Methods of Performance

AppraisalPrepared by: Soumya Sharma

Roll No. 07 M.Com (Sem IV)

1. Graphic Rating Scales

Employee may be assessed by superiors, colleagues, subordinates or customers, depending upon the type of job.

The rating is given for every appraisal trait (attitude, regularity, accountability, sincerity etc) on a scale of, say, 1 to 10.

1 indicates negative feedback. 10 indicates a positive feedback.

Employee who scores more points is treated as top performer.

Least scoring employee is treated as a non-performer.

Advantages – Adaptability, low cost, no formal training.

Disadvantage – Rater’s bias

2. Checklist

Contains descriptive statements about the employee and his behavior.

The rater puts a check against the trait the employee possesses; otherwise, the item is left blank.

A variant of this method is the weighted checklist, in which the value of each question may be weighted equally or certain questions are weighted more heavily than others.

Advantages – Economy, ease of administration, limited training required, standardization.

Disadvantages – Rater’s bias, use of improper weights by HR, no relative ratings.

3. Forced Choice Method

A series of statements arranged in such a manner that the rater is forced to choose as to which statement is true or false.

The actual assessment is done by the HR department.

Advantage – Absence of personal bias

Disadvantage – Statements may be wrongly framed

4. Field Review Method

Appraisal is done by someone outside the employee’s own department.

Advantage – Useful for managerial level promotions.

Disadvantage – Rater’s unfamiliarity with

employee’s work environment

5. Forced Distribution Method Rater is compelled to distribute ratings for the

employees into a “pre-specified” performance distribution.

The performance distribution is chosen to reflect the normal curve.

A relatively small percentage of employees are placed in the extremes (best and worst performers) and a large percentage of employees are placed in the categories toward the middle of the performance distribution. 

Advantages – Managers are forced to identify the most and least talented members of the workgroup.

Disadvantages – Increases cut-throat competitiveness, discourages teamwork spirit, harms morale

The company used one of the most well-known forced ranking systems.

Managers placed employees into one of the three categories: “A” for the top 20 percent, “B” for the middle 70 percent, and “C” for the bottom 10 percent.

The bottom 10 percent are usually either let go or put on a performance plan.

The top 20 percent are given more responsibility, even promoted.

In 2006, GE reinvented its stringent system to remove references to the 20/70/10 split.

The curve now serves as a guideline, giving greater freedom to managers to distribute employees in a less stringent manner.

6. Critical Incidents Method

Focus is on certain critical behaviors of employees that make a difference in their performance.

Manager maintains logs on employees.

The periodically recorded critical incidents or events of employee’s behavior are used in performance evaluation at the end of the rating period.

Advantages – Evaluation is based on actual job behavior, easy feedback, reduce recency bias.

Disadvantages – Negative incidents may be prioritized, close supervision may be disliked by employee, manager may forget to record incidents.

7. Confidential Reporting

Superior observes the job performance of the subordinate, then proceeds to write a confidential report about performance as well as behavior in the organization.

The confidential reports are forwarded to the top management for taking decisions regarding the employee, especially in case of promotions and transfer in the government sector.

Key factors assessed include character and conduct of the employee, absenteeism, knowledge, quality of work, integrity, honesty, punctuality, complaints against the employee etc.

Advantage – Effective tool, popularly used by the government sector in India

Disadvantage – Subjective analysis of the superior can be questioned.

8. Essay Evaluation

Rater is asked to express strong as well as weak points of the employee’s behavior.

Normally combined with rating scale method for effective evaluation.

The rater, while preparing the essay, considers a number of factors, such as job knowledge and potential, understanding of the company’s policies, procedures and objectives, relations with co-workers, attitudes and perceptions.

Advantage – Provides a great deal of information about the employee

Disadvantages – Highly subjective, rater may not be an effective writer, time consuming.

9. Performance Tests and Observations

The method is based on the test of knowledge or skills.

The test may be written or require an actual presentation of skills.

Advantage – Aptly measures potential as compared to actual performance

Disadvantage – Costs of test development or administration may be high.

