Managing People &

Organization

UNIT-3
By :Dr. Mragakshi Tiwari
Concept of Performance Appraisal
✔ Performance appraisal is a part of a company’s process of understanding their employees better and
giving them feedback to help them improve their performance. While several employees find
performance appraisal to be unnecessary if done right, it can have several benefits for the
organization.

✔ Performance appraisals are used for an employee’s development. It helps the management to make
decisions regarding promotions, job transfer & terminations. This systematic approach also gives
employees an insight into their current capabilities, whether they have scope to learn and grow, “where
they currently stand” with their boss & their long-term plans with the company.

✔ The entire performance appraisal process can be formal or informal depending on the call that the HR
department takes. Decisions regarding the format of performance appraisals are entirely dependent
upon the particular organization.
Defination
Performance appraisal is a process where the employee’s performance, contributions & skills are
evaluated against his/her job requirements. This provides a uniform platform to measure financial
rewards, selection for promotions, or assignments to important projects for each candidate.

Performance Appraisal in HRM creates a healthy competition between colleagues. It also helps
employees compare and improve upon their skills if needed. Appraisals are usually held annually in most
companies.
Objectives
Provide Feedback:
Appraisals are an effective way to give feedback to employees Also, managers to communicate clearly
regarding employee objectives and expectations. An employee can learn about what he/she can do to
improve their future performance.

In addition, Some tips for employee feedback

1. Performance Outcome
2. Quarterly Reviews
3. Give feedback on a 1-2-1 basis

Downsize or Right-Size:
The COVID pandemic is one of the many harsh realities that might force an organization to downsize. In such
a situation, appraisals are a way to make sure that the most productive and talented individuals can be
retained in a company. It is also an effective way to know which employees are non-performers.

Promote The Right Person:

Appraisals give an organization objective and data-driven tools to make good promotion decisions Also, It
helps the most talented individuals retain the position of the highest importance.
Objectives
Set Goals & Measure Goals:
The annual appraisals are also an effective way to set future goals for the employees. This ensures maximum
productivity and superior performance.

Improve Work Performance:

An employee can only improve if he knows how to Objectives of a good appraisal include highlighting the
specific area of improvement for every employee.

Some tips improve performance:

1. Keep your eyes on the deadline
2. Also, Improve project evaluation skills
3. Set Goals as well as Personal Benchmarks

Determine Compensation Changes:

An appraisal system works as a determining factor in increasing compensation, pay raises, etc. Also, It
ensures that people who work harder get paid better.
Objectives
Encourage Coaching & Mentoring:
Managers are usually expected to coach their team members Also, appraisals help the managers to identify
the areas where mentoring is required.

Employee Training and Development:

Individual skills are evaluated during an appraisal. Also, this helps employees to identify if they need to
acquire more skills and competencies to contribute to the company. It also helps an organization to plan the
up-skilling training for their employees.
Process of Performance Appraisal
Types of Performance Appraisal
1. Graphic Rating Scale Method
This method is based on the idea of rating employees based on individual
characteristics. For example, some organizations may choose to evaluate employees
based on quality and quantity of work, decisiveness & emotional stability.

Employees are rated on a fixed scale (say 1-10), based on the extent to which they
meet each of the desired criteria. The average of all the scores constitutes the overall
score of the employee.

Graphic scales are practical, they are cost-effective and can be developed quickly.
They also help in measuring a particular objective effectively. However, the appraisal in
such cases largely depends upon individual perspectives. This may lead to disputes or
non-uniformity in evaluations. Furthermore, personal bias can also play a role in it. You
must be careful to define each character as clearly as possible.
2. Ranking Method

The name of this method explains exactly what it is. The Human Resources team
ranks each employee on a list based on factors decided by the human resource
department. Hence, the best performers are on the top, and the worst performers
rank at the bottom.

This simple method of ranking employees can be modified in several ways. One of
these methods is the paired comparison ranking style wherein employees are
compared in pairs of two against each other. The number of times one employee is
preferred over someone else is recorded. The top employee is the one with the
highest number of preferences.

