Professional Documents
Culture Documents
Once an employee has been selected, trained and placed on the job, the next step is that of performance appraisal. Performance appraisal is the process of evaluating the performance of the employee in the organization. Performance appraisal is the process by which the management finds out how well or how badly the employee is performing on the job. Performance appraisal is beneficial both to the employee in the organization. Performance appraisal is a kind of feedback to the employee. It enables him to understand whether his work is satisfactory or whether he needs any improvements in his performance. Performance appraisal will reveal to an employee his strengths and weaknesses, enhancing his self confidence in some areas and encouraging him to improve his performance in other areas. Every organization has certain goals and is interested in making optimum profits. Performance appraisal provides feedback to the management whether an employees performance is up to the mark and whether he is contributing to the attainment of organizational goals. Important management decisions such as promotions, transfers, demonstrations, raises in salary, training and as on are made on the basis of the performance appraisal reports.
Communication: For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways: 1) Through performance appraisal, the employers can understand and accept skills of subordinates. 2) The subordinates can also understand and create a trust and confidence in superiors. 3) It also helps in maintaining cordial and congenial labor management relationship. 4) It develops the spirit of work and boosts the morale of employees. All the above factors ensure effective communication. Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a persons efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future.
Disadvantages
1. Time Consuming It is recommended that a manager spend about an hour per employee writing performance appraisals and depending on the number of people being evaluated, it can take hours to write the departments PA but also hours meeting with staff to review the PA. Ive know managers who had 100 plus people to write PAs on. 2. Discouragement
If the process is not a pleasant experience, it has the potential to discourage staff. The process needs to be one of encouragement, positive reinforcement and a celebration of a years worth of accomplishments. It is critical that managers document not only issues that need to be corrected, but also the positive things an employee does throughout the course of a year, and both should be discussed during a PA. 3. Inconsistent Message If a manager does not keep notes and accurate records of employee behavior, they may not be successful in sending a consistent message to the employee. We all struggle with memory with as busy as we all are so it is critical to document issues (both positive and negative) when it is fresh in our minds. 4. Biases It is difficult to keep biases out of the PA process and it takes a very structured, objective process and a mature manager to remain unbiased through the process. See Performance Appraisal Rater Errors Article.
Performance Appraisal, also known as employee appraisal, is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). Performance Appraisal is a part of career development. Performance Appraisals are regular reviews of employee performance within organizations. Generally, the aims of a Performance Appraisal are to: 1. Give feedback on performance to employees. 2. Identify employee training needs. 3. Document criteria used to allocate organizational rewards. 4. Form a basis for personnel decisions: salary increases, promotions, disciplinary actions, etc. 5. Provide the opportunity for organizational diagnosis and development. 6. Facilitate communication between employee and administration 7. Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements.
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Performance Appraisal is a management tool which is helpful in motivating and effectively utilizing human resources. Assessment of human potential is difficult, no matter how well designed and appropriates the performance planning and appraisal system is, the Performance Appraisal system should: d with the organizational mission, philosophies and value system;
- Linking
rewards
with achievements,
- generating information for the growth of the employee as well as of the organization, - suggesting appropriate person-task matching and career plans. Feedback is an important component of Performance Appraisal. While positive feedback is easily accepted, negative feedback often meets with resistance unless it is objective, based on a credible source and given in a skilful manner.
There are various methods available for assessing results, behavior and personal characteristics of an employee. These methods can be used according to the particular circumstances and requirements. (ii) Communicating Job Expectations The second step in the appraisal process is communicating to employees the measures and standards which will be used in the appraisal process. Such communication should clarify expectations and create a feeling of involvement. (iii) Planning
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In this stage, the manager plans for the realization of performance expectations, arranging for the resources to be available which are required for attaining the goals set. This is an enabling role. (iv) Monitoring Performance Performance Appraisal is a continuous process, involving ongoing feedback. Even though performance is appraised annually, it has to be managed 'each day, all year long.' Monitoring is a key part of the Performance Appraisal process. It should involve providing assistance as necessary and removing obstacles rather than interfering. The best way to effectively monitor is to walk around, thus creating continuous contacts, providing first-hand information, and identifying problems, which can then be solved promptly. (v) Appraising This stage involves documenting performance through observing, recalling, evaluating, written communication, judgment and analysis of data. This is like putting together an appraisal record. (vi) Feedback After the formal appraisal stage, a feedback session is desirable. This session should involve verbal communication, listening, problem solving, negotiating, compromising, conflict resolution and reaching consensus. (vii) Decision Making On the basis of appraisal and feedback results, various decisions can be made about giving rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demotion). The outcome of an appraisal system should also be used for career development.
