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Effectiveness of Performance Appraisal System

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The whole principle of this study report is to identify and appreciate the value of performance appraisal system, from the staff point of view, in command to notify a developed system that will be executed in Sidmak Laboratories (India) Pvt. Ltd. The first chapter gives a general idea of the entire dissertation. It will present background to the research, give explanation exactly what the matter is that needs research, validate the project, and present a summary of the methodology that will be used.

Background to the research

Sidmak India was established in 1984 in technical collaboration with Sidmak USA. Sidmak India has successfully adopted various technology platforms under this collaboration and continues to develop additional technologies.

Sidmak Laboratories (India) Pvt. Ltd. is a pharmaceutical corporation contains developing ability at Gujarat, India. Sidmak point towards at improved safety and ease for human life through a dedicated excellence in manufacturing recommendation drugs, specifically oral dosages. The organisation is permitted by W.H.O. as per GMP rule and by local FDA as per Drug and Cosmetic Act. The organisation has skill in the production of constant release solid dosage mode. Sidmak manufactures both pharmaceuticals as well as nutraceuticals products. The organisation preserves highest level of quality by sticking on to cGMP and cGLP compliance rule in manufacturing products and meeting national and international requirement.

Working with Sidmak has given me good experience about how to work in an organisation. It has also given me knowledge about the flow or work from one department to another department. Thought the work flow is very smooth in Sidmak, I personally feel that it can be more productive and beneficial to the employee and the organisation if company adopts proper appraisal system.

Research Questions

The whole research dilemma relates to the reliability and effectiveness of performance appraisal systems. The literature review will sketch many comments in relation to the plan and function of such systems. It was transparent from administrating the literature review that a large amount had been written regarding the effectiveness of performance appraisal system.

The goal, therefore, of this dissertation is to realize and appreciate the effectiveness of performance appraisal, from the staff point of view.

Four objectives have been recognised, and by undertaking these unified objectives, a comprehensive literature review, and new practical research, answers to the problem should be known. The objectives of this research are:


The research pattern take on is interpretive. The interpretive model is an idealistic location which is related to with understanding the way we humans build logic of the world surrounding us (Saunder at al, 2007). The purpose for this method are set out in describe in the methodology.

The study method is qualitative. The methodology is extra related with human questions than pure science. The literature review does not place out a specific theory, but does set up a theoretical structure to assist the gathering and study of data, to respond the research issues.

The preferred research tactic is a case study. The practical data will be established on qualitative interview techniques. This will present the utmost transform of successful research, as it will quantify human reaction. It can also be accomplished inside the timescale of the project.

Semi-structured interviews and utilise of secondary data from comprehensive Employee estimation Survey will be incorporated in the research methods.

The primary source includes the personal experience which I had experienced while working with Sidmak Laboratories (I) Pvt. Ltd. and the secondary sources includes information gathered through surfing the internet, information available on intranet site on knowledge management, different study materials, and sample performance appraisal forms obtained from reliable resources.

The research will permit evaluation between groups of employees, to find out if duration of service or superiority is a issue. Privacy will be guaranteed to participants and the information will be edited to look after the identification of persons before it is pass around to the organisations management board.

Outline of the chapters

Chapter 1

This chapter presents a summary of the entire project. It puts out what the research area is, splits it down into a sequence of objectives for the project, and associates this to the background of the firm that is to be researched in depth.

Chapter 2

This section reviews literature related to the research purposes. It constructs a theoretical establishment upon which the research is build. It starts with an assessment of what performance is, and why it is measured. The vital parts of a valuable and efficient performance appraisal system consist of recognize its foundations and the important steps that set the foundation. It is also essential to make out the objectives and advantages of this system. For profit realization it is required to recognize Key Result Areas (KRAs) i.e. goal setting and observe resulting performance so that a significant relationship between performance, reward and development of necessary skills, through counseling, can be set up. And a lot of thinking, suggestions and bright ideas are required to be done to develop a sensible appraisal system by assessing available techniques and execution process. The section then takes into account how performance appraisal fits into the parent control of performance management. A study of literature including appraisal systems and their application follows, and this consists of reference to new appraisals. The above data will then direct to the creating of the conceptual type that will be build up through the research.

Chapter 3

This section explains the methodology that will be employed to collect the primary data. It will sketch the research model selected, put out the research strategy, and also give explanation for the selection of the methodology. Ethical problems will also be focused in this chapter.

Chapter 4

This section will put forward the findings of the research. Due to the diverse ways used to research the issues, some of the findings will be put out in text, and some will be displayed in tables. The data will be examined in research of the following chapter, which sets out the conclusions.

Chapter 5

This section will put out conclusions on the subject of the research objectives through connecting the research findings, with the findings of section 2. The chapter will talk about the limitations of the research and place opportunities for further research that will ahead make clear the problem area.

Chapter 6

Based on the conclusion of section 5, this section involves advices and suggestions for new performance appraisal system.


This beginning section has familiarized the reader to the organisation, and quoted its new transformation. The section has exposed the need, to build up a performance culture, and contained by that, a full-bodied performance appraisal system. The research question and objectives have been put out, together with the methodology to be used to deal with the objectives.

Structure of thesis

Literature Review


This section reviews literature related to the research objectives. It develops a theoretical base upon which the research is established. It begins with an examination of what performance is, and why it is measured. The section then takes into account how performance appraisal fits into the parent regulation of performance management. A literature review covering appraisal systems and their application pursues, and this consists of reference to the system in place. The above information will then guide to the construct of the conceptual framework that will be experienced through the research.

