MODULE 4

The basic purpose of performance appraisal is to identify

employees worth and contribution to the company. Important
factors include – attendance, efficiency, attitude, quality of work,
amount of work are just a few important factors.

The physical or objective factors like attendance, amount of work,

efficiency can be easily measured by the records maintained by
the Human Resource Department Manager.

A performance appraisal is a regular review of an employee's

job performance and overall contribution to a company. Also
known as an annual review, performance review or evaluation,
or employee appraisal, a performance appraisal evaluates an
employee's skills, achievements, and growth
As Dale Yoder said, “Performance appraisal includes all
formal procedures used to evaluate personalities and
contributions and potential of group members in a working
organisation. It is a continuous process to secure
information necessary for making correct and objective
decisions on employees.
OBJECTIVES OF PERFORMANCE APPRAISAL
Performance Appraisal can be done with following objectives in
mind:

1. To maintain records in order to determine compensation

packages, wage structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to
place right men on right job.
3. To maintain and assess the potential present in a person for
further growth and development.
4. To provide a feedback to employees regarding their
performance and related status.
5. To provide a feedback to employees regarding their
performance and related status.
6. It serves as a basis for influencing working habits of the
employees.
7. To review and retain the promotional and other training
programmes.

IMPORTANCE OF PERFORMANCE APPRAISAL

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 includes 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.

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.
NEED FOR PERFORMANCE APPRAISAL:
There are certain requirements expected from the employees for
which performance appraisal are conducted.

1. Providing information about the performance ranks on which

decision regarding salary fixation, promotion, etc. are taken.

2. Review of the performance of the subordinates.

3. Providing information that helps to counsel the subordinates.

4. Getting information to diagnose deficiency in employees

regarding skills, knowledge, etc.

5. To prevent grievance and in disciplinary activities.

PROCESS OF PERFORMANCE APPRAISAL

Performance appraisal can be undertaken either on informal basis

or on formal and systematic basis. In comparatively smaller
organizations, appraisal, either based on traits or performance or
a combination of both, is done informally through the observation
of concerned employees.

In larger organizations, appraisal has to be more systematic and

formal as it reveals various types of information which can be
used for variety of purposes. A systematic performance appraisal
goes through different steps.
1.Establishing performance standards

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. In case the performance of the employee
cannot be measured, great care should be taken to describe the
standards.

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 info
rmed and the standards should be clearly explained to the
employees. 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 actual performance with desired performance

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 [Feedback]

The result ofthe 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. Performance appraisal feedback
by managers should be in such way helpful to correct mistakes
done by the employees and help them to motivate for better
performance but not to demotivate. Performance feedback task
should be handled very carefully as it may leads to emotional
outburst if it is not handing properly. Sometimes employees
should be prepared before giving them feedback as it may be
received positively or negatively depending upon the nature and
attitude of employees.
6.Come up with corrective measures

This is the final stage in appraisal processes. Initiating some effective

corrective measures should be executed according to the results of the
appraisal. Carefully examine the results and identify areas that require
improvement and then come up with corrective action that will make it
possible for employees to improve performance. At this stage.

PROBLEMS OF PERFORMANCE APPRAISAL

1) Compare/contrast error

When appraising employees, it is important never to compare

their abilities and using it to make a judgment.

Each employee is gifted in their unique way and thus has different
strengths and weaknesses. When you try to compare or contrast
their abilities, it means that you will not get a fair review because
high performers will certainly make relatively low performers for
particular tasks to look below average, which on some occasions
is never the case.

Of essence is to ensure that you appraise every worker by their

performance against established standards and criteria,
individually.

2) Similarity error

In every organization, some employees have a resemblance of

different aspects with the manager. Now some managers usually
find it easy to reward such employees highly compared to those
who portray contrasting behaviour or opinion.
As a manager, it would be significant to ensure that you perform
your employee appraisal objectively and considering that diversity
should be respected, try to carry out the appraisal process based
on performance and results that they provide and not primarily by
similarity/dissimilarity that you have.
3) Bias

Bias is also one of the problems with performance

appraisal managers often encounter. As a matter of fact,
everyone has some biases towards someone or something
irrespective of how we portray them. However, as a manager,
it is imperative not to let the biases hinder the manner in
which you approach performance evaluation process.

