unit 1 pmrs

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Performance Appraisal &Retention Strategies (M-410)MBA IV Sem

Unit 1

Manali Pareek

PMRS (M-410)



Syllabus of Unit 1

Performance Appraisal – A ConceptualFramework, Concept & Definitions of

performance appraisal, Objectives ofperformance appraisal: Process ofperformance appraisal, Performance

Appraisal vs Performance ManagementSystem, Concept of performancemanagement, Process & elements 0fperformance management.



Concept of performance appraisal

Performance appraisal is central part ofperformance management . Organizationattempt to measure several aspect of their workactivities through various means and indicator ofemployee performance .It relate withproductivity, effectiveness , quality andtimeliness. Basically performance indicate what

expected to be delivered by an individual or aset of individual within a time frame. It iscontinuous process of measuring qualitativelyand quantitatively performance of employees .



Meaning

Performance appraisal is the assessment ofan employee’s job performance . It

comprises the steps of observing andassessing employee performancerecording the assessment and providing

feedback to the employees .



Definition –

According to Edwin B Floppy, “Performance

appraisal is the systematic periodic and an

impartial rating of an employees excellence inmatters pertaining to his present job and hispotential for a better job”.

According to Armstrong “ Performance appraisal

can be defined as the formal assessment andrating of individual by their managers at usuallyand annual review meeting”



Objective of performance appraisal

Administrative – Performance appraisal providesmanagers with the information they need tomake salary , promotion and dismissal decision.

Developmental – Information gathered in theappraisal can be used to identify and plan theadditional training , learning or otherimprovement employee requires .

Motivation – It can encourage initiative, developa sense of responsibility and stimulate efforts toperform better .



Communication – It can serve as a basis for ongoing disucssion between superior andsubordinate about job related matters

Human resource planning – Appraisal includevaluable input to skills inventories and humanresource planning .

Legal compliance – It can serve as legal

compliance for promotion, transfer , rewards anddischarges. Performance appraisal helpful in evaluate the

result of training programmes .



It helps the subordinate – supervisorcounselling relationship.

It help to evaluate HR policies andprogrammes .

It help in assessing the abiltiy of the

individual to make the best use ofemployee talent in the present job.

It helpful to find out area of weakness.



Nature of performance appraisal

Performance appraisal is a process consisting of aseries of steps. It is the assessment of employeestrength and weaknesses in terms of jobs .

It is a scientific or objective study. It tries to find out how well employee performing the job

and tries to establish further improvement.

It is carried out periodically according to definate plan.

It focus on quantified objectives. It is result oriented as well as potential oriented .



Importance

Work for better Human resource planning Enhancing employee performance It contribute to productivity

Determining training need . It work for produces better supervision Proper validation of HR programmes Work for employee grievances reduced.

Helpful in various decision such as recuritment ,promotion, transfer, demotion, termination, successionplanning etc.

Improve communication between managers andemployees .



Benefits of performance appraisal

Improve the work performance by enhancing theproductivity of an employee.

Identification of those who need some type ofsupport to improve and increase their workperformance .

Compensation according to achievement

Placement of employees according to theirknowledge ,skill and ability .

Reduction or elimination of grievances .



Process of performance appraisal

Determine appraisal objective

Choose appraisal technique

Determine appraisers

Train managers and employees

Finalize ratings

Prepare MIS



Determine appraisal objectives – Performance appraisal

begins with determination of objective the appraisal

system seeks to achieve for the organization . It focus onassessing performance of employees for affecting careerprogression, transfer, awarding , compensation revisionetc.

Choose appraisal technique – Choose appropriate performance

appraisal technique like in traditional technique – Ranking method,Forced choice method, essay method, Group appraisal method,confidential report etc .



Modern Method – Behavourally rating method,Behavioural observation scale method,Assessment centers , Appraisal through MBO,360 degree appraisal method etc

Determine Appraisers-

Appraises play a pivotal role insuccess and credibility of any performance appraisal

system. Appraiser can motivate higher commitment tothe system by making fair and accurate judgement andinstilling a sense of confidence in the employees .



