SUBJECT CODE MU0016
SUBJECT NAME PERFORMANCE MANAGEMENT AND APPRAISAL
ROLL NO. 1408010895
COURSE NAME & SEMESTER MBA (4th
Q1. Explain the aims and purpose of “Performance management’’?
Ans.: Performance management: aims at building a high performance culture for both the
individuals and the teams so that they jointly take the responsibility of improving the business
processes on a continuous basis and at the same time raise the competence bar by upgrading their
own skills within a leadership framework.
Its focusison enablinggoal clarity for making people do the right things in the right time. It may be
saidthat the mainobjective of a performance management system is to achieve the capacity of the
employeesto the full potential in favor of both the employee and the organization, by defining the
expectationsintermsof roles,responsibilities and accountabilities, required competencies and the
The main goal of performance management is to ensure that the organization as a system and its
subsystemsworktogetherinanintegratedfashionfor accomplishing optimum results or outcomes.
The major objectives of performance management are discussed below: -
To enable the employees towards achievement of superior standards of work performance.
To help the employees in identifying the knowledge and skills required for performing the job
efficiently as this would drive their focus towards performing the right task in the right way.
Boosting the performance of the employees by encouraging employee empowerment,
motivation and implementation of an effective reward mechanism.
Promotingatwo waysystemof communicationbetweenthe supervisors and the employees for
clarifying expectations about the roles and accountabilities, communicating the functional and
organizational goals, providing a regular and a transparent feedback for improving employee
performance and continuous coaching.
Identifyingthe barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.
Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance based payment.
Promotingpersonal growthandadvancementinthe careerof the employeesby helping them in
acquiring the desired knowledge and skills.
Some of the key concerns of a performance management system in an organization are:
Concernedwiththe output(the resultsachieved),outcomes,processes requiredforreaching the
results and also the inputs (knowledge, skills and attitudes).
Concerned with measurement of results and review of progress in the achievement of set
Concerned with defining business plans in advance for shaping a successful future.
Strivingforcontinuousimprovementandcontinuousdevelopmentby creating a learning culture
and an open system.
Concernedwithestablishingaculture of trustand mutual understandingthatfostersfree flow of
communication at all levels in matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the team together.
Concernedwiththe provisionof procedural fairness and transparency in the process of decision
The performance management approach has become an indispensable tool in the hands of the
corporates as it ensures that the people uphold the corporate values and tread in the path of
accomplishment of the ultimate corporate vision and mission. It is a forward looking process as it
involvesboththe supervisorandalsothe employee in a process of joint planning and goal setting in
the beginning of the year.
Q2.Define performance appraisal. What are the dimensions of performance appraisal?Describe the
Characteristics of performance appraisal.
Ans.Inthe presentscenario,the organizationshave shiftedtheirfocusfromperformanceappraisalsto
performance managementasaresultof internationalizationof human resourcesandglobalization of
business. The functions of HRMhave become far morecomplicated as today the major focus of
strategic HRMpractices is on the management of talent by implementing such development
programmes which enhance the competencies ofthe employees.
The performance management approach focuses more on observed behaviors and concrete results
basedon the previously established smart objectives. By adopting techniques like Management by
Objectives (MBO), smart objectives are established in terms of either facts and figures and in the
entire process the superior plays the role of a coach or a facilitator. The objectives are mutually
decided at the beginning of the performance season and serve as a standard of performance for
evaluation.Inthismethod,the employees can offer a feedback on their contributions by filling up a
Performance management is a much broader term in comparison with performance appraisal as it
deals with a gamut of activities which performance appraisals never deal with.
Thissystemisa strategicandan integratedapproachwhichaimsat building successful organizations
by developing high performance teams and individuals and improving the performance of people.
This process starts when a job is defined. Performance management emphasizes on front end
planning instead of looking backward unlike performance appraisals and the focus is on ongoing
dialogue instead of appraisal documents and ratings. Thus, performance management may be
regarded as a continuous process.
Q3. Explain 5 traditional and 5 modern methods of performance appraisal.
Ans.Traditional Methodsof Performance Appraisal:
1. Essay Appraisal Method:This traditional formof appraisal,alsoknownas “Free Form
method”involvesadescriptionof the performance of anemployee byhissuperior.The description
isanevaluationof the performance of anyindividualbasedonthe factsand oftenincludesexamples
and evidencestosupportthe information.A majordrawbackof the methodisthe inseparability
ofthe biasof the evaluator.
2. Straight Ranking Method: Thisis one of the oldestandsimplesttechniquesof performance
appraisal.Inthismethod,the appraiserranksthe employeesfromthe besttothe poorestonthe
basisof theiroverall performance.Itisquite useful foracomparative evaluation.
