Chapter Three: The Development of HR

 This chapter includes three basic concepts

such as
– Training
– Development
– Performance Management
3.1 Training

 In a fast paced world, continuous learning is

essential to success. Individuals need to learn
to succeed in life and at work. This is because
Skills and knowledge can easily become
obsolete as machines and technology
 Companies need to ensure their employees
continue to learn, so they can keep up with
increased job demands, and so the company
can gain or maintain competitive advantage
Difference Between Training and Dev’t

 Training and Development are usually used

interchangeably, but they are different in that:
 Training is a systematic process of changing the
behavior, skill and motivation of employee that will
improve in their current jobs. It is used for non-
managerial positions. It is also short-term activity.
 Development is a broad, ongoing multi-faceted set of
activities to bring someone up to another threshold of
performance, often to perform some job or new role in
the future i.e. it is the process of preparing an
employee for future job responsibility. It is used for
managerial positions .It is also long term activity.
Reasons for Training and Development

 Training and development can be initiated for a variety

of reasons for an employee or group of employees:
– When a performance appraisal indicates performance
improvement is needed
– To "benchmark" the status of improvement so far in a
performance improvement effort
– As part of an overall professional development program
– As part of succession planning to help an employee be eligible
for a planned change in role in the organization
– To "pilot", or test, the operation of a new performance
management system
– To increase productivity and job satisfaction
Types of Training Inputs
 There are three types of training inputs:
– Skill: the ability to do something well; expertise.
– mechanical, administration, communication,
computer, customer handling,
– Attitude: a settled way of thinking or feeling about
something.
– change perception, motivation, behavior, ethics,
– Knowledge: facts, information, and skills acquired through
experience or education; the theoretical or practical understanding of a
subject
– specific or general knowledge
Approach in training and Develpment
 Traditional Approach : Most of the organizations
before never used to believe in training. They were
holding the traditional view that managers are born and
not made. There were also some views that training is a
very costly affair and not worth. Organizations used to
believe more in executive pinching. But now the
scenario seems to be changing.
 The modern approach of training and development
is that Organizations have realized the importance of
corporate training. Training is now considered as
more of retention tool than a cost. The training
system in Industry has been changed to create a
smarter workforce and yield the best results
Steps in Training Process

 There are five steps followed in Training

Process:
A. Determining the training need and objective
B. Developing training program
C. Selection of trainee and trainer
D. Implementation of the training program
E. Evaluation the training program
Step 1: Determining the training need
and objective

 Training is expensive. Unless there is a need, impossible

to design training program. Every organization should
conduct Training Need Analysis.
 An analysis of training need is an essential requirement
to the design of effective training. The purpose of
training need analysis is to determine whether there
is a gap between what is required for effective
performance and present level of performance
 Training need analysis is conducted to determine
whether resources required are available or not. It helps
to plan the budget of the company, areas where training
is required, and also highlights the occasions where
training might not be appropriate but requires alternate
action
Training Need Assessment/Analysis/

Training Need arises at three levels:

 Three types of Training Need
 Organizational Level: Training need analysis at organizational level focuses on strategic
planning, business need, and goals. It starts with the assessment of internal environment
of the organization such as, procedures, structures, policies, strengths, and weaknesses
and external environment such as opportunities and threats. After doing the SWOT
analysis, weaknesses can be dealt with the training interventions, while strengths can
further be strengthened with continued training. Threats can be reduced by identifying the
areas where training is required. And, opportunities can be exploited by balancing it
against
 Individual Level: Training need analysis at individual level focuses on each and every
individual in the organization. At this level, the organization checks whether an employee
is performing at desired level or the performance is below expectation. If the difference
between the expected performance and actual performance comes out to be positive, then
certainly there is a need of training.
 Operational Level: Training Need analysis at operational level focuses on the work that is
being assigned to the employees. The job analyst gathers the information on whether the
job is clearly understood by an employee or not. He/she gathers this information through
technical interview, observation, psychological test; questionnaires asking the closed
ended as well as open ended questions, etc. Today, jobs are dynamic and keep changing
over the time. Employees need to prepare for these changes.
Training Objective
 The principal objective of training and development
division is to make sure the availability of a skilled and
willing workforce to an organization. In addition to that,
there are four other objectives:
– Individual Objectives; help employees in achieving their
personal goals, which in turn, enhances the individual
contribution to an organization.
– Organizational Objectives: assist the organization with its
primary objective by bringing individual effectiveness.
– Functional Objectives: maintain the department’s contribution
at a level suitable to the organization’s needs.
– Societal Objectives: ensure that an organization is ethically
and socially responsible to the needs and challenges of the
society
Step 2: Develop Training Program
 The design of the training program can be undertaken only
when a clear training objective has been produced. The training
objective clears what goal has to be achieved by the end of training
program i.e. what the trainees are expected to be able to do at the
end of their training.
 Training objectives assist trainers to design the
training program.
 Training Program outlines
– training packages such as who, what, how much time,
available budget, when and what training tasks must be
performed.
– training instruments such as facilities, venue, aids and
methodology.
Step 3: Selection of Trainer and Trainee

