PERFORMANCE
APPRAISAL
SYSTEM
INDEX
1
MEASURING PERFORMANCE V/S ACTION
Come appraisal time and one of the most debated aspects of completing the fair-and-square
appraisal revolves around what is 'measured' and what is 'achieved'. And the fable of the Bees
and the Bee Keepers is a very popular paradigm that often gets quoted at such times. It goes thus:
The Story: Once upon a time there were two beekeepers that each had a beehive.
The beekeepers worked for a company called Bees, Inc. The company's customers loved its
honey and demand for the product was increasing. So Bees, Inc. assigned each beekeeper a goal
for increased honey production. The beekeepers had different ideas about how to meet their goal
and designed different approaches to improve the performance of their hives.
2
The first beekeeper established a bee performance management approach that measured the
number of flowers each bee visited. At considerable cost to the beekeeper, an extensive
measurement system was created to count the flowers each bee visited. He also provided
feedback to each bee at mid-season on his individual performance. He also created special
awards for the bees who visited the most number of flowers. However, the bees were never told
about the hive's goal to produce more honey so that the company could increase honey sales. The
second beekeeper also established a bee performance management approach but this approach
communicated to each bee the goal of the hive for increased honey production. The beekeeper
and his bees measured two aspects of their performance the amount of nectar each bee brought
back to the hive and the amount of honey the hive produced. The performance of each bee and
the hive's overall performance were charted and posted on the hive's bulletin board for all the
bees to see. The beekeeper created a few awards for the bees that gathered the most nectar. But
he also established a hive incentive program that rewarded each bee in the hive based on the
hive's overall honey production the more honey produced, the more recognition each bee would
receive.
At the end of the season, the beekeepers evaluated their approaches. The first beekeeper found
that his hive had indeed increased the number of flowers visited ,but the amount of honey
produced by the hive had dropped. The Queen Bee reported that because the bees were so busy
trying to visit as many flowers as possible, they limited the amount of nectar they would carry so
they could fly faster. Also, since only the top performers would be recognized, the bees felt they
were competing against each other for awards. As a result, they would not share valuable
information with each other that could have helped improve the performance of all the bees (like
the location of the flower filled fields they'd spotted on the way back to the hive). As the
beekeeper handed out the awards to individual bees, unhappy buzzing was heard in the
background. After all was said and done, one of the high performing bees told the beekeeper that
if he had known that the real goal was to make more honey, he would have worked totally
differently. The second beekeeper, however, had very different results. Because each bee in his
hive was focused on the hive's goal of producing more honey. This Bess had concentrated their
efforts on gathering more nectar in order to produce more honey than ever before. The bees
worked together to determine the highest nectar yielding flowers and to create quicker processes
for depositing the nectar they had gathered. They also worked together to help increase the
amount of nectar gathered by the poorer performers. Tile Queen Bee of this hive reported that
the poor performers either improved their performance or transferred to hive No.1, because the
hive had reached its goal. The beekeeper rewarded each bee his portion of the hive incentive.
The keeper was also surprised to hear a loud, happy buzz and a jubilant flapping of wings as he
rewarded the individual high-performing bees with special recognition.
Should you measure performance or mere activities of employees? is the one who does silent
work but does not show of himself/herself or the one who puts up a show but hardly performs to
be recognized and rewarded? This and other related questions are answered in this chapter.
3
PERFORMANCE APPRAISAL
An organization’s goals can be achieved only when people put in their best efforts. How to
ascertain whether an employee has shown his or her best performance on a given job? The
answer is performance appraisal. Employee assessment is one of the fundamental jobs of
HRM. But not an easy one though. This chapter is devoted to a detailed discussion of the
nature and process of conducting performance appraisal.
Meaning and Definition
In simple terms, performance 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.”
Performance
Appraisal
Performance
Standards
Job Analysis
Fig. Relationship of Performance Appraisal and Job Analysis
4
OBJECTIVES OF PERFORMANCE APPRAISAL
Data relating to performance assessment of employees arc recorded, stored. and used for
seven purposes. The main purposes of employee assessment are:
1. To effect promotions based on competence and performance.
2. To confirm the services of probationary employees upon their completing the
probationary period satisfactorily.
3. To assess the training and development needs of employees.
4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have
not been fixed.
5. To let the employees know where they stand insofar as their performance is concerned
and to assist them with constructive criticism and guidance for the purpose of their
development.
6. 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
rate.
7. Finally, performance appraisal can be used to determine whether HR programs such a
selection, training, and transfers have been effective or not.
Broadly, performance appraisal serves four objectives(i)
developmental uses,
(ii)
administrative uses/decisions,
(iii)
organizational maintenance/objectives, and
(iv)
documentation purposes
Table below outlines these and specific uses more clearly:-
5
PERFORMANCE APPRAISAL AND COMPETITIVE
ADVANTAGE
The objectives of performance appraisal, listed above, point out the purpose which such an
exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm's
competitive strength. Besides encouraging high levels of performance, the evaluation system
helps identify employees with potential, reward performance equitably and determine employee's
need for training. Specifically, performance appraisal helps an organization gain competitive
edge in the following ways (see Fig below)
6
Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage?
Improving Performance
An effective appraisal system can contribute to competitive advantage by improving employee
job performance in two ways-by directing employee behavior towards organizational goals, as
was done by the second beekeeper (see opening case), and by monitoring that behavior to ensure
that the goals are met.
Making Correct Decisions
As stated above, appraisal is a critical input in making decisions on such issues as pay raise,
promotion, transfer, training, discharges and completion of probationary periods. Right decision
on each of these can contribute to competitive strength of an organization. If promotion, for
example, is made on performance, the promote feels motivated to enhance his or her
performance.
Ensuring Legal Compliance
Promotions made on factors other than performance might land up a firm in a legal battle, thus
diverting its focus on non-productive areas, as it happened to Williamson Magar. Organizations
can minimize costly performance-related litigation by using appraisal systems that give fair and
accurate ratings.
Minimizing Job Dissatisfaction and Turnover
Employees tend to become emotional and frustrated if they perceive that the ratings they get
are unfair and inaccurate. Such employees find that the efforts they had put in became futile and
obviously get de-motivated.
Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased
turnover. Fair and accurate appraisal results in high motivation and increased
7
job satisfaction. An organization having satisfied and motivated employees will have an edge
over its competitors
Consistency between Organizational Strategy and Behavior
An organization needs a strategy consistent with the behavior of its employees if it were to
realize its goals. A truism of organizational life is that people engage themselves in behaviours
that they perceive will be rewarded. As employees want to be rewarded, they tend to occupy
themselves more with those activities on which the organization emphasizes. For example, if the
focus is on service, employees will behave in ways that will help them in gaining rewards
associated with service delivery. If the focus is on cost control, employees will seek to control
cost and thus be recognized and rewarded. If the focus is on rewarding productivity, employees
will strive for productivity. The performance appraisal becomes not only a means of knowing if
the employees' behavior is consistent with the overall strategic focus, but also a way of bringing
to the fore any negative consequence of the strategy- behavior fit For example, a single point
productivity focus may include potential negative consequences such as decreased quality and
co-operations. Thus, the performance appraisal system is an important organizational mechanism
to elicit feedback on the consistency of the strategy-behavior link.
Organizational Strategy and Performance Appraisal
The performance appraisal system serves many organizational objectives and goals. Besides
encouraging high level of performance, the evaluation system is useful in identifying employees
with potential, rewarding performance equitably. And determining employees' needs for
development. These are all the activities that should support the organization’s strategic
orientation. Although these activities are clearly instrumental in achieving corporate plans and
long-term growth, typical appraisal systems in most organizations have been focused on shortterm
goals.
8
From the strategic management point of view, organizations can be grouped into three
categories defenders, prospectors and analyzers. Performance appraisal has definite roles in all
the three strategies.
Typically, defenders have a narrow and relatively stable product-market domain. Because of
this narrow focus, these organizations seldom need to make major adjustments in their
technology. Structure or methods of operations. They devote primary attention to improving the
efficiency of their existing operations. Because of the emphasis 011building skills within the
organization, successful defenders use performance appraisal for identifying training needs.
Performance appraisal is usually more behaviour oriented.
Organizations with a prospector strategy continuously search for different product and market
opportunities. In addition, these organizations regularly experiment with potential responses to
new and emerging environmental trends. Prospectors are often the harbingers of change. Because
of the emphasis on skills identification and acquisition of human resources from external
sources, as opposed to skills building with the organization, prospectors often use the
performance appraisal as a means of identifying staffing needs. The emphasis is on results.
Finally, the focus is on division and corporate performance evaluation as they compare with
other companies during the same evaluation period.
Organizations with an analyzer strategy operate in two types of product-.market domains. One
domain is stable while the other is changing. In their more innovative areas, managers watch
their competitors closely and rapidly adopt the ideas that appear promising. In general, analyzers
use cost effective technologies for stable products and project or matrix technologies for new
product. Analyzers tend to emphasize both skill building and skill i1cquisilion and employ
extensive training programmes.
Thus, these organizations attempt to identify both training as well as staffing needs. The
appraisal systems are considered at the individual, group and divisional levels. Finally,
successful analyzers have a tendency to examine current performance with past performance
within the organization. Cross-sectional comparisons (comparisons among 'companies) may also
occur.
Whatever the category, a performance appraisal system has strategic importance to a firm in
three ways:
1. Feedback mechanism,
2. Consistency between organizational strategy and job behavior, and
3. Consistency between organizational values and job behavior.
9
APPRAISAL PROCESS
Figure below outlines the performance- appraisal process. Each step in the process is crucial and
is arranged logically. The process as shown in Fig. Below is somewhat idea1ised. Many
organizations make every effort to approximate the ideal process, resulting in first-rate appraisal
systems. Unfortunately, many others fail to consider one or more of the steps and, therefore,
have less-effective appraisal system.
Objectives of
Appraisal
Establish job
Expectation
Design an appraisal
performance
Performance
interview
Use appraisal data for
appropriate purposes
1. Objectives of Appraisal
Objectives of appraisal as stated above include effecting promotions and transfers, assessing
training needs, awarding pay increases, and the like. The emphasis in all these is to correct
problems. Theses objectives are appropriate as long as the approach in
10
appraisal is individual. Appraisal in future, would assume systems orientations. In the
systems approach, the objectives of appraisal stretch beyond the traditional ones.
In the systems approach, appraisal aims at improving the performance, instead of
merely assessing it. Towards this end, an appraisal system seeks to evaluate opportunity
factors. Opportunity factors include the physical environment such as noise, ventilation
and lightings, available resources such as human and computer assistance and social
processes such as leadership effectiveness. These opportunity variables are more
important than individual abilities in determining work performance.
In the systems approach the emphasis is not on individual assessment and rewards or
punishments. But it is on how work the work system affects an individual’s.
In the systems approach the emphasis is not on individual assessment and rewards or
punishments. But it is on how the work systems affect an individual’s performance. In
order to use a systems approach, managers must learn to appreciate the impact that
systems levels factors have on individual performance and subordinates must adjust to
lack of competition among individuals. Thus, if a systems approach is going to be
successful, the employee must believe that by working towards shared goals, everyone
will benefit.
Not that the role of the individual is undermined. The individual is responsible for a
large percentage of his or her work performance. Employees should not be encouraged to
seek organizational reasons for his failures. The identifications of systems obstacles
should be used to facilitate development and motivation, not as an excuse to poor
performance. The following table displays some of the differences between the traditional
approach and the systems-oriented one.
PERFORMANCE APPRAISAL SYSTEMS
Guiding value
Primary roles
Traditional
Attribution to individual
Control, documentation
Leadership practices
Appraisal frequency
Degree of formality
Reward practices
Directional, evaluative
Occasional
High
Individual orientation
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Systems
Attribution to systems
Development, problem
solving
Facilitative, coaching
Frequent
Low
Group orientation
2. Establish Job Expectations
The second step in the appraisal process is to establish job expectations. This includes informing
the employee what is expected of him or her on the job. Normally, a discussion is held with his
or her superior to review the major duties contained in the job place of formal performance
evaluation.
3. Design Appraisal Programme
Designing an appraisal programme poses several questions which we need to answers. They are:
1. Formals versus informal appraisal
2. Whose performance is to be assessed?
3. Who are the raters?
4. What problems are encountered?
5. How to solve the problems?
6. What should be evaluated?
7. When to evaluate?
8. What methods of appraisal are to be used?
What
methods?
Formal
V/s
Informal
When to
evaluate?
Whose
performanc
e
Appraisal
design
What to
evaluate?
What are
the
raters?
What
problems
How to
solve?
1. Whose performance should be rated? To the question as to whose performance should
be rated, the answer is obvious—employees, is it individual or teams? Specifically the
12
rate may be defined as the individual, work group, division, or organizations. It is also
possible to define the rate at multiple levels. For example, under some condition, it may
be desirable to appraise performance both at work-group level for merit-pay increases
and at the individual level to assess training needs. Two conditions necessitate a group
level appraisal—group cohesiveness and difficulty in identifying individual
performance. Description. Individual should not be expected to begin the job until they
understand what is expected out of them.
