Unit 4
Performance Appraisal Management
Performance appraisal/management system is the systematic approach to measure the performance of employees. It is a process through which the organization aligns their mission, goals and objectives with available resources (e.g. Manpower, material etc), systems and set the priorities. The execution administration framework is a constant procedure of characterizing and conveying the activity parts and duties, execution desires, goals and set their needs between boss (administrator) and subordinates (workers). It incorporates association, office and representative shared objective and targets which are lined up with frameworks and assets. It is the channel of providing clarity about goals and also to improve the business processes through various methods and mechanism. The competency, skills and knowledge gaps are also identified through this process which can be improved by providing guidance, trainings, coaching and mentoring to employees or teams at different levels and designations. It optimizes the results through a roper channel and process which reduces the conflicts and grievances among teams or employees. Because each individual is clear about the expectations from his/ her role and put their efforts to meet performance standards. This process can be applied to single department / function or to whole organization. It aims to continuously monitor and measure the performance standards against the desired goals and objectives.
Characteristics of performance appraisal
(1) It should be simple and understandable by the employees. Any complications need to be avoidable.
(2) It should be suitable to be adopted for appraisal at regular intervals because periodic appraisal enables the employees to improve.
(3) It should create the atmosphere of mutual understanding and confidence.
(4) The system should be capable of giving equitable justice to all employees. Therefore it should be objective and free from personal bias
(5) The employees should be taken in confidence while preparing performance appraisal.
(6) The system should be suitable to the organisation from the points of its structure, needs and more essentially based on latest development in the area.
(7) It should be able to fulfill the desired purpose by locating potential for promotion, increments, placements, transfers etc.
(8) Special training is given to evaluated” for making him more impartial and free from bias.
(9) Negative appraisal of any employee should be immediately communicated to him so that he can adopt measures for improvement.
(10) The employee should be allowed to go in appeal in case his performance appraisal is negative if he is not satisfied. By this the management will win the confidence of the employees.
Objectives of performance appraisal
The following main objectives of employee performance appraisal are:
i. To identify employee weaknesses and strengths;
Ii. To identify and meet training needs and aspirations;
Iii. To generate significant, relevant and valid information about employee;
Iv. To provide inputs to increments of rewards, transfers, promotion and salary administration.
v. To help in improving employee’s performance if he is not found to be suitable during the review period;
Vi. To create a desirable culture and tradition in the organisation;
Vii. To help in planning career development and human resources planning based on potentialities.
Viii. To provide ‘deadlock’ and research data for improving overall human resources information system.
Need and Importance of Performance Appraisal
Performance appraisal provides important and useful information relating to employee’s skill, knowledge, ability and overall job performance. Some of the significant need and importance of performance appraisal are-
Figure: Importance of performance appraisal
1. Assessment of Employee Performance:
Performance appraisal helps supervisors to assess the work performance of their subordinates. The strength, weaknesses and potentialities of employees, level of performance are disclosed through performance appraisal.
2. Improvement of Performance:
The performance of employees are continuously scanned and reviewed. This creates a psychological pressure on employees to perform well, as well as motivates the employees. Performance appraisal helps to improve the performance of the employees.
3. Designing Training and Development Programme:
Performance appraisal helps in designing training and development programme for the employees. Training and development programme are designed considering the existing skill, knowledge, capability and performance of the employees as disclosed by performance appraisal. This enables to improve the performance of the work force. Performance appraisal also helps to assess the effectiveness of training and development programme by analysing employee performance before and after training.
4. Determination of Pay:
Often the pay structure of employees is linked to performance of employees and their productivity. Bonus and increment of salary is determined on the basis of performance of employees.
5. Decision Regarding Promotion and Transfer:
Performance appraisal helps in decision making regarding promotion and transfer. Performance appraisal on a continuous basis helps to evaluate the improvement of employee performance, their skill, knowledge, capability so that they can be allotted a new job.
