The evaluation process started in the late 1960s, in an informal way. Marketing executives who were called officers earlier were only accountable for the number of finished products sold. Production people were producing these finished products. They were also given a lot of authority and were considered as contributing directly to the organization. They were given most of the rewards by the top management or the owner of the company.
This changed in early 1970s and few professional companies like Larsen & Toubro Ltd., Voltas Limited, Pfizer Limited, Hindustan Lever Ltd, etc. introduced a system of their own for evaluation of performance of executive ranks. By the mid 1970s, the evaluation was done with more clarity. Against each goal or objective the performance quantity was specified and extended to most of the functional areas including maintenance and purchase. Finance and personnel were somehow excluded. For example, one of the objectives of purchase executive was to bring down the cost of procurement by say 1% or the no. of machines to be taken under preventive maintenance by the maintenance department.
By 1990s the entire department including finance and personnel were covered under evaluation of performance it was called ‘Performance Appraisal’. The junior level executive were given goals set by the immediate superior. The middle management and above have to set their own goals called Key Result Areas (KRAs). The KRAs are also given weight age according to their importance in the job of a middle management executive. At the end of the year the immediate superior and the employee sit together and by a process of Performance Appraisal adopted by the company, the scores are then worked out. The frequency is 6 months and in some companies even 3 months is not ruled out. Based on these scores and other discretionary factors of the immediate superior and management guidelines the subordinate is given a pay rise or jump.
In this the immediate superior and subordinate, review the appraisal and make plans to remedy deficiencies and reinforce strengths initially.
An appraisal is some sort of an interview itself. Interviews like these are often uncomfortable. Few people like to receive or give negative feedback. Adequate preparation and effective implementation are therefore essential.
Types of Appraisal Interviews:
Satisfactory – Promotable is the easiest interview: The person’s performance is satisfactory and there is a promotion ahead.
Satisfactory — Not promotable is for employees whose performance is satisfactory but for whom promotion is not possible. Perhaps there is no more room in the company. Perhaps he or she is happy as it is and doesn’t want a promotion. The objective here is to maintain satisfactory performance. The best option is usually to find incentives like extra time off, a small bonus, additional authority to handle a slightly enlarged job, and occasional appreciation.
When the person’s performance is unsatisfactory but can be corrected and improved. The interview objective is to layout and plan for correcting the unsatisfactory performance.
If the employee is unsatisfactory and the situation is not correctable you can usually skip the interview. You either tolerate the person’s poor performance for now, or dismiss the person. Here for such a case the immediate superior is questioned by the management as to how he had selected and confirmed the person or what he has done to improve his work etc. Such a case rarely occurs in professional companies.
How to conduct the appraisal interview?
Preparation is essential. Review the person’s job description, compare performance to the standards and review the employee’s previous appraisals. Give the employee at least a week’s notice to review his or her work, analyse problems, and gather questions and comments.
Find a mutually agreeable time for the interview and allow enough time for the entire interview. Interviews with lower level personnel like clerical workers and maintenance staff should not take more than an hour. Interviews with management employees and executives may take two or three hours. The interview must be done in a private place where there is no disturbance.
Employees in general are overly optimistic about what their ratings will be. Managers and employees know their rise in career progress and peace of mind may well hinge well on how they are rated. This alone makes it difficult to rate performance.
Most employers use graphic type rating scales to appraise performance but these scales are socially susceptible to several problems: unclear standards, halo effect, central tendency, leniency or strictness and bias.
The best way to fix this problem is to develop and include descriptive phrases that define each trait. That form spells out what measures like Role Model or Below Expectations mean. This specificity results in more consistent and more easily explained appraisals.
In performance appraisal the problem that occurs when an immediate superior’s rating of a subordinate is on one trait bias and the rating of that person on other traits is not done.
Experts define halo effect as the influence of a rater’s general impression on ratings of specific rate qualities. Being aware of this problem is a big step towards avoiding it. Supervisory training can also alleviate the problem.
A tendency to rate all employees the same way such as rating them all average.
Some immediate superiors stick to the middle when filing in rating scales. For example, if the rating scale ranges from 1 to 7 they tend to avoid the highs (6 and 7) and lows (1 and 2) they rate most of their people between 3 and 5. Central tendency basically means rating all employees as average.
It is better for the immediate superior to rate the subordinate based on the quantity of the task completed in terms of percentage of the task completed and significant contributions made and initiatives taken beyond the normal scope of work.