Jagannath University

Department of Management Studies

Session: 2022-23
Course Title: Training and Development
Course Code: MGT-5202
Assignment on Performance Appraisal

Submitted To:
Dewan Badrul Hasan
Assistant Professor
Department of Management Studies
Jagannath University, Dhaka-1100

Submitted By:
RAMISHA AKTER
ID No: M220202105
MBA, 2nd Semester;
Department of Management Studies
Jagannath University, Dhaka-1100
Performance appraisal
Performance appraisal is a systematic process used by organizations to evaluate and
document an employee’s job performance and productivity over a specific period. This
process aims to provide employees with feedback on their work, identify strengths and areas
for improvement, set future goals, and align individual performance with the organization’s
strategic objectives.

performance management system measuring

A performance management system (PMS) helps organizations measure, track, and improve
employee performance over time. Measuring performance within this system is essential for
aligning individual efforts with organizational goals, enhancing productivity, and supporting
continuous development.
Here are key components and methods used in measuring performance within a PMS:

Setting Clear Performance Goals and KPIs

 Key Performance Indicators (KPIs): Quantifiable metrics aligned with

organizational objectives, such as sales targets, customer satisfaction scores, or
project completion times.
 SMART Goals: Specific, Measurable, Achievable, Relevant, and Time-bound goals
provide clear, objective criteria for success.

Regular Monitoring and Feedback

 Continuous Feedback: Frequent, informal feedback sessions between managers and

employees help address issues as they arise and keep performance aligned with
expectations.
 One-on-One Meetings: Regular check-ins to discuss progress, challenges, and
support needed help measure ongoing performance and adjust goals if needed.

Formal Appraisals and Performance Reviews

 Annual or Semi-Annual Reviews: Formal appraisals summarize an employee’s

overall performance, often involving a combination of self-assessments, manager
evaluations, and feedback from peers.
 360-Degree Feedback: This method collects feedback from an employee’s
colleagues, direct reports, and supervisors to provide a well-rounded perspective on
their performance.

Quantitative and Qualitative Data Analysis

 Quantitative Metrics: Objective, data-based measures such as sales figures, output

numbers, or time taken to complete tasks. These metrics allow for precise, numerical
performance tracking.
 Qualitative Feedback: Subjective assessments of traits such as teamwork,
communication, and leadership skills, which are essential but harder to quantify.
Behavioral and Competency Assessment
  Competency Frameworks: These outline the skills and behaviors necessary for a
role and assess an employee’s capabilities against them.
 Behavioral Assessments: Evaluating how well employees demonstrate company
values, collaborate, and adapt to changes in the workplace.

Self-Assessment and Peer Review

 Self-Assessment: Allows employees to reflect on their accomplishments, challenges,

and areas for improvement, which can lead to better self-awareness.
 Peer Review: Provides insights into how colleagues perceive an employee’s
contributions, especially in team-based roles.

Performance Analytics and Reports

 Dashboards and Analytics: Many PMS platforms use analytics to track trends and
provide insights into performance at both the individual and team levels.
 Reports: Summarize performance data for managers, helping them make informed
decisions regarding promotions, rewards, and development needs.

Development and Improvement Plans

 Personal Development Plans (PDPs): Based on performance data, PDPs outline

actions employees should take to improve in specific areas.
 Training Programs: Targeted training is suggested based on performance gaps to
help employees acquire necessary skills for their roles.

Rewards and Recognition

 Merit-Based Rewards: Salary raises, bonuses, or other incentives linked to

performance ratings motivate employees to achieve their goals.
 Recognition Programs: Recognizing high performers can positively impact morale
and encourage continued success.

Together, these methods ensure that performance measurement within a PMS is

comprehensive, data-driven, and focused on supporting growth while driving organizational
success.

Uses of performance appraisal

Performance appraisals serve various important functions in an organization, from improving
individual productivity to supporting strategic decision-making. Here are some key uses:

Improving Employee Performance

 Appraisals help employees understand their strengths and areas for improvement,
providing feedback that can drive personal and professional growth. This supports
continuous performance enhancement.

Setting and Aligning Goals

  Through appraisals, managers and employees can set individual goals that align with
team and organizational objectives. This alignment ensures that everyone’s efforts
contribute toward broader company goals.

