SCIENTIFIC MANAGEMENT/RATIONAL ECONOMIC

VIEW
• F.W. Taylor, known as the Father of Scientific
Management
Scientific Motivation
• Taylor believed that the best way to increase output Study of through
was to improve the techniques used by workers, Physical Differential
requiring workers to adjust to management. Work Pay
• People are primarily motivated by economic
considerations. Efficiency
through
Prescriptions
SCIENTIFIC MANAGEMENT/RATIONAL ECONOMIC
VIEW
Criticism of Taylor’s Scientific Management:
• Dehumanizing workers, treating them as mere
production factors.
• Simplistic assumption about human behavior referred to
as the "rabble hypothesis".
• Assumed workers were primarily motivated by the need
for money, but in reality, workers seek a variety of needs
HUMAN RELATION MODEL
• Elton Mayo’s Hawthorne Studies Conducted in the 1920s and
early 1930s at Western Electric Company.
• Found that management needs to consider human affairs in
addition to technological methods to improve output.
• Mayo’s studies revealed that workers are not solely motivated by
money; social contacts at the workplace are crucial.
• Managers can motivate employees by acknowledging their social
needs and making them feel important.
• Employees were given more freedom to make decisions about
their jobs.
• Increased attention was given to informal work groups, and more
information was provided to employees about management’s
intentions and operations.
HUMAN RELATION MODEL
• In the Scientific Management Model, workers accepted authority
in exchange for higher wages.
• In the Human Relations Model, workers accepted authority
because supervisors treated them with consideration and
addressed their needs.
• Criticism of the Human Relations Model:
o The model is criticized for its undue reliance on social contacts
at work for motivating employees.
o While social contacts are desirable, they alone may not always
effectively motivate workers.
MASLOW'S HIERARCHY OF NEEDS
MASLOW'S HIERARCHY OF NEEDS
• The prominence of these needs follows a
hierarchy where once a lower need is
satisfied, the next higher need becomes
prominent.
• Exceptions exist where individuals prioritize
higher needs over lower ones for achieving a
higher goal.
HERZBERG'S TWO-FACTOR/MOTIVATION-HYGIENE THEORY
• The theory distinguishes between factors
that lead to job satisfaction and those that
prevent job dissatisfaction.
• Motivational Factors: Related directly to
the job itself. Their presence creates
motivation, but their absence does not
cause dissatisfaction.
• Hygiene or Maintenance Factors: Related
to the job environment rather than the job
itself. Their absence causes dissatisfaction,
but their presence does not necessarily
create motivation
ERG THEORY
• Unlike Maslow’s theory, the
ERG theory suggests that
these three needs can operate
simultaneously.
• “Frustration regression,"
where individuals revert to
satisfying lower-order needs if
higher-order needs are
frustrated.
ACHIEVEMENT MOTIVATION
THEORY
• Developed by David C. McClelland and his
associates.
• Achievement: They are driven by the
ability to achieve goals rather than
monetary rewards. High achievers prefer to
work independently.
• Power: The actual achievement of goals is
secondary to the means by which they are
achieved. Found in positions of influence
(military, civil services)
• Affiliation: They have a strong desire for
interpersonal ties and prefer working with
those they have close relationships with.
VROOM’S EXPECTANCY MODEL
• Developed by Victor H. Vroom, the expectancy model is also known as instrumentality
theory, path-goal theory, and valence-instrumentality-expectancy theory.
• The theory posits that motivation is determined by the expected rewards resulting from
job performance.
• It is based on the assumption that individuals are rational and will choose actions that
maximize perceived value.
VROOM’S EXPECTANCY MODEL
ADAM’S EQUITY THEORY
• Emphasizes the importance of perceived fairness in the
workplace.
• Individuals are motivated when they perceive that the rewards
they receive for their contributions are fair and equitable
compared to others.
• Motivation to act arises when a person compares their
input/outcome ratio to that of another person.
• Inequity: Perceived when a person's input/outcome ratio is not
equal to that of the comparison group.
• The greater the perceived inequity, the stronger the motivation
to reduce it.
ADAM’S EQUITY THEORY
• To reduce inequity, a person may:
o Alter their inputs (e.g., work harder or reduce effort).
o Alter their outcomes (e.g., seek higher pay or benefits).
o Distort inputs or outcomes cognitively (e.g., reinterpreting the value of
their contributions).
o Change the comparison group.
o Leave the job or field altogether if the perceived inequity persists.
• The theory highlights the significance of fairness in employee motivation,
engagement, and retention.
• Organizational fairness in HR practices is seen as crucial for maintaining
productivity and ensuring employee satisfaction.
PORTER AND LAWLER MODEL
REINFORCEMENT THEORY
• Developed by B.F. Skinner and his associates, the
Reinforcement Theory of motivation is based on
the "law of effect.“
• The theory suggests that an individual's behavior
is a function of its consequences, meaning
behaviors are selected based on their outcomes.
• Operant Conditioning: A technique used to
modify behavior through reinforcement, either by
rewarding desired behaviors or by punishing
undesired behaviors
• Individual behavior can be predicted based on
past experiences, as people tend to repeat
actions that have previously led to positive
outcomes.
REINFORCEMENT THEORY
MOTIVATION TO WORK
Common Incentives
• Knowing theories of motivation is not enough;
managers must apply practical techniques to motivate Money
employees.
• Job Enlargement: Involves expanding a job horizontally
Appreciation
by adding more tasks at the same level of skill and
responsibility. Job enlargement
• Job Enrichment: Redesigns jobs to be more
challenging, less repetitive, and to include greater Job enrichment
responsibility.
• Job Rotation: Involves shifting employees between Job rotation
different jobs at the same level to vary their work
experience. Participative management