3. Paired Comparison: A better technique of comparison than the straight ranking method, this
method compares each employee with all others in the group, one at a time. After all the
comparisons on the basis of the overall comparisons, the employees are given the final rankings.
4. Critical Incidents Methods : In this method of Performance appraisal, the evaluator rates the
employeeonthe basisof critical events and how the employee behaved during those incidents. It
includesbothnegativeandpositive points. The drawback of this method is that the supervisor has
to note down the critical incidents and the employee behaviour as and when they occur.
5.Field Review : In this method, a senior member of the HR department or a training officer
discussesandinterviewsthe supervisorstoevaluate andrate theirrespective subordinates. A major
drawback of this method is that it is a very time consuming method. But this method helps to
reduce the superiors’ personal bias.
Modern Methods of Performance Management: -
1.AssessmentCentre method:Thismethodwas used for the first time in 1930 by the German army
and then in 1960’s by the British army. This method tests a candidate in different social situations
usinga numberof assessorandprocedures. The performance of an employee an also his potential
for a newjobis evaluatedinthis method by assessing his performance on job related simulations.
Characteristics that the concerned managers feel are important for the success of a particular job
are included in these simulations. Techniques like business games role playing and in basket
exercises are used in this method.
The employees are evaluated individually as well as collectively on job related characteristics.
Personal interview and projective tests help in assessing the motivation, career orientation and
dependence onothersof anemployee.Tomeasure the intellectual capacity written tests are used.
The evaluators in this method consist of experienced manager working at different levels who
prepare a summaryreportfor the managementaswell asforthe employees.Thistechnique usually
measures the planning ability interpersonal skills and organizational skills of an employee.
2. Human Resource AccountingMethod:Human resourcesare a valuable assetforanyorganization
and itcan be valuedinmonetaryterms.Thismethodevaluatesthe performance of an employee in
terms of costs and contributions. HR costs include expenses incurred on HR planning recruitment
selection induction and training. The difference between this costs and the contribution by an
employeereflectsthe performance of that employee. This method is still developing hence is not
very popular at present.
3. Behaviorally anchored rating scale (BARS): This method combines the graphic rating scale and
the critical incidentmethod.Itdeterminesin advance the critical areas of the performance and the
most effective behavior to achieve the results. Then the actual job behavior of an employee is
evaluated against the predetermined behavior.
The followingstepsare usedfor constructing BARS.
1. Supervisorandotherpersonswell acquaintedwithajobare askedto describedspecificcritical
incidence of effective performance behavior
2. Then these personscategorizedthe incidentsintosetsof performance dimensionsandeachset
3. These people thenreallocate the originalcritical incidents.Theyare giventhe clusterdefinition
and critical incidentsandare askedtore-designeachincidenttothe dimensionsthatdescribesit
the best.A critical incidentsisretainonlyasome percentage thatisusuallybetween50 – 80
percentof thisgroup assignsthe incidentstothe same clusteraswasdone by the earliergroup.
4. The secondgroupthenrates eachincidentona 7 – 9 pointscale where the ratingisdone on
the basisof howwell the behaviordescribedinthe incidentsrepresentedthe performance onthe
5. A sub setof incidentsisusedasbehavioranchorsforthe performance dimensions.
4 Appraisal through management by objectives (MBO): This concept was introduced by Peter
Druckerin 1954 whonamedit managementbyobjectivesandself-control.Itisaneffective way it is
also known as goal setting approach to appraisal .In this process the supervisor and subordinate
members jointly identify the common goals of the organization and set the areas of the
responsibilityof eachindividualintermsof results expected from that person. These measures are
uses for operating the unit as well as for appraising the performance of the employees.
5 The 360 degree appraisal: The 360 degree method of performance appraisal is used to make the
appraisal processmore transparent,objective and participative. It introduced the concepts of self-
appraisal subordinatesappraisal,peerappraisal andappraisal bycustomers.Itiscalleda 360 degree
method because it involves the evaluation of an employee by persons above him, below him and
alongside him. Structured questionnaires are used to collect information from the seniors,
subordinates and peers. The employee to be evaluated thus acquires a central position and
everyone around him participates in the appraisal process in the 360 degree method.
The following four are the main components of 360 degree appraisal: -
and identifying the areas of development. The employees get a chance to share the development
areas withtheirseniorsbasedontheirself-appraisal and jointly worked out a plan in tune with the
organizational realities like the availability of resources and time. It also gives a chance to the
employee to express his career plans which is in the interest of the organization as it knows
beforehand the aspirations of its employee.
