are

best suited.

(ii) The results of performance appraisal may be used by the supervisor in

constructively guiding the employees in the efficient performance of their

jobs.

(iii) Performance appraisal provides the management an objective basil.

for discussing salary increases and special increments of the staff.

(iv) Performance appraisal can be used for transfer and promotions of

employees, if the performance of an employee is better than others, he

can be recommended for promotion, but if he is not doing well, he may

be transferred to some other job for which he is best suiteil,

(v) Appraisals can be used to analyse the training and development neeas

and evaluating the effectiveness of existing training programme!,

Weaknesses of the employees revealed through performance appraisall

can be removed through further training.

(vi) Performance appraisal facilitates human resource planning, career planning

and succession planning.

(vii) When achievements are recognised and rewarded on the basis 01

objective performance measures, there is improvement in worK

environment.

(viii) Performance appraisal provides'an incentive to the employees to better

their performance in a bid to improve their rating over others. .

(ix) Systemetic appraisal of performance helps to develop confidence among

employees. It will prevent grievances, if the employees are convinced of the

impartial basis of the evaluation.

Thus, performance appraisal is a significant element of information and

control system in organisations. It can be put to several uses concerning the

entire spectrum of human resource management functions.

LIMITATIONS OF PERFORMANCE APPRAISAL

In the words of W. Edwards" Annual performance review leaves people

bitter, dejected, depressed and in despair for months." Both the appraiser ana

the appraised consider it an unpleasant task as no performance appraisal

system can be perfect and free from personal biases and other defects,

Performance appraisal may not yield the desired results because of the

following elements:

1. Halo Error. The hallo error or effect is a tendency to evaluate a person

on the basis of one trait of characteristic. The appraiser judges a person on the

strength of a specific trait and does not base his inference on his overall

performance. An individual may be consistently rated high, average or low on

various traits depending upon the rater's overall judgement of the person. If the

rater is friendly to a worker, he may consistently rate him outstanding, on the

other hand if a person is unfriendly then he may be rated below average even if

his performance on the jot> is very good. Hallo effect may be controlled ,if the

rater is given a list of characteristics and is asked to evaluate personal

characteristics wise.

2. Central Tendency. It is the most commonly found error in merit rating,

This error arises when the rater is not sure about the performance of a person,

may not be well conversant with his work or may have less time at his disposal.

He will like to play safe in evaluating persons and will rate them as average.

Neither he will rate them having poor performance not he will rate them

outstanding. The rater follows a via media and gives mediocre reports to the

subordinates about whom he does not want to commit. This type of tendency

on the part of evaluators distorts the evaluation, making them most useless for

promotion, salary or counselling purposes.

3. Leniency or Strictness. The evaluators have their own value system

which acts as a standard for evaluation. Some evaluators may be lenient and

will give high rating to everyone. On the other hand, an evaluator may be strict

and will give low ratings to all persons. The tendency of giving high rating is

known as positive leniency error and the tendency of giving low ratings is called

negative leniency error. Both the trends can arise from varying standards of

performance observed by supervisors and from different interpretations of what

they observe in employee performance. The raters should be trained for

evaluation purpose and be told of what is expected from ratings.

4. Similarity Error. This error arises from the mental make up of an

evaluator. The evaluator uses his own trait as a basis for assessing the

employees. If the rater is aggressive then he will try to fmd this trait in

subordinates. Those who have this trait will be rated high and those who do not

have it will be rated low. This error can be washed out if the same rater

appraises all employees in the organisation.

5. Miscellaneous Biases. Bias may exist on the ground of sex, race,

religion, position, etc. The persons on higher positions may be given higher

ratings. A rater may also give high ratings to his group because persons in other

groups may not get higher pay rises than his subordinates. A rater may have

preference for persons belonging to his own sex, race, religion, etc.

6. Faulty Assumptions. There are faulty assumptions about the

performance appraisal system both by the superiors and the subordinates.

These assumptions work against the effectiveness of this system. The

assumptions are:

(a) The assumption that superiors will make impartial assumption of

subordinates is not practical. Both show tendency to avoid appraisal

processes.

(b) It is assumed that appraisal system once implemented properly will be

utilised in every project. This is too much of expectation from the

system.

(c) Superiors sometimes feel that their personal judgement of the

subordinates is better than that of appraisal system.

