2.

With reference to an organization of your choice discuss the process of performance

appraisal. In your response critique the methods available citing their pros and cons.

Performance appraisal is defined as a process that systematically measures an employee’s

personality and performance usually by managers or immediate supervisors against
predefined attributes like skillset, knowledge about the role, technical know-how, attitude,
punctuality, and so on. Denis, A. & Pritchard, R. (2006). Performance appraisal has many
names across organizations, some call it performance evaluation, and some prefer
performance review, merit rating, and annual reviews among many. This process is carried
out to identify the inherent qualities of an employee and the abilities and level of competency
of an employee for their future growth and development and that of the organization they are
associated with. It aims at ascertaining the value of an employee and his/her offering to the
organization. Performance appraisal helps managers and supervisors place the right employee
to do the right job, depending on the skill set they possess. Without an ounce of doubt, every
organization needs a robust performance appraisal system. It is however the prerogative of
this write-up, to explore the process of performance appraisal, interrogating the methods
available to this concept.

At the very outset, it is imperative to note that, there are various methods that are used by
managers and supervisors to evaluate employees based on objective and subjective factors,
however, it can get a bit tricky, but to effectively evaluate an employee both factors are
essential. Manasa, K. & Reddy, N. (2009). It is important to note that one of the essential first
steps towards promoting an employee, is based on the subjective and objective factors-
performance and competency and this include, identifying the training and development
needs of an employee, to provide confirmation to those employees who were recently hired
and are on their probation period, to take a concrete decision what should be the percentage
of hike in the salary of an employee based on the work done by them, to encourage a proper
feedback system between the manager and employees and to help employees understand
where they stand in the current year and what is the scope of improvement.

Process of performance appraisal

Establishing performance standards

The first step in the process of performance appraisal is the setting up of the standards which
will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives.
The standards set should be clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measured, great care should be taken to describe the
standards.

Communicating the standards

Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be informed and the standards should
be clearly explained to the employees. This will help them to understand their roles and to
know what exactly is expected from them. The standards should also be communicated to the
appraisers or the evaluators and if required, the standards can also be modified at this stage
itself according to the relevant feedback from the employees or the evaluators.

Measuring the actual performance

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of time. It is a continuous process which involves monitoring the performance
throughout the year. This stage requires the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not affect the outcome of the process and
providing assistance rather than interfering in an employees work.

Comparing actual performance with desired performance

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data related
to the employees’ performance.

Discussing results

The result of the appraisal is communicated and discussed with the employees on one-to-one
basis. The focus of this discussion is on communication and listening. Martin, D. C. & Bartol,
K. M. (1998). The results, the problems and the possible solutions are discussed with the aim
of problem solving and reaching consensus. The feedback should be given with a positive
attitude as this can have an effect on the employees’ future performance. Performance
appraisal feedback by managers should be in such way helpful to correct mistakes done by
the employees and help them to motivate for better performance but not to demotivate.
Performance feedback task should be handled very carefully as it may leads to emotional
outburst if it is not handing properly. Sometimes employees should be prepared before giving
them feedback as it may be received positively or negatively depending upon the nature and
attitude of employees.

Methods of performance appraisal

Different companies use different methods to conduct their performance appraisal

calculations. Also, it depends on the job role and the type of company it is. A few of the
common methods doing performance appraisals in HRM are:

Graphic Rating Scale Method

This method is based on the idea of rating employees based on individual characteristics. For
example, some organizations may choose to evaluate employees based on quality and
quantity of work, decisiveness & emotional stability. Employees are rated on a fixed scale
(say 1-10), based on the extent to which they meet each of the desired criteria. The average of
all the scores constitutes the overall score of the employee. Graphic scales are practical; they
are cost-effective and can be developed quickly. They also help in measuring a particular
objective effectively. However, the appraisal in such cases largely depends upon individual
perspectives. This may lead to disputes or non-uniformity in evaluations. Furthermore,
personal bias can also play a role in it. You must be careful to define each character as clearly
as possible.

Ranking Method

The name of this method explains exactly what it is. The Human Resources team ranks each
employee on a list based on factors decided by the human resource department. Hence, the
best performers are on the top, and the worst performers rank at the bottom. This simple
method of ranking employees can be modified in several ways. One of these methods is the
paired comparison ranking style wherein employees are compared in pairs of two against
each other. The number of times one employee is preferred over someone else is recorded.
The top employee is the one with the highest number of preferences. The grading scale
method can be combined with ranking. The employees with the best overall score on the
grade scale (from 1-10) rank at the top of the list. The ranking method is preferred because it
is simple, efficient, and requires little time and money. However, personal bias and favoritism
may cause major disruptions in objective evaluation.

Checklist Method

Employees are evaluated by making use of a checklist in this method. The checklist can have
a variety of different factors that the human resource department has chosen to be important.
The employees are then judged based on those factors. The employers must select between
the yes/no options in those checkboxes. Items in the checklist carry a numerical value based
on their importance to job performance Therefore, the appraisal score is calculated by adding
up the scores of all these individual factors. For example, Behavior Based appraisals are done
by using the checklist method. This happens by having a pre-set personality and behavioral
checkpoints. If an employee meets them then they are considered for an appraisal. The
checklist method makes it easy to evaluate employees as their supervisors have to simply
choose between yes/no. It also helps the employees receive clear and direct feedback.
However, it may not be easy to design an effective checklist and assign a weight based on the
importance of factors.

Management by Objectives Method (MBO)

MBO is considered to be one of the most systematic methods in performance appraisals. The
idea is to give each employee a set of objectives that have to be achieved by them. During the
performance appraisal, the supervisors will evaluate the extent to which the objectives have
been achieved. D. M.,& Tonnsen, S. L. (2005). This is a strong method of evaluation. The
employees have been clearly instructed as to what is expected of them. It also helps the
company to set benchmarks and standards for growth. However, a lot of time and effort goes
into determining the objectives and evaluating them.

360-degree Feedback Appraisal

This approach is basically a group performance review. The data regarding an employee’s
behavior is collected by his/her close subordinates. An employee’s colleagues might be able
to review his/her performance under a variety of situations and circumstances, which might
have escaped the employer. This allows for holistic, full-circle, multi-tiered feedback
regarding a person. This method is useful as it eliminates subjectivity. Muchinsky, P. M.
(2006). It also promotes an atmosphere of open culture, self-development and better
communication. However, every company must develop an effective system and procedure to
utilize this method.

General Performance Appraisal in HRM

General performance appraisal is one of the most common types of performance appraisals.
In general, a manager sets goals and targets for an employee and urges them to achieve it.
This pushes the employee to achieve them and encourages them to grow. The manager calls a
meeting and sets certain goals for an employee. Once the employee achieves those goals, they
review it and set newer goals. This method is an ongoing conversation between the employee
and the manager throughout the year. The manager can also recommend development plans
and key growth areas.

Technological Performance Appraisal

In this method of performance appraisal, the employee’s technological capabilities are judged
and also the Technological skills are kept at the forefront of all the other skills that are not
related to the employee’s job. Here the focus is on how easily the employee adapts to new
technology, how aware the employee is of the technology around them, and how much
technical knowledge they have.

Sales Performance Appraisal

A salesperson is closely linked to the financials of an organization. Therefore, this kind of

appraisal has a direct impact on the sales of a company. Here, the employee is judged based
on the revenue they bring into the company. Here the focus is on what the employee achieves
in contrast to how they are or how they behave. The manager should discuss goals and
deadlines for sales. This way an employee can have a goal to achieve.
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