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Performance Appraisal System

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This Performance Appraisal System document contains general information about performance appraisal and lists several methods of implementing these systems. Performance appraisal is a method through which an employee is evaluated. It serves many purposes, including providing feedback on employee performance, facilitating communication between management and employees, and determining training needs. This document is designed to assist an organization in understanding the different methods and determining which one is the best fit. This should be used by the human resources department within any company or employer.

More Info
									This Performance Appraisal System document contains general information about
performance appraisal and lists several methods of implementing these systems.
Performance appraisal is a method through which an employee is evaluated. It serves
many purposes, including providing feedback on employee performance, facilitating
communication between management and employees, and determining training needs.
This document is designed to assist an organization in understanding the different
methods and determining which one is the best fit. This should be used by the human
resources department within any company or employer.
Performance Appraisal
       System
Table of Contents

Performance Appraisal System ..................................................................................................................... 2

Definition ...................................................................................................................................................... 2

Introduction .................................................................................................................................................. 2

Idea behind performance appraisal .............................................................................................................. 2

Performance Appraisal Aims......................................................................................................................... 2

Methods ........................................................................................................................................................ 3

       1. Critical incident method.................................................................................................................... 3

       2. Weighted checklist method .............................................................................................................. 3

       3. Paired comparison analysis ............................................................................................................... 3

       4. Graphic rating scales ......................................................................................................................... 3

       5. Essay Evaluation method .................................................................................................................. 4

       6. Behaviorally anchored rating scales ................................................................................................. 4

       7. Performance ranking method ........................................................................................................... 4

       8. Management by Objectives (MBO) method ..................................................................................... 4

       9. 360 degree performance appraisal ................................................................................................... 4

       10. Forced ranking (forced distribution) ............................................................................................... 4

       11. Behavioral Observation Scales ........................................................................................................ 5

The HR Challenge .......................................................................................................................................... 5

Criticism ........................................................................................................................................................ 5

References .................................................................................................................................................... 6




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                                    Performance Appraisal System


Definition
A performance appraisal, also known as performance review, or career development discussion,
is a method through which an employee is evaluated.

The evaluation is usually done by the manager or the supervisor of the employee and it is based
upon the quality of work performed within the specified resource of time and money.


Introduction
A performance appraisal is a very important aspect of development not only from an employee’s
point of view but from the company’s prospective as well. Whenever an employee is working
hard individually, his efforts proportionally affects the company performance as well, therefore
these appraisals are very effective in determining not only the individual’s performance but the
performance of the company as well. The appraisal guide managers determine which employee
is moving in the right path. When we study the definition of performance appraisal, it has been
described as a process of observing, examining and recording down information of employee
which effects the organization. In performance appraisal, an employee’s, strengths, weaknesses,
successes and failures are recorded that determines how much potential he has in sustaining his
position or growing within the organizational structure.


Idea Behind Performance Appraisal
Every person in the world has their own potential of performing well. Abilities, attitudes,
aptitude, motivation and eagerness all vary from person to person. This organization is a place
where different people from different backgrounds work together and there are high probabilities
that the potential working standards and productivity of each person will not be the same. The
ideas of performance appraisal come in here, through this method each individual person in the
organization is marked according to his performance and skills. This helps in understanding the
ability and the level to which an employee can contribute to the growth of organization (Archer,
1998).


Performance Appraisal Aims

The major aims of a performance appraisal are discussed as follows:

        To provide feedback on their individual performance

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        To identify if an employee needs training on certain grounds
        To document a certain criteria for organizational rewards
        To form basis for salary increases, promotions, disciplinary actions, bonuses, etc.
        To provide opportunities for analysis and development in the organization
        To communicate among employees and high level administration
        To validate selection techniques and human resource policies to fulfill federal Equal
         Employment Opportunity requirements.
        To enhance skills and to encourage personal development.


Methods

Some of the famous methods that are used to evaluate the performance of employees are
discussed as follows:

1. Critical incident method

In the critical incident method, the supervisor or the manager notes the negative and the positive
points that were observed during the performance of an employee, this marking is based on some
particular time span, which can be quarterly, half yearly or on a yearly basis. The Key
Performance Indicator (KPI) are marked through this technique, and at the end of the period the
points are combined together to see the overall performance of the employee.