(d) The thinking that employees want to know about their appraisal is not

correct. In fact employees try to avoid appraisal system.

7. Psychological Blocks. The utility of appraisal system will depend upon

the skills of the users. This system will depend upon the psychological

characteristic of managers, no matter' what method is being used. There

are many psychological blocks working against this system. Managers

consider appraisal as an extra burden, they try to treat subordinates' failure

as their own, dislike to communicate unfavourable reports to subordinates.

Because of these psychological blocks managers do not tend to become

impartial or objective in evaluating the subordinates.

PERFORMANCE APPRAISAL PROCESS

Performance appraisal should be done on the basis of certain standards or

criterion fixed in advance. The employees should also have the knowledge of

the yardsticks to be used for evaluating them. Unless a proper process is used

for evaluation, it will not give good results. Following process is used for merit-

rating:

1. Establishing Standards. The employees will have to be rated against the

standards set for their performance. There should be some base on which

one may say that the performance of a person is good, average, bad etc.

The standards may be in quantity and quality of production in case of

workers; personality traits like leadership, initiative, imagination in case of

executives; files cleared in case of office staff, etc. These standards will

help in setting yardsticks for evaluating performance.

2. Communicating Standards to Employees. The standards set

forperformance should be communicated to the emp10yees. They should

know what is expected from them. In the absence of any knowledge of

standards, the employees will keep on guessing only. When the standards

are made known to employees, they will try to make their performance

equal or above them. Even later on they will not resent adverse reports if

they fail to achieve certain standards. It is essential to get feedback from

employees whether they have followed the standards as is intended by the

management.

3. Measuring Actual Performance. The next step in evaluation process

is to measure actual performance of employees. The performance may be

measured through personal observation, statistical reports, oral reports,

written reports etc.

4. Comparing Actual with Standards. The actual performance is

compared to the standards set earlier for finding out the standing of

employees. The employee is evaluated and judged by his potential for

growth and advancement. Deviations in performance are also noted at this

stage.

5. Discussing Reports with Employees. The assessment reports are

periodically discussed with concerned employees. The weak points, good

points and difficulties are indicated for helping employees to improve their

performance. The information received by employees influences their

performance. It also influences their attitude and work in future. It may be

easy to convey good reprots but it requires tact to discuss adverse reports.

6. Taking Corrective Action. Evaluation process will be useful only when

corrective action is taken on the basis of reports. One corrective action may be

in the form of advice, counsel, warning etc., other action may be in the form of

additional training, refresher courses, delegation of more authority, special

assignments, coaching etc. These actions will be useful in helping employees

to improve their performance in future.

METHODS OF PERFORMANCE APPRAISAL

Several methods and techniques are used for evaluating employee

performance. These may be classified into two broad categories as shown in the

following figure:-

PERFORMANCE POORAISAL

TRADITIONAL METHODS MODERN METHODS

A. Traditional Methods

Traditional approach is also known as traits approach. It is based on the

evaluation of traits in a person. This system may list ten to fifteen personal

'characteristics such as ability to get along with people, competence,

judgement, initiative, leadership etc. There may also be added work related

characteristics such as job knowledge, ability to complete an assignment,

success in carrying out plans, efforts in cost reduction etc. In the recent past,

personal traits have outnumbered work related characteristics. The rater

appraises subordinates on the basis of these standards and gives his rating.

Since there may be different methods of rating people on the basis of such

dimensions, there are several methods based on this approach. Some such

methods are discussed as follows:

1. Confidential Report. In most of the government departments and

public enterprises, performance appraisal is done through annual confidential

reports. These reports differ from department to department and from level to

level. The confidential report is written for a unit of one year and relates to the

performance, ability and character of the employee during that year. A very

casual attitude is found among raters while filling confidential reports of the

employees working under them. The report is not data based but subjective. No

feedback is provided to the employee bring appraised and therefore, its

credibility is very low. The method focuses on evaluating rather than developing

the employee. The employee who is appraised never knows his weaknesses and

the opportunities available for overcoming them. In recent years, due to

pressure from courts and trade unions, the details of a negative confidential

report are given to the appraiser.

2. Graphic Scales Method. The graphic rating scale is the simplest and

most pop,ular method for appraising performance. A rating scale lists traits and

a range of performance values for each trait. The supervisor rates each

subordinate by circling or checking the score that best describes his

performance for each trait. The assigned values for the traits are then totaled.