Your biases can manipulate the objectivity of appraisal hence it is

important to ensure that you keep it off as much as possible to
make sure that you do not compromise the results of your
findings. Biases may also lead to inconsistencies among different
employees bearing in mind that the key element for attaining best
results from appraisal is consistency.

4) Stereotyping

Stereotyping is closely related to biases only that in this case, you

tend to make your judgment by your predetermined mindset
towards a particular employee’s race, gender, political
affiliation, religious background, culture and other
characteristics.

Stereotyping is problematic when assessing employees’

performance because it implies that you will only be able to
provide judgment based on what you label the group similar to
one that the particular employee belongs to.
5) Recency effect

This is majorly about carrying out an appraisal for a short

period before it takes place. As stated earlier, an appraisal is
an activity that takes place continuously, which means that the
focus should not only be for the short period before it happens but
rather the entire time of the year.

In many organizations, problems with performance appraisal

usually arise when a manager decides to determine results by
basing their evaluation on what an employee has achieved just
before the assessment. In this case, it sounds unfair to
employees who have been outstanding throughout but later
faulted few days to assessment and vice versa because the
appraisal will not be able to reveal the actual reality.

7) Attribution error

This is one of the trickiest problems with performance

appraisal. It involves making your independent belief on
possible causes of some behaviours or outcome and letting
that influence your judgment.

It is never a good idea to develop an assumption of what

transpired or made the employee behave in the manner that he or
she did and later use it as a basis for reviewing the appraisal
process. It is only essential if you stick by the stipulated standards
and criterion and how the performance of each employee
compares to such standards. It only becomes a fair when the
employee is judged on their performance in line with the set
standards rather than preconceived notion.
8. Halo Effect:
The “halo effect” is a tendency to let the assessment of an
individual’s one trait influence the evaluation of that person on
other specific traits. He assumes that a man who performs one
task well must be able to do anything well.

CAREER PLANNING
Career planning is the process by which one selects career
goals and the path to these goals. The major focus of career
planning is on assisting the employees achieve a better match
between personal goals and the opportunities that are realistically
available in the organization. Career programmers should not
concentrate only on career growth opportunities. Practically
speaking, there may not be enough high level positions to make
upward mobility a reality for a large number of employees. Hence,
career-planning efforts need to pin-point and highlight those areas
that offer psychological success instead of vertical growth.
Career planning is not an event or end in itself, but a
continuous process of developing human resources for
achieving optimum results. It must, however, be noted that
individual and organizational careers are not separate and
distinct. A person who is not able to translate his career plan
into action within the organization may probably quit the job,
if he has a choice. Organizations, therefore, should help
employees in career planning so that both can satisfy each
other’s needs.

CAREER PLANNING FEATURES

* Career planning of the employee is supplemented by the
organisation.

* It is continuous and for long term, where goals of the individuals

are harmonised with the goals of the organisation.

* The objective of career planning is to ensure not only

succession in the organisation but also to ensure that the skills of
all the employees are utilised to the optimum extent.

* Career planning is time consuming and needs lot of foresight

and imagination.

* The goals, aptitude and the capacity of the individual are kept in
mind before planning the career.

* The organisation tries to create a conducive environment to help

employees plan their careers properly.

* Career planning is an integral part of human resource planning.