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(viii) Development of performance The last stage of Performance Appraisal is 'development of performance,' or professional development, by providing opportunities for upgrading skills and professional interactions. This can be done by supporting participation in professional conferences or by providing opportunities for further study. Such opportunities can also act as incentives or rewards to employees.
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means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings. / Goals the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information.
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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 the organization such as recruitment, selection, training and development.
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TRADITIONAL METHODS
(1) Graphic Rating Scale A graphic scale 'assesses a person on the quality of his or her work (average; above average; outstanding; or unsatisfactory).' Assessment could also be trait centered and cover observable traits, such as reliability, adaptability, communication skills, etc. Although graphic scales seem simplistic in construction, they have application in a wide variety of job responsibilities and are more consistent and reliable in comparison with essay appraisal. The utility of this technique can be enhanced by using it in conjunction with the essay appraisal technique.
(2) Ranking Methods: Some of the important forms of ranking for Performance Appraisal are given below, based on Oberg, 1972; and Monga, 1983:
(a) Alteration Ranking Method The Individual with the Best performance is chosen as the ideal employee. Other employees are then ranked against this employee in descending order of comparative performance on a scale of best to worst performance. The alteration ranking method usually involves rating by more than one assessor. The ranks
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assigned by each assessor are then averaged and a relative ranking of each member in the group is determined. While this is a simple method, it is impractical for large groups. In addition, there may be wide variations in ability between ranks for different positions.
(b) Person-to-Person Rating: In the person-to-person rating scales, the names of the actual individuals known to all the assessors are used as a series of standards. These standards may be defined as lowest, low, middle, high and highest performers. Individual employees in the group are then compared with the individuals used as the standards, and rated for a standard where they match the best. The advantage of this rating scale is that the standards are concrete and are in terms of real individuals. The disadvantage is that the standards set by different assessors may not be consistent. Each assessor constructs their own person-to-person scale which makes comparison of different ratings difficult.
(c) Checklist Method: The assessor is furnished with a checklist of pre-scaled descriptions of behavior, which are then used to evaluate the personnel being rated (Monga, 1983). The scale values of the behavior items are unknown to the assessor, who has to check as many items as she or he believes describe the worker being assessed. A final rating is obtained by averaging the scale values of the items that have been marked.
(d) Behaviorally Anchored Rating Scales (BARS): This is a relatively new technique. It consists of sets of behavioral statements describing good or bad performance with respect to important qualities. These qualities may refer to interpersonal relationships, planning and organizing abilities, adaptability and
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reliability. These statements are developed from critical incidents collected both from the assessor and the subject.
