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#1
09-18-2010, 01:59 AM
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Performance Appraisal
It is that time of the year when the past years performance of an organization is measured against defined budgets. It is an opportunity for an organization and its managers to reflect on what went right and what could have been done better. While it is important to assess the performance of an organization it is even more important to measure the success of its managers and employees. Measuring the performance of the employees is done with a performance appraisal. Performance appraisal is a powerful tool that allows an organization to align its resources in the right direction. It not only highlights the performance of the individual but also that of an organization as a whole. Let us take an example of Joginder Singh and Co, a Non Banking Financial Company in the business of consumer loans. As a business, they foresee themselves to be a Rs. 100 crore group by 2008. In order to achieve the organizational goals it is important to align the goals of its constituent elements i.e its managers and employees. Therefore the management of Joginder Singh and Co. decided to set the goals of business managers and functional heads in line with the organizational objectives. On periodical intervals everyone at Joginder Singh and Co. is appraised based on the defined targets and budgets. It’s an opportunity to review performance and set new benchmarks. It’s also an opportunity to review the organizations “Human Capital”. Organizations these days use the performance appraisal as a tool to align organization competencies and individual competencies. What started out as a method for justifying an employee’s salary in the 1980’s and 1990’s is now one of the most essential system of an organization. Performance appraisal is a structured formal interaction between the senior and the sub ordinate to determine what was set as a goal for the employee and what has actually been achieved. This appraisal can be done yearly or half yearly depending upon the needs of the organization. The outcome of this appraisal can be used as a tool to identify areas of improvement for the employees thus developing them as a true asset for the organization. There are many opinions on the usage and validity of this system. While many experts argue that the linking of the performance appraisal to the reward or incentive schemes limits the scope of developmental values of appraisals others feel that it is the life line of all organizations. The performance appraisal system of Alrose limited, a manufacturing unit of chemicals is a fine example that linking the performance appraisal to rewards might not be always fruitful. Alrose Limited does the appraisal of its employees once a year and the outcome of this appraisal leads to increments and promotions. Since all employees know that their increments rest on this exercise none of them come forward to define the problems that they face in their working which sometimes slows or reduces their productivity. Neither are the managers who are responsible for appraising the employees willing to address the need for areas of improvement and training. This has lead to fall in production, high rejection of products by the consumers and customers, high attrition and dissatisfaction amongst its employees. On the other hand modern experts strongly argue that performance appraisal must be linked to the reward system, which when used competently may lead to high success and profitability of the organization. When it is not done so the employees might feel that the whole system is a sham and not be motivated to perform better or higher. Jankidas Vallabh and Sons follows the practice of linking the appraisal results to the rewards and compensation. Rewarding an employee for his performance in the past year and addressing to his training needs may motivate him further to excel in his area of expertise. The result is energetic and loyal workforces aiming to achieve their goals in line with making the company perform better. An effective performance appraisal is one which is a conjunction of two systems: Evaluation and Feedback. The purpose of evaluation is to find out the difference between what was set as a target for an individual to achieve and what has actually been achieved. It brings forth the gap between the targets and the actual. The purpose of feedback system is that the assesee has to be informed about his or her performance and the assessor has to be made aware of the problems that the employee maybe encountering in the performance of their duties. One of the best ways to appreciate the performance appraisal systems is to look at it from the employee as well as the organizations perspective. What does the employee want out of this system? What does an organization want to achieve from performance appraisal? From the organization's viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability. The chief cause of organizational failure is "non-alignment of responsibility and accountability." In most organizations there is an overlap of work being carried out. This gives the employees a perfect chance of blaming the other person for any mistake or failures. Performance appraisal assigns roles and responsibility to one and all across the organization. In case where non alignment is not so severe the organization continues to perform albeit so poorly that it resembles a poorly maintained engine which is costly, ineffective and unreliable. We’d like to leave you with a thought….as a manager or an investor should you not know what your organization is doing and what is everyone’s role to make that happen. 
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#2
09-18-2010, 02:00 AM
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Performance appraisal is a distinct and formal management procedure used in the evaluation of work performance. It can be defined as a structured formal interaction between a subordinate and his superior, at a defined periodicity. During a performance discussion the previous period’s performance of the subordinate is examined and discussed. In addition the performance appraisal is also used to identify areas of training and improvement.