The selection of factors to be measured on the graphic rating scale is an

important point under this system. These are of two types of characteristics

such as initiative and dependability and (il) contributions such as quantity and

quality of work. Since certain areas of job performance cannot be objectively

measured, it is likely that graphic scale will continue to use a mixture of both

characteristics and contributions.

Rating scales are of two types viz. continuous and discontinuous. In

continuous scale the degree of a trait are measured in numbers. ranging from 0

to 5 whereas in a discrete or discontinuous scale, appropriate boxes or squares

are used. The following figures contain the rating scales:

The graphic scale is the most common method of evaluation of an

employee's performance. Its main advantages are that it is easy to understand.

easy to use and permits a statistical tabulation of scores of employees. When

ratings are objective in nature, they can be effectively used as evaluators.

Graphic scales, however, impose a heavy burden upon the supervisor. He

must report and evaluate the performance of his subordinates on scales

involved as many as five degrees on perhaps ten different factors. Moreover,

this method may be arbitrary and the rating may be subjective. It may be

difficult to decide about relative weightage of different traits and it may be

difficult to ensure uniformity as rating would differ with different ~aters. In

practice, rating tend to cluster on the high side under this system. A supervisor

may tend to rate his men high to avoid criticism from them.

3. Straight Ranking Method. It is the simplest and old method of merit

rating. Every employee is judged as a whole without distinguishing the rates

from his performance. A list is then prepared for rating the workers in order of

their performance on the job so that an excellent employee is at the top and the

poor at the bottom. It permits comparison of all employees in any single rating

group regardless of the types of work. The difficulty of this method is that it is

very difficult on the whole when they differ in qualities, attitudes, etc. This

method only tells' us about the standing of various persons and, not the actual

difference among them. We can only say who is number 1, 2, 3 and so on but

cannot say how much the person at number one is better than that at number

two. This method is suitable only when there are limited persons in an

organisation.

4. Paired Comparisons Method. In this method every person is compared

trait-wise, with other persons, one at a time, the number of times on~ person is

compared with others is tallied on a piece of paper. These numbers help in

yielding rank orders of employees. For example, if there are five persons to be

compared. A's performance is first compared with that of B to find out who has

better performance, then A is compared with C, D and E in turn and

performance is recorded. Then B is compared to C, D and E, since he has

already been compared with A. In turn C is compared with D and E and so on.

The results of these comparisons are tabulated and a rank is assigned to each

employee. The number of rank order in this would be n(n-2) where n

represents the number of persons to be compared.

This method gives more reliable rating than straight ranking. But it will be

suitable only when the number of persons is small.

5. Grading System. Under this system certain features like analytical

ability, co-operativeness, dependability, job-knowledge, etc. are selected for

evaluation.

The employees are given grades according to the judgement of the rater. The.

grades may be such as :

A-outstanding; B-very good; C-satisfactory; D-average; E-below average,

etc. The actual performance of every employee is rated with various grades in

mind.

6. Forced Distribution Method. Some raters suffer from a constant

error i.e. either they rate of employees as good, average or poor. They do not

evaluate the employees properly. This system minimises rater's bias so that all

employees are not similarly rated. This system is based on the presumption

that all employees can be divided into five categories i.e. Outstanding, above

average, average, below average and poor. The rater is asked to place 10 per

cent persons in outstanding group; 20 per cent in above average; 40 percent

in average; 20 percent below average and 10 percent in poor category. The

main idea in this system is to spread ratings in a number of grades. This

method obviously eliminates the room for subjective judgement on the part of

the supervisors. Besides this the system is easy to understand and administer.

But in this method employees are placed in a certain category and not

ranked within a category. This method is based on the questionable

assumption that all groups of employees have the same distribution of good

and poor performances. The rater does not explain why an employee is placed

in a particular category. Specific job related criteria is not used in ratings.

Forced distribution of rankings is feasible for a large group of employees.

