PERFORMANCE APPRAISAL

• Performance Appraisal may be understood as the

assessment of an individuals performance in a systematic
way, the performance being measured against such factors
as
- Job knowledge
- Quantity & quality of output
- Initiative
- Leadership
- Abilities
- supervision
- co-operation
- Judgment etc

Other terms used for Performance Appraisal are:-

Performance Rating, Employee Assessment,
Employee performance review, Personnel
appraisal & Merit rating.
• Performance Appraisal is an objective
assessment of an individual’s performance
against well defined benchmarks.
• Definition:
According to Flippo,” PA is the
systematic, periodic & an impartial rating of
an employees excellence in matters pertaining
to his present job & of his potentialities for a
better job”.

PA takes place once in 6 months/ once in a year.

• Purposes:

- It can serve as a basis for job change or promotion.

- By identifying the strengths & weaknesses of an

employee it serves as a guide for formulating a
suitable training & development programme to
improve his quality of performance in his present
work.

- It serves as a feedback to the employee.

 Appraisal Process
Objectives of PA
Establish Job
Expectation
Design an Appraisal
Programme
Feedback
Appraise performance

Performance Interview

Archive
Performance Appraisal Data
Management Use Appraisal. Data for
appropriate purposes
- Objectives:
- It can serve as a basis for job change or
promotion.

- By identifying the strengths & weaknesses of an

employee it serves as a guide for formulating a
suitable training & development programme
• Establish job expectations:
Inform the employee what is expected of him
on the job.
Normally, a discussion is held with his superior
to review the major duties contained in the job
description.
• Design Appraisal Programme

What Formal Whose

methods vs performance?
? Informal

When to Appraisal Who are the

evaluate? Design raters?
What to
How to What
evaluate?
solve? problems?
- Formal Vs Informal:
Formal appraisals usually occur at specified time
periods-once or twice a year.
Informal appraisal can occur whenever the
supervisor feels the need for communication.
• Whose performance should be rated?
-employees
the ratee may be defined as the individual,
work group, division or organization.
• Problems of rating:
-errors occur in the rater’s observations,
judgement & information processing
• How to solve?:
The best way to overcome the problems is to
provide training to the raters.
• What should be rated?
Quality
Quantity
Need for supervision
• When to evaluate?
How often should an employee be assessed?
The general trend is to evaluate once in three
months, or six months, or once in a year.

• What methods?
 Methods of PA

Traditional methods Modern Methods

(past oriented) (future oriented)

Ranking method BARS

Paired comparison method MBO
Graphic rating method 360 degree
Forced distribution method Assessment centers
checklist method psychological
Essay method appraisals
Confidential method
• Methods of PA

• Traditional Methods:

1. Ranking Method: the superior ranks his/her

subordinates in the order of their merit starting
from the best to the worst.

2. Paired-Comparison method: Under this method,

the appraiser compares each employee with
every other employee one at a time.
3. Graphic rating scale:
this is a chart that presents the lists of qualities like
initiative, output, attendance, co-operation & the
like. Each scale ranges from excellent to poor. Acc
to the total numerical score the PA is made.

1,2 3 4,5 6,7 8,9,10

Poor below average above excellent

average average
4. Forced distribution method: here certain
categories (grades) of ability are established &
certain % of marks are assigned for each grade.

5. Checklist method: A list of statements on

the traits of the employee & his/her job is
prepared in two columns viz; YES/NO.
The rater tick the Yes column if the answer
to the statement is positive & forward the
list to the HR dept.
Depending on the no.of YES the total score is
arrived at. When points are allotted to the
checklist, the technique becomes a weighted
checklist.

6. Essay method/ Free form appraisal: The rater

must describe the employee within a number of
broad categories.
- The raters overall impression of the employees
performance.
- The promotability of the employee
- The jobs that the employee is now able to
perform
- The strength & weaknesses of the employee.
- The T&D assistance required by the employee
7. Group Appraisal (360 degree appraisal):
where multiple raters are involved in
evaluating performance, the technique is
called 360 degree appraisal.
it is a systematic collection of performance data
on an individual or group, derived from a
number of stakeholders.
The stakeholders being the immediate
supervisors, team members, customers ,peers
& self.