Performance appraisal involves six steps which are discussed below-
Figure: Performance appraisal process
1. Establish Performance Standards:
The appraisal process begins with the establishment of performance standards. The managers must determine what outputs, accomplishments and skills will be evaluated. These standards should have evolved out of job analysis and job descriptions. These performance standards should also be clear and objective to be understood and measured. Standards should not be expressed in an articulated or vague manner such as “a good job” or “a full day’s work” as these vague phrases tells nothing.
2. Communicate Performance Expectations to Employees:
Once the performance standards are established, this need to be communicated to the respective employees so that they come to know what is expected of them. Past experience indicates that not communicating standards to the employees compounds the appraisal problem. Here, it must be noted that mere transference of information (relating to performance standards, for example) from the manager to the employees is not communication. It becomes communication only when the transference of information has taken place and has been received and understood by the employees’. The feedback from the employees on the standards communicated to them must be obtained. If required, the standards may be modified or revised in the light of feedback obtained from the employees. It is important to note that communication is a two-way street.
3. Measure Actual Performance:
This is the third step involved in the appraisal process. In this stage, the actual performance of the employee is measured on the basis of information available from various sources such as personal observation, statistical reports, oral reports, and written reports. Needless to mention, the evaluator’s feelings should not influence the performance measurement of the employee. Measurement must be objective based on facts and findings. This is because what we measure is more critical and important to the evaluation process than how we measure.
4. Compare Actual Performance with Standards:
In this stage, the actual performance is compared with the predetermined standards. Such a comparison may reveal the deviation between standard performance and actual performance and will enable the evaluator to proceed to the fifth step in the process, i.e., the discussion of the appraisal with the concerned employees.
5. Discuss the Appraisal with the Employee:
The fifth step in the appraisal process is to communicate to and discuss with the employees the results of the appraisal. This is, in fact, one of the most challenging tasks the manager’s face to present an accurate appraisal to the employees and then make them accept the appraisal in a constructive manner. A discussion on appraisal enables employees to know their strengths and weaknesses. This has, in turn, impact on their future performance. Yes, the impact may be positive or negative depending upon how the appraisal is presented and discussed with the employees.
6. Initiate Corrective Action:
The final step in the appraisal process is the initiation of corrective action when it is necessary. The areas needing improvement are identified and then, the measures to correct or improve the performance are identified and initiated. The corrective action can be of two types. One is immediate and deals predominantly with symptoms. This action is often called as “putting out fires.” The other is basic and delves into causes of deviations and seeks to adjust the difference permanently. This type of action involves time to analyse deviations. Hence, managers often opt for the immediate action, or say, “put out fires”. Training, coaching, counselling, etc. is the common examples of corrective actions that managers initiate to improve the employee performance.
KEY PERFORMANCE
- PERFORMANCE APPRAISAL/MANAGEMENT SYSTEM IS THE SYSTEMATIC APPROACH TO MEASURE THE PERFORMANCE OF EMPLOYEES. IT IS A PROCESS THROUGH WHICH THE ORGANIZATION ALIGNS THEIR MISSION, GOALS AND OBJECTIVES WITH AVAILABLE RESOURCES (E.G. MANPOWER, MATERIAL ETC), SYSTEMS AND SET THE PRIORITIES.
Merits of performance appraisal
Some of the advantages of performance appraisal are discussed below-
Figure: Advantages of performance appraisal
- It helps to improve the performance of employees by evaluating their performance from time to time.
- It determines the training and development needs of the people and accordingly develops the skills of the employees.
- It helps to detect the errors and mistakes in performance of employees and accordingly corrective actions are taken.
- Performance appraisal serves as a valuable tool in the case of career planning to the employees, since it helps in preparing SWOT analysis of every employee.
- Performance appraisal also helps the management in deciding about the promotions, transfers and rewards of the employee.
Limitations of performance employees
Some of the limitations of performance appraisal are discussed below-
Figure: Disadvantages of performance appraisal
- There may be error in performance appraisal if it is done without standard setting.
- There may be prejudices and biasness in the performance appraisal process.
- If the performance appraisal uses a very small sample of the employee’s work, it may be subject to sampling error.
- A defective performance appraisal appraisal can create a negative experience for both the employee as well as the manager.
