UNIT-4 HUMAN RESOURCE MANAGEMENT MBA-2 SEM.

UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-25

MEANING AND SIGNIFICANCE OF PERFORMANCE APPRAISAL

Performance Appraisal is the systematic evaluation of the performance of employees and

to understand the abilities of a person for further growth and development. Performance
appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance

Performance Appraisal is the process of obtaining, analyzing and recording information

about the relative worth of an employee. The focus of the performance appraisal is
measuring and improving the actual performance of the employee and also the future
potential of the employee. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, "performance

appraisal is the systematic, periodic and an impartial rating of an employee’s excellence
in the matters pertaining to his present job and his potential for a better job."
Performance appraisal is a systematic way of reviewing and assessing the performance of
an employee during a given period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It
helps to analyze his achievements and evaluate his contribution towards the achievements
of the overall organizational goals.
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Performance appraisal is a method of evaluating the behavior of employees in the work

place normally including both the quantitative and qualitative aspects of job performance.
Performance refers to the degree of accomplishment of the tasks that make up an
individual’s job. It indicates how well an individual is fulfilling the job demands.

Every organization has to decide upon the content to be appraised before the programme is
approved on the basis of job analysis. The content to be appraised may vary with the
purpose of appraisal and type and level of employees.

The key factor in an organization to support an effective performance appraisal system is

as follows:

 Organizational planning based on potentialities of human resources.

 Human Resource Planning based on weakness, strengths and potentialities of human
resource
 Organizational effectiveness through performance improvement
 Fixation and re fixation of salary, allowances, incentives and benefits
 Original placement or placement adjustment decisions
 Identifying training and development needs and to evaluate effectiveness of training
and development
 Needs and to evaluate effectiveness of training and development programmes
 Career planning and development and movement of employees

OBJECTIVES OF PERFORMANCE APPRAISAL:

 To review the performance of the employees over a given period of time.

 To judge the gap between the actual and the desired performance.
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 To help the management in exercising organizational control.

 Helps to strengthen the relationship and communication between superior –
subordinates and management – employees.
 To diagnose the strengths and weaknesses of the individuals so as to identify the
training and development needs of the future.
 To provide feedback to the employees regarding their past performance.
 Provide information to assist in the other personal decisions in the organization.
 Provide clarity of the expectations and responsibilities of the functions to be performed
by the employees.
 To judge the effectiveness of the other human resource functions of the organization
such as recruitment, selection, training and development.
 To reduce the grievances of the employees.
 To create and maintain a satisfactory level of performance.
 To guide the job changes with the help to continuous ranking.
 To facilitate fair and equitable compensation based on performance.
 To provide information for making decisions regarding lay-off, retrenchment etc.

ADVANTAGES OF PERFORMANCE APPRAISAL

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It is said that performance appraisal is an investment for the company which can be
justified by following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion
programmes for efficient employees. In this regards, inefficient workers can be
dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for
employees. Merit rating is possible through performance appraisal. Performance
Appraisal tries to give worth to a performance. Compensation packages which include
bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on
performance appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the
supervisors to frame training policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for efficient employees. It
also helps in framing future development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the
validity and importance of the selection procedure. The supervisors come to know the
validity and thereby the strengths and weaknesses of selection procedure. Future
changes in selection methods can be made in this regard.
5. Communication: For an organization, effective communication between employees and
employers is very important. Through performance appraisal, communication can be
sought for in the following ways:
a- Through performance appraisal, the employers can understand and accept skills of
subordinates.
b- The subordinates can also understand and create a trust and confidence in superiors.
c- It also helps in maintaining cordial and congenial labour management relationship.
d- It develops the spirit of work and boosts the morale of employees.

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All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating

performance of employees, a person’s efficiency can be determined if the targets are
achieved. This very well motivates a person for better job and helps him to improve his
performance in the future.

References

1. Human resource management by C.B. Gupta, Sultan and Chand Publication

2. https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3. https://hbr.org/1976/07/appraisal-of-what-performance

UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

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MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-26

PERFROMANCE APPRAISAL PROCESS

Setting performance standards

Decision making/ Communicating

corrective actions standards

Discussing the Measuring

result performance

Comparing with
standards

1- SETTING PERFORMANCE STANDARDS

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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

2- 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 them.
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.

3- 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.

4- COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

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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.

5- 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. 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. The purpose of the meeting should be to
solve the problems faced and motivate the employees to perform better.

6- DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR
decisions like rewards, promotions, demotions, transfers etc.