2. Formal V/s informal appraisal: - the first step in designing an appraisal programme is to
decide whether the appraisal should be formal or informal. Formal appraisal usually
occurs at specified time periods—once or twice year. Formal appraisals are most often
required by the organizations for the purposes of employee evaluation. Informal
performance appraisal can occur whenever the superior feels the need for
communication. For example, if the employee has been consistently meeting or
executing standards, an informal appraisal may be in order to simply recognize this fact.
Discussions can take place anywhere in the organizations, ranging from the managers
office to the canteen. But care needs to be taken to ensure that the discussion is held in
private. Many organizations encourage a mixture of both formal and informal appraisal.
The formal appraisal is most often used as primary evaluation. However, the informal
appraisal is very helpful for more performance feedback. Informal appraisal should not
take the Group cohesiveness refers to shared feeling among work-team members. There
is cooperation and clear understanding to accomplish tasks which are
interdependent. Any attempt to assess individual performance shall undermine group
cohesiveness and tend to promote individualistic or even competitive orientation. The
difficulty in identifying individual contribution is also important to consider. In some
cases, interdependent of tasks is so complete that it is difficult to identify who has
contributed what. There is no other choice but to view that task as a team effort. But the
point to be remembered is that the performance of all employees must be rated. All must
become raters.
3. Who are Raters? Raters can be immediate supervisors, specialist from the HR
department, subordinates. Peers, committees, clients, self appraisal, or a combination of
several.
a. Immediate supervisor is the fit candidate to appraise the performance of his or
her subordinate. There are 3 reasons in support of this choice. No one is familiar
with the subordinate’s performance than his or her superior. Another reason is
that the superior has the responsibility of managing a particular unit. When the
tasks of evaluating a subordinate is given to another person, the superior
authority may be undermined seriously. Finally, training and development of
subordinate is am portent element in every mangers job. Since appraisal
programme are often clearly linked to training and development, the immediate
superior may be the legal choice to conduct the performance evaluation.
b. Subordinate can assess the performance of their superiors. The use of this choice
13
may be useful in assessing an employee ability to communicate, delegate work,
allocate resources, disseminate information, resolve intra-personal conflict, and
deal with employees on a fair basis. But the problem with the subordinate
evaluation is that supervisors tend to become popular, not by effective leadership,
but by mere gimmicks.
c. Peers are in better position to evaluate certain facts of job performance
which the subordinates or supervisors cannot do. Such facts include
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contribution skills, reliability and initiative. Closeness of the working relationships and the
amount of personal contacts place peers in a better position to make accurate assessments.
Unfortunately friendship or animosity may result in distortion of evaluation. Further when
reward allocation is based on peer evaluation, series conflicts among co-workers may develop.
Finally join together to rate each other high.
d. Although clients are seldom used for rating employee performance, nothing
prevents an organization from using this source. Clients may be members within
the organization who have direct contact with the rate and make use of an output
(goods or services) this employee provides. Interest, courtesy, dependability and
innovativeness are but a few of the qualities for which clients can offer rating
information. Clients, external to the organization can also offer similar kinds of
information. Where appraisal is made by the superior, peers, subordinates and
clients, it is called the 360-degree system of appraisal. First developed at General
Electric, US in 1992 the system has become popular in our country too. GE
(India). Reliance Industries, Crompton Greaves, Godrej Soaps, Wipro, Infosys,
Thermax and Thomas Cook are using the method with greater benefits. The
Arthur Anderson Survey 1997 reveals that 20% of the organization use 360
degree method. In the 360 degree method, besides assessing performance. Other
attributes of the assess—talents, behavioral quirks, values, ethical standards,
tempers and loyalty are evaluated by the people who are best placed to do it.
Many employees use rating committees to evaluate employees. These
committees are often composed of the employee’s immediate supervisor and
three or four other supervisors who come in contact with the employee. This
choice is welcome when an employee in the course of his or her job performs a
variety of tasks in different environment. For e.g. 1supervisor may work with the
employee when technical aspects of a job are being performed and another
supervisor may deal with the same employee in situations where communications
skills are crucial. There are several benefits in
15
using multiple raters. First there may be objectivity in rating as more than rater is
involved in the assessment. Furthermore where there are differences in the rater
ought ratings they usually stem from the fact that raters at different level in the
organization often observe different facets of an employee performance-the
appraisal to reflect these differences. The disadvantages of committee rating are
that it diminishes the role of the immediate supervisor in the area of training and
development.
e. In self –appraisal employee himself or herself evaluates his or her own
performance. Indian Telephone Industries has been following the self-appraisal
system for executives in grade I to IV. Hewlett-Packard and Texas Instruments
too ask their performance to prepare their own appraisal. On the positive side it
may be stated that in self-appraisal there is an opportunity to participate in
evaluation particularly if it is combine with goal setti9ng and this should be
improve the mangers motivation. Managers are less defensive in self-evaluation
than when supervisors tell them what they are. Self-appraisal is best suited where
executive development is the main purpose of evaluation as the approach
enablers’ managers to clearly assess their areas of differences. Unfortunately selfappraisal falls short almost by any criterion. They tend to be more lenient
compared to other sources of evaluation, even that of peers who are more lenient
than their superiors. Self-appraisal is also more likely to be less biased and less in
agreement with judgment of others. In practice a combination of methods is
followed for employee. For example evaluation by self may be followed by a
superior, the personal department or the HR department (following diagram).
16
METHODS OF APPRAISAL
The last to be addressed in the process of designing an appraisal programme is to determine
methods of evaluation. Numerous methods have been devised to measure the quantity and
quality of employee’s job performance. Each of the methods discussed could be effective for
some purposes, for some organizations. None should be dismissed or accepted as appropriate
except as they relate to the particular needs of the organization or of a particular type of
employees. Broadly, all the approaches to appraisal can be identified into (i) past-oriented
methods, and (ii) future-oriented methods. Each group has several techniques as shown in the
figure below:
Appraisal Methods
17
Past-Oriented Methods
Rating Scales: This is the simplest and most popular technique for appraising employee
performance; the typical rating-scale system consists of several numerical scales, each
representing a job-related performance criterion such as dependability, initiative, output,
attendance, attitude, co-operation, and the like. Each scale ranges from excellent to poor.
