Presentation on performance appraisal process and methods

1. PRESENTATION ON PERFORMANCE
APPRAISAL PROCESS AND METHODS
Presented By:
MBA-BF,LBC
Group Roll No.:
25 - 27
Utsav Gautam
Sirjana Chhetri
Bindu Pantha

2. PERFORMANCE APPRAISALS
Meaning of Performance Appraisals
 According to Flippo, a prominent personality in the field of
Human resources, "performance appraisal is the
systematic, periodic and an impartial rating of an
employee’s excellence in the matters pertaining to his
present job and his potential for a better job."
 “It is formal, structured system of measuring, evaluating
job related behaviors and outcomes to discover reasons
of performance and how to perform effectively in future
so that employee, organization and society all benefits.”
Performance Appraisals is the assessment of individual’s
performance in a systematic way. It is a developmental
tool used for all round development of the employee and

3. • The performance is measured against such factors as job
knowledge, quality and quantity of output, initiative, leadership
abilities, supervision, dependability, co-operation, judgment,
versatility and health. Assessment should be confined to past as
well as potential performance also. The second definition is
more focused on behaviors as a part of assessment because
behaviors do affect job results.
• Performance appraisal has been synonymous with performance
review, performance evaluation, performance assessment,
performance measurement, employee evaluation, personnel
review, staff assessment, service rating, etc. The development of
performance appraisal has four distinct phases. It is called
TEAM (Technical, Extended, Appraisal and Maintenance)
approach .
• Performance Appraisal is reviewing past performance,
rewarding past performance, goal setting for future performance
and employee development .

4.  Employee's appraisal system may be considered as one of the
indicators of the quality of Human Resource Management in an
organization. Properly designed and realized process of employees’
appraisal is not only the necessary basis of successful employee
performance management, but also provides valuable information
for other human resource management functions .
 Performance Appraisal is important because it helps in
Performance Feedback, Employee Training and Development
Decisions, Validation of Selection process, Promotions &
Transfers, Layoff Decisions, Compensation Decisions, Human
Resource Planning (HRP), Career Development and Develop
Interpersonal Relationship.

5. Performance Appraisals and Job
Analysis Relationship
Job Analysis Performance
Standards
Performance
Appraisals
Describe the work
and personnel
requirement of a
particular job.
Translate job
requirements into
levels of acceptable
or unacceptable
performance
Describe the job
relevant strengths
and weaknesses of
each individual.

6. Use Or Needs Of Performance
Appraisals
A recent survey from the Society for Human Resource
Management found that 72% of organizations conduct
formal appraisals only once a year, whilst only 2% of
employees gave their employer an A grade for their
performance management.
1. Promotions
2. Confirmations
3. Training and Development
4. Compensation reviews
5. Competency building
6. Improve communication
7. Evaluation of HR Programs
8. Feedback & Grievances

7. Performance Appraisal
Process
A. DEVELOP THE STANDARDS FOR
EVALUATION
Performance standards are:
 Based on the position, not the individual
 Observable, specific indicators of success
 Meaningful, reasonable and attainable
 Describe “fully satisfactory” performance once trained
 Expressed in terms of quantity, quality, timeliness, cost, safety or
outcomes
B. SETTING OBJECTIVES
 Specific
 Performance oriented
 Realistic

8. CONTD..
C. DATA COLLECTION
 Sources of performance information
 Personal observation
 Reports, documentation, correspondence. Etc.
 Feedback (internal and external)
 Periodic discussions with employee
D. PERFORMANCE APPRAISAL INTERVIEW
 Review standards, documentation and job description as well as the
appraisal form and various ratings.
 Write the appraisal ( Complete the Performance Appraisal Form)
 Know the person’s record thoroughly.
 Prepare the employee in advance.

9. CONTD..
E. FUTURE GOALS AND OBJECTIVES
 At the end of the interview, the employer should allow some time to
create a development plan.
 The employer should record specific goals, targets or benchmarks that the
employee will attempt to achieve.
 Both employer and employee should agree on the steps to be taken to
achieve these targets,
 Both should agree on how the employee’s progress towards these
objectives will be measured and set a defined timeframe, even if this is
simply the next performance appraisal.
F. FOLLOW :
Follow up means more than simply conducting regular formal
performance reviews once a year.
 If employers review employees and provide feedback as part of everyday
management, both employers and the employee will learn much more
about their strengths, weaknesses and how employers would prefer the job
up to be done.