(e) Assessment centers: This technique is used to predict future performance of employees were they to be promoted. The individual whose potential is to be assessed has to work on individual as well as group assignments similar to those they would be required to handle were they promoted. The judgment of observers is pooled and paired comparison or alteration ranking is sometimes used to arrive at a final assessment. The final assessment helps in making an order-of-merit ranking for each employee. It also involves subjective judgment by observers. A Performance Appraisal system could be designed based on intuition, selfanalysis, personality traits, behavioral methods and result-based techniques. Different approaches and techniques could be blended, depending on the goals of Performance Appraisal in the organization and the type of review. For example, management by objectives, goal-setting and work standard methods are effective for objective coaching, counseling and motivational purposes. Critical incident appraisal is best suited when supervisor's personal assessment and criticism are essential. A carefully developed and validated forced-choice rating can provide valuable analysis of the individual when considering possible promotion to supervisory positions. Combined graphic and essay form is simple, effective in identifying training and development needs, and facilitates other management decisions. (3) Paired comparison method: = In this method each employee is compared with every other employee in the workgroup. Comparisons are made between two people at a time, and a judgment is made about which of the pair is superior
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The raters task is to merely state which of the two is better on the dimension being rated. Final conclusion is drawn on the basis of the number of time each person was selected as the better of the pair. Employee is ranked by the number of superior ratings they receive. The number of pairs compared when this method is used is determined by the formula:
N (N-1) 2 Where N is the number of employee to be evaluated. The disadvantage of the paired-comparison method is that it becomes very complicated when the number of individuals to be evaluated is very large. For example if 50 employees are to be evaluated then the rater will have to compare 1225 pairs.
(4) Forced distribution method This method is used when the number of employees to be evaluated is large. This method is based on the principle of normal distribution and assumes that employee performance is normally distributed. The forced distribution system is called by that name because the rater is forced to assign (place) a definite percentage of the employees in each one of the several predetermined categories. The standard distribution is as follows.
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The main advantage of this method is that it does not allow the rater to place all employees at the higher or lower end of the scale. The drawback of this method is that it is not very popular with raters. Raters feel that employee performance is not normally distributed. They also resent the restriction placed on their freedom of choice.
(5) Confidential report A confidential report is a report prepared by the employees immediate superior. It describes the employees personality and behavior, this traditional method of appraisal is used in government organization and is focused on evaluating rather than developing the employee.
(6) Group appraisal In this method employees are evaluated by a group of evaluators. This group usually consists of the immediate superior of the employee, other superiors having close contact with the employees work, head of the department and HR expert. The group of evaluators determines the standards of performance for the job, measures the actual performance of the employee and offers suggestions for improvements. The advantage of this method is that it is more through. It also reduces blas due to the presence of multiple evaluators. The drawback of this method is that it is time consuming in nature.
(7) Critical Incident Appraisal Method In this method, a supervisor describes critical incidents, giving details of both positive and negative behavior of the employee. These are then discussed with the employee. The discussion focuses on actual behavior rather than on traits. While this technique is well suited for performance review interviews, it has the
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drawback that the supervisor has to note down the critical incidents as and when they occur. That may be impractical, and may delay feedback to employees. It makes little sense to wait six months or a year to discuss a misdeed, a mistake or good display of initiative
(8) Essay Appraisal Method: The assessor writes a brief essay providing an assessment of the strengths, weaknesses and potential of the subject. In order to do so objectively, it is necessary that the assessor knows the subject well and should have interacted with them. Since the length and contents of the essay vary between assessors, essay ratings are difficult to compare.
(9) Field Review Method Since individual assessors differ in their standards, they inadvertently introduce bias in their ratings. To overcome this assessor-related bias, essay and graphic rating techniques can be combined in a systematic review process. In the field review method, 'a member of the HRM staff meets a small group of assessors from the supervisory units to discuss each rating, systematically identifying areas of inter-assessor disagreement.' It can then be a mechanism to help each assessor to perceive the standards uniformly and thus match the other assessors. Although field review assessment is considered valid and reliable, it is very time consuming.
(10) Forced-Choice Rating Method Unlike the field review method, the forced-choice rating method does not involve discussion with supervisors. Although this technique has several variations, the most common method is to force the assessor to choose the best and worst fit statements from a group of statements. These statements are weighted or scored in advance to assess the employee. The scores or weights assigned to the individual statements are not revealed to the assessor so that she or he cannot favor any
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individual. In this way, the assessor bias is largely eliminated and comparable standards of performance evolved for an objective. However, this technique is of little value wherever Performance Appraisal interviews are conducted.
