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PERFORMANCE
APPRAISAL
BY – ABHINAV SINHA (HR&IR)

WHAT IS PERFORMANCE
APPRAISAL..???
 Performance appraisal is a method of evaluating
the behavior of employees in the workplace ,
normally including both the quantitative and
qualitative aspects of the job performance .
 It is a systematic and objective way of evaluating
both work-related behavior and potential of
employees .
 It is a process that involves determining and
communicating to an employee how he or she is
performing the job and ideally developing a plan
of improvement.

CHARACTERISTICS OF
PERFORMANCE APPRAISAL
 A Systematic process- as a number of steps are followed to
evaluate the strengths and weaknesses of an employee.
 Provides an Objective Description - of an employee’s
relevant strengths and weaknesses.
 Establishes a Plan for Future Improvement - by evaluating
the employee’s performance.
 It’s a Periodic Process - As it is not a one-shot deal.
 Differs from Job Evaluation - As it studies how much a job
is worth to the organization and Performance Appraisal
studies how well an employee is conducting a job .
 It can be formal or informal - Informal is based upon
personal factors whereas formal appraisal is more fair ,
systematic.

OBJECTIVES OF
COMPENSATION DECISIONS
PROMOTION DECISION
TRAINING & DEVELOPMENT PROGRAMMES
FEEDBACK
PERSONAL DEVELOPMENT

Uses of Performance
Appraisal
Human
Resource
Planning
Recruitment
and Selection
Training and
Development
Career
Planning and
Development
Compensation
Programs
Internal
Employee
Relations
Assessment
of Employee
Potential

Human Resource Planning
 In assessing a firm’s human resources, data must
be available to identify those who have the
potential to be promoted or for any area of internal
employee relations.
 Through performance appraisal it may be
discovered that there is an insufficient number of
workers who are prepared to enter management.
Plans can then be made for greater emphasis on
management development.
 Succession planning -A well-designed appraisal
system provides a profile of the organization’s
human resource strengths and weaknesses to
support this effort.

Recruitment and Selection
 Performance evaluation ratings may be helpful in
predicting the performance of job applicants. For
example, it may be determined that a firm’s successful
employees (identified through performance
evaluations) exhibit certain behaviors when
performing key tasks.
 These data may then provide benchmarks for
evaluating applicant responses obtained through
behavioral interviews.
 Also, in validating selection tests, employee ratings
may be used as the variable against which test scores
are compared. In this instance, determination of the
selection test’s validity would depend on the accuracy
of appraisal results.

Training and Development
 Performance appraisal should point out an employee’s specific
needs for training and development.
 For instance, if Pat Compton’s job requires skill in technical
writing and her evaluation reveals a deficiency in this factor, she
may need additional training in written communication.
 If firm finds that a number of first-line supervisors are having
difficulty in administering disciplinary action, training sessions
addressing this problem may be appropriate.
 By identifying deficiencies that adversely affect performance,
T&D programs can be developed that permit individuals to build
on their strengths and minimize their deficiencies.
 An appraisal system does not guarantee properly trained and
developed employees. However, determining T&D needs is
more precise when appraisal data are available.

Career Planning and
Development
 Career planning is an ongoing process whereby an
individual sets career goals and identifies the means
to achieve them.
 On the other hand, career development is a formal
approach used by the organization to ensure that
people with the proper qualifications and experiences
are available when needed.
 Performance appraisal data is essential in assessing
an employee’s strengths and weaknesses and in
determining the person’s potential.
 Managers may use such information to counsel
subordinates and assist them in developing and
implementing their career plans.

Compensation Programs
 Performance appraisal results provide a basis for
rational decisions regarding pay adjustments.
 Most managers believe that you should reward
outstanding job performance tangibly with pay
increases.
 They believe that the behaviors you reward are the
behaviors you get. Rewarding behaviors necessary
for accomplishing organizational objectives is at the
heart of a firm’s strategic plan.
 To encourage good performance, a firm should design
and implement a reliable performance appraisal
system and then reward the most productive workers
and teams accordingly.

Internal Employee Relations
 Performance appraisal data are also used for
decisions in several areas of internal
employee relations, including promotion,
demotion, termination, layoff, and transfer.
 For example, an employee’s performance in
one job may be useful in determining his or
her ability to perform another job on the same
level, as is required in the consideration of
transfers.
 When the performance level is unacceptable,
demotion or even termination may be
appropriate.

Assessment of Employee
Potential
 Some organizations attempt to assess an employee’s
potential as they appraise his or her job performance.
Although past behaviors may be a good predictor of future
behaviors in some jobs, an employee’s past performance
may not accurately indicate future performance in other jobs.
 The best salesperson in the company may not have what it
takes to become a successful district sales manager, where
the tasks are distinctly different.
 Similarly, the best systems analyst may, if promoted, be a
disaster as an information technology manager.
Overemphasizing technical skills and ignoring other equally
important skills is a common error in promoting employees
into management jobs
 . Recognition of this problem has led some firms to separate
the appraisal of performance, which focuses on past
behavior, from the assessment of potential, which is future-
oriented.

Performance Appraisal
Process
Identify Specific Performance
Appraisal Goals
Establish Performance Criteria
and Communicate Them to
Employees.
Examine Work Performed
Appraise Performance
Discuss Appraisal with Employee

RESPONSIBLILITY FOR
APPRAISAL
PERFORMANC
E APPRAISAL
IMMEDIATE
SUPERVISOR
SUBORDINAT
ES
CONSULTANT
S
PEERS AND
TEAM
MEMBERS
SELF-
APPRAISAL
CUSTOMER
APPRAISAL

ESSENTIALS OF EFFECTIVE
APPRAISAL SYSTEM
RELIABILITY & VALIDITY
JOB RELATEDNESS
STANDARDISATION
PRACTICAL VIABILITY
LEGAL SANCTION
TRAINING TO APPRAISERS
OPEN COMMUNICATION
EMPLOYEE ACESS TO RESULTS
DUE PROCESS

TRADITIONAL METHODS OF
RANKING METHOD
GRADING METHOD
MAN-TO-MAN COMPARISON
METHOD
GRAPHIC RATING SCALE
METHOD

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Performance appraisal

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