performance appraisal

Purvish Shah - NAVIGATORPurvish Shah - NAVIGATOR

Performance Performance AppraisalsAppraisals


Performance AppraisalPerformance Appraisal The The systematicsystematic, , periodicperiodic and an and an

impartial rating of an employee’s impartial rating of an employee’s excellence in the matters pertaining excellence in the matters pertaining to::-to::-

• His present job His present job • His His potential for a better jobpotential for a better job


Objectives Of Performance Objectives Of Performance appraisalappraisal

Estimate gap between the actual and the Estimate gap between the actual and the desired performance.desired performance.

Exercising organizational control.Exercising organizational control. Feedback to the employees regarding Feedback to the employees regarding

their past performance.their past performance.


Provide clarity of the expectations and Provide clarity of the expectations and responsibilities of the functions to be performed responsibilities of the functions to be performed by the employees.by the employees.

To judge the effectiveness of the other HR To judge the effectiveness of the other HR functions such as functions such as recruitment, selection, recruitment, selection, training and development.training and development.

To reduce the grievances of the employees.To reduce the grievances of the employees.


::Appraisals Assist::::Appraisals Assist::

Employee Training Needs Assessment Employee Training Needs Assessment Organizational Performance Organizational Performance Succession Planning Succession Planning TQM TQM Change organizational Culture Change organizational Culture


ProcessProcessEstablishing Standards

Communicating Standards and expectations

Measuring the actual performance

Comparing with standards

Providing feedback

Corrective Actions


Pre-requisites for Performance Pre-requisites for Performance AppraisalAppraisal

DocumentationDocumentation --continuous noting and --continuous noting and documenting the performance documenting the performance

Standards / GoalsStandards / Goals --should be clear, easy --should be clear, easy to understand, achievable, motivating, to understand, achievable, motivating, time bound and measurable time bound and measurable

Practical and simple format -Practical and simple format - The The appraisal format should be simple, clear, appraisal format should be simple, clear, fair and objective. fair and objective.


Evaluation technique –Evaluation technique – An appropriate An appropriate evaluation technique should be selected evaluation technique should be selected

Communication –ECommunication –Expected results should xpected results should be communicated to the employees as well be communicated to the employees as well as the evaluators as the evaluators

Feedback – SFeedback – Should be developmental hould be developmental rather than judgmentalrather than judgmental

Personal BiasPersonal Bias --evaluators should be --evaluators should be trained to carry out appraisals without trained to carry out appraisals without personal bias personal bias


Purpose Of Performance AppraisalPurpose Of Performance Appraisal

0% 20% 40% 60% 80% 100%

Payroll

T&D needs

Gaps

Deciding future goals

Mobility

Others

(A Survey of 100 Companies done by AC Nelsons)


Payroll and compensation decisions – 80%Payroll and compensation decisions – 80%

Training and development needs – 71%Training and development needs – 71%

Identifying the gaps in desired and actual performance– Identifying the gaps in desired and actual performance– 76%76%

Deciding future goals and course of action – 42%Deciding future goals and course of action – 42%

Promotions, demotions and transfers – 49%Promotions, demotions and transfers – 49%

Other purposes – 6% (job analysis and providing Other purposes – 6% (job analysis and providing superior support, assistance and counseling)superior support, assistance and counseling)


Performance Appraisals as Career Performance Appraisals as Career DevelopmentDevelopment

““Get paid according to what you Get paid according to what you contribute”contribute”

Performance appraisal as Career DevelopmentPerformance appraisal as Career Development leads leads to the recognition of the work done by the employeesto the recognition of the work done by the employees

It is a link between the organizational goals and the It is a link between the organizational goals and the

employees’ personal career goals. employees’ personal career goals.

Potential appraisal, a part of Potential appraisal, a part of Performance appraisalPerformance appraisal, , helps to identify the hidden talents and potential of the helps to identify the hidden talents and potential of the individualsindividuals


A positive feedback motivates employees to identify A positive feedback motivates employees to identify individual career developmental plansindividual career developmental plans

Based on the evaluation, employees can develop ::Based on the evaluation, employees can develop ::• Their career goals Their career goals • Achieve new levels of competencies Achieve new levels of competencies • Chart their career progressionChart their career progression

Performance appraisalPerformance appraisal encourages employees to encourages employees to reinforce their strengths and overcome their reinforce their strengths and overcome their weaknesses. weaknesses.


