Define employee performance appraisal. What are the different methods of performance appraisal?

Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development. Performance appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.

1. The supervisor analyses the factors behind work performances of employees.
2. The employers are in position to guide the employees for a better performance.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
5. 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 labour management relationship.
4. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a person’s 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

Different methods of performance appraisal:-

1. Critical incident method

This format of performance appraisal is a method which is involved identifying and describing specific incidents where employees did something really well or that needs improving during their performance period.

Overview

• Each employee will be evaluated as such and one’s performance appraisal will be based on the logs that are put in the evaluation form.
• The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.
• At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance.
• The critical incidents file of performance appraisal is a form of documentation that reflect all data about employee performances.

Disadvantages of critical Incident

This method suffers however from the following limitations:

• Critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates.
• Negative incidents may be more noticeable than positive incidents.
• It results in very close supervision which may not be liked by the employee.
• The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it.
• The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.

 

2. Weighted checklist method

In this style, performance appraisal is made under a method where the jobs being evaluated based on descriptive statements about effective and ineffective behavior on jobs.

Process of weighted checklist

• HR department and Managers / Supervisors will set up checklist for each position.
• If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank.

Sample of weighted checklist

• Does he give respect to his superiors? Yes/No
• Does he follow instructions properly? Yes/No
• Does he make mistakes frequently? Yes/No
The value of each question may be weighted equally or certain questions may be weighted more heavily than others.

Advantages and disadvantages of weighted checklist

• This method help the manager in evaluation of the performance of the employee.
• The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions.
• This method also is expensive and time consuming.
• It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employee’s characteristics, contributions and behaviors.

 

3. Paired comparison analysis

This form of performance appraisal is a good way to make full use of the methods of options. There will be a list of relevant options. Each option is in comparison with the others in the list. The results will be calculated and then such option with highest score will be mostly chosen.

Advantages and disadvantages of paired comparison analysis

• It is useful where priorities are not clear.
• It is particularly useful where you do not have objective data to base this on.
• It helps you to set priorities where there are conflicting demands on your resources.
• This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage.

Steps to conduct paired comparison analysis

• List the options you will compare (elements as A, B, C, D, E for example).
• Create a table 6 rows and 7 column.
• Write down option to column and row; A to row second, cell first from left and A to row first, cell second from left; B to row third, cell first from left and B to row first, cell third from left etc; column seventh is total point.
• Identify importance from 0 (no difference) to 3 (major difference).
• Compare element “A” to B, C, D, E and place “point” at each cell.
• Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score.

Paired comparison in performance appraisal

• The term used to describe an appraisal method for ranking employees.
• We use the above model to appraise employee’ s performance.

 

4. Graphic rating scales

This format is considered the oldest and most popular method to assess the employee’s performance.

In this style of performance appraisal, the management just simply does checks on the performance levels of their staff.

Content of appraisal

• Quantity of work. Volume of work under normal working conditions
• Quality of work. Neatness, thoroughness and accuracy of work Knowledge of job.
• Dependability. Conscientious, thorough, reliable, accurate, with respect to attendance, relief, lunch breaks, etc.
• Judgment
• attitude. Exhibits enthusiasm and cooperativeness on the job
• Cooperation . Willingness and ability to work with others to produce desired goals.
• Initiative.

Rating scales

Rating scales can include 5 elements as follows:
• Unsatisfactory
• Fair
• Satisfactory
• Good
• Outstanding

Advantages of the rating scales

• Graphic rating scales are less time consuming to develop.
• They also allow for quantitative comparison.

Disadvantages of the rating scales

• Different supervisors will use the same graphic scales in slightly different ways.
• One way to get around the ambiguity inherent in graphic rating scales is to use behavior based scales, in which specific work related behaviors are assessed.
• More validity comparing workers ratings from a single supervisor than comparing two workers who were rated by different supervisors.

 

5. Essay Evaluation method

In this style of performance appraisal, managers/ supervisors are required to figure out the strong and weak points of staff’s behaviors. Essay evaluation method is a non-quantitative technique. It is often mixed with the method the graphic rating scale.

Input of information sources

• Job knowledge and potential of the employee;
• Employee’s understanding of the company’s programs, policies, objectives, etc.;
• The employee’s relations with co-workers and superiors;
• The employee’s general planning, organizing and controlling ability;
• The attitudes and perceptions of the employee, in general.

Disadvantages of essay evaluation

• Manager / supervisor may write a biased essay.
• A busy rater may write the essay hurriedly without properly assessing the actual performance of the worker.
• Apart from that, rater takes a long time, this becomes uneconomical from the view point of the firm, because the time of rater is costly.
• Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee.

 

6. Behaviorally anchored rating scales (BARs)

This formatted performance appraisal is based on making rates on behaviors or sets of indicators to determine the effectiveness or ineffectiveness of working performance. The form is a mix of the rating scale and critical incident techniques to assess performance of the staff.

