Chapter 12, Performance Management Concept and Process Performance Appraisal, Potential Appraisal

Performance appraisal
THE APPRAISAL PROCESS
1.
2.
3.
4.
5.
6.
7.
8.
Identify The goals of the organization

Identify the criteria for performance appraisal
Decide about the frequency of the appraisals
Decision about who will be the performance
appraiser
Choosing the most appropriate methods of
Performance appraisal.
Communicating appraisals to the employees
Post appraisal interview with the employees, and
Evaluation of the appraisal process.
Challenges of PA
Integrating evaluation into corporate objectives
Developing and implementing goal setting
startegies for employees
Designing appraisal system that also measures
employees potential
Assessing the methods and managing styles of
employees
Making appraisal objective by including multiple
point of views.
Creatinf a mechanism for feedback on evaluation
Devising a system for assessing and

rewarding performance.
Rewarding superior performance of
individuals.
Ensuring internal and external equity
in compensation.
motivating through monetary and
non monetary rewards.
Top CEOS pay is linked to

performance
Middle mangers are underpaid
Junior managers :
short term : want to earn as much as
possible
long term: want to learn as much as
possible .
OBJECTIVES OF PA
Set mutually accepted goals linked to
corporate objectives
Departmental level
Managerial level
Individual level
Appraisal
Performance
Training and coaching / career development

Forces of change
Feedback
Evaluation
PAY REVIEW : FACTORS OF

INFLUENCE
REWARDS
PROMOTION
1. Performance Appraisal
Performance appraisals areemployedto determine
whoneedswhattraining, and who will be promoted,
demoted, retained, or fired in the next session. It is a
processby which amanagerorconsultant
Aims at examining and evaluating the employee's
performance at the work and his consequent
behaviorby comparing it with preset standards,
Documentstheresultsof the comparison, and
Usesthe results toprovidefeedbackto the employee
to show whereimprovementsare needed and why.
METHODS OF PERFORMANCE
APPRAISAL
Traditional Methods
Modern Methods
1. ASSESSMENT CENTRES
Intellectual
Planning
Career
Motivation
Interpersonal
Orientation
And
Capability
Organizing
Skills
Capabilities
2.BEHAVIORALLY ANCHORED
RATING SCALES (BARS)
Exhibit 1: An Example Of Behaviorally Anchored Rating Scale (BARS)
Extremely good
7
Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all
over the country.
Good
6
Can expect to initiate creative ideas for improved sales.
Above average
5
Can expect to keep in touch with the customers throughout the year.
Average
4
Can manage, with difficulty, to deliver the goods in time.
Below average
3
Can expect to unload the trucks when asked by the supervisor.
Poor
2
Can expect to inform only a part of the customers.
Extremely poor
1
Can expect to take extended coffee breaks and roam around purposelessly.

3.HUMAN RESOURCE ACCOUNTING METHOD (HRA)
Human Resource Accountingis a method

to measure the effectiveness of personnel
management activities and the use of
people in an organization.
HRA is the process of Assigning, budgeting,
reporting the cost of human resources
incurred in an organization,
including wages and salaries and training
expenses.
HRA: Cost of Human

Resources
4.MANAGEMENT BY
OBJECTIVES(MBO): PETER DRUCKER
5.CUSTOMER FEEDBACK
METHOD
Customer feedback is directly linked with

employee performance. This method of
assessment could be unbiased and reliable since
customers who are outsiders may give correct
judgment about employee performance than the
insiders who are superiors.
Companies like Cognizant and Wipro software
solutions are using customer feedback method to
assess the performance of their sales staff in
order to hike salaries.
6.THE 360 EVALUATION FEEDBACK METHOD: (Google )
TRADITIONAL METHODS
1. ESSAY APPRAISAL METHOD
Job knowledge and potential of the

employee;
Employees understanding of the companys
programmes, policies, objectives, etc.;
The employees relations with co-workers
and superiors;
The employees general planning,
organizing and controlling ability;
The attitudes and perceptions of the
employee, in general.
2.RANKING METHOD
The manager compares an employee
to other similar employees, rather
than to a standard measurement.
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

This technique of performance appraisal was
developed byFlanagan and Burns.
The manager prepares lists of statements of
very effective and ineffective behavior of an
employee.
These critical incidents or events represent the
outstanding or poor behavior of employees on
the job.
The manager maintains logs on each
employee, whereby he periodically records
critical incidents of the workers behavior.
This method suffers however from the following limitations:
Negative incidents may be more noticeable

than positive incidents.
The supervisors have a tendency to unload a
series of complaints about incidents during
an annual performance review session.
It results in very close supervision which
may not be liked by the employee.
The recording of incidents may be a chore
for the manager concerned, who may be too
busy or forget to do it.
5.CONFIDENTIAL REPORT
SYSTEM
Character and conduct of an employee

Absenteeism of an employee
Knowledge of an employee
His nature and quality of work
Punctuality of employee
Unauthorized absenteeism or leave without permission
Behavior of an employee with colleagues, superiors
and with public
Ability of supervision and controlling
His/her integrity and honesty
If any complaints against employee
6. CHECKLIST METHOD
Is the employee really interested in the task assigned?
Yes/No
Is he respected by his colleagues (co-workers)
Yes/No
Does he give respect to his superiors?
Yes/No
Does he follow instructions properly?
Yes/No
Does he make mistakes frequently?
Yes/No
7.FORCED DISTRIBUTION
POTENTIAL APPRAISAL
Identification of the hidden talents and

skills of a person.
The person might or might not be aware
of them.
Potential appraisal is a future oriented
appraisal whose main objective is to
identify and evaluate the potential of the
employees to assume higher positions and
responsibilities in the organizational
hierarchy.
Techniques of potential
appraisal
Self appraisals,
Peer appraisals
Superior appraisals
Management by objectives
Psychological and psychometric tests
Management games like role playing
Leadership exercises etc
Potential appraisal can serve

the following purposes
To advise employees about their overall
career development and future
prospects
Help the organization to chalk out
succession plans
Motivate the employees to further
develop their skills and competencies.
To identify the training needs.
Philips model of potential appraisal:

measures performance( y axis ) and
potential ( x axis ) on the matrix , low and
high
Problem children
Techniques of potential appraisal:
Self appraisals,
Peer appraisals
Superior appraisals
Management by objectives
Psychological and psychometric tests
Management games like role playing
Leadership exercises etc.

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Performance appraisal

THE APPRAISAL PROCESS

Identify The goals of the organization

Devising a system for assessing and

Top CEOS pay is linked to

Training and coaching / career development

PAY REVIEW : FACTORS OF

3.HUMAN RESOURCE ACCOUNTING METHOD (HRA)

Human Resource Accountingis a method

HRA: Cost of Human

Customer feedback is directly linked with

6.THE 360 EVALUATION FEEDBACK METHOD: (Google )

Job knowledge and potential of the

A better technique of comparison than

4.CRITICAL INCIDENTS METHODS

This method suffers however from the following limitations:

Negative incidents may be more noticeable

Character and conduct of an employee

Identification of the hidden talents and

Potential appraisal can serve

Philips model of potential appraisal:

Techniques of potential appraisal:

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