Performance Management

and Appraisal-
Performance
The results of activities of an organization or investment
over a given period of time.

Accomplishment of a given task measured against pre-set

standards of accuracy, completeness, cost, and speed.
Doing something successfully by using skills, knowledge
and motivation.
Out come , results and accomplishments
Constituents of Individual Performance

Employee
=
Content x Context
Performanc Factors Factors
e

Degree of
Opportuni control over
= Ability x Willingness x ty to do
x
to do to do technology
and external
factors
Performance Management
Performance management is a continuous
process of identifying, measuring and
developing the performance of individuals
and teams and aligning performance with the
strategic goals of the organization
 Performance Management
Process to establish a shared understanding
about what is to be achieved, and an approach
to managing and developing people in order to
achieve it.
Getting better results for the organization via
the measurement of individual performance

5
 Nature of Performance Management

Processes used to identify, encourage, measure, evaluate, improve, and reward

employee performance
Provide information to employees about their performance.
Clarify organizational performance expectations.
Identify the development steps that are needed to enhance employee
performance.
Document performance for personnel actions.
Informing and getting agreement on individual performance
Facilitate them to achieve better results
Provide rewards for achieving performance objectives.
6
 Stage 1
Planning the
Performance

Stage 2
Needs
Rewards Development Supporting the
Performance

Stage 4 Stage 3
Formal Cyclic Ongoing Performance
Performance Review
Review
Performance Appraisal
Performance appraisal means evaluating an
employee`s current and/or past performance
in comparison with the set standards.
Performance Management
V/S
Performance Appraisal
Performance Performance
Management Appraisal
o Strategic business o Assesses employee

considerations o Strengths &

o Ongoing feedback so o Weaknesses

employee can improve o Once a year

performance
o Lacks ongoing
o Driven by line manager
feedback

o Driven by HR
Contributions of Performance
Management- For Employees
Clarifies job definitions and expectations
Increases motivation to perform
Enhances urge for self development
Possibly happier at work
Recognition and appreciation to the
contributions
Direction to capitalize your strengths
Contributions of Performance Management- For
Organization/ HR dept
Clarifies organizational goals
Fairer and more appropriate
administrative actions
More engaged and focused workforce
Higher ability to retain top performers
Succession planning
Identification of coaching and training
needs
Drawbacks of poorly implemented PM systems

For Employees:
Lowered self esteem
Job dissatisfaction
Damaged employee-employer relationships
Use of false or misleading information
For Managers:
Rise in the employee turnover
Lower motivation
Potential conflicts between the managers and
employees

For Organization:
Wastage of time and money
Unclear rating systems which fails to
highlight correct elements
Increased risk of lawsuits
Aims and Role of PM System
1. Strategic Purpose- link individual goals with organizational

goals, communicate most crucial areas of the business.

2. Administrative purpose- salary adjustments, promotions,

retention, termination, recognition of performance, layoffs

3. Informational purpose- To communicate the company

expectations to employees, what they are doing, how they

need to improve
Development Purpose- performance feedback,
identification of individual strengths and
weaknesses, causes of performance deficiencies,
Organization Maintenance purpose- plan
effective workforce, assess future training needs,
evaluate effectiveness of HR activities.
Documentation purpose- document
administrative activities, supporting legal
requirements.
Performance
Management
Linkage

17
Types of Performance Information

18
Frequency of Appraisal
Summative: Performance evaluation done at
end keeping all objectives , goals and
strategies in consideration . It is not
motivating

Formative: Ongoing and encouraging,

continuous feedback
Who can be the appraiser
Immediate manager
Other managers familiar with employee work
Higher level management
Personnel department or HR
Employee Peers
Service Users
Employee himself and employee subordinates
 Performance Standards
•Performance Standards
▫ Expected levels of performance
 Benchmarks, goals, and targets

▫ Characteristics of well-defined standards

 Realistic
 Measurable
 Clearly understood
 Challenging
E.g. - Finish 20 bags per hour
- Making 20 presentation with at least grade B in first semester
- Innovate 3 new products in the first three months 21
 Performance Appraisal
▫ Informal appraisals: ongoing basic within
the organization

▫ Formal appraisals: occurrence at certain

intervals throughout that person’s history of
employment

Performance Appraisal is a part of Performance Measurement Process

22
 Where to Appraise?
Common
Performan
ce
Measures

Quantity Quality Timeliness Presence

of of of at
Output Output Output Work

23
The Process of Performance Appraisal
• Step 1- Identification of criteria
• Step 2- Appraise for a period of time
• Step 3- Prepare an appraisal report by manager
• Step 4- Appraisal interview
• Step 5- Modify the report if necessary as a
result of interview
• Step 6- Review of the assessment
• Step 7- Prepare the action plan for
improvement
• Step 8- Implement the action plan
• Step 9- Follow up the result
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Appraising
Performance
Methods
Graphic Rating Scale:

