Performance appraisal is a distinct and formal management procedure used in the evaluation of work performance.

It can be defined as a structured formal interaction between a subordinate and his superior, at a defined periodicity. During a performance discussion the previous periods performance of the subordinate is examined and discussed. In addition the performance appraisal is also used to identify areas of training and improvement. It is a review of his work and goals that are set for him by the company in accordance with the goals of the company. In many organizations, appraisal results are used, to help determine reward outcomes. It helps in identifying the better performers employee who will get majority of available merit pay increases, bonuses and promotions. It also helps in identifying the poor performers who may require some form of counseling or in extreme cases, demotion, dismissal or decrease in pay. Appraisals address a whole person development and not just job skills or skills required for promotion. There are 8 commonly used methods of Performance Appraisal.

Comparative Standards or multi-person comparison- this relative method of performance is one in which one employees performance is compared to the performances of the other employees.

Group Rank Ordering in this kind of performance appraisal, the supervisor places employees into a particular classification such as top one fifth and second one fifth. If a supervisor has ten employees only two could be in the top fifth and two must be assigned to the bottom fifth.

Individual ranking- in this, the supervisor lists the employees from highest to lowest. The difference between the top two employees is assumed equivalent to the difference between the bottom two employees.

Paired comparison- in this the supervisor compares each employee in the group and rates each as either superior or weaker of the pair. After all comparisons are made, each employee is assigned a summary or ranking based on the number of superior scores received.

Critical incidents- the supervisors attention is focused on specific or critical behavior that separate effective from ineffective performance.

Graphic rating scale- in this kind of performance appraisal, a set of performance factors such as job-knowledge, work quality, cooperation are listed, that the supervisor uses to rate employee performance using an incremental scale.

Behaviorally anchored rating scale (BARS) BARS combines elements from critical incident and graphic rating scale approaches. The supervisor rates employees according to items on a numerical scale. Management by objectives- management by objectives evaluate how well an employee has accomplished objectives determined to be critical in job performance. This method aligns objectives with quantitative performance measures such as sales, profits, zerodefect units produced.

360 degree feedback- In this multisource feedback method provides a comprehensive perspective of employee performance by utilizing feedback from the fuel circle of people with whom the employee interacts, supervisors, subordinates and co-workers. It is effective for career coaching and identifying strength and weaknesses.

Strengths of the negotiated performance appraisal are its ability to promote candid two-way communication between the supervisor and the person being appraised and to help the latter take responsibility for improving performance. In contrast, in the traditional performance appraisal, the supervisor acts more as a judge of employee performance, than a coach. By doing so, unfortunately, the focus is on blame rather than on helping the employee assume responsibility for improvement. Thus there are a whole lot of conventional trends that have changed the outlook of performance appraisals. Lets analyze the new trends that are prevalent in performance appraisal in todays corporate world: A valuable line management tool- todays performance appraisal system is one of the principle tool, executives, line managers, and employees are able to use to achieve their collective goals. The change in application of performance appraisal has been enabled by software that provides management with a way to achieve its operational and strategic goals. These new applications provide a means of: cascading strategic and operational objectives down to ensure every person knows their part of the plan and executes their part of the plan,

developing the entire organization by setting specific development objectives for each individual, providing managers with visibility of their team members, Multiple assessment methods like business objectives, development objectives, competency review, behavioral objectives and activity review. Full time performance appraisal - Annual appraisal is rapidly being replaced with Full time Performance Management. This trend provides a mechanism where both managers and employees are able to make relevant notes on performance related issues throughout the year. This function is also referred to as performance diary. When the appraisal is conducted, both are better prepared and have a full record of achievements or areas for development and coaching throughout the year. This feature also promotes an ongoing dialogue between managers and employees and ensures that both are on track to achieve their goals for the year. Lets take an example of an IT manager to see how the performance diary is used in practice. One of his primary objectives is to deliver all projects on time and on budget. With the performance diary, the IT manager makes notes on each project all the way through the year. His own manager also makes notes about these projects. When both parties meet, they have an adequate data to draw from and can perform a meaningful review in a short amount of time. They can objectively develop a relevant performance rating derived from factual data. Therefore, the IT manager receives an objective review based on documented information as opposed to a subjective review based on memory. Less reliance on position descriptions- In years gone by, appraisals were often conducted against a position description. Today both HR and Line management are using performance appraisal system to drive performance requirements during future performance periods. The reasons behind this shift are: firstly, position descriptions are typically static. Secondly, position descriptions are only one element of the performance management spectrum. Thirdly, position descriptions are far out of date and line management cannot rely on their integrity to conduct performance appraisal. Low administration Performance Management- Early automated performance management systems were stand alone systems that offered several benefits but still suffered from high administrative input. These systems required HR to make duplicate data entries for all additions, changes and deletions to staff because entries had to be made in both the payroll system and the performance management system. Today, performance management applications can be fully integrated with the payroll system which means data entry is only required in payroll. All changes made to payroll are automatically made to the performance management application. This substantially reduces costs related to administration, enabling HR to assist line management with more strategic issues and matters of compliance. Link to strategy- Performance Appraisal systems are the vehicle for setting organizational objectives to organizational strategy. Combined with Full Time Performance diary functionality, performance appraisal system is now one of the most powerful methods for effectively directing organizational effort.