Quality of work life

ROLE
• A role refers to the set of expected behavior patterns attributed to someone
occupying a given position in a social unit.
• Roles encompass both rights and obligations and are shaped by the position or
status a person holds in life.
• Position is a relational and power-related concept, while role is an obligation
concept important for integrating individuals within an organization.
• Role Stagnation:
o Occurs when an individual outgrows a previous role but fails to adapt to a new
role effectively, leading to role stress.
o Example: A senior clerk promoted to a junior officer may experience role
stagnation if unable to manage the new responsibilities.
ROLE
• Inter-Role Distance: Conflicts arise when an individual occupies multiple
roles that may conflict, such as balancing organizational roles with
personal roles (e.g., manager and father).
• Role Set Conflicts: Occur due to conflicting expectations from different
individuals within a role set. Forms of role set conflicts include:
o Role Ambiguity: Lack of clarity regarding role expectations, often
occurring in new or changing roles.
o Role Expectation Conflict: Conflicts due to differing or conflicting
expectations from superiors, peers, or subordinates.
• Role Overload: A stressor caused by the perception that the demands of
one's role exceed personal resources. Example: A bank branch accountant
feeling overwhelmed by conflicting demands from management and
customers.
ROLE
• Role Erosion: A decrease in one's level of responsibility or feeling underutilized, often due to
role changes or redistribution of functions.
• Resource Inadequacy: Occurs when a role occupant lacks necessary resources to perform
effectively, leading to role stress.
• Personal Inadequacy: Results from a lack of knowledge, skills, or experience required for
effective role performance.
• Role Isolation: When a role occupant feels isolated due to a lack of strong linkages with
other roles, often based on the frequency and ease of interaction with other roles.
• Role Design by HR: In modern organizations, especially with rapid changes in technology and
market demands, HR must design roles effectively to adapt to these changes.
• Importance of decentralizing control, clear role expectations, and building competence in
employees to achieve organizational goals.
 CAIIB
Advanced Bank Management (ABM)

