Meaning and Definition of Performance Appraisal

Meaning and Definition of Performance Appraisal Performance appraisal is a formal system that evaluates the quality of a employees performance. An appraisal should not be viewed as an end in itself, but rather as an important process within a broader performance management system that links: Organizational objectives Day-to-day performance Professional development Rewards and incentives In simple terms, appraisal may be understood as the assessment of an individuals performance in a systematic way, the performance being measured against such factors as job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed. Traditional Performance Appraisal The history of performance appraisal is quite brief.Its roots in the early 20th century can be traced to Taylors pioneering Time and Motion studies. But this is not very helpful for the same may be said about almost everything in the field of modern human resources management. During the First World War, appraisals concept was adopted by US army which was in the form of merit rating. It was man-to-man rating system for evaluation of military personnel. From the army this concept entered the business field and was restricted to hourly-paid workers. During 1920s, relational wage structures for hourly paid workers were adopted in industrial units and each worker were used to be rated in comparison to other for determining wages rates. This system was known by merit rating. The process was firmly linked to material outcomes. If an employees performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. These observations were confirmed in empirical studies. Pay rates were important, but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time. Modern Appraisal Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, which usually takes the form of a periodic interview, in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations but not all, appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotion. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. Whether this is an appropriate use of performance appraisal, the assignment and justification of rewards and penalties, is a very uncertain and contentious matter. Objectives of Performance Appraisal Salary Increase Performance appraisal plays a role in making decision about salary increase. Normally salary increase of an employee depends upon on how he is performing his job. There is continuous evaluation of his performance either formally or informally. This may disclose how well an employee is performing and how much he should be compensated by way of salary increase. Promotion Performance appraisal plays significant role where promotion is based on merit and seniority. Performance appraisal discloses how an employee is working in his present job and what are his strong and weak points. In the light of these, it can be decided whether he can be promoted to the next higher position. Training and Development Performance appraisal tries to identify the strengths and weakness of an employee on his present job. This information can be used for devising training and development programmers appropriate for overcoming weaknesses of employees. Feedback Performance appraisal provides feedback to employees about their performance. A person works better when he knows how he is working. This works in two ways, firstly, the person gets feedback about his performance. Secondly, when the person gets feedback about his performance, he can relate his work to the orgaisational objectives. Pressure on Employees Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal. Others: Identifying systemic factors that are barriers to, or facilitators of, effective performance. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the rate. To determine whether HR programmers such as selection, training, and transfer have been effective or not. Methods of Performance Appraisal A) Traditional methods 1) Rating Scales: The rating scale method offers a high degree of structure for appraisals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from poor to excellent. The traits assessed on these scales include employee attributes such as cooperation, communications ability, initiative, punctuality and technical (work skills) competence. The nature and scope of the traits selected for inclusion is limited only by the imagination of the scales designer, or by the organizations need to know. The one major provision in selecting traits is that they should be in some way relevant to the  appraisers job. 2) Check-list Method: Under this method, checklist of statement of traits of employee in the form of Yes or No based questions is prepared. Here, the rater only does the reporting or checking and HR department does the actual evaluation. The rater concerned has to tick appropriate answers relevant to the appraises. When the check-list is completed, it is sent to HR department for further processing. Various questions in the check list may have either equal weightage or more weightage may be given to those questions which are more important. The HR department then calculates the total scores which show the appraisal result of an employee. Advantages economy, ease of administration, limited training required, standardization. Disadvantages Raters biases, use of improper weights by HR Dept, does not allow rater to give relative ratings. 3) Force Choice Method: A series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment. Advantages Absence of personal biases because of forced choice. Disadvantages Statements may not be correctly framed. 4) Force Distribution Method: One of the problems faced in large organizations is relative assessment tendencies of raters. Some are too lenient and others too severe. This method overcomes that problem. It forces everyone to do a comparative rating of all the employees on a predetermined distribution pattern of good to bad. Say 10% employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade, 20% in Below Average Grade and 10% in Unsatisfied grade. The real problem of this method occurs in organizations where there is a tendency to pack certain key departments with all good employees and some other departments with discards and laggards. Relatively good employees of key departments get poor rating and relatively poor employees of laggards departments get good rating. 