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CEO Online Magazine (Ezine): Human Resources Management (HRM)

Performance Appraisals

Appraising the performance of individuals, groups and organizations is a common practice of all societies. While in some instances the appraisal processes are structured and formally sanctioned, in other instances they are an informal and integral part of daily activities. Thus teachers evaluate the performance of students, bankers evaluate the problem of creditors, and all of us, consciously or unconsciously, evaluate our own actions from time to time.

Performance appraisal is a method of evaluating the behavior of employees in the workplace, normally including both the quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individual's job. It indicates how well an individual is fulfilling the job demands. Often the term is confused with effort. No: performance is always measured in terms of results.

A student, for example, may exert a great deal of effort while preparing for the examination but may manage to get a poor grade. In this case the effort expended is high but performance is low. In order to find out whether an employee is worthy of continued employment or not, and if so, whether he should receive a bonus, a pay raise or a promotion, his performance needs to be evaluated from time to time.

When properly conducted, performance appraisals not only let the employee know how well he is performing, but should also influence the employee's future level of effort, activities, results and task direction. Performance appraisal is the systematic description of an employee's job-relevant strengths and weaknesses. The basic purpose is to find out how well the employee is performing the job and establish a plan of improvement. Appraisal process is always systematic in the sense that it tries to evaluate performances in the same manner using the same approach. Appraisals are arranged periodically according to a definite plan. Performance appraisal is not job evaluation. Performance appraisal refers to how well someone is doing the assigned job. Job evaluation determines how much a job is worth to the organization and therefore what range of pay should be assigned to the job.

Job Performance Appraisals

Job performance appraisals are needed in order to provide information about performance rankings. This information helps in making decisions regarding salary fixation, confirmation, promotion, transfer and demotion. In addition, job performance appraisals provide feedback information about the level of achievement and behavior of subordinates. This information helps to review the performance of the subordinate, rectifying performance deficiencies and to set new standards of work, if necessary.

These appraisals play a pivotal part in providing information that helps to counsel the subordinate. The information helps to diagnose deficiency in employees regarding skill and knowledge; determine training and developmental needs; prescribe the means for employee growth; and suggestions for correcting placement. Moreover, job performance appraisals prevent grievances and disciplinary activities.

Performance appraisal aims at attaining various purposes. The first purpose is to create and maintain a satisfactory level of performance. The second purpose is to contribute to employee growth and development through training, self and management development programs. The third purpose is to help the superiors to have a proper understanding about their subordinates. They also play a significant part in guiding employees to job changes with the help of continuous ranking. The fourth purpose is to facilitate fair and equitable compensation based on performance and to facilitate for testing and validating selection tests, interview techniques through comparing their scores with performance appraisal ranks. The last purpose is to provide information for making decisions regarding layoff and retrenchment; ensure organizational effectiveness through correcting the employee for standard and improved performance; and suggesting the change in employee behavior.

Every organization has to decide upon the content to be appraised before the program is approved. Generally, content to be appraised is determined on the basis of job analysis. Content to be appraised may be in the form of contribution to organizational objectives (measures) like production, cost saving, return on capital etc. Other measures are based on behavior, which measure observable physical actions, movements. Then there are objectives which measure job related results, like amount of deposits mobilized. Finally, there are traits which are measured in terms of personal characteristics observable in employee job activities. Content to be appraised may vary with the purpose of appraisal and type and level of employees.

How To Write A Performance Appraisal

The appraiser may be any person who observes the employee while performing a job. The appraiser has thorough knowledge about the job content, contents to be appraised, and standards of contents. The appraiser should prepare reports and make judgments without bias. Typical appraisers are supervisors, peers, subordinates, employees themselves, users of service, and consultants.

Supervisors include superiors of the employee, other superiors having knowledge about the work of the employee, and department heads or managers. General practice is that immediate superiors appraise the performance, which in turn is reviewed by the departmental head manager. This is because supervisors are responsible for managing their subordinates and they have the opportunity to observe, direct and control the subordinate continuously. Moreover, they are accountable for the successful performance of their subordinates. On the negative side, immediate supervisors, may emphasis certain aspects of employee performance to the neglect of others. Also, managers have been known to manipulate evaluations to justify their decisions on pay increases and promotions.

Peer appraisal may be reliable if the work group is stable over a reasonably long period of time and performs tasks that require interaction. However, little research has been conducted to determine how peers establish standards for evaluating others or the overall effect of peer appraisal on the group's attitude. The concept of having superiors rated subordinates is being used in most organizations today, especially in developed countries. For instance in most US universities students evaluate a professor's performance in the classroom. Such a novel method can be useful in other organizational settings too, provided the relationships between superiors and subordinates are cordial.

If individuals understand the objectives they are expected to achieve and the standards by which they are to be evaluated, they are to a great extent in the best position to appraise their own performance. Employee performance in service organizations relating to behaviors, promptness, speed in doing the job and accuracy, can be better judged by the customers or users of services.

