Unit: 3

Performance Appraisals:

Performance refers to accomplishments of assigned tasks by an employee; it is the result of effort and
abilities. Appraisal means evaluation. Performance appraisal is the periodic, formal evaluation of
employee performance for the purpose of making career decision. "Performance appraisal is the
systematic evaluation of the individual with respect to his or her performance on the job and his
potential for development". -Dale S Beach.

Systematic performance appraisal techniques came into prominence during and immediately after the
world 1st era. It was than Walter Dill Scott succeeded in persuading the US army to adopt his "man to
man" rating system for evaluation and classify military officers. It is a review of an employee
performance on the job and his potential for assuming future responsibilities. It reveals the job related
strengths and weakness of employees. It is enhancing your self confidence in some areas and motivation
you to improve your performance in others.
Performance appraisal affects employees pay raises promotions and job duties. This affects not only
your income and standard of living but also your self esteem, emotional security and general satisfaction
with life. Performance appraisals can also determine whether you keep your job. Fair employment
practices are essential for appraisal; it should be based on job analysis rather than personal trait.
Characteristics of performance appraisal:
 It is a systematic process consisting of a series of steps. It compares actual performance with
predetermined performance standards.
 It is an objective to measure of what an employee does. It is performance based.
 It focuses on job performance and potential for future development of an employee.
 It is an ongoing process conducted periodically.
 It is judgmental, logical, developmental. It judges employees performance. It is based on logical
facts about actual performance. It identifies training and development needs for employees.

Importance (Purpose) of performance appraisal:

Performance appraisal is an essential part of effective personnel management. Its main purposes are:-
 1. Validation of selection criteria: Whether we are concerned with psychological tests, interviews,
application blanks, or some other techniques, we cannot determine their usefulness until we
examine the subsequent performance of the workers who were selected and hired on the basis of
those techniques. Therefore, a major purpose of performance appraisal is to provide information
for validating employee selection techniques.
2. Training requirement: A careful employee performance evaluation can cover weakness and
deficiencies in knowledge, skills and abilities. Once these are identified, they can be corrected
through training program for new workers and the retraining of current workers to correct short
comings. It can also be used to assess the worth of a training program to determine whether the
job performance is improved after the training program.
3. Employee Improvement: Appraisals can also suggests how employees might change certain
behavior and attitudes to improve their work efficiency. It is possible when they get feedback
about their job strengths and weakness.
4. Pay promotion and other personnel decisions: In employing organizations, rewards are in the
form of salary increases, bonuses, promotions and transfers to positions these change in status
cannot depend on a supervisor's whim or personal bias but must be based on a systematic
evaluation of employee worth. appraisals provide the foundations of these career decisions.
5. Maintain and enhance employee performance: Appraisals are an aid creating and maintaining
a satisfactory level of performance by employees on their present job. It plays psychological role
in enhancing performance.
6. Supervisory understanding: A formal periodic appraisal encourages supervisors to observe the
behavior of their subordinates. Encouraged by the proper top management attitude, they can be
motivated to take an interest in each person and to help him.
7. Guide to job changes: A systematic appraisal of the employee performance in the job provides
ideas about redesign and changes the job content, which is essential for organizational
betterment. (Duties and responsibilities).

In summary, various uses of appraisal can be classified into two categories:

(I) Administrative: Employee improvement, maintain and enhance performance, supervisory

understanding, pay, promotions and other employee decisions.
(II) Research: Usually for validating selection tools and guide to job changers, not everyone is favor of
formal performance appraisal systems- many employees, labor unions might be against of performance
appraisal.

Performance appraisal process: performance appraisal depends upon the nature of the work. So that it
may be done daily, weekly, monthly, half yearly or yearly. In this time management must have use a
definite process of performance appraisal. The appraisal process consists of the following process.

Establish performance standards.

Establish performance standards.

Establish performance standards.

Establish performance standards.

Establish performance standards.

Establish performance standards.

