1. Purvish Shah - NAVIGATORPurvish Shah - NAVIGATOR
PerformancePerformance
AppraisalsAppraisals

2. Purvish Shah - NAVIGATOR
Performance AppraisalPerformance Appraisal
 TheThe systematicsystematic,, periodicperiodic and anand an
impartial rating of an employee’simpartial rating of an employee’s
excellence in the matters pertainingexcellence in the matters pertaining
to::-to::-
• His present jobHis present job
• HisHis potential for a better jobpotential for a better job

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Objectives Of PerformanceObjectives Of Performance
appraisalappraisal
 Estimate gap between the actual and theEstimate gap between the actual and the
desired performance.desired performance.
 Exercising organizational control.Exercising organizational control.
 Feedback to the employees regardingFeedback to the employees regarding
their past performance.their past performance.

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 Provide clarity of the expectations andProvide clarity of the expectations and
responsibilities of the functions to be performedresponsibilities of the functions to be performed
by the employees.by the employees.
 To judge the effectiveness of the other HRTo judge the effectiveness of the other HR
functions such asfunctions such as recruitment, selection,recruitment, selection,
training and development.training and development.
 To reduce the grievances of the employees.To reduce the grievances of the employees.

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::Appraisals Assist::::Appraisals Assist::
 Employee Training Needs AssessmentEmployee Training Needs Assessment
 Organizational PerformanceOrganizational Performance
 Succession PlanningSuccession Planning
 TQMTQM
 Change organizational CultureChange organizational Culture

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ProcessProcess
Establishing Standards
Communicating Standards and expectations
Measuring the actual performance
Comparing with standards
Providing feedback
Corrective Actions

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Pre-requisites for PerformancePre-requisites for Performance
AppraisalAppraisal
 DocumentationDocumentation --continuous noting and--continuous noting and
documenting the performancedocumenting the performance
 Standards / GoalsStandards / Goals --should be clear, easy--should be clear, easy
to understand, achievable, motivating,to understand, achievable, motivating,
time bound and measurabletime bound and measurable
 Practical and simple format -Practical and simple format - TheThe
appraisal format should be simple, clear,appraisal format should be simple, clear,
fair and objective.fair and objective.

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 Evaluation technique –Evaluation technique – An appropriateAn appropriate
evaluation technique should be selectedevaluation technique should be selected
 Communication –ECommunication –Expected resultsxpected results
should be communicated to theshould be communicated to the
employees as well as the evaluatorsemployees as well as the evaluators
 Feedback – SFeedback – Should be developmentalhould be developmental
rather than judgmentalrather than judgmental
 Personal BiasPersonal Bias --evaluators should be--evaluators should be
trained to carry out appraisals withouttrained to carry out appraisals without
personal biaspersonal bias

9. Purvish Shah - NAVIGATOR
Purpose Of Performance AppraisalPurpose Of Performance Appraisal
0% 20% 40% 60% 80% 100%
Payroll
T&D needs
Gaps
Deciding future goals
Mobility
Others
(A Survey of 100 Companies done by AC Nelsons)

10. Purvish Shah - NAVIGATOR
 Payroll and compensation decisions – 80%Payroll and compensation decisions – 80%
 Training and development needs – 71%Training and development needs – 71%
 Identifying the gaps in desired and actual performance–Identifying the gaps in desired and actual performance–
76%76%
 Deciding future goals and course of action – 42%Deciding future goals and course of action – 42%
 Promotions, demotions and transfers – 49%Promotions, demotions and transfers – 49%
 Other purposes – 6% (job analysis and providingOther purposes – 6% (job analysis and providing
superior support, assistance and counseling)superior support, assistance and counseling)

