A DISSERTATION REPORT ON PERFORMANCE APPRAISAL

INTRODUCTION
PERFORMANCE APPRAISAL

Performance appraisal may be defined as a structured formal interaction between a subordinate

and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in
which the work performance of the subordinate is examined and discussed, with a view to
identifying weaknesses and strengths as well as opportunities for improvement and skills
development. Performance appraisal, also known as employee appraisal, is a method by which
the job performance of an employee is evaluated (generally in terms of quality, quantity, cost and
time). Performance appraisal is a part of career development. Performance appraisals are regular
reviews of employee performance within organizations. Generally, the aims of a performance
appraisal are to:

 Give feedback on performance to employees.

 Identify employee training needs.
 Document criteria used to allocate organizational rewards.
 Form a basis for personnel decisions: salary increases, promotions, disciplinary
actions, etc.
 Provide the opportunity for organizational diagnosis and development.
 Facilitate communication between employee and administration

Validate selection techniques and human resource policies to meet federal Equal Employment
Opportunity requirements. Finally, performance appraisals may be used as a basis for the
coaching and counselling of individual employees by their superiors. To summarize the uses of
performance appraisal:

 Performance improvement
 Compensation
 Placement
 Training & development needs assessment
  Career planning
 Job design error detection

CHAPTER- II

CHARACTERISTICS OF AN APPRAISAL SYSTEM

Performance appraisal cannot be implemented successfully unless it is accepted by all

concerned. There should be a common and clear understanding of the distinction between
evaluation and appraisal. As Patten (1982) argues, evaluation aims at 'objective' measurement,
while appraisal includes both objective and subjective assessment of how well an employee has
performed during the period under review. Thus performance appraisal aims at 'feedback,
development and assessment.' The process of performance appraisal should concentrate on the
job of an employee, the environment of the organization, and the employee him- or herself.
These three factors are inter-related and inter-dependent. Therefore, in order to be effective, the
appraisal system should be individualized, subjective, qualitative and oriented towards problem-
solving. It should be based on clearly specified and measurable standards and indicators of
performance. Since what is being appraised is performance and not personality, personality traits
which are not relevant to job performance should be excluded from the appraisal framework.
Some of the important considerations in designing a performance appraisal system are:

 Goal The job description and the performance goals should be structured, mutually decided
and accepted by both management and employees.

 Reliable and consistent Appraisal should include both objective and subjective ratings to
produce reliable and consistent measurement of performance.

 Practical and simple format The appraisal format should be practical, simple and aim at
fulfilling its basic functions. Long and complicated formats are time consuming, difficult to
understand, and do not elicit much useful information.
 Regular and routine While an appraisal system is expected to be formal in a structured
manner, informal contacts and interactions can also be used for providing feedback to
employees.

 Participatory and open an effective appraisal system should necessarily involve the
employee's participation, usually through an appraisal interview with the supervisor, for
feedback and future planning. During this interview, past performance should be discussed
frankly and future goals established.

 Rewards Rewards - both positive and negative - should be part of the performance appraisal
system. Otherwise, the process lacks impact.

 Feedback should be timely Unless feedback is timely, it loses its utility and may have only
limited influence on performance.

 Impersonal feedback Feedback must be impersonal if it is to have the desired effect.

Personal feedback is usually rejected with contempt, and eventually de-motivates the employee.

 Feedback must be noticeable The staff member being appraised must be made aware of the
information used in the appraisal process. An open appraisal process creates credibility.

 Relevance and responsiveness Planning and appraisal of performance and consequent

rewards or punishments should be oriented towards the objectives of the programme in which the
employee has been assigned a role. For example, if the objectives of a programme are directed
towards a particular client group, then the appraisal system has to be designed with that
orientation.

 Commitment Responsibility for the appraisal system should be located at a senior level in
the organization so as to ensure commitment and involvement throughout the management
hierarchy.
 CHAPTER- III

ROLE OF PERFORMANCE APPRAISAL

We've seen from previous discussions, that people are one of a company's most valuable assets.
While most assets depreciate over time, people, viewed as assets, may actually appreciate. One
of the manager's major responsibilities is to improve and update the knowledge and skills of
employees -- appreciation of assets. Performance appraisal plays a significant role as a tool and
technique of organizational development and growth. In essence, effective appraisal systems
provide both evaluation and feedback.The main aim of the evaluation is to identify performance
gaps -- when performance does not meet the organizational standards -- whereas feedback is
necessary to inform employee about those performance gaps.

