Performance Appraisal Systems - Essay Example

PERFORMANCE APPRAISAL SYSTEMS (Degree for which this dissertation is being submitted) Submitted in part fulfillment of the Date of Submission Performance Appraisal Systems The individual joins an organization to satisfy his objectives. But the organization also has its own goals, which need not to be in conformity with the individual goals. If the goals of the individual and the organization are extremely contradictory, a conflict will arise which will either result into suppression of human personality or a complete set back to his work. In simple words, performance appraisal is a systematic evaluation of the individual with respect to his performance on the job and his potential for development. Performance appraisal is concerned with determining the differences of performance among the employees working in the organization. The evaluation is normally done by the individual's immediate superior in the organization who rates others is also rated by his superior. Performance appraisal employees rating techniques for comparing individual employees in his work group, in terms of personal qualities or deficiencies and the requirements of their respective jobs. It should be differentiated from job evaluation, which is concerned with the determination of worth of different jobs. Performance appraisal refers to the task of the rating or assessing the individual performance and abilities at work. (Yvonne, 1999, p.119) The performance appraisal is a formal programme in an organization, which is concerned not only with the contributions of the members who form part of the organization, but aims at spotting the potential also. The satisfactory performance is only a part of the system as a whole and the management needs more than merely evaluating the performance of the subordinates Need for Performance Appraisal Systems For any organization to function, it is important that the information regarding the performance and capacity of the human resource is available. Performance evaluation is, something of an executive, art and science in itself. One important benefit of the system is that it helps top management to make further judgements about the executives who judge others. The top management can get a sense from the various performance appraisals, about the various departments of the organization and also the need of executive development in the years to come. Performance appraisal helps the supervisors to evaluate the performance and to know the potentials of their subordinates systematically and periodically. (Yvonne, 1999, p.124) Following are the benefits of merit rating: (a) It helps in the correct placement of workers. (b) Performance rating helps in guiding and correcting employees. (c) It helps the employees to know where they stand and consequently they try to improve their performance. (d) The performance appraisal helps to find out the ability of the personnel. This will stimulate them to better their performance in a bid to improve their rating over others. (e) Ratings can be used as the basis of sound personnel policy in relation to transfer and promotion. (f) Performance appraisal helps in designing the training programme in better way. (g) The performance appraisal if done scientifically and systematically will prevent grievances and develop a sense of confidence amongst workers because they are convinced of the impartial basis of evaluation. The making of appraisal ratings has a beneficial effect both on the persons doing the appraisal and the one being appraised. The appraisal brings to attention of supervisors or executives, the importance of knowing their subordinates as individuals. Purpose of Performance Appraisal Systems The object of performance appraisal falls in two categories: Administrative; and Self- improvement (a) Administrative Promotion. This is perhaps the most important administrative use of performance appraisal. It is of common interest to both, management and employees, to promote employees to positions where they can most effectively utilize their abilities. A properly developed and administered performance appraisal system can aid in determining whether individuals should be considered for promotions (Ahuja, 2005, p.180). It is important that rater must rate the rate for the present job and his potentialities for higher jobs. Other Personnel Actions. In an organization, it may be necessary to consider various types of personnel actions such as transfers, lay-offs, demotions, and discharges. In some cases such actions are imperatives for unsatisfactory performance while in other cases it may be due to economic conditions over which the organization has no control or it may be because of changes in production process. Such actions can be justified if they are based on performance appraisal. Wage And Salary Administration. In certain organizations wage increases are based on the performance appraisal report. In some cases appraisals and seniority are used in combination. Training And Development. An appropriate system of performance appraisal can be helpful in identifying the areas of skills or knowledge in which employees are not up to the mark or there exist a training deficiency which presumably should be corrected by additional training, interviews, discussions or counseling. These appraisals help in spotting the potential to train and develop them to create an inventory of executive skills. Personnel Research. Performance appraisal helps in the research, specially in the field of personnel management and human relations. Various theories in human relationship are the outcome of efforts to find out the cause and effect relationship between the personnel and their performance. (b) Self improvement Merit rating brings out the deficiencies and shortcomings of the rates. A discussion between the rater and rate conducted in a spirit of co-operation and mutual understanding gives the chance to employee to have an insight on his performance or behavior in the general set up of the organization. The way these discussions are conducted give chance to the employees to take suitable steps to improve upon their performance