5) Critical Incident Method: In this method, only critical incidents and behavior associated with these incidents are taken for evaluation. This method involves three steps. A test of noteworthy on the job behavior is prepared. A group of experts then assigns scale values to them depending on the degree of desirability for the job. Finally, a checklist of incidents which define good and bad employees is prepared. Advantages: This method is very useful for discovering potential of employees who can be useful in critical situation. Disadvantages: a) Negative incidents are, generally, more noticeable than positive ones. b) The recording of incidents is a core to the superior and may be put off and easily forgotten. c) Overly close supervision may result. 6) Essay Method: In the essay method approach, the appraiser prepares a written statement about the employee being appraised. The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas. The statement may be written and edited by the appraiser alone, or it be composed in collaboration with the appraisee. 7) Grading: In this method, certain categories of abilities of performance are defined well in advance and person are put in particular category depending on their traits and characteristics. Such categories may be definitional like outstanding, good, average, poor, very poor or may be in terms of letter like A, B, C, D etc with A indicating the best and D indicating the worst. This method, however, suffers from one basic limitation that the rater may rate most of the employees at higher grades. 8) Performance Tests Observations: This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful. Advantage Tests only measure potential and not attitude. Actual performance is more a function of attitude of person than potential. Disadvantages Sometimes costs of test development or administration are high. 9) Confidential Reports: Though popular with government departments, its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR). The system is highly secretive and confidential. Feedback to the assessed is given only in case of an adverse entry. Disadvantage is that it is highly prone to biases and regency effect and ratings can be manipulated because the evaluations are linked to future rewards like promotions, good postings, etc. 10) Comparative Evaluation Method (Ranking Paired Comparisons): These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method. Ranking Method: Superior ranks his worker based on merit, from best to worst. However how best and why best are not elaborated in this method. It is easy to administer. Paired Comparison Method: In this method each employee is paired with every other employee in the same cadre and then comparative rating done in pairs so formed. The number of comparisons may be calculated with the help of a formula N x (N-1) / 2. The method is too tedious for large departments and often such exact details are not available with raters. B) Morden Methods 1) MBO (Appraisal by Results): The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress. 2) Assessment Center Method This technique was first developed in USA and UK in 1943. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviours across a series of select exercises or work samples. Assesses are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. Advantages Well-conducted assessment centre can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in Assessment Centres. The tests also make sure that the wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and promotion. Disadvantages Concentrates on future performance potential. No assessment of past performance. Costs of employees travelling and lodging, psychologists. Ratings strongly influenced by assassins inter-personal skills. Solid performers may feel suffocated in simulated situations. 3) 360o Appraisal: It is a technique in which performance data/feedback/rating is collected from all sections of people employee interacts in the course of his job like immediate supervisors, team members, customers, peers, subordinates and self with different weight age to each group of raters. This technique has been found to be extremely useful and effective. It is especially useful to measure inter-personal skills, customer satisfaction and team building skills. One of the biggest advantages of this system is that assesses cannot afford to neglect any constituency and has to show all-round performance. However, on the negative side, receiving feedback from multiple sources can be intimidating, threatening, and expensive and time consuming. 4) Psychological Appraisals: These appraisals are more directed to assess employee potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depends upon the skills of psychologists who perform the evaluation. Performance Appraisals purpose Performance appraisals are essential for the effective management and evaluation of staff. Appraisals help develop persons, progress of organizational performance, and feed into business planning. Official performance appraisals are generally conducted annually for all staff in the organization. Every staff member is appraised by their line supervisor. Directors are appraised by the CEO, who is appraised by the chairman or company owners, depending on the size and formation of the organization. Annual performance appraisals allow management and monitoring of standards, agreeing expectations and objectives, and allocation of responsibilities and tasks. Staff performance appraisals also create individual training needs and facilitate organizational training needs analysis and planning. Performance appraisal also normally feed into organization annual pay and grading reviews which commonly also coincides with the business planning for the next trading year. Performance appraisals generally review each individual`s performance against objectives and standards for the trading year, agreed at the earlier appraisal meeting. Performance appraisals are also necessary for career and succession planning for individuals, critical jobs and for the organization as an entire. Performance appraisal are important for staff motivation, attitude and behaviour development, communicating and supporting individual and organization aims and fostering positive relationship between staff and supervision. Performance appraisal affords a formal, recorded, regular review of an individuals performance and a plan for future progress. Job performance appraisal in whatever forms they take are therefore fundamental for managing the performance of people and organizations. Managers and appraises frequently dislike appraisal and try to avoid them. To these people the