2. MEANING
• A performance evaluation or appraisal is the process whereby organizations assess the
performance of employees.
• Performance appraisal is the systematic evaluation of the performance of employees
and to understand the abilities of a person for further growth and development.
3. PURPOSE
• To review the performance of the employees.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• To diagnose training and development needs of the future.
• Provide information to assist in the hr decisions like promotions, transfer, etc.
• Helps to strengthen the relationship and communication between superior-subordinate
and management-employee.
4. FACTORS
* Knowledge of work * Extent of co-operation
* Initiative * Honesty
* Quality of work * Ambition
* Target attainment * Discipline
* Aptitude * Punctuality
* Degree of skill
7. LIVE CASES
• 1. Adobe introduced continuous performance management in place
of annual reviews
Adobe were the forerunners of change when they abandoned annual performance
appraisals back in 2012. They replaced them with regular check-ins, supported by frequent
feedback – both positive and constructive. There are no performance ratings or rankings
and they allow different parts of the organization to determine how frequently they should
hold check-in conversations, according to their work cycles.
The result has been a marked increase in employee engagement, with voluntary turnover
decreasing by 30% since check-ins were introduced.
8. • 2. DELOITTE SAVED 2 MILLION WORKING HOURS PER YEAR WITH
WEEKLY CHECK-INS
DELOITTE WAS THE FIRST BIG NAME TO ANNOUNCE IN 2015 THAT IT WAS SCRAPPING ONCE-A-
YEAR PERFORMANCE REVIEWS, 360-DEGREE FEEDBACK AND OBJECTIVE CASCADING. THIS
WAS AFTER IT CALCULATED THAT THESE PROCESSES WERE CONSUMING A REMARKABLE 2
MILLION HOURS A YEAR ACROSS THE ORGANISATION.
DELOITTE’S NEW PROCESS REQUIRES EVERY TEAM LEADER TO CHECK IN WITH EACH TEAM
MEMBER ONCE A WEEK TO DISCUSS NEAR-TERM WORK AND PRIORITIES, COMMENT ON
RECENT WORK AND PROVIDE COACHING. TO ENSURE THESE CHECK-INS TAKE PLACE
FREQUENTLY, THE CHECK-INS ARE INITIATED BY THE TEAM MEMBERS, RATHER THAN THE
TEAM LEADERS.
THESE WEEKLY CHECK-INS ARE SUPPORTED BY QUARTERLY REVIEWS IN WHICH TEAM
LEADERS ARE ASKED TO RESPOND TO FOUR FUTURE-FOCUSED STATEMENTS ABOUT EACH
TEAM MEMBER. RATHER THAN ASKING TEAM LEADERS WHAT THEY THINK OF THE TEAM
MEMBER, WHICH IS WHAT TRADITIONAL PERFORMANCE RATINGS DO, THEY ASK WHAT THE
TEAM LEADER WOULD DO WITH THE TEAM MEMBER.
9. • 3. General electric put an end to ‘rank and yank’ performance
management
Under the reign of its former CEO, jack welsh, general electric was the most well-known
proponent of annual performance ratings and forced distribution curves. For decades, GE
operated a ‘rank and yank’ system, whereby employees were appraised and rated once a year,
following which the bottom 10% were fired. Not exactly a recipe for employee engagement.
In 2015, ge announced that it was replacing this approach with frequent feedback and regular
conversations called ‘touchpoints’ to review progress against agreed near-term goals. This is
supported by an online and mobile app, similar to our own clear review performance
management tool, which enables employees to capture progress against their goals, give their
peers feedback and also request feedback.
Managers will still have an annual summary with employees, looking back at the year and
setting goals, but this conversation will be more about standing back and discussing
achievements and learnings, and much less fraught than annual reviews
10. • 4. Accenture abandoned ratings for performance development
As of september 2015, accenture, one of the largest companies in the world, disbanded its
former ranking and once-a-year evaluation process. LIKE GE, accenture has decided to
put frequent feedback and conversations at the heart of its new process and focus on
performance development, rather than performance rating.
As ellyn shook, chief hr officer at accenture, stated: “rather than taking a retrospective
view, our people will engage in future-focused conversations about their aspirations,
leading to actions to help them grow and progress their careers.”
11. • 5. Cargill introduced on-the-job conversations in place of annual
appraisals
Like adobe, cargill, the US food producer and distributor, started to transform its traditional
performance management processes back in 2012, when it introduced ‘everyday performance
management’. It removed performance ratings and annual review forms and instead focused
on managers having frequent, on-the-job conversations and giving regular, constructive
feedback. They have made this work by:
Regularly rewarding and recognising managers who demonstrate good day-to-day
performance management practices.
