Human

Resource
Management
Institute of Management Studies, KUK
Lecturer: Kamran Shinwari
EXTRA CLASSES
PERFORMANCE
APPRAISAL
 PERFORMANCE APPRAISAL

A method of evaluating the behaviour of employees in

the work spot, normally including both the quantitative
and qualitative aspects of job performance.
It is a process that involves determining and
communicating to an employee how he or she is
performing the job and ideally, establishing a plan of
improvement.

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Performance Appraisal Process
Establish
Performance
Standards

Communicate
with Standards

Measure Actual
Performance

Compare Actual
Performance
with standards
and discuss the
appraisal

Taking Corrective
Action 5
 Performance Appraisal Process
1. Establish Performance Standards 2. Communicate the Standards
Appraisal systems require Performance appraisal involves at
performance standards, which serve least two parties; the appraiser who
as benchmarks against which does the appraisal and the appraisee
performance is measured. whose performance is being
evaluated.
To be useful, standards should relate
to the desired results of each job. The appraiser should prepare job
The performance standards or goals description clearly.
must be developed after a thorough The appraise should be clear what
analysis of the job. he/she is doing and why.
Goals must be written down, just
talking about them is not enough.

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 Performance Appraisal Process
3. Measure actual performance a. Objective Criteria: Objective
This requires the use of dependable criteria include quality of
performance measures, the ratings production, degree of training
used to evaluate performance. needed and accidents in a given
period, absenteeism, length of
Four common sources of information service, etc.
which are generally used by managers
b. Subjective Criteria: Subjective
regarding how to measure actual
criteria include ratings by
performance are personal
superiors, overall goals, and
observation, statistical reports, oral
socio-cultural values of the
reports and written reports.
environment.
Performance measures may be
objective or subjective.

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 Performance Appraisal Process
4. Compare actual performance with 5. Taking Corrective Action, If
standards and discuss the appraisal necessary
Actual performance may be better than Corrective action is of two types: one
expected and sometimes it may go off the puts out the fires immediately, while
track. Whatever be the consequences,
there is a way to communicate and
the other destroys the root of the
discuss the final outcome. problem permanently.
The assessment of another person’s Immediate action sets the things right
contribution and ability is not an easy and get things back on track whereas
task. It has serious emotional overtones as the basic corrective action gets to the
it affects the self-esteem of the appraisee. source of deviations and seeks to
Any appraisal based on subjective criteria adjust the difference permanently.
is likely to be questioned by the appraisee Basic corrective steps seek to find out
and leave him/her quite dejected and how and why performance deviates.
unhappy when the appraisal turns out to
be negative.

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 Methods of
Performance
Appraisal
 Methods of Performance Appraisal

Individual Evaluation Multiple-Person

Other Methods
Methods Evaluation Methods
• 1. Confidential • 8. Ranking • 10. Group
Report • 9. Paired Appraisal
• 2. Essay Evaluation Comparison • 11. HRA
• 3. Critical Incidents • 12. Assessment
• 4. Checklists Centre
• 5. Graphic Rating • 13. Field Review
Scale
• 6. Forced Choice
Method
• 7. MBO
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 Individual Evaluation Methods

Under the individual evaluation methods of merit rating, employees are evaluated
one at a time without comparing them with other employees in the organisation.
1. Confidential Report
It is mostly used in government organisations. It is a descriptive report prepared,
generally at the end of every year, by the employee’s immediate superior.
The report highlights the strengths and weaknesses of the subordinate. It does not
provide any feedback to the appraisee. The appraisee is not very sure about why his
ratings have fallen despite his/her best efforts, why other are rated high when
compared to him, how to rectify his/her mistakes and on what basis he/she is going
to be evaluated next year.
In recent years, due to pressure from courts and trade unions, the details of a
negative confidential report are given to the appraisee.

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 Individual Evaluation Methods

2. Essay Evaluation
Under this method, the rater is asked to express the strong as well as weak points of
the employee’s behaviour. While preparing the essay on the employee, the rater
considers the following factors:
i. Job knowledge and potential of the employees
ii. Employee’s understanding of the company’s programs, policies, objectives etc.,
iii. The employee’s relations with co-workers and superiors
iv. The employee’s general planning, organising and controlling ability
v. The attitudes and perceptions of the employee, in general
Essay evaluation is a non-quantitative technique. This method is advantageous in at
least one sense, i.e., the essay provides a good deal of information about the
employee and also reveals more about the evaluator. Some limitations are:
• It is highly subjective; the supervisor may write a biased essay.
• Some evaluators may be poor in writing essays on employee performance.
• A busy appraiser may write the essay hurriedly without properly assessing the
actual performance of the worker.
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 Individual Evaluation Methods