1. Establish performance standards: The appraisal process begins with the establishment of
performance standard. These standards should also be clear and objective enough to be
understood and measure. They serve as the criteria of performance- what is to be done and how
well it is to be done? These should have evolved under the job analysis and the job description.
Standard can be is terms of quality, quantity, time, cost etc.
2. Communicate performance expectations to employees: The performance standards should be
communicated to employees. It is important to note that communication is a two way street.
 3. Measure actual performance: The actual performance of the employee during specified period
is measured through objective and judgmental appraisal methods, we should use techniques of
appraisal like personal observations, statistical reports, oral and written reports, 360 degree
feedback, management by objectives are the main techniques. How we measure and what we
measure are critical matters. Wrong criteria can result serious dysfunctional consequences.
4. Compare actual performance with standards: The actual performance is compared with
performance standards, deviations are noted. The magnitude, mature, causes and incidence of
deviation are analyzed. Performance can be equal, be higher or be lower than the standards.
Supervisors make the performance ratings at this step. Average rating is problem.
5. Discuss the appraisal with the employees: The result of appraisal is discussed with the
employees. This provides performance feedback to the employees. The discussion is based on
comparing actual results with agreed standards in a constructive manner. It is one of the most
challenging task facing managers is to present an accurate appraisal to the subordinates and than
have the subordinate accept the appraisal. Sometimes it creates negative discussion between
them. Agreement is also reached about what needs to be done to improve the employee
performance.
6. If necessary, initiate corrective actions: The final step in the appraisal is the initiation or
corrective action when necessary. Corrective actions can be of two types:
6.1 Immediate: it is often described a putting out fires. It deal predominantly with symptoms
(transfer).
6.2 Basics: It seeks the source of adjustment like training, well ness, fitness program etc.

The main corrective actions are:

 Correct deviations.
 Change standards.
 Training assignments.

Techniques of performance appraisal (methods): I- O psychologists have developed a number of

techniques to measure job performance. The specific techniques used depend on the type of work being
evaluated. The abilities needed to work satisfactorily on an assembly line differ from those required on a
sales job or a high level administrative position. The performance measure chosen must reflect the
nature and complexities of the job duties. For example, repetitive assembly line work can be assessed
more objectively than the daily activities of bank executive. The main techniques are:-

1: Objective performance appraisal methods: The measurement of performance on production jobs is

relatively easy in principle. It typically involves recording the number of units produced in a give time
period. Such measures of quantity are widely used in industry because production records are easily
available. In practice performance appraisal of production job is not so simple, particularly for non
repetitive jobs. Quality of output must be assessed. They are:-

1.1 Output measures: In this method rating depends upon the quality of output and quantity of output.
For example word processing.

Employee A------70 words per minute----20 Errors.

Employee B------55 words per minute -----0 Errors.

We must consider the possibility that other factors can influence the performance measures.

-Open room surrounded by many other employees.

-Private office and few distractions.

-A lot of noisy office equipment.

-Length of job experience.

1.2 Computerized performance monitoring: Many organizations have programmed their computers to
monitor employees on the job activities largely in word processing, data entry, insurance, customer
service jobs, telecommunications, and airline hotel reservations. Everything a worker produces a unit of
work such as keystroke; it is automatically counted and stored, providing an objective measure of job
performance. Computers can record the number of keystrokes, the incidence of errors, the pace of work
over the course of a shift, the number and length of work, breaks or rest pauses. This is called 'electronic
supervisor'.

Advantages:
  It provides immediate and objective feedback.
 Reduces biasness.
 Helps to identify training needs.
 Facilitates goal setting.
 May contribute to increase productivity.

Disadvantages:

 Invades workers privacy.

 Stressful (may reduce work quality)
 May reduce job satisfaction.

1.3 Job related personal data:- Another objective approach to performance appraisal involves the use
of personal data such as-

 Absenteeism.
 Earning History.
 Accidents.
 Advancement rate.