appraisal is daunting and time consuming. The process is seen as a difficult administrative responsibility and emotionally challenging. The annual appraisal is may be only time since last year that the two people have sat down together for a meaningful one to one discussion. No wonder then that appraisals are stressful which then beats the whole purpose. Appraisals are much easier and especially more peaceful, if the boss meets each of the team members individually and repeatedly for one to one discussion throughout the year. Meaningful regular discussion about work, career, aims, progress, development, hopes and dreams, life, the universe the tv, common interests etc., whatever, make appraisals so much appraisal so much easier because people then know and trust each other which diminish all the stress and the uncertainty. Appraisals much address whole person development not just job skills or the skills necessary for the subsequently promotion. Appraisal must not differentiate against anyone on the grounds of age, sexual orientation, race, gender, religion etc. For Example in the uk, the uk employment equality regulation 2006, which is effective from 1st oct. 06, make it particularly important to avoid any comments, judgments, suggestions, questions or decision which might be supposed by the appraisal to be based on age. This means people who are young as well as old. Age, along with other description stated above, is not a lawful basis for assessing and managing people, unless proper objective justification can be proven. See the age variety information. When crafty or planning behaviour appraisal, seek to help the whole person to grow in whatever direction they want not just to identify clearly relevant work skill training. Increasingly, the best employee distinguish that increasing the whole person promotes positive attitudes, advancement, motivation and also develops lots of new skills that can be unexpectedly significant to working productively and effectively in any nature of organization. Developing the whole person is also an important aspect of modern corporate duty and independently, whole person development is a crucial benefit in the employment market, in which all employers contend to attract the best recruits and to retain the best staff. Therefore in appraisal be creative and imaginative in discussing discovering and agreeing whole person development that people will respond to, beyond the usual job skill set and incorporate this sort of development into the appraisal process. Abrsham Maslow recognised this over fifty year ago. If you are an employee and your employer has yet to cuddle or even acknowledge these concepts, do them a favour at your own appraisal and suggest they look at these ideas or maybe mention it at your exit interview prior to joining a better employer who cares about the people not just the work. Incidentally the Multiple Intelligences test and Vak learning styles test are tremendously useful tools for appraisals before or after to help people understand their nature probable and strengths and to help managers appreciate this about their people too. There are a lot of people out there who are in jobs which dont allow them to use and develop their supreme strengths, so the more we can help folk understand their own special likely and find roles that really fit well the happier we shall all be. Essentials for a successful performance appraisal system Basing appraisals on accurate and current job descriptions Ensuring that appraisers have adequate knowledge and direct experience of the employees performance Providing ratings via aggregated anonymous feedback when multiple sources of information are used Incorporating performance appraisals into a formal goal setting system Offering adequate support and assistance to employees such as professional development opportunities in order to improve their performance Conducting appraisals on a regular basis (at least two times a year) rather than annually. If resource constraints do not permit frequent formal appraisals, consider conducting one formal appraisal annually, with a review of progress in the mid-year and ongoing review in regular supervision meetings Using performance appraisal to address workforce development challenges: Regular performance appraisals provide a useful opportunity to conduct a check up on various workforce development issues that may impact on employees effectiveness and well being. Performance appraisals can be used to: Recognize, reward and support effective performance Develop and reward effective teamwork Identify and manage issues likely to impact on retention Monitor and support employees well being.   Recognize, reward and support effective performance Ensuring employees receive adequate rewards and recognition is a key workforce development issue for the performance. Performance appraisals provide a good opportunity to formally recognize employees achievements and contributions to the organization, and to ensure a clear link is maintained between performance and rewards. The appraisal interview can also be used as a vehicle to demonstrate supervisory and organizational support for employees by discussing barriers and supports to effective performance, and strategies to address problems or difficulties.   Develop and reward effective teamwork The appraisal interview is also a useful vehicle for recognizing and rewarding employees contributions to various teams in the organization, especially if appraisal information is gained from team members. An appraisal of the team as a whole can also be a useful strategy to recognize and reward team performance, and to identify strategies to improve team functioning.   Identify and manage issues likely to impact on retention Open and constructive performance appraisals can be useful to identify issues that are likely to impact on employees willingness to stay with the organization in the longer-term. Key factors associated with retention include salary and remuneration, professional development opportunities, and work-related demands and stress. The appraisal interview provides a good opportunity for a check up regarding employees satisfaction with their working conditions and environment, and a discussion of strategies to address any problems or issues.   