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PERFORMANCE APPRAISAL
PRESENTED BY:-PRIYANKA SAIKIA
ASSAM INSTITUTE OF MANAGEMENT
PGDBM; 4TH TRIMESTER
AAAA
WHAT IS PERFORMANCE APPRAISAL?
PERFORMANCE APPRAISAL is a process of evaluating an employee’s performance of a job in terms of its requirements.
Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview,annual or 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.
HISTORY OF PERFORMANCE APPRAISAL
Employee appraisal systems are said to have been used for the first time during the 1st World War.
The US Army adopted the Man –To- Man rating system for evaluating military personnel
During the 1920-30 period, rational wage structures for hourly paid workers were adopted in industrial units. Under this system, the policy of giving grade wage increment on the basis of merit was accepted. These employee programs were known as Merit rating programs.
TRENDS IN EMPLOYEE APPRAISAL
Item former Emphasis PresentEmphasisTerminogy Merit Rating Employee appraisal Performance appraisal
Purpose Determine qualification Development of individual for promotion, transfer, improved performance wage increase etc. Emotional security.
Factors Personal traits Reults,PerformanceRated
Technique Rating Scales, statistical Mutual goal setting, manipulation of data performance standards
OBJECTIVE OF PA
1. To enable an organisation to maintain an inventory of the number and quality of all managers and to identify and meet their training aspirations
2. To determine increments ,rewards,ad provide a reliableindex for grater responsibility
3. To maintain individual and group deveopment by informing the employee of his performance standards
4. To suggest employee ways of improvement during review period
5. To identify T&D need and its effectiveness
6. To plan career development ,HR planning based on potentialities
AIMS OF PA
Performance Appraisal is being practiced in 90% of the organizations worldwide
Typically, Performance Appraisal is aimed at:
· 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.· To diagnose the training and development needs of the future. . To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development . To reduce the grievances of the employees.. To reduce the grievances of the employees.
IMPORTANCE OF PA
PA is an important tool of personal managementIt is a judgement of the charactritics,traits and performance of employees and has a wide range of utility.\
I. It unifies the appraisal procedure so that all employees are rated in the same manner so that ratings are comparable
II. These are information in the form of records which can be produced as evidence
III. It serves t stimulate and guide employee development
IV. It makes a better employee-emoployer relation through mutual confidence
V. It gives the supervisor a more effective tool for rating their personnel.
WHAT SHOULD BE RATED
There are SEVEN criteria
1. QUALITY
2. QUANTITY
3. TIMELINESS
4. COST EFFECTIVENESS
5. NEED FOR SUPERVISION
6. INTERPERSONAL IMPACT
7. TRAINING
THE EVALUATION PROCESS
Establish performance standards
Communicate performance expectation to employees
Measure actual performance
Compare actual P with standards
Discuss with employee
Initiate corrective action
METHOD OF PERFORMANCE APPRAISAL
There are two types.
Traditional & Modern
Traditional :-
Straight ranking method
Man-to-Man comparison
Paired comparison
Grading
Graphic rating
Checklist
Free essay
Modern Method :-
Assessment Centre
MBO
360 Degree Appraisal
Human asset accounting Method
Behaviouraly anchored rating method
1.MBO
Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management‘
.The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
Features and Advantages
Some of the important features and advantages of MBO are:Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
Clarity of goals
Limitations
1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.2. It underemphasizes the importance of the environment or context in which the goals are set in .In1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity.3.It did not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didn’t adequately cope with the obstacles of:Defects in resources, planning and methodology, The increasing burden of managing the information organization challenge, The impact of a rapidly changing environment, which could alter the landscape enough to make yesterday’s goals and action plans irrelevant to the present.4.Tug of war
2.3600 Feedback:
360-degree feedback, also known as multi-rater feedback, multisource feedback, or multisource assessment Performance-appraisal data collected from 'all around' an employee—his or her peers, subordinates, supervisors, and sometimes, from internal and external customers. Its main objective usually is to assess training and development needs and to provide competence-related information for succession planning—not promotion or pay increase.
The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development. Results are also used by some organizations in making administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a "360-degree review."
LIMITATION
However, there is a great deal of controversy as to whether 360-degree feedback should be used exclusively for development purposes, or should be used for appraisal purposes as well
3.BEHAVIOURALLY ANCHORED RATING SCALE
BARS Behaviorally Anchored Rating scales is a method that combines elements of the traditional rating scales and critical incidents methods. In order to construct BARS seven steps are followed as mentioned below
•Examples of effective and ineffective behavior related to job are collected from people with knowledge of job. •These behaviors are converted in to performance dimensions. •A group of participants will be asked to reclassify the incidents. At this stage the incidents for which there is not 75% agreement are discarded as being too subjective. •Then the above mentioned incidents are rated from one to nine on a scale. •Finally about six to seven incidents for each performance dimensions- will be used as BARS. This is by far the best method used for a performance appraisal method
ADVANTAGES & LIMITATION
Advantages:-
•More accurate
•Clear standards
•Good for providing feedback
BARS technique is more time-consuming and expensive than other appraisal tools.
4.HUMAN ASSET ACCOUNTING METOD
The HAAM refers to activity devoted to attaching money estimates to the value of a firm’s internal human organization and its external customer goodwill.