Module-B Chapter-13
Employees’ Feedback & Reward
System
EMPLOYEES’ FEEDBACK
• Employee satisfaction at workplace is crucial for achieving organizational objectives.
• Progressive organizations gather employee feedback on HRM & new initiatives
• Showing team their importance in the organization's growth.
• Exchanging information about teamwork, skills, performance to drive
improvement.
• Information is collected both formally (through questionnaires, psychological
instruments, suggestion schemes) and informally (through discussions,
observations, and appraisal/exit interviews).
• Formal feedback helps refine and fine-tune policy initiatives, while informal
feedback provides insights into employee behavior and satisfaction.
• Exit interviews, especially of those leaving unexpectedly
FEEDBACK THROUGH CLIMATE SURVEYS
• Measure employees' perceptions of the prevailing climate
within an organization
• Climate is typically measured across different departments
or divisions to assess and compare the organizational
climate.
• HR department usually coordinates the entire process,
including designing, administering, and tabulating the
questionnaire.
• Results are presented to top management and analyzed to
find solutions for improvement.
• Line managers also assist in administering the
questionnaire.
TYPICAL CONTENT OF CLIMATE SURVEY
• Support: Perceptions of support from managers and other
employees, emphasizing mutual support.
• Standards: Importance placed on implicit and explicit
goals and performance standards.
• Conflict: The feeling that different opinions are valued,
and conflict resolution is effective.
• Identity: The feeling of belonging to the organization and
perceived value within the organization.
CONSEQUENCES OF CLIMATE SURVEY
• Unfavorable Climate Characteristics: Can lead to high
CHARACTERISTICS
stress, job dissatisfaction, poor communication, and
increased turnover.
• Favorable Climate Characteristics: Promote problem-
solving, loyalty, cooperation, enhanced motivation,
and high-quality customer service.
• The HRD department should formulate strategies to
create and maintain a favorable climate.
EMPLOYEE SURVEYS
• Conducting employee surveys requires careful planning,
including designing the questionnaire, selecting
respondents, and interpreting results.
• Poorly conducted surveys can create more problems than
they solve if employees are not prepared to provide genuine
feedback.
• Communicating survey results to employees, even in
summarized form, is crucial to avoid confusion and ensure
effective implementation.
REWARD AND COMPENSATION
• The basic goal for an employee is to earn satisfactory
SYSTEM
wages and perform well to be recognized for other
financial and non-financial rewards.
• The salary and wage structure is a critical part of an
organization's personnel policy, ensuring employees are
adequately compensated.
• Disproportionate compensation - high turnover or poor
employee quality.
• Compensation should not be so low that it demotivates
employees or so high that it becomes counter-productive.
TOTAL REWARDS
• Monetary and non-monetary investments made by organizations to attract, retain, and
engage their workforce.
• Compensation: Pay for services rendered, including fixed and variable pay.
• Benefits: Programs supplementing cash compensation, offering income protection, savings,
and retirement programs.
• Work-Life Effectiveness: Organizational practices and policies supporting success at work and
home.
• Recognition: Programs acknowledging employee actions, efforts, or performance to support
business strategy.
• Performance Management: Aligning efforts toward achieving business goals, including skill
assessment and feedback.
• Talent Development: Providing opportunities and tools for advancing skills and competencies
in the short and long term.
TOTAL REWARDS
Performance-based Career/Environmental
Foundational Rewards
Rewards Rewards
Short-term
Base Salary Mentoring
Incentives

