An all round insight into the Concepts of Performance Appraisal from the standpoint of its significance,objectives, process, methods & common errors.

1. PERFORMANCE
APPRAISAL

2. CONCEPT
• Performance appraisal is an objective assessment/review of an
individual’s performance against well defined benchmarks.
• Performance appraisal involves reviewing past performance,
rewarding past performance, goal setting for future performance and
employee development.
• Performance Appraisals can be conducted by Supervisors, Peers,
Customers, Subordinates or the by the Individual employee himself.
• Performance Appraisal can be conducted once in three months, six
months or once in a year depending on the organizational policy.

3. 1. Set Performance
standards/expectations
2. Communicate Performance
standards/expectations
3.
Observe/Track
Employee
performance
4. Conduct
Performance
assessment
5. Reward/
Improvement
plans

4. SIGNIFICANCE
• Allows for two way communication on goals and performance.
• Performance appraisal helps superiors to assess the work
performance of their subordinates.
• Helps in assessing the Training & Development needs of the
employees.
• It holds employee accountable for their job performance.
• Performance appraisal provides grounds for employees to correct
their mistakes, and it also provides proper guidance for employee
development.
• Serves as a basis for rewarding employees for superior performance.

5. • Performance appraisal helps to prepare pay structure/ compensation
decisions for each employee working in the organization.
• Promotions, Transfer, Layoff Decisions are determined by taking P.A into
consideration.
• Performance appraisal helps to review the potentiality of employees so
that their future capability is ascertained and career planned.
• Provides management with decision making information on human
resources.
• Builds stronger worker relationships and employee morale.
• In the long run, improves organizational productivity.

6. PROCESS
Objectives of
Performance Appraisal
Establish Job
Expectations
Design an Appraisal
Programme
Appraise Performance
Performance Interview
Archive Appraisal Data
Use Appraisal Data for
Appropriate Purposes
F
E
E
D
B
A
C
K
PERFORMANCE
MANAGEMENT

7. OBJECTIVESOF PERFORMANCE
APPRAISAL
• The first step in Performance appraisal is determining the
purpose for which the performance appraisal is to be
conducted.
• Promotions, Training & Development, Compensation Reviews,
Competency Building, Evaluation of H.R Programs, Providing
Rewards & Incentives and Feedback & Grievances are the
most common uses of conducting Performing Appraisal.

8. ESATBLISHJOB EXPECTATION
• This step includes the process of informing the employees
what is expected of him/her.
• A discussion is held between a superior and a subordinate to
review the major duties contained in the job description and
the level of output/ performance the employee is expected to
discharge within a certain period.

9. DESIGNAN APPRAISALPROGRAMME
• This step answers the following Questions pertaining to
Performance Appraisal:
Whose Performance is to be assessed?
Who are the raters?
What Problems?
How to Solve?
What to Evaluate?
When to Evaluate?
What Methods?

10. APPRAISETHEPERFORMANCE
• This step is where the actual evaluation/Assessment of employee performance takes
place.
• Performance is assessed mainly on the following Parameters:
 Quantity of Output
 Quality of Output
 Timeliness of Output
 Presence at Work
 Cooperativeness
 Job Knowledge
 Supervision/Leadership Abilities
 Versatility
 Health
• Assessment should also include one’s potential to perform not just actual performance.

11. PERFORMANCEINTERVIEW
• An interview in which the supervisor and subordinate review the
appraisal and make plans to remedy the deficiencies and reinforce
strengths.
• It has three goals:
o Change Undesirable Behaviour of underperforming employees.
o Maintain Desirable Behaviour of performing employees.
o Recognize Superior Performance Behaviours so that they will be
continued.
• Several methods are Tell & Sell, Tell & Listen, Problem Solving and
Mixed.

12. ARCHIVEAPPRAISALDATA
• The collected Appraisal Data is stored or Archived so that the
information is retrieved at any time in the future.
• The data also need to be stored to compare the employee
performance over the years.
• Issues such as Pay hike, confirmation of probationary services
to name a few requires availability of past performance
appraisal data records.

13. USEOFAPPRAISALDATA
• The final step of Appraisal involves usage of the appraisal data
for any one of the following purposes:
Remuneration Administration
Validation of Selection Programmes
Employee Training & Development
Promotion, Transfer and lay-off decisions
Grievance & Discipline Programmes
Human Resource Planning

14. PERFORMANCEAPPRAISALMETHODS
 Graphic Rating Scales
 Essays
 Confidential Reports
 BARS (Behaviourally Anchored Rating Scales)
 360 Degree Appraisal

15. GRAPHIC RATINGSCALES
• Simplest & most popular method of appraising performance.
• It is a performance appraisal method that uses a predetermined
scale to rate the worker on important job dimensions.
• This type of evaluation lists traits (such as quality & reliability)
and a range of performance values (from unsatisfactory to
outstanding) for each trait.
• The rating can be done on a numerical scale or a verbal
anchoring system ranging from high to low scores.
• The supervisor rates each subordinate by circling or checking the
score that best describes his/her performance for each trait.

