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Flow of Presentation
Introduction
Features of Performance Appraisal
Objective of Performance Appraisal
Performance Appraisal Process
Performance Appraisal Methods
360 degree Feedback
Prerequisites for solid Performance Appraisal
Pros & Cons of Performance Appraisal
4 types of bias in Performance Appraisal Contribution to firms competitive Advantages
Conclusion
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Introduction
Performance Appraisal is the systematic
evaluation of the performance of
employees and to understand the
abilities of a person for further growth
and development.
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Features of Performance Appraisal
It is a systematic process involving three step
Setting work standards
Assessing employee actual performance relative to these
standards Offering feedback to the employees to eliminate
deficiencies and improve performance in course of time.
Appraisal is carried out periodically according todefined plan of action.
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Performance appraisal is not apastoriented
activity
Performance appraisal is not job evaluation
Performance appraisal is not limited to callingthe fouls.
Performance appraisal may be formal or
informal.
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Objectives of Performance AppraisalPerformance appraisal could be taken either for evaluating the
performance of employee or developing them. Appraisal of employee serve several useful purposes
Compensation decisions: It can serve as a basis for pay raises
Promotion decisions: It can serve as useful basis for job
change or promotion
Training and Development Programmes: It can serve as a
guide for formulating suitable training and development
programmes
Feedback: Performance appraisal enables the employee to
know how well is doing on the job
Personal Development : Performance appraisal can help
reveal the causes of good and poor employee performance.
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The performance appraisal process1. Establish performance standards: this process serves as a benchmarks
against which performance is measured.
2. Communicate the standards: This process includes two parties
Appraiser: who does the appraisal
Appraisee: whose performance is to be evaluated.
3. Measure actual performance: It is done by
Personal observation
Statistical reports
Oral reports
Written Reports
4. Compare actual performance with standards and discuss the appraisals.
5. Taking corrective actions, if necessary: Corrective actions are of two types
Immediate action set things right and get things back.
Basic corrective actions gets the source of deviations and seeks to
adjust the differences permanently.
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Individual evaluation methods:
1. Graphic rating scale2. Behaviorally anchored rating
scales
3 . Critical incident Method
4. Checklists and observation
scales
5. Mixed standard rating scales
6. Management by objectives
(MBO):
Multiple person evaluation
methods:
1.Forced Ranking/ distribution2. Paired Comparison
3. Ranking Method
4. Field Review Method
PERFORMANCE APPRAISAL METHODS
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The graphic rating scale method gives employees a numerical score on job-relevant
traits and/or behaviors
Definition
One of the most popular forms of PA.
Lists desirable traits and managers rate
employees on each trait.
Scale typically involves scores that range from
unsatisfactory to outstanding.
Individual scores are aggregated into anoverall performance score.
Traditionally used for assessing traits (e.g.
reliable, hardworking), but is now commonly
used to assess job-related behaviors and
duties.
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Graphic rating scales: easy to develop, but are
light in detail and the results are not easy to explain
Pros
Cons
Easy to develop.
Easy to use.
Provides a numerical rating for each employee.
Easy to customize based on different job descriptions.
When todraw
from it
When used to assess traits, graphic rating scales focus on personal
characteristics rather than job-related behaviors.
Can be subjective and ambiguous without an explanation of the score
and, therefore, less legally defensible.
Can be subject to rater bias.
If there is not a lot of time to create a performance appraisal program.
If a quick and informal approach is required for easy start-up.
Ifnumericalratings are needed to rank or score employees to inform
salary, promotion, or termination decisions.
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Behaviorally anchored rating scales allow managers to rate employee
performance based on detailed descriptions
Definition (BARS)
Identifies a range of ineffective to excellent behaviors that can be displayed by employees. performing each
task.
Employees are rated on
each performance
dimension on a behavioral
scale ranging from
ineffective toexcellent performance.
Allows for a total profile
of job performance to
be created for each
employee, which covers
various dimensions of
work.
Greater validity is
ensured when jobholders
are involved in identifying
tasks and behaviors.
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BARS: provides in-depth descriptions of employee
performance, but is time consuming to develop
Pros
Cons
Evaluation criteria are clearly defined in behavioral terms .