 The trainer must be those who are capable and

qualified. Before starting a training program, a trainer
analyzes his/her technical, interpersonal, judgmental
skills in order to deliver quality content to trainers.
 The trainees should be selected based on the
training need assessment. A good training design
requires close scrutiny of the trainees and their
profiles. Age, experience, needs and expectations of
the trainees are some of the important factors that
affect training design.
Step 4-Implementation of the Training Program

 Once the training program is designed, trainees and

trainers are selected, the next step is putting the training
program in to practice/action/.
 Training implementation is the hardest part of the system
because one wrong step can lead to the failure of whole
training program. Even the best training program will fail
due to one wrong action. Training implementation can be
segregated into: Practical administrative
arrangements and Carrying out of the training
 We have different methods. There is no one best method
and one is not superior to the other. It depends on cost,
availability of facilities, willingness and availability of
trainers and trainees.
 Cont’d
 following are the factors that are kept in mind while
implementing training program:
– The trainer need to be prepared mentally before the delivery of
content. Trainer prepares materials and activities well in advance.
The trainer also set grounds before meeting with participants by
making sure that he/she is comfortable with course content and is
flexible in his/her approach.
– Good physical set up is pre requisite for effective and successful
training program because it makes the first impression on
participants. Classrooms should not be very small or big but as
nearly square as possible. This will bring people together both
physically and psychologically. Also, right amount of space should
be allocated to every participant.
– Establishing rapport with participants
– Reviewing the Agenda/Objective of the training
Methods of Training

 There are various methods of training, which can be

divided in to cognitive and behavioral methods.
Trainers need to understand the pros and cons of each
method, also its impact on trainees keeping their
background and skills in mind before giving training.
 Cognitive methods are more of giving theoretical
training to the trainees. The various methods under
Cognitive approach provide the rules for how to do
something, written or verbal information, demonstrate
relationships among concepts, etc. These methods are
associated with changes in knowledge and attitude by
stimulating learning.
Cognitive Methods
 The various methods that come under Cognitive
approach are :
A. Lecture: It is one of the oldest methods of training. This
method is used to create understanding of a topic or to
influence behavior, attitudes through lecture. A lecture can be
in printed or oral form. Lecture is telling someone about
something. Lecture is given to enhance the knowledge of
listener or to give him the theoretical aspect of a topic.
Training is basically incomplete without lecture. When the
trainer begins the training session by telling the aim, goal,
agenda, processes, or methods that will be used in training
that means the trainer is using the lecture method. It is
difficult to imagine training without lecture format. There are
some variations in Lecture method. The variation here means
that some forms of lectures are interactive while some are
not.
Cognitive Methods

B. Discussion: This method uses a lecturer to provide the

learners with context that is supported, elaborated, explains,
or expanded on through interactions both among the trainees
and between the trainer and the trainees. The interaction and
the communication between these two make it much more
effective and powerful than the lecture method. If the
Discussion method is used with proper sequence i.e.
lectures, followed by discussion and questioning, can achieve
higher level knowledge objectives, such as problem solving
and principle learning. The Discussion method consists a two-
way flow of communication i.e. knowledge in the form of
lecture is communicated to trainees, and then understanding
is conveyed back by trainees to trainer.
Cognitive Methods

C. Demonstration: is a visual display of how something

works or how to do something. As an example, trainer
shows the trainees how to perform or how to do the
tasks of the job. In order to be more effective,
demonstration method should be accompanied by the
discussion or lecture method. To carry out an effective
demonstration, a trainer first prepares the lesson plan
by breaking the task to be performed into smaller
modules, easily learned parts. Then, the trainer
sequentially organizes those modules and prepares an
explanation for why that part is required. While
performing the demonstration, trainer:
D. Computer Based Learning: trainer provides training to
trainees the theoretical knowledge of the subject
Behavioral Methods

