Modern Methods of performance apraisl

¨(a)  MBO (Management by Objective or Joint Target Setting) :
¨This method was propounded by Alfred Sloans and Donaldson Brown in 1920s. However, it was further popularised by Peter Drucker in his book "The Practice of Management" in 1954.
¨According to George S. Odiorne, MBO can be described as "a process whereby the superior and the immediate subordinate of an organisation jointly identify the common goals, define each individual's major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."
¨In this method emphasis is laid on stating objectives for Key Result Areas (KRAs) in Quantifiable terms. For example, in case of Research and Development department, objective is stated in the following terms. i.e. to design a new product by 31st March, 2005.
¨MBO is used as a performance appraisal technique, as it is easy to measure whether the stated objectives have been achieved or not.
¨(b)  BARS (Behaviourally Anchored Rating Scale) :
¨In order to overcome the problem of judgmental evaluation, this method was conceived by some organisations. This method combines the benefits of Essay Method, Critical Incident and Rating scales.
¨In this method the employee's behaviour and performance dimensions are analysed and used for evaluating the performance of the employee. The HR department is involved in the process of preparing the BARS. Based on the Employee's performance and behaviour, employees are anchored in different slots of good, average and poor. The rater is required to give corresponding ratings to the employee.
¨(c)  Assessment Centres :
¨This method was used to appraise army officers in Germany way back in 1930s. The concept was adapted from army to business arena in 1960s. In India, the concept has been adopted by organisations such as Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox recently.
¨This method is mainly used to evaluate executive and supervisory potential. Here employees are taken to a place away from work and a series of tests and exercises are administered. For example, assesses are asked to participate in; in-basket exercise, simulations, group exercise and role plays. Performance of the employee is evaluated in each of these tests and feedback is provided to the ratee, in terms of strengths and weaknesses.
¨(d)  360o Appraisal Method :
¨Where multiple raters are involved in evaluating performance, the technique is called 360-degree appraisal.
¨The 360-degree technique is understood as systematic collection of performance data on an individual or a, group derived from a number of stakeholders—the stakeholders being the immediate, team members customers peers and self.
¨In this method an employee's performance is evaluated by his supervisor, subordinates, peers and customers (or an outside expert).
¨All these appraisers provide information or feedback by completing a questionnaire designed for this purpose.
¨The 360-degree degree appraisal provides a broader perspective about an employee’s performance.   In addition, the technique facilitates greater self-development of the employee. It enables an employee to compare his evaluation about self with perceptions of others. Though this method was developed to bring about a degree of objectivity, it still suffers from subjectivity.
¨(e)  Cost Accounting Method :
¨This method evaluates an employee's performance in relation to the contribution of an employee in monetary terms. Here the rater evaluates the employee in terms of cost of retaining the employee and the benefits the organisation derives from him/her. The following factors are taken into account in this method :
¨(1)  Cost of training the employee.
¨(2)  Quality of product or service rendered.
¨(3)  Accidents, damages, errors, spoilage, wastages, etc.
¨(4)  The time spent in appraising the employee.