Appraisal by superiors: An appraisal by superiors involves providing constructive, feedback about
the performance of any employee as well as his development areas during the review period. It
helpsinsettinggoals for the employees that help in achieve the organizational goals and improve
the performance of the employee. The career aspirations of an employee are also put in proper
Appraisal by subordinates: This is a unique feature of the 360 degree method of appraisal. As the
subordinates play an important role in the performance of the employee. The feedback by the
subordinates gives firsthand account of how they look at their superior in terms of working style.
The capabilityof a superiorinmotivating,delegatingthe work, building a team and communicating
with them effectively form the basis of appraisal by the subordinates.
Peer appraisal: It also plays an important role in 360 degree appraisal as the role of peers is quite
important in life of an employee. Selecting the right peers is very important and peers from the
departmentsthatare directlyrelatedwiththe departmentof the employee shouldalsobe included.
It mainlyfocusesonfeedbackaboutthe style of functioningof the employee under review and can
also include his ability to work as team leader besides his co-operation and collaboration.
Potential appraisal: It is different from performance appraisal as it refers to the abilities of the
employeesthatare notbeingusedat the time of appraisal.Itsearches for the latent abilities of the
employeeindischarginghigherresponsibilities in future. The potential of the employees is judged
on the basis of his present performance, personality traits, past experience and age and
qualification.Italsolooksat the unused skills and knowledge of an employee. It aims at informing
the employee their future prospectus and helps the organization in drawing your suitable
successionsplan.Italsorequiresupdatingthe trainingefforts regularly and advised the employees
on things which they can do to improve their career prospectus.
Q4. What is performance feedback? List any 3 important principles of feedback? Explain some of the
pitfalls of performance feedback?
Answers:The performance feedback process is ongoing between managers and employees. The
exchange of informationinvolvesbothperformance expectedandperformance exhibited. According
to Indiana University Human Resources Service & Constructive feedback can praise good
performance orcorrect poorperformance and should always be tied to the performance standards.
Getting the facts, then having a face-to-face conversation can provide direction to help solve
The important principles of Feedback are as follows:
8. Establish a dialogue
Specific – Feedback must be based on observable behavior, not one’s feelings or the conclusions
drawn from the behavior. For example, “Last Friday morning I saw you help Mary fix a problem on
her computer. Your willingness to share your expertise is a great example of teamwork and makes
thisa more effective organization.”Thisspecificexample, tied to a positive organizational outcome,
ismore effective thansaying“Youare a helpful person,”since the subordinate can link the feedback
to an actual event.
Timely – Feedback should be given in a timely enough manner so that both parties can recall the
specific behavior involved.
Actionable – Feedback should be based on something over which a person has control. When
necessary, the supervisor should identify ways to improve performance.
Measurable – Goals and objectives should be stated in terms so that both parties will know if the
goals are achieved.
Achievable – Performance measuresshouldbe realisticandwithinthe resourcesthatare available to
Positive – Give bothpositive and critical feedback, but tip the balance in the positive direction. The
Center for Creative Leadership suggests a 4:1 ratio of positive to critical feedback.
Non-evaluative – Opinions, perceptions, and reactions should be differentiated from facts. Don’t
psychoanalyze;avoidinferencesandinterpretations.Avoidlabels.Establishadialogue –The effective
feedbacksessionisnota one-waycommunication.The supervisorshouldaskthe subordinateif he or
she fully understands what is being said and then listen carefully to the response. The supervisor
should ensure the subordinate understands his or her role in the organization and how that role
contributes to the goals and mission of the organization.
Performance reviews are important tools that managers can use to boost employee performance and
productivity to higher levels, but often fall prey to some common mistakes. Some of the pitfalls of
performance feedback are as follows:
1. Managers aren'ttrainedor prepared.
2. Managersdon't evaluate employeesaccurately.
3. Managersare toovague.
4. Managerssurprise theiremployees.
5. Managersaren't supportedbysolidprocessesandsystems.
1. Managers aren't trained or prepared:Many managers are never trained on how to properly
conducta performance reviewsotheydon'tknow how toplan forand deliveraneffectivereview.
There are provenbestpracticesregardingconductinganeffective performance review, including
what to document, what to say, and how to say it, so it's important to make sure managers
receive performance management training on planning for the review, writing a review, and
delivering a review discussion. These topics should be continually revisited and reinforced.