Approaches to Approaches to Performance AppraisalsPerformance Appraisals

Traditional approachTraditional approach Traditionally, P.A. has been used as just a Traditionally, P.A. has been used as just a

method for method for determining and justifying the determining and justifying the salaries of the employees salaries of the employees

Than it began to be used a tool for Than it began to be used a tool for determining determining rewardsrewards (a rise in the pay) and (a rise in the pay) and punishmentspunishments (a cut in the pay) for the (a cut in the pay) for the past performancepast performance of of the employees the employees


Traditional Approach…Traditional Approach…

A past oriented approach A past oriented approach FocusedFocused only on the only on the past performancepast performance of of

the employeesthe employees Did not consider the Did not consider the developmental aspectsdevelopmental aspects

of the employee performance of the employee performance


Modern approachModern approach Performance appraisal processes are Performance appraisal processes are more formalmore formal and and

structured.structured.

Apart from the routine HR Functions, Modern approach Apart from the routine HR Functions, Modern approach to performance appraisals to performance appraisals includes a includes a feedback processfeedback process

This This improves the communicationimproves the communication between superior- between superior-subordinates subordinates

The modern approach to is a The modern approach to is a future orientedfuture oriented approach and is approach and is developmental in naturedevelopmental in nature. This . This recognizes employees as recognizes employees as individualsindividuals and focuses on and focuses on their development. their development.


Balanced ScorecardBalanced Scorecard

The The balanced scorecardbalanced scorecard provides a list of provides a list of measures that balance the organizations measures that balance the organizations internal and process measures with results, internal and process measures with results, achievements and financial measures. achievements and financial measures.

The two basic features of the balanced The two basic features of the balanced scorecard are:scorecard are:

• A balanced set of measures based on. the four A balanced set of measures based on. the four perspectives of perspectives of balanced scorecardbalanced scorecard

• Linking the Linking the measures to Employee Performancemeasures to Employee Performance


The 4 key areas::The 4 key areas::

The financial measures –The financial measures –• PProfits, rofits, • increase in the market share, increase in the market share, • return on investments and return on investments and • other economic measures as a result of the actions taken. other economic measures as a result of the actions taken.

The customers’ measures –The customers’ measures – • customer satisfaction,customer satisfaction,• the customer’s perspective about the organisation, the customer’s perspective about the organisation, • customer loyalty, customer loyalty, • acquiring new customers. acquiring new customers. • Number of customer complaints, Number of customer complaints, • The time taken to deliver the products and services, The time taken to deliver the products and services, • improvement in quality etc.improvement in quality etc.


The internal business measures –The internal business measures – These are the These are the measures related to the organization’s internal measures related to the organization’s internal processes which help to achieve the processes which help to achieve the customer customer satisfactionsatisfaction. .

• Infrastructure, Infrastructure, • The long term and short term goals and objectives,The long term and short term goals and objectives,• Organizational processes and procedures, Organizational processes and procedures, • Systems and the human resources. Systems and the human resources.

The innovation and learning perspective – The innovation and learning perspective – • organization's ability to learn, organization's ability to learn, • Innovations and improvements Innovations and improvements • Key competencies Key competencies • Value added and the revenue per employee. Value added and the revenue per employee.


Methods of Performance Methods of Performance appraisalsappraisals

Traditional MethodsTraditional Methods• ESSAY APPRAISAL METHODESSAY APPRAISAL METHOD • STRAIGHT RANKING METHODSTRAIGHT RANKING METHOD • PAIRED COMPARISONPAIRED COMPARISON • CRITICAL INCIDENTS METHODSCRITICAL INCIDENTS METHODS• FIELD REVIEWFIELD REVIEW • CHECKLIST METHODCHECKLIST METHOD • GRAPHIC RATING SCALEGRAPHIC RATING SCALE • FORCED DISTRIBUTIONFORCED DISTRIBUTION


Modern MethodsModern Methods Assessment CenterAssessment Center Human Resource AccountingHuman Resource Accounting Behaviorally Anchored Rating ScalesBehaviorally Anchored Rating Scales MBOMBO 360 Degree Appraisals360 Degree Appraisals


Appraisal as Employee Motivation Appraisal as Employee Motivation MechanismMechanism

Inaccurate Performance Review + Inaccurate Performance Review + Increased Salary = De-motivated Increased Salary = De-motivated EmployeeEmployee

Accurate Review + No Change in Salary = Accurate Review + No Change in Salary = De-motivated EmployeeDe-motivated Employee

Accurate Review + Increased Salary = Accurate Review + Increased Salary = Highly Motivated EmployeeHighly Motivated Employee


Arguments Against Performance AppraisalArguments Against Performance Appraisal • Disparities between the theory and its applicationDisparities between the theory and its application • PA is a bitter process for most of the employeesPA is a bitter process for most of the employees • Creates emotional pressures and stress for the Creates emotional pressures and stress for the

employeesemployees

• PA is often looked upon as a tool to control the PA is often looked upon as a tool to control the employees by the superiors which dampen the intrinsic employees by the superiors which dampen the intrinsic motivation of the employees.motivation of the employees.

