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Performance Appraisal

Appraisals Home » Performance Appraisal

Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, "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." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals.

By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management

s interest in the progressof the employees.

Objectives Of Performance appraisal:• 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.

• Helps to strengthen the relationship and communication between superior– subordinates and management – employees.

• To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.

• To provide feedback to the employees regarding their past performance.

• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

• To judge the effectiveness of the other human resource functions of theorganization such as recruitment, selection, training and development.

• To reduce the grievances of the employees.

Basic Purposes / AIM of PA :



Effective performance appraisal systems contain two basic systems operating in conjunction: an evaluation system and a feedback system.

The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable.

The main aim of the feedback system is to inform the employee about the qualityof his or her performance. (However, the information flow is not exclusively one

way. The appraisers also receives feedback from the employee about job problems, etc.)

One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization.

Employee ViewpointFrom the employee viewpoint, the purpose of performance appraisal is four-fold:(1) Tell me what you want me to do

(2) Tell me how well I have done it(3) Help me improve my performance(4) Reward me for doing well.

Organizational ViewpointFrom the organization

s viewpoint, one of the most important reasons for havinga system of performance appraisal is to establish and uphold the principle of accountability.

For decades it has been known to researchers that one of the chief causes of organizational failure is "non-alignment of responsibility and accountability." Non-alignment occurs where employees are given responsibilities and duties, but are

not held accountable for the way in which those responsibilities and duties areperformed. What typically happens is that several individuals or work units app

ear to have overlapping roles.

The overlap allows - indeed actively encourages - each individual or business unit to "pass the buck" to the others. Ultimately, in the severely non-aligned system, no one is accountable for anything. In this event, the principle of accountability breaks down completely. Organizational failure is the only possible outcome.

In cases where the non-alignment is not so severe, the organization may continueto function, albeit inefficiently. Like a poorly made or badly tuned engine, th

e non-aligned organization may run, but it will be sluggish, costly and unreliable. One of the principal aims of performance appraisal is to make people accountable. The objective is to align responsibility and accountability at every organizational level.



Techniques/Methods Of Performance Appraisal :The various methods and techniques used for Performance appraisal can be categorized as the following traditional and modern methods:

1. Critical incident methodThe critical incidents for performance appraisal is a method in which the manager writes down positive and negative performance behavior of employees throughout

the performance period2. Weighted checklistThis method describe a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs3. Paired comparison analysisPaired comparison analysis is a good way of weighing up the relative importance

of options.A range of plausible options is listed. Each option is compared against each ofthe other options. The results are tallied and the option with the highest score

is the preferred option.4. Graphic rating scalesThe Rating Scale is a form on which the manager simply checks off the employee’s

level of performance.This is the oldest and most widely method used for performance appraisal.5. Essay EvaluationThis method asked managers / supervisors to describe strengths and weaknesses of

an employee’s behavior. Essay evaluation is a non-quantitative techniqueThis method usually use with the graphic rating scale method.6. Behaviorally anchored rating scalesThis method used to describe a performance rating that focused on specific behaviors or sets as indicators of effective or ineffective performance.It is a combination of the rating scale and critical incident techniques of employee performance evaluation.7. Performance ranking methodRanking is a performance appraisal method that is used to evaluate employee performance from best to worst.Manager will compare an employee to another employee, rather than comparing each

one to a standard measurement.8. Management By Objectives (MBO)MBO is a process in which managers / employees set objectives for the employee,periodically evaluate the performance, and reward according to the result.MBO focuses attention on what must be accomplished (goals) rather than how it is

to be accomplished (methods)9. 360 degree performance appraisal360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them.10.Forced ranking (forced distribution)Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution.For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom.11. Behavioral Observation ScalesBehavioral Observation Scales is frequency rating of critical incidents that worker has performed.



Benefits/Advantages of Appraisal

Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily working life, it offers a rare chance for a supervisor and subordinate to have "time out" for a one-on-one discussion of important work issues that might not otherwise be addressed.Almost universally, where performance appraisal is conducted properly, both supervisors and subordinates have reported the experience as beneficial and positive.

