IMPLEMENTING PERFORMANCE APPRAISAL SYSTEM

Hello readers, today you are going to read a detailed study of Performance Appraisal System and its implementation; in which you will get to know the followings:

1. The concept of performance appraisal.
2. The objectives, uses and characteristics of an appraisal system.
3. Important considerations in designing an appraisal system.
4. The appraisal process, approaches and techniques.
5. Attributes considered when evaluating performance.
6. Designing appraisal formats.

So, let’s start the journey of Performance Appraisal as per the steps of implementing the Appraisal System:

PERFORMANCE APPRAISAL

Start the session by asking participants for their understanding of performance appraisal in their organizations. Is it a traditional approach, characterized by

1.       mere evaluation, excluding the planning and development function,

2.       being linked with financial rewards and sanctions, and

3.       being impersonal, bureaucratic, top down, secretive and centralized, which excludes participation of the employee being assessed?

 

If the approach is traditional evaluation, then it can hardly be motivating to an employee. Instead, it must focus more on filling a form giving quantitative rather than qualitative information. What influence would such a system have on an employee's future performance? Observe that a performance appraisal system is a management tool which can help motivate and effectively utilize human resources. It includes performance planning, appraisal and counselling.

Show STEP 1 and discuss desirable features of a performance appraisal system. Emphasize the linkage between:

         I.            past performance and future planning, and

       II.            individual and organizational goals.

Using STEP 2, discuss the process of appraisal and the various stages involved. To begin with, realistic standards and measures have to be established to differentiate between different levels of performance. Then employees have to be informed as to what is expected of them and how their performance will be measured against the set standards and targets. Next comes planning for realization of performance expectation through use of resources and monitoring. Monitoring is to help remove difficulties rather than to interfere. Performance is documented in various ways during the appraisal stage and thereafter feedback is given. Emphasize that feedback should involve planning for the future as well. On the basis of appraisal and feedback, evaluation decisions have to be made, which include rewards or punishments. The final stage is development of performance.

The performance appraisal system has to be based on clearly specified and measurable standards and indicators. Show STEP 3 and discuss important standards and indicators. Goals have to be consistent and mutually decided by the employee and management. If necessary, the appraisal system could be directed towards a particular client. The appraisal system has to be reliable and consistent, and should include both objective and subjective ratings. The appraisal format should be practical and simple. The process should be participatory and open. It should be linked with rewards. Feedback is an important part of appraisal, and has to be timely, impersonal and noticeable. Observe that an appraisal system can be effective only if it is accepted by employees and if management is fully committed.

Performance appraisal has different objectives for management and for the employees. Employees are interested in having an assessment of their work from the viewpoint of personal development, work satisfaction and involvement in the organization. Management assesses the performance of employees to maintain organizational control and disburse rewards and punishments to further organizational goals. Thus, a spirit of mutuality is essential in an effective performance appraisal system. Show STEP 4 and discuss how a performance system can be useful. For employees, it can impart a better understanding of their job, skills and limitations, and provides an opportunity for self-reflection. It can help identify development needs. It can increase mutuality and strengthen communication between employees and management.

Show STEP 5 and discuss different approaches to performance appraisal. The intuitive approach uses perceptions. The self-appraisal approach relies on self-evaluation. The group approach uses evaluation by a group of persons. The trait approach uses the conventional method of evaluation against certain traits. Last is achievement-based appraisal, which compares achievements against goals set mutually during the planning process.

There are several techniques for performance appraisal. Show STEP 6 and discuss each of these techniques. In the essay appraisal method, evaluation is based on an essay type report from a rater who is familiar with the work of the employee being appraised. The graphic rating scale uses either quality of work or personal traits. In the field review method, effort is made to synchronize different ratings. The rater chooses the best-fit and worst-fit statements from a group of statements in the force choice rating method. The critical incident appraisal method uses critical incidents in evaluating performance. Management by objectives involves evaluation against mutually set, realistic goals. In the work standard approach, appraisal is for achievements against targets based on mutually agreed output standards.

The ranking method involves several techniques. In the alteration ranking method, individuals are ranked in a descending order of performance. Paired comparison involves comparison of every individual in the group with other individuals. In the man-to-man rating system, standards are set against actual individuals and then other individuals are matched with them. The checklist method involves a pre-scaled checklist of behavior. Behaviorally anchored rating scales use a set of behavioral statements relating to qualities important for performance. The assessment center is a technique used to predict future performance of the employee and involves performing higher-level duties.

Performance appraisal should help in clearly distinguishing between more specific crucial issues and broad concerns often expressed as perceptions (STEP 7).

