The end of the financial year is in fact the time when the performance of an organisation is reviewed externally as well as internally and the report of this performance affects the organisation at the external level as well as at the internal level. The start of the financial year starts with the top heads of the organisation sitting together and working on the things that have gone perfect in the financial year and how all these can be maintained and specifically on the parameters that have not gone in the right way and things need to be done again or in the better way to get the desired results. In the terms of the management this process of the review of the performance of the staff members is also referred to as the gauging and the gauging should be very sensible in the nature of the working as then only the things can be improved and the staff members will be able to work in the better way to get the desired results for the organisation.

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This level of the management can be referred to as the very critical part or stage of the human resource as a branch of a tree. The performance management refers to the procedure that is followed by the managers or the employers and the employees together in order to plan, then monitor and also review the work done by the employee and take care of the his or her objectives and then finally considering the over all contribution of an individual as a whole towards the organization. The major part that plays a very important role in the management of the performance of an individual or as a whole involves keeping the right type of the people that are required by the organization and are most suitable for the enhancement of the performance of the organization as a whole or an individual basis. This term of the performance management is not just an annual performance review but it is a process that is a continuous process that play a very critical and the vital role in the settlement of the various objectives that have been set and then assessing the progress of the work that has been done and finally providing the on going coaching and the feed back in order to ensure that the employees working for an organization are meeting the objectives that have set individually and also playing there very urgent and vital part for meeting the objectives that have been set by the organization as a whole. On going coaching and followed by the step of the feed back is also done.

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Apart from earlier techniques of appraisals mentioned here, we now have modern methods too. Some of these are:-

1. Assessment centre method: This method was used for the first time in 1930 by the German army and then in 1960’s by the British army. This method tests a candidate in different social situations using a number of assessor and procedures. The performance of an employee an also his potential for a new job is evaluated in this method by assessing his performance on job related simulations. Characteristics that the concerned managers feel are important for the success of a particular job are included in these simulations. Techniques like business games role playing and in basket exercises are used in this method. The employees are evaluated individually as well as collectively on job related characteristics. Personal interview and projective tests help in assessing the motivation, career orientation and dependence on others of an employee. To measure the intellectual capacity written tests are used. The evaluators in this method consist of experienced manager working at different levels who prepare a summary report for the management as well as for the employees. This technique usually measures the planning ability interpersonal skills and organizational skills of an employee.

2. Human Resource Accounting Method: Human resources are a valuable asset for any organization and it can be valued in monetary terms. This method evaluates the performance of an employee in terms of costs and contributions. HR costs include expenses incurred on HR planning recruitment selection induction and training. The difference between this costs and the contribution by an employee reflects the performance of that employee. This method is still developing hence is not very popular at present.

3. Behaviorally anchored rating scale (BARS): This method combines the graphic rating scale and the critical incident method. It determines in advance the critical areas of the performance and the most effective behavior to achieve the results. Then the actual job behavior of an employee is evaluated against the predetermined behavior.

The following steps are used for constructing BARS.
1. Supervisor and other persons well acquainted with a job are asked to described specific critical incidence of effective performance behavior
2. Then these persons categorized the incidents into sets of performance dimensions and each set is then defined.
3. These people then reallocate the original critical incidents. They are given the cluster definition and critical incidents and are asked to re-design each incident to the dimensions that describes it the best. A critical incidents is retain only a some percentage that is usually between 50 – 80 percent of this group assigns the incidents to the same cluster as was done by the earlier group.
4. The second group then rates each incident on a 7 – 9 point scale where the rating is done on the basis of how well the behavior described in the incidents represented the performance on the appropriate dimensions.
5. A sub set of incidents is used as behavior anchors for the performance dimensions.

4 Appraisal through management by objectives (MBO): This concept was introduced by Peter Drucker in 1954 who named it management by objectives and self control. It is an effective way it is also known as goal setting approach to appraisal .In this process the supervisor and subordinate members jointly identify the common goals of the organization and set the areas of the responsibility of each individual in terms of results expected from that person. These measures are use for operating the unit as well as for appraising the performance of the employees.

5 The 360 degree appraisal: The 360 degree method of performance appraisal is used to make the appraisal process more transparent, objective and participative. It introduced the concepts of self appraisal subordinates appraisal, peer appraisal and appraisal by customers. It is called a 360 degree method because it involves the evaluation of an employee by persons above him, below him and alongside him. Structured questionnaires are used to collect information from the seniors, subordinates and peers. The employee to be evaluated thus acquires a central position and everyone around him participates in the appraisal process in the 360 degree method. The following four are the main components of 360 degree appraisal :

Self appraisal: It allows an employee complete freedom in accessing his or her strengths objectively and identifying the areas of development. The employees get a chance to share the development areas with their seniors based on their self appraisal and jointly worked out a plan in tune with the organizational realities like the availability of resources and time. It also gives a chance to the employee to express his career plans which is in the interest of the organization as it knows beforehand the aspirations of its employee.

Appraisal by superiors: An appraisal by superiors involves providing constructive, feedback about the performance of any employee as well as his development areas during the review period. It helps in setting goals for the employees that help in achieve the organizational goals and improve the performance of the employee. The career aspirations of an employee are also put in proper prospective.