The rater checks the appropriate performance level on each criterion, then computes the
employee’s total numerical score. The number of points scored may be linked to salary
increases, whereby so many points equal a rise of some percentage.
RATING SCALE
Instructions: For the following performances factors, please indicate on the rating
Scale your evaluation of the employee named below:
18
Rating scales offer the advantages of adaptability, relatively easy use and low
cost. Nearly every type of job can be evaluated in a short time, and the rater
does not need any training to use the scale.
The disadvantages of this method are several. The rater’s biases are likely to
influence evaluation, and the biases are particularly pronounced on subjective
criteria such as co-operation, attitude and initiative. Furthermore, numerical
scoring gives an illusion of precision that is really unfounded.
Checklist: Under this method a checklist of statements on the traits of the
employee and his or her job is prepared in 2 columns – viz., a ‘Yes’ column
and a ‘No’ column. All that
the rater (immediate superior) should is tick the ‘Yes’ column if the answer to the
statement is positive and in column ‘No’ if the answer is negative. A typical checklist is
given in the table below. After ticking off against each item, the rater forwards the list to
the HR department. The HR department assigns certain points to each ‘Yes’ ticked.
19
Depending upon the number of ‘Yes’ the total score is arrived at. When points are
allotted to the checklist, the technique becomes a weighted checklist. The advantages of
as checklist are economy, ease of administration, limited training of rater, and
standardization. The disadvantages include susceptibility to rater’s biases (especially the
halo effect), use of personality criteria instead of performance criteria, misinterpretation
of checklist items, and the use of improper weights by the HR department. Another
disadvantage of this approach is that it does not allow the rater to give up relative ratings.
Table: - Checklist for Operators
Forced Choice Method: In this, the rater is given a series of statements about an
employee. These statements are arranged in blocks of 2 or more, and the rater indicates
which statement is most or least descriptive of the employee. Typical statements are :
1. Learns fast _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ works hard
2. Work is reliable_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ performance is a good example for
3. Absents often_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ others usually tardy.
As in the checklist method, the rater is simply expected to select the statements that
describe the rate. Actual assessment is done by the HR Department.
This approach is known as the forced choice method because the rater is forced to select
statements, which are readymade. The advantage of this method is the absence of
personal bias in rating. The disadvantage is that the statements may not be properly
framed – they may not be precisely descriptive of the ratee’s traits.
Forced Distribution Method: One of the errors in rating is leniency – clustering a large
number of employees around a high point on a rating scale. The forced distribution
method seeks to overcome the problem by compelling the rater to distribute the ratees on
all points on the rating scale.
The method operates under an assumption that the employee performance level conforms
to a normal statistical distribution. Generally, it is assumed that employee performance
levels conform to a bell shaped curve. For example, the following distribution might be
assumed to exist – excellent 10 %, good 20 %, average 40 %, below average 20 %, and
unsatisfactory 10 %.
The major weakness of the forced distribution method lies in the assumption that the
employee performance levels always conform to a normal distribution. In organizations
that have done a good job of selecting and retaining only the good performers, the use of
20
forced distribution approach would be unrealistic, as well as possibly destructive to the
employee morale.
The error of central tendency may also occur, as the rater resists from placing an
employee in the lowest or in the highest group. Difficulties also arise for the rater to
explain to the rate why he or she has been placed in a particular group. One merit of this
approach is that it seeks to eliminate the error of leniency. However, the forced choice
method is not acceptable to raters and ratees, especially, in small groups or when group
members are of high ability.
Critical Incidents Method: The critical incidents method of employee assessment has
generated a lot of interest these days. The approach focuses on certain critical behaviors
of an employee that make all the difference between effective and non-effective
performance of a job. The supervisors as and when they occur record such incidents.
Examples of critical incidents of a plant manager are given in the following table:
Examples of Critical Incidents for an Assistant Plant Manager
21
One of the advantages of the critical incidents methods is that the evaluation is based on
CONTINUING TARGETS CRITICAL
DUTIES
INCIDENTS
Schedule Production for Plant
Full Utilization of
personnel and
machinery in the plant,
order delivered on time
Instituted new production
scheduling system;
decreased late orders by
10% last month;
increased machine
utilization in plant by20%
last month
Supervise procurement of raw
Minimize inventory
Let inventory storage costs
materials and inventory control
costs while keeping
rise 15% last month;
adequate supplies on
Over – Ordered parts “A”
hand
and “B” by 20%;
Under – Ordered part “C”
by30%
Supervise machinery
No shutdowns due to
Instituted new preventive
maintenance
faulty machinery
maintenance system for
plant;
Prevented a machine
breakdown by discovering
faulty part.
actual job behavior. Further, the approach has descriptions in support of particular ratings of an
employee. Giving job-related feedback to the ratee is also easy. It also reduces the personal
biases, if raters record incidents throughout the rating period. Finally, this approach can
increase the chances that the subordinates will improve because they learn more precisely what
is expected of them. The method however has significant limitations. These include:
1. Negative incidents are generally more noticeable that positive ones.
2. The recording of incidents is a chore to the supervisor and may be put off an easily
forgotten.
3. Overly close supervision may result.
4. Managers may unload a series of complaints about incidents during an annual
performance review session. The feedback may be too much at one time and thus
appearing as a punishment to the rate. More appropriately, the management should use incidents
of poor performance as opportunities for immediate training and counseling.
Behaviorally Anchored Rating Scales:
22
Behaviorally Anchored Scales, sometimes called behavioral expectation scales, are rating scales
whose scale points are determined by statements of effective and ineffective behaviors. They are
said to be behaviorally anchored in that the scales represent a range of descriptive statements of
behavior varying from the least to the most effective. A rater must indicate which behavior on
each scale best describes an employee’s performance. Behaviorally anchored rating scales
(BARS) have the following features:
1. Areas of performance to be evaluated are identified and defined by people who will use the
scales.
2. The scales are anchored by descriptions of actual job behavior that, supervisors agree,
represent specific levels of performance. The result is a set of rating scales in which both
dimensions and anchors are precisely defined.
3. All dimensions of performance to be evaluated are based on observable behaviors and are
relevant to the job being evaluated since BARS are tailor-made for the job.
4. Since the raters who will actually use the scales are actively involved in the development
process. They are more likely to be committed to the final product. BARS were developed to
provide results which subordinates could use to improve performance. Superiors would feel
comfortable to give feedback to the rates. Further, BARS help overcome rating errors.
Unfortunately, this method too suffers from distortion inherent in most rating techniques.