16. ESSAYS
• Also Known as “Free Form Method”.
• In Essay method the rater answers a series of questions about
the employee’s performance in essay form on a number of
categories and hence evaluation is done on a non-
quantitative basis.
• Its mostly used in combination with Graphic Rating Method
• The categories are :
o The rater’s overall impression of the employee performance.
o The promotability of the employee
o The jobs that the employee is now able or qualified to
perform
o The strengths and weakness of the employee.
o The Training or Development assistance required by the
employee

17. CONFIDENTIALREPORTS
• It is mostly used in Government organizations for promoting and
transferring employees.
• In this method the subordinate is observed by his superiors
regarding his performance in the job and on his duties done and
thereafter a confidential report on his performance is prepared.
• Then it is forwarded to the top management officials for taking
necessary actions.
• As the name suggests, they are highly secretive and hence the
feedback is not shared with the subordinates.

18. • It is a descriptive report prepared generally at the end of every year.
• Key Factors assessed in Confidential Report are:
o Absenteeism of an employee
o Knowledge of an Employee
o Nature & Quality of Work
o Strengths and Weaknesses of Employee
o Behavior of an employee with colleagues, superiors and public
o Integrity & Honesty
o Ability of Supervision and Controlling
o Any Complaints against the employee.

19. BARS
• Behaviourally anchored rating scales are rating scales whose
scale points are determined by statements of effective and
ineffective behaviors .
• A rater in his evaluation indicates which behaviour on each
scale best describes an employee’s performance.
• The unit of analysis is an employee’s behaviour critical to the
performance of a given task/job instead of focusing on the
employee’s traits or characteristics.
• A typical BARS is represented with the scale points ranging
from 5 to 9.

20. DEVELOPING ABEHAVIOURALLY
ANCHOREDRATINGSCALE
• The following 5 steps are involved in developing such a
scale:
i. Generate Critical Incidents.
ii. Develop performance dimensions.
iii. Reallocate incidents.
iv. Scale the incidents.
v. Develop a final instrument

21. 360- DEGREEAPPRAISAL
• In 360 Degree Appraisal, Multiple Raters/Stakeholders are
involved in evaluating performance (Multi-source feedback).
• It is a systematic collection of performance data of an
individual or group, derived from a number of stakeholders
like:
Immediate supervisors
Customers
Peers
Team members
Self.
• Ensuring Confidentiality is a key aspect of such an appraisal.
• The feedback form include questions that are measured on a
rating scale and also ask raters to provide written comments.

23. WHATDOES360 FEEDBACKMEASURE?
• Behaviours & Competencies
• Strengths and Weakness
• Coaching and Mentoring Skills
• Relationship Building Skills
• Managerial & Leadership Skills
• Commercial and Customer Understanding
• Job Related Technical Expertise/Knowledge
• Critical Thinking, Problem Solving & Risk Taking ability.

24. ADVANTAGESVSDISADVANTAGES
PERFORMANCE
APPRAISAL METHOD
ADVANTAGES DISADVANTAGES
1. Graphic Rating Scale • Low Cost.
• Easily Constructed.
• Simple.
• Quantifies job
Performance.
• High risk of Rater’s
Bias/Error
• Often Generic and may
not represent job very
well.
• Restrictions on the range
and type of rater
responses.
2. Essay • Evaluation not
restricted by limited
options.
• Can Cover a variety of
factors.
• Scope for Specific
Behavioural
examples.
• Few Development
Demands.
• Highly dependent on the
writing skills of the rater
• Time Consuming.
• Cannot be quantified and
hence difficulty in
performance
comparison.
• Difficulty in
Interpretation & Analysis.

25. PERFORMANCE
APPRAISAL METHOD
ADVANTAGES DISADVANTAGES
3. Confidential Reports • Covers a variety of
rating parameters.
• Conducted by
immediate supervisor
based on constant
behavioural
observation.
• Used as a main
criteria for
Promotion/Transfer
decision of employees
particularly in the
govt sector.
• Feedback is restricted
and hence scope of
improvement limited.
• High Chances of
bias/error by the
supervisor.
• Reasons for a
particular evaluation
not
specified/mentioned.
• Major decisions taken
based on just a single
rater’s observation .
4. BARS (Behaviourally
Anchored Rating Scale)
• Behaviorally based.
• Performance
Dimensions clearly
defined.
• Quantifiable Data.
• It is fully
Individualized.
• Development is Time
Consuming and
Expensive.
• Requires high
Maintenance/
Constant Updation.