• PA process increases the dependency of the employees PA process increases the dependency of the employees on their superiorson their superiors


Performance appraisalPerformance appraisal……

……. process encourages accountability, approvals and . process encourages accountability, approvals and discourages the spirit of creativity and initiative by discourages the spirit of creativity and initiative by employees and also Demotivates them employees and also Demotivates them

……are conducted by managers who are often not trained to are conducted by managers who are often not trained to be appraisers. be appraisers.

…….This obstructs the genuine .This obstructs the genuine feedbackfeedback, leading to , leading to incorrect and unreliable data regarding the performance incorrect and unreliable data regarding the performance of the employeesof the employees

Example:: BPOs’, Government Organizations EtcExample:: BPOs’, Government Organizations Etc


MANAGING WITHOUT MANAGING WITHOUT PERFORMANCE APPRAISALS PERFORMANCE APPRAISALS

The The "appraisals and review meetings""appraisals and review meetings", continuous , continuous accountability and check can cause emotional stress for accountability and check can cause emotional stress for the employees. Therefore, it is recommended to create the employees. Therefore, it is recommended to create such a work culture wheresuch a work culture where

• the employees are made responsible for their own the employees are made responsible for their own performance and developmentperformance and development

• the manager’s / superior’s suggestions, inputs are the manager’s / superior’s suggestions, inputs are encouraged and incorporated in the actions.encouraged and incorporated in the actions.


Changing pay practices--PChanging pay practices--Periodic cost of living eriodic cost of living increases, rewards on some accomplishments, increases, rewards on some accomplishments, tem bonuses, profit and gain sharing tem bonuses, profit and gain sharing

Motivating people—Challenging work, Motivating people—Challenging work, Reminding them about their personal goalsReminding them about their personal goals

Creating an organization with a culture thatCreating an organization with a culture that• Encourages creativity, Encourages creativity, • Fosters innovative efforts and productivity, Fosters innovative efforts and productivity, • Teamwork, Teamwork, • Reformulating strategic plans and assumptions but Reformulating strategic plans and assumptions but

can be effectively put into place without the need of can be effectively put into place without the need of performance appraisals performance appraisals


Performance Appraisal For Employees Performance Appraisal For Employees at Different Levels at Different Levels

For top level managementFor top level management Degree of organizational growth and expansionDegree of organizational growth and expansion Extent of achievement of organizational goalsExtent of achievement of organizational goals Contribution towards the societyContribution towards the society Profitability and return on capital employedProfitability and return on capital employed


For middle level managersFor middle level managers Performance of the departments or teamsPerformance of the departments or teams Co-ordination with other departmentsCo-ordination with other departments Optimal use of resourcesOptimal use of resources Costs Vs. revenues for a given period of timeCosts Vs. revenues for a given period of time The communication with superiors and The communication with superiors and

subordinatessubordinates


For front line supervisors For front line supervisors Quantity of actual output against the Quantity of actual output against the

targetstargets Quality of output against the targetsQuality of output against the targets Number of accidents in a given periodNumber of accidents in a given period Rate of employee absenteeism Rate of employee absenteeism


Global Trends In Performance Global Trends In Performance Appraisal Program Appraisal Program

The focus of the The focus of the performance appraisalsperformance appraisals is is turning towards career developmentturning towards career development

Trend towards a 360-degree feedback system Trend towards a 360-degree feedback system The problems in the performance appraisal The problems in the performance appraisal

processes are being anticipated and efforts are processes are being anticipated and efforts are being made to overcome them. being made to overcome them.

Rank and Yank Strategy or “Up or Out StrategyRank and Yank Strategy or “Up or Out Strategy Team Performance Appraisal Team Performance Appraisal


Points to be RememberedPoints to be Remembered What is the purpose of performance appraisals?What is the purpose of performance appraisals? How should the self appraisal be used?How should the self appraisal be used? How should the ratings be given if there has been a How should the ratings be given if there has been a

change of supervisor or manager during the period of the change of supervisor or manager during the period of the appraisal? appraisal?

How can input/feedback be collected for the appraisal How can input/feedback be collected for the appraisal process?process?

What if the employee refuses to agree or/and accept the What if the employee refuses to agree or/and accept the review? review?

How do you deal with an average or a non-performer? How do you deal with an average or a non-performer?


:::Don't let employees come into the :::Don't let employees come into the Performance Appraisal blindly or leave Performance Appraisal blindly or leave blindly, without a sense of direction or blindly, without a sense of direction or accomplishment!:::accomplishment!:::

performance appraisal

Documents

desired performance

past performance

employees excellence

employees regardingfeedback

organizational goals

ofpotential appraisal

development needs

organizational control