Performance Appraisal Methods
“It is a systematic evaluation of an individual with respect to
performance on the job and individual’s potential for development.”
Definition 2: Formal System, Reasons and Measures of future performance
“It is formal, structured system of measuring, evaluating job related
behaviors and outcomes to discover reasons of performance and how to
perform effectively in future so that employee, organization and society
all benefits.”
Meaning of Performance Appraisals
Performance Appraisals is the assessment of individual’s performance
in a systematic way. It is a developmental tool used for all round
development of the employee and the organization. The performance is
measured against such factors as job knowledge, quality and quantity of
output, initiative, leadership abilities, supervision, dependability,
co-operation, judgment, versatility and health. Assessment should be
confined to past as well as potential performance also. The second
definition is more focused on behaviors as a part of assessment because
behaviors do affect job results.
Performance Appraisals and Job Analysis Relationship
| Job Analysis à |
Performance Standards à |
Performance Appraisals |
| Describe the work and personnel requirement of a particular job. |
Translate job requirements into levels of acceptable or unacceptable performance |
Describe the job relevant strengths and weaknesses of each individual. |
Objectives of Performance Appraisals
Use of Performance Appraisals
1. Promotions
2. Confirmations
3. Training and Development
4. Compensation reviews
5. Competency building
6. Improve communication
7. Evaluation of HR Programs
8. Feedback & Grievances
4 Goals of Performance Appraisals
| General Goals |
Specific Goals |
| Developmental Use |
Individual needs
Performance feedback
Transfers and Placements
Strengths and Development needs |
| Administrative Decisions / Uses |
Salary
Promotion
Retention / Termination
Recognition
Lay offs
Poor Performers identification |
| Organizational Maintenance |
HR Planning
Training Needs
Organizational Goal achievements
Goal Identification
HR Systems Evaluation
Reinforcement of organizational needs |
| Documentation |
Validation Research
For HR Decisions
Legal Requirements |
Performance Appraisal Process
1. Objectives definition of appraisal
2. Job expectations establishment
3. Design an appraisal program
4. Appraise the performance
5. Performance Interviews
6. Use data for appropriate purposes
7. Identify opportunities variables
8. Using social processes, physical processes, human and computer assistance
Difference between Traditional and Modern (Systems) approach to Appraisals
| Categories |
Traditional Appraisals |
Modern, Systems Appraisals |
| Guiding Values |
Individualistic, Control oriented, Documentary |
Systematic, Developmental, Problem solving |
| Leadership Styles |
Directional, Evaluative |
Facilitative, Coaching |
| Frequency |
Occasional |
Frequent |
| Formalities |
High |
Low |
| Rewards |
Individualistic |
Grouped, Organizational |
TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS
Numerous methods have been devised to measure the quantity and
quality of performance appraisals. Each of the methods is effective for
some purposes for some organizations only. None should be dismissed or
accepted as appropriate except as they relate to the particular needs of
the organization or an employee.
Broadly all methods of appraisals can be divided into two different categories.
Past Oriented Methods
1. Rating Scales: Rating scales consists of
several numerical scales representing job related performance criterions
such as dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total numerical scores
are computed and final conclusions are derived. Advantages –
Adaptability, easy to use, low cost, every type of job can be evaluated,
large number of employees covered, no formal training required.
Disadvantages – Rater’s biases
2. Checklist: Under this method, checklist of
statements of traits of employee in the form of Yes or No based
questions is prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation. Advantages –
economy, ease of administration, limited training required,
standardization. Disadvantages – Raters biases, use of improper weighs
by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements
arranged in the blocks of two or more are given and the rater indicates
which statement is true or false. The rater is forced to make a choice.
HR department does actual assessment. Advantages – Absence of personal
biases because of forced choice. Disadvantages – Statements may be
wrongly framed.
4. Forced Distribution Method: here employees are
clustered around a high point on a rating scale. Rater is compelled to
distribute the employees on all points on the scale. It is assumed that
the performance is conformed to normal distribution. Advantages –
Eliminates Disadvantages – Assumption of normal distribution,
unrealistic, errors of central tendency.
5. Critical Incidents Method: The approach is
focused on certain critical behaviors of employee that makes all the
difference in the performance. Supervisors as and when they occur record
such incidents. Advantages – Evaluations are based on actual job
behaviors, ratings are supported by descriptions, feedback is easy,
reduces recency biases, chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized, forgetting
incidents, overly close supervision; feedback may be too much and may
appear to be punishment.
6. Behaviorally Anchored Rating Scales:
statements of effective and ineffective behaviors determine the points.
They are said to be behaviorally anchored. The rater is supposed to say,
which behavior describes the employee performance. Advantages – helps
overcome rating errors. Disadvantages – Suffers from distortions
inherent in most rating techniques.
