Definition of Performance Appraisal
•It is the systematic evaluation of the individual with respect to his / her performance on the job & his / her potential for development.”
•Performance appraisal is a method of evaluating the behavior of employees in the work spot , normally including both the quantitative & qualitative aspect of job performance.
•“ Performance appraisal is a systematic appraisal of the employees’ personality traits & performance on the job & is designed to determine his contribution & relative worth to the firm.”
Objectives/ purpose of Performance Appraisal
•Facilitating Promotion decision.
•Encouraging Performance Improvement.
•Motivating Superior Performance.
•Counseling poor Performance.
•Determining individual Training & Development needs
•Improving overall Organizational performance.
• Facilitating Downsizing decision.
Performance Appraisal Process
•Job Analysis, Job Description.
•Establishing Standard of Performance
. •Communicating Performance Standard to Employees
•Measuring Actual Performance.
•Comparing Actual performance with Standard.
•Initiating Corrective Action
TYPES OF PERFORMANCE APPRAISAL & RATINGS
• 360 – degree appraisal
• General appraisal
• Balanced score card based
• Bell curve for performance appraisal
360 DEGREE APPRAISAL
• An appraisal made by top management, immediate superior, peers,
subordinates, self and customers is called 360 Degree Appraisal. Here, the
performance of the employee or manager is evaluated by six parties,
including himself. So, he gets a feedback of his performance from
everyone around him. This method is very reliable because evaluation is
done by many different parties. These parties are in the best position to
evaluate the employee or manager because they are continuously
interacting and working with him. This method is mostly used to evaluate
the performance of the employees. However, it is also used to evaluate
other qualities such as talents, behavior, values, ethical standards,
tempers, loyalty, etc.
MANAGEMENT BY OBJECTIVE /KRA BASED APPRAISAL BY SUPERIOR
• The thinking behind this modern method is based around both employee
and manager jointly setting goals to be achieved within a specific time
• It’s thought that when an employee is involved in the goal setting process
it’s more likely they’ll achieve their goals.
• This form of appraisal is a process rather than a one-off evaluation and it’s
all about planning and being proactive rather than reactive to events and
circumstances. It’s considered a fair way to appraise because it avoids
subjective bias, it’s not costly to do and it encourages self-awareness
which should in turn improve an employee’s ability to contribute well to
• Balanced Scorecard is a performance based metric which companies
used for strategic management. It improves the internal functions and
external results of the business.
• Meaning- Balanced scorecard basically connects dot between the
strategic part of the organization and the operational elements. It make
sure that mission, vision and core values of the organization are well
reflected in the objective, initiatives and measures taken by the
employees. It also checks the strategic performance is on the line to
strategic focus areas.
• The system uses three categories namely, top performer, average
performer and low performer employees based on the performance. The
bell curve performance appraisal system provides a systematic way to
identify the star performers and to link their performance with
appropriate reward. It also helps the HR department to identify the low
performing employees and further help them to improve their
performances. Some people may argue that the bell curve performance
appraisal system is a forced ranking system and it is not fair to relatively
rank the performance of employees. However many companies support
the use of bell curve Performance Appraisal System due to its accuracy
and utility in terms of improvement of productivity in the organization.
• Normal distribution curve is also known as the Bell curve. The fact that the
curve looks exactly like a bell it is been named as Bell curve. In statistics
and social science, the term bell curve is usually used.
• Grading system – EX, A,B,C,D
• Around reference point – Lower than expectation, Meets expectation,
• Comparative – Below average, Average, Above average
COMPENSATION & MOTIVATION PLAN
• Fixed salary + Incentive/variable ( based on achieving certain targets)
• Awards, Rewards, Recognitions ( Part of motivational plan)
• Promotions – Fast track, normal
• Achievers club , Sending for Management development programs(Motivational Plan)
• An award is a prize given to somebody for accomplishing something rare. Granted for
an incredible work, Achievement, Contribution in a specific field, Winning a contest or
• A reward is an acknowledgement given to somebody for his efforts.
Granted for Hardships, Honesty and Loyalty, Helping someone in need, Merit etc.
• Award is a huge prize for someone’s achievements. Reward is a small token of
appreciation for someone’s efforts. For example, you are the topper of the university –
you get a medal – that’s an award! … Award is thus more formal than reward.