Performance defined

The Oxford English dictionary classifies performance as the “accomplishment, execution, carrying out, and designing out of everything ordered or undertaken”. Performance is a subject not only of what people get, but how they attain it (Armstrong and Baron, 2005). Performance is a multidimensional concept, the dimension of which depends on a kind of issues (Bates and Holton, 1995). Performance indicates both behaviours and findings. Behaviours are also outcomes in their particular right and can be evaluated apart from answers (Brumbach, 1988).

From the explanation, and understandings above, it can be disputed that performance is not only about productivity, it is also related with acts and behaviours established to get given goals. This subject will attribute strongly through the study.

Performance Management features

The main series of performance management are:

Recognition of strategic objectives, background of department / team objectives, activities acknowledged / performance table developed, output decided, monitor / study of performance through appraisal, verify development needs and assign rewards Williams (2004).

For personals, this needs they should be capable to respond the following questions which are as follows:

  • What is projected of me?
  • How am I doing?
  • What shall I do subsequently?
  • What assist will I need?

(Macauley and Cook 1994)

Very small of the literature study links this to team performance. Outstanding exceptions are Armstrong and Baron (1998) who grieve for the need of notice paid to team performance, and Brumbach (2003) who claims strongly for the value of team management, and puts forward the above four questions could be adapted.

Performance Management Cycle

The existing model of performance management is put out below. It is very much personal based and permits for no measurement of team performance.

Armstrong and Baron (1998) and Brumback (2003) grieve for the need of attention paid to the management of team performance and this will be looked more in this research. The series is as follows and is like to the normal model as planed above.

  1. Recognise strategic objectives
  2. Build up team plans
  3. Develop personal goals and outputs
  4. Performance appraisal
  5. Personal development plans / Rewards

The concept seems reasonable, but relevance will be tested in describe throughout this research. The form is planned by HR Department and no formal teaching is given, apart from a briefing notice distributed to managers. Williams (2002) suggests teaching being integrated into the cycle to make sure reliability of application.

Conceptual Framework


The idea of performance appraisal dates back to the First World War and was then called “Merit Rating Program”. More than a period of time, this thought has gone through many modifications. Once an employee has been chosen, taught and boarded on his responsibilities, it is time for performance appraisal. What is performance appraisal? Why do firms need to procure up this task?

It is the course of evaluating the performance and qualifications of the members of staff in phrase of job necessity, for administrative reasons such as placement, selection and promotion, to give financial rewards and other acts which need differential management among the members of a group as distinguished from acts influencing all members equally (Carl Heyel).

Performance Appraisal

Performance appraisal is more and more measured one of the most significant human resource practices (Boswell and Boudreau, 2002). The subsequent part will show how appraisal, although only one component of the wider system explained above, is vital to the success of Performance Management (Piggot-Irvine, 2003). The Oxford English Dictionary classifies appraise as “estimate the worth or attribute of”. Connecting this to performance, Bird (2003) recommend performance appraisal is the measurement of what we produce and how. Corporately, the firm was seen to be unsuccessful, hence the alteration, yet 98% of all staff were scaled as good or excellent. This puts in weight to the aspect of Brumbach (2003) who recommends that the appraisal system can be seen as a false annual practice.

There is a lot research which recommends that appraisal is not carried out well, or welcomed in some cases. Performance appraisal is a yearly formal procedure of channel that generates anxiety and worry in the most experienced, battle hardened managers (Roberts and Pregitzer 2007). Due to the one-sided characteristic of appraisals, it is not astonishing there has been a lot written on partiality, inaccuracy and natural unfairness of most systems (DeNisi 1996). A number of studies presenting worldwide disappointments with appraisal, in specific citing research of 50,000 respondents that discloses only 13% of employees and 6% of Executives believe their firm's appraisal process is useful (Bellehumeur and Dupuis 2009). A most important trouble in Towers Perrin Performance process practices (Brown 2001). He mentions need of teaching for managers is mainly significant. The key findings were;

  • Managers do not take the method sincerely
  • Insufficient try from all involved
  • Awful statements and training obstruct effectiveness
  • The systems are too distinctive, remote and disruptive, and
  • Evaluation can be contradictory and dishonest

Present appraisal practice motivates most staff to a level similar to a visit to the dentist (Wilson and Western 2001)

The above analysis appears ruthless, and the research to pursue will test these beliefs within Sidmak. Even though the criticism and doubt, performance appraisal looks surrounded into the public and private sector. It is here to live. Managers and employees carry on believing performance appraisal systems whilst accepting they are filled with factual error (Bellehumeur & Dupuis 2009). The following part seems at the sections of performance appraisal.

The purpose of performance appraisal

A starting peak for a complete literature review on performance appraisal should be what are the goals and purposes? Thinking on the advantages of appraisal systems has moved on. Early literature, best established by Stewart and Stewart (1987), mentions the advantages of appraisal system, but these were primarily from the organisation point of view. Boice and Kleiner (1997) recommend the overall objective of performance appraisal is to allow an employee recognise how his or her performance evaluates with the manager's anticipations. Again, this is a one dimensional observation. Fletcher (2006) takes a more stable observation, recommending that for performance appraisal to be productive and beneficial, there requires to be something in it for appraiser and appraise. Youngcourt, Leiva and Jones (2007) recommend that the general purpose of performance appraisal leans to be directed at the measurement of personals, and take into account that this focus is not enough.

From the organisation point of view, a profitable and doing well performance management is the vital key to success of corporate aims. It is argued above that performance appraisal is the essential part of performance management, and so it must be that for an organisation, the intention of performance appraisal is the skill and ability of corporate goals. Caruth and Humphreys (2008) add to this viewpoint by recommending it is a business requirement that the performance appraisal system consists of characteristics to meet the organisational necessities and all of its stakeholders with management and staff. Bach (2000) recommends that one of the basic reasons of performance appraisal systems is to draw out corporate fulfillment.