The spread out of ratings in the form of a normal distribution curve is shown in

the following figure:

7. Check List Method. A check list is a list of statements that describes

the characteristics and performance of employees on the job. The rater checks

to indicate whether the behaviour of an employee is positive or negative to

each statement. The performance of the employee is rated on the basis of

numbers of positive checks. There are three types of check lists that can be

used:

(a). Simple Check List. Under this method he supervisors are provided with

printed forms containing descriptive questions about the performance of

employees. The supervisor has the answer in yes or no. After ticking these

questions the forms are sent to Personnel Departfnent where final rating is

done. Various questions in the form may be weighed equally or certain

questions maybe given more weightage than others.

The check list may contain such questions:

(i) Is the employee hard working?

(ii) Is he regular on the work?

iii) Does he co-operate with his superiors?

(iv) Does he maintain his equipment well ?

(v) Does he follow instructions well ?

The supervispr's bias remains in this method because he can distinguish

between positive and negative questions. It is also difficult to put all possible

questions in the check list because it will become lengthy.

(b) Weighted Check List. This method is used particularly with the objective of avoiding scope

for personal prejudices. In this method, weights are assigned to different statements to indicate their

relative importance. The weighted check list may be as follows:

Traits Weights Performance Scale Ratings (1-5)

1. Regularity 0.5 I

2. Knowledge of the Job 1.0

3. Dependability 1.5

4. Interpersonal Relations 2.0

5. Loyalty 1.5

6. Leadership Potential 1.5

Weighted Checklist : Weighted check list method involves a very lengthy.

and time consuming procedure. Moreover this method is a relatively costly

affair. Financial burden is increased when diverse jobs are evaluated as a

separate procedure must be

established for each job. .

(c) Forced Choice Checklist. In this checklist, five statements are given

for each trait, two most descriptive statement'i, two least descriptive

statemen~ and one neutral statement. The rater is required to tick one

statement each from the most descriptive and least descriptive ones. The aim is

to minimise the rater's personal bias. A specimen of forced choice check list is

as follows:

1. Regularity Most Least

(i) Always regular

(ii) Informs in advance for absence or delay

(iii) Never regular

(iv) Remains absent without prior notice

(v) Neither regular nor irregular

Forced Choice Checklist

The main advantage of forced choice check list is that it has greater

objectivity than most other methods. But it is very expensive to instal this

system. Secondly, the procedure involved is very lengthy and time consuming

Thirdly, it is difficult for the supervisor to discuss rating with subordinates

because these items are scored by the personnel department.

8. Critical Incident Method. This method attempts to measure worker's

performance in terms of certain-events or incidents that occur in the course of

work. The assumption in this method is that the performance of the employee

on the happening of critical incidents determines his failure or success. The

supervisor keeps a record of critical incidents at different times and then rates

him on this basis. Examples of critical incidents are:

(i) Refused to accept instructions with a detailed discussion.

(ii) Refused to accept instructions even when these were clear.

(iii) Increased his efficiency despite resentment from other workers.

(iv) Showed presence of mind in saving a worker when there was accidental

fire.

(v) Performed a difficult task even though it was outside his regular duties.

(vi) Displayed a courteous behaviour to a supplier.

(vii) He helped fellow employees in solving their problems.

Critical incident method provides an objective basis for conducting a

thorough discussion of an employee's performance. The evaluation, under this

met4od, is based on actual job behaviour. This method also avoids recency bias

(most recent incidents get too much emphasis), as raters record ratings

throughout the rating period. Finally, this method can increase the chances that

the subordinates will improve because they learn precisely what is expected of

them. However, this method has significant limitations:

(i) Outstanding incidents may not happen very regularly.

(ii) Negative incidents are, generally, more noticeable than the positive ones.

(iiz) The supervisor may not record an incident immediately and forget it

later on.

(iv) It may also be very difficult for a supervisor to decide whether an

incident is critical or not.

(v) Very close supervision may result, which may not be to the liking of the

employees.

(vi) Supervisors may unload a series of complaints about incidents during an

annual performance review session. The feedback may be too much at one

time and thus, appear as a punishment to the ratee.

9. Free Essay Method. Under free essay method, the supervisor writes a

report about the employee which is based on his assessment. The supervisor

continuously watches the subordinates and writes his assessment in the report.

While preparing an essay on the employee, the rater generally considers the

following factors:

(i) Job knowledge and potential of the employee

(ii) Employee's relations with co-workers and supervisors

(iii) Employee's traits and attitudes

(iv) Employee's understanding of the companies programmes, policies,

objectives etc.

(v)' Development needs for future etc.

