CHAPTER

4
PERFORMANCE APPRAISAL

HRM Principles & Practices

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After completing each chapter, students should be able to:

1) IDENTIFY THE MAIN COMPONENTS IN A PERFORMANCE

MANAGEMENT SYSTEM.
2) EXPLAIN THE BENEFITS OF HAVING AN EFFECTIVE PERFORMANCE
APPRAISAL SYSTEM.
3) EXAMINE THE FACTORS TO CONSIDER WHEN DESIGNING AN
APPRAISAL SYSTEM.
1) PROBLEMS IN PA
2) PARTIES INVOLVED IN PA
3) METHOD
4) APPRAISAL INTERVIEW

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WHAT IS A PERFORMANCE MANAGEMENT
SYSTEM?
PERFORMANCE MANAGEMENT SYSTEM IS A MEAN TO ENSURE THAT EVERY
EMPLOYEE WORKS IN A MANNER WHICH IS ALIGNED WITH
ORGANIZATIONAL GOALS AND WHICH ENSURES THAT THE EMPLOYEE
REACHES HIS MAXIMUM POTENTIAL ON THE JOB.

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EMPLOYEE PERFORMANCE MANAGEMENT SYSTEM MUST TAKE
INTO ACCOUNT :

• RECRUITMENT OF WORKERS
• TRAINING
• COMPENSATION AND REWARD SYSTEMS

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 FACTORS AFFECTING EMPLOYEE
PERFORMANCE

EMPLOYEE’S
PERFORMANCE

EMPLOYEE’S
EMPLOYEE’S WORK
KNOWLEDGE &
MOTIVATION ENVIRONMENT
SKILL

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 COMPONENTS OF PERFORMANCE MANAGEMENT SYSTEM

Objectives
Setting

Coaching Work Ongoing

Implementation Monitoring

Decide on Performance Reward

Training Needs Review Employees

Take Remedial
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 OBJECTIVES SETTING FOR PERFORMANCE APPRAISAL

THE OBJECTIVES/TARGETS/KEY RESULT AREAS/ KEY PERFORMANCE

INDICATORS ESTABLISHED FOR EACH EMPLOYEE MUST BE:

•CAPABLE OF ACHIEVEMENT BY THE EMPLOYEE

•MEASURABLE
•ACCEPTED BY THE EMPLOYEE
•TIME-BOUND

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IMPLEMENTATION OF WORK BY THE EMPLOYEE

WHILE THE WORK IS BEING CARRIED OUT BY THE EMPLOYEE, THE

MANAGER MUST:

•MONITOR

•GIVE FEEDBACK REGULARLY

•COACH, IF NECESSARY.

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 BENEFITS OF A PERFORMANCE APPRAISAL
SYSTEM
1) ENCOURAGES QUALITY PERFORMANCE BY
REWARDING THOSE WHO DO WELL.
2) IMPROVES CURRENT PERFORMANCE BY GIVING
WORKERS FEEDBACK.
3) ASSISTS IN IDENTIFYING TRAINING NEEDS.
4) PROVIDES DOCUMENTATION IF DISCIPLINARY
PROCEEDINGS ARE NEEDED.
5) PROVIDES A CHANNEL OF COMMUNICATION
BETWEEN MANAGERS AND THEIR SUBORDINATES.

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 EFFECTIVE APPRAISAL SYSTEMS

1) ARE INTEGRATED INTO A PERFORMANCE MANAGEMENT

SYSTEM.
2) RECEIVE TOP MANAGEMENT SUPPORT.
3) ARE CUSTOMIZED TO THE NEEDS OF THE
ORGANIZATION.
4) ARE ACCEPTABLE AND UNDERSTANDABLE.
5) ARE RELIABLE AND UNBIASED AS FAR AS POSSIBLE.

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 POTENTIAL BIAS/PROBLEMS IN PERFORMANCE
APPRAISAL
1) RECENCY EFFECT- MOST RECENT PERFORMANCE AND IGNORE EARLIER WORK
WHICH MAY BETTER/WORSE THAN WORK CARRIED OUT CLOSER TO
APPRAISAL TIME.
2) HALO EFFECT- MANAGER/SUPERVISOR RATES HIGHLY SOMEONE THEY LIKE
SUCH AS SIMILAR BACKGROUND AND LIFESTYLE (SIMILAR COLLEGE AND
COUNTRY).
3) CENTRAL TENDENCY- WHEN APPRAISER RATES ALL HIS SUBORDINATES AS
BEING AVERAGE ON ALL CRITERIA BEING EVALUATED.
4) PREJUDICE AND STEREOTYPING-PREJUDICED AND STEREOTYPED BASED ON
RACIAL, AGE, RELIGIOUS, GENDER/AGE.
5) FATIGUE-IT REQUIRES MANAGER TO APPRAISE ALL OF HIS SUBORDINATES
THAT MAY BLUR HIS JUDGEMENT.
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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL

THE MANAGER

OTHER PARTIES THE EMPLOYEE

COLLEAGUES SUBORDINATES

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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL
1) THE MANAGER
MANAGERS / SUPERVISORS PLAY A CENTRAL ROLE IN THE APPRAISAL
PROCESS, AND SHOULD ALWAYS BE INCLUDED AS ONE OF THE MAIN
APPRAISERS. IN ESSENCE, MANAGERS AND SUPERVISORS HAVE TWO
ROLES IN
PERFORMANCE APPRAISAL:
“JUDGE”: ASSESSING PERFORMANCE
“COACH”: PROVIDING CONSTRUCTIVE FEEDBACK AND
IDENTIFYING AREAS FOR IMPROVEMENT.

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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL

2) THE EMPLOYEE
EMPLOYEE MAY BE ASKED TO CARRY OUT SELF-EVALUATION.
SOME EMPLOYEES
WOULD BE OBJECTIVE TO RATE THEMSELVES AND SOME OF
THEM MAY OVERRATE THEIR OWN PERFORMANCE, WHILE
SOME OF THEM MAY TO SHY TO APPRAISE THEMSELVES
ACCURATELY.

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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL

3) SUBORDINATES
SUBORDINATES ARE A VALUABLE SOURCE OF INFORMATION
REGARDING PARTICULAR ASPECTS OF A SUPERVISOR OR LEADER’S
PERFORMANCE SUCH AS COMMUNICATION, TEAM-BUILDING OR
DELEGATION.
SUBORDINATES CAN PROVIDE FEEDBACK TO HELP MANAGERS /
SUPERVISORS DEVELOP THEIR SKILLS IN THESE AREAS. THE FOCUS
SHOULD BE ON ASPECTS OF MANAGERIAL PERFORMANCE THAT
SUBORDINATES ARE ABLE TO COMMENT UPON.
THIS SOURCE OF APPRAISAL MAY ONLY BE APPROPRIATE IN LARGER
ORGANISATIONS WHERE THERE ARE SUFFICIENT SUBORDINATES.

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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL

4) COLLEAGUES/CO-WORKERS
 CO-WORKERS CAN PROVIDE VALUABLE FEEDBACK ON PERFORMANCE,
PARTICULARLY WHERE TEAMWORK OCCURS. CO-WORKERS ARE OFTEN AWARE
OF DIFFERENT ASPECTS OF A WORKER’S PERFORMANCE THAT MANAGERS
/SUPERVISORS MAY NOT HAVE THE OPPORTUNITY TO OBSERVE. IN ADDITION, AS
THERE IS USUALLY MORE THAN ONE
CO-WORKER WHO RATES A WORKER’S PERFORMANCE, THEIR
EVALUATIONS TEND TO BE MORE RELIABLE.
CO-WORKER EVALUATIONS, HOWEVER, MAY BE BIASED TOWARDS
THOSE INDIVIDUALS MOST WELL-LIKED IN AN ORGANISATION (I.E.,
FRIENDSHIP BIAS). FURTHERMORE, CO-WORKER APPRAISALS MAY HAVE A
NEGATIVE IMPACT ON TEAMWORK AND COOPERATION IF WORKERS
ARE COMPETING WITH ONE ANOTHER FOR ORGANISATIONAL
INCENTIVES AND REWARDS.

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 PARTIES INVOLVED IN PERFORMANCE APPRAISAL

5) OTHER PARTIES
THE OTHER PARTIES INCLUDE CUSTOMERS. CUSTOMERS CAN
ALSO EVALUATE THE PERFORMANCE OF THE EMPLOYEES WHO
INTERACTS WITH THEM. THIS EVALUATION IS BEST BECAUSE IT IS
OBJECTIVE. IT IS ALSO GIVEN A LOT OF IMPORTANCE BECAUSE
THE CUSTOMER IS THE MOST IMPORTANT PERSON FOR THE
BUSINESS. ORGANISATIONS USE CUSTOMER APPRAISALS TO
IMPROVE THE STRENGTHS AND REMOVE THE WEAKNESSES OF
THEIR EMPLOYEES.

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 PERFORMANCE APPRAISAL METHODS
1) COMPARATIVE METHODS
-IT REQUIRES THE APPRAISER TO COMPARE HIS SUBORDINATES. MANAGER/SUPERVISOR RANK/LIST THE
SUBORDINATES FROM BEST DOWN TO THE WEAKEST PERFORMER.
-IT IS SIMPLEST METHOD TO USE, SUITABLE FOR THE SUPERVISOR HAS ONLY A FEW SUBORDINATES.

2) TRAIT RATING SCALES

-IT IS THE MOST POPULAR APPRAISAL METHOD USED TODAY.
-EMPLOYER MUST CHOOSE THE KEY FACTORS WHICH ARE ESSENTIAL FOR SUCCESS ON THE JOB SUCH AS
PERSONALITY-BASED TRAITS, PERFORMANCE-RELATED BEHAVIOUR.
-EXAMPLE OF JOB-RELATED FACTORS ARE QUANTITY OF WORK, QUALITY OF WORK, ATTENDANCE AND
PUNCTUALITY
-EXAMPLE OF PERSONALITY AND BEHAVIOUR FACTORS ARE COOPERATION WITH OTHERS, INITIATIVE,
ADAPTABILITY AND PATIENCE.
-TO HELP APPRAISERS, SOME COMPANIES PROVIDE DESCRIPTIONS OF ACCEPTABLE AND UNACCEPTABLE
BEHAVIOUR.

3) ESSAY TECHNIQUE
-MANAGER/SUPERVISOR MAY BE ASKED TO WRITE DOWN ANSWERS TO CERTAIN OPEN-ENDED QUESTIONS
ABOUT PERFORMANCE OF THEIR SUBORDINATES.
-THIS REQUIRES EFFORT OF MANAGER/SUPERVISOR TO FIND THE RIGHT WORDS TO DESCRIBE THE
SUBORDINATES.
-IT IS NOT A POPULAR APPRAISAL TECHNIQUE. IT IS TIME-CONSUMING BECAUSE MANAGER/SUPERVISOR
NEEDS TO WRITE SPECIFIC COMMENTS RATHER THAN GENERAL PHRASES WHICH ARE NOT HELPFUL THE
EMPLOYEE AND&ARE
HRM Principles UNLIKELY TO LEAD TO IMPROVED PERFORMANCE.
Practices
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 IMPLEMENTATION OF AN APPRAISAL SYSTEM
1) THE APPRAISAL INTERVIEW
o THE MANAGER AND HIS SUBORDINATE MUST SIT TOGETHER TO REVIEW THE SUBORDINATE'S PAST
PERFORMANCE, SET GOALS FOR NEXT TIME PERIOD AND DISCUSS HOW THE MANAGER CAN HELP THE
SUBORDINATE OVERCOME ANY PROBLEMS HE IS FACING IN HIS WORK.

2) COUNSELLING EMPLOYEES WITH PROBLEMS

• MANAGERS ARE CALLED UPON COUNSEL EMPLOYEES IN A VARIETY OF SITUATIONS, INCLUDING APPRAISAL
DISCUSSIONS SUCH AS:
• DISCIPLINARY INTERVIEWS
• RETRENCHMENT EXERCISES
• CAREER DEVELOPMENT INTERVIEWS
• PRE-RETIREMENT PROGRAMS

 MANAGERS NEED TO OFFER A RANGE OF SERVICES TO EMPLOYEES IN ORDER TO PROMOTE PRODUCTIVITY.

HELPING EMPLOYEES PERFORM SATISFACTORILY MAY REQUIRE A COMBINATION OF:
 NON-DIRECTIVE COUNSELLING
 ADVICE GIVING
 INFORMATION GIVING
 TEACHING AND COACHING

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 IMPLEMENTATION OF AN APPRAISAL SYSTEM
AFTER APPRAISAL INTERVIEW/DISCUSSION
AFTER A DISCUSSION HAS BEEN HELD BETWEEN THE
SUPERVISOR AND EACH OF HIS SUBORDINATES, APPROPRIATE
FOLLOW-UP ACTION MUST BE TAKEN. IF THE SUBORDINATE
HAS PERFORMED VERY WELL, HE SHOULD BE REWARDED. MOST
MEDIUM-TO LARGE-SIZED COMPANIES TIE BONUSES AND
INCREMENT TO PERFORMANCE.
ON THE OTHER HAND, EMPLOYEE’S THAT HAVE PERFORMANCE
BELOW STANDARD, THE MANAGER, AFTER DISCUSSING THE
ISSUE WITH HIM/HER, WILL DECIDE WHETHER THE WORKERS
NEED MORE TRAINING OR RETRAINING AND MAKE THE
NECESSARY ARRANGEMENTS.

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• Organizations have performance management systems to
ensure each and every worker performs to the best of his
ability

• An appropriate appraisal method must be used to ensure

the system is fair and perceived as fair by the employees
being appraised

• After each formal appraisal, an action plan is needed to

establish new employee as well as any remedial training or
other action needed.

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 REFERENCE

MAIMUNAH AMINUDDIN (2008).HUMAN RESOURCE MANAGEMENT:

PRINCIPLES AND PRACTICES. 3RD EDITION. OXFORD UNIVERSITY : PRESS
MALAYSIA.
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