Healthcare Long-term Incentives Flexibility

Retirement Recognition Career Development

Well-being
Insurance Profit Sharing
programs

Talent Mobility
WORLD AT WORK TOTAL REWARDS
• Emphasizes the dynamic
MODEL
relationship between
employers & employees
• Impact of external
influences and the global
business environment on
attraction, motivation,
retention, and engagement.
• Do not achieve their
objectives, not because
badly designed, but poorly
delivered
Types of Compensations
• Money or remuneration received for work
performance, including benefits provided by the
organization.
• Includes wages, salary, bonus, cash allowances,
benefits like accident insurance, health cover,
employer contributions to retirement funds, and
provision of accommodation.
• Compensation can also be grouped by the method of
payment, which may include a fixed component and a
variable portion tied to individual or team
performance.
Compensation Base
• Company objectives: Level of compensation is aligned with
the company’s capacity to pay, cost-benefit analysis, and
philosophy to attract the best talent.
• Market situation or prevailing market rate: demand and
availability of skilled personnel, market demand, and company
policies on growth and recruitment.
• Internal and external pressures: Factors like company capacity
to pay, union bargaining power, attraction and retention
pressures, labor laws, and wage-related regulations influence
compensation levels.
Compensation Theories
• A good compensation package should cover factors like adequacy, societal
considerations, supply and demand position, fairness, equal pay for equal
work, and job evaluation.
• Minimum wages is a wage level to sustain the worker
• Living wages consider the aspect of satisfaction of social needs and
insurance coverage.
• Fair wages is the one between the minimum wages and the one which could
be determined on the capacity of the organisation to pay, but covering the
aspects of productivity of worker, prevailing rates, economic scenario, etc. .
Compensation Theories
Strategy HR program Compensation System
Innovative Committed to agile, Reward Innovative products
risk taking, innovative Market based pay
people Flexible
Cost Cutting Efficiency Focus on competitors labour cost
Operational Excellence Increase variable pay
Emphasise productivity
Customer Focused Delight Customer Focus on system Control & work
Exceed Expectations specifications
Customer Satisfaction Incentives
Value of Job & skills based on
customer contact
SOCIETAL CONSIDERATIONS & LEGAL
• Compensation levels decided by socio-economic considerations,
FRAMEWORK
with market forces usually determining the compensation level.
• The government must protect the workforce from irrationally low
wages.
o Payment of Wages Act, 1936: Ensures timely payment of wages
and prevents unauthorized deductions or arbitrary fines.
o Minimum Wages Act, 1948: Fixes minimum wages for workers,
both skilled and unskilled, in both organized and unorganized
sectors, including agricultural workers.
SOCIETAL CONSIDERATIONS & LEGAL
FRAMEWORK
o Payment of Bonus Act, 1965: Provides for the payment of bonuses to workers
as deferred wages, regardless of the profit or loss of the organization.
o Equal Remuneration Act, 1976: Establishes the principle of equal remuneration
for equal work for both men and women workers.
• These acts collectively ensure:
o Regular payment of wages
o Prevention of unauthorized deductions
o A defined minimum wage level for certain industries
o Fair bonus distribution
o Protection against worker exploitation by employers
JOB EVALUATION
• It is the process of assessing the relative worth of jobs
in an organization.
• Jobs are evaluated based on content, complexity, and
importance to determine compensation levels.
• Complexity of the
• Ensure parity of compensation for similar or equal jobs. job
• Objectives of Job Evaluation: • Skills required
Key Factors • Risk involved
o Determine compensation rates
o Link pay with job requirements
o Account for pay differentials based on skills, efforts,
and hazards
o Establish a compensation structure
JOB EVALUATION
• Helpful for manpower planning, performance appraisal, etc.
• Job Ranking: Process
o Jobs are ranked based on perceived difficulty and value addition. Involves
o Classified in groups based on skill intensity, difficulty, hazards,
responsibility, and experience.
Job Analysis
• Pay Determination:
o Higher value jobs receive higher pay.
Job
o Higher responsibility leads to higher pay. Description
o Supervisors typically earn more than workers due to greater responsibility
and experience required. Job
o In exceptional cases, workers may earn more if the job is risky and requires Specification
higher skills or physical work.
JOB EVALUATION
Ranking or Job
Comparison
Non-
quantitative
Grading or Job
Classification
Job Evaluation
Methods
Point Rating
Quantitative
Factor
Comparison
RANKING METHOD
• Jobs are ranked from highest to the lowest on the basis of
their importance in the organization.
• In this method, the overall job is compared with the other
set of jobs and then is given a rank on the basis of its
content and complexity in performing it.
• Here the job is not broken into the factors, an overall
analysis of the job is done.
• Very easy to understand and is least expensive.
• Subjective in nature due to which employees may feel
offended, and also, it may not be fruitful in the case of big
organizations
JOB GRADING METHOD
• Job grades or classes are predetermined and then each job is assigned to
these and is evaluated accordingly.
• For Example Class, I, comprise of the managerial level people under which
sub-classification is done on the basis of the job roles such as office manager,
department managers, departmental supervisor, etc.
• The advantage of this method is that it is less subjective as compared to the
raking method and is acceptable to the employees.
• And also, the entire job is compared against the other jobs and is not broken
into factors.
• The major limitation of this method is that the jobs may differ with respect
to their content and the complexity and by placing all under one category
the results may be overestimated or underestimated.
JOB GRADING METHOD
Class I Class II Class III Class IV