Essay evaluation is a non-quantitative technique of appraisal. It provides a

good deal of specific information about the employee and can reveal even more

about the supervisor.

The essay method may suffer from personal & human bias because of

likings or dislikings of the supervisor. An appraiser may not be able to express

his judgement in apropriate words and it will limit the utility of appraisal reports.

Moreover, a busy appraiser may write the essay hurriedly without properly

assessmg the actual performance of the employee. On the other hand, if the

appraiser takes a lot of time in preparing the essay it becomes uneconomical

from the point of view of the firm, because time is a very costly factor.

10. Group Appraisal. Under the group appraisal method, employees are

rated by an appraisal group, consisting of their supervisor, and three or four

other persons who have some knowledge of their performance. The supervisor

explains to the group the nature of his subordinates' duties. The group then

discusses the standards of performance for that job, the actual performance of

the employee and the causes of their particular level of performance and offers

suggestions for future improvements, if any.

This method is devoid of personal bias, since appraisal is done by multiple

judges. Moreover, it is a very thorough and simple method. The only drawback

is that this method is very time consuming.

11. Field Review Method. Under the field review method, an expert

from the personnel department interviews line supervisors to evaluate their

respective subordinates. The expert questions the supervisor and obtains all

the important information on each employee and takes notes in his note book.

There is no rating form with factors or degrees, but overall ratings are

obtained. The employees are usually classified into three categories as

outstanding, satisfactory and unsatisfactory.

The interviewer questions the supervisor about the requirements of each

job in his unit and about the performance of each man in his job. He probes to

find out not only how a man is doing but also why he does that way and what

can be done to improve or develop him. The supervisor is required to give his

opinion about the progress of his subordinates, the level of the performance of

each subordinate, his weaknesses, good points, outstanding ability,

promotability and the possible plans of action in cases requiring further

consideration. The questions are asked and answered verbally.

The success of this method depends upon the competence of the

interviewer. He can contribute significantly to accurate appraisals only if he

knows his job. This method relieves the supervisors of the tedious writing work

of filling in appraisal forms. Moreover, supervisors are kept on their toes by

this evaluation and biases and prejudices are reduced to the minimum,

because the process ~ largely controlled by the personnel department.

This method is useful for a large organisation only. The main limitation is

that it keeps two managerial personnel busy with the appraisal.

12. Nominations. Under the nominations method, appraisers are asked to

identify the exceptionally good and exceptionally poor performers, who are

then singled out for special treatment.

13. Work Sample Tests. In this method, employees are given, from time

to time, work related tests which are then evaluated.

B. MODERN METHODS

Modem concerns use the following methods for the performance appraisal:

1. Assessment Centre

First developed in the U.S.A. and the U.K. in 1943, the assessment centre is

gaining popularity in our country. Crompton Greaves, Eicher and Hindustan

Lever Limited are using the technique with highly positive results. Earlier,

assessment centre was being used for executive hiring, but now-a-days, these

are being used for evaluating executive or supervisory potential. An assessment

centre is a central location where the managers may come together to

participate in job related exercises evaluated by trained observers. The

principle idea is to ..evaluate managers over a period of time, by observing and

latest evaluating their behaviour across a series of select exercises or work

samples. Managers are asked to participate in in-basket exercises, work groups

(without leaders), computer stimulations, role playing and other similar

activities. which require the same attributes for successful performance as on

the actual job. After recording their observations, the raters meet to discuss

these observations. The decision regarding the performance of each manager is

based upon the discussion of observations. Self appraisal and peer evaluation

are also used in for final rating.

An assessment centre generally measures iriterpersonal skills,

communication skills, ability to plan and organise, self confidence, resistance to

stress, mental alertness etc.

Assessment centres are not only a method of appraisal but help to

determine training and development needs of employees and provide data for

human resource planning. This method is also used to select candidates for

entry level positions. All candidates get an equal opportunity to prove their

merit. They are evaluated by a team of trained evaluators under similar

conditions. Rater's personal bias is reduced.

Assessment centre is a time consuming and expensive method. The ratings

of this method are said to be strongly influenced by the participant's

interpersonal skills, judges tend to evaluate the quality of the individual's social

skills rather than quality of the decisions themselves. Further, the organisation

and decision making abilities are measured by in-basket exercises, verbal

ability and personal traits. Thus, the relatively inexpensive paper and pencil

tests for measuring potential may be as accurate as the high-cost high stress

assessment centre. Another drawback of this method is that the candidates who

receive a negative report from the assessment centre may feel demoralised.

