Question

Q1) Evaluating the individual
• Reasons for performance appraisals
• Pitfalls in performance appraisals (intentional and unintentional inaccuracies in appraisals)
• Methods and instruments for appraisal
1) Ranking
2) Behaviorally anchored ranking
3) Behavior observation scales
4) Field review
• Source of appraisal (superiors, peer, subordinates, self, customers)
• Issues in designing an effective merit system in an organization.

word limit 2000 words and plagiarism free

Answer 1

Performance Appraisal:

Performance appraisal should be a positive experience and contribute to the overall welfare of the organization. If done properly, performance appraisal is a very effective tool to improve performance, productivity and for developing employees. It helps individuals to do better, raises self-esteem and motivation

Reasons for providing appraisal

(1) to provide adequate feedback to each person on his or her performance;

(2) to serve as a basis for modifying or changing behavior toward more effective working habits; and

(3) to provide data to managers with which they may judge future job assignments

Pitfalls in Performance Appraisal

If the performance appraisal isn’t done right, they can create a negative experience. Some reasons could be,

Managers aren't trained or prepared

Many managers are never trained on how to properly conduct a performance review so they don't know how to plan for and deliver an effective review.

Managers don't evaluate employees accurately

Managers may make certain unconscious rating errors when writing and delivering a performance review. One of the most common errors is the "recency effect," where managers may base their opinions on the most recent performance of an employee rather than their performance throughout the year.

Managers are too vague

Many managers tend to use vague language during the performance review such as: "You're doing a great job" or "You could do better," instead of citing specifics in terms of what the employee did well or not well in terms of their performance. Without knowing the specifics of what their boss liked or didn't like, employees aren't provided with useful feedback that they can use to improve their performance nor do they understand why they didn't receive the pay increase or promotion they wanted, if the review is tied to compensation or advancement.

Managers surprise their employees.

Some managers never bother to let their employees know when their performance is slipping, and during the performance review, the employee is surprised with negative feedback, a low performance score, a missed promotion opportunity, and possibly even a threat of termination. Not providing feedback throughout the year (on both good and bad performance) is a common mistake managers make.

Managers aren't supported by solid processes and systems.

Without an accurate way of measuring performance, a clear process, and methods that make delivering a performance review easy, managers have to work within defective and inefficient systems. System constraints that can make it difficult for managers to deliver an effective performance review

Methods of performance appraisal:

• The 360-Degree Appraisal.
• General Performance Appraisal.
• Technological/Administrative Performance Appraisal.
• Manager Performance Appraisal.
• Employee Self-Assessment.
• Project Evaluation Review.
• Sales Performance Appraisal.

Popular performance appraisal tools

• Kissflow HR Cloud. Kissflow HR Cloud's powerful performance management module aligns individual employees and teams with business goals and strategies efficiently.
• BambooHR.
• SAP SuccessFactors.
• Workday HCM.
• Zoho.
• Performance reviews.
• 360-degree feedback.
• Rewards and recognitions.

1. Ranking Method

The ranking system requires the rater to rank his subordinates on overall performance. This consists in simply putting a man in a rank order. Under this method, the ranking of an employee in a work group is done against that of another employee. The relative position of each employee is tested in terms of his numerical rank. It may also be done by ranking a person on his job performance against another member of the competitive group.

Advantages of Ranking Method

1. Employees are ranked according to their performance levels.
2. It is easier to rank the best and the worst employee.

Limitations of Ranking Method

1. The “whole man” is compared with another “whole man” in this method. In practice, it is very difficult to compare individuals possessing various individual traits.
2. This method speaks only of the position where an employee stands in his group. It does not test anything about how much better or how much worse an employee is when compared to another employee.

B) Behavior observation scales or Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees or the job. The manager maintains logs of each employee, whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the worker’s performance.

Advantages of Critical Incident techniques

1. This method provides an objective basis for conducting a thorough discussion of an employees performance.
2. This method avoids recency bias (most recent incidents are too much emphasized)

Limitations of Critical Incident techniques

1. Negative incidents may be more noticeable than positive incidents.
2. The supervisors have a tendency to unload a series of complaints about the incidents during an annual performance review sessions.

C) Behaviorally anchored rating scale

Behaviorally anchored rating scale (BARS) systems are designed to emphasize behaviors, traits, and skills needed to successfully perform a job. A typical BARS form consists of a left column has a rating scale and a right column contains behavioral anchors that reflect those ratings.

Advantages:

• Reduces the potential for biased responses
• Focuses on specific, observable behaviors
• Provides specific and standardized comments on job performance

Downsides:

• Can be time consuming and complicated to develop
• Depends on accuracy and appropriateness of “anchor statements”
• Must be updated as job requirements change

Sources of Performance Appraisal:

Sources of employee appraisal have emerged such as self-appraisal, peer review, upward appraisal.

Self-appraisal: Self-appraisal is the technique of evaluating your own performance and then discussing this with line manager. Self-appraisal is useful when managers seek to increase an employee’s involvement in the performance appraisal process.

Peer review: Peer review has been in existence since 1920s. The system is based upon the assumption that co-employees who performance similar tasks are more knowledgeable about the work than a manger and are in better position to evaluate work.

Upward appraisal: Employees by virtue of their frequent dealing and interactions with their manager can evaluate them better.

Benchmarking: Benchmarking is a continuous process of measuring products, services and practices against the recognized competitors with the objective of rectifying performance gaps. Meaningful benchmarking should be between organizations with similar goals and characteristics in order to deliver effective outcome from employee appraisal.

.Merit pay

Merit pay directly links an employee's individual effort and ambition to a reward. It encourages employees to meet and exceed company goals, which increases the company's bottom line. It can also work towards fostering a strong, highly productive workforce with a high rate of employee retention

Some businesses are not conducive to measuring employee contributions so clearly and definitively, making it difficult to establish an effective means for merit pay.

Concerns about favoritism: In many offices, the value of any particular employee is subjective and ultimately determined by a supervisor. Without clear measurables, others easily could dispute the outcomes when merit pay is determined. Even in offices where there are measurables, outcomes can be challenged. For example, some might argue that the salesperson with the best sales had an advantage because he had the best sales territory.

Uses time and resources better spent elsewhere: The amount of time and energy that organizations invest in an attempt to make performance measurable for merit pay, including developing competencies, measurements, baselines for performance, and so forth, is better spent on delivering service for customers.

Communication troubles: Given the limitations of metrics, the ability of a supervisor to communicate to each employee the value of his or her contribution, and what superior performance entails that makes it worthy of merit pay consideration, is an ongoing challenge.

Merit pay may create problems in employee relationships due to jealousy, fear, favoritism, negative competition, and insecurity.