MODERN TECHNIQUES
(1) Management by Objectives The employees are asked to set or help set their own performance goals. This avoids the feeling among employees that they are being judged by unfairly high standards. This method is currently widely used, but not always in its true spirit. Even though the employees are consulted, in many cases management ends up by imposing its standards and objectives. In some cases employees may not like 'selfdirection or authority.' To avoid such problems, the work standard approach is used.
(2) Work Standard Approach In this technique, management establishes the goals openly and sets targets against realistic output standards. These standards are incorporated into the organizational Performance Appraisal system. Thus each employee has a clear understanding of their duties and knows well what is expected of them. Performance Appraisal and interview comments are related to these duties. This makes the appraisal process objective and more accurate. However, it is difficult to compare individual ratings because standards for work may differ from job to job and from employee to employee. This limitation can be overcome by some form of ranking using pooled judgment.
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(3) Assessment centers The assessment center in an organization is the place where individuals are assessed in as systematic and scientific manner as possible. An assessment center is a place specially designed and equipped for a specific purpose appraisal. The objective of an assessment center is the evaluation of individuals for future growth and development. The evaluation is made not on the job but is based on observations of behavior and on the results obtained in psychological tests. In an assessment center a thorough and complete evaluation is done of the individual his strengths, weaknesses and personality characteristics. The common procedure in assessment centers is to evaluate a small group of individuals over a period of 2 to 3 days. The group undergoes several types of individual and group activities or exercises for 2 or 3 days under the watchful eyes of a team of experts. The activities and exercise include such things as management group discussions, psychological tests, interviews, self-ratings and problem solving exercises. The results of assessments are used to make selection, promotion and transfer decisions.
(4) Human assets accounting This method is still in the early stages of development. It attempts to measure the monetary value of the human resources of the organization. In this method, evaluation is done in terms of costs and contributions of employees. Costs of human resources consist of expenditure on human resources is the money value of labor productivity of value added by human resources. The difference between cost and contribution reflects the performance of employees.
and to know and understand him better. Hence, it is possible that their rating would be more accurate and reliable than the superior who is not so much in touch with the employee. Also an employee is more likely to be his normal self when he is with his peers and act differently when the superiors are around.
(2) Appraisal by subordinates In this system of appraisal, the junior or subordinate evaluates his immediate senior of superior. The major problem here is the fear of appraisal (revenge). The subordinate may not express negative opinions out of fear that the superior may create trouble for him. Besides a subordinate may rate the superior in terms of the degree to which the superior has satisfied his personal motives and desires rather than in terms of his contribution to the organizational goals.
(3) Psychological appraisal A different type of appraisal is carried out by industrial psychologists who have had some training in the techniques of personality assessment. Appraisal reports are prepared after conducting extensive interview and administering different psychological tests on the employee. The psychologist attempts to get a clear understanding regarding the personality of the employee. He tries to know the underlying intellectual (very intelligent, average etc.), emotional (very sensitive, gets distributed quickly etc.) and motivational (very ambitious, persistent etc.) characteristics of the person. The psychologist then converts this information in to a picture of how such a person might be expected to behave in the future.
(4) Self-evaluation In this method of performance appraisal, the employees are asked to assess their own abilities and job performance. They have to also evaluate their strengths and weaknesses. The central idea behind self-rating is that no one knows
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an individual better than the individual himself. Self appraisal can be useful when combined with information obtained through other methods.
(5) 360-degree feedback The 360-degree feedback method of performance appraisal is become popular and is growing in use. Its growing popularity is reflected in a recent study, which found that nearly 90 percent of fortune 1000 firms use 360-dgree feedback for their employee appraisal. In India too, large organizations such as Reliance industries, Infosys, Godrej Soaps, and Wipro have started using this system to evaluate the performance of their employees. A 360-degree feedback is a performance appraisal process that gathers performance information from multiple people, including ones subordinates, peers, supervisors and customers. 360-degree aims at providing more accurate and diverse input on an employees performance by seeking feedback from varied sources. The 360-degree feedback system recognizes that performance varies across contexts and that individuals behave differently in different situations. This system acknowledges the reality that an employees performance is made up of multiple behaviors. By using multiple raters, 360-degree feedback attempts to capture this variety of behavior and improve the quality of performance appraisal.
