performance management performance management is the process of planning performance, appraising performance, giving its feedback ,and counseling

an employee to improve his performance.

Features of performance management Performance management system is closely linked to the other system of human resource management. It is a continuous process of monitoring and feedback Performance mgt involves effective use of technology in conveying desired competencies and monitoring, collecting, and giving feedback It is a dynamic system that is suitable for changing workplace realities It emphasizes comprehensive training to managers not only for their improvement but to act as a effective coaches Difference between performance management and performance appraisal Performance mgt is more comprehensive than performance appraisal, though latter is the key ingredients of the former. Besides performance appraisal and performance management involves Performance planning and providing feedback and counseling to employees to improve their performance.

Performance appraisal consists in the setting of job standards and evaluation of the past performance. It is understood that the evaluation is carried out based on the job standards that have earlier been set. On the other hand performance management concentrates on managing the performance in state time so that the performance can reach the expected level. This is one of the main differences between performance management and performance appraisal. performance management is the older and traditional approach. On the other hand performance appraisal is a sort modern method or approach of evaluating the performance of an employee of a firm or an organization Performance appraisal is a limited function in the sense that it concentrates only on the evaluation of the past performances and it is usually done once or at the most two times in a year. On the other hand performance management is a continuous function in the

sense that it is done in an on-going fashion to ensure that the employees discharge their capabilities in such a way that targets are achieved in real-time basis. Performance appraisal is more formal and structural in nature. On the other hand performance management is more casual and flexible in nature. This is also an interesting difference between the two methods of evaluation. Performance management is more customized for employees work. On the other hand performance appraisal is more standardized based on the designation of the employee of the firm

Performance appraisal Performance Appraisal :- is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding manager or supervisor. A performance appraisal is a part of guiding and managing career development. It is the process of obtaining, analyzing, and recording information about the relative worth of an employee to the organization. Performance appraisal is the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employed. For the purpose of administration including placement, selection for promotion, providing financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally. According to shubin, :- performance appraisal is a systematic appraisal of the employee personality traits and performance on the job and designed to determine his contribution and relative worth to the firm OBJECTIVES OF PERFORMANCE APPRAISAL: Data relevant to performance assessment of employee are recorded, stored and used for several purposes.The main objectives of employees performance appraisal are: 1. To effect promotions based on performance and competence. 2. To confirm the services of probationary employees, upon their completing the probationary period satisfactorily.

3. To access the training and development need of the employees. 4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed. 5. To let the employees become aware about their performance level and to assist them with constructive criticism and guidance for the purpose of their development. 6. To improve communication, performance appraisal provides a format of dialog between superiors and the subordinates, there by bringing an understanding or personal goals and concerns.

IMPORTANCE OF PERFORMANCE APPRAISAL: Performance appraisal is the systematic description of an employees job relevant strengths and weakness. The basic purpose is to find out how well the employee is performing the job and establish a plan of improvement. Appraisal is arranged periodically according to a definite plan. Performance appraisal is not job evaluation. Performance appraisal refers to how well; someone is doing the assigned job. Job evaluation determines how much a job is worth, to the organization and therefore, what range of pay should be assigned to the job.

PERFORMANCE APPRAISAL PROCESS: Establishing the Performance appraisal standards

Communicating the standards to employee

Measuring the actual performance

Comparing the actual performance with standard performance

Discussing about appraisal

Taking corrective action

ESTABLISHING THE PERFORMANCE APPRAISAL STANDARDS: The appraisal process begins with setting up of objective. To be used for appraising the performance of employee. The criteria are specified with the help of job analysis. The criteria should be clear objective and in written form. COMMUNICATING THE STANDARDS TO EMPLOYEE: The standard set for performance appraisal should be communicated to all the employees. That standard must be explained to all employees. When the standards are known to the employee they will try to put their affords for to achieve objectives with out communicating. MEASURING THE ACTUAL PERFORMANCE: Once, the performance standards are specified and accepted the next step is evaluated the actual performance. The evaluation mainly depending upon some techniques and methods and internal and external factors. COMPARING THE ACTUAL PERFORMANCE WITH STANDARD

