CHAPTER 6: Appraising
Employee Performance
 DISCUSSANT: JOY B. SALDAŇA
Ed. D. Student

CHAPTER 6: Appraising
Employee Performance
 6.1. Objectives of Performance Appraisal
 6.2. Need to Evaluate Employee Performance
 6.3. Methods Used in Performance Appraisal
 6.4. Management by Objectives
 6.5. Developing An Appraisal Program

What is a performance
appraisal?

What is a performance
appraisal?
 performance appraisal (PA), also referred to as a
performance review, performance evaluation, (career)
development discussion, or employee appraisal is a
method by which the job performance of an employee is
documented and evaluated. Performance appraisals
are a part of career development and consist of regular
reviews of employee performance within organizations.

According to Newstrom, “It is the process of
evaluating the performance of employees,
sharing that information with them and searching
for ways to improve their performance’’.
General Definition

The Appraisal System.
Concepts of Appraisal &
Appraisal Methods

6.1. Objectives of Performance
Appraisal

6.1. Objectives of Performance
Appraisal
Measuring the efficiency
Maintaining organizational
control.
Concrete and tangible
particulars about their work
Assessment of
performance
Mutual goals of the
employees & the organization.
Growth & development
Increase harmony & enhance
effectiveness
 Personal development
 Work satisfaction
 Involvement in the
organization.
Employee Organization
According to:
Aims at:

6.2. Need to Evaluate
Employee Performance
 Performance management/program involves
more than simply providing an annual review for
each employee. It is about working together with
that employee to identify strengths and
weaknesses in their performance and how to help
them be a more productive and effective worker.

6.3. Methods Used in
Performance Appraisal

1. Paired comparison
2. Graphic Rating scales
3. Forced choice Description
method
4. Forced Distribution Method
5. Checks lists
6. Free essay method
7. Critical Incidents
8. Group Appraisal
9. Field Review Method
10.Confidential Report
11.Ranking
1. Assessment Center
2. Appraisal by Results or
Management by
Objectives
3. Human Asset
Accounting
4. Behaviorally Anchored
Rating scales
Traditional Methods Modern Methods
6.3. Methods Used in Performance Appraisal

Paired Comparison Method
 Ranking employees by making a chart of all
possible pairs of the employees for each trait and
indicating which is the better employee of the
pair.
 It is useful where priorities are not clear
 This method is not appropriate if a large number
of employee are required to be evaluated.

As compared to A B
C
A + -
+
B - +
-
C + -
+
For the Trait “Quality of
work”
A - +
+
B + -
+
C + +
As compared to A B
C
For the Trait “Creativity”
+
+
++
+
+
+
+ +-
-
-
--
- +
- -
Person rated Person rated
Ranking employees by paired comparison Method

Graphic or Linear Rating Scales
 A scale that lists a number of traits and a range of
performance for each. The employee is then
rated by identifying the score that best describes
his or her performance for each trait.
 It includes the employee characteristics and
employee contribution

Graphic or Linear Rating Scales
Attitude
No interest
In work:
consistent
complainer
Careless:
In-different
Instructions
Interested in
work:
Accepts
opinions &
advice of
others
Enthusiasti
c about job
&
fellow-
workers
Enthusiastic
opinions &
advice
sought by
others
Decisiveness
Take
decisions in
consultation
with others
whose views
he values
Slow to
take
decisions
Take
decisions
after careful
consideration
Takes
decisions
promptly
Take
decisions
without
consultation
0 5 10 15 20
0 5 10 15 20

Criteria Rating
1.Regularity on the job Most Least
Forced choice method
•Always regular
•Inform in advance for delay
•Never regular
•Remain absent
•Neither regular nor irregular

No.
of
employees 10% 20% 40% 20% 10%
poor Below
average
average good Excellent
Force distribution curve
Forced distribution method

Ex: A fire, sudden breakdown, accident
Workers Reaction scale
A Informed the supervisor immediately 5
B Become anxious on loss of output 4
C Tried to repair the machine 3
D Complained for poor maintenance 2
E Was happy to forced test 1
Critical Incident method

Staff Appraisal
Name . . . . . . . Job Title . . . . . . .
Department . . . . . . . . . . . . Date of Review . . . . . . .
Age . . . . . .. . Years in present job
Section I Appraisal Of Performance
Note to Appraiser
1. Appraisal must cover the period of the preceding 12 months
2. Consideration to every function & responsibility of the job
3. An objective factual assessment of an employee’s improvement or
deterioration
Section II Promotability & Potential
Promotability
1. Promotion now
2. Within 2 years
3. Within 5 years
4. Unlikely to qualify for promotion
Section III Career Development
Section IV Notes on Interview with employee
Section V Comments on & Endorsement by Reviewing Authority
Specimenof StaffAssessment Form[DescriptiveEssayType]

Performance subordinate peers superior customer
Dimension
Leadership ^ ^
Communication ^ ^
Interpersonal skills ^ ^
Decision making ^ ^ ^
Technical skills ^ ^ ^
Motivation ^ ^ ^
Field review method

Modern Methods of
Performance Appraisals

(a)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.
 In this method the employee's behavior and
performance dimensions are analyzed and used for
evaluating the performance of the employee. The
HR department is involved in the process of
preparing the BARS. Based on the Employee's
performance and behavior, employees are
anchored in different slots of good, average and
poor. The rater is required to give corresponding
ratings to the employee.