In spite of this, the majority of the literature reviewed for this research focuses on the objectives of performance appraisal from the personal point of view, mainly concentrating on measurement of personal performance, recognizing training and allocating rewards. Weightman (1996) concentrates on the personal when citing the aim of performance appraisal, recommending it can be utilised for many reasons, together with; reward, discipline, coaching, counseling, raising morale, measuring achievement of targets and outputs, recognizing development opportunities, improving upward and downward communication, reinforcing management control and choosing people for promotion or redundancy. Fletcher (1993) mentions a study where 80% of respondents were unhappy with their appraisal system, in specific with diversity of objectives. Randell (1994) also focuses a multiplicity of principle together with; valuation, auditing, chain planning, training, controlling and inspiration. Rees and Porter (2003) mention that a general problem is that systems have too many goals. They add that there can be inconsistency between goals, but do not increase on this point. Based on the examinations of others, maybe it is the contradiction between control and development that is apparent. What is reliable with all literature is that goals of performance appraisal are a mixture of backward looking/forward planning. The above covers a wide series of objectives, and asks for the question if appraisal is attempting to accomplish too much. The research will decide whether that range of objectives is related from the employee point of view.

Yet again, from the personal point of view, Simmons (2002) illustrates together a range of resources, arguing that a forceful, performance enhancing and reasonable performance appraisal system, which increases the commitment of professionals, is a crucial factor in achieving a good return on an organisations “intellectual capital”.

The important function of performance appraisal is to clarify pay and other financial compensation (Murphy and Cleveland 1995). The matter of outcomes of performance appraisal, such as pay, will be addressed afterward in this literature review and in the research. Performance appraisal can decrease role uncertainty (Pettijohn et al 2001)

The most apparent reason for appraising a personal is to make safe its improvement (Harrison and Goulding 1997). It pursues that securing performance improvement for all personals, will increase wider organisation performance. General to almost all reason of performance appraisal is the model of improving performance developing people.

In general, some commentators directs on organisation aims as the key purpose, many concentrates on personal performance informant. In a new organisation it is recommended that a system that meets both organisation and personal requirements is vital.

From the above, the following table lists the recognised points of performance appraisal.


Achievement of Organisation Goals

Setting of individual objectives

Evaluation of individual performance against objectives

Improvement of Performance

Allocation of Rewards

The performance review procedure gives a motivation for constant improvement. The method is intended to supply the following benefits:

  • An open review of performance at standard periods
  • A focus for arrangement about setting apparent performance objectives which are connected to the corporate and business strategy
  • A analysis of development requires and the setting of development action plans
  • A relation to the annual salary review

Performance appraisal systems

As with the majority organisations, Sidmak has a recognised Performance Appraisal system surrounded within the performance and planning cycle. There should always be ultimate written and communicated process for performance appraisal (Allan 1994). Developing an appraisal system that precisely imitates employee performance is a difficult job (Boice and Kleiner 1997). A doing well performance appraisal system is one that has resulted from hard work, watchful ideas, planning and integrated with the approach and needs of the organisation (Caruth and Humphreys 2006). This will be observed during the experimental research.

A large variety of techniques are used to carry out performance appraisals, from the simplest of ranking methods, to complex ability and/or behavioural secured ratings systems (Snape, Redman & Bamber 1994). The quality of an organisations appraisal system is often indication on its resources and skill (Redman & Wilkinson 2001). In association with different performance appraisal schemes, the Sidmak system can be measured simplistic. This is likely because of the irresponsibility of the organisation and a total of two staff in the HR department.

There is a risk that highly characterized schemes can be too practical, with the result that conclusion of paperwork, or marking boxes, becomes the key driver (Rogers 1999). It is crucial that employees are also involved in the planning of the system, for practical, operational and psychological purposes (Harrison and Goulding 1997). Sidmak has not involved staff in growth and progress of the system but has a chance to get in hold with staff in updating any system.

An integral part of performance management system

Successful and efficient performance management needs a good arrangement of face-to-face supervisor-employee communication. By getting familiar with the subordinates, a supervisor can guide them onto a path of higher efficiency and optimized output. Long-term profitable and doing well business owners sight performance appraisal as a process of getting to know the people who work for them. It is the most considerable and crucial means for an organisation. It gives information, which makes easier in taking important judgments for the growth of an individual and the organisation.

Thus, one stage of the yearly performance management cycle is performance appraisal, the method of reviewing employee performance vis-à-vis the place beliefs in a sensible way, documenting the review, and supplying the review orally in a face-to-face meeting, to improve performance standards year over year through sincere and productive feedback. In the practice management insists on to reinforce the employee's potency, recognise improvement areas so that one can work on them and also set extended objectives for the coming year.

It is made up of the following two procedures both of which are qualitative subject to human prejudice - observation and judgment.

The factors of performance are a mixture of technical proficiency and behavioral characteristics. The concluding attains a high level of importance with regards to prospective appraisal.

Concept of Performance Appraisal

The idea of performance appraisal can be make clear with the analogy demonstrated below:

The head of the key stands for the individuality of the employee. No two employees are similar.

The ring stands for the management's necessity.

The shaft stands for the communication among the employee and the organisation, the transmission of the duty and the response from the performer.


Decades ago, the member of staff used to be appraised by his department leader or person in charge. The department leaders used to communicates the employee feedback and comments to the direct supervisor of the employee. Thus the feedback was kept private in character. As time passed by, the direct supervisor started appraising his subordinate's performance and transfers his private information to the department leader. These were the times when the employee was not integrated in his appraisal method. The assessments used to be taken by his boss relating to his pay hike, promotion etc. So we can say that the system was non-transparent.