26. PERFORMANCE
APPRAISAL METHOD
ADVANTAGES DISADVANTAGES
5. 360 Degree
Appraisal
• Multiple
Raters/Stakeholders
involved in rating, hence
most credible method.
• Employees are
evaluated on varied
parameters (Customer
Service, Leadership etc.).
• Most suitable for overall
development of an
employee.
• Perceived to be fair by
employees as more
objectivity involved.
• Increases responsibility
of employees to their
customers.
• Time Consuming &
Expensive
• Requires High
involvement and
commitment from
various stakeholders.
• Can Suffer because of
lack of knowledge on
the part of the
stakeholders.
• Cannot be used for
employees across all
levels of hierarchy.
• Inconsistency in
Interpretation.

27. ERRORS DURINGPERFORMANCEAPPRAISAL
• Performance Appraisal are subject to a wide variety of inaccuracies
and biases referred to as Rating Errors.
• Errors arise in the rater’s observations, judgment, and information
processing and can have a serious impact on assessment results.
• The most Common Rating Errors are as follows
 Central Tendency
 Halo Effect
 Rater Effect
 Leniency or Severity
 Primacy & Recency Effects
 Contrast Effect
 Attribution Error
 Spillover Effect
 Status Effect
 Similar to me effect
 Stereotyping
 Performance dimension

28. 1. Central Tendency:
• The inclination to rate people in the middle scale even when
the performance clearly warrants a substantially higher or
lower rating.
• The attitude of the rater is to play safe.
2. Halo Error/Effect:
• Inappropriate generalizations from one aspect of an
individual’s performance to all areas of that person’s
performance.
• Here, one negative aspect might influence an employee’s
overall performance assessment.
3. Rater Effect:
• Includes favoritism, stereotyping, and hostility to influence the
evaluation.
• Evaluation determined by rater’s attitude towards the subject
and not on actual outcome or behaviour.

29. 4. Leniency or Severity:
• The error caused by the tendency of the rater to rate an
employee higher or lower than what his/her actual
performance warrants.
• Influenced by a rater’s style of evaluation either being too
easy on the employee or being overly critical of the
employee’s performance.
5. Primacy & Recency Effect:
• The rater’s ratings are heavily influenced either by behaviour
exhibited by the subject during the early stages of the review
period (Primacy) or by outcomes or behaviours exhibited near
the end of the review period (Recency).
• Error caused by drawing judgment of employee performance
too soon or too late in the review period.

30. 6. Contrast Effect:
• Tendency of a rater to evaluate people in comparison with
other individuals rather than against the standards of the job.
7. Attribution Error:
• The tendency to attribute performance failings to factors
under the control of the individual and performance success
to external causes/factors.
8. Spill Over Effect:
• Refers to allowing past performance appraisal ratings to
unjustifiably influence current evaluation.
• Past Rating, Good or Bad, result in similar rating for current
period although the demonstrated behaviour does not
deserve the particular rating.

31. 9. Status Effect:
• It refers to overrating of employees in higher level job or jobs
held/perceived high esteem & underrating employees in lower-level
job or jobs held/perceived in low esteem.
10. Similar to me Effect:
• The tendency of the rater to rate employee’s who resemble
themselves more highly than they rate others.
11. Stereotyping:
• The tendency to generalize across groups and ignore individual
differences.
12. Performance Dimension Order:
• Two or more Dimensions on a performance instrument follow or
closely follow each other and both describe/rotate similar quality.
• The rater rates the first dimension accurately and then rates the
second dimension similar to first because of their close proximity.

32. REDUCINGERRORS
• Conduct Training sessions for Performance Appraisal Evaluators/Raters
to train them on the following aspects:
 Policies and Process in place for Performance appraisal in the
Organization.
 Create awareness of the Common Performance Appraisal Errors/Biases.
 Provide means to Guard against or overcome those Errors/Bias.
• Pre Evaluation, the rater needs to be provided with a checklist to obtain
and review the relevant job related information.
• Performance Evaluation Factors/Standards must be clearly defined to
the raters to avoid evaluation on unmatched/irrelevant criteria.

33. • Design the Performance Appraisal form and scales in a way
that is comfortable and easy to use for the Evaluator to avoid
any confusion/misinterpretation.
• Promote frequent, random observation of the employee in
varied situations to provide the evaluator sufficient idea
before performing the appraisal & rating the employee.
• Encourage Evaluators to Document performance/behaviour
on a consistent basis to improve the recall.
• Focus must be on Performance/Job Behaviour of the
employee & not on the person, hence evaluation must be
performance oriented and not person oriented to reduce any
bias.

34. • Review the Performance Appraisal Draft with a H.R specialist
in the organization before proceeding with providing feedback
to the employee or taking any action.
• Have mechanisms in place to monitor/control the influence of
external factors while appraising the performance.
• Ensure Performance Appraisal is not the only basis to reward
or take action against an employee.
• Use multiple raters wherever possible to get a better overview
of an employee’s performance.
• Higher level of management must be actively involved in
reviewing and updating the Performance Appraisal system in
the organization on a periodic basis.