 Behavioral methods are more of giving practical

training to the trainees. The various methods under
Behavioral approach allow the trainee to behavior in a
real fashion. These methods are best used for skill
development.
 It Includes
– Simulation,
– Case Studies,
– Vestibule Training,
– Role Plays,
– sensitivity Training
Behavioral Method

A. Simulation :A simulator is any kind of equipment or technique that

duplicates as nearly as possible the actual conditions encountered
on the job. Simulation then, is an attempt to create a realistic
decision-making environment for the trainee. Simulations present
likely problem situation and alternatives to the trainee. For
example, activities of an organization may be simulated and the
trainee may be asked to make a decision in support to those
activities. The results of those decisions are reported back to the
trainee with an explanation of what would have happened had they
actually made in the workplace. The trainee learns from this
feedback and improves his/her subsequent simulation and
workplace decisions. The more widely held simulation exercises
are case study, role playing and vestibu1 training.
Behavioral Method

B. Case Study: is a written description of an actual situation in

business which provokes, in the reader, the need to decide what is
going on, what the situation really is or what the problems are, and
what can and should be done. Taken from the actual
experiences of organizations, these cases represent to
describe, as accurately as possible, real problems that
managers have faced. Trainee studies the cases to determine
problems, analyses causes, develop alternative solutions, select
the best one, and implement it. Case study can provide stimulating
discussions among participants as well as excellent opportunities
for individuals to defend their analytical and judgment abilities. It
appears to be an ideal method to promote decision- making
abilities within the constraints of limited data.
Behavioral Method

C. Role playing: generally focuses on emotional (mainly

human relations) issues rather than actual ones. The
essence of role playing is to create a realistic situation,
as in case study, and then have the trainee assume the
parts of specific personalities in the situation. For
example, a male worker may assume the role of a
female supervisor, and the supervisor may assume the
role of a male worker. Then, both may be given a typical
work situation and asked to respond as they expect
others to do. The consequences are a better
understanding among individuals. Role playing helps
promote interpersonal relation. Attitude change is
another result of role playing.
Behavioral Method

D. Vestibule Training: utilizes equipment which closely resembles the

actual ones used on the job. However, training takes place away
from the work environment. A special area or a room is set aside
from the main production area and is equipped with furnishings
similar to those found in the actual production area. The trainee is
then permitted to learn under simulated conditions, without
disrupting ongoing operations. A primary advantage of vestibule
training it relieves the employee from the pressure of having to
produce while learning. The emphasis is on learning skills required
by the job. The advantage of simulation is the opportunity to
'create an environment' similar to real situations the manager
incurs. The disadvantage is (i) it is difficult to duplicate the
pressures and realities of actual decision-making non the job and
(ii) individuals often act differently in real-life situations than they do
in acting out a simulated exercise.
Behavioral Method

E. Sensitivity Training: Sensitivity training uses

small numbers of trainees, usually fewer than
12 in a Group. They meet with a passive trainer
and gain insight into their own and others'
behavior. Meeting have no agenda, are held
away from workplaces, and questions deal with
the 'here and now' of the group process.
E. Training Evaluation

 It checks whether training has had the desired

effect. Training evaluation ensures that whether
candidates are able to implement their learning
in their respective workplaces, or to the regular
work routines.
 Training evaluation will be made at the
beginning, during or after the training.
 Most valid training includes reaction, learning,
behavioral change and tangible results.
Purpose of Training Evaluation

 The five main purposes of training evaluation are:

– Feedback: It helps in giving feedback to the candidates by
defining the objectives and linking it to learning outcomes.
– Research: It helps in ascertaining the relationship between
acquired knowledge, transfer of knowledge at the work place,
and training.
– Control: It helps in controlling the training program because if
the training is not effective, then it can be dealt with accordingly.
– Power games: At times, the top management (higher
authoritative employee) uses the evaluative data to manipulate it
for their own benefits.
– Intervention: It helps in determining that whether the actual
outcomes are aligned with the expected outcomes.
Process of Training Evaluation

 Before Training: The learner's skills and

knowledge are assessed before the training
program. During the start of training, candidates
generally perceive it as a waste of resources
because at most of the times candidates are
unaware of the objectives and learning
outcomes of the program. Once aware, they are
asked to give their opinions on the methods
used and whether those methods confirm to the
candidates preferences and learning style.
Process of Training Evaluation