Train managers and employees – organization need to train

comprehensively the managers and appraisers and

employees as appraisees in the tools , technique ,system and instrument of performance appraisal .Thisdepend on type of technique, training design anddelivery .

Distribute forms –

Distribue the necessary form tomanager and employees for recording theirobservation, comments and remarks towardsadministering performace appraisal . It also suggesttraining and developmental inputs . It provideperformance review .



Finalize ratings – the managers evaluate the performance

of employees and assign ranking or score.

Communicate ratings-The finding score or rating of

employees reviewing officer consolidate to employees . Prepare MIS –

HR department after reviewing the entire

performance of all work unit consolidates in the form ofMIS (Management information system ) for the purposeof enabling top management to take HR decision.



Performance appraisal processSetting performance standards

Communicating Standards

Measuring Performance

Comparing with standards

Discussing results

Taking corrective action



Methods of Performance Appraisal

Past Oriented Methods

- Essay appraisal Method

- Graphic rating scale appraisal- Field Review appraisal

- Forced choice rating approach

- Critical incident approach

- Work standards approach

- Ranking method approach



Future Oriented Method

- Management By Objective appraisal

- Assessment centers method

- Behaviorally Anchored Rating scale

-

360 degree appraisal- Balanced Scored



Past Oriented Methods

-Essay Appraisal Methods –

In this technique manager rates

the employees in an open ended manner and uses afree form in his own words and put down his impressionabout the employees on a continuous basis. Managernote some factors –

Job knowledge, Skills , Employee relationship, Employeesunderstanding , responsibility, Attitude towards jobs .



- Graphic Rating Scale Appraisal – In this graphic

scale assesses an employee on a rating scale

comprising lists of qualities and range ofperformance . Rating scale could be continuousways like – (1,2,3,4,5)scale .

Rating qualities base on – Job knowledge , Ability

to complete work in time , Proficiency inutilization of material, Punctuality, Self discipline,Leadership, Ability to learn higher skills



- Field Review Appraisal – In this method a member of HR

department interviews line managers to evaluate their

respective employees .And note down the performanceof each employees .- Forced Choice Rating Appraisal –

This technique wasdeveloped to reduce bias and establish objective

standards of comparison between individual. This usemany scale like – Exceptional performance, Very goodperformance, Average performance, Satisfactory andpoor performance



Critical Incident Appraisal

This method prove to be traumatic experience formanagers . It forced to hold employees . In this actualand factual incidents discuss with an employee. Method

involve general duty, target etc.-Word Standard Approach –

This technique establish work andemployee targets aimed at improving productivity. In thisgood deal of time is spent observing employees on the

job , simplifying and improving the job by providingstandard output.



-Ranking Methods Appraisal

In this method

employees are ranked form exceptional to poorperformance on a characteristic for evaluatingemployees .This method use for comparativepurpose particularly when employee on different

statement , ratings or appraisal but it involveoverall judgment .



Future Oriented Method

Management by objective –

This method of performanceappraisal introduced by Drucker. In this method manager

jointly with the employees determines specificmeasurable goals or targets . Depending on theperformance , goals or targets are redesigned ormodified for next appraisal cycle. This process use-

Organization planed goal, Departmental jointly goals, shortterm performance targets ,Feedback criteria base etc.



Assessment Centers –

This consists of

standardized evaluation of behaviourbased on multiple inputs. Assessmentcomprise a number of exercise which havebeen designed to replicate the tasks or

demands of the jobs which a candidate isbeing considered.



Behaviourally Anchored Rating Scale – This using specific

behaviour point each of which reflects a different degree

of performance effectiveness. BARS use – -Effective and ineffective job behaviour are identified todescribe performance.

- These incidents are clustered into smaller set ofperformance dimensions.

- Job experts relocate the original critical incidents.- Subset of the incidents in used as behavioural anchors

for each dimension.