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Field Review Method
This is an appraisal by someone outside the, assessor’s own department. Usually someone
from the corporate office or the HR department. The outsider reviews Employee records and
holds interviews with the ratee and his or her superior.
This method is primarily used for making promotional decision at the managerial level. Field
reviews are also useful when comparable information is needed from employees in different
units or locations. Two disadvantage of this method are:1. An "outsider" is usually not familiar with conditions in an employees’ work environment
which may affect the employee's ability or motivation to perform.
2. An 'outsider' review dose not have the opportunity to observe employee behavior of
performance over a period of time and in a variety of situations. But only in an artificially
structured interview situation which extends over a very short period of time.
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Extremely good 7
performance
By knowing the price of items. This checker would be
expected to look for mismarked and unmarked items.
Good
performance
You can expect this checker to be aware of items
that constantly fluctuate in price.
Slightly good
performance
When in doubt. This checker would ask the other clerk
if the item is taxable.
This checker can be expected to verify with another
checker a discrepancy between the shelf and the marked
price before ringing up that Item.
Neither poor
nor good
performance
4
Slightly poor
performance
3
Poor
performance
2
When operating the quick check. If the lights are flashing
this checker can be expected to check out a customer with
15 items.
You could expect this checker to ask the customer
the price of an Item that he or she does not know.
In the daily course of personal relationships, he or she may
be expected to linger in long conversations with a
customer or with another checker.
In order to take a break. this checker can be expected to
block off the check stand while people wait in line.
Extremely poor 1
performance
25
A BARS Scale for the Knowledge and Judgement Dimension of a Grocery
Checker's Job.
Raters, making field reviews normally receive training on how to conduct the interview and
develop their writing skills. Being independent of the work scene they normally have less bias
for or against the ratee than docs the immediate supervisor. Even when a supervisor or others
concerned supply biased information the rater may he able to pinpoint areas requiring training
and development assistance.
Performance Tests and Observations
With limited number of jobs, employee assessment may be based upon a test of knowledge or
skills. The test may he of the paper-and-pencil variety or an actual demonstration of skills. The
test must he reliable and validated to be useful. Even then, performance tests are apt to measure
potential more than actual performance. In order for the test to be job related, observations
should he made under circumstances likely to be encountered. Practicality may suffer if costs of
test development or administration arc high.
Confidential Records
26
Confidential records arc maintained mostly in government Departments. though its application
in the industry .not ruled out. ITI. for example. had followed this method for a long time. Called
the Annual Confidential Report (ACR). the approach had 14 items-(i) attendance. (ii) selfexpression (written or oral). (iii) ability to work with others. (iv) leadership. (v) initiative. (vi)
technical ability (job knowledge). (vii) ability to understand new material. (viii) ability to reason,
(ix) originality and resourcefulness. (x) areas of work that suits the person best. (xi) judgement.
(xii) integrity. (xiii) responsibility and. (xiv) and defect-indebtedness. Memo served. etc. Twelve
of these were filled on a four-point grade scale (Excellent. Good. Fair and Poor).
For integrity. there were special instructions from the management. Justification was required for
outstanding or poor rating. Over:!!! rating on a five-point scale was separately given
(Outstanding. Very good. Good. Average, Poor). again with justification for rating as
outstanding or poor. Recommendations for promotion were also given. The ACR contained
recommendations and signature of the rater. the head of the department and the CMD.
The system was highly secretive and confidential Feedback to the assessee was given only in
case of an adverse entry. The AC'R was highly subjective. Ratings were easily manipulated
because the evaluation was linked to promotion. Even ITI has discontinued ACR system for
these reasons.
27
Essay Method
In the essay method the rater must describe the employee within a number of broad categories
such as (i) the rater's overall impression of the employee's performance. (ii), the promo ability of
the employee (iii) the jobs that the employee is now able or qualified to perform (.iv) the
strengths and weaknesses of the employee. and (v)the training and the development assistance
required by the employee. Although this method may be used independently, it is most
frequently found in combination with others. It is extremely useful in filing information gaps
about the employees that often occur in the better structured checklist method.
The strength of the essay method depends on the writing skills and analytical ability of the
rater.
However many raters do not have good writing skills. They become confused about what to
say. How much they should state and the depth of the narrative The essay method can consume
much time because the rater must collect the information necessary to develop the essay and then
he or she must write it The essay method also depends on the memory power of the rater.
A problem with this method is that the rate may be rated on the quality of the appraisals that
they give. The quality standard for the appraisal may be unduly influenced by appearance rather
than content. Thus. a 'high quality' appraisal may provide little useful information about the
performance of the rate.
Cost Accounting Method
This method evaluates performance from the monetary returns the employee yields to his or
her organisation. A relationship is established between the cost included in keeping the employee
and the benefit the organization derives from him or her. Performance of the employee is then
evaluated based on the established relationship between the cost and the benefit.
Comparative Evaluation Approache
These are a collection of different methods that compare one worker's performance with
that of his/her co-workers. Comparative appraisals are usually conducted by supervisors. As
these appraisals can result in a ranking from best to worst, they are useful in deciding merit-pay
increases, promotions and organizational rewards. The usual comparative forms used in this kind
28
of evaluation are the ranking method and the paired comparison method.
Ranking Method
In this, the superior ranks his or her subordinates in the order of their merit, starting from the
best to the worst. All that the HR department knows is that A is better than B. The, 'how' and
'why' are not questioned, nor answered. No attempt, is made to fractionalize what is being
appraised into component elements. This method is subject to the halo and recency effects,
although rankings by two or more raters can be averaged to help reduce biases. Its advantages
include ease of administration and explanation.
Paired-comparison Method
Under this method the appraiser compares each employee with every other employee one at a
time. For example there are five employees named A, B. C. D and E. The performance of A is
first compared with the performance of B and a decision is made about whose performance is
better. Then A is compared with C. D and E in that order. The same procedure is repeated for
other employees. The number of comparisons may be calculated with the help of a formula
which reads thus: N(N-1)/ 2 where N stands for the number of employees to be compared. If
there are 10 employees, the number of comparisons will be 10(10-1)/2 = 45.
After the completion of comparison, the results can be tabulated and a rank is created from the
number of times each person is considered to be superior.
Future-oriented Appraisals
Is it not enough if only the past performance is assessed . How an employee can perform in
the days to come is equally important. This can be assessed by focusing on
employee potential or setting future performance goals. The commonly used future-oriented
techniques are MBO, psychological appraisals, and assessment centers.