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The butt of many a corporate joke, these hard working professionals are often relegated to small back offices where their activities, viewed as little more than administrative functions, are carried out without much recognition. But in an increasingly aggressive corporate world, where every competitive edge counts, leading organisations would do well to recognise the human potential that can be unleashed by adopting effective human resource management strategies that realise the potential of employees and earn their respect and loyalty.
Dealing with the mundane personal matters of corporate life has traditionally been seen as the sole purpose of the HR department. From hiring workers and providing transportation and meals services, to processing housing, medical and insurance benefits, the functions of HR professionals have been recognised as essential, but have not always inspired respect for those involved in executing them. Essentially, people remain the strongest and most competitive assets of a business. This should, and is, changing. In a region where business growth is rapid, and organisations are competing to secure talent from the same pool, investing in and revering effective HR departments to find, train and help retain this talent is increasingly important. Testament to the fact many banks in the region are now recognising the value of developing their human resources, Abu Dhabi recently hosted the Middle East Human Resource Summit - the annual conference and
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exhibition for industry professionals. But can everyone be persuaded to take real action in developing their HR departments
Banking industry is facing a cut throat completion in present banking scenario where the motivation of the employee can be a competitive advantage to retain its customer.
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(2) Encouraging present supervisors to attend communication or conflict management Classes at the local community college, or
For validation purposes, it is easier to evaluate performance data when large numbers of workers are involved such as in banks. Useful performance data may still be collected when employees are evaluated singly, but it may take years to obtain significant data trends.
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The facilitation of high achievement by employees. Performance management involves enabling people to perform their work to the best of their ability, meeting and perhaps exceeding targets and standards. Performance management can be coordinated by an interrelated framework between manager and employee. Key areas of the framework to be agreed are objectives, human resource management, standards and performance indicators, and means of reward. For successful performance management in ICICI , a culture of collective and individual responsibility for the continuing improvement of business processes needs to be established, and individual skills and contributions need to be encouraged and nurtured as the bank deals in service sector where the employees are the main factor of making the difference . One tool for monitoring performance management is Performance Appraisal that the banks use for rewarding its employees. For the bank, performance management is usually known as company performance and is monitored through business appraisal.
Develop valuable communication among appraisal participants Encourage increased self-understanding among staff as well as insight into the kind of development activities that are of value Distribute rewards on a fair and credible basis Clarify organizational goals so they can be more readily accepted Improve institutional/departmental manpower planning, test validation, and development of training programs
Effective banks are not build merely on investment and returns but more on the quality of the workforce, its commitment to the organizational goals and investments made to attract train and retain superior human capital. An integrated
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Performance Management system is essential to get the best out of its people. Employee performance is linked to the banks performance. This helps in achieving the organizational goal and creates a performance culture in the bank. Invention, creativity, diversity of perspectives is fostered. Employees act as one bank one brand.
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Performance Planning (includes employee goal setting / objective setting) Ongoing Performance Communication Data Gathering, Observation and Documentation Performance Appraisal Meetings Performance Diagnosis and Coaching
An effective Performance Appraisal system in ICICI bank emphasizes individual objectives, Bank objectives and also mutual objectives. From the viewpoint of individual objective the Performance Appraisal talks about a) What task the individual is expected to do? b) How well the individual has done the task? c) How can his performance be further improved? d) His reward for doing well. From the bank view point a Performance Appraisal should generate manpower information, improve efficiency and effectiveness serve as a mechanism of control and provide a rational compensation structure. In short the appraisal system establishes and upholds the principle of accountability in the absence of which bank failure is the only possible outcome. Finally, talking about mutual goals, the emphasis is on growth and development, harmony, effectiveness and profitability of the bank
measuring and evaluation of individual behavior and performance, whilst influencing an employees job related attributes through such factors as increased job satisfaction and recognition (with the use of promotional aids such as better equipment, duties, and salaries). The purpose of any such system, is not only to measure the performance of human resources but also to find areas of skill deficit for further development (through employee feedback), identify excess potential that could be better utilized, and communicate objectives more accurately to workers . By doing so, businesses move one step closer to the achievement of their set goals and objectives. Included here is also one other factor that is not a direct objective of appraisals, but becomes a valuable asset within itself. This simply is the provision for maintaining records of workers that are legally viable, that can protect the business when dealing in cases of dismissals and demotions. This is especially important in todays society because of the "increasing legislation and regulation dealing with victimization and discrimination" making bank liable for all their actions.