3. Critical Incident Methods

Under this method, the manager prepares lists of statements of every effective and
ineffective behaviour of an employee. These critical incidents or events represent the
outstanding or poor behaviour of employees on the job.
The manager keep logs of such incidents and at the end of the rating period, these
recorded critical incidents are used in the evaluation of the workers’ performance.
Example:
July 20 – The sales clerk patiently attended to the customer’s complaint. He is polite,
prompt, enthusiastic in solving the customer’s problem. (Positive Incident)
July 25 – The assistant stayed 45 minutes over on his break during the busiest part of
the day. He failed to answer the store manager’s call thrice. He is lazy, negligent,
stubborn and uninterested in work. (Negative Incident)
Limitations:
• Negative incidents may be more noticeable than positive incidents.
• It results in a very close supervision which may not be liked by everyone.
• Recording of incidents take a lot of time, and managers may be too busy.
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 Individual Evaluation Methods

4. Checklists and weighted checklists

A checklist represents, in its simplest form, a set of objectives or descriptive
statements about the employee and his behaviour. If the rater believes strongly that
the employee possesses a particular listed trait, he checks the item; otherwise, he
leaves the item blank.
A more recent variation of the checklist method is the weighted list. Under this, the
value of each question may be weighted equally or certain questions may be
weighted more heavily than others. Some examples are as:
• Is the employee really interested in the task assigned? Yes/No
• Is he respected by his colleagues (co-workers) Yes/No
• Does he follow the instructions properly? Yes/No
• Does he make mistakes frequently? Yes/No
Limitations:
• The rater may assign biased weights to the questions.
• This method is expensive and time consuming.

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 Individual Evaluation Methods

5. Graphic Rating Scale

Under this method, a printed form, as shown below, is used to evaluate the
performance of an employee. A variety of traits may be used in these types of rating
devices, the most common being the quantity of work.
One positive point of this method is that it is easy to understand, easy to use and
permits a statistical tabulation of scores of employees.
When ratings are objective in nature, they can be effectively used as evaluators.

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 Individual Evaluation Methods

6. Forced choice method

This method was developed to eliminate bias and the preponderance of high ratings
that might occur in some organisations.
The primary purpose of the forced choice method is to correct the tendency of a
rater to give consistently high or low ratings to all the employees. This method makes
use of several sets of pair phrases, two of which may be positive and two negative
and the rater is asked to indicate which of the four phrases is the most and least
descriptive of a particular worker.
Example:

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 Individual Evaluation Methods

The favourable qualities earn a plus credit and the unfavourable ones earn the
reverse.
Limitations:
• In the preparation of sets of phrases trained technicians are needed and as such
the method becomes very expensive.
• Managers may feel frustrated rating the employees in the dark.
• The results of the forced choice method may not be useful for training employees
because the rater himself does not know how he is evaluating the worker.

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 Individual Evaluation Methods
7. Management By Objectives (MBO)
This technique emphasises participatively set goals (agreed upon by the superior and the
employee) that are tangible, verifiable and measurable. MBO focuses attention on what
must be accomplished (goals) rather than how it is to be accomplished.

6, Provide
feedback
5,
Performance
4, Define reviews
expected
3, Discuss results
departmental
2, Set goals
departmental
1, Set the goals
organizational
goals

MBO demands a great deal of time to set verifiable goals at all levels of an organisation. In
the race to define everything rigidly, some of the qualitative aspects might be ignored (such
as employee attitudes, job satisfaction etc).

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 Multiple-person Evaluation Methods
The above discussed methods are used to evaluate employees one at a time. In this section
some techniques of evaluating one employee in comparison to another.
8. Ranking Method
Under this method, the ranking of an employee in a work group is done against that of
another employee. The relative position of each employee is expressed in terms of his
numerical rank.
It may also be done by ranking a person on his job performance against another member of
the competitive group. Though it is relatively easier to rank the best and the worst employees,
it very difficult to rank the average employees.
Limitations:
• In practice, it is very difficult to compare individuals possessing varied behavioural traits.
• Evaluating large number of employees, becomes a vexing issue.
• There is no systematic procedure for ranking individuals in the organisation. The ranking
system does not eliminate the possibility of snap judgement.
In order to overcome the above limitations, a paired comparison technique has been
advanced by organisational scholars.

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 Multiple-person Evaluation Methods
9. Paired Comparison Method
Under this method, each worker is compared with all other employees in the group, for every
trait, the worker is compared with all other employees.
For instance, when there are five employees to be compared, then A’s performance is
compared with that of B’s and decision is arrived at as to whose is better or worse. Next B is
also compared with all others. Since A is already compared with B, this time B is to be
compared with only C, D and E. By this method, when there are five employees, fifteen
decisions are made (comparisons).
The number of decisions to be made can be determined with help of the formulae n(n-2).
Limitation: Though this method seems to be logical, it not applicable when a group is large,
because the number of comparisons to be made may become frighteningly excessive. For
instance, when n=100, comparisons to be made are 100(100-2) = 100(98) = 9800.

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 Other Methods
10. Group Appraisal
In this method, an employee is appraised by a group of appraisers. This group consists of the
immediate supervisor of the employee, other supervisors who have close contact with the
employee’s work, manager or head of the department and consultants.
This group uses any one of multiple techniques discussed earlier. The immediate supervisor
enlightens other members about the job characteristics, demands, standards of performance
etc.
Then the group appraises the performance of the employee, compares the actual
performance with standards, finds out the deviations, discusses the reasons therefor, suggests
ways for improvement of performance, prepares an action plan, studies the need for change
in the job analysis and standards and recommends changes, if necessary.