or to correct their shortcomings. Merit rating helps to spot out a person's ability to see an organizational problem, device ways of attacking it, translate his ideas into actions, incorporate new information as it arises and carry out is plans, through the results. (Ahuja, 2005, p.182) The appraisal programme aims at assessing the record of managerial success and not the manager's personality. Following are the cases, where performance appraisal serves to guide the management in its actions. (a) When promotions are recommended, the men so chosen should generally be those who have received high ratings unless other factors influence the decision. (b) Performance appraisal helps in pointing out outstanding persons in the organization so as to maintain inventory of talented persons. (c) Appraisal influences the management decision in laying off the workers. It tells the management whether it is losing its best men or is improving the organization by shunting out inefficient workers. (d) In taking people from other organizations, appraisal rating help in ascertaining whether have the merit to join the organizations. (e) Performance appraisal motivates the management to give proper weightage to merit while recommending pay increases. (f) In re-hiring the workers, management should give preference to those whom it had previously considered most effective. Various Methods of Performance Appraisal Merit rating aims at objectively assessing the individual performance of personnel, but it has been observed that subjectivity cannot be eliminated completely even from the most systematic methods. Variations amongst the different rating sheets are inevitable. However, a continuing effort has constantly been made to make such ratings more objective, more valued and less dependent upon unsupported whims of the raters. The various traditional methods of performance appraisal: Unstructured appraisal Under this system, the appraiser is required to write down his impression about the appraise, in an unstructured way. However, in some organizations comments are required to be grouped under specific headings such as nature of job performance, reasons for specific job behavior, personality characteristics and development needs. This system is highly subjective and has got its merit in its simplicity and is in use especially in the public sector undertakings and government departments. Employees ranking It consists of (a) Rank order rating (b) paired comparison method (c) forced distribution rating. a) Rank order rating- it is a simple process of placing employees in a rank in order to observe job performance. It permits comparison of all employees in any single rating group regardless of the type of work. All workers are judged on the same factors. This method eliminates the necessity of comparing an individual's performance with the definition of satisfactory or excellent performance. Under ranking system of performance appraisal, subordinates are rated on an overall basis with reference to their job performance, instead of individual assessment of traits. In this way, the best is placed first in the rank and poorest occupies the last rank. The difficulty of this system is that the rater is asked to consider rate as a whole man. It is quite obvious that human personality is very complicated and to ask a human being to pass a judgement on another human being in terms of saying he is 'good' or 'bad' is not only difficult but also undesirable. The other difficulty with this method is that it does not indicate the degree or difference between the first man and the second man and so on. b) Paired comparison method- In paired comparison system every employee in a job family is compared with every other employee to determine who is a better worker. The paired comparison gives a more reliable rating than the merit plan discussed above although this system is more tedious to construct and use. It is not used for periodic employees ratings, as it is difficult ad use. It is not used for periodic employees ratings, as it is difficult to make evaluation of any improvement that the employees might have made over a period of time. c) Forced distribution system- some appraisers suffer from the constant error, i.e., they either rate all workers as excellent, average or poor. They fail to evaluate the poor, average or excellent employees clearly and cluster them closely around a particular point in the rating scale. The forced distribution system is devised to force the appraiser to fit the employees being appraised into predetermined ranges of scale. The forced distribution system is applicable to a large group of employees. It has an advantage over the paired comparison system in that two or more employees can be given equal ratings. This system is based on the presumption that all employees can be divided into five-point scale of outstanding, above average, blow average and poor. In this system the appraiser is asked to distribute the employees into one of these categories in such a way that 10% of the men are in group 'outstanding' 20% above average 40% average 20% below average and 10% 'poor'. (Yvonne, 1999, p.149) This method obviously eliminates the scope for subjective judgement on the part of supervisors. Besides this, the system is easy to understand and administer. The objective of this technique is to spread out ratings in the form of a normal distribution. Many times this categorization is not found in work groups particularly when the group is comparatively small. In short, rating and ranking methods used in performance appraisal suffer from serious drawbacks in the sense that the evaluated factors are often ill defined and it is difficult to communicate the deficiencies to an employee. Principles of learning indicate that for improvement to take place one's previous performance must be make known to him. Graphic rating scales This is also one of oldest and most widely used form of performance appraisal under which scales are established for a number of specific factors. Five degrees are possible for each factor and general definition appears at points along the scales. This technique resembles the 'point system' of