10.Behaviorally Anchored Rating Scales (BARs) Based on making rates on behaviors to determine the

effectiveness or ineffectiveness of work performance.

The rater describes which behavior describes employee performance.

Advantage – Helps overcome rating errors

Disadvantage – Distortions inherent in rating techniques.

11. Comparative Evaluation Method

a) Ranking Method

Superior ranks workers based on merit, from best to worst.

Easy to administer and explain.

b) Paired Comparison Method

Each employee is rated with other employees in the form of pairs, one at a time.

The employees are given final rankings on the basis of overall comparisons.

12.Management by Objectives (MBO) Performance is rated against the achievement of

the stated objectives of the management.

The MBO process includes:

a) Establish goals and desired outcomes for each subordinate.

b) Setting performance standards.

c) Comparison of actual goals with goals attained.

d) Establish new goals and new strategies for unattained goals.

Systematic and rational technique that produces maximum results from available resources.

An objective must satisfy the SMART conditions –

Specific,

Measurable,

Achievable,

Relevant, and

Time-Specific.

Advantage – Emphasis is on the future, not on the past.

Disadvantages – Not applicable to all jobs, policy of merit pay may result in setting short-term goals rather than important, long-term goals.

13. Psychological Appraisals

Assesses employee’s potential for future performance, rather than past performance.

Conducted in the form of in-depth interviews, psychological tests, discussion with supervisors and review of other evaluations.

Places greater emphasis on the emotional, intellectual, motivational and other personal characteristics of the employees.

Advantage – Useful for evaluating the potential of young employees.

Disadvantages – Slow, expensive, dependent on the skills of the psychologists conducting the evaluation.

14. Assessment Centers

Emphasis is on observation of behaviors across a series of select exercises or work samples.

Managers are evaluated by trained observers in respect of their participation in job-related exercises, such as work groups, computer simulations, role playing.

Characteristics assessed can be assertiveness, persuasive ability, communicating ability, planning and organizational ability, resistance to stress, energy level, self-confidence, creativity, mental alertness etc.

Advantages – Achieve better forecasts of future performance and progress; high degree of reliability and predictive ability; clearly defined criteria for selection and promotion.

Disadvantages – Expensive, ratings influenced by interpersonal skills of those being evaluated, good performers may feel suffocated in simulated environment.

The method is adopted by the RBI for assessment of its officers.

15. 360-Degree Feedback

Requires employees to give confidential and anonymous assessments on their colleagues.

Involves systematic collection of performance data from immediate supervisors, team members, customers, colleagues and self.

Objective is to assess training and development needs and to provide competence-related information.

Concentrates on subjective areas, such as teamwork, character and leadership.

Four components - self appraisal, subordinate appraisal, peer appraisal and superior’s appraisal.

Advantages – Comprehensive view of employee performance, high credibility, accurate assessment, motivation to improve.

Disadvantages – Complex, time-consuming, may create an environment of suspicion, brews tensions among staff.

This method is popularly used by Wipro, Infosys, HCL, Maruti Udyog Ltd.

16.Human Resource Accounting (HRA) Method

Process of assigning, budgeting and reporting the cost of human resource incurred in an organization

Measures the effectiveness of personnel management activities and the use of people in an organization.

Performance of employees is judged in terms of their cost and contribution.

Cost of employees includes expenses on compensation, recruitment and selection, induction and training etc. contribution includes the total value added (in monetary terms).

The difference between the cost and contribution is the performance of the employee.

Advantages – Information for manpower planning, making personnel policies; proper placements, increases morale and motivation, designing training and development programs

Disadvantages – Employee mobility, lack of uniform standards, no specific guidelines for valuation.

