Performance appraisal

Dr. M.Jothilakshmi, Assistant Professor,
Department of MBA, VVVCollege, VNR

 Edwin B. Flippo (1984):
“Performance appraisal is the systematic,
periodic and an impartial rating of an employee’s
excellence in the matters pertaining to his present job
and his potential for a better job”.
 C.D.Fisher & J.B.Shaw:
“It is the process by which an employee’s
contribution to the organization during a specified
period of time is assessed.”

 Appraiser- A person who is accountable or carryout the
process of assessing performance of employee for certain
period of time.
 HR personnel, Immediate supervisor (or)outside consultant
 Appraisee- An employee who is being appraised in
an appraisal process.
Dr. M.Jothilakshmi, Assistant Professor, Department of MBA,
VVVCollege, VNR

 To improve current
performance.
 Provide feedback on job
performance.
 Increase motivation
 Identify training needs
 Identify employees’
potential
 Rewards & promotion
 Decision making regarding
layoff, retrenchment.
 Career development
 Better compensation
 Objective setting
 Career succession
 Reduce job related issues
 Increase individual/
group/ organizational
performance
VVVCollege, VNR

VVVCollege, VNR

 Immediate manager/
supervisor
 Peers (Individuals who
are working in the same
hierarchy level)
 Self appraisal
 Employee subordinates
 Other managers
 Higher level managers
(Zone / branch head)
 Specialist from HR
Department
 Users of
services/Customers
 Consultants
VVVCollege, VNR

• No. of products
• Quality
• Usage of raw
materials
• Cost
• No. of damages/
accidents
• Creativity /Innovation
Production
• Communication
• Decision making
• Achievements
• Grievances solved
• Efficiency
• Leadership
• Adaptability/Personal
trait
Service
VVVCollege, VNR

Job analysis
Establish the
standards
Communicate
to the
employee
Measuring
actual
performance
Compare
Remedial
VVVCollege, VNR

TRADITIONAL MODERN
 BARS
 MBO
 ASSESSMENT CENTRE
 HR Accounting
 Psychological
 360o appraisal
Dr.M.Jothilakshmi,AssistantProfessor,
DepartmentofMBA,VVVCollege,VNR

 A very popular, simple method which is easy to understand and
use.
 Core traits of employee pertaining to his job are carefully defined
& allotted with numerical scale to tabulate the scores.
 Appraiser ticks rating of particular trait depending upon his/her
endeavor in job. Score vary form employee to employee
depending up on performance levels.
 Companies like DELL, Maruthi Suzuki India Ltd and airtel are
using this method. Dr. M.Jothilakshmi, Assistant Professor, Department of MBA,
VVVCollege, VNR

Rating
scale
VVVCollege, VNR

Performance Trait Excellen
t
Good Average Fair Poor
Attitude 5 4 3 2 1
Knowledge of Work 5 4 3 2 1
Managerial Skills 5 4 3 2 1
Team Work 5 4 3 2 1
Honesty 5 4 3 2 1
Regularity 5 4 3 2 1
Accountability 5 4 3 2 1
Interpersonal
relationships
5 4 3 2 1
Creativity 5 4 3 2 1
Discipline 5 4 3 2 1
VVVCollege, VNR

Straight ranking
method
VVVCollege, VNR

 Easy and inexpensive method.
 Less time consuming.
 Number of employees to be evaluated may hinder
the effectiveness. (neither too large nor small).
 The rater’s quality and reliability too affects the
appraisal process.
VVVCollege, VNR

Man- Man
comparison
VVVCollege, VNR

A
F
D
C
B
F
VVVCollege, VNR

 Easy and simple method.
 More time consuming.
 This method is quite easy when employees are less in
numbers.
 No. of comparisons = N(N-1)/2.
 No specific job contents are considered while
appraising.
VVVCollege, VNR

 This is a ranking technique where raters are required to
allocate a certain percentage of rates to certain categories.
 It is based on the bell shaped curve simply a graphical
representation.
 This method tends to eliminate raters bias.
 It may lead low morale, low productivity and high
absenteeism among employees because the fact that all
the employees aren’t perfectly fit into one category.
 Infosy, Wipro, Aditya Birla, ICICI bank are the indian
corporate use this method to evaluate lakhs of its workers
VVVCollege, VNR

 It’s a simple type of individual evaluation method that
represents, a set of objectives or descriptive statements
about the employee and his behavior.
 In this method, a series of statements, i.e., questions with
their answers in ‘yes’ or ‘no’ are prepared for each job
category.
 It involves a lot of money, time and efforts.

