ESSENTIAL OF GOOD PERFORMANCE APPRAISAL SYSTEM -HUMAN RESOURCE MANAGEMENT THEORY

 

ESSENTIAL OF GOOD PERFORMANCE APPRAISAL SYSTEM
BY
SMART LEARNING WAY

Contents 

·         Introduction of performance appraisal system
·         Meaning of performance appraisal system
·         Definition of performance appraisal system
·         Essential of good performance appraisal system
·         Uses of performance appraisal system
·         Objectives of performance appraisal system
·         Problems in performance Appraisal
(Limitations of performance Appraisal)
·         Conclusion

Introduction 

Appraisal of performance is widely used in society. Parents evaluate their children, teachers evaluate their students and employers evaluate their employees. However, formal evaluation of employees is believed to have been adopted for the first time during the first world war. At the instance of Walter Dill Scott, the U.S. Army adopted the ‘Man to Man’ rating system for evaluating military personnel. During 1920-1930 hourly – paid workers in industrial units were evaluated on the basis of rating scores. This early
  
Appraisal system was called merit rating. In the early fifties, performance appraisal techniques began to be used for technical, professional and managerial personnel. Since then tremendous changes have taken place in the concept, techniques and philosophy of employee appraisal.

Meaning
            
 Performance means degree of accomplishment of the tasks involved in a job. It depends  upon ability and efforts. Performance  evaluation or performance appraisal is the process of assessing the performance and progress of an employee or of a group of employees on a given job and his potential for future development. It consists of all formal procedures used in working organizations to evaluate personalities, contributions and potentials of employees.
           
 It is the process of obtaining, analyzing and recording information about the relative worth of an employee. Performance appraisal and merit rating are used synonymously. But strictly speaking, performance appraisal is a wider term than merit–rating. In merit-rating, the focus is on judging the caliber of an employee so as to decide salary increment. It is designed primarily to cover rank and file personnel. On the other hand, performance appraisal focuses on the performance and future potential  of the employee. Its aim is not simply to decide salary
  
 Increments but to develop a rational basis for personnel decisions. Merit-rating measures what the person is (traits) whereas performance appraisal measures what the person does (performance).

Definition

A formal definition of performance  appraisal is:
          
It is the systematic evaluation of the individual with respect to his or her performance  on the job and his or her potential for development.

A more comprehensive definition is : performance appraisal is a formal structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee can perform more effectively in the future so that the employee, organization, and society all benefit.

The second definition includes employee’s  behaviors  as part of the assessment. Behavior can be active or passive do something or do nothing.

According to Heyel, “ It is the process of evaluating the performance and qualifications of the employees in terms of the requirement of the job for which he is employed for purpose of financial rewards and  other action which require differential treatment among the members of a group as distinguished from actions affecting all members equally.”

According to Wendell French performance appraisal  is, “ The formal, systematic assessment of how well employees are performing their jobs on relation to established  standard, and the communication of that assessment to employees.”

Performance appraisal is the personnel activity by mean of which the enterprise determines the extent to which the employee is performing the job effectively.”
                                                       - W. F. gluek
Performance appraisal is a process of evaluating the performance  of an employee on the job in terms of fulfilling its requirements.”
                                                        - W. D. Scott,  -R.C. Clothier, - W.R. Spriegel
Performance appraisal is a process of estimating or judging the value, excellence qualities or status of some object, person or thing.”                               

 Essential of good performance appraisal system
 
To effective, a performance appraisal system should the following requirements:

Mutual Trust :-

An atmosphere of mutual trust and confidence should be created in the organisation before introducing the appraisal system. Such an atmosphere is necessary for frank discussion of appraisal. It also helps to obtain the faith of employees in the appraisal system.

Performance appraisal is an emotional process involving feelings of fairness and equal treatment. The human element in it must be considered if is to serve the individual and organizational purposes.

Clear objectives :-
                     
 The objectives and uses of performance appraisal should be made clear and specific. The objectives should be relevant, timely and open. The appraisal system should be fair so that it is beneficial to both the individual employee and the organization. The system should be adequately and appropriately linked with other subsystems of human resource management.

Standardization :-
                 
Well – defined performance factors and criteria should be developed. These factors as well as appraisal form, procedures and techniques should be standardized. It will help to ensure uniformity and comparison of ratings.

 The appraisal techniques should measure what they are supposed to measure. These should also be easy to administer and economical to use. Employees should be made fully aware of performance standards and should be involved in setting the standards.

Training :-

 Evaluators should be given training in philosophy and techniques of appraisal. They should be provided with knowledge and skills  in documenting appraisals, conducting post appraisal interviews, rating errors, etc.

Job Relatedness :-
                 
   The evaluators should focus attention on job-related behaviour and performance of employees. Multiple criteria should be used for appraisal and appraisal should be done periodically rather than once a year.

Documentation :-
                
 The raters should be required to justify their ratings. Documentation will encourage evaluators to make conclusions efforts minimizing personal biases. It will also help to impart accountability for ratings.

Feedback and participation :-

Arrangements should be made to communicate the ratings to both the employees and the raters. The employees should actively participate in managing performance and in the ongoing process of evaluation. The superior should play the role of coach and counseller. The overall purpose of appraisals should be developmental rather than judgemental. The feedback message must contain comments with examples and suggestions for improvement.

