There is " . . . a basic human tendency to make judgments about those one is working with, as well as about oneself” (Dulewicz). Appraising is unavoidable and universal. Even in a basic work structure, people will naturally, informally tend to judge the work of others. However; this natural human inclination can create problems in the work setting such as: motivational, ethical and legal. A structured appraisal system is needed in order to be lawful, fair, and justifiable.
Performance appraisal systems began as a means to justify income. It was used to decide whether or not the wages of an employee was proper. This process strongly associated appraisals to material outcomes. There would be a pay cut for unsatisfactory performance and a pay raise for superior performance. It was believed that a cut or raise in pay would, and should, provide enough motivation to improve or continue to perform well. Sometimes this system worked, but more often it fell short of expectations.
Researchers began finding that people with different levels of motivation and performance were getting paid the same. Experimental studies confirmed their findings. Pay was not he only element that had an impact on employee performance. Other aspects, such as moral and self-esteem, could also have a major influence. As a result, in the 1950's in the United States, the possible usefulness of appraisals as tool for motivation and development was progressively acknowledged. This is when the models we know and use today began being developed.
The Performance Management System – Beyond Appraisals
Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance.
Performance Management is a means whereby employee's work behaviors are aligned with the organization's goals.
[...] Criteria for a Good Appraisal System Validity Reliability Freedom from Bias Freedom from Rating Errors Leniency Errors Severity Errors Central Tendency Errors Halo Errors Practicality Performance Appraisal in Practice 93% smaller organizations(fewer than 500 employee) 97% larger organizations 62% small organizations use rating scales use MBO 51% large organizations use rating scales use essays, and about 17% use MBO. An Evaluation of Performance Appraisal Formats CRITERIA Format Employee Administration Research Cost Validity Development Personnel Ranking poor average good good good Standard average poor poor good average Rating Scale BARs good average poor poor average MBO excellent average poor average excellent Essay unknown good poor average unknown Summary of Appraisal Methods ADVANTAGES DISADVANTAGES TRAITS Inexpensive Potential for error Meaningful Poor for counseling Easy to use Poor for allocating rewards Poor for promotional decisions BEHAVIOR Specific dimensions Time consuming Accepted by employees Costly Useful for feedback Some rating error OK for reward / promotion RESULTS Less subjectivity error Time consuming Accepted by employees Focus on short term Performance reward link Criterion contamination Encourages goal setting Criterion deficiency Good for promotional decisions Performance Appraisal Methods 1.Ranking The term ranking has been used to describe an alternative method of performance appraisal where the supervisor has been asked to order his or her employees in terms of performance from highest to lowest. [...]
[...] Structure—they are standardized and can be easily compared and contrasted universally Equality—each employee is subject to the same process and rating, encourages fair treatment Easy—to use and understand, widespread acceptance for this approach Drawbacks / Disadvantages Unclear standards Halo effect Central tendency Bias Restrictions on the range of possible rater responses Differences in the interpretations of the meanings of scale items and scale ranges by raters Poorly designed scales that encourage rater errors Rating form deficiencies that limit the effectiveness of the appraisal Trait Relevance—a fixed system doesn't consider the difference of importance of traits in different positions Perceptual Errors—people in general see in others what we want to see in them Perceived Meaning—appraisers do not share the same opinion about the meaning of the selected traits Rating Errors—appraisers may be tempted to give out too many passive, middle ratings, regardless of the actual performance 6. [...]
[...] Suggest using appraisals performed by several board members in contact with CEO Self evaluation Subordinate evaluation Middle management and facility managers 360-degree appraisal Supervisor, peer, subordinate and customer evaluation Risks associated with implementation Employees unwilling to accept the system Error possibilities in evaluation Biases Rater errors Error of central tendency Leniency or strictness error Recency error Contrast error Similar-to-me error Cultural differences Cultural Characteristics Loyalty for the company Need for stability Lack of communication Suspicious attitude Jealousy Attitudes changing Training objectives To change the attitudes towards appraising To increase feedback level To encourage worker involvement To advance the quality of evaluation Training program Explanation of the plan's purpose Rating system mechanics o frequency o who will put them into practice standards of performance 4 basic considerations Strategic Relevance Criterion Deficiency Criterion Contamination Reliability Information about the risks Feedback training Bangalore Works Performance Appraisal The performance appraisal for Executives is done once a year, during March. [...]
[...] To assess the training and development needs of employees. To decide upon a pay raise where (as in the unorganized sector)regular pay scales have not been fixed. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. [...]
[...] 360-degree appraisal system PROS more comprehensive lessens biases quality of information improved feedback increasing employee self-development complements TQM initiatives 360-degree appraisal system - CONS administratively complex increases potential conflict training required time-consuming can cause resentment and intimidation invalid evaluations effect results 16. RESULTS/MBO (MANAGEMENT BY OBJECTIVE) METHOD The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. This appraisal method tries to measure employee performance by questioning the extent to which predetermined work objectives have been met. [...]
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