 The manager prepares lists of statements of very effective
and ineffective behavior of an employee.
 The manager maintains logs on each employee, whereby
he/she periodically records critical incidents of the
workers behavior.
 At the end of the rating period, these recorded critical
incidents are used in the evaluation of the workers’
performance.
VVVCollege, VNR

 An example of a good critical incident of a sales assistant is
the following:
 July 20 – The sales clerk patiently attended to the customers
complaint. He is polite, prompt, enthusiastic in solving the
customers’ problem.
 On the other hand the bad critical incident may appear as
under:
 July 20 – The sales assistant stayed 45 minutes over on his break
during the busiest part of the day. He failed to answer the store
manager’s call thrice. He is lazy, negligent, stubborn and
uninterested in work.

 Negative incidents may be more noticeable than positive
incidents.
 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.
 Time and effort consuming.
 The behavior may vary over time.
VVVCollege, VNR

 In this appraiser required to give a narrative description
on an employee’s strengths, weaknesses, past
performance, potential and suggestions for improvement.
 It is very simple and no specified format.
 But it fully relies on writing ability of appraiser (neither
negative nor superficial).
 May be biased and fully subjective (qualitative)

 This method is commonly used in many government
organizations/departments in India like Judiciary, police
department for promotion or transfer.
 An employee is observed by superiors regarding performance in
the job and on duties done.
 Thereafter Superior writes confidential report on his/her
performance, mainly on behaviour in the organization and conduct
and remarks if any.
 confidential reports will be kept confidential and will not be
revealed to anyone & finally confidential reports will be forwarded
to the top management officials for taking decision
VVVCollege, VNR

 Proposed by Peter Drucker on 1954.
 It can be defined as, “Management by objectives is a process
whereby the superior and subordinate managers of an
organisation jointly identify its common goals, define each
individual’s major areas of responsibility in terms of the
results expected of him, and use these measures as guides for
operating the unit and assessing the contribution of each of
its members.”
VVVCollege, VNR

 Employer & employee joint together in order to achieve
the org. goals.
 Employees are allowed to set their own goals.
 Periodically their performance are discussed and
evaluated in a discussion manner.
 The employer counsels, coach the employees and play a
supportive role to attain the required goal.
VVVCollege, VNR

 An assessment centre is a place to evaluate an individual
potentiality and performance, normally, organizations
outsource assessment centers instead of making them by their
own.
 They are mainly used for evaluating executive or supervisory
potential.
 The major competencies that are judged in assessment centers
are interpersonal skills, intellectual capability, planning and
organizing capabilities, motivation, career orientation etc.
VVVCollege, VNR

 It gives accurate evaluation, minimum bias, right
selection and promotion of executives.
 It is cost and time consuming.
 Crompton Greaves, Eicher, Hindustan Lever, RBI
have adopted this technique.
VVVCollege, VNR

 Behaviorally Anchored Rating Scale.
 BARS are descriptions of various degrees of behaviour with
regard to a specific performance dimension.
 It 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.
VVVCollege, VNR

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 and
roam around purposelessly.
An Example of Behaviorally Anchored Rating Scale (BARS)
VVVCollege, VNR

 “It is a method to measure the effectiveness of personnel
management activities and the use of people in an organization.”
 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.
VVVCollege, VNR

 Unit wise average value of production (or) service.
 Quality of product produced or service rendered.
 Overhead cost incurred.
 Accidents, damages, errors, spoilage, wastage caused
through unusual wear and tear.
 Human relationship with others.
 Cost of the time supervisor spent in appraising the
employee.
VVVCollege, VNR

 BOS – Behavior observation Scale
 Results method
 Productivity
 Psychological appraisal
VVVCollege, VNR

 Halo Error - In this type or rating error, the overall
rating of an employee gets influenced by good or bad
performance in a few areas of his/her work.
 Recency error - Rate the employees based on the recent
or past few months performances.
 Central tendency error - Sometimes, managers with
the intention of avoiding conflict, play it safe,
by rating employees in the middle of the rating
scale.
VVVCollege, VNR

 Leniency error - managers tend to rate all employees on the
positive or higher scale
 Severity error - managers tend to rate all employees on the
negative or lower scale.
 Prejudices – Interpersonal conflicts among employee and
employer may affect the appraisal process.
 Contrast error – This takes place when rate one employee with
another employee.
VVVCollege, VNR

 Poor execution
 Poor planning
 Underlying intention of PA (layoff, retrenchment
rather than promotion, incentives)
 Qualities of appraiser
 Less reliability & validity of PA techniques.
 Influence of External environment
 Attitude of management & employees
VVVCollege, VNR

Performance appraisal

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