The existing method of performance appraisal is much wider and gives a number of scopes for self-appraisal by the employee. The self-appraisal goes along by a joint discussion with superior and then a conclusion is taken by the department leader on his promotion, pay hike etc. The comment linking to the performance is directly given to the employee. Thus performance appraisal development has gone all through the stage of non-transparency to transparency.

In this transparency stage, a performance appraisal can be described as a structured official communication between a subordinate and supervisor that generally takes the form of a periodic questionnaire, in which the work execution of the subordinate is observed and talk about, with a view to make out weak point and strong point as well as opportunities for progress and skills growth.

In day to day interfaces, whether an organisation agrees to or not the value of performance appraisal, whether it takes on a formal appraisal system or not, top management is frequently appraising the performance of its subordinate managers. The last are doing the same to their personal subordinates. They are doing so as performance appraisal, official or in official, remains at the heart of management.

Organizing is active process, related to the present and the future, and whereas performance appraisal, as usually used has been a static rating of an employee linked almost completely with the past. In recent times, as some management were recognizing that “rating” by itself had very partial value; they start on to appreciate that administration had changed into an art. They saw that “management by hunch” could no longer be accepted, and that dimensions-no matters how elusive were necessary for the future development of the art of administration.

The necessity for measurements give birth to a number of “systems” of managing which attempts to pertain measurements of a variety of sorts to the different aspects and phases of the manager's job. A number of these systems support on the better performance appraisal methods for their measuring methods or at least for initial point for measurement. In some cases, these systems stretched the meaning of performance appraisal from a simple rating to take in the whole theory of management with all its components.

Foundations of Performance Appraisal

Performance appraisal reviews how well employees have been doing their jobs and what they must do to be better in their responsibilities. It trades with the subjects of the job and what they are anticipated to accomplish in each part of their work. Following are the groundwork in performance appraisal process.

Job profile

Job explanation focuses more on the definition of duties the jobholders has to complete. It contains lists of reporting relationship and usually covers the overall objectives of the job. It points out how a personal's job will add to the achievement of goals of a team or a department and in the end the mission of the organisation.


An objective explains about, which has to be proficient, capable and skillful. Objectives classify what organisations, functions, departments, teams and personals are anticipated to attain.

There are two types of objectives:

  1. Work of equipped objectives: It passes on to the result to be attained or the input to be made to the success of team, departmental and corporate objectives.
  2. Development objectives: It is related with what personal should do and gain knowledge to develop their performance and/or their knowledge, skills and competencies.


Competencies refer to be behavioral scope of a job. It is the behaviour needed of employees to carry out their work acceptably. Competencies are what employee takes to a profession in the kind of different types and levels of behaviour. They rule the process features of job performance.


Increasingly, organisations are locating out the principal values that they believe should preside over the behaviour of all their employees. Values declarations may be organised which define principal values in areas such as care for customers, interest for employee, competitiveness, quality, progress, innovation.

Three essential steps for effective performance appraisal

The procedure of getting to recognise the employee who does job for the organisation includes three main steps. i.e. training, evaluation and review.


Successful training is the execution of a system in which each person in the workplace is geared towards development and expansion. It includes a hands on tactic in which the employee is confident to appraise himself or herself under the leadership and direction of the appraiser.

How it works? First, the appraiser involves the employee in the appraisal procedure. When an employee realise that his or her judgment of other employees is taken into account, he or she also realizes that everyone else judgment counts just as much. This not only allows the employee and develops relations in the workplace, but it promotes higher efficiency as well. This interactive method is made done with the leadership of the appraiser. Carefully administering honor coupled with positive appreciation keeps the workforce on its toes.


The most excellent ways for employee assessment are relied on results and behaviour. While carrying out performance appraisal based on employee's characteristic personality is quite common, the outcomes are repeatedly subjective and unsatisfactory. A result-based method to performance appraisal is by far the cleanest, most intention method of tackling the difficult job of assessment. It uses a ranking system to assess productivity within a given period of time. If an employee makes a definite number of sales in a specified week, he or she can be rated by absolute worth as well as ranked against other employees. The review of behaviour is closely joined to productivity. The speed of work, enthusiasm to put in overtime and talent to work with others all add to overall productivity.


The review process should, again, employ the methods of interactivity. Before meeting down together, the appraiser should offer the employee opportunity to review him or herself. This not only allows the employee, but also keeps a lot to time and possible opinion during the real discussion. Primarily the appraiser should walk the employee during the procedure. The doing well supervisor starts out with a general idea of why the review session is desirable. Then the supervisor guides the employee down a point-by-point record of every features of the job. In each case, the employee should be given an opportunity to explain his or her accomplishments and deficiencies. The supervisor should constantly complement this with added insight. While admiring and applying assessment the supervisor keeps authority throughout the review and in fact the whole appraisal process.

Designing an appraisal process

Before knowing the method of appraisal, the following phrases are reworked.

Performance submits to an employee's achievements of allocated jobs.

Performance appraisal is the methodical report of the job-relevant strengths and weaknesses of a personal or a group.

Appraisal period is the duration of time during which an employee's work performance is scrutinize in order to make a formal report of it.

Performance management is the complete method of watching an employee's work in relation to job necessity over a period of time and then developing an appraisal of it. Information obtained from the method may be feedback with the help of an appraisal interview to decide the significance of personal and work-group performance to organisational purposes, get better the usefulness of unit and make better the work performance of employees.