11. Purvish Shah - NAVIGATOR
Performance Appraisals as CareerPerformance Appraisals as Career
DevelopmentDevelopment
““Get paid according to what youGet paid according to what you
contribute”contribute”
 Performance appraisal as CareerPerformance appraisal as Career
DevelopmentDevelopment leads to the recognition of theleads to the recognition of the
work done by the employeeswork done by the employees
 It is a link between the organizational goals andIt is a link between the organizational goals and
the employees’ personal career goals.the employees’ personal career goals.
 Potential appraisal, a part ofPotential appraisal, a part of
Performance appraisalPerformance appraisal, helps to identify the, helps to identify the
hidden talents and potential of the individualshidden talents and potential of the individuals

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 A positive feedback motivates employees toA positive feedback motivates employees to
identify individual career developmental plansidentify individual career developmental plans
 Based on the evaluation, employees canBased on the evaluation, employees can
develop ::develop ::
• Their career goalsTheir career goals
• Achieve new levels of competenciesAchieve new levels of competencies
• Chart their career progressionChart their career progression
 Performance appraisalPerformance appraisal encourages employeesencourages employees
to reinforce their strengths and overcome theirto reinforce their strengths and overcome their
weaknesses.weaknesses.

13. Purvish Shah - NAVIGATOR
Approaches to PerformanceApproaches to Performance
AppraisalsAppraisals
Traditional approachTraditional approach
 Traditionally, P.A. has been used as just aTraditionally, P.A. has been used as just a
method formethod for determining and justifyingdetermining and justifying
the salaries of the employeesthe salaries of the employees
 Than it began to be used a tool forThan it began to be used a tool for
determining rewardsdetermining rewards (a rise in the pay)(a rise in the pay)
andand punishmentspunishments (a cut in the pay) for the(a cut in the pay) for the
past performancepast performance of the employeesof the employees

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Traditional Approach…Traditional Approach…
 A past oriented approachA past oriented approach
 FocusedFocused only on theonly on the past performancepast performance ofof
the employeesthe employees
 Did not consider theDid not consider the developmental aspectsdevelopmental aspects
of the employee performanceof the employee performance

15. Purvish Shah - NAVIGATOR
Modern approachModern approach
 Performance appraisal processes arePerformance appraisal processes are more formalmore formal andand
structured.structured.
 Apart from the routine HR Functions, Modern approachApart from the routine HR Functions, Modern approach
to performance appraisalsto performance appraisals includes aincludes a
feedback processfeedback process
 ThisThis improves the communicationimproves the communication between superior-between superior-
subordinatessubordinates
The modern approach to is aThe modern approach to is a future orientedfuture oriented
approach and isapproach and is developmental in naturedevelopmental in nature. This. This
recognizes employees asrecognizes employees as individualsindividuals and focuses onand focuses on
their development.their development.

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Balanced ScorecardBalanced Scorecard
 TheThe balanced scorecardbalanced scorecard provides a list ofprovides a list of
measures that balance the organizationsmeasures that balance the organizations
internal and process measures withinternal and process measures with
results, achievements and financialresults, achievements and financial
measures.measures.
 The two basic features of the balancedThe two basic features of the balanced
scorecard are:scorecard are:
• A balanced set of measures based on. the fourA balanced set of measures based on. the four
perspectives ofperspectives of balanced scorecardbalanced scorecard
• Linking theLinking the measures to Employee Performancemeasures to Employee Performance

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The 4 key areas::The 4 key areas::
 The financial measures –The financial measures –
• PProfits,rofits,
• increase in the market share,increase in the market share,
• return on investments andreturn on investments and
• other economic measures as a result of the actions taken.other economic measures as a result of the actions taken.
 The customers’ measures –The customers’ measures –
• customer satisfaction,customer satisfaction,
• the customer’s perspective about the organisation,the customer’s perspective about the organisation,
• customer loyalty,customer loyalty,
• acquiring new customers.acquiring new customers.
• Number of customer complaints,Number of customer complaints,
• The time taken to deliver the products and services,The time taken to deliver the products and services,
• improvement in quality etc.improvement in quality etc.

