Performance Appraisal

The meaning of the word “appraisal” is “to fix a price or value for something”. This is used in finance in terms such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance appraisal is a process in which one values the employee contribution and worth to the organisation.
The objectives of performance appraisal are:
1.To help better current performances
2. To help in development of the employee.
3.To determine training and development needs.
4. To give employee feedback and counsel them
5. To review performance for salary purposes.
Employees across the entire organisation are appraised of their performance. This could be done annually, twice a year, periodically depending the need of the organisation
The various kinds of performance appraisal systems are:
1.Personality based performance appraisal system:
Here the appraiser is supposed to rate the personality traits of the person being appraised.
This is not in much in organisations as it very subjective and judgmental. It could also be biased and prejudiced.
2.Competence based performance appraisal system:
Here the job analysis is used and the employee is appraised for the skills he exhibits. For e.g. if his job entails dealing with the clients then he is judged foe his effectiveness in dealing with them. This enables both the organisation and the employee as to what deficiencies are to be overcome and can be useful in providing training to the employee to better his performance.
Result based performance appraisal system:
This system concentrates on the final results achieved by the employee irrespective of his personality or deficiencies. This is totally related to the job and concentrates on the end results that are more important to the organisation.
The performance appraisal system has to be transparent and the employee should be taken into full confidence. In many cases employees themselves are given a chance to conduct a self-appraisal. Performance appraisal is a case of joint problem solving by the organisation and the employee. However the organisation must also take care of future potential and not get bogged down by current performance.
Normally the immediate supervisor does the appraisal. Some organisations also have a peer group performance appraisal where colleagues rate the performance.
The HR person must also ensure that line managers are properly trained for carrying out the appraisal including interviewing techniques and on how to give feedback. The managers must also be trained to look at the cases objectively outside of their personal opinion of the candidate.

ATTITUDE SURVEYS

The typical attitude survey presents the employee with a set of statements or questions with a rating scale indicating the degree of agreement.
The organization can include in their survey about as compared with those of other organizations, Best use of individual abilities in their job, and knowledge of employee about his job.. Ideally, the items should be tailored to obtain the specific information that management desires. An individual’s attitudes score is achieved by summing up responses to his or her questionnaire desires. These scores can then be averaged for work groups, teams, departments, divisions, or the organization as a whole.
Result from attitude surveys can frequently surprise management. Because employees were actively involved in division decisions and profitability was the highest within the entire company. Management assumed morale was high and to confirm their beliefs, they conducted a short attitude survey.
Employees were asked if they agreed or disagreed with the following statements:
1. At work, your opinions count.2. Those of you who want to be a leader in this company have the opportunity to become one.3. In the past six months, someone has talked to you about your personal development.
In survey, 43% disagreed with step 1, 48% with step 2 and 62% with step 3. Management was astounded. How could this be? The division had been holding shop floor meetings to review the numbers every week for more than 12 years and most of the managers have come up through the ranks. Management has made a committee from every department in the divisions and all three shifts. The committee quickly found some little things the divisions were doing was alienating employees. Through the committee came lot of suggestions which improved the employees’ perception of their decision –making influence and career opportunities.
With attitude surveys on the regular basis helps the managers with valuable feedback on how employees perceive their working conditions. Policies and practices that management views as objectives and fair may be seen as not compatible by employees in general or by certain groups of employees. If distorted perceptions lead to negative attitudes about the job and organization it is important for management to know about it.
The use of regular attitude surveys can alert management to potential problems and employees’ intentions early so that action can be taken to prevent repercussions.

Need and Importance of Management

Peter Ducker once remarked 'Management is what the modern world is all about'. Modern world is witnessing continuous breakthroughs in science and technology. There are developments all over the world. There is no doubt that all the breakthroughs and developments were made possible by efficient and effective management.

You are well aware that there is a wide gap of development between Europe and Asia . European countries, Japan , and U.S.A. arc highly developed as compared to Asian and African nations. You may call this gap as the 'Science and Technology gap', but in reality it is the 'Management Gap'. In other words, economies of well developed nations are well managed, whereas, economies of less developed nations arc poorly managed. Everyone knows that Japan and Germany we're totally in ruins after the World War II, but today these two nations are highly developed, thanks to better and innovative management.

You must have heard that some organizations survive and succeed during bad times, whereas, others fail even during good times. This is mainly because of the quality of management in the concerned organizations. Thus, it is evident that management plays a vital role in the success and develop­ ment of not only the business organizations but the entire nation as a whole.

The importance of management can be stated as follows:

1. It facilitates optimum utilization of resources:

Managers make use of several resources such as men, money, materials, machines, methods, etc. Efficient management facilitates optimum utilization of resources in order to accomplish results. In other words, management transforms resources into results.