 During Training: It is the phase at which

instruction is started. This phase usually consist
of short tests at regular intervals
 After Training: It is the phase when learner’s
skills and knowledge are assessed again to
measure the effectiveness of the training. This
phase is designed to determine whether
training has had the desired effect at individual
department and organizational levels
Techniques of Evaluation

 The various methods of training

evaluation are:
– Observation
– Questionnaire
– Interview
– Self diaries
– Self recording of specific incidents
3.2 Development
 Development is the process of preparing a potential
employee who will become successful leader in the future.
Assessment Center is the training center for potential
managers.
 Development is the more future oriented method and more
concerned with education of the employees. To become a
better performer by education implies that management
development activities attempt to instill sound reasoning
processes.
 Management development method is further divided into
two parts:
– on the job training
– off the job training
On the job training

 The development of a manager's abilities can take place

on the job. Some of the techniques for on the job
development are:
– Coaching
– Mentoring [learning from skilled and experienced
person]
– Committee assignment
– Delegation/temporary assignment/
– Case analysis
– Job rotation
Off the job training

 There are many management development

techniques that an employee can take in off the
job. The few popular methods are:
– Sensitivity Training
– Transactional Training It provides trainees with a
realistic and useful method for analyzing and
understanding the behavior of others.
– Lectures
– Simulation Exercises
3.3 Performance Evaluation

 People differ in their abilities and their aptitudes. There

is always some difference between the quality and
quantity of the same work on the same job being done
by two different people
 Performance appraisals of Employees are
necessary to understand each employee’s abilities,
competencies and relative merit and worth for the
organization.
 Performance appraisal rates the employees in terms
of their performance
Nature of Performance Appraisal

 If the process of performance appraisals is formal and

properly structured, it helps the employees to clearly
understand their roles and responsibilities and give
direction to the individual’s performance. It helps to align
the individual performances with the organizational
goals and also review their performance.
 Performance appraisal takes into account the past
performance of the employees and focuses on the
improvement of the future performance of the
employees.
Cont’d…

 Appraisals are much easier, and especially more

relaxed, if the superior/leader meets each of the team
members individually and regularly for one-to-one
discussion throughout the year. Meaningful regular
discussion about work, career, aims, progress,
development, hopes and dreams, life, the universe, the
TV, common interests, etc., whatever, makes
appraisals so much easier because people then know
and trust each other - which reduces all the stress and
the uncertainty.
Purpose of PA

 Performance Appraisal is aimed at:

– To review the performance of the employees over a
given period of time.
– To judge the gap between the actual and the desired
performance.
– To help the management in exercising organizational
control and decisions such as promotion, demotion,
transfer and others
– To diagnose the training and development needs of
the future.
Corporate Responsibility of PA
 When designing or planning and conducting appraisals, seek to
help the 'whole-person' to grow in whatever direction they want,
not just to identify obviously relevant work skills training.
Increasingly, the best employers recognize that growing the 'whole
person' promotes positive attitudes, advancement, motivation, and
also develops lots of new skills that can be surprisingly relevant to
working productively and effectively in any sort of organization.
 Developing the whole-person is also an important
aspect of modern corporate responsibility, and
separately whole-person development is a crucial
advantage in the employment market, in which all
employers compete to attract the best recruits, and to
retain the best staff.
 Process of PA
 STEP1. ESTABLISHING PERFORMANCE STANDARDS: The first
step in the process of performance appraisal is the setting up of
the standards which will be used to as the base to compare the
actual performance of the employees. This step requires setting the
criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the
organizational goals and objectives. The standards set should be
clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measured, great care
should be taken to describe the standards.
 The criteria should focus on job related areas such as
quality of work performed, quantity of work performed,
presence at work, cooperativeness and timelineness of
output.
Process of PA

 STEP2. COMMUNICATING THE STANDARDS: Once

set, it is the responsibility of the management to
communicate the standards to all the employees of the
organization. The employees should be informed and
the standards should be clearly explained to workers.
This will help them to understand their roles and to know
what exactly is expected from them. The standards
should also be communicated to the appraisers or the
evaluators and if required, the standards can also be
modified at this stage itself according to the relevant
feedback from the employees or the evaluators
Process of PA

 STEP 3. MEASURING THE ACTUAL

PERFORMANCE: The most difficult part of the
Performance appraisal process is measuring the actual
performance of the employees that is the work done by
the employees during the specified period of time. It is a
continuous process which involves monitoring the
performance throughout the year. This stage requires
the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not
affect the outcome of the process and providing
assistance rather than interfering in an employees
work.
Process of PA
 STEP 4. COMPARING THE ACTUAL WITH
THE DESIRED PERFORMANCE: The actual
performance is compared with the desired or the
standard performance. The comparison tells the
deviations in the performance of the employees from
the standards set. The result can show the actual
performance being more than the desired performance
or, the actual performance being less than the desired
performance depicting a negative deviation in the
organizational performance. It includes recalling,
evaluating and analysis of data related to the
employees’ performance.
Process of PA

 STEP 5. DISCUSSING RESULTS/Providing

Feedback/: The result of the appraisal is
communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on
communication and listening. The results, the problems
and the possible solutions are discussed with the aim of
problem solving and reaching consensus. The feedback
should be given with a positive attitude as this can have
an effect on the employees’ future performance. The
purpose of the meeting should be to solve the problems
faced and motivate the employees to perform better.
Process of PA

 STEP 6. DECISION MAKING/Taking

Corrective Action: The last step of the
process is to take decisions which
can be taken either to improve the
performance of the employees, take
the required corrective actions, or the
related HR decisions like rewards,
promotions, demotions, transfers etc.
Pre-requisite of PA

 The essentials of an effective performance system are

as follows:
– Documentation – means continuous noting and documenting
the performance. It also helps the evaluators to give a proof
and the basis of their ratings.
– Standards / Goals – the standards set should be clear, easy
to understand, achievable, motivating, time bound and
measurable.
– Practical and simple format - The appraisal format should be
simple, clear, fair and objective. Long and complicated formats
are time consuming, difficult to understand, and do not elicit
much useful information.
Pre-requisite of PA
 Evaluation technique – An appropriate evaluation
technique should be selected; the appraisal system
should be performance based and uniform. The criteria
for evaluation should be based on observable and
measurable characteristics of the behavior of the
employee.
 Communication – Communication is an indispensable
part of the Performance appraisal process. The desired
behavior or the expected results should be
communicated to the employees as well as the
evaluators. Communication also plays an important role
in the review or feedback meeting. Open
communication system motivates the employees to
actively participate in the appraisal process.
Pre-requisite of PA

 Feedback – The purpose of the feedback should be

developmental rather than judgmental. To maintain its
utility, timely feedback should be provided to the
employees and the manner of giving feedback should
be such that it should have a motivating effect on the
employees’ future performance.
 Personal Bias – Interpersonal relationships can
influence the evaluation and the decisions in the
performance appraisal process. Therefore, the
evaluators should be trained to carry out the processes
of appraisals without personal bias and effectively.
Challenges of PA
 An organization comes across various problems and
challenges Of Performance Appraisal in order to
make a performance appraisal system effective and
successful. The main Performance Appraisal
challenges involved in the performance appraisal
process are:
– Determining the evaluation criteria
Identification of the appraisal criteria is one of the
biggest problems faced by the top management. The
performance data to be considered for evaluation
should be carefully selected. For the purpose of
evaluation, the criteria selected should be in
quantifiable or measurable terms
Challenges of PA

 Create a rating instrument

The purpose of the Performance appraisal
process is to judge the performance of the
employees rather than the employee. The focus
of the system should be on the development of
the employees of the organization.
 Lack of competence : Top management should
choose the raters or the evaluators carefully. They
should have the required expertise and the knowledge
to decide the criteria accurately. They should have the
experience and the necessary training to carry out the
appraisal process objectively.
Challenges in PA

 ·Errors in rating and evaluation

Many errors based on the personal bias like
stereotyping, halo effect (i.e. one trait
influencing the evaluator’s rating for all other
traits) etc. may creep in the appraisal process.
Therefore the rater should exercise objectivity
and fairness in evaluating and rating the
performance of the employees.
Challenge in PA

 Resistance: The appraisal process may face

resistance from the employees and the trade
unions for the fear of negative ratings.
Therefore, the employees should be
communicated and clearly explained the
purpose as well the process of appraisal. The
standards should be clearly communicated and
every employee should be made aware that
what exactly is expected from him/her.
Method of Performance Appraisal
 Traditional Approach:
– Traditionally, performance appraisal has been
used as just a method for determining and justifying
the salaries of the employees. Than it began to be
used a tool for determining rewards (a rise in the
pay) and punishments (a cut in the pay) for the past
performance of the employees.
– This approach was a past oriented approach which
focused only on the past performance of the
employees i.e. during a past specified period of time.
This approach did not consider the developmental
aspects of the employee performance
Traditional Approach of PA

A. ESSAY APPRAISAL METHOD: This traditional form of

appraisal, also known as "Free Form method" involves
a description of the performance of an employee by his
superior. The description is an evaluation of the
performance of any individual based on the facts and
often includes examples and evidences to support the
information. A major drawback of the method is the
inseparability of the bias of the evaluator.
B. STRAIGHT RANKING METHOD ; This is one of the
oldest and simplest techniques of performance
appraisal. In this method, the appraiser ranks the
employees from the best to the poorest on the basis of
their overall performance. It is quite useful for a
comparative evaluation.
Traditional Approach of PA

C. 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.
D. CRITICAL INCIDENTS METHOD: In this method of Performance
appraisal, the evaluator rates the employee on the basis of critical
events and how the employee behaved during those incidents. It
includes both negative and positive points. The drawback of this
method is that the supervisor has to note down the critical incidents
and the employee behavior as and when they occur.
Traditional Approach of PA

E. FIELD REVIEW: In this method, a senior member of the

HR department or a training officer discusses and
interviews the supervisors to evaluate and rate their
respective 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.
F. CHECKLIST METHOD: The rater is given a checklist of the
descriptions of the behavior of the employees on job. The checklist
contains a list of statements on the basis of which the rater
describes the on the job performance of the employees.
Traditional Approach to PA

G. GRAPHIC RATING SCALE: In this method, an employee’s quality and

quantity of work is assessed in a graphic scale indicating different
degrees of a particular trait. The factors taken into consideration
include both the personal characteristics and characteristics related
to the on the job performance of the employees. For example a trait
like Job Knowledge may be judged on the range of average, above
average, outstanding or unsatisfactory.
H. FORCED DISTRIBUTION: To eliminate the element of bias from the
rater’s ratings, the evaluator is asked to distribute the employees in
some fixed categories of ratings like on a normal distribution
curve. The rater chooses for the appropriate fit for the categories in
his/her discretion.
Method of Performance Appraisal

 Modern approach:
– The modern approach to performance development has made
the performance appraisal process more formal and structured.
Now, the performance appraisal is taken as a tool to identify
better performing employees from others, employees’ training
needs, career development paths, rewards and bonuses and
their promotions to the next levels.
– The modern approach to performance appraisals includes a
feedback process that helps to strengthen the relationships
between superiors and subordinates and improve
communication throughout the organization. The modern
approach to Performance appraisal is a future oriented
approach and is developmental in nature. This recognizes
employees as individuals and focuses on their development.
Modern Approach to PA

A. Assessment Center: it involves the use of methods like

social/informal events, tests and exercises, assignments being
given to a group of employees to assess their competencies to
take higher responsibilities in the future. Generally,
employees are given an assignment similar to the job they would
be expected to perform if promoted. The trained evaluators
observe and evaluate employees as they perform the assigned
jobs and are evaluated on job related characteristics.
 The major competencies that are judged in assessment centers
are interpersonal skills, intellectual capability, planning and
organizing capabilities, motivation, career orientation etc.
assessment centers are also an effective way to determine the
training and development needs of the targeted employees.
Modern Approach to PA

B. Behaviorally Anchored Rating Scales (BARS) is a

relatively new technique which combines the graphic
rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets
of behavioral statements describing important job
performance qualities as good or bad (for eg. the
qualities like inter personal relationships, adaptability
and reliability, job knowledge etc). These statements
are developed from critical incidents. In this method, an
employee’s actual job behavior is judged against the
desired behavior by recording and comparing the
behavior with BARS. Developing and practicing BARS
requires expert
Modern Approach to PA

C. HUMAN RESOURCE ACCOUNTING METHOD: Human

resources are valuable assets for every organization. Human
resource accounting method tries to find the relative worth of these
assets in the terms of money. In this method the Performance
appraisal of the employees is judged in terms of cost and
contribution of the employees. The cost of employees include all
the expenses incurred on them like their compensation,
recruitment and selection costs, induction and training costs etc
whereas their contribution includes the total value added (in
monetary terms). The difference between the cost and the
contribution will be the performance of the employees. Ideally, the
contribution of the employees should be greater than the cost
incurred on them
Modern Approach to PA

D. 360 degree feedback, also known as 'multi-rater

feedback', is the most comprehensive appraisal where
the feedback about the employees’ performance comes
from all the sources that come in contact with the
employee on his/her job. 360 degree respondents for an
employee can be his/her peers, managers (i.e. superior),
subordinates, team members, customers, suppliers/
vendors - anyone who comes into contact with the
employee and can provide valuable insights and
information or feedback regarding the "on-the-job"
performance of the employee.
 Modern Approach to PA

 360 degree appraisal has four components:

– Self appraisal: gives a chance to the employee to look at his/her strengths
and weaknesses, his achievements, and judge his own performance more
than anyone. But, it has the problem of perception for behavioral reason.
– Superior’s appraisal: forms the traditional part of the 360 degree
performance appraisal where the employees’ responsibilities and actual
performance is rated by the superior. But, they play ‘role of God’
– Subordinate’s appraisal: gives a chance to judge the employee on the
parameters like communication and motivating abilities, superior’s ability to
delegate the work, leadership qualities etc. But, the problem is ‘scratch my
back, I will scratch yours’
– Peer appraisal: known as internal customers, the correct feedback given by
peers can help to find employees’ abilities to work in a team, co-operation
and sensitivity towards others. But it has problem that they don’t want to rate
more than them selves during high competition
Modern Approach to PA

E. Management By Objective: The concept of ‘Management by

Objectives’ (MBO) was first given by Peter Drucker in 1954. It can
be defined as a process whereby the employees and the superiors
come together to identify common goals, the employees set their
goals to be achieved, the standards to be taken as the criteria for
measurement of their performance and contribution and deciding
the course of action to be followed. The principle behind
Management by Objectives (MBO) is to create
empowered employees who have clarity of the roles and
responsibilities expected from them, understand their
objectives to be achieved and thus help in the
achievement of organizational as well as personal goals.
Modern Approach to PA
 Some of the important features and advantages of MBO
are:
– Clarity of goals – With MBO, came the concept of SMART
goals Clarity of goals
– The focus is on future rather than on past. Goals and
standards are set for the performance for the future with
periodic reviews and feedback.
– Motivation – Involving employees in the whole process of
goal setting and increasing employee empowerment
increases employee job satisfaction and commitment.
– Better communication and Coordination – Frequent
reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships
within the enterprise and also solve many problems faced
during the period.
Balanced Scorecard and PA

 Balanced scorecard – an approach given by

Kaplan and Norton provides a framework of
various measures to ensure the complete and
balanced view of the performance of the
employees.
 Balanced scorecard focuses on the measures
that drive performance
 The balanced scorecard approach can be used
and applied at both the individual and the
organizational level
BSC
 The four Perspectives recommended by Kaplan and Norton for the
managers to collect information are:
– The financial measures – The financial measures include the results like
profits, increase in the market share, return on investments and other economic
measures as a result of the actions taken.
– The customers’ measures - These measures help to get on customer
satisfaction, the customer’s perspective about the organization, customer
loyalty, acquiring new customers. The data can be collected from the frequency
and number of customer complaints, the time taken to deliver the products and
services, improvement in quality etc.
– The internal business measures – These are the measures related to the
organization’s internal processes which help to achieve the customer
satisfaction. It includes the infrastructure, the long term and short term goals
and objectives, organizational processes and procedures, systems and the
human resources.
– The innovation and learning perspective - The innovation and learning
measures cover the organization's ability to learn, innovate and improve. They
can be judged by employee skills matrix, key competencies, value added and
the revenue per employee.
BSC

 For each perspective of the following things are

measured:
– Objectives: the goals and the targets to be
achieved
– Measures: the standards which will be used to
measure the actual performance and the progress.
– Action plans: the initiatives taken and the course of
action to be followed to achieve the objectives
  

                                                           
BSC

 Why Implement a Balanced Scorecard?

– Increase focus on strategy and results
– Improve organizational performance by measuring
what matters
– Align organization strategy with the work people do on
a day-to-day basis
– Focus on the drivers of future performance
– Improve communication of the organization’s Vision
and Strategy
– Prioritize Projects / Initiatives
Assignment

 Briefly describe the current practice of

Performance Appraisal at your organization.
What is the purpose of the performance
Evaluation at your organization?
 What is BSC?