Performance Appraisal: Enhancing Organizational Efficiency

1. Appraising Performance

2. Purpose of Performance Appraisal The main focus of performance appraisal is: • improving organisation performance by focusing on individual effort and by developing them The other purpose of a performance appraisal is: • to communicate to the employee how management views his/her productivity, based on job specifications. • to provide a forum for an exchange of information and input between employer and employee.

3. Performance Appraisal • Purpose: improve organisational performance • How: regular discussions between individual & manager • Where: at the work place • When: continuous; often at half yearly or yearly interval • By Whom: employee's supervisor and the employee

4. What is it for? The underlying purpose of performance management is to improve the utilisation of staff resources by: • assigning work more efficiently • improving job placement • validating selection procedures and evaluating training programs • recognizing potential for development to managerial positions • identifying training needs • fostering a better working relationship between subordinate and supervisor • fostering a better working relationship between work units • assisting employees in setting career goals • fostering improvements in work performance • meeting employees' needs for growth • keeping employees advised of what is expected of them

5. It is also to provide a basis for such personnel actions as: • Periodic appraisal • promotion based on merit • recognition and rewards for past performance • review at completion of a probationary period • warning about unacceptable performance

6. What does it need? • a precise summary of the individual's agreed contribution to the organisation performance for the year • knowledge of what the individual has achieved in the past period • knowledge of the way the individual performs his/her tasks/duties

7. Designing an effective system of appraisal • The process of designing an appraisal system should ideally involve incumbents, supervisor, clients, peers, customers and HR professionals in making decisions about each of the following issues: • measurement content • measurement process • defining the rater (i.e. who should rate the performance) • defining the ratee (i.e., the level of performance to rate) • administrative characteristics.

8. The Appraisal Process • An appraisal involves: • Setting work standards • Assessing actual performance vs. these standards • Providing feedback to the employee

9. Why Appraise Performance? • Appraisals provide information for promotion and salary decisions • Provides opportunity to review an employee’s work related behavior with the goal of correcting deficiencies • Is part of the career-planning process • Appraisals help manage and improve your firm’s performance

10. The Supervisor’s Role • Must be familiar with basic appraisal techniques • Be candid but fair when delivering bad news • HR will often outline guidelines but leave implementation to supervisors

11. Steps in Appraising Performance Define the Job Make sure all agree on duties Appraise Performance Provide Feedback Compare performance to the standard Discuss progress & make plans

12. Manage Expectations • Job descriptions are usually written for a group of jobs leaving many aspects of a job without specific goals • Quantify expectations with explicit goals for each expectation • Employee should know basis of appraisal ahead of time

13. Appraisal Methods Graphic rating scale: • 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 the level of performance for each trait. • Quality - 1-5 • Productivity - 1 - 5

14. Appraisal Methods Alternation Ranking Method: • Ranking employees from best to worst on a particular trait, choosing highest then lowest till all are ranked. A particular trait Ranking

15. Appraisal Methods Paired Comparison Method: • Ranking employees by making a chart of all possible pairs of the employee for each trait and indicating which is the better of the employee.

16. Appraisal Methods Forced Distribution Method: • Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories.

17. Appraisal Methods • Critical incident method • Keeping a record of uncommonly good or undesirable examples of an employees work related behaviour and reviewing it with the employee at the predetermined time.

18. Narrative Forms • Final appraisals are frequently in a written narrative form • Supervisor rates employee’s: • Performance factor or skill • Give examples & an improvement plan • Explains good & bad performance areas

19. Behaviorally Anchored Rating Scales BARS combine best features of narrative, critical incidents, and quantified scales in five steps • Generatecritical incidents • Developperformance dimensions • Reallocate incidents • Scale the incidents • Develop a final instrument

20. BARS for Grocery Clerks • Researchers developed a BARS for grocery clerks by collecting critical incidents in 8 areas (rating scale given below): • Knowledge and judgment • Conscientiousness • Skill in human relations • Skill in operation of register • Skill in bagging • Ability of checkout work • Skill in monetary transactions • Observational ability 9 1 Extremely Poor Poor Average Good Extremely Good

21. Advantages of BARS • A more accurate gauge of performance • Clearer standards – critical incidents along the scale make it clear • Feedback – its easier to explain ratings to appraises • Independent dimensions – clustering critical incidents make dimensions more independent • Consistency – different raters appraisals of same individual are similar

22. Management by Objectives MBO refers to a organizational 6 step goal setting and appraisal program Set the organization’s goals Set the departmental goals Discuss developmental goals Define expected results Performance reviews Provide feedback

23. Dealing With Rating scale Appraisal Problems • Unclear standards – use of words like “good” or “fair” on appraisals • Halo effect – one trait affects all ratings • Central tendency – everyone’s in the middle • Leniency or strictness – no middle • Bias – characteristics affect rating

24. One study showed appraisal reviewers rated the same woman differently when only difference was pregnancy It demonstrates that outside biases can influence ratings Men and women raters act differently; many things influence how a review is conducted Research Insight

25. How to Avoid Appraisal Problems • Learn and understand the problems • Use the right appraisal tool • Train supervisors • Reduce outside factors: time constraints, union pressures & turnover • Keep a diary of critical incidents

26. Legal Issues in Appraisals • Inadequate appraisal systems often lie at the root of discriminatory layoffs, promotions, discharges or merit pays • They are arguable if appraisals are: • Based on subjective observations • Not administered and scored consistently • Based on evaluators who did not have daily contact

27. Who Does the Appraising? • Peers • Your Boss • Rating committee • Subordinates • You

28. 360o Appraisals • 360o assessments evolved from upward feedback appraisals • One study: 29% use it with 11% planning to add multi-source assessments • Great deal of paperwork

29. The Appraisal Interview Appraisal interview - an interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. Adequate preparation and effective implementation are therefore essential.

30. Three Appraisal Types/Objectives Appraisal Type The Objective Performance is satisfactory Employee promotable Make development Plans Satisfactory Not promotable Maintain Performance Unsatisfactory Correctable Take corrective Action

31. Keep These in Mind When Conducting the Interview • Be direct and specific -talk in terms of objective work data • Don’t get personal -“You’re too slow in producing those reports.” • Encourage the person to talk -stop and listen to what the person is saying • Don’t tiptoe around -make sure the person leaves knowing exactly what they are doing right and wrong

32. A Defensive Subordinate • Understanding and dealing with defensiveness is an important appraisal skill • Defensive behavior is normal • Never attack a person’s defenses • Sometimes it is best to do nothing at all • Recognize your own limitations – don’t expect to be able to solve every problem that arises

33. Use Constructive Criticism • Provide examples • Avoid yearly “critical broadsides” by giving frequent feedback • No real surprises at formal appraisal • Criticism should be objective

34. How to Insure Improved Performance • Set improvement goals • Establish comfort • Allow employee influences • Provide constructive information

35. Most Commonly Used Appraisal Methods Society for Human Resource Management reports about 89% of surveyed managers use performance appraisal for all their employees

36. Do Appraisals Really Help? • Traditional appraisals may be counterproductive • One study showed 32% rated appraisals ineffective; 4% rated them effective