CHAPTER SIX:
PERFORMANCE
APPRAISAL
Instructor:
Abdihakim Abdillahi
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DEFINITION
According to Edwin B
Flippo,
“Performance appraisal
is a
periodic and so far as humanly possible, an
systematic,
impartial rating of an employee’s excellence in
matters pertaining to his present job and to his
potentialities for a better job.”
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OBJECTIVES OF
APPRAISAL
• To determine the effectiveness of employees
on their present jobs so as to decide their
benefits.
• To identify the shortcomings of employees so
as to overcome them through systematic
guidance and training.
• To find out their potential for promotion and
advancement.
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PURPOSES OF PERFORMANCE
APPRAISAL
Performance appraisal helps the
management to take decision about
the salary increase of an employee.
The continuous evaluation of an
employee helps in improving the
quality of an employee in job
performance.
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It minimizes the communication
gap between the employer and
employee.
Promotion is given to an employee
on the basis of performance
appraisal.
The training needs of an employee
can be identified through
performance appraisal.
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The decision for discharging an employee.
Performance appraisal is used to transfer a person.
The grievances of an employee are eliminated
through performance appraisal.
The job satisfaction of an employee increases morale.
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CONCEPT OF
PERFORMANCE
APPRAISAL
Appraisal should be in writing and
carried at least once a year.
The performance appraisal information
should be shared with the employee.
Employee should have the opportunity
to respond in writing to the appraisal.
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Employees should have a
mechanism to appeal the
results of the
performance appraisal.
Manager should have
adequate opportunity to
observe the
employees
Anecdotal notes on the
employee‘s performance
should be kept during the
entire evaluation period.
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Evaluator should
be trained to carry
out the
performance
appraisal process
Performance appraisal
should focus on employee
behaviour and results
rather than on personal
traits or characteristics.
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PRINCIPLES OF PERFORMANCE
APPRAISAL
Single employee is rated by two raters.
Continuous and personal observation of an
employee is essential to make effective
performance appraisal.
The rating should be done by an immediate
superior of any subordinate in an
organization.
A separate department may be created for
effective performance appraisal.
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The is conveyed to the concerned
employee.
rating
The management should create confidence in the
minds of employees.
The standard for each job should be determined
by the management.
Separate printed forms should be used for
performance appraisal to each job according to
the nature of the job.
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TOOLS/METHODS OF
PERFORMANCE APPRAISAL
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RANKING METHOD
An employee is ranked against the
other in the working group under this
method.
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• Each employee be compared
with the other person.
Advantages • Useful in
small
organization.
• Can not be used for
big organization.
• Does not evaluate the
Disadvantages individuality of an
employee.
• It lags objectivity
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PAIRED COMPARISON METHOD
Paired comparison method has been
developed to be used in a big organization.
Each employee is compared with other
employees taking only one at a time. The
evaluator compares two employees and
puts a tick mark against an employee
whom he considers a better employee.
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• This method is
suitable for big
Advantages organizations.
• Individual traits
are evaluated.
• The understanding of
this method is difficult
Disadvantages one.
• Itinvolves
considerable time.
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FORCED DISTRIBUTION
METHOD
A method which forces the rater to distribute
the ratings of the overall performance of an
employee is known as forced distribution
method.
Group wise rating is done under this method.
This method is suitable to large organizations,
but the individual traits could not be
appraised under this method.
Example: a group of workers doing the same
job would fall into the same group as superior,
at and above average, below average and poor.
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GRADING
Certain categories of abilities or
performance of employees are defined well
in advance to fall in certain grades under
this method. Such grades are very good,
good, average, poor and very poor. Here
the individual traits and characteristics are
identified.
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FORCED CHOICE METHOD
A series of groups of statements are
prepared positively or negatively under
this method, both these statements describe
the characteristics of an employee, but the
rater is forced to tick any one of the
statements either out of positive statements
or out of negative statements.
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FUTURE ORIENTED METHODS
Management Psychological
Appraisals
by Objectives
360-Degree
Feedback
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MBO
It means management by objectives and the
performance is rated against the achievement
of objectives stated by the management.
MBO process goes as under.
Establish goals and desired outcomes for
each subordinate
Setting performance standards
Comparison of actual goals with goals
attained by the employee
Establish new goals and new strategies for
goals not achieved in previous year.
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Advantages
It is more useful for managerial positions.
Disadvantages
Not applicable to all jobs, allocation of merit
pay may result in setting short-term goals
rather than important and long-term goals etc.
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360-DEGREE FEEDBACK
It is a technique which is systematic collection of performance data
on an individual group, derived from a number of stakeholders like
immediate supervisors, team members, customers, peers and self.
This technique is highly useful in terms of broader
perspective,
greater self-development and multi-source feedback is useful.
360-degree appraisals are useful to measure inter-personal skills,
customer satisfaction and team building skills.
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PSYCHOLOGICAL APPRAISALS
These appraisals are more directed to
assess employee’s potential for future
performance rather than the past one. It is
done in the form of in-depth interviews,
psychological tests, and discussion with
supervisors and review of
evaluations. Itother
is more focused
employees emotional,
on intellectual,
motivational and and other
personal characteristics affecting his
performance.
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LIMITATIONS OF PERFORMANCE APPRAISAL
The performance appraisal methods are unreliable.
If an employee is well known to an employer,
the performance appraisal may not be correct.
The inability of supervision to appraise an employee
does not bring out the accurate performance appraisal.
Some qualities of an employee can not be
easily appraised through any performance appraisal
method.
A supervisor may appraise an employee to be good to
avoid incurring his displeasure.
Uniform standards are not followed by
the supervisors in the performance appraisal.
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POTENTIAL APPRAISAL PROBLEMS
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