2. Managers don'tevaluate employeesaccurately:Managersmaymake certain unconscious rating
errorswhenwritinganddeliveringaperformance review. One of the most common errors is the
"recencyeffect,"wheremanagersmaybase theiropinionsonthe mostrecentperformance of an
employeeratherthantheirperformance throughout the year. Other rating errors that managers
commonly make in the performance review process include:
Central tendency bias
3. Managers are too vague: Many managers tend to use vague language during the performance
review such as: "You're doing a great job" or "You could do better," instead of citing specifics in
termsof what the employeedidwell ornotwell intermsof theirperformance.Without knowing
the specifics of what their boss liked or didn't like, employees aren't provided with useful
feedbackthattheycanuse to improve theirperformance nordotheyunderstandwhytheydidn't
receive the pay increase or promotion they wanted, if the review is tied to compensation or
4. Managers surprise theiremployees: Some managers never bother to let their employees know
when their performance is slipping, and during the performance review, the employee is
surprisedwithnegative feedback,alow performance score,amissedpromotionopportunity,and
possiblyevenathreatof termination.Notprovidingfeedbackthroughoutthe year (on both good
and bad performance) is a common mistake managers make.
Surprisesaren'tfairto youremployee,andthey aren't a good practice for performance reviews.
Employees need more frequent feedback on how their performing versus just an annual
evaluation to explain to them what they are doing right and wrong so that they have a fair
chance to change their behavior.
5. Managers aren't supported by solid processes and systems: Finally, strong performance
managementsystemsare the foundationfor delivering a good performance review. Without an
accurate way of measuring performance, a clear process, and methods that make delivering a
performance review easy, managers have to work within defective and inefficient systems.
Q5. What is meant by “360 Degree feedback”? Explain its purpose. What are the
advantagesanddis-advantages of 360 degree feedback?
Ans.Definition:360 degree feedbackisa multisource assessment,where individual’s Performance is
assessed and feedback is recorded from a number of people that may include Managers,
Subordinates, Colleagues and customers. The assessment in the feedback takes the form of rating
against certain performance dimension. When the feedback is from the subordinates to the
managers, it is referred to as 180 degree feedback. Common use of 360 Degree feedback is for: -
LearningandDevelopmentof the participants
The methodologyforthe feedbackisthatdatais obtainedthroughthe questionnairesthat measure
behaviors of individuals from different perspectives against list of competencies. A typical 360
degree feedback may cover the following aspects of performance
There is a need for actions following the process of feedback, otherwise the whole activity could
lose iteffectiveness,if the purposeisdevelopmental,the actions maybe lefttoindividualsaspartof
their personal development plan.
Advantagesand Disadvantagesof 360-Degree Feedback
Individualsgetabroaderperspective astohow theyare perceivedbyothers
The feedbackprovidesamore roundedview of theirperformance
Enhancedawarenessandrelevance of competencies
Awarenessforseniormanagementtoo,astheywill gettoknow theirneedfordevelopment
Feedbackisperceivedmore validandobjective asit’scollectedfromvariedsources.
Frankand honestopinionmaynotbe received
Stressmightbe puton individualsforgivingfeedback
Lack of actionfollowingfeedback
Too muchbureaucracy(Official Proceduremightslow the process)
Q6. Write a brief note on Ethics in performance management.
Ans.Ethics: The word ‘ethics’ comes from the Greek word ‘ethikos’. It refers to one’s moral
character and the way in which society expects people to behave in accordance with accepted
principles.Mostphilosophersconcludethatethical failure occurs because of lack of character or, in
otherwords,virtuouspeople willliveethically. Itcan be usedto describe aparticular person’s own,
idiosyncraticprinciples or habits. It is a set of concepts and principles that guide us in determining
what behavior helps or harms sentient creatures.
Key Factors to Ensure Ethics in Performance Management
Define and describe the ethical standards: Along with ethical standards to handle the external
agencies,itisnecessarytodefine the ethical standards for internal actions, particularly PM. The
PMdocumentshouldhave achapter containingwhatisconsideredethical and what is not in the
PMcontext and the consequences of following these or disobeying them.
Plan the PM well in advance: It is unethical to include goals in retrospect, i.e., you should give
the goals at least a month prior to its being effective so that the employee has a headstart.
Take collective decision:The decisionsmade asagroup usuallyproduce better quality decisions
as thiswill be inclusive of the diverseinterestsand perspectives. Such decisions taken generally
increase creditability of process and in turn benefit the outcome because of the reduced
suspicion of unfair bias.
Record critical incidentsfrequentlyandlet the employee knowit: Decisionsof performance are
often taken on the basis of critical incidents. While it is desirable to record it as and when it
occurs, one must record it at least once in a month. Permit an employee to have access to the
critical incidents on a continual basis. This would act as an automatic feedback system in some
Ethics during feedback: Give objective and focused feedback. It raises several ethical issues:
1. Denial of a frank feedback and opportunity to improve may come in the way of future
promotions and increments
2. Giving a frank feedback to one person while denying it to another, whatever be the
premise, militates against justice.
3. Notgivingfrankfeedbackandconsequentdenial of achievingorganizational objectives is
not from an organizational perspective.