Show STEP 8 and discuss various components of an appraisal format. Inform participants that later on they will be required to design an appraisal format. In designing this format, one must seek information on the attributes to be considered in evaluating performance. These may include personal qualities as well as demonstrated performance.

Show STEP 9 and discuss various personal qualities and demonstrated performance attributes which should be considered in designing an appraisal format. Note that there are problems relating to assessment, identification of appraisal criteria, and policy for performance evaluation.

Show STEP 10 and discuss various problems in a performance appraisal system. These problems may relate to measurement, judgement, policy or organization.

Show STEP 11 and discuss the importance of the performance appraisal interview, during which focus is on future planning while giving feedback on past performance. A performance appraisal interview should be properly planned and conducted skillfully. It should be used to efficiently communicate feedback on performance during the previous year.

Conclude the session by asking the participants for their criteria for evaluating scientists. Write their responses on the chalkboard and compare them with STEP 12

STEP 1
WHAT SHOULD A PERFORMANCE SYSTEM BE?

· Correlated with the organization's philosophies and mission

· Cover assessment of performance as well as potential for development

· Look after the needs of both the individual and the organization

· Help create a clean environment

· Rewards linked to achievements

· Generate information for personnel development and career planning

· Suggesting appropriate person-task matching

Performance appraisal should evaluate, audit, motivate, identify training needs, develop the individual and plan for future performance

STEP 2
THE PERFORMANCE APPRAISAL PROCESS:

Image Source: Craig, E., Schneiier, R., Beatty, W., and Baird, L. S. 1986. Training and Development Journal. May

STEP 3
STANDARDS AND INDICATORS OF PERFORMANCE APPRAISAL

• Mutual goal
• Reliable and consistent
• Accurate and equitable
• Practical and simple format
• Regular and routine
• Participatory and open
• Rewards
• Timely feedback
• Impersonal feedback
• Noticeable feedback
• Relevance and responsiveness
• Commitment

STEP 4
HOW CAN THE PERFORMANCE APPRAISAL SYSTEM HELP?

• Promote better understanding of an employee's role and clarity about his or her functions
• give a better understanding of personal strengths and weaknesses in relation to expected roles and functions
• Identify development needs of an employee
• Establish common ground between the employee and the supervisor
• Increase communication
• Provide an employee with the opportunity for self-reflection and individual goal setting
• Help an employee internalize the culture, norms and values of the organization. This helps develop an identity with and commitment to the organization and prepares an employee for higher-level positions in the hierarchy
• Assist in a variety of personnel decisions

STEP 5
APPROACHES IN PERFORMANCE APPRAISAL

• Intuitive
• Self-appraisal
• Group
• Trait
• Achievement of results

STEP 6
TECHNIQUES OF PERFORMANCE APPRAISAL

• Easy appraisal method
• Graphic rating scales
• Field review method
• Forced choice rating method
• Critical incident appraisal method
• Management by objectives
• Work standard approach
• Ranking methods:
• Alteration methods
• Alteration ranking
• Paired comparison
• Person-to-person rating
• Checklist
• Behaviorally anchored rating scales
• Assessment centers

STEP 7
DURING PERFORMANCE APPRAISAL, DISTINGUISH BETWEEN

• Accomplishments and Activity
• Working efficiently and Working effectively
• Work and Important work
• Working hard and Working smart

Source: Nickel, L. J. 1989. Research Management for Development: An Open Letter to a New Agricultural Research Director. San Jose, Costa Rica: ICCA.

STEP 8

COMPONENTS OF THE APPRAISAL FORMAT 

• Identification of key performance areas
• Identification of qualities for job performance
• Self-appraisal
• Analysis
• Discussion
• Identification of training needs
• Action plan and goal settings for the future
• Final assessment

STEP 9
ATTRIBUTES CONSIDERED IN EVALUATING PERFORMANCE

Personal qualities:

• Adaptability
• Appearance and bearing
• Decisiveness
• Dependability
• Drive and determination
• Ingenuity
• Initiative
• Integrity
• Loyalty
• Maturity
• Stamina
• Tenacity
• Verbal expression
• Written expression

Demonstrated performance:

• Professional knowledge
• Administrative ability
• Responsibility for staff development
• Foresight
• Delegation
• Motivation
• Morale
• Control

STEP 10
PERFORMANCE APPRAISAL SYSTEMS

Image Source: Craig, E. S., Beatty, R. E., and Baird, L. S. 1986. How to contract a successful performance appraisal system. Training and Development Journal, April: 38-42

STEP 11
APPRAISAL INTERVIEW

• Planning an interview
• tell and sell
• tell and listen
• problem solving
• Conducting an interview as planned
• Applying good questioning techniques
• Listen intelligently and without prejudice while someone less senior does most of the talking
• Communicating 
  

STEP 12

MEASURING THE PERFORMANCE OF EMPLOYEES

• Overall performance
• Quality of output
• Productivity
• Quantity of written work
• Originality of written work
• Recent reports
• Membership in professional societies
• Recognition for organizational contribution
• Status-seeking tendencies
• Current organizational status
• Creativity rating from high-level supervisors
• Overall quality rating by immediate supervisors

Effective human resources management (HRM) is essential for optimally utilizing creativity and attaining individual as well as organizational goals. Leadership has to ensure proper integration of various activities and harmonious functioning directed towards organizational goals. High motivation is essential for ensuring commitment of human resources to the given objectives. The key to motivation lies in integrating organizational and individual goals. Therefore, a manager has to concentrate on basic HRM tasks such as planning, development, compensation and evaluation. Evaluation includes performance planning, appraisal and counselling. These are critical in effective HRM.

PERFORMANCE APPRAISAL SYSTEM: THE CONCEPT

Performance appraisal is a management tool which is helpful in motivating and effectively utilizing human resources. Assessment of human potential is difficult, no matter how well designed and appropriate the performance planning and appraisal system is. Performance appraisals are comprised of preset standards which are used to measure employees’ work behavior and the results are provided as feedback for the employee. An appraisal system helps employers with the decision-making process involved in employee promotion and compensation, or perhaps in an unfortunate situation, termination. 

The performance appraisal system should:

• be correlated with the organizational mission, philosophies and value system;
• cover assessment of performance as well as potential for development;
• take care of organizational as well as individual needs; and
• help in creating a clean environment by
• linking rewards with achievements,
• generating information for the growth of the employee as well as of the organization, and
• suggesting appropriate person-task matching and career plans.

Feedback is an important component of performance appraisal. While positive feedback is easily accepted, negative feedback often meets with resistance unless it is objective, based on a credible source and given in a skillful manner

OBJECTIVES OF PERFORMANCE APPRAISAL

Employees would like to know from a performance appraisal system:

• concrete and tangible particulars about their work; and
• assessment of their performance.

This would include how they:

• did;
• could do better in future;
• could obtain a larger share of rewards; and
• could achieve their life goals through their position.

Therefore, an employee would desire that the appraisal system should aim at:

• their personal development;
• their work satisfaction; and
• their involvement in the organization.

From the point of view of the organization, performance appraisal serves the purpose of:

• providing information about human resources and their development;
• measuring the efficiency with which human resources are being used and improved;
• providing compensation packages to employees; and
• maintaining organizational control.

Performance appraisal should also aim at the mutual goals of the employees and the organization. This is essential because employees can develop only when the organization's interests are fulfilled. The organization's main resources are its employees, and their interest cannot be neglected. Mutual goals simultaneously provide for growth and development of the organization as well as of the human resources. They increase harmony and enhance effectiveness of human resources in the organization.

USES OF AN APPRAISAL SYSTEM

A properly designed performance appraisal system can (Rao, 1985):

• help each employee understand more about their role and become clear about their functions;
• be instrumental in helping employees to better understand their strengths and weaknesses with respect to their role and functions in the organization;
• help in identifying the developmental needs of employees, given their role and function;
• increase mutuality between employees and their supervisors so that every employee feels happy to work with their supervisor and thereby contributes their maximum to the organization;
• act as a mechanism for increasing communication between employees and their supervisors. In this way, each employee gets to know the expectations of their superior, and each superior also gets to know the difficulties of their subordinates and can try to solve them. Together, they can thus better accomplish their tasks;
• provide an opportunity to each employee for self-reflection and individual goal-setting, so that individually planned and monitored development takes place;
• help employees internalize the culture, norms and values of the organization, thus developing an identity and commitment throughout the organization;
• help prepare employees for higher responsibilities in the future by continuously reinforcing the development of the behavior and qualities required for higher-level positions in the organization;
• be instrumental in creating a positive and healthy climate in the organization that drives employees to give their best while enjoying doing so; and
• assist in a variety of personnel decisions by periodically generating data regarding each employee.

CHARACTERISTICS OF AN APPRAISAL SYSTEM

Performance appraisal cannot be implemented successfully unless it is accepted by all concerned. There should be a common and clear understanding of the distinction between evaluation and appraisal. As Patten (1982) argues, evaluation aims at 'objective' measurement, while appraisal includes both objective and subjective assessment of how well an employee has performed during the period under review. Thus, performance appraisal aims at 'feedback, development and assessment.' The process of performance appraisal should concentrate on the job of an employee, the environment of the organization, and the employee him- or herself. These three factors are inter-related and inter-dependent. Therefore, in order to be effective, the appraisal system should be individualized, subjective, qualitative and oriented towards problem-solving. It should be based on clearly specified and measurable standards and indicators of performance. Since what is being appraised is performance and not personality, personality traits which are not relevant to job performance should be excluded from the appraisal framework.

Some of the important considerations in designing a performance appraisal system are:

• Goal The job description and the performance goals should be structured, mutually decided and accepted by both management and employees.
• Reliable and consistent Appraisal should include both objective and subjective ratings to produce reliable and consistent measurement of performance.
• Practical and simple format the appraisal format should be practical, simple and aim at fulfilling its basic functions. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information.
• Regular and routine While an appraisal system is expected to be formal in a structured manner, informal contacts and interactions can also be used for providing feedback to employees.
• Participatory and open an effective appraisal system should necessarily involve the employee's participation, usually through an appraisal interview with the supervisor, for feedback and future planning. During this interview, past performance should be discussed frankly and future goals established. A strategy for accomplishing these goals as well as for improving future performance should be evolved jointly by the supervisor and the employee being appraised. Such participation imparts a feeling of involvement and creates a sense of belonging.
• Rewards - both positive and negative - should be part of the performance appraisal system. Otherwise, the process lacks impact.
• Feedback should be timely Unless feedback is timely, it loses its utility and may have only limited influence on performance.
• Impersonal feedback must be impersonal if it is to have the desired effect. Personal feedback is usually rejected with contempt, and eventually de-motivates the employee.
• Feedback must be noticeable the staff member being appraised must be made aware of the information used in the appraisal process. An open appraisal process creates credibility.
• Relevance and responsiveness Planning and appraisal of performance and consequent rewards or punishments should be oriented towards the objectives of the programme in which the employee has been assigned a role. For example, if the objectives of a programme are directed towards a particular client group, then the appraisal system has to be designed with that orientation.
• Commitment Responsibility for the appraisal system should be located at a senior level in the organization so as to ensure commitment and involvement throughout the management hierarchy.

PERFORMANCE APPRAISAL SYSTEM: THE PROCESS

Performance appraisal involves an evaluation of actual against desired performance. It also helps in reviewing various factors which influence performance. Managers should plan performance development strategies in a structured manner for each employee. In doing so, they should keep the goals of the organization in mind and aim at optimal utilization of all available resources, including financial. Performance appraisal is a multistage process in which communication plays an important role.

Craig, Beatty and Baird (1986) suggested an eight-stage performance appraisal process:

 (i) Establishing standards and measures

The first step is to identify and establish measures which would differentiate between successful and unsuccessful performances. These measures should be under the control of the employees being appraised. The methods for assessing performance should be decided next. Basically, management wants to:

· know the behavior and personal characteristics of each employee; and

· assess their performance and achievement in the job.

There are various methods available for assessing results, behavior and personal characteristics of an employee. These methods can be used according to the particular circumstances and requirements.

 (ii) Communicating job expectations

The second step in the appraisal process is communicating to employees the measures and standards which will be used in the appraisal process. Such communication should clarify expectations and create a feeling of involvement.

(iii) Planning

In this stage, the manager plans for the realization of performance expectations, arranging for the resources to be available which are required for attaining the goals set. This is an enabling role.

(iv) Monitoring performance

Performance appraisal is a continuous process, involving ongoing feedback. Even though performance is appraised annually, it has to be managed 'each day, all year long.' Monitoring is a key part of the performance appraisal process. It should involve providing assistance as necessary and removing obstacles rather than interfering. The best way to effectively monitor is to walk around, thus creating continuous contacts, providing first-hand information, and identifying problems, which can then be solved promptly.

(v) Appraising

This stage involves documenting performance through observing, recalling, evaluating, written communication, judgment and analysis of data. This is like putting together an appraisal record.

(vi) Feedback

After the formal appraisal stage, a feedback session is desirable. This session should involve verbal communication, listening, problem solving, negotiating, compromising, conflict resolution and reaching consensus.

(vii) Decision making

On the basis of appraisal and feedback results, various decisions can be made about giving rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demotion). The outcome of an appraisal system should also be used for career development.

(viii) Development of performance

The last stage of performance appraisal is 'development of performance,' or professional development, by providing opportunities for upgrading skills and professional interactions. This can be done by supporting participation in professional conferences or by providing opportunities for further study. Such opportunities can also act as incentives or rewards to employees.