Appraisal offers a valuable opportunity to focus on work activities and goals, t

o identify and correct existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced.For many employees, an "official" appraisal interview may be the only time theyget to have exclusive, uninterrupted access to their supervisor. Said one employee of a large organization after his first formal performance appraisal, "In twenty years of work, that

s the first time anyone has ever bothered to sit down and tell me how I

m doing."The value of this intense and purposeful interaction between a supervisors and subordinate should not be underestimated.

Motivation and SatisfactionPerformance appraisal can have a profound effect on levels of employee motivation and satisfaction - for better as well as for worse.Performance appraisal provides employees with recognition for their work efforts. The power of social recognition as an incentive has been long noted. In fact,there is evidence that human beings will even prefer negative recognition in preference to no recognition at all.If nothing else, the existence of an appraisal program indicates to an employeethat the organization is genuinely interested in their individual performance and development. This alone can have a positive influence on the individual

s sense of worth, commitment and belonging.The strength and prevalence of this natural human desire for individual recognition should not be overlooked. Absenteeism and turnover rates in some organizations might be greatly reduced if more attention were paid to it. Regular performance appraisal, at least, is a good start.

Training and DevelopmentPerformance appraisal offers an excellent opportunity - perhaps the best that will ever occur - for a supervisor and subordinate to recognize and agree upon individual training and development needs.During the discussion of an employee

s work performance, the presence or absenceof work skills can become very obvious - even to those who habitually reject th

e idea of training for them!Performance appraisal can make the need for training more pressing and relevantby linking it clearly to performance outcomes and future career aspirations.From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This data may be analysed by variables such as sex, department, etc. In this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization.



Recruitment and InductionAppraisal data can be used to monitor the success of the organization

s recruitment and induction practices. For example, how well are the employees performingwho were hired in the past two years?Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and givensufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the workforce is improving, staying steady, or declining.

Employee EvaluationThough often understated or even denied, evaluation is a legitimate and major objective of performance appraisal.But the need to evaluate (i.e., to judge) is also an ongoing source of tension,since evaluative and developmental priorities appear to frequently clash. Yet at

its most basic level, performance appraisal is the process of examining and evaluating the performance of an individual.Though organizations have a clear right - some would say a duty - to conduct such evaluations of performance, many still recoil from the idea. To them, the expl

icit process of judgement can be dehumanizing and demoralizing and a source of anxiety and distress to employees.It is been said by some that appraisal cannot serve the needs of evaluation anddevelopment at the same time; it must be one or the other.But there may be an acceptable middle ground, where the need to evaluate employees objectively, and the need to encourage and develop them, can be balanced.Benefits for the individual:

• Gaining a better understanding of their role

• Understanding more clearly how and where they fit in within the wider picture

• A better understanding of how performance is assessed and monitored

• Getting an insight into how their performance is perceived

• Improving understanding of their strengths and weaknesses and developmental needs

• Identifying ways in which they can improve performance• Providing an opportunity to discuss and clarify developmental and training needs

• Understanding and agreeing their objectives for the next year.

• An opportunity to discuss career direction and prospects.

Benefits to the line manager/supervisor/team leader:

• Opportunities to hear and exchange views and opinions away from the normal pressure of work

• An opportunity to identify any potential difficulties or weaknesses

• An improved understanding of the resources available

• An opportunity to plan for and set objectives for the next period

• An opportunity to think about and clarify their own role

• An opportunity to plan for achieving improved performance





The history of performance appraisal is quite brief. Its roots in the early 20thcentury can be traced to Taylor

s pioneering Time and Motion studies. But thisis not very helpful, for the same may be said about almost everything in the field of modern human resources management.

As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago.

Yet in a broader sense, the practice of appraisal is a very ancient art. In thescale of things historical, it might well lay claim to being the world

s secondoldest profession!

There is, says Dulewicz (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems,is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily.The human inclination to judge can create serious motivational, ethical and lega

l problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgements made will be lawful, fair, defensibleand accurate.

Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified.The process was firmly linked to material outcomes. If an employee

s performancewas found to be less than ideal, a cut in pay would follow. On the other hand,

if their performance was better than the supervisor expected, a pay rise was inorder.Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well.

Sometimes this basic system succeeded in getting the results that were intended;but more often than not, it failed.