The grading scale method can be combined with ranking. The employees with the
best overall score on the grade scale (from 1-10) rank at the top of the list. The
ranking method is preferred because it is simple, efficient, and requires little time and
money. However, personal bias and favoritism may cause major disruptions in
objective evaluation.
3. Checklist Method
Employees are evaluated by making use of a checklist in this method. The checklist can
have a variety of different factors that the human resource department has chosen to be
important. The employees are then judged based on those factors The employers must
select between the yes/no options in those checkboxes.

Items in the checklist carry a numerical value based on their importance to job
performance Therefore, the appraisal score is calculated by adding up the scores of all
these individual factors.

For example, Behaviour Based appraisals are done by using the checklist method. This
happens by having a pre-set personality and behavioral checkpoints. If an employee
meets them then they are considered for an appraisal.

The checklist method makes it easy to evaluate employees as their supervisors have to
simply choose between yes/no. It also helps the employees receive clear and direct
feedback. However, it may not be easy to design an effective checklist and assign a
weight based on the importance of factors.
4. Management by Objectives Method(MBO)
MBO is considered to be one of the most systematic methods in performance appraisals. The idea is to
give each employee a set of objectives that have to be achieved by them. During the performance
appraisal, the supervisors will evaluate the extent to which the objectives have been achieved.

This is a strong method of evaluation. The employees have been clearly instructed as to what is expected
of them. It also helps the company to set benchmarks and standards for growth. However, a lot of time and
effort goes into determining the objectives and evaluating them.

5. 360-degree Feedback Appraisal

This approach is basically a group performance review. The data regarding an employee’s behavior is
collected by his/her close subordinates. An employee’s colleagues might be able to review his/her
performance under a variety of situations and circumstances, which might have escaped the employer.
This allows for holistic, full-circle, multi-tiered feedback regarding a person.

This method is useful as it eliminates subjectivity. It also promotes an atmosphere of open culture,
self-development and better communication. However, every company must develop an effective system
and procedure to utilize this method.
 Errors in Performance Appraisal
1. Halo Effect (one positive effect)
Halo Effect is when a rater’s overall positive or negative impression of an individual
employee leads to rating him or her the same across all rating dimensions. This is
when a manager really likes or dislikes an employee and allows their personal
feelings about this employee to influence their performance ratings of them.

2. Leniency Effect (Not so strict)

Leniency error is when a rater’s tendency is to rate all employees at the positive end
of the scale (positive leniency) or at the low end of the scale (negative leniency).
Sometimes our emotions determine how we rate an employee, and this emotional
response may not be objective. This can happen when a manager over-emphasizes
either positive or negative behaviors.
3. Central Tendency Error (Average)
Central tendency error is the raters’ tendency to avoid making “extreme” judgments
of employee performance resulting in the rating of all employees in the middle part of
a scale. This can happen either when a manager is not comfortable with conflict and
avoids low marks to avoid dealing with behavioral issues or when a manager
intentionally forces all employees to the middle of the scale.

4.Recency Error (Ignore Past Performance)