job evaluation. Most commonly the rater is supplied with a printed form, one for each person to be rated. The selection of factors to be measured on the graphic rating scale is an important point under this system. These are of two types: 1) Characteristics, such as, initiative, dependability and 2) Contributions, such as quantity and quality of work. Since certain areas of job performance cannot be objectively measured, it is likely that graphic scale will continue to use a mixture of both characteristics and contributions, with greater emphasis on the latter. The rating method is easy to understand and easy to use. It permits the statistical tabulation of scores in terms of measures of central tendency, skew ness and dispersion. It permits a ready comparison of scores among employees. The scores presumable reveal the merit or value of every individual. However, this method has certain serious drawbacks also. There is a disadvantage that a high score on one factor can compensate for a low score on another. If a man scores low for quantity of work produced, this may be counter-balanced by high scores for attendance, attitude co-cooperativeness etc., in practice, ratings tend to cluster on the high side with this system. Critical incident A critical incident is a significant act by an employee exceeding or failing any of the requirements of his job. The examples of such incidents are: a) Became upset over work. b) Refused to help a fellow worker c) Suggested an improvement in the work method. d) Tried to get a fellow worker to accept the management decision. Critical incident method requires every supervisor to record in a notebook all such significant incidents of each employee behavior, which indicate effective or successful action and those, which indicate ineffective or poor behavior. These are recorded in a specifically designed notebook, which contains categories or characteristics under which the various behaviors can be recorded. Examples of such types of job requirements for workers are judgement, learning ability, productivity, dependability, accuracy of work responsibility and initiative. Daily recording of these items seems to be most effective because, otherwise, supervisor may forget incidents of his men. (Ahuja, 2005, p.198) The main problem with this method is that the outstanding incidents happen so infrequently that individual's appraiser may not vary markedly at any two-time periods. It has been observed that most of the time the employees have neither positive nor negative incidents. If the critical event does not happen, it will be difficult to rate an employee. Moreover, it may be difficult for a supervisor to decide what is the critical or exceptional incident. Field Review Under this method the departmental supervisors do not fill up forms, but an expert belonging to the personnel department interviews them. The expert questions the supervisor to obtain all the pertinent information regarding each employee and takes notes in his notebook. These notes are sent to supervisor for his approval or suggestion or modification. Thus there is no rating form with factors, or degree by overall rating is obtained. The workers are usually classified into three categories: outstanding, satisfactory and unsatisfactory. The interviewer questions the supervisor about the requirements of each job in his unit and performance of each man in his job. He attempts to find out only how a man is doing but also why he does that way and what can be done to improve or develop him (Ahuja, 2005, p.208) Field review method relives the supervisor of the tedious writing work of filling out appraisal forms. It also ensures a greater likelihood that the supervisors will give adequate attention to the appraisals, because the personnel department largely controls the process. Superficial judgement can be eliminated if the appraiser probes deeply. Appraisal Interview The appraisal interview had two objectives. First was to justify recommended salary action and secondly, to present an opportunity for the manager to review his subordinate's performance and promote discussion on needed improvements. But the behaviorally oriented interview is characterized by an atmosphere of equality, empathy, respect, shared definition and solution of problems and provisional, rather than final conclusion on the part of the rater at the end of the interview. (Ahuja, 2005, p.220) The superiors demonstrate an optimistic attitude with respect to work improvement and achievement of goals in future. The supervisor and subordinate meet in the interview at the end of the specified period to discuss the results of the subordinate's efforts to med the goal already established. This review leads to problem solving rather than critical discussion of the performance of the subordinate. Post - appraisal interview is necessary for the following reasons: a) Post - appraisal interview develops mutual understanding of what is expected, what subordinates are aiming for as three personal goals, how they feel about their work and to know them as individuals. b) It helps the manger in understanding people's abilities, aims, strengths and weaknesses, lie and dislikes. c) Post-appraisal interview is necessary to let the employees now where they stand. This relates to the problems of bringing about congruency in their perceptions. It has been seen that people tend to rate themselves high. Appraisal interview world avoid cases of unnecessary worry and insecurity, unjustified high self-confidence and above all world mitigate frustrations to a large extent. d) Post-appraisal instructions in the shape of counseling can prevent industrial disputes by creating better understanding between the management and the employees. Interview under behavioral approach concentrate upon reviewing the subordinate's progress towards mutually agreed upon goals. It is task-oriented approach rather than a person oriented approach. The objective of the post appraisal interview is improvement and development rather than scoring, praising, and criticizing. It is a problem solving approach rather than ' tell and sell' approach that is why such interviews are more pleasant