Sharing the experiences and tips of their successful managers.
Holding teams accountable for practicing day-to-day performance management.
Building the skills needed to succeed at everyday performance management, including
effective two-way communication, giving feedback, and coaching.
The outcome has been impressive, with 70% of cargill employees now saying they feel valued
as a result of their ongoing performance discussions with their manager.
12. PAST ORIENTED (TRADITIONAL) METHODS
Ranking method: employee is compared with all others for the purpose of placing order of worth.
Checklist : questions are prepared with their yes/no answers by hr department.
Forced choice method : the rater is forced to answer ready-made statements of two or more
blocks , about the employees in terms of true or false.
Forced distribution method: employees performance level confirms to a normal statistical
distribution i.E., 10,20,40,20,10%
Critical incidents method: describes extremely good or bad behavior related to job performance.
13. Field review method: appraisal done by someone from outside usually HR department or
corporates.
Grading: there can be three categories established for employees: outstanding,
satisfactory and unsatisfactory. There can be more than three grades. Employee
performance is compared with grade definitions.
Confidential report method: done mainly for government department. Structured format is
devised to know strength,weakness,intelligence,character,attendance.
Graphic scale method: it is also known as linear rating scale. In this method, the printed
appraisal form is used to appraise each employee.
Paired comparison approach: employee is compared on one-to-one basis.
14. GRAPHIC SCALE METHOD: IT IS ALSO KNOWN AS LINEAR RATING
SCALE. IN THIS METHOD, THE PRINTED APPRAISAL FORM IS USED TO
APPRAISE EACH EMPLOYEE
FORCED DISTRIBUTION METHOD: EMPLOYEES PERFORMANCE LEVEL
CONFIRMS TO A NORMAL STATISTICAL DISTRIBUTION
15. Modern method
• PSYCHOLOGICAL APPRAISALS
• BEHAVIOURAL ANCHORED RATING SCALES
• APPRAISAL INTERVIEW
• ASSESSMENT CENTRE METHOD
• APPRAISAL THROUGH MANAGEMENT BY OBJECTIVES (MBO)
• THE 360 DEGREE APPRAISAL
• HUMAN RESOURCE ACCOUNTING METHOD
16. PSYCHOLOGICAL
APPRAISALS
• IT FOCUSES ON THE FUTURE POTENTIAL OF AN EMPLOYEE.
• THE PSYCHOLOGIST CONDUCTS THE PSYCHOLOGICAL TESTS
• DISCUSSIONS WITH THE SUPERVISORS AND THE REVIEWS OF OTHER
EVALUATIONS.
• EVALUATION IS BASED ON EMPLOYEE’S INTELLECTUAL , EMOTIONAL,
MOTIVATIONAL AND OTHER RELATED CHARACTERISTICS.
17. BEHAVIOURALLY ANCHORED RATING
SCALES
• IS A RELATIVELY NEW TECHNIQUE WHICH COMBINES THE GRAPHIC RATING
SCALE AND CRITICAL INCIDENTS METHOD.
• IT CONSISTS OF PREDETERMINED CRITICAL AREAS OF JOB PERFORMANCE OR
SETS OF BEHAVIOURAL STATEMENTS DESCRIBING IMPORTANT JOB
PERFORMANCE QUALITIES AS GOOD OR BAD.
• IN THIS METHOD ,AN EMPLOYEE’S ACTUAL JOB BEHAVIOUR IS JUDGED
AGAINST THE DESIRED BEHAVIOUR BY RECORDING AND COMPARING THE
BEHAVIOUR WITH BARS.
18. Performance: Points Behaviour
Extremely good 7 Can expect trainee to make valuable suggestions for increased sales and
to have positive relationships with customers all over the country.
Good 6 Can expect to initiate creative ideas for
improved sales
.
Above average 5 Can expect to keep in touch with the customers through out the
year
Average 4 Can manage with difficulty to deliver the goods in time
Below average 3 Can expect to unload the trucks when asked by the supervisor.
Poor 2 Can expect to inforrn only a part of the customers.
Extremely poor I Can expect to take extended coffee breaks and roam around
purposelessly.
19. APPRAISAL INTERVIEW
• THE INTERVIEW IS A FORMAL DISCUSSION PROCESS BETWEEN AN EMPLOYEE
AND HIS/HER MANAGER.