Crafting an appraisal program poses a number of questions, which need answers. They are:

  1. Whose performance is to be assessed?
  2. Who are the appraisers?
  3. What should be evaluated?
  4. When to appraise?
  5. What problems are encountered?
  6. How to solve the problems?
  7. What methods of appraisal are to be used?

Whose performance should be assessed?

Noticeably the answer is going to be employees. When we say employees, it is personals or the whole teams. The appraisee can be described as the personal, work group, division or organisation.

All Sidmak staff, including the Chief Executive Officer, is appraised, making it a comprehensive method. This also takes in all part time staff. Bach (2000) declares the development in the growth of performance appraisal to cover a big proportion of the employees. Most of the cases in Sidmak, the line managers are the appraiser apart from the Chief Executive Officer who is appraised by the chairman. The basis is that the line manager is best positioned to carry out appraisals because of the quantity of contact and greater knowledge and skills (Fletcher 1999).

Who are the appraisers?

Appraisers can be direct superiors, professionals from the human resource department, inferiors, peers, committees, clients, self-appraisals or a combination thereof.

What should be evaluated?

One of the steps in crafting an appraisal program is to formatting the evaluation criteria. It is clear that the criteria should be associated to the work. The criteria for measuring performance can be:

  1. Quality & quantity
  2. Timeliness
  3. Cost efficiency
  4. Need for supervision
  5. Interpersonal collision
  6. improvement & creativity
  7. Problem examination
  8. Customer direction
  9. Market direction
  10. Entrepreneurial drive
  11. Negotiation skills etc

This is not a comprehensive list, but a number of other parameters too can be added depending on profession requirements and organisational requests.

When to appraise/rate?

The most common rating plans are semi-annual and annual. New employees are rated more often than older ones. Some practices call for ratings:

  1. Annually as per company carry out
  2. After first 6 months of employment
  3. Upon promotion or within 3 months after promotion
  4. When the job occupied has been reevaluated up
  5. Upon particular request, as when the employee's salary is under the average pay

What are the problems related to performance appraisal?

A complete performance appraisal is ready when the assessment is free from prejudices and idiosyncrasies of the surveyor. There are many issues of appraisal that show the way to failure of the system.

Negative attitude toward performance appraisal:

There is a big population of supervisors who are unpleasant and tough or indifferent to the performance appraisal methods and/or do it badly if they do it at all.

Hostility from the appraiser:

The appraiser responds indifferently to the appraising method because he thinks that it is a waste of time. At times they believe that the system has nothing to do with their own requirements and it lives to nourish the personnel database.

Hostility from the appraisee:

Hostility from the employee at the receiving end occurs because they believe Performance Appraisal is just another system in the hands of the managers to exercise their control and organise privileges. They think that the data composed will make the most of as evidence against them. In some situations appraisee even have a belief that the result of the performance assessment is programmed by the management or their superiors and the procedure is done only as a formality, due to which appraisee do not have interest in the complete appraisal process.

Halo error:

Under this sort of error, one marked features or latest accomplishment or failure of the appraisee (either favourable or unfavourable) may be acceptable to govern the appraisal for the complete year.

Logical error:

This is a dangerous drawback for the unproven appraiser. He is very frequently liable to arrive at comparable evaluations in respect of qualities that look logically related.

Constant error:

When two appraisers pace an appraisee their ratings may be distinctive. One may demonstrate reliable humanity by giving him lofty scores, the other my steadily rate him by giving little scores.

Central tendency:

It is also known as “Average Ratings”. Here, the appraiser looks after to keep away from giving honest views to the question asked or the appraiser is in uncertainty or he has not enough information or he simply wants to play secure and don't annoy anyone.

Mirror-image error or projection error:

This mistake happens when an appraiser anticipates his own qualities, skills, and values in an appraisee. The appraiser may wrongly think that if the appraisee is good he has to be similar him (appraiser) because the appraiser judges himself as the standard.

Contrast error:

This mistake happens in the sequencing of marks. If manager performers are ranked first, average performers are ranked down, if inferior performers come first, the average performers will be ranked more up.

Biases of position, sex, race, religion and nationality:

There is a trend to rank the occupant at a senior position more positively than the person in a lower place. Similarly marking can be partial founded on sex, religion and nationality too.

Lack of skill in conducting appraisal discussion:

Carrying out Performance Appraisal discussions need assured skills and training.

How to solve the appraiser's problems?

The most excellent way to conquer the problem is to give training to the appraiser. Training can assist get better the appraisal method to the amount that distortion occurring due to appraiser mistakes such as halo, leniency, central tendency and bias are minimized.

Factors that help to improve accuracy:

  1. The appraiser has gone under the process and is well-known with behaviors to be appraised.
  2. The appraiser has standard actions calling for progress and expansion.
  3. The appraiser has a checklist to get hold of the evaluation on job-related information
  4. The appraiser is concerned of individual biases and is eager to take charge to decrease their effects.
  5. Rating gains by appraisers of one unit or organisation are reviewed and evaluated with those by other appraisers.
  6. The appraiser concentrates on performance associated behaviours over which he has enhance power than on other aspects of assessment.
  7. Higher stages of management are detained accountable for evaluating all ratings.

Factors that may lower accuracy:

  1. The appraiser ranks only when administrative acts are considered.
  2. The appraiser is not capable to state herself/himself honestly and explicitly.
  3. Appraisal systems, procedures and instruments fail to hold the appraiser.
  4. The appraiser is uninformed of causes of ranking errors.
  5. The appraiser has to rank the individuals on factors that are weakly defined.

Techniques/methods of appraisal to be used?