2. It motivates personnel:

Managers need to create a good environment in the organization. They need to provide good working conditions and facilities to the employees. The success of management is reflected through the efforts of highly dedicated and motivated work-force. In order to have a dedicated and motivated work-force, managers provide monetary and non-monetary incentives to their subordinates.

3. It encourages initiative:

Managers of successful organizations follow the principle of en­ couraging initiative. They encourage their subordinates to show their initiative, to come out with suggestions and actions that would not only help the organization to grow and expand but also enable the subordinates to fulfill their career aspirations. Thus, it helps to im­ prove individual, group and organizational effectiveness.

4. It facilitates innovation:

Modern management is dynamic in nature. Successful managers generate innovative ideas to solve business problems or to handle their tasks and responsibilities. Again, due to freedom of self- expression, and specialization, subordinates often come out with innovative ideas. Such innovativeness helps them to carry out their activities effectively and efficiently.

5. It furthers technological improvements:

Modern world is witnessing continuous breakthroughs in science and technology. New machines, new methods and new techniques are being introduced in business activities. This is possible due to effec­tive and efficient management. Such technological developments are not only vital to the concerned organization but also to the entire nation and even to the whole world.

6. Minimizes wastages:

Managers minimize wastages by following the process of manage­ ment. Every manager at all levels needs to plan, to organize, to direct and to control activities. For instance, the production manager makes optimum use of resources through systematic production planning and control. This results in reduction in wastages of resources, and as such brings higher returns.

7. Maintains good relations:

Managers develop good relations with their subordinates. Good rela­tions are maintained by proper directions, communication and leader­ ship. The success of any organization depends largely on the smooth relations between management and employees, between superior and subordinates, between different levels, and between different depart­ments or sections.

8. Facilitates expansion and diversification :

Successful managers arc responsible for the growth and expansion of the enterprise. Without the active involvement and commitment on the part of the superiors and their subordinates, it is not possible for any organization to grow and expand. Quite often, it is the inefficient management that retards the growth and expansion of the organizat ion.

9 . Quality of workers' life:

Modern management shares the fruits of productivity and efficiency with the workers. Workers are provided not only with good working conditions but they are also rewarded monetarily and non-monetarily, and as such their quality of life enhances.

10. Assists society:

Managers are socially responsible. Now-a-days, profit is not the only motive. Successful organizations have reconciled profit motive with social responsibility. Because of this factor, the society at large is benefited in terms of quality goods at good prices, employment opportunities, and so on.

PROBLEM IN PERFORMANCE APPRAISAL

The problem with subjective measure is the rating which is not verifiable by others and has the opportunity for bias. The rate biases include: (a) halo effect (b) the error of central tendency, (c) the leniency and strictness biases (d) personal prejudice, and (e) the recent performance effect

(a) Halo Effect: It is the tendency of the raters to depend excessively on the rating of one trait or behavioral consideration in rating all others traits or behavioral considerations. One way of minimizing the halo effect is appraising all the employees by one trait before going to rate on the basis of another trait.

(b) The error of Central Tendency: Some raters follow play safe policy in rating by rating all the employees around the middle point of the rating scale and they avoid rating the people at both the extremes of the scale. They follow play safe policy because of answerability to management or lack of knowledge about the job and person he is rating or least interest in his job.

(c) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any purpose. Equally damaging one is assigning consistently low rates.

(d) Personal Prejudice: If the rater dislikes any employee or any group, he may rate them at the lower end, which may distort the rating purpose and affect the career of these employees.

(e) The Recent performance Effect: The raters generally remember the recent actions, of the employee at the time of rating and rate on the basis of these recent actions favorable or unfavorable than on the whole activities.

Other factors that are considered as problems are

· Failure of the superiors in conducting performance appraisal and post performance appraisal interview.

· Most part of the appraisal is based on subjectivity.

· Less reliability and validity of the performance appraisal techniques.

· Negative ratings affect interpersonal relations and industrial relations system.

· Influence of external environmental factors and uncontrollable internal factors.

· Feedback and post appraisal interview may have a setback on production.

· Management emphasizes on punishment rather than development of an employee in performance appraisal.

· Some ratings particularly about the potential appraisal are purely based on guess work.

The other problems of performance appraisal reported by various studies are:

Relationship between appraisal rates and performances after promotions was not significant.
Some superiors completed appraisal reports within a few minutes.
Absence of inter-rater reliability.
The situation was unpleasant in feedback interview.
Superiors lack that tact of offering the suggestions constructively to subordinates.
Supervisors were often confused due to too many objectives of performance appraisal.
Advantages of Performance Appraisal through Computers:

There will be an objective analysis of traits of both the superior and subordinate and a chance to subordinate to express his views even after performance appraisal.

An employee shall express his emotional needs and his value system which may not be possible direct face to face with superior. Communication through computer overcomes the communication barrier between the superior and subordinate.

Computer based appraisal will remove the inherent weakness of the appraisal system that is subjective assessment of vague and abstract performance targets, unclear guidelines for appraisal etc.