Criteria are based on feedback from employees which improvesacceptance levels from managers and employees.
Gives concrete examples of work that will improve performance.
Are legally defensible due to the detailed descriptions of behavior.
Usually well accepted by employees.
When to
draw
from it
Can be time-consuming to develop.
Hard to keep the information current as job expectations can change over
time.
Does not necessarily give more accurate ratings than graphic rating scales
that incorporate good behavioral descriptions.
Does not provide a numerical score, which makes comparisons difficult.
If clearly outlined job descriptions exist that can be turned into concretebehavioral anchors.
If there is time to develop specific behavioral descriptions that outline
different levels of performance.
If a numerical score is not important and the appraisal will be used for
ongoing feedback and coaching.
If job expectations dont tend to change frequently.
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The critical incident method requires that managers keep a log of job-
relevant behaviors to create performance appraisals
Definition
Manager keeps an ongoing log of events thatrepresent outstanding or poor behavior.
At the end of the rating period, the recorded
critical incidents are used to evaluate
performance.
Often used to supplement another methodsuch as graphic rating scale.
For example, if an employee is rated as
failing to meet expectations, specific
examples can be given as to why
performance was unsatisfactory.
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Critical incident: provides detailed examples of
employee behavior, but should not be used in isolation
Pros
Cons
Provides concrete examples to explain performance appraisal.
Avoids recency bias as it forces managers to compile an ongoing log of events, as
opposed to focusing solely on the most recent behavior.
When todraw
from it
Negative incidents may be more noticeable than positive incidents. May result in very close supervision which is difficult for some employees.
The recording of incidents may be seen as a chore by the manager, and if creating
the log is forgotten the recency bias will be apparent.
It is difficult to compare employees to each other because no numerical score is
given.
Use this approach to supplement other approaches (combine with graphic rating
scale to make a numerical score more concrete).
If managers have time to regularly log events.
This approach can be used on its own if the managers primary focus is to give
ongoing feedback and coaching as opposed to giving a numerical score.
It should not be used to compare employees for salary decisions.
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Checklists and observation scales: can also be used to incorporate
behavioral examples into the performance appraisal
Behavioral Checklist
Predefined behaviors are listedand checked
offas an employee demonstrates the
behavior.
Behavioral Observation Scale
Focus on descriptions of behavior and results.
Use absolute standards.
May meet with less resistance from employees.
A lot of time and money must be invested to
construct the checklist because they will be
different for each role.
Pros
Cons
Identifies key tasks and evaluates how
frequentlyan employee exhibits the behavior
required for high performance.
Gives employees a numerical score that is tied to
the frequency of the specific job-related
behaviors.
Frequency does not always equate to successful
(or unsuccessful) job performance.
Pros
Cons
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Mixed standard rating scales require managers to rate
employees as equal to, above, or below performance standards
Definition
Contain statements representing good, average and poor performance for each dimension the employee isbeing evaluated on.
The evaluator indicates
whether an employee
fits the statement (=),
is better than the
statement (+) or is
worse than the
statement (-).
The statements are
randomly mixed in an
attempt to make it
less obvious which
reflect good or badperformance.
There are many
algorithms that exist to
create numeric scores
for each dimension.
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Mixed standard rating scales: reduce bias,
but make it difficult to give constructive feedback
Pros
Cons
Uses specific behavioral examples to identify good, average and poor
performance.
Keeps raters relatively blind to which behaviors are reflective of which
level of performance, which helps to minimize potential biases.
When todraw
from it
The fact that the rater is unaware of which items reflect which levels of
performance makes it difficult for the rater to give constructive feedback.
For example, if an employee asks why he/she received a low score on a
particular dimension, the rater may not be able to tell them why.
If it is very important that raters are blind to which behaviors represent
which levels of performance.
If there is time to create good, average, and poor behavioral statements
for each dimension on which the employee is being evaluated.
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Management by objectives (MBO): links organizational
goals to employee performance targets
Definition (MBO)
Sets organization-wide goals, and links
these to employee specific goals.
Managers periodically discuss employee
progress towards departmental goals, as
well as how the employee is contributing
to organization-wide goals.