There are different kinds of methods for measuring the quality of an employee. Each kind of methods has its own advantages and disadvantages. The earlier build up methods, which are still being used, are Traditional Methods that are non-transparent in nature, while other new methods are transparent in nature. All of the procedure has its own design of appraisal form.

Other sources of feedback

Research on the success of 360 degree appraisal is inconsistent. The precursor of Sidmak, experimented with 360 degree appraisal, but it is not now part of the official procedure. Mabey (2001) accomplished that the quantity of practical research on the impact of 360 degree appraisal is very little, in spite of increasing popularity and fame. Williams (2002) increases concerns about 360 degree feedback, citing that it carry with it ethical, logical, political and resource problems, and has the aptitude to do extra damage than good. Armstrong and Baron (1998) quote research by a variety of organisations where expanded feedback on behaviour of persons against a list of main competencies has improved development plans. Kline and Sulsky (2009) recmmended that it has been recognised for some time that performance feedback from various resources has been exposed to guide to more consistent ratings and better performance developments. However, in the same research they quote Love (1991) stating that equal rankings are highly undependable.

Self appraisal

Survey verification collected by Williams (2002) recommends that use of it is increasingly gradually. There is very small observed evidence to recommend it is having any effect, and this is an area valuable of further examination in organisations where it does take place. Atwater (1998) recognised some of the possible benefits of self appraisal, below, but fell short of evaluating their value.

  • Increases employees awareness of fairness of the procedures
  • Decreases potential for personal bias by giving further rating
  • Gives a useful means to increase communication in the procedures
  • Helps to make clear differences of belief about performance requirements
  • Increases loyalty to development plans and new aims.

Rees and Porter (2003) advise self appraisal can have a part in prearranged feedback, as people can be their own harshest opponent.

Frequency of performance review and feedback

Even as performance management is a nonstop process, appraisals are broken up activities (Rao 2004). Most organisations have at least an annual evaluation. Salh (1990) recommends that regular reviews are needed to ensure growth is being made on development objectives. Sidmak needs a formal annual review with a fewer formal six monthly review. This is supported up by monthly casual one to one session between manager and staff member.

Training and guidelines

A significant element of building up an effective performance scheme is training for those individuals engaged as raters (Boice and Kleiner 1997). Evans (1991) recommends that training should slot in coaching and counseling, conflict determination, setting performance norms, connecting the system to pay and giving employee feedback. Williams (2002) also recommends training being included into any scheme to make sure it is used time after time and effectively. Pigott-Irvine (2003) quotes research that recommends training for carrying out appraisal should include all elements, such as values, purpose, objective setting, observation skills, interviewing and report writing. Rees and Porter (2003) also quote the requirement for training of use of the scheme to be included, covering the main skills appraisers want. Training for employees should also be measured (Williams 2002). Farr (1993) notices the need for the requirement of training to be given to employees to get feedback in a non-defensive way. Bretz, Milkovich and Read (1992) also recommend that a lack of training of appraises may grounds discrepancies between expected and real performance of the procedures, and related satisfaction. Overall, training should add the success of the Performance Appraisal system and guide to greater organisational success (Cook and Crossman 2004). There is no proper training process Sidmak appraisers or appraises, and this is measured as a big weakness.

The performance appraisal interview

The appraisal interview should be held in an open and none threatening way to help decrease nervousness or doubt appraises may have (Harrison & Goulding 1997). Faith between appraiser and appraise is an essential issue. Performance appraisal could be observed as another form of management control (Bach 1998). This is yet more important when there appears a lack of enthusiasm or inability to assemble objective information to notify the appraisal process (Pigott-Irvine 2003). There is no necessity or mention within the Sidmak to gather and arrange evidence of performance. Groundwork is also measured important. Finding time to assume appraisal can be difficult, mainly in organisation such as Sidmak, where the speed of work is anxious. However, where appraisal is going good, it is often because management has accorded it suitable priority (Pigott-Irvine 2003).

Sidmak is missing in what could be enclosed in an appraisal interview. This literature review discloses a whole host of problems that could/should be covered in the interview. Redman and Wilkinson (2001) quoted research of the practice of performance appraisal. The reason of setting out this table below is to demonstrate the variety of topics discussed and exposed in the research.

Range of issues covered in appraisals


Achievement of work objectives

Future work objectives

Personality or behaviour

Skills and competencies

Training and Development needs

Career aspirations

Pay or benefits

Job difficulties

How you might improve your performance

How your supervisor might help you improve your performance

Personal or domestic circumstances

Source: Redman and Wilkinson 2001

What is appraised?

Definitions of Performance Management previous quote the requirement to line up individual and organisational goals. It is only when the principle of the organisation are decided, and activities and products are clear and calculated, can there be competent use of resources (Flynn and Strehl 1996). Armstrong and Baron (1998) explain how many organisations now use SMART criteria (specific, measurable, agreed, realistic and time related) for performance measurement. It is not at all times done good. Rogers (1999) brings to light that setting objectives and goals remain the primary activity of performance appraisal, but in practice is badly carried out, with very small regard for ensuring that organisation and personal objectives are united as closely as possible. Of more concern is that no-one, apart from appraiser and appraise, is assessing the appropriateness and possibility of aims set. Setting aims which are idealistic and not appropriate may decrease a staff member's personal dedication. Transparency of role is also vital, and could be researched through the process. If people do not know what is predicted of them, there is a good chance that their behaviour will not play the game to expectations (Youngcourt, Leiva & Jones 2007). Simmons (2002) quoted research on appraisal in universities which recommended that their appraisal was not mainly successful in increasing precision of job responsibilities.