and less to be feared on the part of both the supervisor and the subordinate. (Yvonne, 1999, p.171) However, it does not tell the subordinate where he stands in relation, to others in the eyes of management. The subordinate has to wait for decisions concerning pay increase, advancement and other regards, trusting that they will be generally consistent with his own evaluation of the appraisal interview. Management By Objective Approach To Performance Appraisal This approach is designed to overcome the limitations of the more traditional system. This is a result-oriented appraisal and has been widely adopted by number of organizations. The approach of merit rating is based on the quantitative measurable performance goals often agreed jointly by superior and subordinates. Instead of asking the superior to rate his subordinates under this approach each subordinate is requested to set for himself short-department. The senior executive will also help his subordinates to set goals for themselves. Senior officer will discuss with his subordinate what is required to meet their goals and adjust them consistent with goals of other subordinates and the organization as a whole. After the end of the stipulated period they will meet again to evaluate how well those goals have been met to discuss what could be done better and also to set goals for the next period. Instead of superior wring a detailed evaluation for the subordinate, the subordinate writes his own accomplishment report. This method gives the subordinate an opportunity to make his own actually appraising himself probably giving some insight on how he might improve his own attitudes, methods or behavior. With MBO the subordinate evaluates himself against standards that he has set himself. If this method of merit rating is handled properly the atmosphere becomes less punitive and exalting than is a conventional appraisal. (Ahuja, 2005, p.225) This method is a two-way process where not only the subordinate performance is appraised but the relationship between the subordinate and superior also improves. MBO approach is also known as " work planning and technique", or 'Goal setting system' or work planning and research method. This method is based on clear and time bound objectives from the corporate level to the department and individual level (Yvonne, 1999, p.178). This method has also a built in device of self-appraisal and post-appraisal interview. Successful MBO requires more than setting individual goals. Individual goals should be consistent with each other and with the overall goals of the work group and the organization as a whole. Advantages In MBO individual knows the standards on which he will be judged. MBO emphasizes the future, which can be changed, rather than the past, which cannot. The emphasis on forward planning changed, rather than the past, which cannot. The emphasis on forward planning helps to clarify responsibilities, organize the job, and iron-out problems in advance. The job of superior shifts from that of criticizing the subordinate to that of helping to improve his records. MBO is consistent with the psychological principle that people work better when they have definite goals to meet in specified periods. By providing feedback, it helps subordinates to discover where they stand and thus enhance learning. By allowing subordinates to set their own goals, it facilitates internalized motivation. MBO permits the subordinate to participate in setting his own goals. It gives him a more active role, increases his sense of control over his environment and reduces his dependence on his boss. If applied throughout the organization, MBO becomes more than a method of appraisal. It becomes a style of management, emphasizing forward planning rather than the aimless fighting of fires. It facilitates interdepartmental communication and co-ordination. It promotes delegation and decentralization. Self Evaluation Self-evaluation is the best method of performance appraisal if it can be systematically introduced. Self-evaluation means the way in which an individual views himself. On analyzing what one has got as well as what one has not got is an essential condition for achieving success in a career. One way of doing this is to put to oneself the question. If I were in business for myself, would I have given myself a job For objective self-evaluation, egoism, ride, self-deceit, self-devaluation and inferiority complex have to be ruthlessly cut out. One should try to get a faithful reflection of one self with one's moles and warts. (Ahuja, 2005, p.229) The capacity for correct-evaluation enables a person to make a realistic and judicious choice of a career. It reveals one's qualities as well as defects and deficiencies. One can then proceed to capitalize on his assets, make up for his defects. The exercise is essential for career programming as it pays rich dividends and eliminates disappointments and frustrations. It gives a sense of right direction and saves one from drift and dissipation of energy and waste of time. CONCLUSION Performance Appraisal Systems plays an important role in the success, efficiency and soundness of an organization. The 'Team', its people, their caliber and their attitude to succeed and out perform determine success of any organization. Employees are the only resource, which is capable of self-propulsion and value addition. Unlike any machinery that gets devalued or depreciated with time and age, the human resource i.e. people appreciates with age and experience. So they are very special but this fruitful only if people are developed and kept satisfied. It is unlikely that any improvement can be made in terms of production, productivity, quality or customer service until people are developed. References Ahuja K, (2005). Human Resource Management. Kalyani Publishers, Calcutta, Pp 179-230 Evan M. Berman, James S. Bowman, Jonathan P. West, Montgomery Van Wart, Human Resource Management in Public Service, Paradoxes, Processes, and Problems, Sage Publications Yvonne Mc Laughhlin, (1999). Business Management: A Practical guide for Managers, Supervisors and Administrators, Business Information Books, Pp 117-189 Read More