One of the most commonly used methods for

appraising performance. It lists traits and
provides a rating scale for each trait.
The employer uses the scale to indicate the
extent to which an employee displays each
trait.
Graphic Rating Scale
Graphic rating scales appraisal forms
generally contain questions related to
common traits of the particular job such as
communication, knowledge, technical
abilities etc.
A drawback of this approach is that it leaves
to the particular manager the decisions about
what is “excellent knowledge” or “worthy
judgment” or “poor interpersonal skills
Competency Based Appraisal Forms
Manager focuses on appraising employee`s
performance based on looking at the
‘competencies’ that are essential for the
particular position.
Competency based appraisal form
Position- Typist

Duty 1 Need Satisfactory Excellent

improvemen
t
Each one
page
document [ [ [
must be ] ] ]
completely
typed at the
speed of 80
words per
minute and
able to
compose
passages in
Urdu at the
speed 65
Alternation Ranking Method
Ranking method which ranks the employees
from highest to lowest performing. In this
employees are rated firstly and then the
names are crossed out of those who are NOT
known well enough to rank. Then they are all
ranked on each separate trait (lowest to
highest) until all the employees are ranked.
Paired Comparison Method
 This approach pairs employees in a group and rate them against
one another. This method compares each employee with each
other employee to establish rankings.
 Paired comparison involves pairwise comparison – i.e., comparing
entities in pairs to judge which is preferable or has a certain level
of some property. LL Thurstone first established the scientific
approach to using this approach for measurement. The paired
comparison method is particularly applicable when the jobs are
significantly different from one another and where a relative
measurement promises to yield insight. It is therefore useful for
business situations which typically involve setting priorities in the
context of limited resources.

 It is a method of comparing employee and job with another one on

the basis of skill sets, time required to execute tasks, knowledge
etc.
Trait Rated: ‘Quality of Work’
A– B– C– D– E–
Rameez Govind Hamid Jamal Raheel

A– + + -- --
Rameez
B– -- -- -- --
Govind
C– -- + + --
Hamid
D– + + -- +
Jamal
E– + + + --
Raheel
Govind
ranks
the
Forced Distribution Method
Assigns a certain percentage of employees to
each category in a set of categories.
Forced ranking is a method of performance
appraisal to rank employee but in order of
forced distribution. For example, the
distribution requested with 10 or 20 percent
in the top category, 70 or 80 percent in the
middle, and 10 percent in the bottom
Forced Distribution- Example
Trait Forced Result
Distribution
Customer Service 10% are top Receive highest
performers; compensation; in
exceeding line for promotion
expectations

80% are good; Receive moderate

meeting compensation
expectations increment
10% are not Receive little or NO
meeting compensation;
expectations coached for
improvement;
termination
Critical Incident Method
Supervisor keeps a LOG of positive and
negative examples (critical incidents) of a
subordinate`s work related behavior. Every 6
months or so, supervisor and subordinate
meet to discuss the performance using the
incidents as examples.