Many organisations are traveling towards inclusion of ability depth. Competencies are significant issues which contribute to high levels of personal performance and therefore organisational efficiency (Armstrong 1999) and so there must be a well built relation to the competencies staff have and their skills to achieve their set objectives. Provisions for employee competencies that are essential could be usefully included into appraisal systems (Rees and Porter 2003). Fletcher (1993) in an overview of appraisal method, take notice of an increasing number of organisations using competency related appraisal joint with a result-oriented appraisal, which he accomplished was a positive way forward. Redman and Wilkinson (2001) recommend that the appraisal of competencies has a number of benefits, most importantly; being clever to direct employees towards areas where there is possibility for behaviour. Some of the competencies measured are place out in the table below.

Examples of competencies measure

Competency area


Business thinking

Business awareness


Problem solving

Working with colleagues

Team working


Building relationships


Developing self and others

Inspiring people

Building confidence


Persuading and influencing


Communicating and presenting

Achieving Goals

Delivering results


Improving performance

Rating systems and fairness

The ranking system for Sidmak staff is basic. Staffs are considered to have either exceeded objectives (rating 1) met objectives (rating 2) or missed objectives (rating 3). The below table sets out the definitions:

An objective exceeded is equal to rating 1 and the definition is:

To score an overall Objectives Exceeded rating it is likely that there is a considerable fact of constantly high performance across all the areas of work covered by the objectives.

Sometimes this may be easy to measure. For example if an objective was accomplished much easier than timescale at a lower cost and with a better result.

It is also likely that an ‘exceeded' ranking will also indicate that the individual achieved despite considerable difficulties. For example, there may have been unexpected difficulties that the personal overcame in order to keep progress.

An objective met is equal to rating 2 and the definition is:

To achieve an overall ‘Objective Met' ranking it is likely that proof of achievement covers all the work areas for which objectives were set. This would reveal meeting all objectives.

In some circumstances an objective may have stopped to apply owing to circumstances beyond the personal's control. In such cases you should consider facts of other performance achievements during the year which have to be included in the review.

An objective missed is equal to rating 3 and the definition is:

The ‘Objectives Missed' rating is likely to apply when there is fact of under performance across the work areas for which objectives were place, provided the individual can be held personally responsible for the lack of result.

Care is required here. For example, in the management of projects with high stages of complexity, it is necessary to recognise the elements for which the person is accountable, especially if the project has a mix of organised activities and engages many people.

Equality of the technique and procedure is measured important. Study by Cook and Crossman (2004) recommended that the recognised fairness of the procedure itself contributes to overall perception of equality. The concern of accuracy is performance appraisal is a problematic one (Atwater and Yammarino 1997). Many studies on performance appraisal concentrate on the fairness/appropriateness of ranking procedures. Earlier research by Henderson (1984) recommended that almost all employees are enormously suspicious of performance ratings. Later work by Harrison and Goulding (1997) exposed results of research into ratings within libraries. Their work recommended that bias can be a difficult where appraisers and appraises are colleagues. They additional recommend that managers may be uncomfortable with analyzing staff they work closely with, and a drive towards centralized ranking could apply. Giving assessment in a positive way can be a very delicate subject (Rees and Porter 2003). Bascal (1999) argues that managers keep an eye to keep away from confrontation by scoring generously. More recent study recommends that the ratings procedure can be perceived as unfair annual ritual. Employees themselves generally do not want listen to bad news, particularly about themselves (Ashford 1999).

Performance, Pay and Development

The conclusion of the appraisal is either in the form of reward by way of increase in pay, extra bonus or incentive and/or promotion, or by way of not influencing any increase in pay, refusing promotion etc. This gives appearance to the idea of Performance Related Pay (PRP).

Performance associated pay is not an easy choice. Before boarding on its introduction the following issues should be taken into explanation.

a. Matching the culture:

A doing well PRP systems need to match the culture and principal values of the organization. It is only by knowing and working with the culture that it is likely to develop schemes.

b. Linking PRP to the Performance Management process:

The focus when linking pay to performance requires being one of the matters which come out from the business development method such as profitability, productivity, cost control, research initiatives, product and market development and usually increasing stakeholder value.

c. Balancing performance measures:

The performance events used as a source for rating must include a balanced mix of both input issues (skills and competences) and output issues (performance and contribution). The evaluation upon which pay conclusions are made should be found not only on performance in achieving goals, contribution to organizational achievements and the levels of skill and expertise achieved, but also on the degree to which the behavior of personals hold corporate values in such areas as teamwork, total quality management, customer services, improvement, etc.

d. Flexibility:

PRP planning should allow for some flexibility in the criteria for incentive and the method of payment.

e. Teamwork:

Poor PRP systems can create a lot of single-minded personals. The significance of teamwork should be identified in structuring the scheme and in defining decisive success factors and performance statistics. Personals should be aware that achieving their goals at the expense of others is not measured competent performance.

f. Avoiding short-termism:

To keep away from the danger of PRP focusing attention on short-term outcomes at the cost of more important longer-term objectives, long-term as well as short-term goals should be place wherever suitable and short-term objectives should be talked in their overall context.

g. Involvement in the design process:

The design of PRP systems is usually an iterative procedure - trying and testing thoughts on measures and structure with those who will finally be concerned in the scheme. It is also a precious learning procedure, which can throw up basic strategic and business matters. Those due to contribute in the system should have an input into approving important success factors and performance indicators equally for themselves and the organization.

h. Getting the message across:

PRP gives a very commanding form of communication. To get the right messages from corner to corner, the following question will have to be dealt with:

i. Assess reasons for PRP

1. Why do we want to establish PRP?

2. What, realistically do we presume to get out of it?

ii. Assess readiness for PRP

1. Is PRP correct for our culture?

2. Do we have the performance management and other procedures in place needed for successful PRP?

3. Are the approaches of management and other employees in support of PRP? (An outlook survey can be held to recognised opinions).