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 The internal business measures –The internal business measures – These are theThese are the
measures related to the organization’s internalmeasures related to the organization’s internal
processes which help to achieve theprocesses which help to achieve the customercustomer
satisfactionsatisfaction..
• Infrastructure,Infrastructure,
• The long term and short term goals and objectives,The long term and short term goals and objectives,
• Organizational processes and procedures,Organizational processes and procedures,
• Systems and the human resources.Systems and the human resources.
 The innovation and learning perspective –The innovation and learning perspective –
• organization's ability to learn,organization's ability to learn,
• Innovations and improvementsInnovations and improvements
• Key competenciesKey competencies
• Value added and the revenue per employee.Value added and the revenue per employee.

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Methods of PerformanceMethods of Performance
appraisalsappraisals
Traditional MethodsTraditional Methods
• ESSAY APPRAISAL METHODESSAY APPRAISAL METHOD
• STRAIGHT RANKING METHODSTRAIGHT RANKING METHOD
• PAIRED COMPARISONPAIRED COMPARISON
• CRITICAL INCIDENTS METHODSCRITICAL INCIDENTS METHODS
• FIELD REVIEWFIELD REVIEW
• CHECKLIST METHODCHECKLIST METHOD
• GRAPHIC RATING SCALEGRAPHIC RATING SCALE
• FORCED DISTRIBUTIONFORCED DISTRIBUTION

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 Modern MethodsModern Methods

Assessment CenterAssessment Center

Human Resource AccountingHuman Resource Accounting

Behaviorally Anchored Rating ScalesBehaviorally Anchored Rating Scales

MBOMBO

360 Degree Appraisals360 Degree Appraisals

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Appraisal as Employee MotivationAppraisal as Employee Motivation
MechanismMechanism
 Inaccurate Performance Review +Inaccurate Performance Review +
Increased Salary = De-motivatedIncreased Salary = De-motivated
EmployeeEmployee
 Accurate Review + No Change in Salary =Accurate Review + No Change in Salary =
De-motivated EmployeeDe-motivated Employee
 Accurate Review + Increased Salary =Accurate Review + Increased Salary =
Highly Motivated EmployeeHighly Motivated Employee

22. Purvish Shah - NAVIGATOR
Arguments Against Performance AppraisalArguments Against Performance Appraisal
• Disparities between the theory and its applicationDisparities between the theory and its application
• PA is a bitter process for most of the employeesPA is a bitter process for most of the employees
• Creates emotional pressures and stress for theCreates emotional pressures and stress for the
employeesemployees
• PA is often looked upon as a tool to control thePA is often looked upon as a tool to control the
employees by the superiors which dampen the intrinsicemployees by the superiors which dampen the intrinsic
motivation of the employees.motivation of the employees.
• PA process increases the dependency of the employeesPA process increases the dependency of the employees
on their superiorson their superiors

23. Purvish Shah - NAVIGATOR
Performance appraisalPerformance appraisal……
……. process encourages accountability, approvals and. process encourages accountability, approvals and
discourages the spirit of creativity and initiative bydiscourages the spirit of creativity and initiative by
employees and also Demotivates thememployees and also Demotivates them
……are conducted by managers who are often not trained toare conducted by managers who are often not trained to
be appraisers.be appraisers.
…….This obstructs the genuine.This obstructs the genuine feedbackfeedback, leading to, leading to
incorrect and unreliable data regarding the performanceincorrect and unreliable data regarding the performance
of the employeesof the employees
Example:: BPOs’, Government Organizations EtcExample:: BPOs’, Government Organizations Etc

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MANAGING WITHOUTMANAGING WITHOUT
PERFORMANCE APPRAISALSPERFORMANCE APPRAISALS
 TheThe "appraisals and review meetings""appraisals and review meetings", continuous, continuous
accountability and check can cause emotional stress foraccountability and check can cause emotional stress for
the employees. Therefore, it is recommended to createthe employees. Therefore, it is recommended to create
such a work culture wheresuch a work culture where
• the employees are made responsible for their ownthe employees are made responsible for their own
performance and developmentperformance and development
• the manager’s / superior’s suggestions, inputs arethe manager’s / superior’s suggestions, inputs are
encouraged and incorporated in the actions.encouraged and incorporated in the actions.

