Jobs are becoming more challenging and demanding day by day. Consistency in progress and development depends on the quality and effectiveness of the workforce. Organisations have therefore to create an environment for motivating, retaining and rewarding good performers. Taking stock of the workforce and assessing their performance on regular intervals, helps management in utilising the potentialities, abilities, talent and capabilities of employees to the fullest extent. Just because a worker is performing effectively, does not mean that he would continue to perform effectively in future. Organisations need only performers. Employees receiving poor appraisal are termed as non–performer. No employer can tolerate poor performance, as poor-performers are parasite on the institution. They can either be shown the door or can be counseled groomed to cope up with the new emerging challenges. All depends on the circumstances. As organisations want to grow with the performing employees, they too want to grow with the job and with the organisation.
Why Performance Appraisal?
Organisations employ people for performing various tasks. It is the basic need of the management to know whether employees are performing and achieving the goals of the institution. What difficulties are they facing in discharging duties and what can make them excellent performer. How their efficiency, effectiveness can be enhanced, sharpened and properly channelised for the betterment of the institution. Performance appraisal is one of the systems for understanding and evaluating the performance of employees. It is an important tool in the hands of management for tracing, measuring and documenting performance towards achieving results.
Advantages of appraisal:
The spirit behind performance appraisal is to continuously improve individual performance for improving overall productivity of the organisation. It helps an organisation in communicating and reinforcing priorities, goals, and work values to employees. It helps them in knowing their duties, responsibilities and management’s expectations. Performance review not only covers the specific performance objectives for the individual employee, but also covers the overall standards and work values of the organisation. Employees’ productivity is enhanced by encouraging them with financial or non-financial rewards and incentives. Performance of poor performers is improved by providing them training in the areas of deficiencies.
Performance appraisal provides feedback to employees about their performance and work behaviour. It helps them in identifying their needs for development and getting over performance deficiencies. It also acts as a motivating factor.
Procedure involved in Performance Appraisal:
Every employee wants to know the expectations of management, his responsibilities and duties, and the feedback about performance. Therefore, the first and foremost step in performance appraisal is to determine the results that the institution wants an employee to achieve. Assessment of performance enables management in distinguishing between high and low performers. Appraisal is done on a pre-designed standard form, as off–the–cuff evaluations generally defeat the purpose.
Basically appraising involves following steps
1). Setting of work standards:
It is defining the key job responsibilities and objectives that an employee has to perform. These are decided and documented at the beginning of the year by the reviewing authority with mutual consultation and agreement. It enables an employee to know his prime responsibilities during the year. If a job responsibility needs revision, employee can discuss with his supervisor for revision in key performance areas. Standards should be clear and specific so that employee understands his duties, expectations, and how his work is linked to the overall goals of the organisation. It should be simple and expressed in measurable terms. Setting of work standards is like entering into a memorandum of understanding between superior and employee.
2). Periodicity:
Periodicity and system of review differs from institution to institution. In some organisations appraisal is done annually and in some, performance is a reviewed continuously. Performance evaluation acts as a feedback to an employee about his performance, efficiencies, deficiencies and management’s expectations. It helps him in improving potentialities and performance. Working in any organisation and not having one’s progress periodically evaluated is like playing a game without keeping a score.
3). Who assesses performance?
Those in daily contact with the employee’s conduct, output and performance can best measure performance. In some organisations, subordinates, peers, group members, or a combination of one or more review employee’s performance. The system of getting performance reviewed by cross section of employees reduces chances of injustice to the person whose performance is being reviewed.
4). Assessment of actual performance:
Performance review is not a once or twice yearly task, but a full-time duty. One way to assess performance is through a formal review on a periodic basis. At the end of the designated time period, the supervisor discusses with the employee his performance and evaluates it in accordance with the established performance objectives, standards mutually agreed and accepted. The performance review process is a collaborative effort between supervisor and employee; therefore, it needs to be formal and fair. Performance is judged both on qualitative and quantitative parameters. By turning the appraisal into a real discussion, the supervisor learns some insightful information that could help boost employee’s performance in the future.