Sources of Error in Performance Appraisal /Problems in performance Appraisal/

Limitations of performance Appraisal

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1- Rating Biases: It is a subjective measure of rating performance which is not verifiable by

others and has the opportunity for bias. There rater biases include:

A) Halo Effect-

It is the tendency to rate employee consistently high or low on the basis of one trait. In this
effect raters depend excessively on the rating of one trait or behavioral consideration in
rating all other traits or behavioral considerations. One way of minimizing the halo effect is
appraising all employees by one trait before going to rate them on the basis of another
trait.

Ex: an employee rated high just because he sits till late in the evening. Similarly an
employee rated low because he may be considered lazy as he does not shave regularly

B) Stereotyping:

Judging on the basis of group of his age, sex, caste, religion and so on

C) The Error of Central Tendency:

Some raters follow play safe policy in rating by rating all the employees around the middle
point of the rating scale and they avoid rating the people at both the extremes scale. They
follow play safe policy because of answerability to the management or lack of knowledge
about the job and person he is rating or has least interest in the job.

D) Constant Error

Leniency error= over rating

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Strictness error= underrating

The Leniency and Strictness: the leniency bias crops when some raters have a tendency to
be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any
purpose. Equally damaging is assigning consistently low rates.

E) Personal Bias:

If the rater dislikes any employee or any group, he may rate them at the lower end, which
may distort the rating purpose and affect the career of these employees.

2- The Recency Effect- The raters generally remember the recent actions of the employee
at the time of rating them on the basis of these recent actions favorable or
unfavorable-rather than on the whole activities.
3- Lack of reliability- Reliability implies stability and consistency in measurement
4- Incompetence- Lack of knowledge and experience of rater
5- Negative approach – Performance Appraisal loses its value when the focus is on
punishment rather than development
6- Resistance
7- Multiple objectives: raters may get confused due to too many objectives or unclear
objectives.

References

1- Human resource management by C.B. Gupta, Sultan and Chand Publication

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2- https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3- https://hbr.org/1976/07/appraisal-of-what-performance

UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

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MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-27

METHODS OF PERFORMANCE APPRAISAL

The performance appraisal methods may be classified into two categories, as shown in
Figure below.

Performance Appraisal Method

TRADITIONAL METHOD MODERN METHOD

1- Confidential report 1- Assessment Centre Method

2- Essay method / free form 2- Human Resource Accounting
3- Check list method 3- Behaviorally Anchored Rating
4- Straight Ranking scales
5- Paired Comparison 4-Appraisal through MBO
6- Graphical rating scales 5- 360 degree Appraisal
7- Critical incident
8- Group Appraisal
9- Field review

TYPES OF TRADITIONAL METHODS

1- Confidential report:

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It is mostly used in government organizations. It is a descriptive report prepared, generally

at the end of every year, by the employee's immediate superior. The report highlights the
strengths and weaknesses of the subordinate. The report is not databased. The impressions
of the superior about the subordinate are merely recorded there. It does not offer any
feedback to the appraisee. The appraisee is not very sure about why his ratings have fallen
despite his best efforts, why others are rated high when compared to him, how to rectify
his mistakes, if any; on what basis he is going to be evaluated next year, etc. Since the
report is generally not made public and hence no feedback is available, the subjective
analysis of the superior is likely to be hotly contested. In recent years, due to pressure from
courts and trade unions, the details of a negative confidential report are given to the
appraisee

2- Essay evaluation/ free form

Under this method, the rater is asked to express the strong as well as weak points of the
employee's behavior. This technique is normally used with a combination of the graphic
rating scale because the rater can elaborately present the scale by substantiating an
explanation for his rating. While preparing the essay on the employee, the rater considers
the following factors: (i) Job knowledge and potential of the employee; (ii) Employee's
understanding of the company's programmes, policies, objectives, etc.; (iii) The employee's
relations with co-workers and superiors; (iv) The employee's general planning, organizing
and controlling ability; (v) The attitudes and perceptions of the employee, in general.

Essay evaluation is a non-quantitative technique. This method is advantageous in at least

one sense, i.e., the essay provides a good deal of information about the employee and also
reveals more about the evaluator. The essay evaluation method however, suffers from the
following limitations:

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 It is highly subjective; the supervisor may write a biased essay. The employees who are
sycophants will be evaluated more favorably then other employees.
 Some evaluators may be poor in writing essays on employee performance. Others may
be superficial in explanation and use flowery language which may not reflect the actual
performance of the employee. It is very difficult to find effective writers nowadays.
 The appraiser is required to find time to prepare the essay. A busy appraiser may write
the essay hurriedly without properly assessing the actual performance of the worker.
On the other hand, appraiser takes a long time; this becomes uneconomical from the
view point of the firm, because the time of the evaluator (supervisor) is costly.