I-O psychologists have found that personal data may provide little information about and individual,
worker's ability in the job. But these data can be used to distinguish good from poor employees.

2: Judgmental performance appraisal methods: Jobs on which employees do not produce a countable
product is called nonproduction jobs. These are more difficult to assess. Like performance of
administrator, supervisor, firefighter, brain surgeons, business executives, bank managers etc. In each of
these instances I-O psychologists must find some way to assess the merit of the person's work, not by
counting of output but by observing work behavior over a period of time and rendering a judgment
about its quality. To determine how effective or ineffective employee is we must ask people who are
familiar with the person and the work usually a supervisor, peers, subordinate and even the employee
being evaluated. Judgmental methods are:-
2.1 Written narratives: (free essay) some organizations use narratives which are brief essays
describing employee performance to appraise employee performance, most also apply numerical rating
procedure. Although narrative approaches are subjective. The narrative technique is more prone to
personal bias. An essay written by a supervisor can be ambiguous or misleading when describing an
employee's job performance. Sometimes they are deliberate to avoid negative appraisal. An article
published in "Harvard Business Review" listed some common expressions used in written narratives and
suggested what they really meant:

 "Exceptionally well qualified"- has committed no major blunders to date.

 "Tactful in dealing with supervisors"- known when to keep quite.
 "Slightly below average"- stupid.

2.2 Merit rating techniques: Merit rating is designed to yield an objective evaluation of work
performance compared with establishment standards. Because our judgments are sometimes faulty so
they develop this technique. It involves judgment + greater objectivity. These are:

2.2.1 Rating technique: It is a performance appraisal technique in which supervisors indicate how or to
what degree a worker possess each relevant job characteristics. In rating, each employee is compared
with his or her past performance or with a company standard. To rate work quality based on
observations of the workers performance, the supervisor expresses a judgment on a rating scale such as
the followings:

-Slightly below average

Some companies rate employees on specific job duties on a broader factor like cooperation, supervisory
skills, time management, communication skills, judgment and initiative and attendance etc. ratings are
popular way of evaluation performance for two reasons:

-They are relatively easy to construct.

-They attempt to reduce personal bias.

2.2.2 Ranking technique: A performance appraisal technique in which supervisors list the workers in
their group in order from highest to lowest or best to worst. In ranking each employee is compared with
all others in the work group and department. They provide rank on the basis of specific characteristics
and abilities and on overall job performance.

Advantages:

- It is simple.

-It can be done quickly.

- Usually accepted by supervisors as a routine task.

Disadvantages:

- Difficult to point out small differences.

- It supplies less evaluation data than does rating.

- Worker's strengths and weakness cannot be easily determined.

-There is little feedback to employees about their work.

-When there is large number of employees to appraise, supervisor would have to know all their workers
well in order to make comparative judgments.

2.2.3 Paired- Comparison technique: An appraisal technique that compares the performance of each
worker with that of every worker in the group. It is similar to ranking and the result in a rank ordering of
workers, but the comparative judgments are more systematic and controlled. Comparisons are made
between two people at a time and a judgment is made about which of the pair is supervisor. If a
supervisor, evaluates six workers by this technique, comparing each worker with every other, 15 paired
comparisons must be made because there are 15 possible pairs. The formula is:

N= Number of persons to be evaluated

N ( N−1 )
2
For example N= 6

N ( N−1 ) 6 (6−1 ) 6∗5 30

= = = =15 paris.
2 2 2 2

Advantages:

It is simple.

Supervisor has to consider only the pair of workers at a time

Possible to give some rank to those of equal ability.

Disadvantages:

Time consuming and costly.

60 employees-1770 comparisons are based on 5 separate traits or factors overall.

It is better for small group of workers.

