UNIT 9

Performance Appraisal
Meaning of Performance Appraisal
Performance appraisal is the process of making an assessment of the performance and progress of the employees of an organisation. Once an employee has been inducted into the organisation and given the necessary training, the next step is to assess his performance periodically. Such an assessment would indicate whether he is efficient or not. Performance appraisal is also known as merit rating or efficiency rating. The following factors are given weightage in evaluating the performance and progress of an employee: 1. Knowledge of work 2. Extent of co-operation with colleagues and superiors 3. Initiative 4. Quality of work 5. Target attainment 6. Aptitude 7. Degree of skill 8. Discipline 9. Punctuality 10. Honesty 11. Ambition 12. Crisis management, etc.

Features of Performance Appraisal

The following are the salient features of performance appraisal: 1. It considers both the job performance as well as personal qualities of an employee.

2. Every subordinate is assessed by his immediate superior. 3. Both the managers and the subordinates are subjected to appraisal. 4. The manner of evaluation is standardised to facilitative comparisons. 5. Appraisal is done periodically and in a systematic manner.

Advantages of Performance Appraisal

The benefits of performance appraisal may be explained as follows: 1. It helps to ensure that the right man has been inducted into the organisation. Although every individual would have been thoroughly examined before placement, it is necessary to know whether the person does his work with the same interest and aptitude he displayed at the time of test and interview. 2. Performance appraisal helps to know whether the training given to an employee has been really effective. If appraisal reveals that there is imporvement in performance after training it should mean that the training is effective. 3. The various incentives provided to an employee may be determined in accordance with his performance evaluation report. Increment, commission and career advancement benefits may be fixed based on the employees performance and progress. 4. Performance appraisal also provides a basis for promotion, transfer or even removal of an employee from service. An employee who has shown good progress may be considered for promotion to a higher level job. He may be transferred to some other section or branch if his performance in the present job is not up to the mark. An employee who is found to be highly inefficient may be even removed from service. 5. It motivates efficient employees to perform even better as they know that if they perform well they will be suitably rewarded. On the other hand, it cautions the less efficient employees by indicating that if their performance is going to be of the same level they may even lose their jobs. 6. Performance appraisal is basically necessary to enable the employee himself to know there he stands in relation to the other employees of the organisation.

This will induce him to put in more efforts if he finds that he is below his colleagues in performance. 7. An employee whose performance is below the expected level may be given the necessary training to do better. This gives him a sense of satisfaction. Such a satisfied employee does not complain about anyone or anything. This improves human relations in the workplace. An atmosphere of cordiality prevails in the organisation that is vital for its growth. 8. The performance appraisal records serve as evidence of an employees progress. The management can preserve such records to defend itself against possible charges of favouritism or discrimination.

Methods of Performance Appraisal

The following are the import methods of appraising the performance of employees: 1. Ranking method 2. Graphic scale rating method 3. Forced choice method 4. Essay appraisal method 5. Paired comparison method 6. Field review method 7. Critical incidents method Let us now discuss these different methods.

Ranking Methods
This is conventional method of appraisal. Under this method, the employees in a group are given ranks by the superior according to their individual performance. The method resembles the one followed in schools in preparing the progress reports of the students. The best employee gets the first rank, the second best the second rank and so on.

Name of the employees Rank

Shyam

Mohan

Sundar

Rajiv

Figure 9.1 Ranking Method A number of factors like attitude, aptitude, behaviour, honesty, commitment etc., will have to be considered in making an assessment of an employees performance. The superior may make a subjective assessment rather than an objective measurement of the employees progress. For a subjective assessment the ranking method may not be recommended. Graphic Scale Rating Method This method of evaluation of employees is widely used in enterprises. The important qualities to be assessed are determined first. The extent of fulfillment of each such quality by an employee is then tick marked. Name of the EmployeeR. Mohan.. Designation.Mechanic. Nature of work.Repair Service.. Figure 9.2 Graphic Rating Scale The method, like the ranking method, is simple to use. But the drawback is that sometimes the evaluator may tend to give an employee the same rating in respect of all his traits. For example, if he has given Excellent for Quality of work, he may give the same rating even for behaviour, initiative, job knowledge etc. Some evaluators may, in order to be neutral or non-committal, rate majority of the employees as just average. On the other hand, there are also superiors who may rate all their subordinates as very good.