Making Compensation Decisions

 Appraisal results often impact compensation, including salary adjustments, bonuses,

and other rewards. This encourages employees to perform well, knowing their efforts
can lead to tangible rewards.

Identifying Training and Development Needs

 By highlighting skill gaps, appraisals help managers determine which training or

development programs employees might need to meet job requirements or advance to
higher positions.

Supporting Promotion and Career Development

 Performance appraisals help identify high-potential employees who are ready for
more responsibility, guiding decisions around promotions and succession planning.

Providing Documentation for HR Decisions

 Appraisals create a record of an employee’s performance over time, which can be

useful for justifying HR decisions such as promotions, terminations, or layoffs in a
fair and transparent manner.

Enhancing Communication and Engagement

 Appraisals open a channel for regular, structured conversations between employees

and supervisors. This helps foster trust, clarify expectations, and improve engagement
and morale.

Supporting Organizational Planning

 By analyzing appraisal data across departments, organizations can assess workforce

strengths and weaknesses, guiding strategic decisions in areas like workforce planning
and departmental restructuring.

Recognizing and Rewarding High Performers

 Appraisals can highlight exceptional contributions, leading to recognition programs

that celebrate high performers. This can boost morale and motivate others to strive for
excellence.

Improving Employee Retention

  When employees see a clear link between performance and recognition or growth
opportunities, they’re more likely to feel satisfied and remain loyal to the
organization.

Advantages of Performance Appraisal

Performance appraisal (PA) systems offer numerous advantages for organizations, managers,
and employees. Here are some of the main benefits:

 Improves employee performance and productivity

Provides feedback that helps employees understand their strengths and areas for
improvement, leading to enhanced productivity and skill development.

 Aligns employee goals with organizational objectives

Ensures individual goals are aligned with the company’s strategic priorities, so
employees contribute effectively to organizational success.

 Facilitates communication and strengthens relationships

Creates a platform for open dialogue between employees and managers, fostering
trust, clarity, and mutual understanding.

 Supports compensation and reward decisions

Provides an objective basis for salary increases, bonuses, and promotions, motivating
employees by linking rewards to performance.

 Identifies training and development needs

Reveals skill gaps, allowing HR to create tailored development programs to meet both
individual and team needs.

 Enhances employee motivation and engagement

Recognizing achievements and providing constructive feedback boosts motivation,
encouraging employees to stay engaged and improve.

 Aids career growth and succession planning

Tracks performance to identify high-potential employees for career advancement,
supporting leadership development and succession planning.

 Provides documentation for HR decisions

Maintains a record of performance to support fair HR decisions around promotions,
disciplinary actions, and dismissals, reducing legal risks.

 Encourages self-improvement and accountability

Promotes self-reflection and a culture of continuous improvement, encouraging
employees to take responsibility for their performance.

 Boosts overall organizational productivity

Identifies and addresses performance issues systematically, helping build a high-
performing workforce and increasing the organization’s competitiveness.
  Supports retention of high performers
Recognizing and rewarding high performers increases job satisfaction and reduces
turnover, helping retain top talent.

 Increases managerial effectiveness

Helps managers understand their team’s strengths and weaknesses, enabling better
decision-making and more targeted support.

Disadvantages of Performance Appraisal

Here are some potential disadvantages of performance appraisal (PA):

 Bias and Subjectivity

Appraisals can be influenced by the manager's personal biases, leading to unfair or
inconsistent evaluations that may affect employee morale and trust.

 Time-Consuming
The process of conducting performance appraisals, collecting feedback, and
reviewing results can be time-consuming for both managers and employees,
especially in large organizations.

 Focus on Short-Term Performance

PAs often focus on short-term goals and immediate performance, which may overlook
long-term growth and development or fail to address broader strategic objectives.

 Creates Stress and Anxiety

The formal evaluation process can create anxiety or stress among employees,
particularly if they fear negative feedback or are uncertain about how they will be
assessed.

 Lack of Clear Criteria

When performance metrics or goals are unclear or undefined, appraisals can become
ambiguous, leading to confusion and frustration for both employees and managers.

 Inconsistent Evaluation Standards

Without standardized criteria, appraisals can vary across managers, departments, or
teams, resulting in inconsistent assessments and potential feelings of unfairness.

 Potential for Overemphasis on Weaknesses

If the appraisal focuses too much on an employee’s weaknesses or shortcomings, it
may negatively impact their confidence and motivation.