Recency error is the rater’s tendency to allow more recent incidents (either effective or
ineffective) of employee behavior to carry too much weight in the evaluation of
performance over an entire rating period. This can be extreme on both ends of the
spectrum. Either an employee just finishing a major project successfully or an
employee may have had a negative incident right before the performance appraisal
process and it is at the forefront of the manager’s thoughts about that employee.
It is for this reason that keeping accurate records of performance throughout the year
to refer back to during performance appraisal time is so important.
5. First Impression Error
First impression error is the rater’s tendency to let their first impression of an
employee’s performance carry too much weight in the evaluation of performance over
an entire rating period.
An example of this would be a new employee joining the organization and performing
at high levels during their “honeymoon” period and then possibly losing some of that
initial momentum.
 TRAINING
• Employee training is a specialized function of human resource management.
• Training is an act for increasing knowledge, skills and attitude of an employee.
• Training is organized procedure by which people learn knowledge and skill for a specific
purpose.
• Training improves, change and mold the employees knowledge, skill, behavior, aptitude and
attitude towards the requirements of the job and organization.
• Training bridges the gap between job requirements and employee’s present specifications.
• Training is most important technique of human resource development.
• Training is more important to develop the employee and make him suitable to the job.
• Trained employees would be a valuable asset to an organization.
• Organizational efficiency, productivity, progress and development to a greater extent depend
on training.
• Organizational objectives like viability, stability and growth can also be achieved through
training.
 Objectives of Training
• Improves profitability and more positive attitudes
• Improves the job knowledge and skills at all levels
• Improves the morale of the workforce
• Helps people in identifying the organizational goals
• Helps to create a better corporate image
• Improves relationship between boss and subordinate
• Helps in preparing guidelines for work
• Provides information for future needs in all areas
• Helps in organizational development
• Helps in increasing quality of work
• Helps in keeping cost down in areas like production, personnel etc.
• Develops a sense of responsibility to organization
 Objectives of Training
• Creates an appropriate climate for growth
• Helps employees adjust to change
• Helps in handling conflict, thereby helping to prevent stress and
tension
• Helps the individual in making better decisions
• Increase job satisfaction and recognition
• Helps in eliminating fear to attempt new tasks.
• Improves communication between groups and individuals
• Improves interpersonal skills
• Provides a good culture for learning, growth and co- ordination.
 Need for Training
• Training is used continuously in every organization.
• Technological changes, automation require updating the skills and knowledge
of the employees.
• The need for training arises due to following reasons:
– To match the employee specifications with the job requirements and organizational needs
– Organizational viability and the Transformation Process
– Technological Advances
– Organizational Complexity: Change as a whole
– Human Relations
– Change in the Job Assignment
• Increase Productivity
• Improve quality of the product/service
• Help a company to fulfill its future personnel needs
• Improve organizational climate
• Improve health and safety
• Prevent obsolescence
• Effect the personal growth
• Minimize the resistance to change
 Assessments of Training Needs
• Training needs are identified on the basis of organizational
analysis, job analysis and man analysis.
• Training program, training methods and course content are to be planned on the
basis of training needs.
– Organizational Analysis: analysis of objectives, resource utilization, environment scanning
and organizational climate
– Departmental Analysis: Departmental strength and weakness including special problems of
the department or a common problem of a group of employees like acquiring skills and
knowledge in operating computer by accounting personnel.
– Job/Role Analysis: This includes study of jobs/roles, design of
jobs due to changes, job enlargement and job enrichment etc.
– Manpower Analysis: Individual strengths and weaknesses in the areas of job knowledge,
skills etc.
 Methods of Training
1. On the Job Methods
2. Off the Job Methods