2.2.4 Forced distribution technique: It is useful with somewhat larger groups. Supervisors rate their
employees in fixed portions, according to a predetermined distribution of ratings. The standard
distribution is as follows:

-Superior 10%

-Better than average 20%

-Average 40%

-Below average 20%

-Poor 10%

It might not fairly represent that particular group of workers. All workers in a group may be better than
average or superior in job performance. However, this technique dictates only 30% can be rated as
above average.
2.2.5 Forced choice technique: In this technique raters are presented with groups of descriptive
statements and are asked to select the phrase in each group that best describes an employee or is least
applicable to that employee. The phrases with is each group are designed to appear equally positive or
equally positives or equally negative. For example, raters may be asked to chose one statement is each
of the following pairs that best describes and least applicable to subordinate.

(A) is reliable, is agreeable, is careful, is delight.

(B) is uncooperative, is sloppy is habits, is arrogant, and is not interested in work.

I-O psychologists develop statements for forced choice rating scales they correlate each item with a
measure of job success. This method is unpopular, tedious and costly method than other ratings.

2.2.6 Behaviorally anchored rating scales (BARS): BARS attempt to evaluate job performance is
terms of specific behavior that are important to success or failure on the job rather than in terms of
general attitudes, factors such as common since. It uses critical incidents for ratings; supervisors familiar
with job observe the performance of their workers and note those behaviors necessary for effective job
performance. A series of critical incident behaviors are established some associated with superior
performance and others with unsatisfactory performance. These behavior are based on actual job
behaviors are used as standards for appraising worker effectiveness, much of the success of the BARS
approach depends upon the observational skill of the supervisors in identifying behaviors that are truly
critical incidents in inadequate, any performance appraisal based on these behaviors may be misleading.
In some applications of the BARS technique, behaviors are listed in terms of expectations that are called
behavior expectation scale (BES). Its main advantage is that is meets federal fair employment
guidelines.

2.2.7 Behavioral observation scale (BOS): In this appraisal employees are also evaluated in terms of
critical incidents. In that respect, it is similar to BARS; however the BOS appraiser's rate subordinates
on the frequency of the critical incidents as they are observed to occur over a given period. The ratings
are assigned on a 5 point scale. The evaluation yields a total score for each employee, obtained by
adding the ratings for each critical incident. It also meets the equal employee opportunity guidelines. I-O
psychology research comparing BARS and BOS techniques has been inconclusive.
3. Management by objectives (MBO): It involves a mutual agreement between employee and manager
on goals to be achieve in a given period. MBO focuses on results on how well employees accomplish
specified goals. It actively involves employees in their own evaluations. They are not simply graded or
rated by others. MBO consists of two phases.

3.1 Goal setting: In goal setting, employees meet individually with supervisors to determine the goals
for which they will strive in the time before the next appraisal and to discuss ways of reaching those
goals. The goals must be realistic, specific, and as objective as possible. For example, it is not enough
for scales to say that they will try to sell more products. A fixed number of items or a dollar volume
must be established as the goal.

3.2 Performance review: In performance review, employee and supervisors discuss the extent to which
the goals were met. again, this is a mutual process involving both parties. The appraisal is based on job
results, not on characteristics such as initiative or general skills.

Advantages:

-It satisfies fair employment guideline and has been found to be effective increasing employee
motivation and productivity.

-It converts organizational objectives into individual objectives.

-It needs high level of trust by manager to employees.

-Every employee has different set of goals.

Disadvantages:

-Employees in MBO programs may feel pressured to set higher goals with each appraisal to show
evidence of improvement. MBO is not useful for jobs that cannot be quantified.

4. Assessment Centers: (Army administration is Germany- 1930s) this method is very popular and
widely used method in the appraisal of manager's performance Managers participate in simulated job
tasks, such as management games, group problem solving, leaderless group discussions, in basket
techniques and interview.
-It has high validity when used for performance appraisal purposes.

-It provides stress to participants.

5. 360 feedbacks: It is also widely used method for appraisal of the performance of managers. This
method used performance feedback information from multiple raters.
Boss

Peer 360° feedback subordinate

Self

It involves combining evaluations from several source into an overall appraisal. It also involves the
evaluations by the organization, customers or clients who have dealings with the person being rated.