Forced Choice Method

In this case, the assessor has to assess his subordinates based on certain statements given to him. These statements may indicate the positive as well as the negative qualities of an employee. The evaluator has to select those statements that describe the employee, who is assessed, in the best manner. This is illustrated below: Positive Qualities 1. Very knowledgeable 2. Meticulous in planning 3. Very good in execution 4. Committed to work 5. Sincere 6. Dependable 7. Possess good communication skills 8. Loyal 9. Time conscious 10. Co-operative Negative Qualities 1. Shirks duties 2. Undependable 3. Quarrelsome 4. Non-co-operative 5. Poor in planning 6. Lacks the skill to communicate 7. Lacks initiative 8. Lethargic 9. Irregular 10. Irritable nature

The evaluator will choose from the above statements those that describe the subordinate in the most appropriate manner. But the drawback of this method is that the superior has to select only from the given statements. He may find the statements either inadequate or unsuitable to bring out the actual traits of the individual.

Essay Appraisal Method

As the very name indicates this approach is descriptive in nature. The assessor in this case has to write in detail about each of the subordinates whose performance he assesses. This method helps to overcome the drawbacks of the methods discussed already.

A superior may manage 5 or 6 subordinates and knows the traits of each them. It will not, therefore, be difficult for him to write about their performance and progress. The assessment made using the essay method is bound to be more reliable as it is in the evaluators own write-up. But the essay method is not free from limitations. It is considered to be a timeconsuming method. The success of the method depends mainly on the capacity of the superior to write effectively about his subordinates.

Paired Comparison Method

In this case a subordinate in a group is compared with the other members. For example, if A, B, C and D are the subordinates working under S, A may be compared with B, C and D in respect of job knowledge, initiative, extent of co-operation and so on. In this manner every employee is compared with every other employee of the group. Paired comparison method is generally considered to be a complicated one. It is time-consuming as well.

Field Review Method

This is an altogether different approach t performance appraisal. In this case, an interviewer from the personnel department of the enterprise would meet the supervisor and gather information on the performance of the subordinates working under him. The supervisor may also be asked to suggest measures to improve the subordinates performance. The interviewer records the views of the supervisor carefully and the same will be preserved for future reference or guidance. The success of this method, however depends much on the capability of the interviewer to get the relevant information from each supervisor and the willingness of the supervisor t disclose correct information.

Critical Incident Method

This is yet another different method. The evaluator in this case will be asked to record the behaviour of different subordinates when a critical incident takes place in the workplace. Rating will be done based on the extent of correctness of the subordinates behaviour. Let us assume that P, Q, R, S and T are factory worker. Let us further assume that T is involved in an accident while at work and record the reactions of P, Q, R and S and the scores they would get for the same. Name of the worker Reaction Score

Run away from the place.

Informed the supervisor.

Gave T the necessary first aid.

Took T to the nearest

hospital.

The scores given are in accordance with the extent of correctness of behaviour of each employee. This approach is suitable to measure such qualities of an individual as judgement, alertness, initiative, loyalty etc. The drawback of this method is that critical incidents do not take place in the workplace often. As a result, it is not possible to make frequent appraisal of the employees. Moreover, whether an incident is critical or not is difficult to judge.

MBO method (MBO-MANAGEMENT BY OBJECTIVES)

It is a technique by which the superior and the subordinate jointly identify the objectives desired to be achieved by the subordinate in tune with the overall results expected. The concept of MBO was developed b Peter Drucker.

