Performance Appraisal: Doing It The Right Way

Anil joined a reputed IT organisation last year in January. He was included in an outsourced project immediately. The project was particularly specialized in nature and Anil had to spend a lot of time getting acquainted with the processes, deliverables and the know-hows. He worked more than 12 hours a day. After a year when the project ended, Anil’s seniors lauded him for his ability to understand complex things with little hiccups and for his dedication. Yet, when the time for appraisal came, Anil received a ‘Meets Expectation’ rating. Naturally, he was really upset and escalated the matter with the Group Supervisory Manager. He was told that due to the bell curve, every new employee in the organization receives such low appraisal in the first year….

Priya, an experienced senior developer was asked to salvage a failing software development project that was suffering from delays and too many unacceptable bugs. She carried on with the responsibility with grit and dedication. And within a year, all the inconsistencies in the project were ironed out. The project now had a definitive finish date. Despite such stupendous performance, Priya receives an average appraisal rating which enraged her. When she protested, the manager told her that she did perform the task well, but she was not a team player and had undermined the morale of her team members.?

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As you can see from the above two examples, appraisal - both objective and subjective - is a very delicate subject. The gap between expectation and reality is a source of constant friction between employees and managers. Why is it that even after so many years, performance appraisals remain something that employees and management don’t agree on? To truly understand this, we need to first make sure that we are on the same page regarding the purpose of appraisal.

The Purpose of Performance Appraisal

The purpose of performance appraisals has three sides to it-

• To provide employees with a report of their quality (and quantity), value and importance of the work they did during the past year.
• To help employees know how to work in such a way that his/her goals are aligned with the goals of the company.
• To help the management decide what sort of work and remuneration should be offered to an employee.

Types of Appraisal

There are many types of performance appraisals-

• Generalised or Goal Setting Based Performance Appraisal: Here the manager and the employee together set some goals and based on how many or how much goals the employee is able to achieve, the manager appraises him.
• Skills Based Performance Appraisal: In some work settings, having people with some specific skills is a must. Without those skills, the organisation can’t function. It is therefore necessary to take those skills into consideration in these organisations during performance appraisals. In such scenarios, managers use skills based performance appraisals.
• Self Assessment: In this method, both managers and employees are given appraisal sheets and then the sheet filled up by the employee herself is compared with the one filled by the manager often leading to debates and disagreement.
• Project Completion Based: Project completion based performance appraisals happen at the end of a project and not at the end of a year. Here how successfully a project is completed is taken into account.
• Sales Based Appraisal: In this type of performance appraisal, whether an employee is able to achieve the sales target is taken into account.
• Appraisal of the manager: The manager himself needs to be appraised based on the relationship he has with employees and clients. There can be set goals that managers need to accomplish.

Methods of Performance Appraisals

Traditionally, managers and HRs have been using many types of performance appraisal methods. The popular among them are explained below.

• Graphical Rating Scale

In this method, managers list a number of desired traits necessary to be there in an employee for the success of the company. And then they rank the employees against these traits using a numbered scale. So for example, managers can list 5 traits- punctuality, honesty, dedication, sales target and team work. Now against these traits, they rank employees on a scale of 1 to 5 or 1 to 8 or 1 to 10 etc. Sometimes instead of a numbered scale managers can use text based scale where the numbers are replaced with texts like - “strongly disagree”, “disagree”, strongly agree” and “agree.”

Graphical Rating scale is one of the least complicated methods of performance appraisal.

• Free Form Method/ Qualitative Method

In this method, instead of a quantitative approach, managers take a qualitative approach where fact based and evidence based description of the employee’s performance is taken into account.

• Checklist Method

In this method, a number of desirable traits are listed which is then answered by the manager in Yes or No while evaluating an employee.

• Critical Incidents

As the name suggests, in this method, the manager prepares a list of important incidents that highlight the performance of the employee and based on the incidents and the employee’s attitude towards them, the manager appraises him.

• Work Standards Based Approach

In this method, the employees already know what approach to take, or how to perform. In short, the standard of work is already fixed by the management. Based on how well this standard is adhered to, the employees are appraised. Here personal traits take a backseat.

• Ranking Based

In this method, the manager ranks employees having similar job roles.?

• Objective Based

In this method, the management sets goals for the employees to achieve. Based on the accomplishment of these goals, the employees are evaluated.

