Performance appraisal is the method of evaluating the behaviour of employees in the workplace, evaluating the quantitative and qualitative aspects of job performance in terms of output.
According to dale Yoder, “Performance appraisal includes all formal procedures used to evaluate contributions 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:
Compensation decisions: It can serve as a basis for pay raises. Performance appraisal helps managers to identify employees who are performing at or above expected levels to compensate for merit.
Promotion Decisions: Individuals performing at their bet are rewarded with promotion.
Training and Development Programmes: Performance appraisal can help employees to self-assess their skills, any training required to improve skills for better performance.
Transfers: Unsatisfactory performance calls for transfers, demotions and discharges due to economic conditions of the organisation. It is greatly influenced by appraisals.
Feedback: Performance appraisal enables the employee and the employer to know how well the individual is performing.
Self-improvement: Through discussions with individual employees, a line manager can find out why they perform at lower levels, which steps can be initiated to improve their performance. The discussion between senior and subordinate gives chance to the employees for introspection and to enhance his output to the organisation
Parties Conducting Appraisals:
The appeared or evaluator can be a person who has complete knowledge about job content, parameters to be judged, standards of the job contents and also a person who observes the employee while performing a job. He should prepare reports and make judgements without any bias. These appraisers can be
Supervisor: Boss, department head, line managers, etc who are senior in position to the employee being appraised. Generally, immediate senior is the appraiser.
Peers: Peer appraiser may be reliable if the workgroup is stable over a long period of time, peers are matured enough to appraise without personal prejudices.
Subordinates: Such kind of appraisal is done in educational institutes where teachers are evaluated by students. Now this concept is introduced in MNCs also provides the relationships between superiors and subordinates are cordinal.
Self-appraisal: If the individuals understand their job expectations, their responsibilities and the parameters on which they are to be evaluated, they are in the best position to appraise their performance. Such employees are highly motivated.
Users of Services: In the case of service industries, employees are evaluated by customers relating to behaviour, promptness in handling customer query, speed of delivery service and the accuracy of performance.
Consultants: When the organisation do not trust his employees for supervisory appraisal, peer appraisal or even the self-appraisal, such cases, organisations hire external consulting agencies. Consultants are trained and they observe the employee at work for sufficiently long periods for the purpose of the appraisal.
Methods of Performance Appraisal Techniques:
Individual Evaluation Techniques:
These are traditional methods of appraisal:
Confidential Report: It is created by the immediate supervisor at the end of the year in subjective form.
Essay Evaluation: rater is asked to express strong as well as weak points of the employee’s behaviour, his general planning, organising abilities, attitudes towards the job. It is an unstructured appraisal.
Critical Incident Technique: managers prepare a list of events which are critically representing the outstanding or poor behaviour of the employees on the job.
Checklists: It represents the simplest form of a list of descriptive statements about the employee’s behaviour on the job. A rating score from the weighted checklist helps the manager in evaluating the performance to be good or bad or moderate.
Graphic Rating Scale: Under this method, scales are established in form of very good, good, average, poor and very poor. Then a number of specific jobs relate factors are ranked on these scales. factors to be rated are personal characteristics like initiative, leadership etc and contribution such as quantity and quality of work.
Forced Choice Method: This method requires the rater to select the most descriptive statement in each pair of statements about the employee being evaluated.
Behaviourally Anchored Rating Scale: It is also known as the behavioural expectations sale. It is a combination of the rating scale and critical incident techniques. The critical incidents serve as anchor statements on a scale and the rating form usually contains six to eight defined performance dimension. Evaluator rate each statement on as 1 to 7 or 1 to 9. A rating of 1 presents ineffective performance, the top scale value reflects effective performance. Means and standard deviations are calculated on these scale value assigned to each incident.
Multiperson Evaluation Techniques:
In these types of techniques, one employee is evaluated in comparison to another. These are also the modern methods of appraisal.
Ranking Method: The ranking of each employee in a workgroup is done against that of other employees. Employees are ranked according to there performance in a group. Under this method, the evaluator is asked to rate employment from highest to lowest on some overall criterion.
Paired Comparisons: In this method, each worker is compared with all other employees in the group for each and every trait. If there are ‘n’ employees, then ‘n(n-2) comparisons’ are different.
Management by Objective(MBO): It is also termed as a goal-setting approach. The essential feature of this method is the mutual establishment of job goals. The superior discuss key result Areas (KRAs) with the subordinates, checkpoints are established for evaluation, superior and subordinates meet the target mutually at say half-yearly or yearly.
Field Review Method: A trained, skilled representative of HR department goes into the field and assist line supervisors with the ratings of their respective subordinates. HR specialist requests the supervisor to provide information about employees performance. based on this information, HR expert prepares a report which is sent to the supervisor for review, changes, approval and discussion with the employee who is being rated on standardised objective forms.
Forced Distribution Method: The rater is asked to rate the employee on a predetermined distribution scale between two extremes ‘good’ or ‘bad’. The two criteria used for rating job performance and profitability. There are no descriptive statements. This method assumes that all top-grade workers should go the highest 10% grade, 20% employees should go to the next highest grade and so on.
The promotional scale consists of three points likely promotional, may be/may not be promotional and quite unlikely promotional material.
Problems with Performance Appraisal:
Judgement Errors: Managers commit mistakes while appraising the employee’s performance due to certain basis and errors which distort the measurement. These are:
- First Impression: The appraiser’s first impression of a candidate may decide his evaluation of all subsequent behaviour. This is called ‘primary effect’.
- Halo Effect: It occurs when one aspect or trait of the employee affects the raters evaluation of other performance attributes.
- Horn effect: The rater’s bias is directed towards one negative quality of the rate, he is being rated harshly for his one negative trait.
- Leniency: Depending on rater’s own mood at the time of evaluation, he can rate very strictly or very leniently.
- Central Tendency: The rater rate all employees moderately at the average point.
- Stereotyping: Generalising behaviour of a person on the basis of the mental picture already set in the mind of the appraiser.
- Recency Effect: the rater gives greater weightage to recent incidents than earlier performance.
Poor Appraisal Forms: Rating scale may be quite vague and unclear form ignores important performance parameters, the form is too lengthy, difficult and confusing.
Lack of Rater’s Preparedness: Appriser is not properly trained to carry out an appraisal. Insufficient time, lack of skills, lack of self-confidence, the unclear fundamental thought process can be some reason.
Ineffective Organisational Policies: Rater get influenced by other senior managers who will review his ratings. this causes him to manipulate the evaluation process in order to build his good image. As a result, rater goes off the track and cause significant damage to the rating process.
Essentials of an Effective Appraisal System:
- A good appraisal system should provide reliable valid data which can be used to rate the employee on specified parameters, it must measure only job-related aspects.
- Appraisal forms, procedures, ratings, data analysis techniques etc should be standardised so as to rate all employees equally.
- They must comply with provisions of various acts relating to labour and should be easily understood.
- It should ensure that the appraisers are honest and rational in their judgement and behaviour.
- Appraisers should be given the training to get insights and ideas on rating and to document the appraisals.
- The appraisal system should be fit in the structure and operations of the organisation.
- The top management must build trust among employees on the appraisal system to be a fair and error-free process.