Other problems include strong and unhealthy sense of competition among the

employees, difficulty of conducting the tests frequently and the possibility of

over emphasising the test performance.

In order to make this method effective, it is necessary to state the goals clearly,

to obtain top management support, to conduct job analysis, to train the

evaluators and to periodically evaluate and revise the assessment programme.

2. Human Resource Accounting

Human Resource Accounting Human resources are a valuable asset of any

organisation. This asset can method attaches money values be valued in terms

of money. Human resource Accounting method attaches lot values to the value

of a firm's internal human resources and its external human resources and Its

external customer goodwill. customer goodwill. When competent and well

trained employees leave an organisation the human asset is decreased and vice

versa. Under. this method, performance is judged in terms of costs and

contributions of employees. Costs of human resources consists of expenditure

on human resource planning, recruitment, selection, induction, training,

compensation etc. Contribution of human resources is the money value of

labour productivity or value added by human resources. Difference between

cost and contribution will reflect the performance of employees. This method is

still in the infancy stage and is, therefore, not very popular at present.

3. Behaviourally Anchored Rating Scales (BARS)

A behaviourally anchored rating scale combines the benefits of critical

incidents and graphic rating scales by anchoring a scale with specific

behavioural examples of good 9r poor performance. Its proponents claim that

it provides better, more equitable appraisals than do the other tools,

discussed earlier. Developing a BARS typically requires five steps:

(i) Generate Critical Incidents. Persons who know the job being

appraised (Job holders and/or Supervisors) are asked to describe specific

illustrations (critical incidents) of effective and ineffective performance.

(ii) Develop Performance Dimensions. 'These people then cluster the

incidents into a smaller set of performance dimensions (say 5 or 10). Each

cluster (dimension) such as 'conscientiousness' is thus defined.

(ii) Reallocate Incidents. Another group of people who also know the

job then reallocate the original critical incidents. They are given the cluster's

definitions and the critical incidents and are asked to reassign each incident

to the cluster they think it fits best. Typically, a critical incident is retained if

some percentage (usual1y 50% to 80%) of this second group assigns it to

same cluster as did the group in step (ii).

(iv) Scale the Incidents. The second group is generally asked to rate

the behaviour described in the incident as to how effectively or ineffectively it

represents performance on the appropriate dimension (seven or nine point

scales are typical).

(v) Develop Final Instrument. A subset of the incidents (usually Six or Seven

per cluster) is used as behavioural anchors for each dimension.

BARS have certain important advantages as follows :

(i) People who know the job and its requirements better than anyone;

else develop the BARS. The result should therefore be a good and accurate

guage of performance on the job.

(ii) The critical incidents along the scale help to clarify what is meant by

extremely good performance, average performance and so forth.

(iii) The critical incidents may be more useful in providing feed back to

appraisees than simply informing them of their performance rating and not

providing specific. behavioural examples.

(iv) Systemetically clustering the critical incidents into 5 or 6 performance

dimensions, helps in making the dimensions more independent of one another.

(v) BARS evaluations seem to be relatively consist~nt and reliable in that

different raters' appraisals of the same person tend to be similar. The

technique is not biased by the experience and evaluation of the rater.

However, BARS is very time consuming and expensive method. Secondly,

behaviours used are more activity oriented than result oriented. Several

appraisal forms are required to accommodate different types of jobs in an

organisation. Despite its initial appeal, this method is not necessarily superior

to the traditional methods of appraisal.

4. Management By Objectives (MBO)

In its basic form, management by objectives requires the managers to set

specific measurable goals with each employee and then periodically discuss his

progress to wards these goals. MBO can be on a modest scale with subordinates

and superiors jointly setting goals and periodically providing feed back.

However the term, MBO almost always refers to a comprehensive, organisation

wise goal setting and appraisal programme that consists of the following steps.

(i) Set the Organisation's Goals. Establish an organisation wise plan for next

year and set goals.

(ii) Set Departmental Goals. In this step departmental heads and their superiors

jointly set goals for their departments.