Classification of behaviorally anchored rating scales:

• Behavioral observation scales
• Behavioral expectations scales
• Numerically anchored rating scales

Rating scales

Each behavior can rate at one of 7 scales as follows (you can set scales depend on your requirements)
• Extremely poor (1 points)
• Poor (2 points)
• Below average (3 points)
• Average (4 points)
• Above average (5 points)
• Good (6 points)
• Extremely good (7 points)

Advantages and disadvantages of behaviorally anchored rating scales:

• This method are very useful and exactly.
• It is very difficult to develop this method because you need to identify what is “good level” etc.

  

7. Performance ranking method

The performance appraisal of ranking is used to assess the working performance of employees from the highest to lowest levels.

Managers will make comparisons of an employee with the others, instead of making comparison of each employee with some certain standards.

 

8. Management By Objectives (MBO) method

MBO is a method of performance appraisal in which managers or employers set a list of objectives and make assessments on their performance on a regular basis, and finally make rewards based on the results achieved. This method mostly cares about the results achieved (goals) but not to the way how employees can fulfill them.

Classification of Objectives

• Corporate objectives
• Functional objectives
• Individual objectives

Conditions of Management By Objectives

An objective must be satisfied SMART conditions:

• Specific,
• Measurable,
• Achievable,
• Relevant, and
• Time-Specific.

Advantages of MBO

• It is based on the assumption that the individual (employee) knows more than anyone else about her/his own capabilities, needs, strengths, weaknesses and goals.
• A further advantage of MBO is that the emphasis is on the future rather than on the past. Appraisal thus becomes a means to a constructive end.

 

9. 360 degree performance appraisal

The style of 360 degree performance appraisal is a method that employees will give confidential and anonymous assessments on their colleagues. This post also information that can be used as references for such methods of performance assessments of 720, 540, 180…

What’s 360 degree measures?

• 360 degree measures manners and capacities.

• 360 degree improves such skills as listening, planning and goal-setting.

• 360 degree concentrates on subjective areas, for example efficiencies of teamwork, character, and leadership.

• 360 degree supplies on the way others think about a specific staff.

Advantages of 360 degree appraisal

• Offer a more comprehensive view towards the performance of employees.

• Improve credibility of performance appraisal.

• Such colleague’s feedback will help strengthen self-development.

• Increases responsibilities of employees to their customers.

• The mix of ideas can give a more accurate assessment.

• Opinions gathered from lots of staff are sure to be more persuasive.

• Not only manager should make assessments on its staff performance but other colleagues should do, too.

• People who undervalue themselves are often motivated by feedback from others.

• If more staff takes part in the process of performance appraisal, the organizational culture of the company will become more honest.

Disadvantages of 360 degree appraisal

• Taking a lot of time, and being complex in administration

• Extension of exchange feedback can cause troubles and tensions to several staff.

• There is requirement for training and important effort in order to achieve efficient working.

• It will be very hard to figure out the results.

• Feedback can be useless if it is not carefully and smoothly dealt.

• Can impose an environment of suspicion if the information is not openly and honestly managed.

Who should conduct 360 degree performance appraisal?

• Subordinates.

• Peers.

• Managers (i.e. superior).

• Team members.

• Customers.

• Suppliers/ vendors.

• Anyone who comes into contact with the employee and can provide valuable insights and information.

360 degree appraisal has four components:

• Self appraisal

• Subordinate’s appraisal

• Peer appraisal.

• Superior’s appraisal

 

10. Forced ranking (forced distribution)

In this style of performance appraisal, employees are ranked in terms of forced allocations.

For instance, it is vital that the proportions be shared in the way that 10 or 20 % will be the highest levels of performances, while 70 or 80% will be in the middle level and the rest will be in the lowest one.

Application of Forced Ranking

GE, Ford Motor, Conoco, Sun Microsystems, Cisco Systems, EDS, Enron and a host of other U.S. corporations have adopted similar policies of this method

Advantages and disadvantages of forced Ranking

Advantages:

• They force reluctant managers to make difficult decisions and identify the most and least talented members of the work group.
• They create and sustain a high performance culture in which the workforce continuously improves.

Disadvantages

• They increase unhealthy cut-throat competitiveness;
• They discourage collaboration and teamwork;
• They harm morale;
• They are legally suspect giving rise to age discrimination cases.

 

11. Behavioral Observation Scales

The method based on the scales of observation on behaviors is the one in which important tasks that workers have performed during their working time will be assessed on a regular basis.

Rating scales

We use 5 scales as follows to identify frequency of behavior.

• Never
• Seldom
• Sometimes
• Generally
• Always

Identification of critical incidents

Items indicate either desired or undesired aspects of work performance, for examples :
• Worker misses workdays ________
• Worker never needs her/his work to be double checked _______