It provides data from unique perspectives:

-Multisource feedback can reduce many forms of biasness.

-Managers can easily accept their criticisms if by multisource.

Disadvantage:

-It is more costly method than other single ratings.

-Both employees and managers like this technique, because it provides a comprehensive picture of
managerial performance. Development needs of managers can be identified.

Errors in performance appraisal: Certain of these errors are common in appraisal methods they are:-

1. Halo error: It is the tendency to judge all aspects of a person's behavior or character on the basis f
single trait of attribute. For example shyness, neatness etc.
2. Leniency error: Employees are given more positive performance ratings than they deserve. The
evaluation is subjective.

3. Severity error: Employees are consistently given low performance ratings than they deserve.

4. Central tendency (Average Error): Employees are rated as average high and low ratings are
avoided. Raters play it safe.

5. Regency error: Rating is based on employee's most recent behavior of performance. Past
performance of the evaluation period is forgotten.

6. Contrast error: Rating is based on comparison of several employees; a slightly better performance
compared to other s is rate very high.

7. Personal bias error: Rating is based on personal prejudices, likes and dislikes Rater's cognitive
process play role in this error attribution is main error.

8. Political influence error: Employees are evaluated under the pressure of politics. This type of error
is common in third world countries.

I-O psychologists believe that we can reduce above mentioned error through.

-Training to the persons who conduct appraisal

-Providing feedback to raters by trained ones.

-Subordinate participation in appraisal (it develops trust between them).

Job analysis: A job analysis is a systematic exploration of the activities within a job.

"Job analysis is the systematic investigation of job content, the physical circumstances in which the job
is carried out, and the qualifications needed to carryout job responsibilities" -Wendell French.

"Job analysis systematically collects, evaluates, and organizes information about jobs"- Weather and
Davis.
Overall, job analysis is the study of the job to describe in specific terms the nature of the component
tasks performed by the workers. Many I-O psychologists prefer to us the term "work analysis" instead of
job analysis work analysis focuses on certain tasks and skills that can be transferred from on job to
another. A job involves position, duty, task and element.

A job element is the smallest unit into which work can be divided, cutting onions for momo is suitable
example.

A task is a distinct work activity carries out for distinct purposes. For example typing a letter, preparing
for instruction.

A duty is a number of tasks. For example, counseling students is a duty of a college instructor.

Position refers one or more duties performed by one person in an organization. For example , supervisor,
clerk, peon etc.

A job is a king of positions within the organizations. If a campus has five peons, then there are 5
positions but only one job of peon.

Purpose of job analysis: A comprehensive job analysis program is an essential ingredient of sound
personal management.

Job analysis

Job Description Job Specification Job Evaluation

Job description: It is an overall written summary of job requirement. It is a profile of the job. It
includes:

-job title -Nature, duties and responsibilities of the job

-Job Location -Accountabilities and authority.

-Level of the job - Working conditions.

Job Specification: It is an overall summary of worker requirements. It is a profile of human

characteristics needed for performing the job. It includes:

-Education and training-Experience

-Physical health.

-Skills (communication, compute, driving).

-Abilities

1) Physical-Strength, dexterity (eye hand coordination)

2) Mental-Judgment, initiative, decision making.

Job evaluation: Job evaluation specifies relative value of each job in the organization. It ranks all jobs
in a hierarchy. It rates the job not the employees. job description, specification serves as input for job
evaluation. Job evaluation provides information for:

-establish wages and salaries.

-Developing compensation packages.

-Ranking jobs.

Job evaluation finds out similar demands in terms of skills, education and other personal characteristics
for job. It contributes toward that and by specifying the relative value of each job in the organization.

Purpose and Importance of Job analysis:

 Organization and manpower planning. (defines labor needs, duties, responsibilities)

 Recruitment and selection.
 Wage and salary administration.
 Job reengineering. (job changes)
  Performance appraisal. (to establish standards)
 Health and safety (Identify Hazards)

Overall, job analysis is a systematic recording of activities involved in a job. It is essential for sound
human resource management.

