Performance Management System
• Performance appraisal
• Role of appraisals in performance management
• Approaches to measuring performance
Invalid File
Sitanshu Sekhar Das, Ph.D.
Session 4
Performance appraisal
• Performance appraisal is an evaluation process in which
quantitative scores are assigned based on the judged level of the
employee’s job performance on the dimensions or criteria used,
and the scores are shared with the employee being evaluated.
• Two major issues in Performance appraisal:
1. Measurement issues Invalid File
2. Issues of rater motivation
• Effective appraisal systems are those where the raters have the
ability to measure employee performance and the motivation to
assign the most accurate ratings.
• A performance appraisal system is a systematic way to examine
how well an employee is performing in his or her job.
• Systematic implies the performance appraisal should be a
planned system that allows feedback to be given in a formal—as
opposed to informal—sense.
• Why should performance appraisal be systematic?
1. It should encourage positive
performance
and behavior.
Invalid
File
2. It must satisfy employee curiosity as to how well they are
performing in their job.
3. It can also be used as a tool to develop employees.
4. It can provide a basis for pay raises, promotions, and legal
disciplinary actions.
• Performance appraisal provides information to help managers
manage in such a way that employee performance improves.
• Performance appraisal provides the basis for answering two
fundamental questions:
1. Is what is being done worth doing?
2. Has it been done well?
Invalid File
Interesting statistics
• Only 5% of HR managers are satisfied with performance reviews.
(Gartner, 2023)
• 59% of employees think that traditional performance reviews have
“no impact” on their personal performance. (Gartner, 2023)
• 76% of employees want at least monthly performance reviews and
Invalid File
feedback. (TruQu)
• 77% of employees and 94% of HR managers think the traditional
performance reviews are outdated and need to be renewed. (TruQu)
• Nearly half of millennials (47%) after receiving their performance
reviews felt like they can’t do anything right. (TriNet, 2015)
• 47% of millennials started looking for a different job after receiving
their performance review. (Adobe, 2017)
• Only 51% of HR professionals believe that their organization’s
performance reviews are an accurate evaluation of their employees’
work. (SHRM, 2018)
• HR professionals agree that semiannual (60%), quarterly (86%), or
ongoing reviews (90%) give more of an accurate appraisal of an
employees’ work. (SHRM, 2018)
• Regular feedback makes employees nearly three times more likely to
be engaged in their work. (Gallup,
Invalid2019)
File
• 30% of workers are so discouraged by negative feedback that they
actively seek new employment. (SHRM, 2020)
• Only 3% of firms believe their performance management is excellent,
while 48% think it requires improvement. (Pavestep, 2021)
• According to 77% of HR directors, performance evaluations are not an
accurate indication of employee performance. (LinkedIn, 2017)
Role of appraisals in performance management
Performance
Planning
Performance
Review
Performance
Execution
Invalid File
Performance
Appraisal
• Performance appraisals as subsets of performance management.
• Performance management is not possible without performance
appraisal.
• Appraisals do not just reduce the individual performances into
some quantitative data, they
measure
Invalid
File and rate the individual
performances with one another, and in the process facilitate in
taking performance related decisions, such as employee
development, promotion, transfer, compensation design, etc.
more objectively.
Performance appraisal serves over a dozen different
organizational purposes:
• Providing feedback to employees • Determining who gets promoted
about their performance
• Facilitating layoff or downsizing
• Supporting manpower planning or
decisions
succession planning
• Encouraging performance
• Determining individual training
improvement
and development needs
Invalid •File
Motivating superior performance
• Determining organizational
• Setting and measuring goals
training and development needs
• Counseling poor performers
• Confirming that good hiring
• Determining compensation
decisions are being made
changes
• Providing legal defensibility for
• Encouraging coaching and
personnel decisions
mentoring
• Improving overall organizational
performance
If performance appraisal is truly important, why is it
the butt of so many jokes and the target of Dilbert
cartoons?
