Performance appraisal

Dr.G.GEETHA
 Performance Appraisal
 Appraisal refers to the rating or evaluation of the worth, merit or effectiveness.

 Performance appraisal earlier known as merit rating.

 It is defined as Systematic evaluation of performance of employees by

superiors or others who are familiar with their performance

 According to Flippo “Performance appraisal is the systematic, periodic and an

impartial rating of an employee’s excellence in matters pertaining to his
present job and of his potentialities for a better job”.
 SIGNIFICANCE OT APPRAISAL:
Systematic performance appraisal provides information for taking decisions on
promotion of lower-level executives.

it reveals deficiencies and weaknesses of individuals. It identifies the training

needs of executives so that suitable training programs may be designed for their
development.

It serves to stimulate and guide executives in their efforts towards self
development.
Periodic and formal appraisal has a psychological effect on executives, they are compelled
to do a better job when they know that their efforts are being evaluated.

It imparts whether the manager know their tasks and how well they are performing.
Without systematic appraisal, an organisation will have to take policy decisions on the
basis of hunch and intuition.

It assists managers to observe their sub-ordinates more closely and to do better job of
coaching.

It provides information on executive manpower planning by identifying individuals

contributions and potential for development.
 Objectives of performance appraisal :
• Salary increase :performance appraisal plays a key role in making decision about salary
increase.

• To determine the effectiveness of employees on their present job so as to decide their benefits.

• To identify the short comings of employees so as to overcome them through systematic

guidance and training.

• To find out their potential for promotion and advancement

• To judge the effectiveness of selection and placement.

• To guide and motivate self development of personnel by providing information on how well
they are doing.
 Methods of performance appraisal
TRADITIONAL METHODS:
 Ranking method
 Paired comparison
 Grading
 Force distribution method
 Force choice method
 Check list method

 Critical incidents method

 Graph scale method
 Confidential report
 Appraisal by results
MODERN METHOD:
 Assessments centres
 360-degree Appraisal
 Behaviourally anchored rating scales
 Management by objectives
 720-degree Appraisal.
RANKING METHOD:
It is the oldest and simplest method of appraisal in which person ranked
according to certain traits.

In the ranking method various employees are given ranks on the basis of traits.

This is very simple method when the number of employees to be ranked is small
because ranking has to be given on the basis of traits which are not easily
determinable not like marks in an examination.

Since differences in ranks do not indicate absolute or equal differences of ability

between individuals, this method has limited value for appraisal.
 GRADING
 In the method certain categories of abilities or performances are defined in advance
and employees are put in a particular category depending on their traits and
characteristics.

 Categories like outstanding, good , average , poor and very poor

 The actual performance of the employees is on measured against these grades.

 The method is generally useful for promotion based on performance

 This method . However suffers from one basic limitation that the rater may rate most
of the employees at higher grades.
PAIRED COMPARISON:
In this method each employee is compared with other employees taking only one
trait at a time.

Only one trait for overall suitability to perform the job is considered.

The rater is provided with bunch of slips each containing a pair of names and final
ranking is determined by the number of times that employee is judged better than
others.

This method provides better comparison of employees but this increases the work
because of large number of comparison.
FORCE DISTRIBUTION METHOD
 In order to check the tendency of rating most of the appraisees around high
point in a rating scale, this method has been adopted.

 The basic assumption in this method is that employees performance level

conforms to a normal statistical distribution.

 Example : 10% employees rated as excellent, 20% rated as above average,

40% rates as below average and 10% as poor.

 This method is useful to rate job performance and promotability.

 The basic advantage of the method is that it overcomes the problem of

adopting a central tendency of rating.
FORCE CHECKLIST METHOD
It has series of statements which are positive and negative which describe the characteristics of
employee, the rater is forced to tick only one which appears to more descriptive of the employee.

For example : 1) The employee is hardworking 2)The employee gives clear instructions to
subordinates.

 Here the statements are positive but the rater is asked to rate only one which is more descriptive.

Subjectivity is avoided, several sets of such statements are given for rating.

The final rating is done on the basis of all sets of statements.

Hence this method is more objective but it involves lot of problems in constructing such sets of
statements.
CHECKLIST METHOD
In this method ,series of questions relevant to employee are prepared, the appraiser concerned has to
tick the appropriate answer.

For example: each question has two alternatives yes or no , as given below :

1. Is he /she interested in the job? Yes/No

2. Does she/he show uniform behaviour to all? Yes/ No

3. Is he/she willing to help other employees? Yes /No

The appraiser concerned has to tick appropriate answers relevant to the appraisees.