PERFORMANCE:The actual performance compared with the pre determined performance standards. When, the actual performance is exceed than standard performance the result is positive. The actual performance is less than standard performance the result is negative. DISCUSSING ABOUT APPRAISAL:The results of the appraisals are communicated to the employees and discussed with the employee about performance such decisions enable thee employee to know his weaknesses and strengths. TAKING CORRECTIVE ACTION: Appraisal process will be useful only when corrective action is taken on the basis of results. The corrective action may be the form of advice (or)

warning. It may be in the form of additional training, refresher training, and management development programs, coaching, etc, CHARACTERISTICS OF PERFORMANCE APPERAISAL: (1). RELIABILITY AND VALIDITY:Appraisal system should provide consistent reliable and valid information and data, which can be used to defend the organization even in large challenges. (2). JOB RELATEDNESS:The appraisal technique should measure the performance and information in job related areas. (3). STANDARDIZATION:Appraisal forms, procedures, administration of techniques, rating, etc., should be standardized as appraisal decisions affect all employees of the group. (4). PRACTICAL VIABILITY:The techniques should be practically viable to administrator, possible to implement and economical regarding cost aspect. (5). LEGAL SANCTION:It should have compliance with the legal provisions concerned of the counter. (6). TRAINING AND APPRAISERS: Appraisal is important and some times difficult. It would be useful to provide training to appraisers. (7). OPEN COMMUNICATION: A good appraisal system provides the needed feedback on a continuing basis. (8). EMPLOYEE ASSESS TO RESULTS:The employees should receive adequate feedback on their performance. If performance appraisal is meant for improving employees performance, then with holding appraisal results would not serve any purpose

CONTENTS OF PERFORMANCE APPRAISAL: Every organization has to decide upon the content to be appraised before the programmer is approved. Content to be appraisal may be in the form of contribution to organizational objectives. Like, production, cost saving, return of capital, etc., .

Other measures are based on Regularity of attendance. Self expression. Ability to work with others. Leadership styles and abilities. Initiative. Technical skills. Ability to insert. Originality and resourcefulness. Creative skills. Area of insert. Area of suitability. Judgment skills. Honesty and sincerity. Organizational knowledge.

WHO SHOULD APPRAISE PERFORMANCE? MANAGER / SUPERIOR APPRAISAL Performance Appraisal done by an employees manager and often reviewed by a manager one level higher. Manager and/or Superior appraisal has been the traditional approach to evaluating an employees performance. In most instances supervisors are in the best position to perform this function, although it may not always be possible for them to do so. Managers often complain that they do not have the time to fully observe the performance of employees. These managers must then rely on performance records to evaluate an employees performance. If reliable and valid measures are not available, the appraisal May be less than accurate.

SELF-APPRAISAL Performance appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview. Sometimes employees are asked to evaluate themselves on a self-appraisal form. The self-appraisal is beneficial when managers seek to increase an employees involvement in the review process. A self-appraisal system requires an employee to complete the appraisal from prior to the performance interview. At a minimum, this gets the employee thinking about his or her strengths and weaknesses and may lead to discussions about barriers to effective performance. During the performance interview, the manager and the employee discuss job performance and agree on a final appraisal. Critics of self-appraisal argue that self-raters are more lenient than managers in their assessments and tend to present themselves in a highly favorable light.

SUBORDINATE APPRAISAL Performance appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes. Subordinate appraisal has been used by both large organizations (such as Xerox and Honeywell) and small organizations (such as Hyde Manufacturing and Alliance funding) to give managers feedback on how their subordinates view them. Subordinates are I in a good position to evaluate their managers since they are in frequent contact with their superiors and occupy a unique position from which to observe many performance related behaviors. Those performance dimensions judged most appropriate for subordinate appraisals include leadership, oral communication, delegation of authority, coordination of team efforts, and interest in subordinates.

PEER APPRAISAL Performance appraisal done by ones fellow employees, generally on forms that are compiled into a single profile for use in the performance interview conducted by the employees manager.

Individuals of equal rank who work together are increasingly asked to evaluate each other. A peer appraisal provides information that differs to some degree from ratings by a superior, since peers often see different dimensions of performance. Peers can readily identity leadership and interpersonal skills along with other strengths and weakness of their co-workers. A superior asked to rate a patrol officer on a dimension such as dealing with the public may not have had much opportunity to observe it. Fellow officers on the other hand, have the opportunity to observe their behavior regularly. One advantage of peer appraisals is the belief that they furnish more accurate and valid information than appraisals by superiors. The supervisor often sees employees putting their best foot forward, while those who work with their fellow employees on a regular basis may see a more realistic picture. With peer appraisals, co-workers complete an evaluation on the employee. Despite the evidence that peer appraisals are possibly the most accurate method of judging employee behavior, there are reasons why they have not been used more frequently.

The reasons commonly cited include the following: 1. Peer ratings are simply a popularity contest. 2. Managers are reluctant to give up control over the appraisal process. 3. Those receiving low ratings might retaliate against their peers 4. Peers rely on stereotypes in ratings

TEAM APPRAISAL Performance appraisal, based on TQM concepts, that recognizes team accomplishment rather than individual performance. An extension of the peer appraisal is the team appraisal. While peers are on equal standing with one another, they may not work closely together. In a team setting, it may be nearly impossible to separate out an individuals contribution. Advocates of team appraisal argue that, in such

cases, individual appraisal can be dysfunctional since it detracts from the critical issues of the team. A companys interest in team appraisals is frequently driven by its commitment to TQM principles and practices. At its root, TQM is a control system that involves settings standards (based on customer requirements), measuring performance against those standards and identifying opportunities for continuous improvement.