For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance.

These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also

have a major influence.As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as

tool for motivation and development was gradually recognized. The general modelof performance appraisal, as it is known today, began from that time.

Modern AppraisalPerformance appraisal may be defined as a structured formal interaction betweena subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.



By the same token, appraisal results are used to identify the poorer performerswho may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their countrythat might restrict their capacity to dismiss employees or decrease pay.)

Whether this is an appropriate use of performance appraisal - the assignment andjustification of rewards and penalties - is a very uncertain and contentious ma

tter.s goals, they will provide a process to accomplish those goals.

Bibliography:Bernardin, H. J., Kane, J. S., Ross, S., Spina, J. D., and Johnson, D. L. (1996). "Performance Appraisal Design, Development, and Implementation." In Handbook of Human Resource Management, Gerald R. Ferris, Sherman D. Rosen, and Darold T. Barnum ed., Cambridge, Mass: Blackwell, 462-493.Cascio, W. F. (1998). Applied Psychology in Human Resource Management, 5th ed. Upper Saddle River, NJ: Prentice-Hall.Cawley, B. D., Keeping, L. M., and Levy, P. E. (1998). "Participation in the Performance Appraisal Process and Employee Reactions: A Meta-Analytic Review of Field Investigations," Journal of Applied Psychology, 83(4):615-633.DeNisi, A. S., Robbins, T. L., and Summers, T. P. (1997). "Organization, Processing, and Use of Performance Information: a Cognitive Role for Appraisal Instruments," Journal of Applied Social Psychology, 27:1884-1905.Greller, M. M. (1998). "Participation in the Performance Appraisal Review: Inflexible Manager Behavior and Variable Worker Needs," Human Relations, vol. 51, no.

8, pp 1061-1083.Grote, D. (1996). The Complete Guide to Performance Appraisal, New York: AMACOMBook Division.Illgen, Daniel R., Barnes-Farrell, Janet L., and McKellin, David B. (1993). "Performance Appraisal Process Research in the 1980s: What Has It Contributed to Appraisals in Use?" Organizational Behavior and Human Decision Processes, 54:321-368.Jawahar, I. M., and Stone, T. H. (1997). "Influence of Raters

Self-Consciousness and Appraisal Purpose on Leniency and Accuracy of Performance Ratings" Psychological Reports, 80:323-336.Jourdan, J. L., and Nasis, D. B. (1992). "Preferences for Performance AppraisalBased on Method Used, Type of Rater, and Purpose of Evaluation" Psychological Report, 70:963-969.Kaplan, R. E. (1993). "360-Degree Feedback Plus: Boosting the Power of Co-Worker

Ratings for Executives." Human Resource Management, 32:299-314.Kravitz, D. A., and Balzer, W. K. (1992). "Context Effects in Performance Appraisal: a Methodological Critique and Empirical Study" Journal of Applied Psychology, 77:24-31.Maurer, T. J., Raju, N. S., and Collins, W. C. (1998). "Peer and Subordinates Performance Appraisal Measurement Equivalence" Journal of Applied Psychology, 83,5:693-902.Mount, M. K., Judge, J. A., Scullen, S. E., Sytsma, M. R., and Hezlett, S. A. (1998). "Trait, Rater, and Level Effects in 360-Degree Performance," Personnel Psy



chology, 51,3:557.Peach, E. B., and Buckley, M. R. (1993). Pay for Performance. In H. J. Bernardin

and J. Russell (eds.), Human Resource Management: An Experiential Approach. NewYork: McGraw-Hill, 482-515.

Sanches, J. I., De La Torre, P. (1996). "A Second Look at the Relationship Between Rating and Behavioral Accuracy in Performance Appraisal," Journal of AppliedPsychology, 81:3-10.Schneier, C. E. and R. W. Beatty, "Developing Behaviorally Anchored Rating Scales (BARS)" The Personnel Administrator, August (1979),60.Smith, H. P. (1997). Performance Appraisal and Human Development, Reading, MA: Addison and Wesley Longman Inc.Wynne, B. (1996). Performance Appraisal: A Practical Guide, Philadelphia: Technical Communications, Oct.

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