So when the checklist is completed ,it is sent to human resource department for further processing,
however this method is difficult in terms of preparing, analysing, and weighing a number of statements
about employee characteristics.
CRITICAL INCIDENTS METHOD
• In the method , only critical incidents and behaviours associated with a situation
are taken for appraisal.

• Three steps: A list of note worthy on the job behaviour is prepared,

• A group of experts then assigns scale value to them depending on the desirability
for the job.
• Finally , a checklist given for appraisal.
• For example: how a supervisor has handled the situation in the case of sudden
disturbance by workers will give better idea about his leadership qualities and
handling of situation.
CONFIDENTIAL REPORT
This method is mostly used by government departments , the report
is given in the form of annual confidentiality report.

Ratings of an employee is given on the following measure :

attendance, self expression, team work, leadership, technical ability ,
reasoning ability, originality etc.,

This method is highly secretive , confidential and highly subjective.

 GRAPHIC SCALE METHOD
It is also known as linear rating scale, most commonly used method of appraisal.

A printed appraisal form is used for rating which include employee characteristics like initiative , leadership ,
dependability, cooperativeness, decisiveness, emotional maturity etc.,

Also includes job performance – quantity and quality of work performance, responsibility assumed, specific
targets achieved, regularity of attendance etc.,

On this basis rating is given in numerical terms like 5, 4, 3, 2, 1. or descriptive terms like excellent ,good ,
average , poor etc.,

The appraiser estimates the degree to which each quality is ossessed by his subordinates.

Graphic scale method is good in measuring various job behaviours of an employee though there may be
problems in specifying the degree of each aspect assessed.
Appraisal by results:
• It involves various steps:

• Appraisal by result is a joint process between superior and his subordinates.

• The subordinate sets his job-related objectives for specific period usually for one year.

• At the end of specified period , the superior appraises performance of the subordinates
on the basis of mutually agreed criteria.

• Results will be discussed among superiors and subordinates ,if necessary corrective
actions are taken.

• This method is quite objective though problems emerge when the targets of subordinate
cannot be measure in quantitative terms.
ASSESSMENT CENTRES:

• In the assessment centres method ,process of performance

appraisal is undertaken at a place which is different from
workplace of the employees to be appraised but at an assessment
centre which is usually located at a central place.
 360-DEGREE APPRAISAL
It is the process of systematically gathering data about an employee’s
skill , abilities, and behaviours from a variety of sources: his superior,
peers, subordinates, and customers.

Appraisal by superior:
Barriers to effective performance appraisal:
 Faulty assumptions

 Psychological blocks

 Technical pitfalls.
 Faulty assumptions:
• The assumption that managers desire to make accurate and fair appraisals is not
always true.

• Many a time they want to avoid formal appraisal, they assume that personal
opinion is better than formal appraisal.

• Some managers rely too much on appraisal system. But in reality ,no appraisal
system is absolutely perfect.

• The assumption that subordinates want to know frankly where do they stand
and what their superiors think about them are not valid, In fact, subordinates
resist to be appraised and their reaction against is often strong.
 Psychological barriers
• The effectiveness of appraisal depends upon the psychological characteristics of
managers to a great extent.

• The principal characteristics that inhibit appraisal are managers’ feeling of

insecurity , appraisal as an extra burden, their being excessively modest or
skeptical, their feeling to treat their subordinates’ failure as their deficiency,
disliking of resentment by subordinates, disliking of communicating poor
performance to subordinates and so on.

• Because of these factors the appraisal is biases or subjective , thereby defeating

the basic purpose of appraisal.
 Technical pitfalls
• The main technical difficulties in performance appraisal are as follows :
Criterion problem and Distortions.

1. Criterion problem:
MEASURES TO OVERCOME BARRIERS
Appraisal system may not be as reliable as a psychological test because the
former deals with intangible objects in the most of the cases, thus one should
go for satisfactory level of reliability only.

In order to bring reliability , appraisal of an individual by two or more

ratings should be compared.

The appraisal system is designed to help in minimising undesirable effects.

It is desirable that the immediate superiors are involved so that they have
better knowledge about the working of their subordinates.
• Employees often feel scared if the post appraisal feedback is not provided, so
the managers should realise that performance appraisal is not just a fault
finding but it is meant for improving performance by indicating where an
employee lacks and how it can be overcome.

• The last factor , for effective appraisal system is the supportive philosophy.

• The philosophy must pervade throughout the organization with good

examples from top management, this helps creating goal-oriented
organizational climate in which there is free flow of communication; and
favours the development of effective performance appraisal system.