There are many studies that point to the benefits of performance appraisals. It is an extremely crucial part of Human Resource management. Yet despite being so important, it is not easy to come up with an appraisal process that does not lead to frictions. There are certain weaknesses of performance appraisals that are too tough to mitigate.

The Problems of Performance Appraisals

• Modern performance appraisals try to be as unbiased as possible. The modern appraisal methods tend to mitigate the aspect of subjective judgment which is why the method of Management By Objective is being stressed more these days. What this means is that the management sets some goals in front of the employees and based on the achievement of the goals, an employee is appraised.

The problem, in this case, is that the behavioral and social aspect of the appraisal gets ignored. There can be extremely talented people in the organisation who might be toxic towards their team members. So even though these employees perform their job well, many of their team members might not be able to put in their 100% just because of these people. Hence performance appraisals must take team-work and good behaviour into consideration.

• Again, when a manager takes the behaviour of the employees into account, there is a high chance that the decision of appraisal might suffer from subjectivity. We have seen in our lives that what is considered acceptable in one department of the company might be considered unacceptable in another. How then, can a manager subjectively judge an employee without letting his or her world-view affect the decision-making process?
• When you try to base your appraisal decision on the bell curve so as to keep it generalised, employees who truly work hard might feel cheated - especially the new ones.

As you can see, performance appraisal is a double edged sword. The use of subjective analysis is both a necessity and a source of trouble. Performance does not just mean going ahead and completing the task. It obviously includes ‘how’ one completed the task.

The Solution

So how exactly can we approach performance appraisal so that it does not turn into an ugly office politics? For that we need to understand the key burning points. The key problem in performance appraisal are - the issue of subjective judgement and the gap between expectation and reality. There are three ways that will help us avoid these two key issues.

Understanding That Bell Curve Is Obsolete

Most companies in India still use the bell curve when it comes to performance appraisal. As a result, most of the employees are forcefully clubbed together in the category of ‘average.’ The other name of the bell curve is ‘normal’ distribution. So as the name suggests, this methodology does not identify the fact that some employees perform better and more than others. Here, the ‘performance’ is distributed among the employees.?

The bell curve looks like this-

Here, it is 70% employees who together achieve the average sales target i.e 50. Only 20% are seen as overachievers.

However reality doesn’t work that way. In reality, more often than not, we see the 80:20? rule where 80% of employees perform below average while 20% employees do most of the heavy lifting. In that case, the L curve is more justifiable.

An L curve looks like this-

Here 75% employees achieve just an average sales of 20. Ofcourse based on the actual performance, the graph will either be skewed leftwards or rightwards, but the general pattern will be more or less like this.

Understanding The Nuances

Now that the problem of bias has a solution, let’s now see how we can make other aspects of the appraisal process as unbiased as possible. First of all, we have the traditional Management By Objective paradigm. This is a tried and tested method where we judge an employee’s performance based on the simple question- has she been able to meet her goals? However, here too, there can be nuances. For example, a person who is dumped extra work will obviously find it difficult to meet his primary goals. It is necessary for an appraiser to understand these nuances.

Mathematics To The Rescue

Written texts are prone to be misunderstood. So using numbers for appraisal should be the norm whenever possible. With points based appraisal systems, the problem of bias can largely be mitigated with the help of a weighting system. We can assign smaller weight to those aspects that we know are prone to attract personal bias. For example, if the appraisal system has just three criteria- goal-achievement, punctuality and teamwork - we can put more weight on the first two and lesser weight on the last one. Why? Because we know that the last criteria is prone to attract subjective opinion -

As you can see, even if the manager awards just the score of 1 as far as Team work is concerned, because the weightage of that criteria is just 15, it won’t severely affect the overall appraisal score of the employee. Yet the criteria is not fully redundant as well.

Data Science As Opposed To Gut Feeling

To be truly able to appraise the employees without an iota of bias, you need the help of Data Science. With Maths you can quantify only those things that are quantifiable. But with Data Science, you can quantify those things that are not easily quantifiable- like integrity, dedication etc. When you try to judge these things all by yourself, you run the risk of mixing the judgement with your own emotion. With Data Science, you can measure them without this risk.

Ask any manager, performance appraisal is one of the complex work that a manager does. Not just the employees, even the managers look forward to it with dread. It is the perfect breeding ground for hostilities. Let’s use objective opinions by means of Mathematical analysis so that the appraisal process remains as clean and transparent as possible.