 May Encourage Unhealthy Competition

When appraisals are linked directly to rewards or promotions, it can foster unhealthy
competition among employees, undermining collaboration and teamwork.
 Employee Resistance or Disengagement
If employees perceive the appraisal process as unfair, irrelevant, or not linked to real
outcomes, they may become disengaged or resistant to the feedback provided.
  Over-Reliance on Manager Feedback
In some cases, appraisals are heavily dependent on one manager's perspective, which
may not capture the full scope of an employee’s performance or contributions.

 Difficulty in Measuring Certain Skills

Non-quantifiable skills like creativity, leadership, and teamwork can be challenging to
assess accurately, leading to subjective or incomplete evaluations.

 Lack of Follow-Up and Action

If feedback and development plans from the appraisal process are not acted upon, the
exercise can feel like a wasted effort and fail to drive meaningful improvement.

Overall, while performance appraisals can be beneficial, these disadvantages highlight the
importance of implementing a fair, consistent, and constructive process.

Who conducts Appraisal?

Performance appraisals are typically conducted by:

 Immediate Supervisors/Managers
The most common appraisers are the employee's direct supervisor or manager, who
has firsthand knowledge of the employee’s day-to-day performance, contributions,
and development needs.

 Self-Appraisal by Employees
In many organizations, employees are asked to assess their own performance before
the formal review. This self-assessment helps employees reflect on their
accomplishments, strengths, and areas for improvement.

 Peer Reviews
Some performance appraisal systems involve peer reviews, where colleagues provide
feedback on an employee's teamwork, communication, and collaboration skills. This
can be part of a 360-degree feedback system.

 360-Degree Feedback (Multiple Sources)

In this system, feedback is collected not only from supervisors but also from peers,
subordinates, and sometimes external parties like clients or customers. This provides a
well-rounded evaluation of the employee’s performance.

 Human Resources (HR)

HR departments may play a role in overseeing the appraisal process to ensure
consistency, fairness, and alignment with organizational policies. They may also
assist in gathering feedback and providing training for managers conducting
appraisals.

 External Assessors or Consultants

In some cases, especially for senior leadership or specialized roles, external
consultants or assessors may be brought in to evaluate performance objectively, based
on their expertise.
Each of these contributors provides different perspectives, allowing a more comprehensive
evaluation of the employee’s performance.

Methods of Appraising Performance

There are several methods for appraising employee performance, each with its own
advantages and limitations. Here are some of the most commonly used methods:

Graphic Rating Scale

 Description: This method uses a scale to rate an employee’s performance on various

traits, such as quality of work, dependability, or communication skills.
 Pros: Simple to use and easy to understand.
 Cons: It can be subjective, leading to bias in ratings.

360-Degree Feedback

 Description: Feedback is gathered from multiple sources: supervisors, peers,

subordinates, and sometimes even customers. This method provides a comprehensive
view of an employee's performance.
 Pros: Offers a well-rounded evaluation and helps reduce bias.
 Cons: Time-consuming and may cause employees to feel overwhelmed by feedback
from many sources.

Behaviorally Anchored Rating Scale (BARS)

 Description: This method combines elements of the graphic rating scale with specific
behavioral examples. It defines performance standards using descriptions of behavior
for each rating level.
 Pros: More objective and accurate than graphic rating scales.
 Cons: Developing BARS can be time-consuming and requires detailed planning.

Management by Objectives (MBO)

 Description: Employees and managers set specific, measurable objectives for the
evaluation period. Performance is appraised based on how well these objectives are
achieved.
 Pros: Clear, measurable goals that align individual performance with organizational
objectives.
 Cons: Focus on achieving specific goals might neglect other aspects of performance
(like teamwork or creativity).

Critical Incident Method

  Description: Managers record specific incidents of exceptionally good or poor
performance during the evaluation period. These incidents are discussed during the
appraisal to highlight key strengths or areas for improvement.
 Pros: Focuses on real, specific behaviors and outcomes.
 Cons: Can be time-consuming, and incidents may be remembered subjectively.

Self-Assessment

 Description: Employees assess their own performance, often using a structured

questionnaire. This method encourages self-reflection and helps employees identify
their own strengths and weaknesses.
 Pros: Encourages self-awareness and personal development.
 Cons: Employees may rate themselves too leniently or overlook areas for
improvement.

