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Performance Appraisal
OBJECTIVES OF STUDY
A) Primary Objectives
1) To study the performance appraisal system in different organization.
2) To study the transformation of performance appraisal form traditional to modern.
3) To get an insight into the relative importance of performance appraisal in organization.
4) To study the effectiveness of performance appraisal system in different organization.
5) To study the practical application of performance appraisal.
6) To compare appraisal system of different organization and find out the most common parameters for appraisal.
7) How can companies use performance appraisal as an effective tool to achieve organisational effectiveness and efficiency.
B) Secondary Objectives.
1) To observe the work environment in organization.
2) To get experience and expertise in making projects.
3) To enhance my communication skills.
4) To increase my confidence.
LIMITATIONS OF STUDY
1) To get contacts of HR Mangers for interviews was difficult.
2) Getting the views and opinion of the interviewee (HR Manager) was a difficult task.
OVERVIEW
Performance appraisals are a systematic way of evaluating the standard of an employee’s performance.
Steps for developing a systematic performance appraisal
.1. Identify key performance criteria
Development of key performance criteria should be based on a comprehensive job description and undertaken in consultation with employees.
2. Develop appraisal measures
In order to obtain accurate and valid performance appraisals, appraisal measures should be tailored to the specific job or “job family” (i.e., groups of similar jobs). An evaluation of factors in the work environment which help or hinder performance is also recommended. This ensures that realistic expectations are set for employee’s performance, and is also likely to increase the perceived fairness and acceptability of performance appraisals.
3. Collect performance information from different sources
Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members (e.g., clients, coworkers, subordinates) can be a valuable source of information as they are likely to have exposure to different aspects of an employee’s performance. Collecting information from multiple sources can increase the accuracy of performance evaluation (i.e., reduce bias), and increase employee’s perceptions of fairness.
4. Conduct an appraisal interview
The two central purposes of the appraisal interview are to:
1. Reflect on past performances to identify major achievements, areas for further improvement, and barriers / facilitators to effective performance
2. Identify goals and strategies for future work practice.
The appraisal interview should be a constructive, two-way exchange between the supervisor and employee, with preparation for the interview done by both parties beforehand.
5. Evaluate the appraisal process
The performance appraisal process should undergo regular review and improvement. For example, focus groups or surveys could be conducted to gauge employee’s perceptions of the appraisal process. A successful performance appraisal process should demonstrate a change in both the ratings of employee’s performance and aspects of the work environment that impact upon work performance.
Best practice in performance appraisal
In essence, best practice in performance appraisals involves:
• Integrating performance appraisal into a formal goal setting system
• Basing appraisals on accurate and current job descriptions
• Offering adequate support and assistance to employees to improve their performance
(e.g., professional development opportunities)
• Ensuring that appraisers have adequate knowledge and direct experience of the employee’s performance
• Conducting appraisals on a regular basis.
Findings on Performance Appraisal of the following companies are analysed
1) 4004 Incorporated
2) HPCL
3) Titan
4) Godrej
5) UTI Mutual Funds
6) Reliance BPO
7) Nicholas Piramal
MEANING AND DEFINITION OF PERFORMANCE APPRAISAL
P
erformance appraisal is a formal system that evaluates the quality of a employee’s 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:
• Organisational objectives
• Day-to-day performance
• Professional development
• Rewards and incentives
In simple terms, appraisal may be understood as the assessment of an individual’s 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.
A formal definition of performance appraisal is:
“It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.”
A more comprehensive definition is:
“Performance appraisal is a formal, structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefit.”
TRADITIONAL PERFORMANCE APPRAISAL
T
he history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's 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 was used to be rated in comparison to other for determining wages rates. This system was called merit rating.
The process was firmly linked to material outcomes. If an employee's 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.
For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance.
These observations were confirmed in empirical studies. Pay rates were important, yes; 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
P
erformance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), 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 promotions.
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. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease 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 programmes 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
a) Identifying systemic factors that are barriers to, or facilitators of, effective performance.
b) To confirm the services of probationary employees upon their completing the
probationary period satisfactorily.
c) 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 ratee.
d) To determine whether HR programmes such as selection, training, and transfer
have been effective or not.
HOW TO CONDUCT A PERFORMANCE APPRAISAL PROCESS
T
he following five-step approach to conducting a systematic performance appraisal is recommended:
1) Identify key performance criteria
2) Develop appraisal measures
3) Collect performance information from different sources
4) Conduct an appraisal interview
5) Evaluate the appraisal process.