Appraisal by subordinates: This is a unique feature of the 360 degree method of appraisal. As the subordinates play an important role in the performance of the employee. The feedback by the subordinates gives firsthand account of how they look at their superior in terms of working style. The capability of a superior in motivating, delegating the work, building a team and communicating with them effectively form the basis of appraisal by the subordinates.

Peer appraisal: It also plays an important role in 360 degree appraisal as the role of peers is quite important in life of an employee. Selecting the right peers is very important and peers from the departments that are directly related with the department of the employee should also be included. It mainly focuses on feedback about the style of functioning of the employee under review and can also include his ability to work as team leader besides his co-operation and collaboration.

Potential appraisal: It is different from performance appraisal as it refers to the abilities of the employees that are not being used at the time of appraisal. It searches for the latent abilities of the employee in discharging higher responsibilities in future. The potential of the employees is judged on the basis of his present performance, personality traits, past experience and age and qualification. It also looks at the unused skills and knowledge of an employee. It aims at informing the employee their future prospectus and helps the organization in drawing your suitable successions plan. It also requires updating the training efforts regularly and advised the employees on things which they can do to improve their career prospectus.

The techniques of appraisal have been divided into two categories: The modern and the traditional techniques. While the traditional methods base their findings on the personality trades of an individual like creativity, responsibility, and leadership, the modern techniques laid more stress on the evaluation of work results. The traditional methods or techniques are:

1. Confidential report: It is used for promotion and transfer of an employee and is prepared by the immediate superior who describes in detail the strength and weaknesses along with major achievements and failures of the employee. The personality and behavior of the employee also find mention in this report.

2. Essay or free form method: As the name suggests the appraiser write a short essay detailing the performance of the employee. It is a very time consuming method and is prone to buys also as specific performance dimensions are not considered. The quality of appraisal also depends on the writing skills of the appraiser. It is also difficult to compare two Essay appraisals as there is no common criterion for the appraiser.

3. Strayed ranking method: This is the old and simplest method of performance appraisal. In this method ranks are assigned relatively to all the employees working in the same unit and doing the same job without analyzing their performance. The method biased as the ranking is not based on the specific performance measures of a job. It can be cumbersome if the number of employees is very large. The other limitations of this method are that it only tells how an employee stands in comparison with other employees.

4. Forced distribution method: In this method the evaluator is required to distribute his rating in the form of normal frequency distribution. Employees are shown in categories that range from poor to excellent by the evaluator. This method was evolved by Joseph Tiffin but it also suffers from certain limitations as the performance criteria related to a job are not used and the reasons for assigning a category to particular employee are not clear.

5. Graphic or linear rating scale: In this method a numerical scale is used which indicates different degrees to a particular trait. These traits can be initiative dependability creativity attitude loyalty emotional stability and co-ordination. The evaluator gives a particular ranking on each trait to every employee. Two types of rating scales are used: Continuous and discontinues. In first type degree of a trait is measure along a continuum like 0 1 2 3. IN discontinues rating scale boxes are used to show the different degrees of the traits like (I) no interest (II) indifferent (III) Interesting (IV) enthusiastic (V) very enthusiastic.

6. Critical incident method: This method was developed after a research by the armed forces of United States of the 2nd world war. It is based on a principal that there are some significant acts in the behavior and performance of every employee which can lead to the success of failure on the job. The supervisor keeps a record of these events which can be good or bad and also records the behavior of the employee during such an event. The ratings of the employee depend on the positive or negative behavior during these events. This method also has certain limitations like it is cumbersome and time consuming and a lot of important information is lost while coating the incident after a considerable gap of time. Continues record keeping is also not possible as such events keep on happening frequently. The bios by the supervisor in reporting these incidents can also not be ruled out completely.

7. Group appraisal method: Employees are rated by a group of people comprising the immediate supervisor of the employee and other supervisor who have the knowledge of the employee work along with the concerned head of the department and a personnel expert. This group determines the standards and then measures the actual performance of the employee. It suggests creative measures after analyzing the causes of poor performance. Though it is a time consuming method, it is free from bias.

Do check the methods of performance appraisal here
>What are the modern methods of performance appraisal?

Performance appraisal process has the following steps:

1. The first step in the process is the establishment of performance standards against which the output can be measured.

2. These standards are them communicated the employees as well as to the evaluators. This step helps the employees know what is expected from them and the feedback from the employees can be used for making any require changes in these standards.

3. The next step is to measure the actual performance against these standards a suitable technique for measurement is selected and the internal and external factors that influence the performance are also identified. Information on results is gathered and four sources are most commonly used to measure the actual performance. These are personal observations, Oral reports, written reports and statistical reports.

4. The results of the appraisal are then shared with the employee so that he become aware of the deviation in performance and can also identify and analyze the cause behind this deviation. This help and employee in identifying his strengths and weaknesses and improve future performance.

5. Corrective actions is then undertaken to improve the performance of the employees the common tools for corrective action are coaching, counseling and training.