Retention- Organizations have now made the link between performance appraisal systems and retention. In the war for talent, employees want to be appreciated and developed. The answer to this is frequent reviews and developmental planning. Automated Performance Appraisal addresses both of these needs. Succession planning- Performance appraisal systems can leverage the data collected to implement succession planning system to allow HR to realize successors for critical and non critical roles and also the high potential staff. A significant benefit of this is that the employees see the organization as a developing career path and this binds them closer to their organization and work. Remuneration management and salary packaging- By implementing aneffectivePerformance Appraisal system, organizations can now rank employees according to how well they achieved their business and development objectives. So remuneration now gains objectivity and is directed mainly towards those employees who are the top achievers. Thus Performance Appraisal system in its present form is a trend itself. Performance Appraisal system has progressed from appraisals and reviews to a valuable tool to link performance to strategy and to do this in an environment that is less onerous on HR than it has ever been in the past. In a nutshell performance appraisals are an important part of any corporate or organizational plan because it drives the manpower in various ways to work their best towards the success of the goals and targets. __________________ .

Mr Shudeep Zara is a senior manager at Moon enterprises, a company specializing in developing telescopes. He has just been promoted to a role which involves people management and does not know how to go about a performance appraisal. He does not know the importance of a performance appraisal and what are the blunders he should avoid. Fortunately, we come to his rescue and answer his queries. The employee Performance Appraisal enables the manager or the supervisor to identify, evaluate and develop an individuals performance. It is a tool to encourage strong performers to maintain their high level of performance and to motivate poor performers to do better. It offers a chance for a supervisor and subordinate to have time out for a one-on-one discussion of important work issues that might not otherwise be addressed. Performance Appraisal is a medium that provides recognition for an employees good work. The existence of an Appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This has a positive influence on the individuals sense of worth, commitment and belonging. Performance Appraisal offers an excellent opportunity, for a supervisor and subordinate to recognize and agree upon individual training and development. From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for

training. This data may be analyzed by variables such as sex, department etc. in this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization. Appraisal data can be used to monitor the success of the organizations recruitment and induction practices. For example how well are the employees performing who were hired in the past two years? Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and given sufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the work force is improving staying steady or declining. Performance Appraisal not only results in a healthy interaction between the supervisor and the employee but also brings forth the problems of a job (if any), needs of a job, strengths and weaknesses of an employee, the training needs etc. The benefits of Performance Appraisal can be discussed under three headings.

Benefits for the employee

Gaining a better understanding of their role. Understanding more clearly how and where they fit in within the wider picture. Understanding of how performance is assessed and monitored. Getting an insight into how their performance is perceived. Improving and understanding their strengths, weaknesses and developmental needs. Identifying ways to improve employee performance. Providing an opportunity to discuss and clarify developmental and training needs. Understanding and agreeing to their objectives for the next year. Discussing career direction and prospects.

The above if done in true spirit encourages employee satisfaction. Benefits to the line manager/supervisor/team leader

Opportunities to hear and exchange views and opinions away from the normal pressure of work. Identifying potential difficulties or weaknesses. Understanding the resources available. Planning for and setting objectives for the next period. Thinking about and clarifying each ones role in the team. Planning for achieving improved performance. Planning for further delegation and coaching. Motivating members of the team.

Benefits to the organization

Identifying and assessing potential. Gathering information regarding the expectations and aspirations of employees. Analyzing information to improve decisions about promotions and motivation. Reviewing succession plan. Assessing training needs which forms the base for developing training plans. Updating of employee records (achievements, new competencies). Career counseling.

In reality, many managers handle performance appraisals quite poorly. The result is not only an unpleasant meeting, but one where the manager and his/her staff members never quite appreciate the others point of view, and never appreciate the others point of view, and never quite settle an appropriate goals for the coming year. Its almost inevitable that the staff members will end up less happy, motivated and less motivated than what she/he was before. To make performance appraisal an enriching experience for both the employee and his supervisors, the supervisor should remember not to make the following 5 mistakes:
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Waiting for the performance appraisal to give feedback

This is a very commonly committed blunder. Its where a manager falls to give someone adequate feedback on their performance during the year, and then dumps it on them in the performance appraisal meeting. Unfortunately, the feedback is almost always negative, so the employee ends up sitting there in shock- at best, wondering why his/her manager didnt say something sooner, at worst, feeling unjustly victimized.
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Overemphasizing recent performances

Its very natural to remember and give greater weight to recent events rather than earlier events. This can lead to an inaccurate and unfair assessment when it comes to reviewing an employees performance. The manager must take notes of an employees work throughout the year.
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Being too positive or too negative

Some managers feel uncomfortable giving negative feedback and consequently, can omit to give employees the constructive criticism they need to improve. And then there are other managers who are instinctively too negative, leaving the employee wondering if they can do anything right. As a manager, appraising an employees performance, he should give an honest opinion, so that the employee understands and appreciates the managers view.