The following are the stages involved in the process of MBO: 1. Establishment of Objective Once the basic objectives of the enterprise have been established, objectives of individual departments will have to be set. The targets of the subordinates of every department will then be fixed mutually between the subordinate concerned and his superior. This will be done after a certain number of meetings between the two. While setting the targets of subordinates, it will be ensured that they are in tune with the enterprise targets. In other words, there shall be perfect co-ordination between the target of the subordinates and those of the enterprise. The subordinates shall express their expected tasks in clear measurable terms. 2. Periodical Review The performance of the subordinates shall be subject to periodic review. The superiors shall provide appropriate direction for the effective performance of the task undertaken. The targets may also be revised if it is found that the subordinates are not able to proceed in the right direction. 3. Final Review In the final meeting between the superior and the subordinate, to review the latters performance, if it is found that the subordinate has successfully accomplished his tasks, he gets not only appreciation but also reward in the form of promotion or such other benefit. If the performance of the subordinate is not satisfactory, he may be given additional training to carry out his tasks better in the next period.

Advantages of MBO
1. It promotes better communication relationship between the superior and his subordinates. 2. It gives the subordinate an opportunity to fix his own targets in consultation with his superior. This he will do by considering his own potentials. The subordinate knows precisely what he is expected to do. 3. As the subordinates have the freedom to determine their own targets, they feel motivated and also show keen interest in their attainment. 4. The periodic review of the subordinates performance enables him to know whether he is proceeding in the right direction.

Disadvantages of MBO
1. The superior and his subordinate may have to meet several times for the sake of setting the objectives mutually. 2. Periodic review of the subordinates performance involves lot of times and also paper work. 3. MBO has not much to do with the lower levels of management.

Problems in Performance Appraisal

The following are the problems normally encountered in appraising the performance of employees: 1. There is no consensus among the assessors on the factors that should be given priority in evaluating the performance of the subordinates. For examples, some may give weightage for the quantum of work done while others may consider only the quality of work even if the quantum of work done is below the expected level. 2. Some superiors have the tendency to certify all their subordinates as very efficient while others may be very strict in their evaluation and may certify even a very efficient subordinate as just average. There are still others who give average ratings to all with a view to be non-committal. 3. The personal likes and dislikes of the superior also affect employee appraisal. If a superior does not personally like a subordinate, he may deliberately give him low ratings. On the other hand, if he likes another subordinate he may give him high ratings. 4. Another problem in performance appraisal is that there is always scope for favouritism and nepotism. Factors such as religion, caste, mother tongue etc., influence employee ratings. Discrimination based on sex is also common. 5. There are a number of methods available to evaluate performance. The plus and minus points of each such method also influence ratings.

6. Such qualities of employees as attitude, commitment, loyalty, dependability etc., cannot be objectively measured. The subjectivity in their measurement also distorts result.

Steps to make Performance Appraisal effective

The following measures may be adopted to make performance appraisal effective. 1. There must be consensus among the raters on the criteria for appraisal of the subordinates performance. Otherwise, each superior will adopt his own criterion to assess performance and this will result in lack of uniformity. For example, if one superior judges performance by the quality of work and another gives weightage for the quantum of work done the assessment will not be correct. 2. The method of appraisal once selected should be continuously followed. This is necessary to ensure consistency in assessment. 3. The managers capacity to judge the subordinates also needs to be examined. The General Manager of the enterprise may undertake this task. 4. There should be no discrimination on the basis of religion, caste, sex and such other considerations. The job performance of the subordinate and related issues alone must get the focus in appraisal. 5. Appraisal of subordinates performance must be undertaken at regular intervals. Only then the manager will be able to know whether there is any change in performance. 6. The results of appraisal must be communicated to the subordinate at the right time. Only then the subordinate will be able to make efforts to performs better if the results indicate that his performance is just average. 7. It will not be enough if the superior only conveys the results to the subordinate. He must also tell them the ways and means to improve their performance. 8. Suitable incentives must be given to the subordinates who have performed really well. Such incentives may be in the form of increment, bonus, greater authority etc. if all the subordinates are treated alike, irrespective of their

performance, there will not be any motivation for the efficient employees to put in efforts. 9. Performance appraisal is meaningful only if certain important decisions like employee promotion, transfer etc., are linked to their job performance. 10. For the appraisal of employees to be successful, it is important that there is trust and confidence between the superiors and subordinates.

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