Bases of Classification

Past-Oriented (Traditional) Methods

Rating Scales

Checklist

Forced Choice Method

Forced Distribution Method

Critical Incidents Method

Behaviorally Anchored Rating Scales (BARs)

Field Review Method

Performance Tests and Observations

Confidential Records

Essay Method

Comparative Evaluation Method

Future-Oriented (Modern) Methods

Management by Objectives (MBO)

Psychological Appraisals

Assessment Centers

360 Degree Feedback

HR Accounting

Traditional and Modern: A Comparison

Categories Traditional Appraisals

Modern Appraisals

Guiding ValuesIndividualistic, Control oriented, Documentary

Systematic, Developmental, Problem solving

Leadership Styles Directional, Evaluative Facilitative, Coaching

Frequency Occasional Frequent

Formalities High Low

Rewards Individualistic Grouped, Organizational

• Essay Appraisal• Critical Incidents Methods• Checklist• Graphic Rating Scales• Forced Choice• BARs

Absolute Standards

• Group Order Ranking• Individual Ranking

Relative Standards

• MBO

Objectives

Individual Evaluation Methods• Essay Evaluation• Confidential

Reports• Checklists• Graphic Rating

Scales• BARs• Forced Choice• MBO

Multi-Person Evaluation Methods• Ranking• Paired Comparison• Forced Distribution

Others

• Performance Tests• Field Review

Techniques

Bottom level management (includes all workers and employees)

Peers Rating – Checklist MethodSupervisor Rating – Rating Method, Forced Distribution MethodSelf Appraisal

Middle level management (consists of managers and supervisors)

Superior Rating – Graphic Rating Scales, Critical IncidentsEmployee Rating Supervisor - BARsPeers Rating – Checklist MethodSelf Appraisal – MBO

Top level management (consists of CEO, MD, VP, GM)

Self Appraisal – MBOManagers Rating Supervisors – BARsPeers Rating – Checklist Method

Application in the Real World

The methods of appraisal used by the company are:

1)180 Degree Feedback

Involves appraisal by subordinates and immediate supervisor.

Promotes self-growth and self-development.

Improves communication within the organization

Raises the level of understanding of behaviors needed to modify organizational and personal effectiveness.

2)Performance Ranking Method

Individual performance is evaluated on a scale of 1 to 5.

5 points for MUCH BETTER

4 points for SLIGHTLY BETTER

3 points for EQUAL

2 points for SLIGHTLY WORST

1 point for MUCH WORST

Manager compares performance of one employee with another in order to give ranking.

3)Behaviorally Anchored Rating Scales (BARs)

Combination of rating scale and critical incidents technique.

Identify behavioral traits, which serve as indicators for effective or ineffective performance.

Provide a rating against each trait, on a scale of 1 to 7:

Extremely poor (1 point)

Poor (2 points)

Below average (3 points)

Average (4 points)

Above average (5 points)

Good (6 points)

Extremely good (7 points)

4) Forced Ranking Method

Employees are placed in three categories:

10 or 20 % in the top category (high potential employees)

70 or 80 % in the middle, and

10 % at the bottom.

Employees at the top rank are mostly targeted for leadership development programs and for a more rapid career.

Employees who rank at the bottom are denied pay increases and bonuses. They are given time i.e. probationary period to improve performance.

5) Management by Objectives (MBO)

Objectives are classified into three broad categories:

• Functional Objectives

• Corporate Objectives

• Individual Objectives

The objectives should satisfy the SMART conditions.

Specific,

Measurable,

Achievable,

Relevant, and

Time-Specific.

The method supports the employee in knowing his/her capabilities more accurately and better than anyone else.

The performance appraisal programme is conducted annually and in two stages:

Stage 1: Appraisal by Immediate Supervisor

The reporting officer assesses performance in the light of the targets set at the commencement of the reporting year.

Stage 2: Self Appraisal by Employee

Academic and professional achievement during the year

Training course attended during the year

Brief resume of work done during the year

The performance appraisal exercise consists of the following two methods:

1) Self Evaluation

Engineers usually take a day or two to complete the exercise.

Focus is on major accomplishments since last review.

2) Peer Evaluation

Employee chooses the peers who shall evaluate him/her.

The number of peers is usually 3 to 8.

In case of new employee, the manager chooses the peers who shall carry out the evaluation exercise.

Thank You.