2. Establishing Standards of Performance:
Appraisal systems require performance standards, which serve as benchmarks against which performance is measured.
The standards set for performance must be clearly defined and unambiguous. They should be attainable by a normal employee.
To be useful, standards should relate to the desired result of each job. Performance standards must be clear to both the appraiser and the appraisee.
The performance standards or goals must be developed with the supervisors to ensure that all the relevant factors have been included.
Where the output can be measured, the personal characteristics, which contribute to employee performance, must be determined.
Goals must be written down. They must be measurable within certain time and cost considerations.
3. Communicating Performance Standards to Employees:
Performance appraisal involves at least two parties; the appraiser who does the appraisal and the appraisee whose performance is being evaluated.
The performance standards specified in the second step above are to be communicated and explained to the employees (both appraiser and appraisee) so that they come to know what is expected of them.
Feedback should also be taken to eliminate any confusion or misunderstanding. Feedback enables the manager to know that the information has reached the employees.
If necessary the standards may be revised or modified in the light of feedback obtained from the employees and evaluators.
As pointed out by DeCenzo and Robbins, “too many jobs have vague performance standards and the problem is compounded when these standards are set in isolation and do not involve the employee”.
4. Measuring Actual Performance:
After the performance standards are set and accepted, the next step is to measure the actual performance.
This requires choosing the right technique of measurement, identifying the internal and external factors influencing performance and collecting information on results achieved.
It can be affected through personal observation, written and oral reports from supervisors. The performance of different employees should be so measured that it is comparable.
Performance measures must be easy to use, be reliable and report on the critical behaviours that determine performance.
Performance measures may be objective or subjective.
(a) Objective Performance Measures:
Objective performance measures are indications of job performance that can be verified by others and are usually quantitative. Objective criteria include:
(i) Quality of production.
(ii) Degree of training needed.
(iii) Accidents in a given period.
(v) Length of service etc.
(b) Subjective Performance Measures:
Subjective performance measures are ratings that are based on the personal standards or opinions of those doing the evaluation and are not verifiable by others. Subjective criteria include:
(i) Ratings by supervisors.
(u) Knowledge about overall goals.
(iii) Contribution to socio-cultural values of the environment.
It should be noted here that objective criteria could be laid down while evaluating lower level jobs, which are specific and defined clearly. This is not the case with middle level and higher-level positions that are complex and vague.
5. Comparing Actual Performance with Standards and Discussing the Appraisal with Employees:
Actual performance is compared with the predetermined performance standards. Actual performance may be better than expected and sometimes it may go off track.
Deviations if any from the set standards are noted. Along with the deviations, the reasons behind them are also analysed and discussed.
Such discussions will enable an employee to know his weakness and strengths. Weakness is discussed so that employee takes interest in improving his performance. He will be motivated to improve himself.
The assessment of another person’s contribution and ability is not an easy task. It has serious emotional overtones as it affects the self-esteem of the appraisee.
Any appraisal based on subjective criteria is likely to be questioned by the appraisee and leave him quite dejected and unhappy when the appraisal turns out to be negative.
6. Initiating Corrective Action, if any:
The last step in the process is to initiate corrective action essential to improve the performance of employees. Corrective action is of two types.
(a) The one, which puts out the fires immediately. Employee can be scolded or warned so that he himself can make necessary attempts to improve his performance. But this is not enough and proper and
(b) The other one, which strikes at the root of the problem permanently. Through mutual discussions with employees, the steps required to improve performance are identified and initiated.
The reasons for low performance should be probed, take the employee into confidence and motivate him for better performance.
Training, coaching, counselling etc. are examples of corrective actions that help to improve performance. Counselling and coaching can do the magic.