10. G. THE PERFORMANCE EVALUATION REPORT
 Class specification and / or informal job description.
 Job standards, procedures and regulations.
 Established goals, objectives and expectations.
 Knowledge and abilities to perform the job with others.
 Job relationships required for successful performance, i.e, supervisors, co-
workers, county employees and the public.
 Quality of work, including the nature and consequences of errors made
during the evaluation period.
 Commendations awarded relative to employee performance.
 Use of job skills and efforts to enhance skills.
 Attendance, use of sick leave, punctuality.
H. REWARDING PERFORMANCE
 Rewarding performance means providing incentives to, and recognition of,
employees for their performance and acknowledging their contributions to
the agency’s mission.

11. Approaches Of Performance Appraisal
Categories Traditional Appraisals Modern, Systems
Appraisals
Guiding Values Individualistic, Control
oriented, Documentary
Systematic, Developmental,
Problem solving
Leadership Styles Directional, Evaluative Facilitative, Coaching
Frequency Occasional Frequent
Formalities High Low
Rewards Individualistic Grouped, Organizational

12. TECHNIQUES / METHODS OF
PERFORMANCE APPRAISALS
Numerous methods have been devised to measure the
quantity and quality of performance appraisals. Each of
the methods is effective for some purposes for some
organizations only. None should be dismissed or accepted
as appropriate except as they relate to the particular needs
of the organization or an employee.
Broadly all methods of appraisals can be divided into two
different categories.
1. Past Oriented Methods
2. Future Oriented Methods

13. Past Oriented Methods
1. Rating Scales/Grading: Rating scales consists of several
numerical scales representing job related performance
criterions such as dependability, initiative, output, attendance,
attitude etc. Each scales ranges from excellent to poor. The
total numerical scores are computed and final conclusions are
derived.
Such type of grading is done is Semester pattern of
examinations and in the selection of a candidate in the public
service sector.
Advantages – Adaptability, easy to use, low cost, every type of
job can be evaluated, large number of employees covered, no
formal training required.
Disadvantages – Rater’s biases

14. 2. Checklist:
Under this method, checklist of statements of
traits of employee in the form of Yes or No based
questions is prepared. Here the rater only does the
reporting or checking and HR department does the
actual evaluation.
Advantages – economy, ease of administration,
limited training required, standardization.
Disadvantages – Raters biases, use of improper
weighs by HR, does not allow rater to give
relative ratings

15. 3. Forced Choice Method: The series of statements arranged in the blocks
of two or more are given and the rater indicates which statement is true or
false. The rater is forced to make a choice. HR department does actual
assessment.
Advantages – Absence of personal biases because of forced choice.
Disadvantages – Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a
high point on a rating scale. Rater is compelled to distribute the employees
on all points on the scale. It is assumed that the performance is conformed
to normal distribution. The expectations of a bell curve would be
something like: excellent is 10 percent, good 20 is percent, average is 40
percent, below average is 20 percent and unsatisfactory is 10 percent. Use
the forced distribution method to prevent leniency among evaluators.
Advantages – It is also highly simple to understand and easy to apply in appraising
the performance of employees in organisations
Disadvantages – Assumption of normal distribution, unrealistic, errors of central
tendency.

16. 5. Critical Incidents Method: The approach is focused on
certain critical behaviors of employee that makes all the
difference in the performance. Supervisors as and when
they occur record such incidents.
Advantages – Evaluations are based on actual job
behaviors, ratings are supported by descriptions, feedback
is easy, reduces recency biases, chances of subordinate
improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

17. 6. Behaviorally Anchored Rating Scales:
The problem of judgmental performance evaluation inherent in the traditional
methods of performance evaluation led to some organizations to go for objective
evaluation by developing a technique known as “Behaviorally Anchored Rating
Scales (BARS)” around 1960s. BARS are descriptions of various degrees of
behavior with regard to a specific performance dimension.
 It combines the benefits of narratives, critical incidents, and quantified ratings by
anchoring a quantified scale with specific behavioral examples of good or poor
performance.
 Advantages – helps overcome rating errors.
 Disadvantages – Suffers from distortions inherent in most rating techniques.
7. Field Review Method:
This is an appraisal done by someone outside employees’ own department usually
from corporate or HR department.
 Advantages – Useful for managerial level promotions, when comparable
information is needed,
 Disadvantages – Outsider is generally not familiar with employees work
environment, Observation of actual behaviors not possible.