From the employee's perspective, performance appraisal informs them about what is required of
them in order to do their jobs, it tells them how well they have achieved those objectives and
helps them take corrective action to improve their performance, and, finally, it may reward them
for meeting the required standards. The firm, on the other hand, needs a performance appraisal
system in order to establish principles of managerial accountability. Clearly, where employees
are given responsibilities and duties, they need to be held accountable. One of the functions of
performance appraisals is to ensure that people are accountable for their organizational
responsibilities.

Performance Appraisal and Motivation

Motivational research has recognized the power of recognition as an incentive (see Maslow and
the Expectancy Theory of Motivation). Performance appraisals provide employees with
recognition for their work efforts.  The appraisal system provides the supervisor with an
opportunity to indicate to employees that the organization is interested in their performance and
development. This recognition can have a positive motivational influence. on the individual's
sense of worth, commitment and belonging.

Performance Appraisal and Training and Development

Performance appraisals identify performance gaps. As such, they provide an excellent
opportunity for a supervisor and subordinate to recognize and agree upon individual training and
development needs. Performance appraisal discussion may identify the presence or absence of
work skills. Further, the need for training can be made more relevant if attaining the requisite job
skills is clearly linked to performance outcomes. Consolidated appraisal data can also help form
a picture of the overall organizational training requirements.

Performance Appraisal and Recruitment

Recruitment and selection procedures need to be evaluated. Appraisal data can be used to
monitor the success of a firm's recruitment and selection practices. From this data, the firm can
determine how well employees who were hired in the past are performing.

Performance Appraisal and Employee Evaluation

Employee evaluation is a major objective of performance appraisal. Given the major functions of
management -- planning, organizing, leading and controlling -- it is clear that evaluations
(controlling) need to be done.

At its most basic level, performance appraisal is the process of examining and evaluating the
performance of employees. However, the need to evaluate is also a source of tension as
evaluative and developmental priorities appear to clash.  Some management experts have argued
that appraisal cannot serve the needs of evaluation and development at the same time.

Performance Appraisal and Total Quality Management (TQM)

With the advent of TQM (Total Quality Management) and the extensive use of teams, traditional
performance appraisal systems have come under some criticism. For example, rather than
motivating employees, conflict may be created when appraisals are tied to merit pay and when
that merit pay is based on a forced ranking.

W. Edwards Deming, the founder of total quality management (TQM) has long been associated
with the view that performance appraisals ought to be eliminated. Many TQM proponents claim
that performance appraisals are harmful.
 CHAPTER- IV

PERFORMANCE APPRAISAL PROCESS AND METHODS

PERFORMANCE APPRAISAL - PROCESS MAP

 PERFORMANCE APPRAISAL METHODS

1. Graphic rating scale

2. Paired Comparison
3. Forced choice approach

4.Easy Appraisal

5.3600 appraisal

Graphic Rating Scale: A performance appraisal that rates the degree to which the employee
has achieved various characteristics.

1)The graphic rating scale is the most common type of appraisal used.

2)Various characteristics such as job knowledge or punctuality are rated by the degree of
achievement.

3)The rate usually receives a score of 1 to 5, with 5 representing excellent performance.

4)Some forms allow for additional comments.

Paired-comparison Approach: A performance appraisal that measures the relative

performance of employees in a group.

1)This is a method of performance evaluation that results in a rank ordering of employees to

come up with a best employee.

2)This type of approach measures the relative performance of employees in a group.

Forced-choice Approach: A performance appraisal that presents the appraiser with sets of
statements describing employee behavior; the appraiser must choose which statement is most
characteristic of the employee and which is least characteristic.

Easy Appraisal: Sometimes the supervisor must write a description of the employee’s
performance. The easy appraisal is often used along with other types of appraisals, notably
graphic rating scales. They provide an opportunity for supervisors to describe aspects of
performance not thoroughly covered by an appraisal questionnaire.
360-degree Performance Appraisal: Evaluating Employees From All Angles

Traditional performance appraisals, as discussed above, can be both subjective and simplistic.
At times, they can also be deemed to be "political". In an attempt to improve this methodology,
some companies have turned to 360-degree appraisals. 360 appraisals pool feedback from a
department's internal and external customers to ensure a broader, more accurate perspective of an
employee's performance.