Type Of Performance Appraisals

Managers have for many years been evaluated against standards of personal traits and work characteristic. Typical trait-rating evaluation systems may list ten to fifteen personal characteristics, such as ability to get along with people, leadership, analytical competence and initiative. The list may also include such work-related characteristics as job knowledge; ability to follow through on assignments, production or cost results; or success in seeing that plans are carried out.

Managers resist doing this type of evaluation or tend to go through the paperwork without knowing exactly how to rate. Even in firms that have made earnest attempts to "sell" such programs, to indoctrinate managers, and to train them in the meaning of traits so that they can improve their appraisal ability, few managers can or will evaluate properly.

One practical problem of the trait approach to appraisal is that trait evaluation cannot be objective. Serious and far-minded managers do not wish to utilize their obviously subjective judgment on a matter as important as performance. To complicate matters, employees receiving a rating lower than what they feel is justified almost invariably feel that they have been dealt with unfairly.

One widely used approach to managerial appraisal is the system of evaluating managerial performance against the setting and accomplishing of verifiable objectives. Once a program of managing by verifiable objectives is operating, appraisal is a fairly easy step. Supervisors determine how well managers set objectives and how well they have performed against them. In cases where appraisal by results has failed or been disillusioning, the principal reason is that managing by objectives was seen only as an appraisal technique. The system is not likely to work if used only for this purpose. Management by objectives must be a way of managing, a way of planning as well as the key to organizing, staffing, leading and controlling. When this is the case, appraisal boils down to whether or not managers have established adequate but reasonably attainable objectives and how they have performed against them in a certain period.

Performance Appraisal Systems

Performance appraisal is a nine-step process. At the first stage, performance standards are established based on job description and job specification. The standards should be clear, objective and incorporate all the factors. The second stage is to inform these standards to all the employees including appraisers. The third stage is following the instructions given for appraisal measurement of employee performance by the appraisers through observation, interview, records and reports.

The fourth stage is finding out the influence of various internal and external factors on actual performance. The influence of these factors may be either inducing or hindering the employee performance. The measured performance may be adjusted according to the influence of external and internal factors. The performance derived at this stage may be taken as actual performance. The fifth stage is comparing the actual performance with that of other employees and previous performance of the employee and others. This gives an idea where the employee stands. If performance of all the employees is ranked either too high or too low, there may be something wrong with the standards and job analysis.

The sixth stage is comparing the actual performance with the standard and finding out the deviations. Deviations may be positive or negative. If employee performance is more than the standards, it is positive deviation and vice versa is negative deviation. The seventh stage is communicating, the actual performance of the employee and other employees doing the same job and discuss with him about the reasons for positive or negative deviations from the pre-set standard as the case may be.

The eighth stage is suggesting necessary changes in standards, job analysis in internal and external environment. Lastly, there is follow up of performance appraisal report. This stage includes guiding, counseling, coaching and directing the employee or making arrangements for training and development of the employee in order to ensure improved performance. If the actual performance is very poor and beyond the scope of improvement, it may be necessary to take steps for demotion, retrenchment or any other suitable measure.

Performance Appraisal Tools

With the evolution and development of appraisal systems, a number of tools and techniques of performance appraisal have been developed. Firstly, there are graphic-rating scales which compare individual performance to an absolute standard. In this method, judgments about performance are recorded on a scale. This is the oldest and most widely used technique. This method is also known as linear rating scale. The appraisers are supplied with printed forms, one for each employee. These forms contain a number of objectives and behavior- and trait-based qualities to be rated (like quality, volume of work, job knowledge, dependability, initiative and attitude). Rating scales are of two types: continuous rating scales and discontinuous rating scales.

In continuous order like 0, 1, 2, 3, 4 and 5, the appraiser assigns the points to each degree. Performance regarding each character is known by the points given by the rater. These points are added up to find out the overall performance. Employees are ranked on the basis of total points assigned to each one of them. One reason for the popularity of the rating scale is its simplicity, which permits many employees to be quickly evaluated. Such scales have relatively low design cost and high incase of administration. They can easily pinpoint significant dimensions of the job. The major drawback of these scales is their subjectivity and low reliability. Another limitation is that the descriptive words often used in such scales may have different meanings to different raters.

Another popular and effective method of performance appraisal is employee ranking. Under this method the employees are ranked from best to worst on some characteristics. The rater first finds the employee with the highest performance and the employee with the lowest performance in that particular job category and rates the former as the best and the latter as poorest. Then the rater selects the next highest and next lowest and so on until he rates all the employees in that group.

About the Author

Performance Appraisals provides detailed information on How to Write a Performance Appraisal, Job Performance Appraisals, Performance Appraisal Software, Performance Appraisal Systems and more. Performance Appraisals is affiliated with Manufacturing Performance Management.

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