This process aims to serve as a basis for: Greater efficiency through systematic
procedures.
Greater employee motivation and
commitment through participation in the
planning process.
Planning for results instead of planning
just for work. Specific objectives being determined
jointly by managers and employees and
end results attributed to rewards.
1. Arranged in order of importance.
2. Expressed quantitatively where
possible.3. Realistic.
4. Consistent with policy.
5. Compatible with one another.
The objectives
must meet fivecriteria. They
must be:
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Formal
Methods
GraphicRating
Scale
Mixed
StandardRating Scale
BARS
Critical
Incident
Management
by Objectives
Appropriate for use when:
The organization requires a quick and easy solution
that results in a numerical rating.
The organization places importance on behavioral
examples, and clear job descriptions allow for a
description of detailed behavioral objectives.
Numerical scores are not necessary and managers are
diligent with recording both positive and negative
events.
Detailed descriptions of excellent, average, and poor
behavior would be easy to develop, and the organizationplaces importance on avoiding bias.
The organization has clear goals that are appropriately
delegated to departments, and actionable objectives
that are clearly described.
In summary:
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Multiple person evaluation methods
1. 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 themiddle level and the rest will be in the lowest one.
2. Paired comparison method
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.
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Employee Rank
A 2
B 1
C 3
D 5
E 4
3. Ranking method
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Forced Distribution method
10% 20% 40% 20% 10%
poor Below
average
average good ExcellentN
o.
ofemploy
ees
Force distribution curve
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Forced ranking should be used to enhance friendly competition, but not when all employees are star performers
Force rank when the culture permits it:
If employees compete individually.
If criteria to be measured is subjective.
If employees perform at various levels (average, vital and star).
A hybrid approach of forced ranking and forced distribution is a great way to identifystar performers, assign bonuses, or determine layoffs.
Force ranking can be used at any time if an appropriate level of privacy is applied:
Full disclosure of rank if the criteria is objective and there are not teams.
Discussion of rank between manager and employee if areas for improvement
are identified. Keep rank between managers if bonuses, salaries or dismissals are determined
by rank.
In summary:
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Get data from all around an employee to identify skill gaps
360-degree
Feedback is also
known as Multi-
Source, Multi-Rater (MSMR)
Feedback
360-degree feedback is bestused to assess training and development needs
and to provide competence-related information for succession planning. It isalso sometimes inappropriatelyused to inform promotion or pay decisions.
Internal Customers
Supervisors
Peers
Subordinates
External Clients
Self
360
Feedback
Watch Info-
Techs Video:
360-DegreeFeedback.
http://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedbackhttp://www.infotech.com/research/360-degree-feedback7/31/2019 pa ppt hrm
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360 d f db k h ld b d h l
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360-degree feedback should be used when employees
work in teams but should not influence monetary decisions
360-degree feedback involves gathering evaluations from those who work closely
with an employee.
This is a great method for managers to create a holistic view of an employees
performance, especially if monitoring daily activities is not possible.
When 360-degree feedback is used for development purposes, employees respond
in drastic and positive ways.
360-degree feedback should never inform salary, promotion or disciplinary decisions.
Attaching the evaluations to these decisions will garner dishonest and inaccurate
feedback.
In summary:
Every solid PA program needs a method of tracking
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Every solid PA program needs a method of tracking
progress and a mix of formal and informal feedback
Buildon the foundation
Tracking method: a living document
or file that houses all the information
about an employees performance.
Informal feedback: interactions with
employees that generate short
feedback sessions that do not result
in a score.
Formal appraisal: deliberately
scheduled evaluation sessions wheregoals, performance and development
is discussed and scored.
These three elements are needed to
support the components that will make
up the remainder of the PA program.
Tracking
Method
Formal
Appraisal
Informal
Feedback
Unique mix of
PA methods
Wh d ll f i l l id i ifi t
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When done well, performance appraisals also provide significant
benefits to executives, managers, employees, and HR
Executives
Managers
Improve employee performance.
Measure departmental
performance.
Highlight top performers.
Improve employee morale and work
quality.
Catch performance issues early.