• IT IS ONE OF THE BEST WAYS FOR AN EMPLOYEE TO INCREASE PRODUCTIVITY
AND CHANGE WORK HABITS.
• TYPES
• 1} SATISFACTORY-PROMOTABLE
• 2} SATISFACTORY-NOT PROMOTABLE
• 3}UNSATISFACTORY-CORRECTABLE
• 4} UNSATISFACTORY-CORRECTABLE
20. GUIDELINES FOR CONDUCTING APPRAISAL
INTERVIEWS
• USE OF WORK DATA.
• DON’T GET PERSONAL.
• VALUE EMPLOYEES OPINION.
• DON’T TIPTOE AROUND.
21. Assessment centre method
• In this approach, indivisuals from various department arre brought together to spend two
or three days working on indivisual or group assignmens similar to the ones they would
be handling when they are promoted .
• The evaluators in this method consist of experienced manager working at different levels
who prepare a summary report for the management as well as for the employees. This
technique usually measures the planning ability interpersonal skills and organizational
skills of an employee.
22. Appraisal through management by objectives (MBO)
• “Process whereby the superior and subordinate managers of an organization jointly
identify its common goals, define each individual’s major areas of responsibility in terms
of results expected of him and use these measures as guides for operating the unit and
assessing the contribution of each its members”.
23. Process of management by objectives
Determining
Organizational
Goals
Determining Employees’ Objectives
Constant Monitoring Progress and
Performance
Performance
Evaluation
Providing
Feedback
The Performance
Appraisal
24. The 360 degree appraisal
• Self appraisal
• Appraisal by superiors
• Appraisal by subordinates
• Peer appraisal
• Potential appraisal
25. Human resource accounting method
• Human resources are a valuable asset for any organization and it can be valued in
monetary terms. This method evaluates the performance of an employee in terms of
costs and contributions. HR costs include expenses incurred on HR planning recruitment
selection induction and training. The difference between this costs and the contribution
by an employee reflects the performance of that employee. This method is still
developing hence is not very popular at present.
27. DISADVANTAGES
• The halo effect
• Contrast error
• Rater bias
• Central tendency error
• Sampling error
• Primary and regency errors
28. Problem in performance appraisals
• Determining the evaluation criteria
• Create a rating instrument
• Lack of competence
• Errors in rating and evaluation
• Resistance
29. Legal aspects of performance appraisals
• Performance appraisals as evidence
• Discrimination
• Inconsistency
• Over-rating
30. Case Study on
Microsoft
• Computer software and hardware industry, Most reliable and
progressive computer software company in the world.
• Established in 1975 by Bill Gates
• No. of employees : 124,000 (2016)
• Revenue : US$ 89.95 billion (2017)
31. During the 1990s, it could be recalled that the world’s computer software and
hardware industry was being dominated by IBM, while Microsoft was still way behind
but nonetheless was already providing excellent competition. At present, the situation
has completely reversed.
During the height of its success, IBM decided to neglect the development of its
organizational culture and its employees and concentrate more on efforts to sustain
their profitability. They invested heavily in research and development activities to find
out the most important computer products that were being needed by the people.
On the part of Microsoft, instead of worrying so much about maximizing their profits,
Bill Gates prioritized on strengthening the organizational culture of the company.
He helped instill the values, mission and vision that would remain as the solid
foundations of achieving success in Microsoft. Bill Gates focused more in addressing
the needs of the employees and making sure that they would be working in an
environment that can bring out the best in their capabilities and skills.
32. Such was the Vision of Bill Gates that he knew that profitability and progress would
eventually come if he took care of Microsoft’s organizational culture first.
He did not worry about the big lead that IBM was having during the 1980s because
he knew that Microsoft’s time to dominate the computer hardware and software
industry would came.
He was not worried about the slow results because Gates realized that as the
employees and leaders of Microsoft are given adequate time to understand the
purpose and objectives of the company, the more productive and profitable the
company is going to be in the long run.
The prophecy of Bill Gates turned out to be corrct as the strong and solid
organization culture of Microsoft that took years to establish eventually proved to be
the winning formula for Microsoft to go ahead of IBM in the computer hardware and
software industry.
33. PROBLEMS FACED BY MICROSOFT
• Discrimination
• Legal restrictions
• Intercultural effects
• Personal Bias
34. METHODS THEY CAME WITH
• Rating scale
• Critical Incident Method
• 360 Degree Feedback
• Field Review Method