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 Changing pay practices--PChanging pay practices--Periodic cost of livingeriodic cost of living
increases, rewards on some accomplishments,increases, rewards on some accomplishments,
tem bonuses, profit and gain sharingtem bonuses, profit and gain sharing
 Motivating people—Challenging work,Motivating people—Challenging work,
Reminding them about their personal goalsReminding them about their personal goals
 Creating an organization with a culture thatCreating an organization with a culture that
• Encourages creativity,Encourages creativity,
• Fosters innovative efforts and productivity,Fosters innovative efforts and productivity,
• Teamwork,Teamwork,
• Reformulating strategic plans and assumptions butReformulating strategic plans and assumptions but
can be effectively put into place without the needcan be effectively put into place without the need
of performance appraisalsof performance appraisals

26. Purvish Shah - NAVIGATOR
Performance Appraisal For EmployeesPerformance Appraisal For Employees
at Different Levelsat Different Levels
For top level managementFor top level management
 Degree of organizational growth and expansionDegree of organizational growth and expansion
 Extent of achievement of organizational goalsExtent of achievement of organizational goals
 Contribution towards the societyContribution towards the society
 Profitability and return on capital employedProfitability and return on capital employed

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For middle level managersFor middle level managers
 Performance of the departments or teamsPerformance of the departments or teams
 Co-ordination with other departmentsCo-ordination with other departments
 Optimal use of resourcesOptimal use of resources
 Costs Vs. revenues for a given period of timeCosts Vs. revenues for a given period of time
 The communication with superiors andThe communication with superiors and
subordinatessubordinates

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For front line supervisorsFor front line supervisors
 Quantity of actual output against theQuantity of actual output against the
targetstargets
 Quality of output against the targetsQuality of output against the targets
 Number of accidents in a given periodNumber of accidents in a given period
 Rate of employee absenteeismRate of employee absenteeism

29. Purvish Shah - NAVIGATOR
Global Trends In PerformanceGlobal Trends In Performance
Appraisal ProgramAppraisal Program
 The focus of theThe focus of the performance appraisalsperformance appraisals isis
turning towards career developmentturning towards career development
 Trend towards a 360-degree feedback systemTrend towards a 360-degree feedback system
 The problems in the performance appraisalThe problems in the performance appraisal
processes are being anticipated and efforts areprocesses are being anticipated and efforts are
being made to overcome them.being made to overcome them.
 Rank and Yank Strategy or “Up or Out StrategyRank and Yank Strategy or “Up or Out Strategy
 Team Performance AppraisalTeam Performance Appraisal

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Points to be RememberedPoints to be Remembered
 What is the purpose of performance appraisals?What is the purpose of performance appraisals?
 How should the self appraisal be used?How should the self appraisal be used?
 How should the ratings be given if there has been aHow should the ratings be given if there has been a
change of supervisor or manager during the period of thechange of supervisor or manager during the period of the
appraisal?appraisal?
 How can input/feedback be collected for the appraisalHow can input/feedback be collected for the appraisal
process?process?
 What if the employee refuses to agree or/and accept theWhat if the employee refuses to agree or/and accept the
review?review?
 How do you deal with an average or a non-performer?How do you deal with an average or a non-performer?

31. Purvish Shah - NAVIGATOR
:::Don't let employees come into the:::Don't let employees come into the
Performance Appraisal blindly or leavePerformance Appraisal blindly or leave
blindly, without a sense of direction orblindly, without a sense of direction or
accomplishment!:::accomplishment!:::