The performance of the employees need to be appraises. The good performance is to be reinforced while the bad performance is to be corrected. Performance appraisal is a process of evaluating an employee’s current and/or past performance relative to his or her performance standard (Dessler & Varkkey, 2011). Performance analysis is critical to the success of the performance management. It is directly reflects the organization’s strategic plan. Performance appraisal, though often being a negative and disliked activity, serves many purposes and has been a high priority for management (Mondy, 2009). The performance appraisal involves (1) setting work standard for the employees with relevant focus on the important aspects of employees’ job, (2) assessing the employees’ actual performance with these standard to evaluate and determining the accomplishment of the standards, (3) providing feedback to the employees with the aim of motivating them and influencing their performance to eliminate deficiencies and to continue to perform above par. (Dessler & Varkkey, 2011) Uses of Performance Appraisal
Performance appraisal has two general uses in the organization. One role is to evaluate the employees’ performance to reward them for better performance and/or the make other administrative decision regarding the employees’. The other role is to develop the employee potential to plan employees’ growth opportunity and direction. (Mathis & Jackson, 2010). Administrative uses: The information from performance appraisal process is used for administrative purpose like personnel decision: compensation, promotion, transfer, dismissal, retention; motivational decision: reward, grades, incentives; human resource planning: layoffs, downsizing, recruitment and selection. Development uses: Performance appraisal information is the key for the future development of the employees. The management will use this information for the development of the employees by assessment of personal competency and potential, identifying the need of development, training, coaching and career planning. The Performance Appraisal Process (Mondy, 2009)
As shown in the above figure the performance process starts with identifying specific performance goal. The appraisal system cannot effectively address every desired purpose, therefore specific appraisal goal are required to be identified at the beginning. After identifying the performance appraisal goal, come the performance criteria. The criteria under which the actual performance will be evaluated are to be established and communicated to the employees. Under the basis of these criteria the work performance is examined and performance appraisal is carried out. The actual performance is compared with the standard performance. The gaps are identified and the performance above the par is appreciated and new standards are created.
The result is the communicated to the employees and appropriate action is taken, either rewarding the employees for performance above the standard or taking corrective measure to influence the performance to meet the standard at lest. The performance criteria involve traits: attitude, appearance, initiative; behavior: leadership style, teamwork, cooperation, customer service orientation; competencies: strategic contribution, business knowledge, personal credibility, HR delivery, HR technology; goal achievement and improvement potential. Methods of Performance Appraisal (Dessler & Varkkey, 2011) Performance can be appraised by a number of methods. These methods can be categorized into different group depending upon the nature. However the commonly used method are as follows: Graphic rating scale: It is an absolute ranking approach where job related and personal characteristics factors are listed such as communication, teamwork, dependability, initiative, overall output and each subordinate are rated with each quality and are finally totaled to check the overall rate.
Alternation ranking: This is the relative approach of rating in which employees are ranked from best to the worst on the basis of their particular traits. All employees are compared and ranked from highest and successively to the lowest. Paired comparison: In this method a chart of all possible pairs of employee is created for each trait and the better employee is determined from each pair. The employee with higher number better performance is ranked highest. Forced distribution: In this method predetermined percentages of ratees are placed in limited number of performance category and eventually high performer and underperformer workgroups are classified and necessary action is taken. Critical incident: In this method a written record of the critical incident i.e. highly favorable or unfavorable employee’s work related behavior is kept and by reviewing those records the employee is evaluated.
Narrative rating: In this method the rater writes a narrative form of appraisal describing the employees work related behavior and performance and areas for improvement. Behaviorally anchored rating scale (BARS): This method aims at combining the benefits of narrative critical incident and quantified rating. It uses the quantified rating scale with specific narrative example of good and bad performance. Management by objectives: It is a method in which appraisals are based on specific performance goals that an individual hopes to attain within an appropriate length time. The employees are determined by evaluating how well the determined objectives are achieved. 360o Appraisal (Mondy, 2009): It this method rating are collected “all around” an employee from supervisors, subordinates, peers, and internal or external customers. The feedback is generally used for development, rather than for pay increases. Potential Appraisal Problem (Dessler & Varkkey, 2011)
The performance appraisal has weakness to it is exposed to the errors in rating system. The rater may be influenced by different factors that will create problem in actual evaluation of the performance and appraisal process. These factor include the following Primacy and recency effects: Primacy effect may influence the rater rates while rating the employee. It is basically rating the employees on basis of their first impression. Under recency effects, rater s influence by the recent events incurred during the job overlapping their performance over the past year. Halo effect: Under the influence of the halo effect, the rater tends to rate the ratee on basis of one trait. It creates biasness as all the rating of other trait being depended on one trait the rater considered.
Central tendency: Some rater may tend to avoid high and low while rating making the employees incorrectly rated near the average. This distorts the evaluation process and decreasing the usefulness and reliability of the appraisal. Leniency or Strictness: The leniency or strictness of the rater will affect the rating of the all the employees under leniency the rater will rate most employees above average while under strictness the rater will rate most of the employees below average. Such practice will definitely create negative consequences and decrease the benefits of appraisal system. Non-performance factor: The supervisor or the rater may rate the individual on basis of the personal factor that may be irrelevant with the performance of the job. This may include the liking and disliking, personal issues with the employees, something that is not related with the performance.
Stereotyping (Mondy, 2009): It is one of the rating error in which rater’s individual difference such as caste, gender, religion affect the rating they give. Such discriminatory rating may result in legal consequences. The rater’s self perception of the employee’s trait may affect the rating. There is actually no single best appraisal format or method. The choice of appraisal system should depend on the requirement and the primary purpose. The performance appraisal is basically used for improving the performance of individuals, teams, and the entire organization. It also assist in making administrative decision concerning human resource planning, compensation, influencing the work behavior and job performance. (Mondy, 2009). Therefore the effective appraisal system needs to be developed by conducting the following activities while developing a appraisal system.
* Use behavior/outcome-based measures
* Monitor and document performance records
* Provide on-going feedback
* Avoid perceptual errors
* Have both interactive (interview) and written (form) structure
* Have multiple raters
* Involve the employee in the appraisal process
* Train appraisers
Dessler, G., & Varkkey, B. (2011). Human Resource Management (12th Edition ed.). Pearson Education, Inc. Gómez-Mejía, L. R., Balkin, D. B., & Cardy, R. L. (2010). Managing Human Resources (6th. ed.). Pearson Education, Inc. as Pearson Prentice Hall. Mathis, R. L., & Jackson, J. H. (2010). Human Resource Management (13th ed.). South-Western Cengage Learning. Mondy, R. W. (2009). Human Resource Management (10th Edition ed.). Pearson Education, Inc.