2. Weighted checklist method

In the weighted checklist method, complete lists of points are noted with a description about the
effective and ineffective behavior of the employee that was experienced by senior management
throughout the time span (Marguilies, 2004).

3. Paired comparison analysis

A good method to evaluate performance of employees is paired comparison analysis. In this
method, several reasonable options are presented in the list. These options are compared with
each other and the results are compared and the option having highest score is preferred.

It is considered one of the best ways of comparing the importance of the given options.

4. Graphic rating scales

This is the most commonly used method of performance appraisal. In this method, a Rating
Scale is developed in the form of a matrix, and the manager or the supervisor marks the
employee’s level of performance, and eventually a quick viewable analysis is prepared with the
manager about the employee’s performance.




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5. Essay Evaluation method

In the essay evaluation method, the manager or the supervisor prepares a detailed description
about the strengths and weaknesses of employee performance and behavior. Although there
aren’t any specific measurable quantity of the behavior since the evaluation is based upon text,
this method is generally used with the graphic scaling method to describe the performance of
employees in details.

6. Behaviorally anchored rating scales

The behaviorally anchored rating scale method emphasizes some of the specific behavior to be
measured through evaluation. These behaviors directly affect organizational success, growth or
failure. This method is also a combination of the rating scale method and critical incident method
of performance evaluation.

7. Performance ranking method

This is another very commonly used method, the manager or the supervisor of the employee
ranks the person through comparing him with other employee. The evaluation is based from best
to worst, and no standard benchmark measurement is used in this comparison.

8. Management by Objectives (MBO) method

MBO is a common management process where managers set some specific objectives for the
employee, these objectives are periodically evaluated through monitoring by the manager, and
the performance is rewarded according to the results. MBO focuses on the accomplishment of
goals on a short term and long term basis, and it does not focus on how the goals are
accomplished but whether they are accomplished or not.

9. 360 degree performance appraisal

Another Performance appraisal method is 360 Degree Feedback method, in this method the
employees receives confidential, anonymous feedback from people who work around them. This
is just to gain a feedback from the people who are closely related in terms of working in the same
environment. This method enhances into 720, 520 methods where more and more people
contribute to evaluate performance of employee through high confidentiality.

10. Forced ranking (forced distribution)

The forced ranking method uses forced distribution to evaluate the performance of employees.
For instance, the distribution is requested with 10 or 20 percent in the top category, 70 or 80
percent in the middle, and 10 percent in the bottom.




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11. Behavioral Observation Scales

The Behavioral Observation Scales or the BOS method uses the scale of frequency rating of
critical incidents that worker perform during a particular time span that benefit to effect the
organization.


The HR Challenge

The HR professionals have great opportunities to evaluate their members, through performance
appraisals, the appraisals are prepared mostly by the managers or the supervisors of the
employee who keep a close eye on the working behavior of the employee. The Challenge of HR
is to determine if the performance appraisal is true and it clearly specifies the ability of the
employee and the skills he or she possess, from the HR prospective this requires creativity and
ability to read between the lines (Patterson, 1987). So that the appraisal is prepared without any
mistakes and the employee’s expectations are fulfilled.


Criticism

These various types of Performance appraisals provide a chance for social control of the
organization and to motivate employees to work harder. Usually, people do not agree with the
performance evaluation done by their supervisors, there are discussions held to identify and
rectify if there is something lacking in the behavior of an employee, so that the next performance
appraisal would show some improvement from the employee, these discussions are often
referred to as development discussions, because they benefit both the employee and the
organization. These dialogues should always be open minded and candor, where people can learn
from their mistakes and rectify their behavior so that they can perform up to the organization’s
expectations.




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References

        Archer, 1998. Introduction to Performance Appraisal. Retrieved February 2, 2010 from
         http://www.performance-appraisal.com/intro.htm
        Margulies, Joyce 2004. Performance Appraisals. Retrieved February 2, 2010 from
         http://www.bnabooks.com/ababna/eeo/2004/eeo55.pdf.
        Patterson, Thomas F. 1987. Refining Performance Appraisal. Retrieved February 2, 2010
         from http://www.joe.org/joe/1987winter/a5.html.




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