MANAGEMENT BY OBJECTIVES
It was Peter F. Drucker who first gave the concept of MBO to the world way back in 1954
when his The Practice of Management was first published. The MBO concept, as was conceived
by Drucker, reflects a management philosophy which values and utilizes employee contributions.
Application of MBO in the field of performance appraisal is a recent thinking.
Four Steps in the MBO Process
How MBO works can be described in four steps:
The first step is to establish the goals each subordinate is to attain. In some organisations,
superiors and subordinates work together to establish goals. In others. Superiors establish goals
for subordinates. The goals typically refer to the desired outcome to be achieved. These goals
can then be used to evaluate employee performance.
The second step involves setting the performance standard for the subordinates in a previously
29
arranged time period. As subordinates perform, they know fairly well what there is to do, what
has been done, and what remains to be done.
In the third step, the actual level of goal attainment is compared with the goals agreed upon.
The evaluator explores reasons for the goals that were not met and for the goals that were
exceeded. This step helps determine possible training needs. It also alerts the superior to
conditions in the organization that may affect a subordinate but over which the subordinate has
no control.
The final step involves establishing new goals and, possibly new strategies for goals not
previously attained. At this point, subordinate and superior involvement in goal-setting may
change. Subordinates who successfully reach the established goals may be allowed to participate
more in the goal setting process the next time. The process is
repeated. As with other approaches. MBO too has been criticised. One comment made against
the approach is that it is not applicable to all jobs in all organisations. Jobs with little or no
flexibility. Such as assembly-line work, are not compatible with MBO. An assembly-line worker
usually has so little job flexibility that the performance standards and objectives are already
determined. The MBO process seems to be most useful with managerial personnel 'and
employees who have a fairly wide range of flexibility and self-control in their jobs. Besides,
when the result of an MBO system are to be used to allocate organisational rewards, employees
may be less likely to establish challenging goals-goals they are confident that they can
accomplish. Further, the allocation of merit pay on a semi-annual or annual basis may encourage
the setting up of goals with short time horizons to the disadvantage of important long-term goals.
The performance appraisal presently followed in L&T reflects the principles of MBO.
Psychological Appraisals
Large organization employs full-time industrial psychologists. When psychologists are used for
evaluations. They assess an individual’s future potential and past performance. The appraisal
normally consists of in-depth interviews, psycho1ogical tests. Discussions with supervisors and a
review' of other evaluations. The psychologist then write an evaluation of the employee's
intellectual, emotional, motivational and other-related characteristics that suggest individual
potential and may predict future performance. The evaluation by the psychologist may be for a
specific job opening for which the person is being considered. Or it may be a global assessment
of his or her future potential. From these evaluations. Placement and development decisions may
be made to shape the person's career. Because this approach is slow and costly, it is usually
required for bright young members who, others think. May have considerable potential within
the organisation. Since the quality of the appraisal depends largely on the skills of the
psychologists, some employees object to this type of evaluation, especially if cross-cultural
differences exist.
30
CONFIDENTIAL NAME
PA FORM:28
EMS. PS. NO
CADRE GROUP DEPT.
EXECUTIVES &
SUPERVISORS
LARSEN &TOUBRO LIMITED
HUMAN RESOURCE DEVELOPMENT-PERFORMANCE APPRAISAL
SYSTEM
PERFORMANCE ANALYSIS AND REVIEW
APRIL 1993 TO MARCH 1994
NAME
DATE
SIGNATURE
EMPLOYEE
IMMEDIATE SUPERVISOR
NEXT SUPERIOR
1.
2.
PERSONNEL/ HRD DEPT.
A]PERFORMANCE REVIEW AGAINST B1]
BY
OBJECTIVES
SUPERIOR
1.
2.
3.
4.
5.
31
INADEQUATE
ADEQUATE
RESULTS
AND ACHIEVED
GOO
V. D
GOO
D
AGREED
OBJECTIVES
TARGETS
BY EMPLOYEE
OUTSTANDING
A1]
IMMEDIATE
A2]
SELF REVIEW (by employee)
SIGNIFICANT CONTRIBUTORS (JOBS OR PROFESSION RELATED –NOT COVERED ABOVE)
IMPORTANT FACTORS FACILITATING PERFORMANCE
IMPORTANT FACTORS HINDERING PERFORMANCE
B2] PERFORMANCE AGAINST OBJECTIVES(BY IMMEDIATE SUPERIOR)
2.
3.
4.
5.
INNOVATIVENESS
Ability to think new and better
ways of doing things that results
in introduction of new ideas or
improvements of the systems
and operations.
INITIATIVE
Ability to determine and initiate
actions that result in improve
handling of jobs,
without
waiting to be told.
INTERPERSONAL &
TEAM RELATIONSHIP
Ability to interact effectively
with people at all levels to gain
their confidence and respect and
work in a collaborative and
participative manner.
RESOURCEFULNESS
Ability to muster resources to
achieve desired results
and
device ways and means of
solving problems in
difficult
situations.
Ability to convey thoughts and
feelings clearly both through
oral as well as written
expressions
for
better
understanding.
COMMUNICATION
SKILLS
C2] AREAS OF STRENGTH AND IMPROVEMENTS (by immediate superior)
32
INADEQUA
TE
INADEQUATE
ADEQUATE
V. GOOD
GOO
D
1.
OUTSTANDING
OUTSTANDING
V. GOOD
GOOD
ADEQUATE
C1] Appraisal of Critical Attributes(by immediate
superior)
C2]
CRITICAL ATTRIBUTES
C3] Potential Areas Of Growth (By Immediate Superior)
D] Recommendations For Training And Development( By Immediate Superior)
D1] IN-COMANT TRAINING PROGRAMMES
Description
Code
Description
1.
2.
D2] OTHER TRAINING PROGRAMMES
1.
2.
D3] SPECIFIC DEVELOPMENT PLANS
Proposed action
(tick as applicable)
Details of Actions Required
Job rotaion
Job enlargement
Special assignment
Deputatiomn of other dept
Others(please specify)
E]
COMMENTS BY NEXT SUPERIOR(S)
E1] ON SPECIFIC DEVELOPMENT PLANS STATED ABOVE IN D3
E2] OVERALL OBSERVATIONS:
F] FOR USE BY PERSONNEL/ HRD CO –ORDINATOR
33
Code
ASSESSMENT CENTRES
Mainly used for executive hiring, assessment centre are now "being used for evaluating
executive or supervisory potential. An assessment centre is a central location where managers
may come together to have their participation in job-related exercise evaluated by trained
observers. The principal idea is to evaluate managers over a period of time say one to three days,
by observing (and later evaluating) their behaviour across a series of select exercises or work
samples. Assesses are requested to participate in in-basket exercises, work groups (without
leaders), computer simulations, role paying, and other similar activities which require the same
attributes for successful performance, as in the actual job. After recording their observations of
ratee behaviors, the raters meet to discuss these observations. The decision regarding the
performance of each assessee is based upon this discussion of observations. Self-appraisal and
peer evaluation are also thrown In for final rating.