1. On-the-Job Methods
– Job Rotation
– Coaching
– Job Instruction
– Committee Assignments
2. Off-the-Job Methods
– Vestibule Training
– Role Playing
– Lecture method
– Conference
– Discussion
– Programmed Instructions
• On-the-job Training Methods
– Commonly known as Job Instruction Training
– Individual placed on a regular job and taught the skills necessary to perform that job
– Trainee learns under the guidance of a qualified instructor
– It is done under the actual working conditions
– Transfer problem is also minimized as the person learns on-the-job.
• Methods
– Job Rotation
• Movement of Trainee from one job to another
• Trainee receives job knowledge and experience
• Opportunity is given to trainee to understand the problems of other department and
employee and eventually respect the job of others
– Coaching
• Trainee is placed under the supervision of a person who improve his skills and
performance
• Trainee has not that much of freedom to express his/her own views to trainers
– Job Instruction
• Step by Step Training
• Trainer explains the trainee a way of doing the job, job knowledge and skills
• Trainer appraises the job performance, provide feedback and correct the trainees
– Prepare employee for Instruction
– Explain and Demonstrate jobs and its importance
– Let trainee do the job
– Correct the errors
– Follow-through
– Committee Assignment
• Group of trainees are given an actual organizational problem and ask them to solve.
• It develops the team work
• Off-the-Job Training Methods
– Trainees are separated from the job situation and focused upon learning for his future job
performance
– Opportunity is provided to trainees for expressing their views and
ideas
• Methods
– Vestibule
• Actual working conditions are simulated in a class room.
• Materials, files and equipment those are used in actual job performance are also used in training
session.
• Used for training personnel belongs to clerical and semi-skilled jobs.
– Role Playing
• Can be defined as method of human interaction that involves realistic behaviour in imaginary
situations
• It involves action, doing and practice
• Participant play the role of certain characters such as production manager, mechanical engineer,
maintenance engineer, quality control inspector etc.
• This method is used to develop interpersonal interaction and relations.
– Lecture Method
• It is considered as traditional and direct method of instruction
• Lecture must motivate and create interest among the trainees
• It can be used for a large group of trainees
• Reduce the cost and time involved in training
• Transfer of training is inadequate in terms of effectiveness
– Conference
• It is used to train clerical, professional and supervisory personnel.
• It involves group of trainees who present their ideas, examine and share the facts, test assumptions and draw
conclusions.
• All trainees contributes to the improvement of job performance.
– Discussion
• It involves two way communication and hence feedback is provided
• The success of the method depends on the leadership quality of the person who leads the group.
– Programmed Instruction
• In this method subject matters to be learned is presented in carefully planned sequential units
• Units should be arranged from simple to complex levels of instruction.
• Trainees clarify their doubts through question-answers
• This method is expensive and time consuming.
 Need for evaluating training
– To determine that training programs are accomplishing the training objectives or
not.
– To ensure that any changes in trainee capability are due to the training program
only.
– Evaluation is useful to explain program failure.
– Evaluation is critical not only for assessing quality of training, but to see the future
changes in training plan which should be made to make it more effective and
goals attainable.
 Kirkpatrick Evaluation Model
• The reason for evaluating is to determine the effectiveness of a training program.
• The four levels of Training Evaluation are:
– Reaction
– Learning
– Behavior
– Results
• The Four Levels represent a sequence of ways to evaluate (training) program.
• As you move from one level to the next, the process becomes more difficult and
time-consuming, but it also provides more valuable information.
• Reaction:
– is the measuring of the reaction of the participants in the training program.
– The reactions of the participants must be positive for the program to survive,
grow, and improve.
– This word-of-mouth gossip reaction can either make the program or break it.
• Learning:
– is the change in the participants’ attitudes, or an increase in knowledge, or
greater skills received, as a result of the participation of the program.
– A training program must accomplish at least one of these three learning traits
in order to be effective for a participant to learn.
• Behavior
– Level 3 attempts to evaluate how much transfer of knowledge, skills, and
attitude occurs after the training.
– Level 3 asks the question “What changes in behavior occurred because
people attended the training?
– This Level is a more difficult evaluation than Levels 1 and 2. The four
conditions Kirkpatrick identifies for changes to occur:
• Desire to change
• Knowledge of what to do and how to do it
• Work in the right climate
• Reward for (positive) change
• Results
– Level 4 is the most important and difficult of all - determining final results after
training.
• Increased production?
• Improved quality?
• Decreased costs?
• Improved safety numbers?
• Increased sales?
• Reduced turnover?
• Higher profits?
– Guidelines for Evaluation:
• Allow time for results to be achieved.
• Measure before and after the program.
• Repeat the measurements, as needed.
• Consider cost versus benefits
• Criteria for measuringeffectivenessat Individual, Team and
Organization levels:

– Measuring Changes in Individual Effectiveness

• Improvement in skills (productivity) positively reflects the performance appraisal of an
Individual due to training.
• Self confidence level can be evaluated before and after training.
– Measuring Changes in Team Effectiveness
• Problem-solving and action planning for tackling the problem
• Improvement of Inter Personal Skills in group
• Role identification by increasing understanding of functional role or team role i.e. building
relationship of team members for achieving the organizational objectives.
– Measuring Changes in Organization Effectiveness
• Evaluation of effectiveness in terms of productivity, flexibility and absence of organizational strain.
• Resource Acquiring: Comparison with competitors
• Stakeholders: Such as customer, suppliers who have stake in the organization expect
positive response from the organization. Effectiveness can be measured in this regard
through assessing customer complaints or company image survey or customer satisfaction
survey.
• Smoothness of Internal processes e.g. No conflicts, No strain
and Smooth working of departments.
• Leadership, Policies, plan and strategy, People management, Resources and processes
Management etc.
• Customer Satisfaction, People satisfaction, impact on society and business results.
 Management Development
• Management Development is a systematic process of growth and development by
which managers develop their abilities to manage.
• Management Development concerned with improving the performance of the
managers by giving them opportunities for growth and development.
• The success of MD depends on the commitment of
executives at all levels.
• It is a fundamental policy decision that involves time, resources and organizational
efficiency.
• It is fully concerned with the training and development of managerial personnel.
 Objectives of Mgmt Development
• To overhaul the management machinery.
• To improve the performance of managers.
• To identify the persons with required potential and prepare them for senior
positions.
• To increase the morale of managers.
• To increase the versatility of managers.
• To improve the thought process and analytical ability
• To understand the problems of human relations and improve human relations skills
of managers.
• To create management succession which can take over in case of contingencies.
• To understand the conceptual issues relating to economic, social and technical
areas.
• To stimulate creative thinking.
 Methods of MDP
• Formal Training/Off-the-job Training
• On-the-job Training

Off-the-Job Training On-the-Job Training

– The Case Method – Coaching
– The Incident Method – Job Rotation
– Role Playing – Under Study
– In Basket Method – Multiple Management
– Business Game
– Sensitivity Training
– Simulation
– Conference
– Lectures
 Off-the-job Training Methods

• Incident
– Deals with the intellectual ability, practical judgment and social awareness
– It is a group process development
– Incidents are prepared on the basis of actual situations which have already been
taken place in different organizations
– Employees asked to study the incident and make short term decisions.
• In-Basket
– Trainees are given background information about a simulated company, its products,
key personnel etc.
– Trainee has to understand and analyze the whole information and subsequently
make the notes on this.
– This method develops the ability of situational judgment of trainees, social
sensitivity and willingness to make decision and take actions.
• Business Game
– Trainees divided into groups or teams
– Teams are considered as management of the organization and discuss on various
practices of different functional areas like production, pricing, research
expenditures, advertising etc. and make relevant decisions
– The other teams assume themselves as competitors and react to
the decisions.
– All above exercises develop organizational ability, quickness of thinking,
leadership quality and ability to work under stress.
• Sensitivity Training Method
– The main objective of sensitivity training is to develop the awareness of behavioral
patterns of one and all.
– This method increase the openness with others, greater concern for others,
increased tolerance for individual differences.
– This method is also deals with developing understanding of group processes,
enhanced listening skills and increase trust and support.
 On-the-job Training Methods

• Understudy
– In understudy method, a person who is undertaking training will be assumed as substitution for
the current position.
– Trainee learns to understand all the responsibilities of the position which is currently holding by his
superior.
– This method supplies the organization a person with as much competence as the superior to fill
his post which may be vacant due to promotion, retirement or transfer.
– It also helps in learning decision making skills.
– Leadership styles can also be learned through this method.
• Multiple Management
– In this method, standing committee of managers study the problems of the company and make
recommendation to higher management.
– This method or system is also called as Junior Board of Executives System.
– It provides an opportunity to acquire knowledge of various aspects of business
– It helps to identify the members who have skills and capabilities of an effective manager.
– It gives an opportunity to participate in group interaction and thereby gain the practical
experiences of group Decision Making.
– This method is relatively inexpensive
– Considerable number of executives can be developed in a short span of time.