The current value of a firm’s human organization can be appraised by periodic measurements of ‘Key causal’ & ‘Intervening enterprise’
Key causal variables Organization's management policiesBusiness leadershipStrategiesSkills and behaviorsDecisions
Intervening enterprise variables LoyaltiesAttitudesMotivationsCommunicationDecision making
5.STRAIGHT RANKING METHOD
This is the most commonly used category rating method. The appraiser checks the appropriate place on the scale
for each task listed.it is giving a rank to a person on his job performance against that of another member of a competitive group by placing him as number one or two or three in total group.its a merit based rating.
6.PAIRED COMPARISON METHOD
Each employee’s every trait is compared with all others in pairs one at a time using the same scale for performance. The numbers of times each individual is compared with another is recorded in a paper .Thes numbers yield the rank order of the entirs group.It makes judgement easier than ordinary ranking method.
It is not suitable when group is large.
7.GRADING METHOD
The rater considers certain features such as analytical ability,self;expression,job knowledge, leadership etc. and marks them accordingly to a scale.The actual performance is then compared with these grades and he is allocated the grade which best describes his performance..
8.GRAPHIC OR LINEAR RATING
The factors included in this rating system are Employee Characteristics & Employee Contribution.Employee Characteristics are:-InitiativeLeadershipDependabilityAttitudeEnthusiasmLoyaltyCreative abilityEmotional abilityDecisivenessEmployee Contribution:-Quantity and quality of workThe responsibility assumedSpecific goals achievedRegularity of attendanceVersatility etc. These traits are evaluated to a continuous scale.
9.FORCED CHOICE DISTRIBUTION METHOD
It was evolved after a great deal of research conducted for the military services during World War II
It attempts to correct a rater’s tendency to give consistently high or low ratings to all the employees. Eg-The employee is
a) Is puncual and careful
b) Is a hard worker and co-operative
c) Is dishonest and disloyal
d) Is disinterested in work.
The rater is asked to indicate which of the four phrases are most and least descriptive of the employee.
10.CHECKLIST METHOD
Under this a rater does not evaluate employee performance ,he supplies reports about is and the final rating is done by the personal department. A series of questions are presented concerning an employee and checks to indicate if the answer to a question about an employee is positive or negative.
Eg:-
1. Is the employee reall interested in his job ? yes/no
2. Does he show uniform behaviour to all ? yes/no
It is difficult to assemble ,analyse, and weigh a number of statements about employee characterstics and contribution.
11.FREE EASSAY METHOD
Under this method ,the supervisor makes a free form,open-ended appraisal of the employee in his own words and puts down his impression about the employee.
No attempt is made to evaluate the employee in quantitative manner
DRAWBACKS
It’s a subjective evaluation
No common criteria for evaluation
Supervisor is required to devote considerable time and thought
12.GROUP APPRAISAL METHOD
Under this method,employees are rated by a group.it consists their supervisor and three or four other supervisors who have some knowledge of their performance.
Group discusses the standards and rate accordingly
Very simple
Devoid of bias
Time consuming
PROBLEMS OF APPRAISAL
1. Hallo effect
2. Leniency or strictness or constant error
3. The central tendency problem
4. Similarity error
5. Social differentiation
APPRAISAL SYSTEMS OF FEW COMPAANIES IN INDIA
1. ONGC
With a view to bringing about a performance driven culture within the
organization, ONGC has an annual objective oriented performance appraisal system, which is implemented uniformly across the Organization
The appraisal system used in ONGC is the oldest one.It is a three tier system where an employee is evaluated in three stages by
By the Reporting Officer under whom employee is working. By the Reviewing Officer By the accepting officer
Self appraisal is also there.
2.NRL
The appraisal system implemented in NRL is CR.
At first KPI s are fixed
Then each employee is appraised by his DMGR
Here employees are appraised only by the superiors
But very soon the appraisal system of NRL is supposed to be changed from CR to 360 degree appraisal.
3.IOC, 4.HPCL 5.BPCL 6.NTPC
The PMS used by M/s IOC, HPCL, SAP are IT enabled
PMS in BPCL ad NTPC are paper based
M/s IOC follows a no pen – no paper approach only for executives.
At IOC and at HPCL, the IT enablement has been achieved using separate servers with offline linkages to HR Master data. The package used is customer specific with in house / consultants support.
At IOC, the database used is Oracle and Java is the programming language, package developed by third party solution provider. In absence of ERP payroll, the performance based incentives are paid by extracting information from data base.
7 DABUR INDIA LIMITED
In Dabur India Limited they have the system of performance appraisal of their employees.
The main objective of this performance appraisal system is to evaluate the performance, promote their employees and to arrange for their various training programmes if they require for enhancing their skills in their respective areas and in contribution enhancement.
Employees are evaluated by how well they accomplish a specific set of objectives that have been determined to be critical in the successful completion of their job. This approach is frequently referred to as
management by objectives.
8.MARUTI UDYOG
The company has introduced a unique 360-degree feedback system, starting with its senior leadership from the year 2007.
It is for the top management such as chief general managers and general managers, whose performance is assessed based on feedback from their peers and junior management employees within the same department.
Till lthe year 2006, their performance was being appraised only by the Directors and the
9. PERFORMANCE APPRAISAL ANALYSIS OF BPO
INDUSTRY
In most of the BPO indusstry ithe PA method which is being used is
MBO
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