PERFORMANCE MANAGEMENT

VS
PERFORMANCE APPRAISAL
Presented By
Alen Mathew George
PERFORMANCE MANAGEMENT
 DEFINITION
“It is a continuous process of identifying, measuring and developing
the performance of individuals and teams and aligning performance
with the strategic goals of the organization”.
PM contains two major components:
1. It’s a continuous process
2. Alignment with strategic goals
Performance management focuses on the performance of an
organization, a department, employee, or even the processes to build a
product or service or any other areas in an organization.
An iterative process of goal-setting, communication, observation and
evaluation to support, retain and develop exceptional employees for
organizational success.
PROCESS
Prerequisites:
Two important prerequisites before PM system are:
1. Knowledge of the org’s mission & strategic goals
2. Knowledge of the job in question (this is done through job analysis)
Performance Planning
Employees should have a through knowledge of the PM System.
Planning discussion includes :
1. Results
2. Behaviours
3. Developmental issues
Performance Execution:
At the execution stage, following factors must be considered:
1. Commitment to goal achievement
2. Ongoing performance feedback & coaching
3. Communication
4. Collecting & sharing performance data
5. Preparing for performance reviews
Performance Assessment:
It is important for employee as well as the managers to take ownership
of assessment process.
It helps the org to use the information obtained in a productive manner
for the future requirements.
Inclusion of self appraisal is also beneficial in all manner.
Performance Review:
Review stage involves meeting between employees & the manager.
This meeting is called Appraisal Meeting.
Review meeting helps employee and manager to design developmental
plans
Renewal and Contracting:
Its identical to planning stage.
Manager uses the insights & information gained from other phases to
reset performance goals for employees
 TECHNIQUES
A holistic analysis of performance:
The proponents of this approach believe that performance management
is all about analyzing performance instead of assessing it. This
technique aims at reaching an agreement for future action or
development after carefully analyzing the strengths or possible
weaknesses.
Narrative Assessment:
This is in the form of a written summary of views about different levels
of performance achieved and is normally prepared by the managers.
This technique lacks consistency in the criterion used for assessments as
different managers will consider different aspects of performance.
Ratings:
Many organizations like ICICI Bank and GE use ratings for assessing
the performance of their employees for making pay related decisions.
Through this method the quality of performance or the competence level
achieved by an employee in a particular skill can be assessed by
evaluating it on a scale against certain parameters which may be
qualitative (behavioral) or quantitative. Regular trainings and peer
reviews may help in promoting consistency in the ratings.
Forced Distribution:
In this method, the manager is forced to offer his ratings according to
the pattern of a normal curve. This technique rests on the basic
assumption that the employees’ performance levels fall under a normal
statistical distribution.
Forced Ranking:
In this method the employees are assigned ranking on the basis of
categories. Since the concept of performance is vague so the rankings
should be accompanied by meaningful performance data.
Quota Systems:
Quota system specifies the distribution of ratings and accordingly
adjusts the ratings of managers after an event for ensuring that the quota
in each level is met.
 PERFORMANCE APPRAISAL
Performance appraisal can be described as a systematic evaluation of
performances of several employees so that they can understand all
abilities of a person and their development and growth.
Performance appraisal is also done in a very systematic manner which
includes measuring the pay of employees and comparing it with all
plans and targets.
 METHODS
I. TRADITIONAL METHODS
II. MODERN METHODS
 TRADITIONAL METHODS
1. Ranking Method
2. Paired Comparison
3. Grading Method
4. Forced Distribution Method
5. Forced-Choice Method
6. Check-List Method
7. Critical Incidents Method
8. Graphic Rating Scale Method
9. Essay Method
10. Field Review Method
11. Confidential Report
1. Ranking Method: It is the oldest and simplest formal systematic
method of performance appraisal in which employee is compared
with all others for the purpose of placing order of worth. The
employees are ranked from the highest to the lowest or from the best
to the worst.
2. Paired Comparison: In this method, each employee is compared
with other employees on one- on one basis only. The rater is
provided with a bunch of slips each coining pair of names, the rater
puts a tick mark against the employee whom he insiders the better of
the two.