3- Critical incident technique:

Under this method, the manager prepares lists of statements of very effective and
ineffective behavior of an employee. These critical incidents or events represent the
outstanding or poor behavior of employees on the job. The manager maintains logs on each
employee, whereby he periodically records critical incidents of the workers behavior. At the
end of the rating period, these recorded critical incidents are used in the evaluation of the
workers' performance.

An example of a good critical incident of a sales assistant is the following:

July 20 – The sales clerk patiently attended to the customer’s complaint. He is polite,
prompt, and enthusiastic in solving the customers' problem.

On the other hand the bad critical incident may appear as under:

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July 20 – The sales assistant stayed 45 minutes over on his break during the busiest part of
the day. He failed to answer the store manager's call thrice. He is lazy, negligent, stubborn
and uninterested in work.

This method suffers however from the following limitations:

 Negative incidents may be more noticeable than positive incidents.

 The supervisors have a tendency to unload a series of complaints about incidents
during an annual performance review session.
 It results in very close supervision which may not be liked by the employee.
 The recording of incidents may be a chore for the manager concerned, who may be
too busy or forget to do it.

4- Checklists and weighted checklists:

Another simple type of individual evaluation method is the checklist. A checklist represents,
in its simplest form, a set of objectives or descriptive statements about the employee and
his behavior. If the rater believes strongly that the employee possesses a particular listed
trait, he checks the item; otherwise, he leaves the item blank. A more recent variation of
the checklist method is the weighted list. Under this, the value of each question may be
weighted equally or certain questions may be weighted more heavily than others.

The following are some of the sample questions in the checklist.

 Is the employee really interested in the task assigned? Yes/No

 Is he respected by his colleagues (co-workers) Yes/No
 Does he give respect to his superiors? Yes/No
 Does he follow instructions properly? Yes/No
 Does he make mistakes frequently? Yes/No
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A rating score from the checklist helps the manager in evaluation of the performance of the
employee. The checklist method has a serious limitation. The rater may be biased in
distinguishing the positive and negative questions. He may assign biased weights to the
questions. Another limitation could be that this method is expensive and time consuming.
Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of
statements about the employee's characteristics, contributions and behaviors. In spite of
these limitations, the checklist method is most frequently used in the employee's
performance evaluation.

References

1- Human resource management by C.B. Gupta, Sultan and Chand Publication

2- https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3- https://hbr.org/1976/07/appraisal-of-what-performance

UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

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MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-28

METHODS OF PERFORMANCE APPRAISAL

5- Straight Ranking Method

This is one of the oldest and simplest techniques of performance appraisal. In this method,
the appraiser ranks the employees from the best to the poorest on the basis of their overall
performance. It is quite useful for a comparative evaluation.

EMPLOYEE RANK

A 2

B 1

C 5

D 4

E 3

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6- Paired Comparison

A better technique of comparison than the straight ranking method, this method compares
each employee with all others in the group, one at a time. After all the comparisons on the
basis of the overall comparisons, the employee’s are given the final rankings.

A B C D E FINAL
RANK

A - - - + + 3

B + - - + + 2

C + + - + + 1

D - - - - - 5

E - - - - + 5

7- Graphic rating scale:

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Perhaps the most commonly used method of performance evaluation is the graphic rating
scale. Of course, it is also one of the oldest methods of evaluation in use. Under this
method, a printed form, as shown below, is used to evaluate the performance of an
employee. A variety of traits may be used in these types of rating devices, the most
common being the quantity and quality of work. The rating scales can also be adapted by
including traits that the company considers important for effectiveness on the job. A model
of a graphic rating scale is given below.

Table: Typical Graphic Rating Scale

Employee Name................... Job title .................

Department ......................... Rate ...............

Data ..................................

Quantity of work: Volume Unsatisfactory Fair Satisfactory Good Outstanding

of work under normal
working conditions
Quality of work:
Neatness, thoroughness
and accuracy of work
Knowledge of job
A clear understanding of
the factors connected
with the job
Attitude: Exhibits
enthusiasm and

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cooperativeness on the
job
Dependability:
Conscientious, thorough,
reliable, accurate, with
respect to attendance,
reliefs, lunch breaks, etc.
Cooperation: Willingness
and ability to work with
others to produce
desired goals.

From the graphic rating scales, excerpts can be obtained about the performance standards
of employees. For instance, if the employee has serious gaps in technical-professional
knowledge (knows only rudimentary phases of job); lacks the knowledge to bring about an
increase in productivity; is reluctant to make decisions on his own (on even when he makes
decisions they are unreliable and substandard); declines to accept responsibility; fails to
plan ahead effectively; wastes and misuses resources; etc., then it can safely be inferred
that the standards of the performance of the employee are dismal and disappointing.