It is a review of his work and goals that are set for him by the company in accordance with the goals of the company. In many organizations, appraisal results are used, to help determine reward outcomes. It helps in identifying the “better performers” employee who will get majority of available merit pay increases, bonuses and promotions. It also helps in identifying the “poor performers” who may require some form of counseling or in extreme cases, demotion, dismissal or decrease in pay. Appraisals address a “whole person development” and not just job s****s or s****s required for promotion. There are 8 commonly used methods of Performance Appraisal.
Strengths of the negotiated performance appraisal are its ability to promote candid two-way communication between the supervisor and the person being appraised and to help the latter take responsibility for improving performance. In contrast, in the traditional performance appraisal, the supervisor acts more as a judge of employee performance, than a coach. By doing so, unfortunately, the focus is on blame rather than on helping the employee assume responsibility for improvement. Thus there are a whole lot of conventional trends that have changed the outlook of performance appraisals. Let’s analyze the new trends that are prevalent in performance appraisal in today’s corporate world: A valuable line management tool- today’s performance appraisal system is one of the principle tool, executives, line managers, and employees are able to use to achieve their collective goals. The change in application of performance appraisal has been enabled by software that provides management with a way to achieve its operational and strategic goals. These new applications provide a means of: Øcascading strategic and operational objectives down to ensure every person knows their part of the plan and executes their part of the plan, Ødeveloping the entire organization by setting specific development objectives for each individual, Øproviding managers with visibility of their team members, ØMultiple assessment methods like business objectives, development objectives, competency review, behavioral objectives and activity review. Full time performance appraisal - Annual appraisal is rapidly being replaced with Full time Performance Management. This trend provides a mechanism where both managers and employees are able to make relevant notes on performance related issues throughout the year. This function is also referred to as “performance diary”. When the appraisal is conducted, both are better prepared and have a full record of achievements or areas for development and coaching throughout the year. This feature also promotes an ongoing dialogue between managers and employees and ensures that both are on track to achieve their goals for the year. Let’s take an example of an IT manager to see how the performance diary is used in practice. One of his primary objectives is to “deliver all projects on time and on budget”. With the performance diary, the IT manager makes notes on each project all the way through the year. His own manager also makes notes about these projects. When both parties meet, they have an adequate data to draw from and can perform a meaningful review in a short amount of time. They can objectively develop a relevant performance rating derived from factual data. Therefore, the IT manager receives an objective review based on documented information as opposed to a subjective review based on memory. Less reliance on position descriptions- In years gone by, appraisals were often conducted against a position description. Today both HR and Line management are using performance appraisal system to drive performance requirements during future performance periods. The reasons behind this shift are: firstly, position descriptions are typically static. Secondly, position descriptions are only one element of the performance management spectrum. Thirdly, position descriptions are far out of date and line management cannot rely on their integrity to conduct performance appraisal. Low administration Performance Management- Early automated performance management systems were stand alone systems that offered several benefits but still suffered from high administrative input. These systems required HR to make duplicate data entries for all additions, changes and deletions to staff because entries had to be made in both the payroll system and the performance management system. Today, performance management applications can be fully integrated with the payroll system which means data entry is only required in payroll. All changes made to payroll are automatically made to the performance management application. This substantially reduces costs related to administration, enabling HR to assist line management with more strategic issues and matters of compliance. Link to strategy- Performance Appraisal systems are the vehicle for setting organizational objectives to organizational strategy. Combined with Full Time Performance diary functionality, performance appraisal system is now one of the most powerful methods for effectively directing organizational effort. Retention- Organizations have now made the link between performance appraisal systems and retention. In the war for talent, employees want to be appreciated and developed. The answer to this is frequent reviews and developmental planning. Automated Performance Appraisal addresses both of these needs. Succession planning- Performance appraisal systems can leverage the data collected to implement succession planning system to allow HR to realize successors for critical and non critical roles and also the high potential staff. A significant benefit of this is that the employees see the organization as a developing career path and this binds them closer to their organization and work. Remuneration management and salary packaging- By implementing aneffectivePerformance Appraisal system, organizations can now rank employees according to how well they achieved their business and development objectives. So remuneration now gains objectivity and is directed mainly towards those employees who are the top achievers. Thus Performance Appraisal system in its present form is a trend itself. Performance Appraisal system has progressed from appraisals and reviews to a valuable tool to link performance to strategy and to do this in an environment that is less onerous on HR than it has ever been in the past. In a nutshell performance appraisals are an important part of any corporate or organizational plan because it drives the manpower in various ways to work their best towards the success of the goals and targets.