Semiskilled Semiskilled
Executives Skilled Workers
Workers Workers

Office Manager,
Machine
Deputy Office Purchasing
Operators, File Clerks, Office
Manager, Assistant, Cashier,
Switchboard Boys
Departmental Receipts Clerk
Operator
Supervisor
FACTOR-COMPARISON METHOD
• Job is evaluated, and the ranks are given based on a series of factors Viz. Mental effort,
physical effort, skills required supervisory responsibilities, working conditions, and other
relevant factors.
• These factors are assumed to be constant for each set of jobs.
• Thus, each job is compared against each other on this basis and is ranked accordingly.
• Method is consistent and less subjective, thus appreciable by all.
• Complex and an expensive method.
POINT-RANKING METHOD
• Under this method, each job’s key factor is
identified and then the subfactors are
determined. These sub-factors are then
assigned the points by its importance.
• For example, the key factor to perform a job is
skills, and then it can be further classified into
sub-factors such as training required,
communication skills, social skills, persuasion
skills, etc.
• The point ranking method is less subjective and
is an error free as the rater sees the job from all
the perspectives.
• Complex method and is time-consuming since
the points and wage scale has to be decided for
each factor and the sub factors.
REWARDS LINKED TO PERFORMANCE
• Compensation can be categorized into three types: fixed, totally variable, and
mixed.
• Fixed Compensation:
o Based on job analysis, market conditions, or collective bargaining.
o Pays employees a fixed rate regardless of job performance.
o Can lead to low motivation and mediocre performance.
• Variable Compensation:
o Compensation is tied directly to the employee’s performance level.
o Suitable for manufacturing where output and quality can be measured against
benchmarks.
o Induces high levels of production but can lead to pressure and frustration due to
external factors or difficulties in measuring performance in service industries.
REWARDS LINKED TO PERFORMANCE
• Mixed Compensation:
o Combines fixed compensation with additional
performance-based rewards.
o Offers a balance between stability and performance
incentives.
o Requires a well-established performance appraisal
system.
o Common in private sector organizations, where the
variable part of compensation is often kept confidential.
COMPA-RATIO
• Percentage obtained by dividing the actual salary paid to an employee by the midpoint of the
salary range for that position.
• CR = (Actual Salary/Midpoint of Pay Range) * 100
• Objectives: Pay Raise, Promotion, Merit Pay
COMPA-RATIO
80-87%: New, inexperienced, or unsatisfactorily
performing incumbents.
88-95%: Gaining experience but not yet fully
competent.
96-103%: Fully competent performers.
Compa-Ratio Zones

104-111%: Consistently performing the job at a higher

level than required.
112-120%: Universally recognized as outstanding
performers.
 CAIIB
Advanced Bank Management (ABM)

Module-B Chapter-14
Performance Management
PERFORMANCE APPRAISAL
• Performance Appraisal: Process by which management
evaluates the effectiveness of hiring and placing
employees.
• It involves a systematic evaluation of the work performed
by employees, comparing their actual performance with
predefined standards.
Methods of Performance Appraisal:
• Typically includes evaluating factors
Casual, such and
unsystematic, as haphazard
work appraisal.
Traditional and systematic
knowledge, performance, attitude,measurement
leadershipofqualities,
employee characteristics and contributions.
Mutual
team behavior, consistency, goal setting, e.g., abilities,
decision-making Management andby Objectives (MBO)
skills.
• Helps in understanding employee abilities, providing
development opportunities, and ensuring that the
performance aligns with organizational standards.
 Methods of Performance
Appraisal:

• Casual, unsystematic, and haphazard

appraisal.
• Traditional and systematic measurement of
employee characteristics and contributions.
• Mutual goal setting, e.g., Management by
Objectives (MBO)
APPRAISAL SYSTEMS
• Appraisal Systems can vary from
simple to complex, vague to Objectives of Performance Appraisal System
objective, and unstructured to
structured.
Judgmental: Used for decisions related to salary
• Organizations can design their own increases, transfers, and promotions.
appraisal system or modify an
existing one. Developmental: Provides feedback to employees on their
performance and suggests changes in skills, attitudes, and
• Informal appraisal systems may work behavior.
in small organizations but lack
scientific rigor Counseling by the superior: Helps understand and
address issues related to poor performance.
PERFORMANCE APPRAISAL
• There are challenges in setting performance
PROCESS
standards for jobs that involve unquantifiable
or hard-to-measure actions.
• Special attention is needed to maintain the
credibility of the appraisal system and the
employees' trust in it.
METHODS OF PERFORMANCE
Modern Methods
APPRAISAL
Traditional Methods
Free Form Essay Assessment Centre Workshops
Straight Ranking
Management by Objectives
Comparison
Human Asset Accounting Method
Grading
Graphic Rating Scale Behaviourally Anchored Rating Scales

Forced Choice 360 Degree Appraisal Method

Forced Distribution
720 Degree Appraisal Method
Group Appraisal
• Free Form Essay Method
o Unstructured appraisal method.
o Appraiser writes an open-ended evaluation covering job
knowledge, attitudes, and development needs.
o Allows complete freedom but can lead to subjective
evaluations.
o Commonly used to appraise top management.
• Straight Ranking Method
o Oldest and simplest method of performance appraisal.
o Employees are ranked in order of merit.
o Challenges include difficulty in comparing individuals with
varying behavior traits.
• Comparison Method
o Modification of straight ranking, also known as factor
comparison method.
o Employees are compared on specific factors like leadership
and initiative.
o Useful in large organizations but can be complex due to the
need for multiple comparisons.
• Grading Method
o Employees are graded on features like analytical ability and
job knowledge.
o Common grading scale: A (outstanding), B (very good), C
(average), D (below average).Widely used method.
• Graphic or Linear Rating Method:
o Considers employee characteristics and contributions.
o Qualities like initiative and dependability are measured, with
weights assigned to quality and quantity of work.
o Continuous scale rating; drawback is potential subjectivity
and equal importance given to all traits.
• Forced Choice Description and Forced Distribution Methods:
o Aimed at minimizing bias by using predetermined scales.
o Employees are rated on job performance and promotion
suitability.
o The superior selects statements that best describe the
employee from a set list.
• Group Appraisal Method:
o Employees are rated by a group of
appraisers, including the immediate
supervisor and others familiar with the
employee's performance.
o Thorough method with minimal bias, but
time-consuming.
o May become a ritual if the number of
employees is high.
ASSESSMENT CENTRE
• To measure the potential of candidates for higher managerial positions.
WORKSHOPS
• To assess training and development needs.
• To select candidates in campus recruitment or fresh students for employment.
• To identify future potential leaders.
• Evaluates interpersonal skills, leadership qualities, planning and organizing abilities, problem-
solving skills, stress tolerance, motivation, and communication skills.
ASSESSMENT CENTRE
WORKSHOPS
Advantages Disadvantages
MANAGEMENT BY OBJECTIVES
(MBO)
MANAGEMENT BY OBJECTIVES (MBO)
HUMAN ASSET ACCOUNTING
• Employees are treated as Human Capital, with monetary
METHOD
values attached to their contributions and the
organization's external goodwill.
• If a trained and experienced employee leaves, the
organization's human asset value decreases. Conversely,
when someone joins with valuable skills, the value
increases.
• Focus: It measures the overall human performance of
the organization in terms of the increase or decrease in
human asset value, rather than individual performance.
BEHAVIOURALLY ANCHORED RATING SCALES
• Purpose: Describes jobs through illustrations or critical incidents of effective
(BARS)
and ineffective performance.
• Method: Incidents are used as "behavior anchors" to create a performance
rating scale.
• Objectivity: While reasonably objective, BARS is time-consuming.
360 DEGREE APPRAISAL
• Feedback from all around the employee,
