Performance Appraisal

• A core HR function is appraising employee performance. Performance

appraisal means evaluating an employee’s current and/or past
performance relative to his or her performance standards.
• Performance appraisal has three basic functions:
• To provide adequate feedback to each person on his or her
performance
• To serve as a basis for modifying or changing behavior toward
more effective working habits; and
• To provide data to managers with which they may judge future job
assignments and compensation.
• Performance appraisal always involves the three-step performance
appraisal process: (1) setting work standards; (2) assessing the
employee’s actual performance relative to those standards (this often
involves some rating form); and (3) providing feedback to the
employee with the aim of helping him or her to eliminate
performance deficiencies or to continue to perform above par.
• Effective appraisals actually begin before the actual appraisal, with
the manager defining the employee’s job and performance criteria.
Defining the job means making sure that you and your subordinate
agree on his or her duties and job standards and on the appraisal
method you will use.
Performance Management Vs. Performance Appraisal.
• Performance Management is a continuous Process of Identifying ,
Measuring , Developing and The performance of individuals and
teams and Aligning performance with Strategic Goals of the
organization
• The emphasis is on improvement, learning and development in order
to achieve the overall business strategy and to create a high
performance workforce.
• Performance Management is not Performance Appraisal.
Performance Management Strategic business considerations, Driven
by line manager, Ongoing feedback So employee can improve
performance
• The process of Performance Management therefore drives organizational
performance outcomes. An effective Performance Management process
establishes the groundwork for excellence by:
• Linking individual employee objectives with the organization's mission and
strategic plans. The employee has a clear concept on how they contribute to
the achievement the overall business objective,
• Focusing on setting clear performance objectives and expectations through
the use of results, actions and behaviors,
• Defining clear development plans as part of the process, and
• Conducting regular discussions throughout the performance cycle which
include such things as coaching, mentoring, feedback and assessment
Steps of PMS

Reviewing
• There are three primary stages where the company defines their long
term and short term goals. The first stage is at the organization level,
where the management describes the holistic view and defines overall
objective of formulation of the company, what are their long term vision,
what are the values on which they stands for, and what is the mission the
company is chasing. The second stage perquisites at department level,
where the management assign targets to each department to achieve
overall organization objective. At this stage, the management strategize
the processes and allocate targets to each department.
• The last stage is individual level, where the department further give
targets to employees.
Performance Rating Methods

• Performance Rating Methods:

• Ranking. Ranking systems list all employees in a designated group from highest to lowest in
order of performance. The primary drawback is that quantifying the differences in individual
performance is difficult and may involve drawing very narrow—if not meaningless—
distinctions.
• Forced distribution. The ratings of employees in a particular group are disbursed along a bell
curve, with the supervisor allocating a certain percentage of the ratings within the group to
each performance level on the scale. The actual distribution of employee performance may
not resemble a bell curve, so supervisors may be forced to include some employees at either
end of the scale when they would otherwise place them somewhere in the middle.
• 360-degree feedback. This process collects information from the employee's supervisor,
colleagues and subordinates about an individual's work-related behavior and its impact. Other
names for this approach include multi-rater feedback, multisource feedback or group review.
This form of appraisal is widely favored for employee development purposes.
• Management by objectives. Management by objectives (MBO) is a process through which goals are set
collaboratively for the organization, various departments and each individual member. Employees are
evaluated annually based on how well they have achieved the results specified by the goals. MBO is
particularly applicable to non-routine jobs, such as those of managers, project leaders and individual
contributors.
• Graphic rating scales. Graphic rating scale (GRS) appraisals list several factors, including general behaviors
and characteristics (e.g., attendance, dependability, quality of work, quantity of work and relationships with
people) on which a supervisor rates an employee. The rating is usually based on a scale of three to five
gradations (e.g., unsatisfactory, marginal, satisfactory, highly satisfactory and outstanding). This type of
system allows the rater to determine the performance of an employee along a continuum. Because of its
simplicity, GRS tends to be one of the most frequently used forms of performance appraisal.
• Behaviorally anchored rating scales. Behaviorally anchored rating scales (BARSs) attempt to assess
employee behavior rather than specific characteristics. The appraisal tool generally contains a set of specific
behaviors that represent gradations of performance and are used as common reference points, called
"anchors," for rating employees on various job dimensions. Developing a BARS assessment tool is time-
consuming and expensive because it is based on extensive job analysis and the collection of critical incidents
for each specific job
• Common Performance Rating Errors
• Regardless of the review system used, a variety of common rater errors exist. HR should take the lead to train
managers on recognizing and ameliorating their effect on the system. Common errors include:
• Lack of differentiation. Because raters often lack the confidence to defend their ratings or are reluctant to pass
judgment, they may rate everyone pretty much the same. This approach can take the form of leniency (everyone
gets high ratings), severity (everyone gets low ratings) or a universal feeling that everyone is doing just fine (and
everyone gets rated in the middle). A reluctance to differentiate can often be attributed to poor training or the
failure of an organization to clarify that performance-based judgments are a critical part of the managerial role.
• Recency effect. When managers are not diligent in continuously measuring performance, providing feedback and
documenting results, they often cannot remember the earlier part of the performance period. As a result, they
weigh the most recent events too heavily.
• Halo/horns effect. The "halo" and "horns" effects occur when an employee is highly competent or incompetent
in one area, respectively, and the supervisor rates the employee correspondingly high or low in all areas.
• Personal bias/favoritism. Some managers may allow their impressions of employees or their personal feelings
about them to dominate the performance rating process.
• Inaccurate information/preparation. Managers sometimes fail to take the time to solicit relevant information
about the employee's actual performance from those who work most directly with the employee, resulting in an
inaccurate assessment.
Performance Management: Few Examples
• Google: performance management at Google process is one that
relies on data and analysis, as well as making sure that their managers
are well trained.
• When assessing their performance management system, Google
launched a project dedicated to assessing their managers, which has
led to a thorough training and future development process that sets
managers, and thus employees, up for success.
• They also use a system of setting goals that have caught on across
multiple industries. Using their Objectives and Key Results (OKRs)
system, they reframe the goal-setting process, with great results.
• General Electric: The rank-and-yank component–which resulted in a
culling of the bottom 10th percentile–was scrapped around 10 years
ago, but the system it was a part of had remained in force. Before the
change, GE managers would meet with employees once a year for
fate-determining evaluations.
• Under the new system, GE is still relying heavily on managers, who
meet with employees at the end of the year. The difference is that
they’ll be guiding employees and coaching them on their path to
meeting their goals under a much less rigid framework. GE is also
rolling out an app for delivering more regular feedback.
• Adobe’s leadership team made a bold leap into a performance
management system that began by training managers how to perform
more frequent check-ins and offer actionable guidance, then the
company gave managers the leeway they needed to effectively lead.
• Management was given much more freedom in how they structured
their check-ins and employee review sessions, as well as more
discretion in salaries and promotions. Employees are often contacted
for ‘pulse surveys’ - a way for the leadership team to make sure that
individual managers are leading their teams well. One of the many
positive results of this has been a 30% cut involuntary turnover due to
a frequent check-in program.
• Eli Lilly has long been progressive in implementing unique HR best
practices and benefits, including job sharing and family assistance perks. In
redesigning its performance management process, company leaders tried
to adhere to the theme of “trust.” The new process is meant to empower
employees to take more initiative and voice their ideas. Eli Lilly says that’s
helping strengthen partnerships between supervisors and employees.
• Accenture’s new model is designed to better chart the ongoing
performance discussions between employees and their managers. The
company is shifting focus to immediate performance development, rather
than an annual forced ranking based on the past year’s metrics, and is
using an internal app to help those within the organization relay feedback.
Potential Disadvantages of poorly Implemented Appraisal
System.
• Poorly-implemented performance management will cost the organization. These
critical consequences affect Quality, Productivity and Customer service organizations.
• Managers who do not coach their staff have consequences. If an employee performs
well and then feels that he/she was assessed unfairly, there’s little motivation left for
him/her to stay with the company. Even if an employee doesn’t quit the company,
he/she may become withdrawn and disengaged.
• Without performance data to back up the appraisal, there’s no way to determine
what’s true – a manager or peer could provide information about performance that’s
either false or misleading, thereby skewing the review unfairly.
• Without data and metrics to rely on to gauge performance, managers are more likely
to give biased reviews and often, they are not linked to training for improvement.
• If the performance management system is unfair and invalid, employees are more
likely to become dissatisfied and burnt out in their roles