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 Other Methods
11. Human Resource Accounting
HRA is a sophisticated way to measure (in financial terms) the effectiveness of personnel
management activities and the use of people in an organisation. It is the process of
accounting for people as an assets and not as expenses.
The HRA process shows the investment the organisation makes in its people and how the
value of these people changes over time. When qualified, competent people leave an
organisation, the value of human assets goes down.
Human resource costs include expenditure incurred by the company in hiring, training,
compensating and developing people. The contributions of human resources is the money
value of labour productivity. Employee performance can be taken as positive when
contribution is more than the cost and performance can be viewed as negative if cost of
employee contribution over the cost of employee. Similarly negative performance can be
calculated in terms of percentage of deficit in employee contribution compared to the cost of
employee. These percentages can be ranked to ‘zero level’ as shown.

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 Other Methods
12. Assessment Centre
This method of appraising was first applied in Germany army in 1930. Later business and
industrial houses started using this method. These techniques include the methods discussed
before in addition to in-basket, role playing, case studies, simulation exercises, structured in
sight, transactional analysis, etc.
In this approach, individuals from various departments are brought together to spend two or
three days working on individual or group assignments similar to the ones they would be
handling when promoted.
Observers rank the performance of each and every participant in order of merit. All assesees
get an equal opportunity to show their talents and intimately and are trained to perform the
evaluation process in an objective manner, the performance ratings may find favour with a
majority of the employees.
The centre enables individuals working in low status departments to compete with people
from well-known departments and enlarge their promotion chances. Such opportunities,
when created on a regular basis, will go a long way in improving the morale of promising
candidates working in ‘less important’ positions.

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 Other Methods
13. Field Review Method
Where subjective performance measures are used, there is scope for rater’s biases influencing
the evaluation process. To avoid this, some employees use the field review method. In this
method, a trained, skilled representative of the HR department goes into the ‘field’ and assists
line supervisors with their ratings of their respective subordinates.
The HR specialist requests from the immediate supervisor specific information about the
employees performance. Based on this information, the expert prepares a report which is
sent to the supervisor for review, changes, approval and discussion with employee who is
being rated. The ratings are done on standardised forms.

Limitation: Since an expert is handling the appraisal process, in consultation with the
supervisor, the ratings are more reliable. However, the use of HR experts makes this approach
costly and impractical for many organisations.

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360-Degree Feedback System

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 360 Degree Feedback System
360-degree feedback, also called multi-rater or
multisource feedback or 360 review, is an employee
evaluation method that garners input from various
sources about performance and areas of
improvement.
It comprises ratings and feedback from internal
stakeholders who have a close working relationship
with the employee, namely peers, direct reports, and
supervisors. Another source of feedback is self-
assessment.
While the 360-degree feedback system has been used
mostly for leaders and managers, it’s becoming
increasingly popular for all employee groups as
companies move away from traditional top-down,
single-source feedback and performance
management. It’s emerging as a valuable employee
development tool because it offers a holistic
perspective on strengths and improvement areas.

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360-Degree Feedback Sources
What Should Be Included In 360-Degree Feedback System

Organizations need to tailor their 360-degree feedback questionnaire to their

assessment needs and values. Questionnaires typically cover the following
categories:
• Communication skills
• Interpersonal/soft skills
• Collaboration and teamwork
• Leadership and management capabilities
• Innovation and creative abilities
• Business goals/desired culture being lived out
Jonathan Westover, OD/HR/Leadership consultant from Human Capital
Innovations, emphasizes: “It is important to ensure that feedback is focused on
behaviors and actions, rather than personal characteristics or traits. This can
help ensure that feedback is objective and focused on areas that the employee
can actually improve upon.”
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 360-Degree Feedback Questionnaire

You must pose the right questions in order to extract high-quality feedback. Here
are some instructions for constructing a 360-degree feedback questionnaire:
• Select the competencies per function that add the most to superior
performance: Each role has critical competencies that are needed for
outstanding performance. Focus on competencies that contribute the most to
the organization’s strategy and goals. Note: Don’t choose more than four
competencies, or it will be overwhelming for employees.
• Define 3-4 behaviors per competency: Define the behaviors, or dimensions, for
each competency. These are the questions that the raters will give feedback
on. (See the examples below.)
• End with open feedback: At the conclusion of the survey, include open-ended
questions about the competencies that the ratee can develop.

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 360-Degree Feedback Examples
• Self-awareness
Controls emotions, even in high-pressure situations.
Demonstrates an awareness of how their actions and decisions affect others.
Treats mistakes and setbacks as learning opportunities.
Actively seeks feedback from others on their performance.
What suggestions do you have to help them improve their self-awareness?
• Drive for results
Sets challenging goals for themself.
Helps others achieve their objectives.
Prioritizes work based on the needs of the organization and its customers.
Achieves objectives even when faced with obstacles and challenges.
What suggestions do you have to help them improve their drive for results?
Trakstar and Qualtrics are some sample softwares which can be used for 360-degree
feedback system.
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