18. 8. Confidential Records: It is the traditional way of
appraising employees mainly in the Government
Departments. Here the report is given in the form of Annual
Confidentiality Report (ACR) and may record ratings with
respect to following items; attendance, self expression,
team work, leadership, initiative, technical ability,
reasoning ability, originality and resourcefulness etc.
 Advantage: The system is highly secretive and confidential.
Feedback to the assess is given only in case of an adverse
entry.
 Disadvantage: Highly subjective and ratings can be
manipulated because the evaluations are linked to HR
actions like promotions etc.

19. 9. Essay Method: In this method the rater writes down the
employee description in detail within a number of broad
categories like, overall impression of performance,
promote ability of employee, existing capabilities and
qualifications of performing jobs, strengths and
weaknesses and training needs of the employee.
• Advantage – It is extremely useful in filing information
gaps about the employees that often occur in a better-
structured checklist.
• Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers. They
may get confused success depends on the memory power
of raters.

20. 10. Cost Accounting Method: Here performance
is evaluated from the monetary returns yields to
his or her organization. Cost to keep employee,
and benefit the organization derives is
ascertained. Hence it is more dependent upon cost
and benefit analysis.
11. Comparative Evaluation Method: These are
collection of different methods that compare
performance with that of other co-workers. The
usual techniques used may be ranking methods
and paired comparison method.

21. • Ranking Methods: Superior ranks his worker
based on merit, from best to worst. However
how best and why best are not elaborated in this
method. It is easy to administer and
explanation.
• Paired Comparison Methods: In this method
each employee is rated with another employee
in the form of pairs.

22. Future Oriented Methods
1. Management By Objectives: Peter F. Drucker
propounded a new concept, namely, management by
objectives (MBO)It means management by objectives and
the performance is rated against the achievement of
objectives stated by the management.
An MBO consists of four main steps:
• goal setting
• performance standard
• comparison
• periodic review
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of
merit pay may result in setting short-term goals rather
than important and long-term goals etc.

23. 2. Assessment Centers:
• This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may
come together to have their participation in job related exercises
evaluated by trained observers.
• It is more focused on observation of behaviors across a series of
select exercises or work samples. Assesses are requested to
participate in in-basket exercises, work groups, computer
simulations, role playing and other similar activities which
require same attributes for successful performance in actual job.
• The characteristics assessed in assessment center can be
assertiveness, persuasive ability, communicating ability, planning
and organizational ability, self confidence, resistance to stress,
energy level, decision making, sensitivity to feelings,
administrative ability, creativity and mental alertness etc.

24. • Advantages – well-conducted assessment center can
achieve better forecasts of future performance and
progress than other methods of appraisals. The tests
also make sure that the wrong people are not hired or
promoted. Finally it clearly defines the criteria for
selection and promotion.
• Disadvantages – Costs of employees traveling and
lodging, psychologists, ratings strongly influenced by
assessor's inter-personal skills. Solid performers may
feel suffocated in simulated situations.

25. 3. Humans Resource Accounting
• The concept of human resource accounting was first developed by
Sir William Petty in 1691.But research into true human resource
accounting began in the 1960 by Rensis Likert. Prof. Flamholtz
defines human resource accounting for people as an organizational
resource.
• The main theory underlying the HRA is: The people are valuable
resources of an organization or enterprise, information on
investment and value of human resource is useful for decision
making in the organization. This paper aims at analyzing the
application of human resource accounting in heavy industries
covering the period from 2001-2010.In1965, both Cronbach &
Glaser and Naylor & Shine developed models for estimating the
financial utility of personnel selection and used the concept of
„utility analysis‟. In 1966, Grojer and Johnson embrace both HRA
and UA, suggest the concept of human resource costing and
accounting (HRCA). Another method of human resource accounting
is human resource value accounting (HRVA).

26. 4. 360-Degree Feedback:
It is a technique which is systematic collection of
performance data on an individual group, derived from a
number of stakeholders like immediate supervisors, team
members, customers, peers and self. In fact anyone who has
useful information on how an employee does a job may be
one of the appraisers.
This technique is highly useful in terms of broader
perspective, greater self-development and multi-source
feedback is useful.
Advantages: 360-degree appraisals are useful to measure inter-
personal skills, customer satisfaction and team building
skills.
Disadvantages: Rceiving feedback from multiple sources can
be intimidating, threatening etc. Multiple raters may be less
adept at providing balanced and objective feedback.