3. Grading Method: In this method, certain categories of worth are
established in advance and carefully defined. There can be three
categories established for employees: outstanding, satisfactory and
unsatisfactory. The employee is, then, allocated to the grade that best
describes his or her performance.
4. Forced Distribution Method: This method assumes that employees
performance level confirms to a normal statistical distribution i.e.,
10,20,40,20 and 10 per cent. This is useful for rating a large number of
employees’ job performance and promo ability. It tends to eliminate or
reduce bias.
5. Forced-Choice Method: Under this method, the rater is forced to
answer the ready-made statements as given in the blocks of two or
more, about the employees in terms of true or false. Once he is done
with the list, it is forwarded to the HR department for the final
assessment of the employee.
6. Check-List Method: The basic purpose of utilizing check-list
method is to ease the evaluation burden upon the rater. In this method, a
series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are
prepared by the HR department. The check-list is, then, presented to the
rater to tick appropriate answers relevant to the appraise. Each question
carries a weight-age in relationship to their importance.
7. Critical Incidents Method: The critical incident method requires the
rater to record statements that describe extremely good or bad behavior
related to job performance. The statements are called critical incidents
and are usually recorded by the supervisor during the evaluation period
for each subordinate. Recorded incidents include a brief explanation of
what happened.
8. Graphic Rating Scale Method: The graphic rating scale is one of
the most popular and simplest techniques for appraising performance. It
is also known as linear rating scale. In this method, the printed appraisal
form is used to appraise each employee.
9. Essay Method: Essay method is the simplest one among various
appraisal methods available. In this method, the rater writes a narrative
description on an employee’s strengths, weaknesses, past performance,
potential and suggestions for improvement. Its positive point is that it is
simple in use. It does not require complex formats and
extensive/specific training to complete it.
10. 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.
11. Confidential Report: It is the traditional way of appraising
employees mainly in the Government Departments. Evaluation is made
by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on
employee’s strength weakness, intelligence, attitude, character,
attendance, discipline, etc.
 MODERN METHODS
1. Management by Objectives (MBO)
2. Behaviourally Anchored Rating Scales (BARS)
3. Assessment Centers
4. 360 – Degree Appraisal
5. Human Resource Accounting
1. Management by Objectives (MBO): The concept of MBO
can be described as a “process whereby the superior and
subordinate managers of an organization jointly identify its
common goals, define each individual’s major areas of
responsibility in terms of results expected of him, and use
these measures as guides for operating the unit and
assessing the contribution of each its members”.
2. Behaviourally Anchored Rating Scales (BARS):
Behaviourally Anchored Rating Scales (BARS) are
designed to bring the benefits of both qualitative and
quantitative data to the employee appraisal process. BARS
compare an individual’s performance against specific
examples of behaviour that are anchored to numerical
ratings.
3. Assessment Centers: An assessment center is a central
location where the managers may come together to participate
in job related exercises evaluated by trained observers. The
principle idea is to evaluate managers over a period of time, by
observing and later evaluating their behaviour.
4. 360 – Degree Appraisal: In 360-degree appraisal system, an
employee is appraised by his supervisor, subordinates, peers,
and customers with whom he interacts in the course of his job
performance. All these appraisers provide information or
feedback on an employee by completing survey questionnaires
designed for this purpose.
5. Human Resource Accounting: Human resource method
attaches money values to the value of a firms internal human
resources and its external customer good will. Under this
method, performance is judged in terms of costs and
contributions of employees. Difference between the cost and
contribution will reflect the performance of the employees
 POTENTIAL APPRAISAL
The potential appraisal refers to the appraisal i.e. The potential
appraisal refers to the appraisal i.e. identification of the hidden talents
and skills of a person. 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.
Many organizations use PA as a part of the performance appraisal
processes.
 “Potential appraisal is a process of determining an employee’ s
strengths and weaknesses with a view to use this as a predictor of
his future performance.”

Need For Appraisal