Modern Methods of Performance Appraisal - MANAGEMENT BY OBJECTIVES - ASSESSMENT CENTRES - BEHAVIORALLY ANCHORED RATING SCALES

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AssessPeople Ltd. is a workforce assessment company, based at Chennai, India, and having wings at all metros across country. They are a pioneer in India to use internet as a platform to design, administer, and provide the results to organizations.

BEHAVIORALLY ANCHORED RATING SCALES

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioral statements describing important job performance qualities as good or bad (for eg. the qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents.

In this method, an employee’s actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.

A behaviorally anchored rating scale is an employee appraisal system where raters distinguish between successful and unsuccessful job performance by collecting and listing critical job factors. These critical behaviors are categorized and appointed a numerical value which is used as the basis for rating performance.

An Example of Behaviorally Anchored Rating Scale (BARS)

HUMAN RESOURCE ACCOUNTING METHOD

Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. HRA is the process of Assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages and salaries and training expenses.

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc. whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.

MANAGEMENT BY OBJECTIVES

The definition of MBO, as expressed by its foremost proponent, Dr. George S. Odiorne, “Management by objectives is a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individual’s major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.” Much of the initial impetus for MBO was provided by Peter Drucker (1954) and by Douglas McGregor (1960). Drucker first described management by objectives in 1954 in the Practice of Management. Drucker pointed the importance of managers having clear objectives that support the purposes of those in higher positions in the organisation. McGregor argues that by establishing performance goals for employees after reaching agreement with superiors, the problems of appraisal of performance are minimised. MBO in essence involves the setting outclearly defined goals of an employee in agreement with his superior. Carroll and Tosi (1973), in an extensive account of MBO, note its following characteristics:

The establishment of organisational goals.

• 1. The setting of individual objectives in relation to organisational goals.

  2. A periodic review of performance as it relates to organisational goals. Effective goal-setting and planning by top management.

  3. Organisational commitment.

  4. Mutual goal-setting.

  5. Frequent individual performance reviews.

  6. Some freedom in developing means of achieving objectives.

MBO is, thus, a method of mutual goal-setting, measuring progress towards the goals, taking action to assure goal attainment, feedback, and participation. It is a result oriented philosophy, enabling an employee to measure progress toward a goal which the employee often has helped to set. In the goal-setting phase of MBO, a superior and subordinate discuss job performance problems and a goal is agreed upon. Along with mutual goal-setting, a major component of MBO is the performance review session between the superior and subordinate, which takes place regularly to evaluate progress towards specified goals.

The key features of management by objectives are as under:

• 1. Superior and subordinate get together and jointly agree upon .the list the principal duties and areas of responsibility of .the individual’s job.

  2. The subordinate sets his own short-term performance goals or .targets in cooperation with his superior.

  3. They agree upon criteria for measuring and evaluating .performance.

  4. From time to time, as decided upon, the superior and .subordinate get together to evaluate progress towards the .agreed-upon goals. At those meetings, new or modified goals .are set for the ensuing period.

  5. The superior plays a supportive role. He tries, on a day-to-.day basis, to help the subordinate achieve the agreed upon .goals. He counsels and coaches.

  6. In the appraisal process, the superior plays less of the .role of a judge and more of the role of one who helps the .subordinate attain the organisation goals or targets.

The MBO process

MBO as a mutual goal setting exercise is most appropriate for technical, professional, supervisory, and executive personnel. In these positions, there is generally enough latitude and room for discretion to make it possible for the person to participate in setting his work goals, tackle new projects, and discover new ways to solve problems. This method is generally not applied for lower categories of workers because their jobs are usually too restricted in scope. There is little discretionary opportunity for them to shape their jobs.

MBO may be viewed as a system of management rather than an appraisal method. A successful installation of MBO requires written mission statements that are prepared at the highest levels of top management. Mission statements provide the coherence in which top-down and bottom-up goal setting appear sensible and compatible. MBO can be applied successfully to an organisation that has sufficient autonomy, personnel, budget allocation, and policy integrity. Managers are expected to perform so that goals are attained by the organisation. Too often MBO is installed top-down in a dictatorial manner with a little or no accompanying training. If properly implemented, it serves as a powerful and useful tool for the success of managerial performance.

MBO is a tool that is inextricably connected with team building so that the work commitment of team members can be increased and their desire to excel in performance can be inspired. It is important to have effective team work among a group of managers or a group of subordinates. The group of employees or subordinates must be looked upon as a team that needs to be brought together. Goals should be set by manager-subordinate pairs, and also by teams. The basic superior subordinate relationship in an organisation is in no way undermined in this concept of team goal setting. Lines of responsibility, authority, and accountability remain clear.

Customer feedback method

This method is truly one of the modern methods of performance appraisal system. Customer feedback method is used, especially for sales staff who deal with sales activity in the organisation. Under this method of appraisal system, customer feedback is directly linked with employee performance. This method of assessment could be unbiased and reliable since customers who are outsiders may give correct judgement about employee performance than the insiders who are superiors.

Companies like Cognizant and Wipro software solutions are using customer feedback method to assess the performance of their sales staff in order to hike salaries.

Some industry experts say placing a higher weightage on customer feedback may fail to motivate employees because customer feedback may vary from customer to customer. Depending on the current state of mind, psychology and perception of the customers may give different feedback for same degree of sales service.