Objectives of Performance Appraisal:
Performance appraisal is an integral part of management. It is powerful and effective management tool for managing and measuring performance of employees. It enables management in identification of aspiration, competencies, talent, capabilities, and potentialities of employees that in turn can result into growth and development of the organisation. It provides job role clarity to employees and helps them in knowing their duties, responsibilities, and expectations of the management. It prepares them in improving their current positions and future opportunities. The objective of all performance appraisals is to
* Review an employee’s overall achievement, based on established performance objectives.
* Review his work related behaviour, willingness to accept reasonable responsibility and learning new skills, attitude towards taking initiative, his attitude and behaviour with colleagues , ability to work in team .
* To judge the integrity of employee in the conduct of work.
*To measures performance of employees in his key responsible areas and rewarded performers either by giving monetary benefit or promotion or both.
*To take appropriate corrective measures against those who are poor, ineffective or non-performers either by showing them the door, or by persuading them to improve or by making them a part of performing team so that group pressure may improve his performance.
* To identify individual’s specific developmental needs for improving the performance.
*To know the strengths and weaknesses of the organisation. Bottlenecks, deficiencies and difficulties being faced by employees in discharging their duties so that corrective measures can be taken.
*To gather useful data on the abilities, potentialities and capabilities of employees for shouldering higher responsibilities or jobs where those skills can be better used.
* To identify, skill gaps and bridge them by imparting training.
*To develop career goals for employees for better performance and stimulating their latent desire for self-development.
*To give opportunities to employees to highlight their performance (self appraisal) and achievements from their perspective.
*To know about employee’s aspirations, their developmental and training needs and what can make them good performers.
*Providing constructive feedback, both positive and negative to employees and the areas needing improvement.
* Know whether he is punctual, regular and respects the value of time for self and others.
Effective performance appraisal recognises employee’s desire to progress. It helps him in identifying strengths and weaknesses and in improving performance for future responsibilities and assignments.
Types of Appraisals:
1. Appraisal for confirmation of service:
Every institution has a definite period of probation for new entrants. During the trial / probation period employees performance, attitude, approach, behaviour, remain under close supervision and observation. Employees are confirmed in the service when their performance is found satisfactory. Many organisations have separate appraisal forms for confirmation. To name a few, these forms contain detailed information about various aspects of employees’ performance, behaviour, attitude, and approach exhibited during the probation period. Management takes decision of retaining or terminating the services of employee on the basis of the appraisal report. Therefore, performance appraisal for the period of probation plays vital role in the organisation, as any wrong assessment may adversely affect future of the organisation.
If reviewing authority feels that on all the major parameters the probationer has performed well but in some minor parameters he was found wanting the probation period is extended with a view to giving him an opportunity to improve. In such an event employee’s probation period is extended and his appraisal is done accordingly.
2. Appraisal for Extending the Probation Period:
While extending the probation period, the reviewing authority mentions both the strong and week areas of the probationer, areas needing improvement and the reasons for recommending extension along with the period of extension. After satisfactorily completion of the extended period of probation, performance is again reviewed for confirmation.
3. Comprehensive appraisal:
As per the system, procedure and practice prevalent in an organisation, performance of employees is reviewed at regular intervals. It is generally conducted once a year. However, in some organisations mid-term review is also done. In mid-term review, the reviewing authority elicits response, views of reviewee and communicates deficiency or excellence in his areas of performance. This helps in identifying the problems that hinder effective performance and keeps open the communication between the superior and subordinates.
4. Change in position:
In addition to regular review, some organisations review performance of employees at the time when they are due for promotion or elevation in organisational hierarchy. The performance review plays important role in taking decision about career progression of employees. Organisations also obtain self-appraisal from employees, thus giving them a fair chance to bring to the notice of the management about their achievements.
Popular methods of appraisal:
1.Ranking of all employees in a group:
Under this appraisal system, instead of reviewing performance of individual employee, performance of all the employees working in the group, division, or department is reviewed. The under line principle is that the out put or performance is the result of teamwork. Common rating is awarded to all the employees in the group. The draw back of this system is that it becomes difficult to distinguish between good and bad performers or non-performers. The good performers get frustrated and demotivated.
2. Peer Ranking:
In the peer ranking approach, performance of an employee is assessed in relation to other employees. Pitting of one employee against another creates negative impact on performance, which adversely affects collaborative environment at the work place. In case of large number of employees, it becomes difficult to rate performance of an employee objectively.
3. Ratings:
Under this system employee is rated as above average, average, and below average. Critical incidents i.e. favourable and unfavourable performance is recorded. Unless the organisation have scientific and logical rating system, subjectivity and bias plays major role in this type of performance review.
4. Weightages:
Employees’ performance is appraised on various objectives, parameters and attributes which are assigned different scores and weightage. The reviewing authority assigns scores against those objectives, attributes and parameters. The reviewee is rated on the basis of his total marks. The probability of subjectivity is minimal.
5. 360-Degree Review:
360-degree is the most comprehensive appraisal. It is multi source assessment, which includes self-ratings, peer review, and assessment by superiors. Feedback is sought from everyone. 360-degree review gives a chance to reviewee in knowing how others view his skills and style. It brings out those things, which are normally never spoken. It helps in reducing tension and improving communications, and raising employees' performance. It helps in improving communications between people.360-degree review helps in bringing out every aspect of an employee's life whether it is cooperation with people within or outside the department, attitude towards peers, subordinates, and customers. This system also helps in eliminating conflicts. The review has high employee involvement and has strongest impact on behavior and performance as it provides people with a good all-around perspective. The employee has to be psychologically matured and not to be sensitive to criticism as probability of conflict arising out of adverse feed back from peers may strain interpersonal relations.
Self- Appraisal:
Self- Appraisal is based on the idea that no one knows the job better than the person performing it, therefore his involvement is essential. He is expected to narrate his achievements Vis-Ã -Vis key responsible areas, outstanding performance; self perceived training needs, constraints, areas of strength, weakness and factors that may improve performance. Self- appraisal enhances dignity and self-esteem of employees and plays important role in his development.
Self-appraisal is doing self-introspection and genuine analysis of one’s own performance. It is identification of individual’s strengths and weakness .It gives employee an opportunity to analyse the causes of his success and failures, and how to become an effective performer. The general impression is that self-appraisal tends to exaggeration and employees rate themselves high. However, studies have shown that most employees find it difficult to evaluate their own performance and they tend to under rate their performance.
Self-appraisal is a kind of feedback to management about on the job and off the job problems, difficulties faced by employee in discharging duties and responsibilities. It is an opportunity to employee to bring to the notice of management his outstanding performance and achievements which might have been overlooked by the authority reviewing the performance.
Role of Supervisor / Appraiser:
The immediate supervisor who does the actual appraising has to be familiar with the basic techniques of appraisal and should avoid problems that can cripple an appraise. Appraiser has to be fair in his judgment. He should be able to judge whether the employee could have put in more effort in work, or could have made better use of the resources available to him. He should know the difficulties and also the constraints under which employee worked. Adequate credit is to be given for ability of performing more than one task i.e. shouldering multi tasking responsibilities, handling special assignments during the review period. Appraising authority has to gain the respect and confidence of his subordinates.
Problems in Appraisal:
1.Halo Effect:
While reviewing the performance it is necessary that reviewing authority have a comprehensive view of subordinate’s, personality, strengths, weaknesses, specific traits, work environment, relationship with superiors, peers, subordinates. In many cases while reviewing the performance, the reviewer is influenced by one particular quality or performance parameter of his subordinate and may rate him high or low, this is known as ‘Halo effect’. This is due to the strong bias towards the revieeew. Thus the ratings based on one-trait are unrealistic. The problem occurs with employees when they are friendly or unfriendly with supervisor.
In the study conducted by Heneman, Greenberger & Anonyou (1989) it was found that subordinates are divided into ‘ two groups: in-groupers and out-groupers’. In groupers are those subordinates who are favoured by their supervisors. They enjoy "a high degree of trust, interaction, support and rewards" in their relationship with the boss.
On the other hand, out groupers do not do as well. They appear to be permanently out of favour and are likely to bear the brunt of supervisory distrust and criticism. Supervisors tend to judge them as either good or bad.
It was found that when an in grouper did poorly on a task, supervisors tended to overlook the failure or attribute to causes such as bad luck or bad timing; when they did well, their success was attributed to effort and ability. But when an out grouper performed well, it was rarely attributed to their effort or ability. And when an out grouper performed poorly, he was termed as lazy or incompetent. This bias lead to a distortion of the appraisal process, and results into a source of frustration for those employees who are discriminated against.{ Heneman, R.L., Greenberger, D.B. & Anonyou C., (1989) Attributions and exchanges: the effects of interpersonal factors on the diagnosis of employee performance, Academy of Management Review, Vol. 32, No 2.}
2.Central Tendency:
Some appraisers do not prefer to give high or low marks against any parameter. As they do not want to spoil personal relations with low performers and do not want good performers to get rewards. They play safe and rate every employee as average. This tendency is known as ‘Central Tendency’. They have a preconceived notion that subordinates given a high rating may expect immediate rewards or employees given a low rating will become troublemakers. This reflects self-inadequacy of appraiser.
3.Leniency:
With a view to appear ‘ nice’ to the reviewees, reviewing authority assigns high marks leniently on all parameters, sacrificing objectivity. This defeats the spirit behind performance review.
4 Strictness:
The problem occurs when a supervisor has a tendency to rate all subordinates low.
5.Bias:
It is the tendency to differentiate employee on the basis of age, race, and sex while appraising. Even previous performance can also affect the evaluation of current performance.
6. Disruptive bias Matthew effect:
It is named after the Matthew of biblical fame who wrote, "To him who has shall be given, and he shall have abundance: but from him who does not have, even that which he has shall be taken away."In performance appraisal, the Matthew Effect is said to occur where employees tend to keep receiving the same appraisal results, year after year. That is, their appraisal results tend to become self-fulfilling: if they have done well, they will continue to do well; if they have done poorly, they will continue to do poorly. The Matthew Effect suggests that no matter how hard an employee strives, their past appraisal records will prejudice their future attempts to improve.
{Gabris, G.T. & Mitchell, K., (1989), The impact of merit raise scores on employee attitudes; the of performance appraisal, Public Personnel Management, Vol 17, No 4 (Special Issue).}
7.Other flaws:
Instead of reviewing the performance for the total period of review, reviewing authority sometimes assigns marks on the basis of the recent past performance. Some reviewing authority tend to review performance of their subordinates on the basis of how their own performance is going to be evaluated. Some reviewing authorities consider performance review as an opportunity to settle scores. Many reviewing authorities do not rate subordinates better as they apprehend that the subordinate if elevated may supersede him. In those cases where two persons in the same grade and rank work together and one person by virtue of holding position perform the functions of reviewing authority, the reviewing authority underrates colleague, as the person is a direct competitor in career progression. While appraising performance of employee, a prudent reviewing authority should be free from all above flaws, personal prejudices and errors. His biggest challenge is self-discipline, to be more objective while evaluating performance of his subordinate.
Performance review in Banks:
In most of the nationalised banks in India, performance is reviewed once a year. Banks adopt two-tier system for performance review. The immediate superior under whom a person works first reviews performance. Thereafter, an authority higher than the one who had evaluated the performance evaluates performance of the concerned employee on the same parameters. The objective is to have fairness in appraisal. Both the authorities award numerical marks. Thereafter average of marks allotted by both the authorities is worked out and grading is done on the basis of pre decided range mentioned the review format. In banks, performance review system is a closely guarded system and is considered to be confidential. Generally no discussion is done with the employee at the time of review. Hardly any feed back about performance is given to him and employee remains in dark.
Following are the important parameters on which performance of an individual is evaluated;
1. Knowledge level of employees. :
Progress of an organisation depends on efficiency, knowledge and competency of its staff. Employee’s performance is directly linked to his knowledge of rules, regulations intricacies about the job, economic development and opportunities. Hence one of the important parameters in performance evaluation is Job Knowledge of the reviewee, his ability to learn new things and approach towards work.
2.Work performance:
An employee knows well in advance his key responsible areas and expectations of management, as the immediate superior in consultation with the employee decides it. Hence, another important factor in appraising performance is evaluation of actual performance with the agreed one. Whether business growth and cost control were in accordance with the agreed and accepted targets?
3. Attitude, Behaviour and Personality:
Attitude and behaviour of an employee affects the work environment and image of the organistion. It also has impact on business and customer service. Therefore while reviewing the performance reviewing authority judges employees willingness to assume responsibilities, level of dependency during difficult or challenging situation, his stamina and stress tolerance ability, honesty and integrity, initiative-and innovative approach, maintaining interpersonal relations, approach towards superiors, peers, subordinates, customers and coordination with other segments of organisation for achieving business goals without shirking responsibility.
4.Leadership:
Working in organisation is not performing in isolation .It is a teamwork. Without the support and cooperation of superiors, peers, and subordinates work cannot be performed effectively. Leadership plays an important role in motivation, harnessing dormant abilities and talent and promoting mutual trust and respect. A leader can make or mar the institution. Therefore leadership qualities have major role to play in achieving corporate goals and objectives.
Reviewing authorities therefore evaluate employee’s ability in development of team spirit, approach towards delegation of responsibilities, capacity to lead in crisis and quality, prudence, quickness, consistency in decision-making and ability of maintaining congenial work environment.
5.Administrative skills:
It covers enforcing punctuality and discipline at the place of work and judicious use of infrastructure. Handling grievances and ability of counseling.
6. Observations and Opinion of Reviewing authority:
As an employee remains in close contact, observation and supervision of the reviewing authority. Therefore, he knows positive and negative traits of employee, his ability to shoulder higher responsibilities, his areas of interest and training needs and how can he be made a better and excellent performer, in which assignment his latent /dormant capabilities can be best utilised so on so forth. Thus these observations in performance appraisal plays important role for taking managerial decisions.
Role of Reviewing Authority:
Success of any system depends on its credibility. The quality of appraisal process depends amongst others, on the nature of day-to-day “supervisor–subordinate relationship”. Without a good supervisor– subordinate relationship, no performance appraisal system can be effective and meaningful. The performance review should be objective. Reviewing Authority has to play basic role of developer of human resources i.e. his subordinate(s) working under him. Therefore, endeavour has to be made by him to integrate needs of the institution and individual growth & development of reviewee.
Conclusion:
Performance appraisal is a part of career development and the main object is to continuously improve employees’ performance, by giving them feedback on performance and improving performance by imparting training, which in turn helps in improving overall performance of the institution. Unfortunately in most of the organisations performance appraisal is used as a tool for revising salaries. With a view to eliminating probability of injustice due to central tendency, hallo effect, bias etc., some organisations also seek reports on performance of employees from different persons under whom or with whom the person had worked. For making the whole performance management process meaningful the entire system needs to be formalised and documented. The efforts have to be made to improve the performance in view of high competitive environment and on the other hand to retain the talent available in the organization. Good organisations seek to improve employee productivity through personal development and their enhanced involvement in operational matters.
