Introduction

The process of HRD helps the employees to acquire and /or develop technical, managerial and behavioral knowledge, skills and abilities and moulds the values, beliefs and attitudes necessary to perform present and future roles. The process of performance appraisal helps the employee and the management to know the level of employee's performance compared to the standard/pre­determined level.

Performance appraisal is essential to understand and improve the employee's performance through HRD. In fact, performance appraisal is the basis for HRD. It was viewed that performance appraisal was useful to decide upon employee promotion/transfer, salary determination and the like. But the recent developments in human resources management indicate that performance appraisal is the basis for employee development. Performance appraisal indicates the level of desired performance level, level of actual performance and the gap between these two. This gap should be bridged through human resources development techniques like training, executive development, etc.

Meaning

Performance Appraisal is the process of evaluating an employee’s performance of a job in terms of its requirements. Performance appraisal involves assessment of the actual performance of an employee against what is expected of him/her. Such assessment is the basis for awarding promotions, effecting transfers or assessing training needs.

Definition

According to Flippo, “Performance Appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job”.

According to Heyel, “Performance Appraisal is the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employed, for purposes of administration including placement, selecting for promotion, providing financial rewards and other actions which require differential treatment among the members of the group as distinguished from actions affecting all members equally”.

Characteristics/Features of Performance Appraisal

• It is different from merit-rating   as it is wider than merit-rating

• It aims to develop rational bases for personnel decisions

• It tries to find out how well the employee is performing the job and tries to establish a plan for further improvement

• It is not a past oriented activity rather it is a future oriented activity showing employees where things have gone wrong, how to set everything in order, and deliver results using their potential in a proper way

• It is not job evaluation

• Its focus is on employee development. It forces managers to become coaches rather than judges

• It may be formal or informal

Evolution of Performance Appraisal 

• Formal appraisal of an individual’s performance began in the Wei dynasty (A.D. 221-265) in China where an Imperial Rater appraised the performance of members of the official family.

• In 1883, the New York City Civil Service in USA introduced a formal appraisal programme shortly before World War I.

• The US Army adopted the man rating system for evaluating military personnel. Hourly paid workers were evaluated during 1920-1930 on the basis of rating scores in Industrial Units.

• Earlier appraisal system was termed as merit rating.

• In 1950, performance appraisal techniques came into picture and were applied on technical, professional and managerial personnel.

• From 1950 to till date tremendous changes have been made in the concept of performance appraisal.

Need for performance appraisal

Performance appraisal is needed in order to

• Provide information about the performance ranks basing on which decision regarding salary fixation, confirmation, promotion, transfer and demotion are taken

• Provide feedback information about the level of achievement and behavior of subordinate. This information helps to review the performance of the subordinate, rectifying performance deficiencies and to set new standards of work, if necessary

• Provide information which helps to counsel the subordinate

• Provide information to diagnose deficiency in employee regarding skill, knowledge, determine training and development needs and to prescribe the means for employee growth provides information for correcting placement

• To prevent grievances and indisciplinary activities

 Purpose of performance appraisal

Purpose of performance appraisal can be broadly classified into two types viz., administrative purpose and development purpose.

1. Administrative purpose

• Document human resource decisions with regards to performance and its related issues

• Determine promotion of employees

• Determine transfer and change in job assignment

• Identify poor performance areas of employees

• Decide retention or termination

• Decide on layoffs

• Validate selection criteria relating performance scores to selection test and interview scores

• Meet legal requirements

• Evaluate the performance of training programmes

• Plan for changes in human resource requirements

• Decide on salary and reward issues

2. Developmental purpose

• Provide performance feedback to all concerned

• Identify individual skills, core competencies, strengths and weaknesses

• Recognize individual performance levels

• Assist the employees in setting goals/identifying goals on unit level/departmental level and organizational goals

• Evaluate goal achievement of employees

• Identify individual training needs

• Determine organizational training needs

• Reinforce authority structure

• Allow employees to discuss concerns

• Improve communication

• Provide a forum for leaders to help the subordinates

The Process of Performance Appraisal

The performance appraisal process follows a set pattern and it consists of the following steps

1. Establishing Performance Standards

The appraisal process begins with the setting up of criteria to be used for appraising the performance of employees. The criterion is specified with the help of job analysis which reveals the content of a job. This criteria should be clear, objective and in writing. It should be discussed with the supervisors to ensure that all the relevant factors have been included. Where the output can be measured the criteria is clear. If work performance cannot be measured the personal characteristics which contribute to employee performance must be determined. Who is to do the appraisal and how frequently appraisal is to be done should also be decided.

2. Communicating the Standards

The performance standards specified in the first step are communicated and explained to the employees so that they come to know what is expected of them. The reactions of employees to the standards should be obtained.

3. Measuring Performance

Once the performance standards are specified and accepted, the next stage is the measurement of actual performance. This requires choosing the right technique of measurement. Identifying the internal and external factors influencing performance and collecting information on results achieved. Personal observations, written reports and-face-to-face contacts are the means of collecting data on performance. The performance of different employees should be so measured that it is comparable.

4. Comparing the Actual with the Standards

Actual performance is compared with the predetermined performance standards. Such comparison will reveal the deviations which may be positive or negative. Positive deviations occur when the performance exceeds the standards. On the other hand, excess of standard performance over the actual performance represents negative deviation.

5.     Discussing the Appraisal

The results of the appraisal are communicated to and discussed with the employees. Along with the deviations, the reasons behind them are also-analyzed and discussed. Such discussion will enable an employee to know his weaknesses and strengths. Therefore, he will be motivated to improve himself.

6.     Taking Corrective Actions

Through mutual discussions with employees, the steps required to improve performance are identified and initiated. Training, coaching, counseling, etc. are examples of corrective actions that help to improve performance.