CAREER PLANNING PROCESS

i. Identifying individual needs and aspirations:

Most individuals do not have a clear cut idea about their career
aspirations, anchors and goals. The human resource
professionals must, therefore, help an employee by providing
as much information as possible showing what kind of work would
suit the employee most, taking his skills, experience, and
aptitude into account. Such assistance is extended through
workshops/seminars while the employees are subjected to
psychological testing, simulation exercises, etc. The basic
purpose of such an exercise is to help an employee form a clear
view about what he should do to build his career within the
company. Workshops and seminars increase employee
interest by showing the value of career planning. They help
employees set career goals, identify career paths and uncover
specific career development activities (discussed later). These
individual efforts may be supplemented by printed or taped
information. To assist employees in a better way, organizations
construct a data bank consisting of information on the career
histories, skill evaluations and career preferences of its
employees (known as skill or talent inventory).
ii. Analyzing career opportunities:
Once career needs and aspirations of employees are known,
the organization has to provide career paths for each
position. Career paths show career progression possibilities
clearly. They indicate the various positions that one could hold
over a period of time, if one is able to perform well. Career paths
change over time, of course, in tune with employee’s needs
and organizational requirements. While outlining career paths,
the claims of experienced persons lacking professional degrees
and that of young recruits with excellent degrees but without
experience need to be balanced properly.

iii. Aligning needs and opportunities:

After employees have identified their needs and have
realized the existence of career opportunities the remaining
problem is one of alignment. This process consists of two
steps: first, identify the potential of employees and then
undertake career development
programmers (discussed later on elaborately) with a view to align
employee needs and organizational opportunities. Through
performance appraisal, the potential of employees can be
assessed to some extent. Such an appraisal would help reveal
employees who need further training, employees who can take up
added responsibilities, etc. After identifying the potential of
employees certain developmental techniques such as special
assignments, planned position rotation, supervisory coaching, job
enrichment, understudy programs can be undertaken to update
employee knowledge and skills.

iv. Action plans and periodic review:

After initiating these steps, it is necessary to review the whole
thing every now and then. This will help the employee know in
which direction he is moving, what changes are likely to take
place, what kind of skills are needed to face new and emerging
organizational challenges. From an organizational standpoint
also, it is necessary to find out how employees are doing, what
are their goals and aspirations, whether the career paths are in
tune with individual needs and serve the overall corporate
objectives, etc.

CAREER PLANNING LIMITATIONS

Though career planning helps an organization in numerous ways,

it has a few limitations that undermine the importance and
relevance of career planning.
 These are;
 Time factor.
 Unsuitable for a large workforce.
 Lack of objectivity.
 External interventions.
 Lack of knowledge and awareness.
 Lack of flexibility.
 Difficulty in measuring career success.
Time Factor
Career planning is usually a long-term and time-consuming
process.
Unsuitable for Large Workforce
It may not be possible for organizations with a large workforce to
develop individual career plans breach and every employee of the
organization.
This is because the career planning process requires an in-depth
analysis of each employee’s strengths and weaknesses on a
sustained basis.
Lack of Objectivity

Only those organizations which belief in strict observance of

objectivity in promotion and transfers can succeed in career
planning.

In contrast, favoritism and nepotism in promotions often make

career planning an unsuccessful exercise.
External interventions

Government rules and regulations can also affect the career

planning options of an organization.

For example, the government may make it mandatory for the

organization to adopt reservations in promotions.

Lack of Knowledge and Awareness

Career planning by an employee is essentially a self-management
process. It requires employees to be aware of the basics of career
planning and management activities.
Lack of Flexibility
Many organizations treat career planning as a ritualistic and rigid
exercise. They often fail to consider the uncertainties caused to
the career planning activities by the changes in the situation.
In fact, the absence of dynamic career planning programs may
limit the applicability of the career plans in uncertain and changing
situations.
Difficulty in Measuring Career Success

Since career success is an abstract concept, it is interpreted

differently by different persons. Some may consider a good
performance on the job as career success.

Others may consider the quality of life as an indicator of career

success. Still, others may consider vertical mobility in the
organizational structure as career success.
This divergence of opinions may cause confusion and vagueness
in interpreting career success.

CAREER DEVOLOPMENT

Career development is the process of self-knowledge,

exploration, and decision-making that shapes your career. It
requires successfully navigating your occupational options to
choose and train for jobs that suit your personality, skills, and
interests.

When someone pays careful attention to their career

development, they identify their own strengths and blind spots,
then work hard to improve their skills. It also involved learning
about different roles and industries to find a match to their
abilities, seeking out opportunities to advance, and maybe even
changing careers altogether if they find a more suitable one

Career development can start when someone is quite young and

just learning about different ways to make a living. It is a part of
human development, and the process can span a lifetime.