8. Confidential Reports: The system was highly

secretive & confidential. Confidential records
are maintained mostly in Govt. depts.
• Modern Methods:

1.BARS (Behaviorally Anchored Rating Scales): combination

of critical incident & graphical rating method.
BARS are rating scales whose scale points are determined
by statements of effective & ineffective behaviours.
They are said to be behaviourally anchored in that the
scales represent a range of descriptive statements of
behaviour varying from the least to the most effective.
• 2.Assessment centers: are now being used for
evaluating executive/supervisory potential.
It is a central location where managers
may come together to have their
participation in job-related exercises
evaluated by trained observers.
• They may conduct some mgmt games like role-
play, in-basket exercise, computer simulation
etc for developing the inter-personal skills.
• An assessment centre generally measures
interpersonal skills, communication skills,
ability to plan & organize, self confidence,
resistance to stress, mental alertness etc.
3.MBO(Management by objectives):
is the process whereby the superior & the
subordinate mgrs of an enterprise

- jointly identify its common goals,

-define each individuals major areas of
responsibility in terms of the results expected of
him,
- & use these measures as guides for operating
the unit & assessing the contribution of each of
its members.
• Psychological Appraisal:

• Large orgns. employ full time industrial

psychologists.
They assess an individuals future potential
& not past performance. The appraisal
normally consists of in-depth interviews,
psychological tests, discussions with
supervisors & a review of other evaluation.
• Compensation
Compensation is what an employees receive in
exchange for their contribution to the
organization. Employees offer their services
for three types of rewards.

pay

incentives benefits
- Pay refers to the basic wages & salaries
employees normally receive.

- Incentives such as bonuses, commissions &

profit sharing plans are designed to
encourage employees to produce results
beyond normal expectations.
Benefits such as insurance, medical,
recreational, retirement etc represent a
more indirect type of compensation.
 Remuneration

Financial Non-financial

Fringe Benefits Perquisites

P.F Co.Car
Hourly & Incentives Gratuity Club Membership
Monthly Rated Individual Plans Medical care Paid Holidays
Wages Group Plans Accident relief Furnished house
Salaries
Health & Group
Insurance

Job Context
Direct Indirect Challenging job
Responsibilities
Recognition
Working Conditions
 Types of Fringe Benefits
Safety & Old age
Payment for Health retirement
time not Safety benefits
worked measures Welfare
P.F
Paid holidays Workmen’s Recreational
Gratuity
Shift Premium Compensatio Facilities
Medical
Holiday pay n Canteens
Benefit
Paid vacation Health Consumer
Pension
Benefits Societies
Housing
Employee
Employee Counselling
Security Holiday homes
Retrenchment Educational
Compensation facilities
Lay-off Parties & Picnics
Compensation Transportation
 Factors Influencing wage & salary
administration:
Wage & salary

External Internal
Demand & Supply Ability to pay
Cost of living Job requirements
Prevailing wage rates
State Regulation
• Demand & Supply of labour:

demand & supply conditions of labour have

considerable influence on determination of
wage rates.

If there is a short supply of labour, the wages

may be high whereas
if there is no dearth(lack) of labour, the
wages tend to be low.
• Cost of living:
wage rates are directly influenced by cost
of living of a place.
The workers will accept a wage which
may ensure them a minimum standard
of living.
• Prevailing wage rates:

The prevailing wage rates in a particular

industry are also taken into account by the
employers.
By considering this, employers will come
reasonably close to the wage level of
competitors & thus retain & attract
qualified workers.
• State Regulation: The State assumes
responsibility for safeguarding the interest of
citizens, it has to step in to regulate the wage
rates of labourers through legislative
measures.
• Internal Factors

• Ability to pay:
The wage level, to a large extent, is
determined by the ability of the
enterprise to pay its workers. The ability
to pay in turn is determined by the
profit-earning capacity of the enterprise.
• Job Requirements:
Jobs requiring specialized knowledge or
involving much mental or manual effort
are priced higher than those which are
light or which do not need any special
knowledge