Monitor and support employees well being Performance appraisal interviews are a good opportunity to discuss employees health and well being in the workplace, particularly in regard to factors that contribute to feelings of stress and experiences that promote satisfaction with their work. 360 Degree Assessment The concept of 360 degree feedback makes a lot of sense and, if used well, should have a great deal to offer. It seems to suit the move towards the less hierarchical, more flexibly-structured and knowledge-based organization of the future Professor Clive Fletcher Goldsmiths College, University of London Introduction In recent year the 360 degree appraisal has become much admired. It has been felt for long that one person`s assessment of another cannot be free of favoritism. In supplementary with the focus on customers and emphasis on softer dimensions of performance it has become necessary to multiple assessments for a more objective assessment. The 360 degree appraisal is multilayer assessment and feedback system. Almost Fortune 500 Company is using this in some form or other. In this method, the candidate is assessed periodically by a number of assessors including his supervisor, immediate subsidiary, colleagues, and inner and outer customers. The assessment is made on a questionnaire specially designed to measure activities measured critical for performance. The appraisal is done anonymously by others and the assessment is collected by outer agent or specially designated inner agent. The assessment is consolidated; feedback profiles are prepared and given to the participant after a workshop o r directly by his supervisor or the HRD department in a performance examination conversation sitting. Due to the incalculable variations possible in the 360 degree feedback and Appraisals and its effectiveness as a competency identification and development tool, it is important to understand the process and its dynamics. 360 degree feedback 360 degree feedback is a full circle system of acquiring informal from peers, subordinates and inner and outer customers about employee`s performance. 360 degree assessment is based on the assessment of an individual`s management styles, competencies and behavior by contemporaries horizontally and vertically by involving his supervisor, peers and direct report in organization. 360-degree feedback is an assessment of multi source, which contain; Self Supervisor Internal customers/staffs/peers External customers Why 360-degree feedback is needed in the organizations? Business is towards surplus generation. Without additional no organization can develop. Here the effort to grow the business and the surplus should come from employee part. The performance of the employees is at work here matters in business development and organizational development. The performance of the employees should then align with the strategic decisions that integrate the business goals in more and more aggressive environment. It is the duty of the Human Resource Management to assimilate the culture of the organization with all available resources to the best possible output. The 3600 Appraisal helps the HR Department to have better understanding of the competitive advantage and disadvantages of the current manpower resources and tune them towards performance quality and output. Prerequisites Top management support Confidence of employees on the appraisal methodology Objective need to be with performance requirement clearly stated A detailed plan of implementation Collaboration between superior and subordinates Some prior experimentation and positive experiences clear organization philosophy and policy objective Uses for 360 Degree Feedback contain: Performance Appraisal Recognition of performance. Providing feedback on individual performance. Providing a basis for self evolution. Assessing employee development   Diagnosing training and career development needs.   Providing a basis for promotion, dismissal, job enrichmen, job transfer, probation etc.   Monetary and other rewards. Organizational Climate Study   Organizational environment improvement needs   Changes in managerial approaches, leadership etc. Customer satisfaction study   Employees attitudinal change   Customer satisfaction improvements Using of 360-degree performance appraisal we get benefits like, 360 degree feedback permit an organization to focus on developmental efforts, at the individual and grouping level, in the nearby business position where the success of the company depends on constant revolution, which is possible through organizational development. 360-degree feedback facilitates the alignment of individual capabilities and behaviors with organizational strategies. That adds value to the organization uncaring ways:- 360 degree feedback afford a talented view about the employee from different source 360 degree feedback provides increased the understanding about one1s role probability 360 degree feedback provide a better understanding of employed development requirements 360 degree feedback provide the understanding of competence and skill in various roles 360 degree feedback provides a better understanding of individual presentation at work 360 degree feedback reduces training costs by identifying common development want 360 degree feedback extends better morale to those who perform and put in well to the organization 360 degree feedback helps everyone to work for a common standard and institutionalize presentation management 360 degree feedback ensure better interpersonal relationship and grouping cohesiveness It promotes self directed learning and provides a road map for employee`s development planning It promotes better communication within departments 360 degree feedback increases the team`s ability to put in to the organization goals 360 degree feedback increases the team`s ability to put in to the organizations goals develop better bottom line thought additional the capability of the organization to meet its objectives. For 360-degree feedback this steps may be taken to gauge the readiness of an organization Identification of the problem.  · Analysis of the organization context for finding a solution to the problem. Allocation of resources for the purpose in terms of time and finances. A detailed plan of implementation. Follow up Drawback of using 360-degree feedback A detailed plan of action which, ensure the transparent and clear implementation of appraisal with employee accountability. Effective follow up is the prime requirement of 360 degree feedback. Failure in follow u cause more scratch than superior. The 360 degree feedback is time consuming and cost consuming assessment process. Without having adequate resource to implement the process, it will end up no where and develop financial