Make well-informed decisions.
Enable the achievement ofdepartmental objectives.
Better organizational performance
and increased revenue.
Apparent opportunities for training
and improvement.
Identification of future leaders.
Reduced turnover and absenteeism
within a department.
Manager awareness of progress.
Develop a department through
training, promotion, bonuses and
terminations.
Benefits Impact on Organization
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Human
Resources
Reduce turnover and absenteeism.
Provide a written record of
performance.
Identify training needs at a
departmental level.
Prepare for the future.
Focus on internal employee development
as opposed to constant recruitment.
Defend promotion and termination
decisions.
Deliver training.
Succession planning.
Employees
Satisfy employees desire to know how
they are performing.
Connect employees to organizational
objectives.
Clarify performance expectations.
Increase engagement.
Opportunities to improve performance
are identified.
There is a desire to achieve goals.
Established sense of fairness and clarity
when performance is appraised.
Increased productivity.
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Pros & Conss
Think performance appraisals will:
Take too much time.
Be an artificial process with no real
benefits.
Be counterproductive.
Likely backfire.
Hinder creativity, innovation, and
positive risk taking.
Think performance appraisals will:
Solve all performance issues.
Increase employee satisfaction.
Foster good relationships between Line-
of-Business managers and subordinates.
Encourage, motivate, and develop
employees.
Achieve financial improvements
Middle
Ground
Most opinions fall
between theextremes of love
and hate when it
comes to
performance
appraisals.
Formal performance evaluations are
unnecessary and also often actively
harmful to motivation and happiness at
work.
- Director, Small
manufacturing firm
Employee performance feedback is very
important as it contributes directly to
the success of the employee.
- Manager, Large property
management firm
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Next Steps
Look for areas of improvement
within the current PA program
you use, and be aware of its
limitations.
Communicate with Line-of-
Business managers that are not
currently on-board.
Be realistic about the issuesthat a PA can help with, and
identify ones that it cannot.
Next Steps
Be open to the benefits of
performance appraisals when
they are done well.
Talk to your employees to
understand their professional
development needs.
Reach out to peers who
administer effective performanceappraisals and look for tips to
make yours work.
Lovers Haters
No matter where a
employee stand,
understand how
performanceappraisals can
enhance your
organization and
make you a betterleader.
4 types of bias that can infiltrate even the most well
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4 types of bias that can infiltrate even the most well-
intentioned performance appraisal
Halo
Effect Occurs when an
employeeperformsparticularlywell (or poorly)in one area andis then ratedcorrespondingly
high or low inall other areas.
LackofD
ifferentiation Occurs when a
manager tendsto score allemployeessimilarly by, forexample, givingeveryone high
scores, lowscores, oraverage scores.
PersonalBias
The morecharacteristics amanager shareswith anemployee, suchas age, race,gender, work
values, workexperience, andpersonality, themore favorablythe manager willtend to rate thatemployeesperformance.
Occurs when amanager weighs anemployees recentperformance tooheavily, as opposedto assessing theemployeesaverageperformance overthe entireevaluation period.
Re
cencyEffect
Tip to Overcome
Tip to Overcome
Tip to Overcome
Tip to Overcome
Having anawareness of this
type of bias is the
most effective
step toward
overcoming it.
Ranking
employees from
best to worst(even as a private
exercise) can help
managers
differentiate
between
employees.
Awareness of this
bias is an
important step
towards
overcoming it.
Engaging in ongoing
coaching and havingemployees send
regular e-mail
updates can serve to
remind managers
what employees are
up to.
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How PA contribute to firms competitive
advantages
Improving
performance
Making correctdecision
Ensuring legal
competenceMinimizing dissatisfaction
And turnover
Values and behavior
Competitive
Advantage
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49%Return on Assets
27%Return on Equity
22% Profit Margins
15%Earnings
Including performance appraisal processes in
management systems result in significant
financial gains.
Increases
PAActiv
ity
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Conclusion
Performance appraisals are a fact of life for
most managers and HR departments. Instead of
thinking of them as an administrative burden,
understand the benefits of an effectiveperformance appraisal program and how to get
the most out of them with the least amount of
effort: