Performance Appraisal

Nearly all organizations seek to monitor the job performance of their members through an evaluation system. Employees who perform their jobs well are usually rewarded and those who do not are penalized. Although all organizations have adopted methods for personnel appraisal, their effectiveness is still a matter of dispute. Performance appraisal may be measured by quantitative and qualitative aspects of the job performance, against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, health, and various other aspects of jobs.

Thus performance appraisals is the assessment of employee performance in past, to improve his future performance. ?Performance appraisal may be defined as: (1)According to “ Dale S. Beach”- ‘The systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development’ (2)According to “Flippo”- ‘A systematic, periodic and so far an impartial rating of an employee’s excellence in matters pertaining to his present job and to his potential for a better job’. It is a powerful tool to calibrate, refine and reward the performance of the employee.

It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management’s interest in the progress of the employees. Banking services is one sector where a great degree of attention is being paid to Performance Appraisal Systems. Several of the public sector banks (PSBs) have changed their PAS or are in the process of changing them. State Bank of India has recently adopted an open system of appraisal.

Its associate banks are likely to follow the same after detailed Appraisal Process. Several banks also have self-appraisal as a part of performance appraisal, although mostly such self-appraisal is more of a communication of achievements. Allahabad Bank has introduced a system that aims in helping officers to identify their strengths and weaknesses and encourage improvement of performance on the job. Indian Overseas Bank has a system in which a branch manager gives a self-appraisal on business growth, customer service, internal administration and training requirements in great detail.

Union Bank of India has an appraisal system in which the reporting officer is required to assess each of his appraisee officers on technical skills, human skills and conceptual skills. All these are defined for different categories of roles and the assessment has to be made on a five-point scale. Corporation Bank, UCO Bank, Central Bank of India, Dena Bank and Bank of Baroda has introduced similar self-appraisal formats. Punjab National Bank has, primarily, a development-oriented appraisal form.

There are ten different formats available for ten different categories of employees. The bank started the system with a self-appraisal by the appraisee. ?Process/procedure of conducting performance appraisal The process of conducting performance appraisal is as follows: (1)Establishing performance standards: The performance appraisal process begins with the setting up of criteria or standards, to be used for appraising the performance of employees. There should be some base on which one may say that the performance of a person is good, average, bad etc.

The standards may be in quantity and quality of production incase of workers, personality traits like leadership, initiative, imagination incase of executives, files cleared incase of office staff etc. these standards should be mentioned in the appraisal form. These standards will help in setting yardsticks for evaluating performance. (2)Communicating the standards: The standards set for performance should be communicated to the employees and explained to them, so that they come to know, what is expected from them.

If the employees do not have knowledge of the standards, they will keep on guessing only. When the standards are made know to employees, then will try to make their performance equal or above them. Even later on they will not resent adverse reports, if they fail to achieve certain standards. The reactions or feedback of employees to the standards should be obtained. if necessary changes should be made in the light of feedback. (3) Measurement of Actual Performance: The next step is to measure the actual performance of the employees.

This requires choosing the right technique of measurement, identifying the internal and external factors influencing performance and collecting information on results achieved. Personal observations, written reports and face to face contacts are the means of collecting data on performance. The performance of different employees should be so measured that it is comparable. (4)Comparing actual with standards: Actual performance is compared with the predetermined standards of performance. Such comparison will reveal the deviations, which may be positive or negative.

Positive deviations occur when the actual performance exceeds the standards. Negative deviation occurs when there is an excess of standards performance over the actual performance. (5)Discussing the Appraisal: The appraisal results are communicated and discussed with the employees. along with the deviations, the reasons behind them are also analyzed and discussed. Such discussion will enable an employee to know his strengths and weaknesses. Therefore, he will be motivated to improve himself. (6)Taking Corrective action: Evaluation process will be useful only when corrective action is taken on the asis of reports. Training, coaching, counseling, advice, refresher courses, warning, delegation of more authority, special assignments, etc are examples of corrective actions that help to improve the employees performance in future. ?Objectives of performance: Data relating to performance assessment of employees are recorded, stored, and used for seven purposes. The main purposes of employee assessment are: 1)To effect promotions based on competence and performance. 2)To confirm the services of probationary employees upon their completing the probationary period satisfactorily. )To assess the training and development needs of employees. 4)To decide upon a pay raise where regular pay scales have not been fixed. 5)To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. 6)To improve communication. Performance appraisal provides a format for dialogue between the superior and subordinate and improves understanding of personal goal and concerns. This can also have the effect of increasing the trust between the rater and the rate. ) Finally, performance appraisal can be used to determine whether HR programmes such as selection, training and transfers have been effective or not. ?Advantages of performance appraisal: 1. It provides valuable information for personnel decisions like promotion, pay increase, demotion, transfer, terminations. Thus, performance appraisal serves as the basis of suitable personnel policies. 2. Performance Appraisal helps the supervisor to evaluate the performance of his employees systematically and periodically.

It helps in the placement of the employees on the jobs for which they are best suited. 3. Appraisal helps to judge the effectiveness of recruitment, selection, placement and orientation system of the organization. 4. Systematic Appraisal of performance helps to develop confidence among employees. It will prevent grievances, if the employees are convinced of the impartial basis of evaluation. 5. Performance Appraisal can be used to determine whether HR programmes such a selection, training and transfers have been effective or not.

Broadly performance appraisal serves four objectives: i. development uses, ii. administrative uses/decision, iii. organizational maintenance/objective , and iv. documentation purpose 6. Performance appraisal facilitates human resource planning, career planning and succession planning. ?Limitation of Appraisal: 1. Halo error: It takes place when one aspect of an individual performance influences the evaluation of the entire performance of the individual. E. g. : When an employee who work late constantly might be rated high on productivity and quality of output as well as on motivation.

Similarly an attractive or popular employee might be given a high overall rating. This error may be minimized by rating all the employees on one trait before taking up another trait. 2. Horn Effect: A corollary to the halo effect is the horn effect where individuals, brands or other things judged to have a single undesirable trait are subsequently judged to have many poor traits, allowing a single weak point or negative trait to influence others’ perception of the person, brand or other thing in general. E. g. If for example you’re in a job Interview, the first thing you say is “the weather is crap and I hate long days” to your next possible employer, the person who is interviewing you will automatically assume that you are generally a negative person, and will probably assume all other traits about you are bound to be negative, and will therefore probably not consider hiring you. 3. Rater Effect: It includes favoritism, stereotyping and hostility. Excessively high or low scores are given only to certain individual or groups based on the raters’ attitude towards the rate, not on actual outcomes or behavior.

E. g. : Sex, age, race, friendship biases. 4. Primary and recency effects: The rater’s ratings are heavily influenced either by behavior exhibited by the rate during the early stage of the review period or by rate outcomes or behavior exhibited by the rate near the end of the review period (recency). E. g. : if a sales person captures an important contract/ sales just before the completion of the appraisal the timing of the incident may inflate his or her standing even though the overall performance of the sales persons may not have been encouraging.

Likewise a blunder committed just before the appraisal period may diminish chance of securing a favorable rating even if a performance is good. 5. Perceptual Set: This occurs when the rater’s assessment is influenced by previously held beliefs. If the supervisors for a example have a belief that employee hailing from 1 particular region is intelligent and hard working his subsequent rating of an employee hailing from that region tends to be favorably high. 6. Performance Dimension order: Two or more dimensions on a performance instrument follows or closely follow each other and both describe or rotate to a similar quality.

The rater rates first dimension accurately and then rates the second dimension similar to the first because of their proximity. If the dimension had been arranged in a significant different order the rating might have been different. 7. Spillover effect: This refer to allowing past performance appraisal rating to unjustifiably influence current ratings. Past ratings, good or bad result for the period although the demonstrated behavior does not deserve the rating good or bad. 8. Status Effect:

It refers to overrating of employee in higher-level jobs held in high esteem, and underrating employees in lower-level-job or held in low esteem. 9. Central Tendency: This occurs when employees are incorrectly rated near the average or middle of the scale. The attitude of the rater is to play safe. This safe playing attitude stems from certain doubts and anxieties which the rater’s have while assessing the rates. Such doubts and anxiety are: -“Do I know the man sufficiently well to be able to give a fair assessment of him? ” -“If I rate him the way I think I could be accused of being partial? ”

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