27. 360-Degree Feedback
Individual Staff
Self-Assessment
Supervisor
Other Superiors
Peers
Teams
Sub-Ordinates
Teams
Customers
Other Superiors

28. 5. 720 Degree
Rick Gal breath became dissatisfied with 360 degree reviews. Gal
breath started using the 720 degree and defined it as a more intense,
personalized and above all greater review of the upper level
managers that brings in the perspective of their customers or
investors, as well as subordinates. 720 degree review focuses on
what matter most, which is the customer or investor perception of
their work.
720 degree approach gives people a very different view of
themselves as leaders and growing individuals. 360 degree appraisal
method is practiced twice. When the 360- Degree appraisal is done,
then the performance of the employee is evaluated and having a
good feedback mechanism, the boss sits down with the employee
again a second time and gives him feedback and tips on achieving
the set targets.

29. Career Planning
Career planning is an ongoing process through which
an individual sets career goals and identifies the
means to achieve them. The process by which
individuals plan their life’s work is referred to as career
planning.
"Career Planning is a deliberate process of becoming
aware of self, opportunities, constraints, choices, and
consequences; identifying career-related goals; and
"career pathing" or programming work, education, and
related developmental experiences to provide the
direction, timing, and sequence of steps to attain a
specific career goal." {McMahon and Merman: 1987)

30.  Career Planning seeks to meet the following objectives:
To provide and maintain appropriate manpower resources
in the organization by offering careers, not jobs.
 To provide environment for the effectiveness, efficiency
and growth of its employees and motivating them to
contribute effectively towards achieving the objectives of
the organization.
 To map out careers of various categories of employees
suitable to their ability, and their willingness to be 'trained
and developed for higher positions.
 To have a stable workforce by reducing absenteeism and
employee turnover.
 To cater to the immediate and future human resources
need of the organization on a timely basis.
 To increase the utilization of managerial reserves within
organization.

31. Step 1:
Self-Assessment The first and foremost step in career
planning is to know and assess yourself. You need to
collect information about yourself while deciding about
a particular career option. You must analyse your
interests, abilities, aptitudes, desired lifestyle, and
personal traits and then study the relationship between
the career opted for and self.
Step 2:
Goal Setting Set your goals according to your academic
qualification, work experience, priorities and
expectations in life. Once your goal is identified, then
you determine the feasible ways and objectives how to
realize it.

32. Step 3:
Academic/Career Options Narrow your general
occupational direction to a particular one by an
informatory decision making process. Analyse the
career option by keeping in mind your present
educational qualification and what more academic
degrees you need to acquire for it.
Step 4:
Plan of Action Recognize those industries and particular
companies where you want to get into. Make the plan a
detailed one so that you can determine for how many
years you are going to work in a company in order to
achieve maximum success, and then switch to another.
Decide where you would like to see yourself after five
years and in which position.

33. Step 5:
Catch Hold of Opportunities Opportunity comes
but once. So, whenever you get any opportunity to
prove yourself and get into your desired career, try
to convert it in every way for suiting your purpose.
Remember, a successful professional is also quite
opportunistic in his moves, examining every
opening to turn to his favour.

34. Most working people go through career
stages and it has been found that
individual’s needs and expectations change
as the individual moves through these
stages.
Exploration Stage: This is the stage where
an individual builds expectations about his
career. Some of them are realistic and some
are not. But the fact is that these could be a
result of the individual's ambitions.

35. Establishment Stage: This could be at the stage
where the individual gets his first job, gets accepted
by his peers, learns in this job, and also gains the
first tangible evidence of success or failure. In this
stage, the individual has made his or her career
choice and is concerned with achievement,
performance, and advancement. Opportunities for
job challenge and use of special competencies are
desired in this stage. The employee strives for
creativity and innovation through new job
assignments. Employees also need a certain degree
of autonomy in this stage so that they can
experience feelings of individual achievement and
personal success.

36.  Mid-Career Stage: The individual's
performance levels either continue to
improve, or levels, or even deteriorates.
 Late Career: This is regarded as a pleasant
phase, where one is allowed to relax and
play the role of an elderly statesman in the
organization.
 Decline: The stage, where the individual is
heading towards retirement.