The characteristics assessed in a typical assessment centre include assertiveness, persuasive
ability, communicating ability, planning and organisational ability, self – confidence, resistance
to stress, energy level, decision – making, sensitivity to the feelings of others, administrative
ability, creativity and mental alertness. It is a formidable list which is quite difficult to measure
accurately over three days, though there would be sizable number of trained observers and
psychologists.
First developed in the US and the UK in 1943, the assessment centre is gaining popularity in
our country, Crompton greaves, Facher, HLL and Modi Xerox are using the technique with
results being highly positive.
Assessment Centre - Many Takers
• Ranbaxy retained the services of a team of psychologists from the UK-based Kelly&
King to take the executives (of Ranbaxy) through an assessment center.
20 star manager went through the exercise.
• Santrupt Misra, Director- Birla Management Corporation had plans for a similar exercise
to be held at Gyanodaya, the Aditya Birla learning centre. Misra first
used the assessment centre concept four years ago on 150 middle and senior level
managers.
• Old timers like Tata have created their own assessment centers, and so have the talent
centric companies' like Wipro and Cognizant.
• SHL, a HR consulting firm has worked with over 100 companies conducting dose to
1,000 assessment centers.
• Consulting firm ECS (formerly known as Eicher Consulting Services) does a number of
assessments in a month for a variety of clients like Tata Steel, ING Vysya and the host of
34
BPO outfits.
• ICICI Bank uses assessment centre as a recruitment and selection tool to find the best
talent, while GE India subsidiary GECIS has used it on 20% of it5 middle managers.
The problem with the assessment centres is their cost Not only are the asses sees away from
their jobs while the company pays for their travel and lodging, but the evaluators are often
company managers who are assigned to the assessment centre for short durations. These
managers are often supplemented by psychologists and HR specialists who run the centre and
also make evaluations. Hence this approach is cost - effective only in large organisations.
Assessment-centre staff is often influenced by subjective element; such as personality of the
candidates: Raters tend to evaluate the quality of the individual's social skills rather than the
quality of the decisions he/she makes. Assessment -centre ratings seem to be strongly influenced
by the participant's interpersonal skills.
The approach also involves real hazards. One of the most obvious is the examination-taking
syndrome. Solid performers in day-to-day operations feel suffocated in the simulated
environment. Another drawback is its potential adverse effect on those not selected to participate
in the exercise.
35
Employees who receive a poor report from the centre may react in negative ways. Ideally, a
rejected employee would return to his or her former job, satisfied that he or she would not be
promoted to a job he or she could not handle. However, a good performer at one level may leave
the organisation in order to remove the bad assessment report from his or her work record. Thus,
a poor report can demoralize an employee who was once an asset.
Other problems include-strong and unhealthy sense of competition among assesses; Difficulty
of conducting the test frequently; and the possibility of overemphasizing the test performance.
But a well-conducted assessment centre can and does achieve better forecasts of future
performance and progress than other methods of appraisal. Also, reliability, content validity, and
predictive validity are said to be high in the assessment centres.
The test also makes sure that the wrong people are not hired or promoted. Finally, the
Assessment centre test clearly defines the criteria for selection and promotion.
36
APPRAISE THE PERFORMANCE
The next step in the appraisal process is to measure the performance. We revert to the moral of
the story narrated in the beginning of this chapter. The moral taught us that we need to measure
the performance and not mere activities.
What then is performance? Performance is essentially what an employee does or does not do.
Employee performance common to most jobs include the following elements:
• Quantity of output
• Quality of output
• Timeliness of output
• Presence at work
• Cooperativeness
In addition to these, other elements that deserve assessment are job knowledge, leadership
abilities, judgement, supervision, versatility and health. Assessment should also include one's
potential to perform and not just actual performance.
Performance measurement needs to be based on the benchmarks listed above. These
benchmarks vary from job to job. The job of a professor needs to be assessed against parameters
that are different to those used to evaluate the performance of a sales representati
37
PERFORMANCE INTERVIEW
Performance interview is another step in the appraisal process. Once appraisal has been made
of employees, the raters should discuss and review the performance with the ratees, so that they
will receive feedback about where they stand in the eyes of superior. Feedback is necessary to
effect improvement in performance, especially when it is inadequate. Specifically, performance
interview has three goals: (i) to change behaviour of employees whose performance does not
meet organisational requirements or their own personal goals. (ii) To maintain the behaviour of
employees who perform in an acceptable manner and (iii) to recognize superior performance
behaviours so that they will be continued.
Raters offer feedback to the ratees through several methods-tell and sell, tell and listen,
problem solving and mixed. In tell and sell, also called directive interview, the interviewer let
assesses know how well they are doing and sells them on the merits of setting specific goals for
improvement, if needed. The tell and listen interview provides the subordinates with chances to
participate and establish a dialogue with their superiors. Its purpose is to communicate the rater's
perceptions about the ratee's strength and weaknesses and let the subordinates respond to these
perceptions. In the problem -solving or participative interview, an active and open dialogue is
established between the superior and the subordinate. Not only are perceptions shared, but also
solutions to problems are presented, discussed, and sought. Mixed interview is a combination of
tell and sell and problem solving interviews.
Whatever be the approach followed, the emphasis in the interview should be on counseling
and development and not on criticism, witch-hunting and buck passing. Because of the
significance of appraisal interview, every effort must be made to make it effective. Guidelines
given in Table below will help make the interview successful.
38
GUIDELINES FOR EFFECTIVE APPRAISAL INTERVIEW
• Select a good time
• Minimize interruptions
• Welcome, set at ease
• Start with something positive
• Ask open – ended questions to encourage discussion
• Listen
• Manage eye contact and body language
• Be specific
• Rate behaviour, not personality
• Layout development plan
• Encourage subordinate participation
• Complete form
• Set mutually agreeable goals for improvement
• End in a positive, encouraging note
• Set time for any follow – up meetings
39
USE OF APPRAISAL DATA
The final step in the evaluation process is the use of evaluation data. The data and information
generated through performance evaluation must be used by the HR department.
It may be recollected that the most significant rewards employers offer to employees are:
1. Money to purchase goods and services required not only for current and future survival, but
also for the luxuries modern life has to offer.