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The rating scale is the most common method of evaluation of an employee's performance
today. One positive point in favor of the rating scale is that it is easy to understand, easy to
use and permits a statistical tabulation of scores of employees. When ratings are objective
in nature they can be effectively used as evaluators. The graphic rating scale may however
suffer from a long standing disadvantage, i.e., it may be arbitrary and the rating may be
subjective. Another pitfall is that each characteristic is equally important in evaluation of
the employee's performance and so on.

References

1- Human resource management by C.B. Gupta, Sultan and Chand Publication

2- https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3- https://hbr.org/1976/07/appraisal-of-what-performance

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MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-29

MODERN METHODS OF PERFORMANCE APPRAISAL

4- Behaviorally anchored rating scales:

Also known as the behavioral expectations scale, this method represents the latest
innovation in performance appraisal. It is a combination of the rating scale and critical
incident techniques of employee performance evaluation. The critical incidents serve as
anchor statements on a scale and the rating form usually contains six to eight specifically
defined performance dimensions. The following chart represents an example of a sales
trainee's competence and a behaviorally anchored rating scale.

Table: An Example of Behaviorally Anchored Rating Scale (BARS)

Performance Points Behavior

Extremely 7 Can expect trainee to make valuable suggestions for
good increased sales and to have positive relationships with
customers all over the country.
Good 6 Can expect to initiate creative ideas for improved sales.
Above average 5 Can expect to keep in touch with the customers
throughout the year.
Average 4 Can manage, with difficulty, to deliver the goods in time.
Below average 3 Can expect to unload the trucks when asked by the
supervisor.

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Poor 2 Can expect to inform only a part of the customers.

Extremely 1 Can expect to take extended coffee breaks and roam
poor around purposelessly.

How to construct BARS

BARS follows a general format which combines techniques employed in the critical incident
method and weighted checklist ratings scales.

Step 1: Collect critical incidents: People with knowledge of the job to be probed, such as
job holders and supervisors, describe specific examples of effective and ineffective behavior
related to job performance.

Step 2: Identify performance dimensions: The people assigned the task of developing the
instrument cluster the incidents into a small set of key performance dimensions. Generally
between five and ten dimensions, account for most of the performance. Examples of
performance dimensions include technical competence, relationships with customers,
handling of paper work and meeting day-to-day deadlines. While developing varying levels
of performance for each dimension (anchors), specific examples of behavior should be
used, this could later be scaled in terms of good, average or below average performance.

Step 3: Reclassification of incidents: Another group of participants who are knowledgeable

about the job is instructed to retranslate or reclassify the critical incidents generated (in
Step II) previously. They are given the definition of job dimension and told to assign each
critical incident to the dimension that it best describes. At this stage, incidents for which
there is not 75 per cent agreement are discarded as being too subjective.

Step 4: Assigning scale values to the incidents: Each incident is then rated on a one-to-
seven or one-to-nine scale with respect of how well it represents performance on the
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appropriate dimension. A rating of one represents ineffective performance; the top scale
value indicates very effective performance. The second group of participants usually assigns
the scale values. Means and standard deviations are then calculated for the scale values
assigned to each incident. Typically incidents that have standard deviations of 1.50 or less
(on a 7-point scale) are retained.

Step 5: Producing the final instrument: About six or seven incidents for each performance
dimension – all having met both the retranslating and standard deviation criteria – will be
used as behavioral anchors. The final BARS instrument consists of a series of vertical scales
(one for each dimension) anchored (or measured) by the final incidents. Each incident is
positioned on the scale according to its mean value.

Because the above process typically requires considerable employee participation, its
acceptance by both supervisors and their subordinates may be greater. Proponents of BARS
also claim that such a system differentiates among behavior, performance and results and
consequently is able to provide a basis for setting developmental goals for the employee.
Because it is job-specific and identifies observable and measurable behavior, it is a more
reliable and valid method for performance appraisal

5- Management by Objectives (MBO):

MBO represents a modern method of evaluating the performance of personnel. Thoughtful

managers have become increasingly aware that the traditional performance evaluation
systems are characterized by somewhat antagonistic judgments on the part of the rater.
There is a growing feeling nowadays that it is better to make the superior work with
subordinates in fixing goals. This would inevitably enable subordinates to exercise self-
control over their performance behaviors. The concept of management by objectives is

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actually the outcome of the pioneering works of Drucker, McGregor and Odiorne in
management science.

Management by objectives can be described as “a process whereby the superior and

subordinate managers of an organization jointly identify its common goals, define each
individuals' major areas of responsibility in terms of results expected of him and use these
measures as guides for operating the unit and assessing the contributions of each of its
members”.

MBO thus represents more than an evaluation programme and process. Practicing
management scientists and pedagogues view it as a philosophy of managerial practice; it is
a method by which managers and subordinates plan, organize, control, communicate and
debate.

Features

 MBO emphasizes participatively set goals that are tangible, verifiable and measurable.
 MBO focuses attention on what must be accomplished (goals) rather than how it is to be
accomplished (methods).
 MBO, by concentrating on key result areas translates the abstract philosophy of
management into concrete phraseology. The technique can be put to general use (non-
specialist technique). Further it is “a dynamic system which seeks to integrate the
company's need to clarify and achieve its profit and growth targets with the manager's
need to contribute and develop himself”.
 MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals. It allows the
subordinate plenty of room to make creative decisions on his own.

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6- Human resource accounting

HRA is a sophisticated way to measure (in financial terms) the effectiveness of

personnel management activities and the use of people in an organization. It is the process
of accounting for people as an organizational resource. It tries to place a value on
organizational human resources as assets and not as expenses. The HRA process shows the
investment the organization makes in its people and how the value of these people changes
over time. The acquisition cost of employees is compared to the replacement cost from
time to time. The value of employees is increased by investments made by the company to
improve the quality of its human resources such as training, development skills acquired by
employees over a period of time through experience, etc. When qualified, competent
people leave an organization; the value of human assets goes down. In this method,
employee performance is evaluated in terms of costs and contributions of employees.
Human resource costs include expenditure incurred by the company in hiring, training,
compensating and developing people. The contributions of human resources are the money
value of labour productivity. The cost of human resources may be taken as the standard.
Employee performance can be measured in terms of employee contribution to the
organization. Employee performance can be taken as positive when contribution is more
than the cost and performance can be viewed as negative if cost is more than contribution.
Positive performance can be measured in terms of percentage of excess of employee
contribution over the cost of employee. Similarly negative performance can be calculated in
terms of percentage of deficit in employee contribution compared to the cost of employee.

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7- Assessment centre

This method of appraising was first applied in German Army in 1930. Later business and
industrial houses started using this method. This is not a technique of performance
appraisal by itself. In fact it is a system or organization, where assessment of several
individuals is done by various experts using various techniques. These techniques include
the methods discussed before in addition to in-basket, role playing, case studies, simulation
exercises, structured in sight, transactional analysis, etc.

In this approach individuals from various departments are brought together to spend two
or three days working on an individual or group assignment similar to the ones they would
be handling when promoted. Observers rank the performance of each and every participant
in order of merit. Since assessment centres are basically meant for evaluating the potential
of candidates to be considered for promotion, training or development, they offer an
excellent means for conducting evaluation processes in an objective way. All assessees get
an equal opportunity to show their talents and capabilities and secure promotion based on
merit.

8- 360 DEGREE FEEDBACK

360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive
appraisal where the feedback about the employees’ performance comes from all the
sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior),
subordinates, team members, customers, suppliers/ vendors anyone who comes into
contact with the employee and can provide valuable insights and information
or feedback regarding the "on-the-job" performance of the employee.

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360 degree appraisal has four integral components:

1. Self appraisal
2. Superior’s appraisal
3. Subordinate’s appraisal
4. Peer appraisal.

Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses,
his achievements, and judge his own performance. Superior’s appraisal forms the
traditional part of the 360 degree performance appraisal where the employees’
responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like
communication and motivating abilities, superior’s ability to delegate the work, leadership
qualities etc. Also known as internal customers, the correct feedback given by peers can
help to find employees’ abilities to work in a team, co-operation and sensitivity towards
others.

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Self assessment is an indispensable part of 360 degree appraisals and therefore 360
degree Performance appraisal have high employee involvement and also have the strongest
impact on behavior and performance. It provides a "360-degree review" of the employees’
performance and is considered to be one of the most credible performance appraisal
methods.

360 degree performance appraisal is also a powerful developmental tool because when
conducted at regular intervals (say yearly) it helps to keep a track of the changes others’
perceptions about the employees. A 360 degree appraisal is generally found more suitable
for the managers as it helps to assess their leadership and managing styles. This technique
is being effectively used across the globe for performance appraisals. Some of the
organizations following it are Wipro, Infosys, and Reliance Industries etc.

References

1. Human resource management by C.B. Gupta, Sultan and Chand Publication

2. https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3. https://hbr.org/1976/07/appraisal-of-what-performance

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UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-30

PERFORMANCE FEEDBACK

Effective and timely feedback is a critical component of a successful performance

management program and should be used in conjunction with setting performance goals. If
effective feedback is given to employees on their progress towards their goals, employee
performance will improve. People need to know in a timely manner how they're doing,
what's working, and what's not.

Feedback can come from many different sources: managers and supervisors, measurement
systems, peers, and customers just to name a few. However feedback occurs, certain
elements are needed to ensure its effectiveness.

Specificity

Feedback works best when it relates to a specific goal. Establishing employee performance
expectations and goals before work begins is the key to providing tangible, objective, and
powerful feedback. Telling employees that they are doing well because they exceeded their
goal by 10% is more effective than simply saying "you're doing a good job."

Timeliness

Employees should receive information about how they're doing as timely as possible. If
improvement needs to be made in their performance, the sooner they find out about it the

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sooner they can correct the problem. If employees have reached or exceeded a goal, the
sooner they receive positive feedback, the more rewarding it is to them.

Manner

Feedback should be given in a manner that will best help improve performance. Since
people respond better to information presented in a positive way, feedback should be
expressed in a positive manner. This is not to say that information should be sugar-coated.
It must be accurate, factual, and complete. When presented, however, feedback is more
effective when it reinforces what the employee did right and then identifies what needs to
be done in the future. Constant criticism eventually will fall upon deaf ears.

If effective feedback is designed into a performance management program, individual and

team performance will improve, which will make your organization more effective. With
effective feedback processes, employees won't be working blind and, hopefully, will
reach their destinations successfully

POTENTIAL APPRAISAL

The potential appraisal refers to the appraisal i.e. identification of the hidden talents and
skills of a person. The person might or might not be aware of them.

Potential appraisal is future oriented appraisal . The objective of potential appraisal is to

identify and evaluate the potential of the employees to assume higher positions and
responsibilities in future.

Many organizations consider and use potential appraisal as a part of the performance
appraisal processes.

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The purposes of a potential review are:

 to inform employees of their future prospects;

 to enable the organisation to draft a management succession programme;
 to update training and recruitment activities;
 to advise employees about the work to be done to enhance .their career opportunities.

Techniques of potential appraisal:

 Self – appraisals
 Peer appraisals
 Superior appraisals
 MBO
 Psychological and psychometric tests
 Management games like role playing
 Leadership exercises etc.

Potential appraisal helps to identify what can happen in future so that it can be guided and
directed towards the achievement of individual and organizational growth and goals.
Therefore, potential should be included as a part of the Performance appraisal in
organisations.

The Potential for Improving Performance, or PIP, measures the performance of the average
worker versus the best person performing a particular task. Large differences suggest that
performance can be improved by bringing average performance up closer to the best
performance. Small differences suggest little potential for improvement.

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The following are some of the requirements and steps to be followed when
introducing a potential appraisal system:

Role Description: A good potential appraisal system would be based on clarity of roles and
functions associated with the different roles in an organisation. This requires extensive job
descriptions to be made available for each job. These job descriptions should spell out the
various functions involved in performing the job.

Qualities Required: Besides job descriptions, it is necessary to have a detailed list of

qualities required to perform each of these functions. These qualities may be broadly
divided into four categories -

(1) technical knowledge and skills,

(2)managerial capabilities and qualities,

(3) behavioural capabilities, and

(4)conceptual capabilities.

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Potential Appraisal Vs. Performance Appraisal

Potential Appraisal is forward looking process whether performance appraisal is backward

looking process. Any good or worse assessment results of performance appraisal may not
be a good factor for potential appraisal. But current performance of an employee could
show evidence somewhere whether he/she is flexible for new working conditions.

References

1. Human resource management by C.B. Gupta, Sultan and Chand Publication

2. https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3. https://hbr.org/1976/07/appraisal-of-what-performance

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UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-31

MEANING, SIGNIFICANCE & PROCESS OF CAREER PLANNING

MEANING OF CAREER:
A Career has been defined as the sequence of a person's experiences on different jobs
over the period of time. It is viewed as fundamentally a relationship between one or more
organizations and the individual.
According to Edwin B. Flippo, “A career is a sequence of separate but related work
activities that provide continuity, order and meaning to a person’s life”

Career development refers to set of programs designed to match an individual’s needs,

abilities, and career goals with current and future opportunities in the organization.
Where career plan sets career path for an employee, career development ensures that
the employee is well developed before he or she moves up the next higher ladder in the
hierarchy.

CAREER PLANNING
Career Planning is a relatively new personnel function. Established programs on
Career Planning are still rare except in larger or more progressive organizations. Career
Planning aims at identifying personal skills, interest, knowledge and other features; and
establishes specific plans to attain specific goals

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OBJECTIVE OF CAREER PLANNING:

•To attract and retain the right type of person in the organization.
•To map out career of employees suitable to their ability and their willingness to be
trained and developed for higher positions.
•To have a more stable workforce by reducing labour turnover and absenteeism.
•It contributes to man power planning as well as organizational development and effective
achievement of corporate goals.
•To increasingly utilize the managerial talent available at all levels within the organization.
• To improve employee morale and motivation by matching skills to job r e q u i r e m e n t
a n d by providing opportunities for promotion.
•It helps employee in thinking of long term involvement with the organization.
•To provide guidance and encourage employees to fulfill their potentials.
•To achieve higher productivity and organizational development.
•To ensure better use of human resource through more satisfied and productive
employees.
•To meet the immediate and future human resource needs of the organization on the
timely basis.

NEED FOR CAREER PLANNING

 To desire to grow and scale new heights.
 Realize and achieve the goals.
 Performance measure.
 High employee turnover
 To educate the employees

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 It motivates employees to grow.

 It motivates employees to avail training and development.
 It increases employee loyalty as they feel organization care’s about them.

ADVANTAGES OF CAREER PLANNING & DEVELOPMENT

In fact both individuals and the organization are going to benefit from career planning and
development. So the advantages are described below:
For Individuals
1. The process of career planning helps the individual to have the knowledge of various
career opportunities, his priorities etc.
2. This knowledge helps him select the career that is suitable to his life styles, preferences,
family environment, scope for self-development etc.
3. It helps the organization identify internal employees who can be promoted.
4. Internal promotions, up gradation and transfers motivate the employees, boost up their
morale and also result in increased job satisfaction.
5. Increased job satisfaction enhances employee commitment and creates a sense of
belongingness and loyalty to the organization.
6. Employee will await his turn of promotion rather than changing to another organization
.This will lower employee turnover.
7. It improves employee’s performance on the job by taping their potential abilities and
further employee turnover.8. It satisfies employee esteem needs.

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For Organizations

A long-term focus of career planning and development will increase the effectiveness
of human resource management. More specifically, the advantages of career planning and
development for an organization include:
1. Efficient career planning and development ensures the availability of human resources
with required skill, knowledge and talent.
2. The efficient policies and practices improve the organization’s ability to attract and retain
highly skilled and talent employees.
3. The proper career planning ensures that the women and people belong to backward
communities get opportunities for growth and development.
4. The career plan continuously tries to satisfy the employee expectations and as such
minimizes employee frustration.
5. By attracting and retaining the people from different cultures, enhances cultural
diversity.
6. Protecting employees’ interest results in promoting organizational goodwill

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CAREER PLANNING AND DEVELOPMENT PROCESS

1. Identifying individual needs and aspirations:

It’s necessary to identify and communicate the career goals, aspiration and career anchors
of every employee because most individuals may not have a clear idea about these. For
this purpose, a human resource inventory of the organization and employee potential areas
concerned.
2 . Analyzing career opportunities:
The organizational set up, future plans and career system of the employees are analyzed to
identify the career opportunities available within it. Career paths can be determined for
each position. It can also necessary to analyze career demands in terms of knowledge, skill,
experience, aptitude etc.

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3. Identifying match and mismatch:

A mechanism to identifying congruence between individual current aspirations and
organizational career system is developed to identify and compare specific areas of match
and mismatch for different categories of employees.

4. Formulating and implementing strategies:

Alternative action plans and strategies for dealing with the match and mismatch are
formulated and implemented.

5 . Reviewing career plans:

A periodic review of the career plan is necessary to know whether the plan is contributing
to effective utilization of human resources by matching employee objectives to job needs.
Review will also indicate to employees in which direction the organization is moving, what
changes are likely to take place and what skills are needed to adapt to the changing needs
of the organization

References

1. Human resource management by C.B. Gupta, Sultan and Chand Publication

2. https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3. https://hbr.org/1976/07/appraisal-of-what-performance

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UNIT-4 (HUMAN RESOURCE MANAGEMENT)-MBA-2 SEM

MODULE IV: PERFORMANCE MANAGEMENT

LECTURE NO:-32

CAREER ANCHOR

Career anchors are career motivators that make employees hold on their jobs. They are
strong non –monetary factors, which affect work and career satisfaction and provide a way
of understanding these motivators of career decisions. The term career anchor was
introduced by Edgar H. Schein which represents aspects of work that are especially valued
or needed by people for their personal fulfillment. Schein identifies eight different anchors:

 Technical expertise
This type prefers to specialize in their skill, and they tend to pursue excellence and enjoy
being challenged in this area (eg sales, engineering, and teaching). They dislike being moved
into managerial positions.
 Managerial
This type of person is a generalist who sees specialization as a trap. They enjoy leadership
and advancement and are happy to move around in different areas of work.
 Autonomy/independence
This type dislikes being bound by rules, hours, dress codes, etc. They dislike the
organization of the workplace and seek autonomy or independence. They often work for
themselves.
 Security/stability
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This type seeks security and stability in their jobs. They dislike personal risk, and often
identify with their organization, which makes them faithful and reliable workers.

