The document discusses performance management systems and performance appraisal. It defines performance management as identifying, measuring, managing, and developing employee performance, while performance appraisal is the ongoing process of evaluating employee performance over time. The document outlines different performance appraisal methods such as graphic rating scales, forced distribution, behavioral anchored rating scales, and 360-degree feedback. It also discusses objectives, participants, and processes involved in performance appraisals as well as common rating errors.

1. PERFORMANCE MGT. SYSTEM

2. INTRODUCTION
• How do we manage performance within the organization? The most
common part of the process and the one with which we are most
familiar, is the process of PERFORMANCE APPRAISAL.
• However PA process is not the only thing that done in performance
mgt.
• Performance mgt. is the process of identifying, measuring,
managing and developing the performance of HR in an
organization.
• PA on the other hand, is the ongoing process of evaluating
employees performance. PA are reviews of employee
performance over time, so appraisal is just one piece of
performance mgt.

3. Cont.
Changing trends in PA
The 1st variation came with the introduction of
MBO later to as MBR
1980s saw a move towards competency based
evaluation
1990s 360 degree feedback
Latest : new social performance mgt. system

4. WHAT IS PERFORMANCE APPRAISAL?
• PA is the method of evaluating the behaviour of
the employees in the workplace, normally
including both quantitative and qualitative aspect
of the job.
 How the employee is performing
 How the employee can develop
 What the superior can do to make it happen
 How the job is going

5. DEFINITION
• According to Edwin Flippo, "Performance
Appraisal is the systematic, periodic and
impartial rating of an employee's excellence, in
matters pertaining to his present job and his
potential for a better job."

6. WHY conduct a Performance
Appraisal
• Provide information about the performance ranks.
Decision regarding salary revision, confirmation,
promotion and demotions.
• Provide feedback about level of achievement and
behaviour of the subordinate.
• Provide information which helps to counsel the employees.
• Provide information to diagnose the deficiency of the
employees.
• Provide training and development needs of the employees.

7. WHEN to conduct a
Performance Appraisal
• The performance review must occur
at least once in a year. Some
companies review twice in a year.
• However, as a part of Performance
Management, the performance
review is a continuing, ongoing
activity.

8. OBJECTIVES
OBJECTIVE REMARKS
1) Setting targets and
goals as performance
standards
Performance std.’s & specific goals are set at the beginning of
appraisal period . These targets motivate the employees to
perform better
2) Evaluating employee
performance
It helps to understand the strengths and weakness of the
employee.
3) Identifying training
and development
needs
Shortcomings in employees performance are improved
through T & D
4) Rewarding
performance
Rewards and punishments, and reinforcement theory
5) Career planning Assist in career planning

9. WHO are involved in Performance
Appraisal
• The Appraisee
• The Appraiser
• HR Department

10. PROCESS OF PERFORMANCE
APPRAISAL
Determin
ation of
standards
What
components are
to be measured
Measurement
of employee
performance
Communicati
ng the actual
result
Take further steps
as per result

11. METHODS OF PERFORAMNCE
APPRAISAL

12. TRADITIONAL METHODS
• These methods lay more emphasis on rating
of individuals' personality traits, such as
initiative, dependability, drive, creativity,
integrity, intelligence, leadership potential,
etc. In the following pages each method has
been described in brief.

13. Graphic Rating Scales:
This is the oldest and most widely method used
for performance appraisal. The scales may
specify five points, so a factor such as job
knowledge might be rated 1 (poorly informed
about work duties) to 5 (has complete
mastery of all phases of the job).

14. Table: Typical Graphic Rating Scale
Employee Name................... Job title
.................
Department ......................... Rate ...............
Data ..................................
Quantity of work: Volume of work
under normal working
conditions
Unsatisfactory
(1)
Fair
(2)
Satisfacto
ry
(3)
Good
(4)
Out
Standi
ng
(5)
Quality of work: Neatness,
thoroughness and accuracy of
work Knowledge of job
A clear understanding of the
factors connected with the job
Attitude: Exhibits enthusiasm and
cooperativeness on the job

15. 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.
• However, this method has some limitations namely :
(1) It is difficult to adopt this method, in case of
evaluating large number of employees.
(2) It is difficult to compare one individual with other
having varying behavioral traits.

16. Paired comparison method
• In this method, each employee is compared with the other on
one-to-one basis. This method makes judgment easier as
compared to ranking method. The number of times the
employee is rated as better in comparisons with others
determines his or her final ranking. The total number of
comparison can be ascertained by the following formula :
where N stands for number of employees to be evaluated.
The concept can be illustrated with the help of the following
example.
If the following five students Ashok (A), Bina (B), Chitra (C),
Dinesh (D), Eillen (E) have to be evaluated for the best student
award, the total number of comparison would be = 10
A with B
A with C B with C
A with D B with D C with D
A with E B with E C with E D with E
• The number of times a student gets a better score, would be the
basis for selecting the Best Student. This method is not
appropriate if a large number of students are required to be
evaluated.

17. Forced Distribution Method
• This technique was contributed by Joseph
Tiffin. The method operates under the
assumption that an employee's performance
can be plotted in a bell-shaped curve. Here
10% of the employees are given excellent
grade, 20% are given good grade, 40% are
given the average grade, next 20% are given
the below average grade and last 10% are
given unsatisfactory grade.

19. Checklist Method
• The main purpose of this method is to reduce
the evaluator's burden of rating the employee.
In this method a dichotomous questionnaire
(A question with two answer choices namely
`Yes' or `No') is used. A rater is required to put
a tick mark against the respective column.
• This questionnaire is prepared and scored by
the HR department. The main disadvantage of
this method is the rater is not given the
flexibility to add or delete the statements. A
typical check list is given below

20. • 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

21. FORCED CHOICE METHOD
• This method was contributed by J.P. Guilford.
Here, an evaluator rates an employee on the
basis of a group of statements. These
statements are a combination of positive and
negative statements. The rater is required to
identify the most or least descriptive
statement pertaining to an employee. For
example :

22. PARTICULARS MOST LEAST
1) Provides clear guidance to employees.
2) Can be depended to complete the assignment
on hand.
3) Is reliable and trustworthy.
4) Is partial to some employees

23. Critical Incidence Method
• Under this method, 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 .
• July 20 – Mr. Paul patiently attended to the
major customers complaint. He is polite,
prompt, enthusiastic in solving the
customers’problem.
On the other hand the bad critical incident
may appear as under:
• September 28– Mr. Paul stayed 45 minutes
over on his break during the busiest part of
the day. He failed to answer the store
manager’s call thrice.

24. Essay Method
• In this method, the rater writes a
narrative description of an employees
strengths, weaknesses, past
performance, potential and suggestions
for improvement. As there is no
prescribed format, the length and
content of essay is likely to vary. Similarly,
the quality of Essay would depend upon
the rater's writing skills. As the essays are
descriptive in nature, it only provides
qualitative information about the
employee

25. Confidential Report
It is mostly used in
government organizations.
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.

26. MODERN METHODS

27. BARS (Behaviorally Anchored Rating
Scale) :
In order to overcome the problem of judgmental
evaluation, this method was conceived by some
organizations. This method combines the benefits
of Essay Method, Critical Incident and Rating
scales.
How to construct BARS:
1) Collect Critical Incidents
2) Identify performance dimensions
3) Assigning scale values to the incidents
4) Producing the final instrument

28. DIMENSIONS: PLANNING AND ORGANIZING
SCALE VALUE ANCHOR
5: EXCELLENT
4: GOOD
3: AVERAGE
2: BELOW
AVERAGE
1:
UNACCEPTABLE
DEVELOPS A COMPREHENSIVE PLAN, DOCUMENTS WELL,
OBTAINS APPROVAL AND DISTRIBUTES TO ALL CONCERNED
LAYS OUT ALL PLANS , SATISFIES CUSTOMER, SOMETIMES
DOCUMENTS ARE NOT READY ON TIME, BUT ITS INFREQUENT
REVISES DUE DATES AS PROJECT PROGRESSES AND
INVESTIGATE TO CUSTOMER COMPLAINTS
POOR PLANS AND UNREALISTIC SCHEDULES
SELDOM COMPLETES A PROJECT AND DOES NOT BOTHER

29. Assessment Centers :
• This method was used to appraise army officers
in Germany way back in 1930s. The concept was
adapted from army to business arena in 1960s. In
India, the concept has been adopted by
organizations such as Crompton Greaves, Eicher,
Hindustan Lever and Modi Xerox recently.
• This method is mainly used to evaluate executive
and supervisory potential. Here employees are
taken to a place away from work and a series of
tests and exercises are administered. For
example, assesses are asked to participate in; in-
basket exercise, simulations, group exercise and
role plays. Performance of the employee is
evaluated in each of these tests and feedback is
provided to the ratee, in terms of strengths and
weaknesses.

30. MBO
A process whereby the superior and subordinates of the organization
jointly identify its common objectives, define each individual’s
major areas of responsibility.
1. Establishment of Goals
2. Setting the performance standard
3. Actual level of job attainment is compared with the goals agreed
upon.
4. Establishing new goals and new strategies for goals not previously
attained.

31. 360 DEGREE FEEDBACK
• 360 Degree Feedback is a multi - rater
feedback system where an individual is
assessed by a number of assessors including
his boss, direct reports, colleagues, internal
customers and external customers

32. Cost Accounting Method :
• This method evaluates an employee's performance in
relation to the contribution of an employee in
monetary terms. Here the rater evaluates the
employee in terms of cost of retaining the employee
and the benefits the organization derives from him/her.
The following factors are taken into account in this
method :
• (1) Cost of training the employee.
• (2) Quality of product or service rendered.
• (3) Accidents, damages, errors, spoilage, wastages,
etc.
• (4) The time spent in appraising the employee.

33. RATING ERRORS

34. 1. Halo/horn effect – employee’s extreme
competence in one area “shines” over all
others. Conversely, employee does poorly in
one area and this overshadows all areas.
2. Bias – own prejudices {race, national
origin, gender, appearance, etc.} influence
the appraisal
3. Comparison Rating – contrasting one
employee with another

35. 3. Central Tendency – rate everyone as
average
4. Recency Effect – focusing on recent
performance instead of entire year
5. Personal Prejudice – If the rater dislikes
one group or employees, he may rate them
at the lower end.
6. Favoritism – evaluating friends or those
who don’t make waves, etc. more favorably
than others

36. • Leniency or Strictness Error: Performance-
rating error in which the appraiser tends to
give employees either unusually high or
unusually low ratings.