• Critical incident method- Recording of events by
appraiser. An incident is critical when it illustrates what
the employers has done good or failed to do
• The critical incidents for performance appraisal is a
method in which the manager writes down positive and
negative performance behavior of employees throughout
the performance period.
• Each employee will be evaluated as such and one’s
performance appraisal will be based on the logs that are
put in the evaluation form.
• The manager maintains logs on each employee,
whereby he periodically records critical incidents of the
workers behavior.
• At the end of the rating period, these recorded critical
incidents are used in the evaluation of the workers’
performance.
• The critical incidents file of performance appraisal is a
form of documentation that reflect all data about
employee performances.
Advantages of CIT in Performance
Appraisal
It’s based on direct observations- The
greatest strength of this approach is that
performance evaluations are based on actual
performance that is observed firsthand by the
employee’s manager.
It’s time-tested- In this approach, managers
gather data over a full year, so it’s less likely
to be influenced by a mad last-minute.
It provides more face time. By definition,
the critical incident approach encourages
managers to spend time on the floors with
their employees, which allows them to
provide more coaching, guidance, and
feedback, while also learning more about
overall developments in the department.
Disadvantages of CIT in performance
appraisal
Negative incidents may be more noticeable than
positive incidents.
• It results in very close supervision which may not be
liked by the employee.
• The recording of incidents may be an unpleasant task
for the manager concerned or may be too busy or
forget to do it.
The supervisors have a tendency to unload a series of
complaints about incidents during an annual
performance review session.
Not too numeric so may not be effective in salary
decisions
It delays the giving of feedback. In order
for feedback to be truly effective (whether the
feedback is positive or negative), it should be
linked as closely as possible to the behavior
in question. With critical incidents, a greater
emphasis may be placed on gathering data
and tallying it than actually using it to inform,
educate, and motivate employees.
BARS- Behavior Anchored Rating Scale
A good way of overcoming the drawbacks of
graphic rating scale is to evaluate employee
behavior.
BARS uses numeric rating scale with specific
examples of good and poor performance
Example BARS- Patrol Officer
Management by Objectives (MBO): people
at each level of the organization set goals in a
process that flows from top to bottom, so that
all levels are contributing to the
organization’s overall goals.
These goals become the standards for
evaluating each employee’s performance.
Management by Objectives – Two
Objectives of a Bank
Assessment Centers
They are generally used for selection
purposes but some companies also use them
for employee performance appraisal. Multiple
raters evaluate employees` performance on a
number of exercises.
360 Degree Performance appraisal
360 degree measures manners and
capacities.
• 360 degree improves such skills as
listening, planning and goal-setting.
• 360 degree concentrates on subjective
areas, for example efficiencies of teamwork,
character, and leadership.
• 360 degree supplies on the way others
think about a specific staff.
360 degree appraisal has four
components:
• Self appraisal
• Subordinate’s appraisal
• Peer appraisal.
• Superior’s appraisal
Advantages
Offer a more comprehensive view towards the
performance of employees
The mix of ideas can give a more accurate
assessment.
• Opinions gathered from lots of staff are sure
to be more persuasive.
Not only manager should make assessments on
its staff performance but other colleagues
should do, too.
People who undervalue themselves are often
motivated by feedback from others.
Disadvantages
REQUIREMENT OF PERFORMANCE
MANAGEMENT SYSTEM IS A MUST
Taking a lot of time, and being complex in
administration
Exchange feedback can cause troubles and
tensions to several staff
Feedback can be useless if it is not carefully
and smoothly dealt
Can impose an environment of suspicion if the
information is not openly and honestly
managed
Performance Measurement
Rating Errors
Halo effect error: In some cases managers
tends to overemphasize one aspect of a
worker performance and neglect all other
aspect. This increased focus on one
parameter gets reflected in overall
performance rating and leads to artificially
magnifying the ratings known as Halo effect
For example let's take the case of a worker
who is very good in oral and written
communication and generally takes care of
the managers written communications and
mail, but he is a very inefficient and lousy
worker. But this worker may be given an
excellent performance rating because
manager is extremely happy with one aspect
of his performance.
Horn effect error: This type of error comes
into play when manager while awarding
rating to a worker give overwhelming
importance to one negative incident and
factor rather than taking the complete
picture of a workers performance into
account. Manager outweighs one negative
incident / information rather than the
comprehensive performance related to a
workers performance
Horn and Halo come into rater bias
Distributional errors: the rater tends to use
only one part of a rating scale.
Leniency: the reviewer rates everyone near the top
Strictness: the rater favors lower rankings
Central tendency: the rater puts everyone near the middle of the
scale
Initial idea effect error: According to a
research it is found that in majority of cases
the managers construct and make a favorable
or unfavorable impression about a worker in
the first meeting and then they tend to mostly
ignore subsequent information that does not
support the initial impression.
Typecast effect error: Typecast means to
categorize a certain group of workers based
upon gender, race, ethnicity, culture or group.
This type of error happens when Manager
allows his own preconceived belief about
these aspects takes precedence over other
documentary evidence and his own rational
judgment. (stereotyping)
Resembling to me effect error: Managers
being human often fall into the trap of being
positively disposed and inclined to workers
who have resemblance to them in attitudes,
look, temperament, performance, personality,
race and gender. Most of the times managers
end up awarding higher performance rating
to such workers.
Preferential treatment error / Nepotism
error: This type of error is a deliberate error
committed by the manager in the award of
performance management rating. The
manager indulges into this type of error when
he illegally wants to provide career benefit to
some of the workers who are either related to
him/her or are liked by him/her. This error
can have a very drastic effect on the work
group morale.
Wrong meaning Understood effect error:
This type of error manifest itself when there
are large numbers of employees and more
than one manager is doing the performance
management. If the managers do not have
similar perception of the performance
criteria's then they tend to interpret the
same parameter with different meaning. For
example if a worker takes initiative and
comes out with positive suggestions related
to execution of work assignment, this may be
understood as a sign of good behavior by one
manager but may be the other manager can
take it as a sign of insubordination.
Giving Performance Feedback
Conducting the Feedback Session
During the feedback session, managers can take any of three
approaches:
1. “Tell-and-Sell” – managers tell employees their ratings and then
justify those ratings.
2. “Tell-and-Listen” – managers tell employees their ratings and then
let the employees explain their side of the story.
3. “Problem-Solving” – managers and employees work together to
solve performance problems.