- Performance appraisals are very time consuming and can be overwhelming to managers with many employees.
KEY TAKEAWAYS
- IT IMPROVES THE PERFORMANCE, DETERMINES THE TRAINING AND DEVELOPMENT NEEDS, DETECT THE ERRORS AND MISTAKES, CAREER PLANNING ETC.
- IT IS TIME CONSUMING, NEGATIVE EXPERIENCE, SAMPLING ERROR ETC.
The techniques of performance appraisal are discussed below-
Figure: Techniques of performance appraisal
1. The 360-Degree Appraisal
This method involves giving out a questionnaire with questions regarding the performance of a colleague and they need to fill it up. This feedback can be considered by the manager while evaluating the performance at the end of the quarter/year.
2. General Performance Appraisal
This method involves continuous interaction between the employee and his manager continuous setting of goals and achieving them. Whether the employee has been able to do justice the entire process or not is evaluated at the end of the year.
3. Technological/Administrative Performance Appraisal
This appraisal technique concentrates on technical more than any other aspect of performance on the job as the employees involved have specialized skills. They’re judged on the skills they possess and the activity they complete.
4. Manager Performance Appraisal
The performance of a manager should also be appraised and this includes not just his/her performance on the job but also relationship management with clients at his/her disposal. Generally, anonymous feedback forms are received which are then considered for appraisal.
5. Employee Self-Assessment
This method is very unpopular among employees as nobody can deal with rating himself or herself. The self-assessment sheet is compared with the one filled up by the manager and the differences are discussed.
6. Project Evaluation Review
This method involves performance appraisal of the team members involved at the end of every project and not at the end of every year. This helps the team and its members develop with each passing project.
7. Sales Performance Appraisal
A salesperson is evaluated on the basis of his/her sales skills and accomplishment of financial goals set previously. Goals set in case of sales should be realistic and ways of achieving them should be decided by the employee and the manager concerned.
KEY TAKEAWAYS
- SALES PROMOTION APPRAISAL, PROJECT EVALUATION REVIEW, EMPLOYEE SELF-ASSESSMENT, MANAGER PERFORMANCE APPRAISAL, GENERAL PERFORMANCE APPRAISAL, 360 DEGREE PERFORMANCE APPRAISAL ETC. ARE THE TECHNIQUES OF PERFORMANCE APPRAISAL.
Ethical performance management is defined as the ‘process of planning, managing, appraising, and monitoring employee performance based on the principles of fairness, objectivity, and transparency and good corporate governance. Ethical performance appraisal involves an objective evaluation of employee performance and the joint development of an employee development plan. It means giving employees an honest assessment of where they stand within the organization. The overall objective of high ethical performance management should be to provide an honest assessment of the performance and mutually develop a plan to improve the rate's effectiveness.
Principles of ethical performance appraisal
The key principles of ethical performance management are as follows:
- An ethical performance management system directs its employees to respect the core values of the organization. Because the ethics practiced by the organization is in conjunction with its environment. On the other side, the organization respects its employees and provide good working environment so that they will generate the result as per the potential.
- This system is designed to make transparency in its operation and all the parties involved in performance management system respect each other’s needs, values, and preoccupations.
- It emphasizes individual responsibility for personal decision making, behaviour, and action rather than collective responsibility.
- This system put emphasis on employees respecting and actively considering the ethical concerns and issues of all stakeholders, rather than focusing merely on shareholders alone.
- This seeks to build or change culture to a state in which the vision of the organization includes its employees, its customers, and the society at large. The values and norms of organization support employee’s decision making, behaviour, and actions consistent with an ‘ethical’ vision.
- This system provide fair and free environment to its employees so that employees can get the opportunity to scrutinize the basis upon which the important decisions were made.
Developing Code of Ethics in performance appraisal
The key guidelines to maintain an ethical performance management system in the organization are given below:
- HR Responsibility
In organizations, the HR professionals are responsible for adding value to by developing HR functions. They are also responsible for maintaining the balance between performance improvement and ethical behaviour in the organization.