(iii) Discuss Departmental Goals. Departmental heads discuss the department's

goals with all the subordinates in the department and ask them to develop their

own individual goals. In other words, every employee will state how can he

contribute to the department's attaining its goals .

(iv) Define Expected Results (Set Individual Goals). In this step, department

heads and their subordinates set short term performance targets.

(v) Performance Reviews: Measure the Results. Department heads compare the

performance of each employee with expected results.

(vi) Provide Feed Back. Department heads hold periodic performance review

meetings with subordinates to discuss and evaluate the latter's progress in

achieving expected results.

The MBO approach has done away with the judgemental role of the

superiors in the appraisal of their subordinates. It leads to greater satisfaction,

greater agreement, greater comfort and less tension and hostility between the

workers and the management. This approach is considerably superior to the

traditional approach of performance appraisal. It emphasises training and

development of individuals. It is problem solving approach. This approach also

has a built in device of self appraisal by the subordinates because they know

their goals and the standards by which their performance will be measured.

MBO method suffers from the following limitations:

(i) This method can be used only when the goal setting is possible by the

subordinates. Blue collar workers are often unable to set their own goals.

(ii) MBO p~ogramme involves considerable time, energy and expenditure. It

is difficult to administer because continuous interaction between superiors and

subordinats is required. If the span of supervision is quite large, it will not be

possible for the superior to have discussion with each and every subordinate for

setting up mutually agreed goals.

(iii) This approach mainly emphasises counselling, training and

development. But in practice, it is not possible to forego the critical aspect of

performance appraisal.

(iv) This approach is appropriate for the appraisal of executives and

supervisory persoIIIlel who can understand it in a better way.

(v) Setting objectives with the subordinates sometimes turns to a tug of war,

with the management pushing for higher quotas and the subordinate pushing

for lower ones.

(VI) MBO can be self defeating if it fails to take into consideration the deeper

emotions of the employees. Rating of every employee on the basis of specific

targets may make it difficult to compare the ratings.

MBO can be applied with great success if the performance appraisal programme

consists of the following elements (I) Detailed job descriptions should be

available to help setting of goals for different positions (il) Superiors should

have trust in subordinates to establish reasonable goals (iii) Emphasis should be

on problem solving rather than criticism of the performance of the subordinates.

5. 360 Degree Performance Appraisal

The 360 degree technique is understood as systematic collection of

performance data on an individual or group, derived from a number of

stakeholders-the stake holders being the immediate supervisors, team

members, customers, peers and self'. In fact, anyone who has useful

information on how an employee does the job' may be one of the appraisors.

The appraisor should be capable of determining what is more important and

what is relatively less important. He should assess the performance without

bias.

The 360-degree appraisal provides a broader perspective about an

employee's performance. In addition, the technique facilitates greater self

development of the employees. 1lris appraisal provides formalised

communication links between an employee and his customers. By design this

appraisal is effective in identifying and measuring interpersonal skills,

customer satisfaction and team building skills.

However, there are some limitations of this method. Receiving feed back

on performance from multiple sources can be intimidating. Further,

organisations that use this technique take a long time in selecting the rater,

designing questionnaires and analysing the data. In addition, multiple raters

are less adapt at providing a balanced and objective feed back than the

supervisors who are sought to be replaced. Raters can have enormous

problems in separating honest observations from personal differences and

biases.

Despite the limitations, more and more firms are using the 360-degree

technique to assess the performance of their employees.

6. Computerised and mob BaSed Performance Appraisal.

Nowadays, several performance appraisal software programmes are also

available in the market. These programmes enable the managers to keep notes

on subordinates during the year and then to electronically rate them on a series

of performance traits. Written text is also generated to support each part of the

appraisal.

Electronic performance monitoring (EPM) is in some respects ultimate in

computerised appraisals. In EPM, the supervisors electronically monitor the

computerised data an employee is processing per day, and thereby monitors his

performance. Nowdays, organisations use computer networks, sophisticated

telephone systems and both wireless audio and video links to monitor and

record the work activities of employees.

Employees react to EPM in two ways:

(i) Employees with the ability to delay or prevent electronic performance

monitoring indicate higher feelings of personal control and demonstrate

superiors task performance. These are the employees who want some

control over how and when they are monitored.

(ii) Participants who know exactly when the monitoring is taking place,

express lower feelings of personal control than do those who do not know

that the monitoring is. on.