CUSTOMER APPRAISAL Performance appraisal, which, like team appraisal, is based on TQM concepts and seeks evaluation from both internal and external customers. Also driven by TQM concerns, an increasing number of organizations use internal and external customer appraisal as a source of performance appraisal information. External customers evaluations, of course, have been used for sometime to appraise restaurant personal. Managers establish customer service measure (CSMs) and set goals for employees (linked to company goals).Often the CSM goals are linked to employee pay through incentive programs. Customer survey data are then incorporated into the performance evaluation. By including CSMs in their performance reviews, managers hope to produce more objective evaluations, more effective employees, more satisfied customers, and better business performance.

METHODS OF APPRAISAL Broadly all the approaches to appraisal can be classified in to following: 1. PAST ORIENTED

Rating Scale Check Lists Forced Choice Method Forced Distribution Method

Critical Incident Method Behaviorally Anchored Scale Field Review Method Performance Tests And Observations Annual Confidential Report Essay Method Cost Accounting Approach Comparative Evaluation

2. FUTURE ORIENTED Management By Objectives 360 Degree Appraisal Psychological Appraisal Assessment Centers

PAST-ORIENTED METHODS: RATING SCALE: This is the simplest and most popular technique of appraising employees performance. The typical rating scale system consists of several numerical scales, each

representing a job related performance criterion such as dependability, initiation, output, attendance, attitude, co-operation and the like. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, and then computes the employees to total numerical score. The number of points scored may be linked salary

increases, where by so many points equal a rise of some percentage. Rating scaled offers the advantages of adaptability, relatively easy use and low cost. The disadvantages of this method are several. The raters biases are likely to influence

evaluation, and the biases are particularly pronounced on subjective criteria such as co-operation, attitude and initiative.

CHECK LIST METHOD Under this method, a check list of statements on the traits of the employee and his /her job is prepared in 2 columns-vise, a Yes column and a No column. All that the rater should do is to tick the Yes column if the answer to the statement is positive and in the column No if the answer is negative. FORCED CHOICE METHOD: In this the rate is given a series of statements about an employee. These statements are arranged in a block of two or more, and rather indicate, which statement is more or least descriptive of the employee. FORCED DISTRIBUTION METHOD: The forced distribution method seeks to over come the problems by compelling the rates on all points on the rating scale. The method operates under an assumption that employee performance level conforms to a normal statistical distribution. Generally it is assumed that the employee performance levels conform to a bell shaped curve. CRITICAL INCIDENTS METHOD: The critical incident method of employee assessment has generated a lot of interest these days. The approach focuses on behavior of employees that makes all the difference between effective and non-effective performance of job. Such incidences are recorded by superiors as and when they occur. BEHAVIOURALLY ANCHORED RATING SCALE (BAR): Behaviorally anchored scales, sometimes called behavioral expectation scales, are rating scales whose scale points are determined by statements of effective and in-effective behaviors. They are said to be behaviorally anchored in that the scale represent a range of descriptive statements of behavior varying from least to most effective. BAR has following features: 1. Areas of performance to be evaluated are identified and defined by the people who will use the scale.

2. The scales are anchored by descriptions of actual job behavior that, supervisors agree, represent specific level of performance. The result is a set of rating scale in which both dimensions and anchors are precisely defined. 3. All dimensions of performance to be evaluated are based on observable behaviors and are relevant to the job being evaluated since BARS are tailor-made for the job. 4. Since the raters who will actually scale are actively involved in the development process, they are more likely to be committed to final product.

FIELD REVIEW METHOD: This is an appraisal by someone outside the accesss own department, usually someone from the corporate office or the HR department. The outsider reviews employee records and holds interviews with the rate and his or her superior. The method is primarily used for making promotional decision at the managerial level; field reviews are also useful when comparable information is needed from employees in different units or locations. PERFORMANCE TEST AND OBSERVATIONS: With a limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may be of the paper and pencil variety or an actual demonstration of skills. The test must be reliable and validated to be useful. COFIDENTIAL RECORD Confidential records are maintained only in government departments, though its application in the industry is not ruled out. The system is highly secretive and confidential. Feedback to the assesses was given only incase of an adverse entry. ESSAY METHOD: In the essay method, the rater must describe the employee within a number of board categories such as The raters overall impression of the employees performance, The promo ability of the employee,

The jobs that the employee is now able or qualified to perform, The strengths and weakness of employee The training and the development assistance required by the employee. Although this method is being used independently, it is most frequently found is combination with others. It is extremely useful for filling information gaps about the employees that often occur in the best structured checklist method.