For example, when a child notices that some people are doctors,
firefighters, or mail carriers, it signals the start of this process. It
continues on through elementary school as they begin to explore
occupations and later into adulthood as people ultimately decide
what career to pursue.

CAREER DEVOLOPMENT OBJECTIVES

 Fostering Better Communication in Organization: The

main objective of designing a career development system is
to foster better communication within the organization as a
whole. It promotes communication at all levels of
organizations for example manager and employee and
managers and top management. Proper communication is
 the lifeblood of any organization and helps in solving several
big issues.
 Assisting with Career Decisions: A career development
system provides employees as well as managers with
helpful assistance with career decisions. They get an
opportunity to assess their skills and competencies and
know their goals and future aspirations. It helps them give a
direction so that they can focus on achieving their long term
career goals.
 Better Use of Employee Skills: A career development
system helps organization make better use of employee
skills. Since managers know their skills and competencies
and therefore, can put them at a job where they will be able
to produce maximum output.
 Setting Realistic Goals: Setting realistic goals and
expectations is another main objective of a career
development system. It helps both employees and
organization to understand what is feasible for them and how
they can achieve their goals.
 Creating a Pool of Talented Employees: Creating a pool
of talented employees is the main objective of organizations.
After all, they need to meet their staffing needs in present
and future and a career development system helps them
fulfill their requirements.
 Enhancing the Career Satisfaction: Organizations
especially design career development systems for
enhancing the career satisfaction of their employees. Since
they have to retain their valuable assets and prepare them
for top notch positions in future, they need to understand
their career requirements and expectations from their
organization.
 Feedback: Giving feedback on every step is also required
within an organization to measure the success rate of a
specific policy implemented and initiatives taken by the
organization. In addition to this, it also helps managers to
 give feedback for employees’ performance so that they can
understand what is expected of them.

CAREER DEVOLOPMENT METHODS

1. Training

This method includes developing employee skills through a

combination of lectures, hands-on-exercises, videos, podcasts,
simulations, and individual/group-based assignments.

It includes both formal (classroom-based, instructor-led,

eLearning courses) and informal (watching YouTube videos,
reviewing educational blogs and posts on peer-group forums like
LinkedIn or chat rooms, self-study) approaches to skills
development.

2. Task/job rotations

Employees could volunteer to rotate roles with colleagues on a

shift/team, to put some of those new skills into practice.

Employers can also encourage job sharing as a method for

employees, who have indicated their desire to get practical
experience, to develop some additional skills.

The goal is to rotate the tasks and roles to learn something new
or have a chance to practice what has been learned.
3. Coaching

When talking about various employee development methods and

their benefits, we can’t stress the importance of helping
employees polish their skills through coaching.

This method of skills development typically involves senior

staffers working one-on-one with less experienced individuals.

4. Mentoring

This method involves senior leaders/management taking junior

staff under their wing to help develop important skills that the
mentored individual might lack.

The more formal mentoring programs are typically used for senior
executive/leadership roles, while less formal structures might be
implemented amongst junior management as well.

5. Workshops/Committees/Working-Groups

These are methods that give employees an opportunity to interact

with peers/colleagues from within and external to the
organization.

The benefit here is rich access to similar colleagues (internal)

and dissimilar colleagues (external).

This broad range of input and knowledge can be useful in gaining

new insights, troubleshooting, and opening up communication on
best practices.
6. Simulations

These are becoming very popular due to both how engaging and
effective they have become.

In its simplest form, a simulation could be role-playing a customer

service interaction, for example, learning how to diffuse an irate
and confrontational client in person, or responding to an
emergency situation such as mock first aid scenarios.

7. Conferences

Much like workshops and committees, conferences are a useful

way to network and gain exposure to a vast knowledge base of
both interdisciplinary and outside industries.

Specific sessions are generally available to increase awareness

and training of relevant topics, often in a pick and choose a format
that can be of interest/usefulness to particular subgroups within an
organization.