The HR professionals shall act as ethics custodians and train and develop human resources for dealing effectively with relationship issues of morality, integrity, and honesty with other stakeholders particularly customer, suppliers, and society at large.
2. Developing Standards
Human resource professionals must strive to meet the highest standards of competence and ethics. The purpose is to keep abreast of organizational strategy, mission, and objectives on a continuous and consistent basis. They must drive ethics training of top managers and employees on a wide scale. They have to educate them on the significance of ethics in attaining high-performance standards. The HR professionals shall transmit ethics to employees, managers, and external stakeholders through performance management system.
3. Ethical Leadership
In making performance management a truly business-aligned, transparent, and credible management endeavour, human resource professionals must exhibit individual leadership. They should act as ethics communicator to improve the situation for their organizations.
4. Fairness and Justice
For employee’s work achievements and their contribution in improving organizational competence and performance, there should be fairness and justice in respect of rewards and recognitions. Human resource professionals are ethically responsible for promoting fairness and justice in the organization and they must enable a culture where ethical behaviour and action is a key performance criterion.
5. Conflict Management
They must safeguard the interest of all stakeholders to eliminate the conflict arising between manager-employees, employer-employee and employees-organization on certain issues related to rewards and recognition etc.
6. Transferring Information
The human resource professionals should ensure truthfulness of communication. It should be in respect of performance feedback and counselling and help top leadership in taking informed personnel decision.
KEY TAKEAWAYS
- ETHICAL PERFORMANCE MANAGEMENT IS DEFINED AS THE ‘PROCESS OF PLANNING, MANAGING, APPRAISING, AND MONITORING EMPLOYEE PERFORMANCE BASED ON THE PRINCIPLES OF FAIRNESS, OBJECTIVITY, AND TRANSPARENCY AND GOOD CORPORATE GOVERNANCE.
Case study
Mobile App Company
The Client
The client is a high growth mobile application software company, providing creative solutions to a range of national and international clients.
The Brief
The client wanted to drive individual performance cohesively towards shared business objectives in order to further improve company performance.
There wasn’t a mechanism in place to review the future demands of the business and to translate that down into meaningful objectives for each employee.
Any support, direction or allocation of activities typically would happen within the open office.
The Solution
Following the client’s initial briefing we soon identified that employees had limited opportunity to receive feedback, support and direction with future tasks.
A process to identify skill and knowledge gaps was needed, coupled with a formal mechanism for communication and a way to align business objectives with individual performance.
The solution was to address all of these requirements within a bi-annual appraisal process.
Solutions for HR designed the appraisal process and documentation and delivered training to the management team in how to:
- Appraise performance by reviewing achievements;
- Deliver feedback constructively to employees;
- Motivate employees to drive performance to meet new objectives;
- Use the process to formalise under-performance;
- Get the employees to self-assess their performance;
- Identify skills and knowledge gaps;
- Identify how an individual’s performance could contribute better to overall business goals
- Identify potential opportunities/career paths for over achieving employees.
Solutions for HR also provided 1-1 coaching as we accompanied managers at the first round of appraisal reviews.
This provided an opportunity for the managers to develop their skills by observing the appraisal techniques and constructive language used when delivering underperformance feedback and how to develop short term objectives in support of longer term business goals.
The Result
Our involvement allowed the company to introduce a formal approach to reviewing performance in a positive way to the entire workforce.
The process enabled many meaningful conversations about the future visions of the company and identified a number of development opportunities for certain employees that hadn’t previously been identified.
This allowed the company to embrace the development needs to up-skill in readiness to achieve the future objectives of the business.
The process also identified an immediate under performance concern and an action plan with short term objectives was put in place.
References
- Personnel and Human Resource Management – A M Sharma (Himalaya Publishing House)
- Personnel Management and Industrial Relations- R S Davar (Vikas Publishing House)
- Human Resource Development and Management- Biswanath Ghosh (Vikas Publishing House)
- Personnel Management – C.B. Mamaria, S V Gankar (Himalaya Publishing House)
- Human Resource Management – AShwathappa