360-degree performance appraisal is an attempt to answer the question: "How can a supervisor
evaluate an employee he or she sees only a few hours each week?"

CHAPTER- V
BENEFITS & GUIDELINES OF PERFORMANCE APPRAISAL
For the organization:
The organization comes to know the true position of the employees working capacities and the
problems they face while working in the organization. This performance appraisal system also
acts as a motivating factor for the employees, which helps the organization to get better results.
For the appraise:
The appraise fells themselves an important part of the organization, they get a chance to express
their views in front of their superiors; they get a platform to express their ideas. The employee
comes to know the truth about:
 To what extent they have achieved their objectives.
 In what respect their work has been most successful.
 Are there any aspects of their work, which they have not completed?

Are many other question, which make them assess rightly. ..

Guidelines for effective performance evaluation interviews...

 emphasize positive aspects of employee performance

 tell employee that the purpose is to improve performance, not to discipline
 conduct the review in private
 review the performance formally at least annually (more frequently for those performing
poorly)
 make criticisms specific
 focus on performance, not personality
 stay calm; do not argue
 identify specific actions the employee can take to improve performance
 emphasize the evaluator’s willingness to assist the employee’s efforts to improve
performance
 end by stressing positive

Appraisal Process

In order to obtain a better understanding of how the performance appraisal has been put together
by The Corporation, the researcher has provided an overview of the company’s performance
appraisal process. The researcher felt that the overview of the performance appraisal process
would be necessary, since the process provided a framework for the performance appraisal.

PRE-APPRASIAL STEPS

The performance evaluation can be made for variety of reasons counseling, promotions, salary
increases, administration or combination of these. It becomes very necessary to begin by stating
the objectives of evaluation programs very clearly and precisely. The personal appraisal system
should address the question who, what, how of performance appraisal.

These questions are the components of these appraisal systems which are discussed below
individually.

“WHO “OF THE APPRAISAL OR ‘’WHO’’ IS TO RATE.

The immediate superior, the head of the department or any other can rate the performance of an
individual. In addition to this, sum organizations follow the system of self appraisal and /or
appraisal by peers. A group, consisting of his senior, peers and subordinates, can do appraisal,
whoever is rating; he should be trained and impartial. In most of the organizations the ratings is
done by his immediate superior who is considered the best person to understand his subordinates
strengths and weaknesses. Now a day some organizations are following the method of self-
appraisal.

THE “WHAT”OF APPRAISAL It is considered with

 Creating and maintaining a satisfactory level of performance of employees in their present

job.
 Highlighting employee’s needs and opportunities of for personal growth and development.
 Aiding in decision making for promotions, transfers, layoff and discharges.
 Promoting understanding between supervisors and his subordinates.
 Providing a useful criterion for determining the validity of selections and training methods
for attracting individuals of higher caliber to the organization.

THE ‘WHEN’ OF APPRAISAL

The ‘when’ answers the query the frequency of appraisal? The informal counseling should
occur continuously but the manager should discuss an employee’s work as soon as he gets an
opportunity to provide positive reinforcement and use poor work as basis of training. The time
and period of appraisal differs according to the need and nature of the organization.

THE ‘WHERE’ OF APPRAISAL

The where indicates the location where employee should be evaluated? It is usually done at
work place or office of the supervisor.

THE ‘HOW’ OF APPRAISAL

Under this, the organization must decide what different kinds of methods are available and which
of these may be used for performance appraisal. On the basis of comparative advantages and
disadvantages, the nature and philosophy of management and the needs of an organization; the
method of appraisal is decided.
CONCLUSION

Engaged employees are those who are willing to invest additional efforts towards enhancing
market position of their company and contribute to better financial results. This is their direct
contribution to the company. Engaged employees are not only motivated to work but they also
know exactly what to do and how to do it more effectively because they know the strategy and
company objectives and share them. All this could possibly mean that the more engaged to the
company people are, the better financial results are likely to be achieved. This correlation has
been confirmed by many surveys conducted by consulting companies. Eventually we can
conclude that raising and maintaining employee’s engagement lies in the hands of an
organization and requires a balanced blend of time, efforts, commitment and investment.