This is the traditional method in which appraises the rate in an open-ended manner and uses a free-form in his own words and puts down his impressions about the employee. They take note about these factors: a) Job knowledge and potentials. b) Employees characteristics and attitude. c) General organization and planning attitude. d) Production or quantity, quality and cost control. e) Physical conditions. f) Development needs of future. COST ACCOUNTING METHOD: This method evaluates performance from the monitory returns the employee yields to his or her organization. A relationship established between the cost included in keeping the employees and the benefits the organization derives from him or her. Performance of the employee is then evaluated based on the established relationship between the cost and the benefits. COMPARITIVE EVALUATION APPROACHS: This method evaluates performance from the monetary returns the employee yields to his or her organization. A relationship is established between the cost included in keeping the employee and the benefit the organization derives from his or her. Performance of the employee is then evaluated based on the established relationship between the cost and the benefit. FUTURE ORIENTED APPRAISAL:

The commonly used future oriented technique is MBO, psychological appraisal &assessment centers. MANAGEMENT BY OBJECTIVES: Management by objectives is a technique used by managers in some organizations to motivate employees to perform well by using the goal-setting technique. OBJECTIVES OF MBO: 1). to identify the problems and opportunities in the business. 2). to convert identified opportunities in to clear goals. 3). to set up a system to convert these goals into achievements. 4). to set a standard of performance. 5). to raise a standard of performance 6). to set a new target where the existing ones have proved unrealistic. . PSYCHOLOGICAL APPRAISAL: Large organizations employ full time industrial psychologist, when psychologists are used for evaluations; they assess an individuals future potential and not performance. The appraisal normally consists of in depth interviews, psychological tests, discussions with supervisors and a review of other evaluations. The psychologist may be for a specific job opening for which the person is being considered, or it may be a global assessment of his or her future potential. ASSESSMENT CENTER Mainly used for executive hiring, assessment centers are now beginning used for evaluating executive or supervisory potential. An Assessment centers are a central location where managers may come together to have their participation in job-related exercises evaluated by trained observers. The principal idea is to evaluate managers over a period of time, say one to three

days, by observing(and later evaluating) their behavior across a series of select exercises or work samples. 360-DEGREE FEEDBACK: The performance evaluation technique by multiple raters is called 360-degree appraisal. The 360-degree technique is understood as systematic collection of performance data on an individual or group, derived from a number of stakeholders- the stakeholders being the immediate supervisors, team members, customers, peers, and self. In fact, anyone who has useful information on how an employee does the job may be one of the appraisers. The 360-degree appraisal provides a broader perspective about an employees performance. In addition, the technique facilitates greater self-development of the employees.

Potential Appraisal In the modern era of HRM, appraisal system lays greater emphasis on the development of employees rather than on their evaluation. This is better fulfilled by the Potential Appraisal which involves assessing the capability of an employee which he possesses but that is not being utilized fully. It is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. Potential appraisals are required to: 1. Inform employees about their future prospects. 2. Help the organization chalk out a suitable succession plan. 3. Update training efforts from time to time. 4. Advise employees about what they must do to improve their career prospects. Process of Potential Appraisal Role descriptions Organizational roles and functions must be defined clearly. For this job descriptions must be prepared for each job.

 Qualities needed to perform the roles Based on job descriptions the roles to be played by people must be prepared (i.e. technical, managerial jobs and behavioral dimensions) Rating mechanisms 1) Rating by others to examine technical capabilities. 2) Psychological tests to know managerial and behavioral dimensions. 3) Simulation games to uncover the potential of the candidate. Performance records and ratings on candidates previous jobs can be examined on dimensions like creativity, risk taking etc Organizing the system HR manager sets up a system to allow the introduction of the scheme smoothly incorporating answers to some complex questions such as: 1. How much weightage to accord to merit in place of seniority in promotions? 2. How much weightage to accord to each of the performance dimensions-technical, managerial, and behavioral qualities? 3. What are the mechanisms of assessing the individual on different indicators of his potential, and with what degree of reliability? Feedback Every employee must have the opportunity to know the results of his assessment.

Performance Counseling It is an interactive process between the employee and hiscounselor to anticipate the likely problems in job performance, defining proactive actions to overcome those problems, and implementing those actions on a continuous basis.

Steps in Performance Counseling: Rapport between employee and counselor. Exploring information about performance. To define future goals. Drawing action plans. Pre-requisite for Performance Counseling: Organizational culture for performance improvement. Continuous desire for learning. Continuous dialogue. Focus on work-related behavior