Forced Distribution Method

 Description: Employees are ranked and placed into categories (e.g., top 20%, middle
70%, bottom 10%) based on their performance. This method forces evaluators to rate
employees in a way that creates a "normal distribution" of performance.
 Pros: Helps differentiate between high and low performers.
 Cons: Can be demotivating for employees who are ranked in the middle or bottom
categories.

Checklist Method

 Description: A list of statements or questions is provided, and the manager checks off
those that best describe the employee’s performance. The checklist can be tailored to
specific job requirements.
 Pros: Simple and quick to use.
 Cons: Lack of detailed feedback or explanations for ratings.

Essay Method

 Description: The manager writes a detailed narrative about the employee's

performance, including strengths, weaknesses, and suggestions for improvement.
 Pros: Provides qualitative feedback and is more personalized.
 Cons: Subjective and may vary widely across different managers.

Assessment Centers

 Description: This method involves evaluating employees through a series of

exercises and simulations, such as role-playing or problem-solving tasks, to assess
skills like leadership, decision-making, and interpersonal abilities.
 Pros: Provides a comprehensive evaluation of an employee’s skills and potential.
 Cons: Expensive and time-consuming

Critical Incident Technique (CIT)

  Description: Similar to the critical incident method, CIT focuses on specific critical
events (positive or negative) that have a significant impact on performance. These
incidents are documented and reviewed in detail.
 Pros: Provides concrete examples of performance, not just ratings.
 Cons: May focus too much on extreme incidents, neglecting more common
performance issues.

Competency-Based Appraisal

 Description: This method assesses an employee’s performance based on key

competencies (e.g., leadership, communication, problem-solving) that are crucial for
the role.
 Pros: Helps align individual performance with organizational goals and
competencies.
 Cons: Can be subjective if the competencies are not clearly defined or measured.

Legal and effective performance appraisal

A legal and effective performance appraisal system ensures that performance evaluations
are conducted fairly, transparently, and in compliance with relevant laws, while also
providing meaningful feedback to employees. Here’s how organizations can achieve both:

Legal Aspects of Performance Appraisal:

 Clear, Documented Criteria: Ensure performance standards are defined and applied
consistently to avoid discrimination claims.
 Non-Discriminatory Practices: Avoid bias based on race, gender, age, disability,
etc., ensuring compliance with EEO laws.
 Consistency in Evaluation: Apply appraisal criteria uniformly across all employees
to prevent legal challenges.
 Employee Rights to Feedback: Inform employees of evaluation methods, provide
opportunities for feedback, and allow appeals.
 Documentation: Maintain records of appraisals to support HR decisions and defend
against potential legal issues.
 Data Privacy: Comply with data protection laws (e.g., GDPR) to keep performance
data confidential.
 Avoid Bias: Use multiple sources of feedback and train evaluators to minimize bias.

Effective Performance Appraisal:

 Clear, Measurable Goals: Set SMART goals that align with organizational
objectives.
 Regular Feedback: Offer ongoing feedback, not just during formal reviews, to keep
employees on track.
 Two-Way Communication: Encourage employee self-assessment and open
discussion during appraisals.
 Development Focus: Use appraisals to highlight growth opportunities and career
development.
 360-Degree Feedback: Gather feedback from peers, subordinates, and supervisors for
a well-rounded view.
  Link to Rewards: Connect appraisals to rewards (raises, promotions) to motivate
employees.
 Timely Feedback: Provide prompt and constructive feedback, focusing on strengths
and areas for improvement.
 Training for Evaluators: Train managers to ensure fair, consistent appraisals and
effective feedback.
 Follow-Up: Ensure actions are taken based on appraisal feedback and track progress.

Performance appraisals are a vital tool for managing employee performance, providing
valuable feedback, and aligning individual goals with organizational objectives. When done
correctly, they improve productivity, foster employee development, and help organizations
make informed decisions regarding rewards, promotions, and training.

However, for performance appraisals to be both legal and effective, they must be fair,
consistent, and objective, free from biases, and comply with legal requirements to avoid
discrimination and protect employee rights. Additionally, the process should focus on
constructive feedback, continuous improvement, and clear, measurable goals to motivate
employees and enhance their engagement.

In summary, a well-structured performance appraisal system drives organizational success by

creating a culture of accountability, growth, and recognition, while also ensuring legal
compliance and fairness.