360 degree appraisal –

This appraisal method

focus on teamwork , employee development andcustomer service the emphasis has shifted toemployee feedback from the full circle of source.Appraisal base on (Superior, subordinate,

internal customer, external customer , peergroup etc.)



Balanced Scorecard –

BSC is management

system that enables organizations toenhance the clarity of their vision andstrategy and enable them to translate thetask in action. Like – Financial , customer ,

Internal processes , Learning and growthetc.



Performance Management

Concept –

Performance management is a system

used by an organization to achieve its objectivesto utilization human capital optimally. This isongoing function of operationalize the strategyand reach the goals and as such it is directly

linked to where the organization and each unitgoing .Basically this maintain necessary skills .



Meaning

Performance management is defined as a processof defining , monitoring, and using objectiveindicators of the performance of an organization

and performance on a regular basis.Definition –

According to Myland , “Performance Management

is a systematic means of ensuring that managerand their sub matters, and to agree what futureaction is appropriate on both sides.”



According to Institute of Personnel Management ,“Performance Management is a strategy which

relates to every activity of the organization set inthe context of its human resource policies,culture and communication systems. The natureof strategy depends on the organizational

context and can vary form organization toorganization.



Purpose of Performance

Management To measure and judge performance

To relate individual performance to organizational goalsand objectives.

To stimulate employee motivation. To enhance communication between manager and

employee.

To serve as a basis for judgement about rewards and

recognition To serve as device for organizational control and

integration.



Performance Management Process

Planning Performance

Managing Performance

Reviewing Performance

Developing Performance

Rewarding Performance



Planning Performance

This refers to the process of setting the work relatedactivities in the form of specific job objectives asintegrated with the work unit or departmental goals. Thisinvolve –

- Set performance objectives- Assessment of employee ability and motivation to deliver

objective .- Written down performance objectives .

- Making periodic review and adjustment .- Seeking commitment of employees to work as per the

objective .



Managing Performance

This involve working towards the performance expectationsestablished in the performance planning stage.Managers analyze the progress of employees in

achieving their performance objectives . This involve – - Revisiting the performance plan of employees

periodically.

- Analyzing for shortcoming in achieving performanceobjectives with regards to time ,cost and quality.

- Reinforcing employee motivation.



Reviewing Performance

Reviewing is fundamental factor of performancemanagement. Performance need to be reviewedat predetermined intervals and feedback given

to employee. This involve – - Linking with planning process- Plan meetings and dates/time/location in

advance with employees.

- Review base on performance only- Rating system is used .



Rewarding Performance

Good performance need to be rewarded.This will promote transparency and

consistency within an organization. Theprocess of performance management willcontinue throughout the working life of the

employee.



Developing Performance

Developing performance of employees is adynamic process which requires managers to

provide counseling for improving performanceand giving an opportunity to employees sharetheir problem freely and frankly. This involve –

- Delivering regular job related feedback.

- Set clear performance objectives

- Provide appropriate opportunities for training



Elements of Performance

Management Performance Planning

Monitoring

Development

Rewarding



Aim of Performance Management

Achieve sustainable improvements inorganization

Increase the abilities of job satisfaction Provide a framework for agreement of objective

Assessment of organization condition and planfor improvement.

Provide a impartial rewarding system



Deference between performance

appraisal and performance management

Performance appraisal is focus on

individual objective but Performance

management emphasis on organizationobjective .

Performance appraisal base on quantative

and qualitative approach but Performancemanagement base on qualified approach



Performance appraisal is annual appraisal butPerformance management is continuous reviewprocess .

Performance appraisal is focus on pastperformance But Performance management isfuture focus base .

Performance appraisal is own by HumanResource Department But Performancemanagement is own by line management .



Performance Management

System



Reference –

Human Resource Management By V.S.P.Roa

PMRS by Herman Aguinus Performance Management By Topomay Deb

Human Resouce Personal Management by

K.Aswathapa

unit 1 pmrs

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