Monday June 22, 1992
Invalid File
Sunday January 30, 2022Sunday Annual Performance Review
Invalid File
Reasons why performance appraisal doesn’t work well
1. No Ownership. Too often, neither the manager nor the individual
has any sense of ownership. They weren’t involved in the design or
administration of the system. They frequently are not trained to use
it effectively.
2. Bad News. Managers don’t like to deliver negative messages to
Invalid
File
people with whom they must
work,
and whom they often like on a
personal basis. Employees don’t like to be told that they are not
quite as good as they think they are. Negative messages generate
defensive reactions and promote hostility, rather than serve as
useful performance feedback.
3. Adverse Impact. Both managers and employees know that bad
reviews adversely impact a person’s career. Managers are conscious
of the permanence of the paper trail that follows formal appraisal
and are often hesitant to commit negative feedback to writing.
Reasons why performance appraisal…
4. Scarce Rewards. The organization usually offers few formal rewards
for taking the process seriously and probably no informal rewards.
On the other hand, there may be many informal rewards for not
delivering unpopular messages.
5. Personal Reflection. Managers hesitate to give unfavorable
appraisals for fear that the appearance of unsatisfactory work by a
Invalid File
subordinate will reflect badly
on the manager’s ability to select and
develop subordinates. Lack of candor in evaluation is a way of
hiding one’s dirty laundry.
6. Equal Employment Opportunity Terror. Managers fear that if they
give an honest but unsatisfactory appraisal to a black, handicapped,
opposite gender, or reserved category employee, they’ll be hauled
off to court for discrimination.
Is there any legal requirements for a performance
appraisal?
• No law compels an organization to review the performance of its
members.
• But, if a company does choose to have a performance appraisal
system, it must comply with the laws.
• In the eyes of the law a performance
appraisal is an employment
Invalid File
test.
• It is thus scrutinized in a manner similar to that of other aspects
of the employment process: initial recruitment, selection and
hiring, promotion, compensation, and termination.
• As a result, the legal requirements for performance appraisal
systems are similar to those for other selection tests.
How to make sure that performance appraisal system
is legally defensible?
• No appraisal system is immune to legal challenges. Nonetheless, the
risk of legal difficulties can be minimized if seven basic good
management practices are followed.
1. Base the performance appraisal on an analysis of the job.
2. Define your performance dimensions in behavioral terms and
support assessments with observable,
Invalid Fileobjective evidence.
3. Keep things simple.
4. Monitor and audit for discrimination.
5. Train raters to assess performance accurately and to conduct
effective appraisal discussions.
6. Provide for upper-management review before the appraisal is
reviewed with the individual.
7. Provide some appeal mechanism.
Approaches to measuring performance
1. Trait approach: This approach recommends use of observable
dimensions of personality, such as initiative, dependability, and
sociability.
• Pros: Easy to do
• Cons: The rater makes judgments on an employee’s personal
Invalid File
characteristics rather than actual contributions to productivity.
2. Behavioral approach: While traits are characteristics, behaviors
are actions. Behaviors must be related to the performance being
appraised.
Pros: behavioral approach is reliable and accurate. Better
understanding of employees
Invalid File
Cons: Supervisors tend to focus on and rate the most recent
behavioral incidents rather than the employee’s performance for
the entire period; writing behavioral charts capable of serving as
valid and reliable instruments is a formidable task.
3. Results-based approach: Designed to overcome the limitations
of the former methods, results-based appraisals are based on
concrete, measurable work objectives or outcomes. Together,
managers and their subordinate can establish short-term
performance goals, such as ways of improving the
department’s efficiency. Invalid File
Pros: As long as the task is easily measurable, the results-based
techniques work
Cons:When the task is hard to quantify, the system usually
breaks down
Administration based approaches
• Self-appraisal
• Appraisal by Supervisor
• Appraisal by Panel
• 360-degreedegree appraisal
Invalid File
Thank you
Invalid File