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#3
09-18-2010, 02:00 AM
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Mr Shudeep Zara is a senior manager at Moon enterprises, a company specializing in developing telescopes. He has just been promoted to a role which involves people management and does not know how to go about a performance appraisal. He does not know the importance of a performance appraisal and what are the blunders he should avoid. Fortunately, we come to his rescue and answer his queries.
The employee Performance Appraisal enables the manager or the supervisor to identify, evaluate and develop an individual’s performance. It is a tool to encourage strong performers to maintain their high level of performance and to motivate poor performers to do better. It offers a chance for a supervisor and subordinate to have “time out” for a one-on-one discussion of important work issues that might not otherwise be addressed. Performance Appraisal is a medium that provides recognition for an employee’s good work. The existence of an Appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This has a positive influence on the individual’s sense of worth, commitment and belonging. Performance Appraisal offers an excellent opportunity, for a supervisor and subordinate to recognize and agree upon individual training and development. From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This data may be analyzed by variables such as ***, department etc. in this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization. Appraisal data can be used to monitor the success of the organization’s recruitment and induction practices. For example how well are the employees performing who were hired in the past two years? Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and given sufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the work force is improving staying steady or declining. Performance Appraisal not only results in a healthy interaction between the supervisor and the employee but also brings forth the problems of a job (if any), needs of a job, strengths and weaknesses of an employee, the training needs etc. The benefits of Performance Appraisal can be discussed under three headings. Benefits for the employee
The above if done in true spirit encourages employee satisfaction. Benefits to the line manager/supervisor/team leader
Benefits to the organization
In reality, many managers handle performance appraisals quite poorly. The result is not only an unpleasant meeting, but one where the manager and his/her staff members never quite appreciate the other’s point of view, and never appreciate the other’s point of view, and never quite settle an appropriate goals for the coming year. It’s almost inevitable that the staff members will end up less happy, motivated and less motivated than what she/he was before. To make performance appraisal an enriching experience for both the employee and his supervisors, the supervisor should remember not to make the following 5 mistakes:
This is a very commonly committed blunder. It’s where a manager falls to give someone adequate feedback on their performance during the year, and then dumps it on them in the performance appraisal meeting. Unfortunately, the feedback is almost always negative, so the employee ends up sitting there in shock- at best, wondering why his/her manager didn’t say something sooner, at worst, feeling unjustly victimized.
It’s very natural to remember and give greater weight to recent events rather than earlier events. This can lead to an inaccurate and unfair assessment when it comes to reviewing an employee’s performance. The manager must take notes of an employee’s work throughout the year.
Some manager’s feel uncomfortable giving negative feedback and consequently, can omit to give employees the constructive criticism they need to improve. And then there are other managers who are instinctively too negative, leaving the employee wondering if they can do anything right. As a manager, appraising an employee’s performance, he should give an honest opinion, so that the employee understands and appreciates the manager’s view.
Some managers can be too critical and neglect to provide any constructive advice on how an employee can improve. This doesn’t help the employee or the manager. In order to refrain the employee from feeling victimized, the manager should validate his criticism by giving reasons and improvement tips.
The final big mistake that the managers make in a performance appraisal is, doing too much talking and not enough listening. Performance Appraisal meeting are meant to be interactive- where the manager doesn’t simply rely on his/her own appraisal of the employees performance but also listens to the employee’s viewpoint and his feedback of the job. In truth, managers who seek to influence the performance of their employees need not always have the support of an elaborate corporate system. The most effective performance management approaches build on a strong communication system that is transparent; exemplifies high standards and trust. In a nutshell Performance Appraisal is a legitimate employee evaluation and feedback system which makes the system and working of a company more transparent and goal-oriented. It is not just a process to review an employee’s performance but also an opportunity that can give the employee, the required motivation to do better and the superior a feedback on the problems of a job (if any) and finally the organization gets rejuvenated employees to work their best.
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