Job analysis techniques: The information collected for job analysis should be converted into job
descriptions and job specifications. The main techniques are:

1. Critical incidents: It is based on the identification of these incidents of behavior that are necessary
for successful job performance. The goal is to have subject matter experts indicate the behavior the
distinguish good from poor workers. The critical incident technique focuses on specific action that lead
to desirable or undesirable consequences on the job. A single critical incident is of little value, but
hundreds of them can effectively describe the unique behaviors required to perform the job well.

2. Chick list: It is widely used by government. It the checklist, the evaluator uses a list of 'behavioral
descriptions' and checks of those behaviors that apply to the job. The evaluator merely goes down the
list and give 'yes' or 'no' responses. Once the checklist is completed, it is usually evaluated by the staff
personnel department. Analyst than score the checklist, often weighting the factors in relationship to
their importance. The final decision can determine or explore about the job.

3. Graphic rating: It is the oldest method, most commonly the rater, who usually rates behaviors
through direct supervisor, is supplied with a printed from, one for each job is rated and each behavior in
job by employee is rated. Ratings are based on.

For non- Supervisory jobs and workers:

 job knowledge.
 Cooperation
 Dependability
 Imitativeness
 Attitude

For Supervisory job or personnel's

  Analytical ability
 Judgment
 Leadership
 Personality
 Imitativeness
 Creative ability
 Emotional Stability.

4. Employee comparison method: In this method there is a comparison of different qualities and
behavior of employees. It ranks each individual in relationship to all others on a one-on- one basis.
Successful employee's qualities and behaviors are list for job success.

5. Other techniques:

 Interview
 Questionnaire
 Direct Observation
 Systematic activity logs: in this technique workers and supervisors maintain detailed written
records of their activities during a given time period.

Job Evaluation: Job evaluation specifies the relative value of each job. It ranks all jobs in a hierarchy,
job description and specification serves as input for job evaluation.

"job evaluation is a process of determining the relative worth of the various jobs within the organization
to establish wages and salaries"- Wendell French.

Methods of job evaluation: There are four basic method of job evaluation currently in use: They are

1. Ranking method: It requires a committee typically composed of both management and employee
representatives to arrange jobs in a simple rank order from highest to lowest. They compare two jobs
and judge which one is more difficult.
2. Classification method: This method was made popular by U. S civil service commission. The
commission requires that classification grades be established. These classifications are created by
identifying some common denominator, skills, knowledge, responsibilities, with the desire goal being
the creation of a number of distinct classes or grades of jobs such as shop jobs, clerical jobs and sales
jobs and so on.

3. Factor comparison method: Factor comparison is a sophisticates and quantitative ranking method.
The evaluators select key job in the organization as standards. The factor is the key jobs will be
compared to other jobs in the base of five criteria's:- 1 Mental requirements. 2. Responsibility. 3. Skill
Requirements. 4. Physical requirements. 5. Working conditions.

4. Point method: It breaks down jobs based on various identifiable criteria (Such as skill, effort and
responsibility) and then allocates points to each of these criteria. Depending on the importance of each
criterion to performing the job, appropriate weights are given, points are summed and jobs with similar
point totals are placed in similar pay grades.

Jobs Skill Effort Responsibility total

A 5 5 4 14(3rd)
B 6 7 3 16(2nd)
C 8 4 8 20 (1st)

Difference Between job Analysis and job evaluation:

Job Analysis Job Evaluation
It is a systematic exploration of the It specifies the relative value of each job
activities within a job. in the organization.
It is a broad concept. It is the one purpose of job analysis
Job analysis techniques are: critical Job evaluation techniques are: Ranking,
incidents, checklists, graphic ratings and Classification, factor comparison and
employee comparison method. point method.
It collects evaluates and organizes all It compares jobs and provides ranks to
information about jobs. jobs in hierarchy.
It rates both employee and jobs. It rates the job not the employees.