Being critical without being constructive

Some managers can be too critical and neglect to provide any constructive advice on how an employee can improve. This doesnt help the employee or the manager. In order to refrain the employee from feeling victimized, the manager should validate his criticism by giving reasons and improvement tips.
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Talking and not listening

The final big mistake that the managers make in a performance appraisal is, doing too much talking and not enough listening. Performance Appraisal meeting are meant to be interactivewhere the manager doesnt simply rely on his/her own appraisal of the employees performance but also listens to the employees viewpoint and his feedback of the job.

In truth, managers who seek to influence the performance of their employees need not always have the support of an elaborate corporate system. The most effective performance management approaches build on a strong communication system that is transparent; exemplifies high standards and trust. In a nutshell Performance Appraisal is a legitimate employee evaluation and feedback system which makes the system and working of a company more transparent and goaloriented. It is not just a process to review an employees performance but also an opportunity that can give the employee, the required motivation to do better and the superior a feedback on the problems of a job (if any) and finally the organization gets rejuvenated employees to work their best.

Performance Management: Current Trends

March 01, 2006 Recent research reveals that the majority of organizations are utilizing performance management systems / performance management software and many are in the process of revamping their first generation systems. According to Development Dimensions International (DDI), performance management systems are active in 91% of 3,600+ organizations studied. This article will review the current trends in performance management, and how companies worldwide are making changes.

Performance Management - A Definition

According to SHRM (the Society for Human Resource Management), "performance management is the organized method of monitoring results of work activities, collecting and evaluating performance to determine achievement of goals, and using performance information to make decisions, allocate resources and communicate whether objectives are met." It is likely the majority of employees equate "performance management" to their performance appraisal form and yearly discussion with their manager about "how they are doing in their job." But things are changing in this area of HR.

Performance Management - Current Trends

Strategic HR - The Link Between Employee Performance Management and Organizational Performance Increasingly companies are focusing on "strategic HR," aligning human resources initiatives with the overall goals of the organization to improve business success. Aligning Employee Performance Management (EPM) with Corporate Performance Management (CPM) has the following effects: 90% of companies surveyed, perceive improved management of their workforce as key to gaining competitive advantage. - "Employee Performance Management: The Aligned, Performance Driven Workforce," AberdeenGroup, 2005

Organizations are aligning their employee performance goals with corporate performance goals through technology solutions. Increased Integration of HR Functions Research shows there is a clear movement to integrate the traditional siloed HR functions into a more holistic, strategic approach to human capital management. Some integration opportunities include:

Aligning employee goals with corporate goals (as described above)

Linking reward and recognition programs to performance Targeting learning and development toward performance gaps Identifying skills and competencies of top performers for retention and succession planning

Increased Automation of Performance Management and HR Functions Integrating traditional HR functions, has given rise to an increased need to automate them. Connecting the functions at their integration points into clean, close-looped systems eliminating duplication of data and streamlining reporting processes is the charge for many organizations. According to CIO Magazine article "Strategic HR Integration" (August 15, 2005) strategic HR integration offers ROI opportunities in "connecting disparate HR systems into a cohesive whole." When selecting external applications from vendors, companies need to make sure they are "connection-oriented."

Online performance management systems

59% of HR executives identify improvement of HCM (Human Capital Management) technology as a key response to their business challenges. Main areas of focus:

hiring management solutions pre-employment assessment employee self-service performance management

- "The HR Executive's Agenda: The 2005 Benchmark Report:", AberdeenGroup, 2005

However, with all this focus on online systems, More than half (52%) of companies surveyed in 2005, are stuck in paper-based performance evaluation systems with annual reviews. - "Employee Performance Management: The Aligned, Performance Driven Workforce," AberdeenGroup, 2005

As companies transition to online performance management systems, some key ingredients are:

Scalability - able to deploy on large scale with solid security Employee self-service - managers and employees able to access systems anytime, any place, on-demand Integration - ability to connect with other HR systems

Increased Communication Regarding Employee Performance With increasing use of performance management technology, managers and employees more easily communicate regarding performance issues. Annual performance reviews are being replaced with more frequent schedules (quarterly, monthly, etc.). In addition, performance management technology enables organizations to include feedback from a variety of audiences. Such 360-degree feedback is internal (supervisors, peers, subordinates) and external (customers, vendors, etc.). Employees Perceptions A recent Watson Wyatt survey of 113 Canadian organizations and 3,000 employees revealed the following of their employees:

Only 29% feel their companies do a good job of identifying and rewarding top performers Only 27% feel there is a clear link between performance and pay Only 24% feel their companies manage poor performers so their work improves

A new Hay Insight Research report is a little more favorable, however still shows room for improvement. Below are some highlights from their research database of approximately 1.2 million employees in over 400 organizations worldwide: Less than 50% of employees believe their organizations adequately address poor performance. Clearly it is a challenge for most companies large or small to manage the performance of their employees . . . especially in the eyes of those employees. However, those organizations making the connection between employee performance and organizational performance are taking steps to integrate once disparate hr functions with online systems that offer long term ROI towards organizational and individual employee success.