Employee performance appraisal theories and techniques

Performance appraisal is to assess and evaluate the performance of employees towards the objectives of the organisation. Performance appraisal has now become a very important part of human resource management. Performance appraisal is the basis for other personnel programs in many of the organisations like counselling, salary administration, or personnel planning. With the decline of careers in organisation, HRM techniques such as performance appraisal has become more important in motivating and controlling the workforce. Appraisal is now seen by some commentators as being much more significant in maintaining employee loyalty and commitment than in directly managing performance (Bowles and Coates, 1993). Use of performance appraisal gives the manager opportunity to change corporate values which are important instrument in control process. Thus we find a growing use of appraisal systems for non-managerial employees that are based on social, attitudinal and trait attributes (Townley, 1989). Employees are now being appraised not only on objective measures such as attendance, productivity and quality but also on subjective measures such as flexibility, loyalty etc. performance appraisal helps in increasing the efficiency of workforce which in turn helps in achieving the objectives set by an organisation.

Performance appraisal is one of the most important components in the systematic approach of Human Resource Management. Performance appraisal is the process of assessing and evaluating the performance of employees according to the objectives of the organisation. Performance appraisal is defined as a procedure which involves the regular use of recorded assessment of an individualâ€™s performance and potential (Phil Long (1986). Performance Appraisal Revisited. 2nd ed. London: IPM Information and Advisory Services. 5.). A primary aim of the performance appraisal is to measure the performance of an individual against the given objectives. Performance appraisal includes the employees, management, supervisors and the units those are most responsible in the organisation. Manual staffs such as skilled employees and employees with technical duties are also subject to appraisal. Many organisations use performance appraisal even for other personnel programs, like counselling, salary administration, promotions or personnel planning etc. It acts as a means of communication between the boss and the sub ordinates required by the company or organisation. There are many possible uses of performance appraisal, but a wise user of the technique will choose among the possibilities and confine performance appraisal to those activities that will meet limited, specific goals (Patricia King (1984). Performance Planning and Appraisal. New York: McGraw-Hill. 7.). Performance appraisal system helps in measuring the performance of individuals against the set objectives of the organisation and the tasks provided to an individual, and rewarding them accordingly. It is also the basis for recruiting the new people, provide feed back, increase motivation, identify potential, study the skills of the employees, training to be provided according to the objectives and the work given and let people know that what is expected from them against the organisation and solve the job problems. A change in payment systems has also helped in growth and development of performance appraisal. Reward systems and increased use of merit and performance have been associated with the development of performance appraisal. It would be clear that performance appraisal practices those are operating from past ten years or so may be effective in many organisations today. New developments has reduced the role of performance appraisal, they now are being used as a measure to achieve organisational objectives, considerable experimentation and innovation. In fact performance appraisal has become more wide spread. New forms of appraisals have also been developed.

Development of performance appraisal:

Informal system of performance appraisal exists as long as people work together; evaluation of employees at work is the universal tendency. The history of formal system of performance appraisal is short. With the new developments performance appraisal has become an important element of human resource management. Wide ranges of methods are used to conduct the performance appraisals such as from ranking schemes and competency based systems to complex behaviourally anchored rating schemes. Performance appraisalâ€™s nature is mostly based on the objectives of management and the available resources for commitment. Simpler ranking and rating schemes are adopted by the small organisations with limited HR expertise, where as schemes such as competency based and 360o appraisal are adopted by the larger organisations. Most of the managements use only one type of appraisal system. Some organisations provide the choice for employees about methods in how they should be appraised. Few organisations adopt multiple systems to separate reward and non reward aspects of appraisal and different systems to different occupational groups and different parts of the organisation.

Appraisal Systems:

Appraisal system formulates the review part of the performance cycle. Appraisal systems are designed on a central basis by personnel function, each manager evaluate the performance of their staff on an annual, six-monthly or even quarterly basis. Traditionally appraisal system has been applicable to the staff those are in higher management and supervisory positions, but with new developments it has also applicable even to the clerical staff and secretarial staff. Appraisal systems are been applicable in all the parts of the organisation for the better performance of the employees. It tends to assess the performance of the employees and reward them accordingly.

Appraisal system can be used to identify the problems and improve current performance, provide feedback. It also can be used to set the organisation objectives, provide information to the HR personnel, selection process and as a reward or punishments. Appraisal can be divided into three categories, reward reviews, potential reviews, and performance reviews, and the appraisal system should satisfy at least one of those. Manager should be very careful in reviewing the primary purpose of the appraisal system.

Source: www.rose.edu/faculty/bperryman/f6.pdf

Performance Appraisal Methods and Techniques:

The techniques to evaluate the performance appraisal can be grouped into three categories: Comparative, Absolute and Outcome or Result-oriented.

Comparative Methods:

These techniques help in evaluation the performance of the employees in a work group. Three main procedures which are used in performance judgements are paired comparisons, raking and forced distribution.

Paired comparisons: In this method appraiser compares the pair of individuals, rating which employee is better. This could be based on the overall performance of the job or one specific trait. A rank order is obtained from the number of times each individual is selected as the better of a pair (Phil Long (1986). Performance Appraisal Revisited. 2nd ed. London: IPM Information and Advisory Services).

Ranking: Rater requires listing the group of individuals and ranking them according to the merit from best to worst. In this procedure a single performance trait is used to evaluate the overall performance of employees towards the objectives.

Forced distribution: This procedure combines both paired comparisons and ranking methods. Individuals receive a rating and also assigned to categories according to predetermined distribution.

Absolute Methods:

This method evaluates the performance of an individual by reference to standards of performance. Techniques include narrative approach, graphic or trait rating scales, critical incidents and behavioural anchored rating scales.

Narrative Approach: This method describes the individualâ€™s work performance and behaviour in the words of appraiser. The appraiser describes the strengths, weaknesses and potential of an individual and also suggest for improvements that are required. Appraiser can explain in the form of essay or written report. Narrative procedures have the benefit that they can explain and provide information regarding the individualâ€™s performance.

Trait Rating Scales: This is highly structured scale which consists of a list of personality traits. The appraiser should indicate the performance of an individual on a numerical scale for which individual is being appraised have these traits. A variation of this is the graphic rating scale which requires the rater to evaluate the individual on each of several defined qualities along a line containing a variety of objectives from very high to very low (Phil Long (1986). Performance Appraisal Revisited. 2nd ed. London: IPM Information and Advisory Services).

Critical incident techniques: In this method rater explains the positive and negative behavioural events which have been observed within a review period. It is more suitable for performance feedback discussions.

Behavioural Anchored Rating Scales (BARS): BARS is one of the prominent behaviour scaling techniques which determine the behaviour ratings and actually constitute job performance. This methodology is carried out using typical BARS instruments which constitute of series of vertical scales. Each scale determines performance dimension based on job requirements and past observations. The behaviour anchors observed determines the work performance of the individual.

Results-oriented Methods:

These methods are mostly based on specific accomplishments and outcomes of job performance rather than behaviours. Assessment is based on how the objectives have been achieved. Objectives being jointly agreed between the superior and subordinate and standards are set by discussion and negotiation. As the standards are known the procedure can be corrected as they develop.