The annual Performance Appraisal is usually done in two steps. First, the employees and their manager complete the Performance Appraisal form - doing a self assessment. Often the bank also uses a 60 degree feedback process, asking for input from peers. Secondly, the bank employees and manager participate in a formal Performance Appraisal interview. The appraisal form, used in the first step, consists of performance standards and criteria that are used to judge evaluate your performance. The items comprising your job description are usually the performance standards that are used in employees annual appraisal .The performance standards are derived from a job analysis, which is a detailed list of all of the skills involved in performing a task. For example, what are the skills necessary to perform a complete blood count? The criteria are used to determine the level of performance, which can be excellent, average, or poor (or alternatively
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meets, exceeds or does not meet standards). Once appraisal is complete, score is averaged and merit raise (if applicable)
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6. Manager Performance Appraisal Form Six-page form with all sections related to managerial skills. Also includes a section for listing future objectives. 7. Administrative/Technical Performance Appraisal Form Four-page form perfect for administrative, technical and customer service workers. 8. Sales Performance Appraisal Form Five-page form focused on sales personnel. Includes four sections: a) actual vs. plan performance, b) lead generation, c) selling skills and d) account maintenance.
9. Project Evaluation Review Form Four-page form geared towards specific projects, and an individuals' role on a given project.
10. Employee Self-Assessment Form Two-page open-ended form for an employee to fill-out before his or her own review. Sections include: a) success in meeting goals from last review, b) accomplishments and c) areas for improvement
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Performance management reminds us that being busy is not the same as producing results. It reminds us that training, strong commitment and lots of hard works alone are not results. The major contribution of performance management is its focus on achieving results -- useful products and services for customers inside and outside the bank and organization. Performance management redirects our efforts away from busyness toward effectiveness.
Recently, organizations have been faced with challenges like never before. Increasing competition from businesses across the world has meant that all
businesses must be much more careful about the choice of strategies to remain competitive. Everyone (and everything) in the organization must be doing what they're supposed to be doing to ensure strategies are implemented effectively.
This situation has put more focus on effectiveness, that systems and processes in the organization be applied in the right way to the right things: to achieve results. All of the results across the organization must continue to be aligned to achieve the
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overall results desired by the organization for it to survive and thrive. Only then it be said that the organization and its various parts are really performing. We can say that Performance management should be:
Strategic - it is about broader issues and longer-term goals Integrated - it should link various aspects of the business, people management, and individuals and teams.
know and understand what is expected of them have the skills and ability to deliver on these expectations are supported by the organization to develop the capacity to meet these expectations are given feedback on their performance
Have the opportunity to discuss and contribute to individual and team aims and objectives.
Ongoing banking scenario has changed the scope of the performance management system as the competition is extensive and to retain the employees has become the challenging task for the management. With the help of Performance Appraisal the bank can recognize its true personnel inventory and formulate the strategy for man power planning and career development. Performance Appraisal directly affects the other sub system of HRM such as manpower planning, selection, career development, potential development, recruitment, compensation etc.
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To wind up our discussion we can say that Performance Appraisal is an integrated and widen approach to guide the employees in the right direction to achieve organizational as well as individual objectives mainly in banking sector because of the dominancy of personal skill and service level to interact with the customers
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BIBLIOGRAPHY
1- Books and journals 2- Internal report of banks 3- Corporate bulletin and finance magazine 4- Internet and banks website 5- Personal sources
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