with the employee at the center.
• The employee is rated by seniors, colleagues
(peers), subordinates, suppliers, customers,
and other stakeholders.
• Includes self-assessment by the employee.
• Benefits: Serves as a comprehensive
feedback mechanism, helping in corrective
measures and developmental initiatives.
• Objective: Aims to minimize human bias by
being a multi-rater appraisal system.
360 DEGREE APPRAISAL
• Common Issues: Even well-designed appraisal systems can fail due to poor
implementation, leading to a loss of credibility if employees find the process ritualistic
and untrustworthy.
• Combination of Methods: Organizations often use a mix of traditional and modern
methods to create an objective and effective appraisal system.
• Service Industry Three-Part Appraisal:
o Self-Appraisal
o Appraisal by Reporting Authority
o Review by Superior
• Employee Participation
• Goal Setting
• Descriptive & scalar appraisal & aims to ensure feedback is open & reduces bias.
360 DEGREE APPRAISAL
• Common Issues: Even well-designed appraisal systems can fail due to poor
implementation, leading to a loss of credibility if employees find the process ritualistic
and untrustworthy.
• Combination of Methods: Organizations often use a mix of traditional and modern
methods to create an objective and effective appraisal system.
• Service Industry Three-Part Appraisal:
o Self-Appraisal
o Appraisal by Reporting Authority
o Review by Superior
• Employee Participation
• Goal Setting
• Descriptive & scalar appraisal & aims to ensure feedback is open & reduces bias.
720 DEGREE APPRAISAL
• First Round: Employee’s performance is measured,
analyzed, and targets are set during the initial appraisal.
• Second Round: After a short period, the employee’s
performance is re-evaluated, and proper feedback and
guidance are given to ensure they achieve the set targets.
• Focus: Provides a personalized and intensive review
• Outcome: Gives employees a broader view of their
development as leaders and professionals, ensuring
continuous feedback and improvement.
ASSESSING POTENTIAL
• Basing promotion decisions solely on current performance
can lead to poor outcomes if the employee lacks potential
for the higher role.
• Potential appraisal is crucial in making informed
promotion decisions.
• It should be used in conjunction with the performance
appraisal system to ensure employees are suitable for
higher roles.
• The Potential Appraisal Report, often used with the
Assessment Centre Method, helps in making more
appropriate and strategic decisions regarding employee
development and promotions.
CONFIDENTIAL REPORT
• Traditionally, performance appraisals conducted as a
confidential activity.
• Confidential report is submitted to the head office and is
surrounded by secrecy.
• Employees tend to dislike this system due to its lack of
transparency and feedback.
• The superior has significant power as they can influence the
employee's career through the confidential report.
• No feedback or developmental guidance is provided to the
employee, making it a very old-fashioned method of reporting.
COMMON ERRORS IN PERFORMANCE
• Halo Effect: Allowing one positive trait of an employee to influence the
APPRAISAL
entire appraisal.
• Horn Effect: Allowing one negative trait of an employee to influence
the entire appraisal.
• Central Tendency: Rating all employees as average, regardless of their
actual performance.
• Strict Rating: Being overly strict and rating all employees lower than
they deserve.
• Lenient Rating: Being overly lenient and rating all employees higher
than they deserve.
• Status Effect: Allowing an employee’s position or status in the
organization to influence their appraisal.
• Spillover Effect: Letting past performance influence the current
appraisal.
COMMON ERRORS IN PERFORMANCE
• Initial Impression: Basing the appraisal on the first impression rather than ongoing
APPRAISAL
performance.
• Latest Impression (Recency Effect): Basing the appraisal on the most recent events
rather than the entire appraisal period.
• Same as Me: Favoring employees who are perceived as similar to the appraiser.
• Different from Me: Rating employees lower because they are perceived as different
from the appraiser.
• Performance Factor Order: Allowing the order of reviewing performance factors to
influence the appraisal.
• Sympathy Effect: Allowing personal sympathy for an employee to influence their
appraisal.
• Similarity Error: The tendency to compare the employee with oneself or others who
have similar traits, resulting in biased ratings.
Appraisal Interview
• The appraisal interview is a meeting between the appraiser and
the appraisee to discuss performance, provide feedback, and