4. Do the people related with managing PRP have the needed skills and resources?

5. Is PRP likely to make a important enough influence on performance to align the costs of developing, introducing and operating the system?

iii. Decide whether or not to set up PRP

1. Does the result of the above evaluation point out that PRP is right for the organisation?

2. If no, what are the options? There are many. Consider performance associated team pay, organisation-wide profit sharing or profit related pay plans, gain sharing, the use of incentive or bonus plans, concentrating more on the motivational views of performance management, job re-design to increase inspiration, performance-linked training more intensive management coaching and training to make better leadership abilities, process re-engineering to develop organisational performance and productivity.

iv. Brief, consult and involve employees

1. How should employees be notified of the organisation's objectives and intensions regarding the introduction of PRP?

2. How do we minimize anxiety about PRP through this briefing process?

3. To what level and how should we discuss and involve employees?

v. Design scheme

1. What criteria should be used to verify PRP awards? It can be an suitable mix of:

a. Input criteria associated to the skills and knowledge brought to accept on fulfilling role responsibilities

b. Process criteria linked to the behavioural competencies used effectively in achieving results

c. Output performance signs related to the accomplishment of objectives and meeting performance necessities as set out in statements of principal accountabilities or main jobs

d. Outcome contribution signs which measure how outputs play a part to the achievement of team, departmental and organisational goals and how the behaviour of personals support company values

2. To what amount will it be possible to define the criteria in the main jobs for which PRP will function?

3. Are performance measures accessible for these criteria, which will allow fair and reliable assessment to be made?

4. What form of ranking scheme should be used?

5. How are we going to make sure that ratings are fair and reliable?

6. What are our policies should be on the size of payments in connection to performance, contribution, skill and ability?

7. What should our policies to be on the rate of succession and any limits to succession within pay ranges?

8. Does the organisation want to make condition for performance connected lump sum bonuses for special accomplishment or constant high level performance at the top of a range?

9. Should PRP assessments be separated in time from performance reviews managed as part of the performance management procedures?

10. What rating, pay increase and financial plan principles are going to be concerned to managers implementing PRP in their departments?

11. Should performance matrices be used? If so, how should they be raised?

12. How PRP will be observed and its effectiveness be assessed?

13. How the cost of PRP would be organised?

14. What is the program for mounting and introducing PRP?

vi. Brief and train

1. How the organisation is going to inform and train line managers on the PRP system?

2. How the organisation is going to inform employees in common on PRP so that they understand how it will function and how they will benefit?

vii. Implement

1. How the practice should be started? Even after proper care some unforeseeable problem will take place. It is often wise to start with a direct scheme, probably at management level so that they recognise the principles, benefits and problem before applying PRP to the people for whom they are accountable.

2. How to monitor the initial stages? It is necessary to keep closely in touch with how things are going so that difficulties can be expected or dealt with swiftly when they arise.

viii. Evaluate

1. Have clear aims been established for the system the progress towards which can be measured and assessed?

2. How to carry out a ongoing monitoring and assessment process?

3. Who is responsible for assessment and taking any corrective action that may be needed?

4. What points should be covered?

i. Evaluating performance related pay

It is necessary to assess the acceptability and cost effectiveness of PRP. The following questions should be answered.

To what level have the defined objectives of PRP been attained?

How much have been paid out under the format?

What differentials have come out between high/average performers over, say, 2-3 years?

What measurable profits has PRP produced in the shape of improved organisational, team and personal performance?

How do managers consider PRP? Do they, for example, consider that it is operating fairly?

To what level have rewards been connected to main and measurable areas of performance? Are rewards meeting people's beliefs?

Does performance management method provide sufficient support for PRP?

Does the organisation want to keep PRP in its present form? If not, what are the options?

j. Performance related pay (PRP) in practice

There is no doubt the system of PRP must be made to suit the culture of the organization. This either means that the on hand culture can be receptive to the competitive and personal elements of PRP or the culture has to be changed. PRP can be used as part of the change procedures but, on its own, it is unlikely to be powerful enough to prove successful.

k. Performance related pay (PRP) - a judgment?

Does Performance Related Pay work? Most experience is that better use of performance pay results in improved organizational performance as calculated by return on capital employed, mainly when applied to managerial pay.

Finally, all research has approved that employees consider positively the concept of PRP but refuse quite strongly that it acts as a motivator for them in practice, and are mostly vital of the resulting procedural and distributive justice. It can be accomplished that employees may work harder, in a more focused way and get better outputs through a PRP schemes which is under printed by a strong performance management scheme but employees may do this through a mixture of need and fear, rather than a genuine desire to do so.

Performance and Development Planning (PDP)

PDP is a procedure for managers that supports personal performance with organisation goals and makes sure focus on the development of ability and aptitude company-wide. PDP is an essential step in their corporate effort to appoint and enable employees to deliver their involvement to their business. Also, PDP serves to enable employees to recognise and understand personal opportunities for growth that are aligned to present and future business challenges.

PDP procedure enables each employee to realise his or her true value-added to the organisation.

Steps for successful execution of PDP are:

  • Schedule the PDP meeting and describe pre-work with appraise.
  • The appraise does self-appraisal, writes business and personal developmental aims on the PDP form and collects required documentation, including 360º feedback results, when available.
  • The appraiser gets ready for the PDP meeting by clearly defining the main significant outcomes required from the appraisee's job within the framework of the organization's calculated proposal.
  • The appraiser writes business and individual developmental objectives on the PDP form in preparat

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