Individual differences :-
                
While designing the appraisal system, individual differences in organisations should be recognized. Organisations differ in terms of size, nature, needs and environment. Therefore, the appraisal system should be tailor-made for the particular organisation. The needs of ratees in terms of feedback, mobility, confidence and openness should also be considered.

Post appraisal Interview :-
              
After appraisal, an interview with the employee should be arranged. It is necessary to supply feedback, to know the difficulties under which the employees work and to identify their training needs. The rater should adopt a problem – solving approach in the interview and should provide counseling for improving performance.

Review and appeal :

A mechanism for review of ratings should be provided. The review may be made by a committee consisting of line executives and personnel experts. The committee will see whether the raters are unusually strict or lenient. It may compare ratings with operating results and may require the raters to give specific examples or tangible proof. Differences if  any  are  discussed   and   dissent   is recorded. Provision must be made for an appeal in case the employee/ratee is not satisfied with the ratings.

Uses of performance appraisal system
·     
             Human resource planning
·         Recruitment and selection
·         Training and development
·         Career planning and development
·         Compensation programs
·         Internal employee relations
·         Assessment of employee potential

Objectives of performance appraisal system 

A performance appraisal furnishes information for a variety of organizational and individual purpose. Objectives of performance appraisal which are thus:

(1)To assist managers in overseeing subordinates   closely and instruct them appropriately and effectively.

(2) To help in motivating employees by providing performance feedback .

(3) To achieve better results and improve the performance at work.

(4)To identify developmental needs that are employed while selecting training and development programmes.

(5)To achieve success by focusing on the objectives effectively and efficiently.

(6)To facilitate research in human resource    management.

(7)To provide feedback to employees so that they come to  know where they stand and can improve their job performance.

Problems in performance Appraisal
(Limitations of Performance Appraisal) 

The main problems involved in performance appraisal are as follows :

1.      Errors in Rating  
            Performance appraisal may  not be valid indicator of performance and potential of employees due to the following types o errors:

2.      Halo effect :
It is the tendency to rate an employee consistently high or low on the basis of overall impression. One trait of the employee influences the rater’s appraisal on all other traits.
      For example, an employee ay be rated high on performance just because he sits on the job late in the evening. Similarly, a person who does not shave regularly may be rating all the employees on one trait before taking up another trait.

3.      Stereotyping :
this implies forming a mental picture of a person on the basis of his age, sex, caste or religion. It results in an over-simplified view and blurs the assessment of job performance. 

4.      Central Tendency :
it means assigning average ratings to all the employees in order to avoid commitment or involvement. This is adopted because the rater has not to justify or clarify the average ratings. As a results, the ratings are clustered around the midpoint.

5.      Constant error :
some evaluators tend to be lenient while others are strict in assessing performance. In the first case, performance is overrated (leniency error) while in the second type it is underrated (strictness error). This tendency may be avoided by holding meetings so that the raters understand what is required of them.

6.      Personal Bias :
 Performance appraisal may become invalid because the rater dislikes an employee. Such bias or prejudice may arise on the basis of regional or religious beliefs and habits or interpersonal conflicts. Bias may also be the result of time. Recent experience or first impression of the rater may affect the evaluation.

7.      Spill over effect :
This arises when past performance affects assessment of present performance. For instance, recent behaviour or performance of an employee may be used to judge him. This is called recency.

8.      Lack of Reliability
                  Reliability implies stability and consistency in the measurement. Lack of consistency over time and among different raters may reduce the reliability of performance appraisal. Inconsistent use of measuring standards and lack of training in appraisal techniques may also reduce reliability. Different qualities may not be given proper weight age. Factors like initiative are highly subjective and cannot be quantified.

9.      Incompetence
                 Raters may fail to evaluate performance accurately due to lack of knowledge and experience. Post appraisal interview is often handled ineffectively.

10.  Negative Approach
            Performance appraisal loses most of its value when the focus of management is on punishment rather than on development of employees.

11.  Multiple objectives
           Raters may get confused due to two many objectives or unclear objectives of performance appraisal.

12.  Resistance
           Trade unions may resist performance appraisal on the ground that it involves discrimination among its members. Negative ratings may affect interpersonal relations and industrial relations particularly when employees/unions do not have  faith in the system of performance appraisal. 

13.  Lack of knowledge
            The staff appraising performance of employees might not be trained and experienced enough to make correct appraisal.

Conclusion 

Performance appraisal is the process of assessing systematically the performance of a person on the present job and his potential for higher level jobs in future. It serves several purposes.

Performance appraisal provides an objective basis for taking personnel decisions.

Confidential report, free form, straight ranking, paired comparisons, forced distribution, graphic rating scales, checklist, critical incidents, group appraisal and field review are the traditional techniques of performance appraisal.

Managers can be appraised both on goal attainment and as managers.

Appraisal interview helps to serve manifold objectives. It can be tell and sell, tell and listen, and problem – solving interview.

The 360- degree appraisal involves appraisal of an employee by self, superior, subordinates and peers.

Bibliography

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  Essential of Human Resource Management & Industrial relations. Text cases & games.
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