 Entrepreneurial/creativity
This type likes creating new organizations, products or services. They therefore particularly
enjoy work where success is closely linked to their own efforts as creators. This work is
often linked to making money.

 Service/dedication to a cause
This type wants to undertake work which embodies values which are central to them.
Service or dedication is more important than the talents or competencies used and are the
prime motivating factor for the type.
 Pure challenge
This type likes conquering, overcoming, solving and winning. It is not the job itself but the
process of succeeding which interests and motivates them.
 Lifestyle
This type is keen to integrate the needs of the self, the family and the career. They seek
flexibility and an organization which understands this desire for balance. It is often
suggested that more people are now identifying with this category.

CAREER STAGES

Career stages can be defined as identifiable periods in one’s work life which are
distinguished by one’s changing activities, concerns, motives, and needs.
What people want from their careers also varies according to the stage of one's career.
What may have been important in an early stage may not be important in a later one. Four

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distinct career stages have been identified: trial, establishment/advancement, mid-career,

and late career. Each stage represents different career needs and interests of the individual

1- Trial stage / Exploration stage

The trial stage begins with an individual's exploration of career-related matters and ends
usually at about age 25 with a commitment on the part of the individual to a particular
occupation. Until the decision is made to settle down, the individual may try a number of
jobs and a number of organizations. Unfortunately for many organizations, this trial and
exploration stage results in high level of turnover among new employees. Employees in this
stage need opportunities for self-exploration and a variety of job activities or assignments.

2- Establishment

The establishment/advancement stage tends to occur between ages 25 and 44. In this
stage, the individual has made his or her career choice and is concerned with achievement,
performance, and advancement. This stage is marked by high employee productivity and
career growth, as the individual is motivated to succeed in the organization and in his or her
chosen occupation. Opportunities for job challenge and use of special competencies are
desired in this stage. The employee strives for creativity and innovation through new job
assignments. Employees also need a certain degree of autonomy in this stage so that they
can experience feelings of individual achievement and personal success.

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3- Mid Career
 Crisis Sub Stage
The period occurring between the mid-thirties and mid-forties during which people often
make a major reassessment of their progress relative to their original career ambitions and
goals.

 Maintenance stage
The mid-career stage, which occurs roughly between the ages 45 and 64, has also been
referred to as the maintenance stage. This stage is typified by a continuation of established
patterns of work behavior. The person is no longer trying to establish a place for him or
herself in the organization, but seeks to maintain his or her position. This stage is viewed as
a mid-career plateau in which little new ground is broken. The individual in this stage may
need some technical updating in his or her field. The employee should be encouraged to
develop new job skills in order to avoid early stagnation and decline.

4- Late-career stage
In this stage the career lessens in importance and the employee plans for retirement and
seeks to develop a sense of identity outside the work environment.

LIMITATIONS OF CAREER PLANNING & DEVELOPMENT

Despite planning the career, employees face certain career problems. They are:
1. Dual Career Families:-With the increase in career orientation among women, number of
female employees is on increase. With this, the dual career families have also been on
increase. Consequently, one of those family members might face the problem of
transfer. This has become a complicated problem to organizations.

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2. Low ceiling careers:-Some careers do not have scope for much advancement.
Employees cannot get promotions despite their career plans and development in such
jobs.
3. Declining Career Opportunities:-Career opportunities for certain categories reach the
declining stage due to the influence of the technological or economic factors. Solution
for such problem is career shift.
4. Downsizing and careers:-Business process reengineering, technological changes and
business environmental factors force the business firms to restructure the organizations
by and downsizing. Downsizing activities result in fixing some employees, and degrading
some other employees .Career planning can become a reality when opportunities for
vertical mobility are available. Therefore, it is not suitable for a very small organization.
5. Others:-Several other problems hamper career planning. These include lack of an
integrated human resources policy, lack of a rational wage structure, absence of
adequate opposition of trade unions, lack of a good performance reporting system,
ineffective attitudinal surveys, etc.

References

1- Human resource management by C.B. Gupta, Sultan and Chand Publication

2- https://www.hrhelpboard.com/performance-management/performance-appraisal-its-
purpose.htm
3- https://hbr.org/1976/07/appraisal-of-what-performance

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