Table of contents
1)What is Performance Appraisal?
2)Performance Appraisal Methods:
c)Management by Objectives
4)Performance Appraisal System of Alarko Group
1) WHAT IS PERFORMANCE APPRAISAL?
Performance appraisal is the effort to determine, in a certain framework of job and mission description, the individual's level to realize this job and mission. It is the measurement of the employee's level of realizing determined missions in a given amount of time.
Performance appraisal is a very important function of human resources management. It consists of studies on measuring the individual's level of efficiency and success in any given subject. To measure the level of efficiency and success is very complex task, because it involves evaluating an individual. Another challenge is that the concepts of performance and success are subjective.
Performance appraisal is observing individual's work, efficiencies, deficiencies, surpluses and inefficiencies with every aspect.
Both the individual's self, and the organization's evaluation of performance is important to observe their level of realization in the role they are occupying.
Organizational performance appraisal is also possible as well as individual appraisal.
With performance appraisal, the individual sees he/she's own output of work and evaluates he/she's own performance. On the other hand, the organization observes at which levels the terms of job contract is realized, the employee's interests and abilities is reflected to the work, employee's success in business, if the employee is able to reach the standards in job description and how the career planning will be.
At which level the expectation of success from the individual is realized is determined according to the outcomes. The outcomes are used for decision making process about promoting, planning the career of, increasing salary of, changing the mission of, firing, enriching the job of the employee.
2) PERFORMANCE APPRAISAL METHODS
A) RATING SCALES
It is the most common and basic method of performance appraisal. The rating scale is used for ranking the employees according to various functions by evaluators. The most appropriate situations to use that scale are organizations where the performance of employees is needed to be evaluated according to quantity of output. With this scale, for example, the performance of an employee working on the assembly line can be demonstrated certainly.
Aside from being basic, another benefit of this method is that it provides the management to see the performance of the employees immediately. In this method, the employees are evaluated according to some factors about work. Some of them are:
- Quantity of work
- Quality of work
- Attention to work
- Knowledge of work
- Ability to make decisions
The evaluation forms are divided into categories according to these factors, and the evaluator marks the evaluation for every category on the form. Generally evaluations are proceeded in 4 steps. These methods can be grouped as follows:
The researches show that this method is the most commonly used method with 57%.
A mark is assigned for every category of evaluation. Thereby a summary of this employee's performance is complied. The manager marks the most appropriate degree for the evaluated employee in every category. Rating scale is applied in two ways as continuous and non-continuous scales.
The possible problems of this method are:
- It doesn't provide constructive criticism.
- It generally isn't based on a conceptual basis that is apart from the evaluator's judgements.
- It is volatile to circle effects.
- Some terms in the evaluation form (because it is prepared for the whole organization) may not be related to some people in the organization.
- It invokes the feeling of 'finishing the work as soon as possible' instead of evaluating the employees in depth and encouraging them.
The rating scale method requires the managers to have more preparation before evaluation, because it is detailed and advanced. It reflects the performance of employees if prepared carefully. There are descriptions special for every subject in rating scale. The manager bases the evaluation of the employees on these descriptions when marking them from 'excellent' to 'very low'. The basic mission and responsibilities are listed and the categories of marks are shown.
Rating scale is an appropriate tool in situations where the performance of the employees is going to be measured quantitatively, i.e. in the framework of numerical data or production capacity.
B) ESSAY METHOD
This method requires the manager to record the important events (positive or negative) during the work and to file them for record. Some categories can be determined regarding the types of events to record. The employees are evaluated according to these categories, and the positive and negative results are filed into the employee records.
The best areas of use for this method are the situations where the documentation af certain events related to work performance can be managed easily. The manager can benefit from the information gathered on various fields of work in the organization on the decisions about how the employees working in the new fields of work should be treated. This method is very useful in situations where the subjective measures play a major role in appraisal. For example, it can be very beneficial for a sales staff in the state of learning the job to be informed about the opinions of the manager on customer care issues.
The benefits of essay method are:
- It provides referance points where the managers and employees can carry on useful debates about performance.
- When there is an important event, valid qualitative data is already provided.
- It invokes various subjects of debate about performance, therefore eases to advise and guide the employees.
Potential problems of this method are:
- It is a time consuming method when applied for every employee diligently.
- When a subjective evaluation is done, it is difficult for the managers to get over the prejudices.
- When there is an important event, if it is not confronted immediately, it is mostly hard to understand the situation and make the necessary changes.
C) MANAGEMENT BY OBJECTIVES
This is the most known and applied method of performance appraisal and it is a basic and logical method where the performance of the employees is evaluating according to the goals that the employees and managers agree on. The determined goals should be clear, measurable and time-limited. These goals can include more conceptual activities such as problem solving or professional growth as well as regular job tasks. The goals are used as the measurement of employees' performance. The level of reaching the goals is considered in evaluation. The important issue in this method is that the employees and managers collaborate in determining the measurable objectives and goals. The personalities, values and other personal characteristics are excluded in this method, because it focuses on reaching the goals.
The potential problems of this method are:
1) The goals of the employees are interrelated, therefore dependant on each other. For example when an employee and a manager agree on certain performance goals, reaching these goals will be dependant on the other organization members' performance.
2) It measures the performance verbally, not numerically. The main support of the method is the debate between employees and the manager. When this method is used, the decisions on subjects like salary increase and promotion is based on subjective evaluations. .
3) The issue of who should shape the goals makes the goal determination difficult. If the employees select the goals, the perspective of the organization should be considered as a whole. When the goals are selected by the manager, the individual needs of the employees should be considered separately.
4) The manager needs to invest an important amount of time on this application. It also requires communication, work analysis and other organizational abilities. The manager may need to be trained or improve his/her abilities in order to maintain the process effectively.
3) ALARKO GROUP OF COMPANIES
ALARKO Group of companies is an enterprise, employing more than 6000 people. Founded in 1954, its first activities were contracts awarded for central heating installations and the manufacture of heating devices for industry.The group now has activities in many different fields of investment, covering diverse range of interest, such as manufacturing, trading, engineering contracting, tourism, land development, construction and energy.
4) THE PERFORMANCE APPRAISAL SYSTEM OF ALARKO
ALARKO Group of companies uses the Management by Objectives method in performance appraisal. The employees are appraised according to the degree of reaching the goals determined by the top management.
These goals are set in the measurable areas as follows:
- Usage of funds
- Cash flows
The performance of the departments without these measurable goals are evaluated with rating scale method. The programs of these departments are appraised according to realization and success of the outcomes.
The criteria used in appraisals are:
- Goal Achievement
- Program Realization
- Protection of general interests of the organization
- Human Relations
- Training personnel for replacement
- Self-training for replacement
- Training Inferiors
- Work Delegation
- Intellectual Curiosity Towards Work
- Communication Abilities
- Obedience to Procedures
- Assurance of Company Future as much as possible
ALARKO has a very strict system of performance appraisal, even though the method of management by objectives is used. The criteria used in appraisal is very detailed and demanding. These features of the system can cause gthe employee to feel inefficiency and incapacity, which can therefore cause his/her feeling of belongingness to the company to fall down.
On the other hand the detailed system of appraisal may encourage the employee to improve constantly. Another benefit is that the system tells the employee exactly what the top management requires and makes the criteria clear for every employee within the organization.
3) ALARKO Group of Companies, "Human Resources Policies", 2003.
4) Margaret J. Palmer, "Performans DeÃÂerlendirmeleri", 1991.
5) Personnel Management (Sixth Edition), W. F. Glueck.