identify potential areas for development and training.
• It facilitates agreement on annual targets and helps in reviewing
and setting necessary tasks for the organizational unit.
• The appraiser should prepare for the interview by reviewing the
employee’s performance using various Management Information
Systems (MIS).
• The appraisee gets the opportunity to express their views on their
performance and the overall work scenario.
APPRAISAL INTERVIEW
• The interview should take place in the appraisee's workspace or a
neutral place, not in the appraiser’s office, to ensure comfort and
freedom for the appraisee.
• Schedule the interview at a time with no disturbances
• Avoid Personal Criticism: Compare performance with standards, not
with other individuals.
• Value Employee’s Opinion
• Clearly communicate what the employee is doing correctly or
incorrectly, and advise on how to improve.
• Act as a supportive colleague, trying to understand the employee’s
perspective without making judgmental remarks.
• Provide feedback at the appropriate time during the interview,
ensuring it is constructive.
COUNSELLING
• Counselling in the workplace typically refers to advising
employees about their performance, particularly in the
context of disciplinary matters or performance reviews.
• It involves a superior taking on the role of a counselor when
an employee's performance requires significant corrective
action.
• Steps: The counselling process usually involves three stages:
1. Recognizing the Problem
2. Helping the Employee Realize the Problem
3. Managing the Problem
COUNSELLING SKILLS
• Atmosphere: It's important to create a conducive
environment where feedback is received positively.
• Communication: The purpose of counselling should be
clearly communicated, focusing on specific and descriptive
feedback.
• Objectivity: Feedback should focus on performance, not
the person, and aim to assist the employee in overcoming
challenges.
• Listening and Support: The counselor should listen to the
employee and provide workable solutions. Effective
listening is key to successful counselling.
MANAGING AVERAGE PERFORMANCE
• Acceptance of Varying Performance Levels: Some
may be classified as average performers despite best
efforts
• Strategies for Improvement: Job rotation, relocation,
and skill-upgradation training can be tried to improve
the performance of average employees.
• Challenges with Technology Implementation: Even
previously high performers may struggle and become
average or below-average performers.
• Retention vs. Removal: Organizations often retain
average performers due to their loyalty and stability.
However, this situation may change in highly
competitive environments.
Strategies to Manage Average Performers
• Understand How They Define Success: Discover what motivates
employees, whether it's work-life balance, career aspirations, or
personal goals
• Find Out How They Think at Work: Understand their perception of
their work and how they view their performance to identify areas for
improvement.
• Assess Skills and Change Job Roles if Needed: Observe and identify any
hidden skills and consider changing their job roles if they've plateaued
in their current position.
Strategies to Manage Average Performers
• Show Appreciation: Recognize and celebrate the efforts of average performers
to prevent resentment. Appreciate in public & criticize in private
• Set High Expectations: Encourage improvement by setting progressively
higher standards, helping avg. performers strive to meet new benchmarks.
• Motivating Through Counselling: It helps employees recognize and overcome
their issues, boosting their confidence and performance levels.
Competency
• Competency is defined as a set of knowledge, skills, or
attitudes (KSA) that are demonstrable and enable an
employee to perform their job efficiently.
• Underlying characteristic of an individual that leads to
effective or superior performance in a job situation.
• Linkage to Performance Planning: Competency is linked to
performance planning for employees. Competency
indicates what an employee is capable of doing (ability),
whereas performance indicates what the employee
actually does.
Types of Competencies
• Technical Competency: These
competencies relate to specific tasks and
processes required in a job. They are
easier to identify and measure as they are
often tied to the technical aspects of a
role.
• Behavioural Competency: These
competencies involve personal attributes
like listening, taking initiative, problem-
solving, interpersonal skills, and
leadership. These are harder to observe
and measure but are crucial for effective
performance in most roles.