2. The opportunity to use innate and learned skills and talents in a productive manner that the
individual and his or her managers and co-workers recognize as valuable.
3. Opportunities to interact with other people in a favorable working environment.
4. Opportunities to learn, grow, and make full use of their potential.
5. A sense of performance and stability through the continuing existence of the organisation and
the job.
6. The opportunity to perform work assignments within an environment that not only protects.
But promotes physiological, emotional and psychological health.
In one way or another, data and information outputs of a performance-appraisal programme
can critically influence these coveted employer-employee reward opportunities. Specifically, the
data and information will be useful in the following areas of HRM:
I. Remuneration administration
2. Validation of selection programmes
3. Employee training and development programmes
4. Promotion, transfer and lay-off decisions
5. Grievance and discipline programmes
6. HR planning
40
EDWARD DEMING ON PERFORMANCE APPRAISAL
Towards the end of this section, it is worthwhile to note Edward Deming's views on performance
evaluation. Deming is opposed to employee assessment, because it:
I. Rewards people for manipulating the system rather than improving it,
2. Is often self-defeating,
3. Is inconsistent with team-work,
4. Acts as a substitute for proper management, and
5. Is inherently unfair.
His alternatives to performance appraisal are:
1. Meticulous selection of leaders,
2. Educating workers about their obligations, and improved training and education after
selection,
3. Getting leaders to function as colleagues rather than as judges,
4. Subordinate performance to be assessed using statistical data,
5. Three to four hours interview annually, with subordinates aimed at support and
encouragement, and
6. Accommodation to lone workers.
41
CHALLENGES OF PERFORMANCE APPRAISAL
With the increased significance of performance appraisal, challenges confronting the
system are mounting. One serious challenge facing the performance appraisal system
relates to assessment of self-managed teams. Popularly called empowered teams, these selfmanaged teams create special challenges for performance appraisal-empowered teams
perform without supervisors. Historically, if one recalls, it is the supervisor who assesses
the performance of his or her subordinates. Another challenge is that both, individual and
team performance, need to be measured. A suitable device needs to be developed to assess
the performance of empowered teams because more and more firms use such teams to
enhance productivity. Figure below contains a typical model of team appraisal.
Identify
KRAs
critical to business
during the year
Evaluate performance of
the
team
against
predetermined targets
Set tangible targets for
each KRA. Incorporate
stretch elements for each
target. Fix the minimum
acceptable target
Communicate the
results to ensure
transparency
Determine
intangible
parameters
(like
initiative), which indicate
pockets of
individual
excellence with the team
Measure
the
performance of
the
team (actual
versus
targets) every month
Identify individuals who have excelled.
Discount subjective factors by including
assessors from outside the team to identify
outstanding individuals.
Figure: Appraising Teams
The Following table contains challenges of Performance Appraisal 42
Challenges of Appraisal:
• Create a culture of excellence that inspires every employee to improve and lend himself
or herself to be assessed
• Align organizational objectives to individual aspirations
• Clear growth paths for talented individuals
• Provide new challenges to rejuvenate careers that have reached the plateau stage
• Forge a partnership with people for managing their careers
• Empower employees to make decisions without the fear of failing
• Embed teamwork in all operational processes
• Debureaucratise the organization structure for ease of flow of information.
43
LEGAL ISSUES ASSOCIATED WITH PERFORMANCE
APPRAISAL
Performance appraisal data as stated earlier, are used to make many important HR decisions (e.g.
Pay, promotion, training, transfer and termination). The appraisal system is a common target of
legal disputes by employees involving charges of unfairness and bias. An employee may seek the
legal recourse to obtain relief from a discriminatory performance appraisal. One such case goes
back to 1980s. In 1981, three junior employees of Williamsons Magor were promoted
superseding 15 of their senior workmen. The basis for promotion was recommendations of the
departmental heads and other authorities. The 15 workmen challenged the promotion to the three
workmen in the Supreme Court and the court upheld the contention of the petitioners on the
ground that he said recommendations of departmental heads and authorities were arbitrary and
could not be the main basis for effecting promotions.
There are several recommendations 10 assist employees in conducting fair performance appraisal
and avoiding legal suits. Gleaned from case laws, these recommendations are intended to be
prescriptive measures that employers should take to develop fair and legally defensible
performance appraisal systems.
1.
Legally Defensible Appraisal Procedures
•
All personnel decisions should be based on a formal standardized performance appraisal
system.
•
Any performance appraisal process should be uniform for all employees within a job
group, and decisions based on those performance appraisals should he monitored for
differences according o race, sex. national origin. Religion or age of the employees.
While obtained differences as a function of these variables are not necessarily illegal. an
organization will have more difficulty defending an appraisal system with ratings related
to these variables.
•
All specific performance standards should be formally communicated to employees.
All employees should be able to review their appraisal results.
•
There should be a formal appeal process for the rate to rebut rater judgments.
•
All raters should be provided with written instructions and training on how to conduct
appraisals properly to facilitate systematic, unbiased appraisals.
•
All personnel decision-makers should be well informed of anti-discrimination laws.They
should be made aware of the fine distinctions between legal and illegal activities
regarding decisions based on appraisals.
2. Legally Defensible Appraisal Content
•
Any performance appraisal content should be based on a job analysis.
44
•
Appraisals based on traits should be avoided.
•
Objectively verifiable performance data (e.g. sales, productivity, not ratings) should be
used whenever possible.
•
Constraints on an employee's performance that are beyond the employee's control should
be prevented from influencing the appraisal to ensure that the employee has an equal
opportunity to achieve any given performance level.
•
Specific job-related performance dimensions should be used rather than global measures
or single overall measures.
•
The performance dimensions should be assigned weights to reflect their relative
importance in calculating the composite performance score.
3. Legally Defensible Documentation of Appraisal Results
• A thoroughly written record of evidence leading to termination decisions should be
maintained(e.g. performance appraisal and performance counseling to advise employees
of performance deficit, and to assist poor performers in making needed improvements)
• Written documentation (e.g. specific behavioural examples) for extreme ratings should he
required and they must be consistent with the numerical ratings.
• Documentation requirements should he consistent among the raters.
45
4. Legally Defensive Raters
• The raters should be trained in how to use an appraisal system
• The raters must have the opportunity to observe the ratee first hand or to review
important ratee performance products
• Use of more than rater is desirable in order to lessen the amount of influence of
any one rater and to reduce the effects of biases. Peers, subordinates, customers,
and clients are possible sources.
46