(b)Assessment Centres :
 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.
 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.

(c) 360 Degrees Appraisal Method :
 Where multiple raters are involved in
evaluating performance, the
technique is called 360-degree
appraisal.
 The 360-degree technique is
understood as systematic collection
of performance data on an individual
or a, group derived from a number of
stakeholders—the stakeholders being
the immediate, team members
customers peers and self.
 In this method an employee's
performance is evaluated by his
supervisor, subordinates, peers and
customers (or an outside expert).
 All these appraisers provide
information or feedback by
completing a questionnaire designed
for this purpose.

 The 360-degree degree appraisal provides a
broader perspective about an employee’s
performance. In addition, the technique
facilitates greater self-development of the
employee. It enables an employee to compare
his evaluation about self with perceptions of
others. Though this method was developed to
bring about a degree of objectivity, it still suffers
from subjectivity.

360 degree performance appraisal

(d) 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.

Performance Points Behavior
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 &
roam around purposelessly.
Behavioral Anchored Rating Scales

6.4. Management by
Objectives
 (a) MBO (Management by Objective or
Joint Target Setting) :
 This method was propounded by Alfred Sloans
and Donaldson Brown in 1920s. However, it was
further popularised by Peter Drucker in his book
"The Practice of Management" in 1954.

 According to George S. Odiorne, MBO can be
described as "a process whereby the superior
and the immediate subordinate of an
organization jointly identify the 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 of its members."

 In this method emphasis is laid on stating
objectives for Key Result Areas (KRAs) in
Quantifiable terms. For example, in case of
Research and Development department,
objective is stated in the following terms. i.e. to
design a new product by 31st March, 2005.
 MBO is used as a performance appraisal
technique, as it is easy to measure whether the
stated objectives have been achieved or not.
 Application of MBO in the field of performance
appraisal is a very recent thinking.

MBO Process
Set organizational goals
Defining performance target
Performance review
Feedback

6.5. Developing an
Appraisal Program
Learn how to develop a performance
management system/appraisal program so
that you can help everyone in your
organization work to their full potential.

6.5. Developing an
Appraisal Program
 1.Evaluate your current performance appraisal
process. Look at what type of feedback you are
providing to your employees. Determine if there is
anything you need to change or add to the
evaluation itself. You may decide to build on
what you already have or to develop a new
system altogether.

6.5. Developing an
Appraisal Program
 2. Identify organizational goals. Performance
management systems help rally staff members
around your organization's goals because they
help staff know how they are to be involved in
reaching that goal. Take the time to clarify what
your goals are for the next year as a company.

6.5. Developing an
Appraisal Program
 3. Set performance expectations. As you sit down
with each employee, clearly lay out your
expectations for them.
• Acknowledge what they are already doing well. Use
this to encourage them.
• Share some weaknesses that you have observed in
them and in their work habits, and how overcoming
those would help their performance in the
company.
• Identify specific things you would like them to
accomplish over the next year, or whatever time
frame works best for you. Prioritize these so the staff
member knows which is most important and make
sure to give them a deadline for each task.

6.5. Developing an
Appraisal Program
 4. Monitor and develop their performance
throughout the year. As employees begin to work
on their performance, keep an eye on how they
are doing. If they appear to be struggling to meet
performance expectations, talk with them and
see if you can offer any support or coaching.

6.5. Developing an
Appraisal Program
 5. Evaluate their performance. At each performance
review, let the employee know how they are doing.
It is often helpful to assign a numeric value on a
scale, rating the employee from "not meeting
expectations" to "meets expectations" to "exceeds
expectations." Provide feedback on their
performance. Be as specific as possible, noting key
examples of when they demonstrated a certain
quality.
• Talk about the consequences or rewards of their
performance. Let them know if they are on
probation, are getting a raise in pay, changes in
vacation days, or any other relevant action.
• Discuss any problems they may be having. Listen to
their concerns or worries as you talk through
potential solutions.

6.5. Developing an
Appraisal Program
 6. Set new performance expectations for the next
year. Some items may be the same. However,
since these are also based on organizational
goals, you will need to re-examine your goals for
the upcoming year.

6.5. Developing an
Appraisal Program
 1.Evaluate your current performance appraisal
process.
 2. Identify organizational goals.
 3. Set performance expectations.
 4. Monitor and develop their performance
throughout the year.
 5. Evaluate their performance.
 6. Set new performance expectations for the next
year.

Advantages of (Pa)
Provide a record of
performance over a
period of time.
Provide an
opportunity for a
manager to meet &
discuss performance
Provide the employee
with feedback about
their performance
Provide an
opportunity for an
employee to discuss
issues and to clarify
expectations
Can be motivational
with the support of a
good reward and
compensation

If not done appropriately, can
be a negative experience.
Very time consuming,
especially for a manager
Subject to rater errors &
biases.
If not done right can be a
complete waste of time.
Can be stressful for all
involved
Disadvantages of (pa)

Conclusion
 Because many of the more conventional performance
appraisal methods have often proved unpopular with
those being appraised and evaluators a like, 360
is gaining popularity with many managers and
employees.
 It offers a new way of addressing the performance issue.
 When used with consideration and discipline, feedback
recipients will feel that they're being treated fairly.
 In addition, supervisors will feel the relief of no longer
carrying the full burden of assessing subordinate
performance.
 The combined effect of these outcomes should result in
increased motivation, which in turn improves performance.