7. Field Review Method: This is an appraisal done
by someone outside employees’ own department usually from corporate or
HR department. Advantages – Useful for managerial level promotions, when
comparable information is needed, Disadvantages – Outsider is generally
not familiar with employees work environment, Observation of actual
behaviors not possible.
8. Performance Tests & Observations: This is
based on the test of knowledge or skills. The tests may be written or an
actual presentation of skills. Tests must be reliable and validated to
be useful. Advantage – Tests may be apt to measure potential more than
actual performance. Disadvantages – Tests may suffer if costs of test
development or administration are high.
9. Confidential Records: Mostly used by
government departments, however its application in industry is not ruled
out. Here the report is given in the form of Annual Confidentiality
Report (ACR) and may record ratings with respect to following items;
attendance, self expression, team work, leadership, initiative,
technical ability, reasoning ability, originality and resourcefulness
etc. The system is highly secretive and confidential. Feedback to the
assessee is given only in case of an adverse entry. Disadvantage is that
it is highly subjective and ratings can be manipulated because the
evaluations are linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes
down the employee description in detail within a number of broad
categories like, overall impression of performance, promoteability of
employee, existing capabilities and qualifications of performing jobs,
strengths and weaknesses and training needs of the employee. Advantage –
It is extremely useful in filing information gaps about the employees
that often occur in a better-structured checklist. Disadvantages – It
its highly dependent upon the writing skills of rater and most of them
are not good writers. They may get confused success depends on the
memory power of raters.
11. Cost Accounting Method: Here performance is
evaluated from the monetary returns yields to his or her organization.
Cost to keep employee, and benefit the organization derives is
ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These
are collection of different methods that compare performance with that
of other co-workers. The usual techniques used may be ranking methods
and paired comparison method.
- Ranking Methods: Superior ranks his worker based on
merit, from best to worst. However how best and why best are not
elaborated in this method. It is easy to administer and explanation.
- Paired Comparison Methods: In this method each
employee is rated with another employee in the form of pairs. The number
of comparisons may be calculated with the help of a formula as under.
N x (N-1) / 2
Future Oriented Methods
1. Management By Objectives: It means management
by objectives and the performance is rated against the achievement of
objectives stated by the management. MBO process goes as under.
- Establish goals and desired outcomes for each subordinate
- Setting performance standards
- Comparison of actual goals with goals attained by the employee
- Establish new goals and new strategies for goals not achieved in previous year.
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit pay
may result in setting short-term goals rather than important and
long-term goals etc.
2. Psychological Appraisals: These appraisals are
more directed to assess employees potential for future performance
rather than the past one. It is done in the form of in-depth interviews,
psychological tests, and discussion with supervisors and review of
other evaluations. It is more focused on employees emotional,
intellectual, and motivational and other personal characteristics
affecting his performance. This approach is slow and costly and may be
useful for bright young members who may have considerable potential.
However quality of these appraisals largely depend upon the skills of
psychologists who perform the evaluation.
3. Assessment Centers: This technique was first
developed in USA and UK in 1943. An assessment center is a central
location where managers may come together to have their participation in
job related exercises evaluated by trained observers. It is more
focused on observation of behaviors across a series of select exercises
or work samples. Assessees are requested to participate in in-basket
exercises, work groups, computer simulations, role playing and other
similar activities which require same attributes for successful
performance in actual job. The characteristics assessed in assessment
center can be assertiveness, persuasive ability, communicating ability,
planning and organizational ability, self confidence, resistance to
stress, energy level, decision making, sensitivity to feelings,
administrative ability, creativity and mental alertness etc.
Disadvantages – Costs of employees traveling and lodging, psychologists,
ratings strongly influenced by assessee’s inter-personal skills. Solid
performers may feel suffocated in simulated situations. Those who are
not selected for this also may get affected.
Advantages – well-conducted assessment center can
achieve better forecasts of future performance and progress than other
methods of appraisals. Also reliability, content validity and predictive
ability are said to be high in assessment centers. The tests also make
sure that the wrong people are not hired or promoted. Finally it clearly
defines the criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which
is systematic collection of performance data on an individual group,
derived from a number of stakeholders like immediate supervisors, team
members, customers, peers and self. In fact anyone who has useful
information on how an employee does a job may be one of the appraisers.
This technique is highly useful in terms of broader perspective, greater
self-development and multi-source feedback is useful. 360-degree
appraisals are useful to measure inter-personal skills, customer
satisfaction and team building skills. However on the negative side,
receiving feedback from multiple sources can be intimidating,
threatening etc. Multiple raters may be less adept at providing balanced
and objective feedback.
