Performance appraisal is the foundation of career planning. Through this process, employees work towards goals that support the needs of the business and their professional development.
The purpose is to build relationships and facilitate conversations between employees and managers throughout the year with regard to performance goals, career goals, and career planning.
Feedback communicated in a positive manner goes a long way to motivate the employees and helps to identify individual career developmental plans.
Based on the evaluation, employees can develop their career goals, achieve new levels of competencies, and chart their career progression.
Performance appraisal encourages employees to reinforce their strengths and overcome their weaknesses.
The latest mantra being followed by organizations across the world is – “get paid according to what you contribute” – the focus of the organizations is turning to performance appraisal and specifically to individual performance.
Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organisational goals.
Performance appraisal as a career planning and development tool lead to the recognition of the work done by the employees, many times by the means of rewards and appreciation, etc.
It plays the role of the link between the organisation and the employee’s personal career goals.
Performance appraisal is also closely linked to other HR processes as it helps to identify the training and development needs, promotions, demotions, changes in compensation, etc.
The linking of appraisal to pay and/or promotion should not be seen as payment by results. Rather this linking is an attempt to ensure that informed decisions are taken about the career progression of employees.
In short, ‘decisions directly affecting career development within the current salary structure – internal promotion and references for external promotions, e.g. – should be as well informed as possible.
This knowledge can best be acquired through staff appraisals that focus on performance. In matters of performance, ‘it remains the department’s view that a pay system which rewards exceptional performance in the organisation would be very much in the interests of the employees’.
Thus, performance appraisals play a key role in several administrative areas such as promotions, job transfers, and legal protection.
With the data generated from employee appraisals, one is better able to make good decisions about a wide range of matters that directly affect the employees, department, and the company at large.
Objectives of Linking Performance with Promotion Policy
The objectives of linking performance with promotion policy are as follows:
- To integrate the growth opportunities of the executives with the fulfilment of the company’s objectives.
- To identify, train, and develop competent personnel with growth potential and to provide a policy environment for high levels of performance.
- To provide a system of equality in opportunity, equity in assessment, and uniformity in implementation among all the Units, Business Groups, Directorates, and Officers of the company in the matter of promotion.
- To seek and provide a continuous team of work sustained high levels of competence in the company.
Setting Groundwork for Promotion
One of the strongest motivators that many employees bring to the job is focused on being promoted.
As a manager, one can look back on an employee’s performance over a given period and have a general impression regarding his promotability.
However, if employer bases a promotion decision on feelings rather than findings, he actually generates difficulties in three distinct areas:
Problems for the Promoted Employee
Without accurate performance data, the employer is likely to promote the wrong person.
In such a case, the outcome is obvious; Namely, he is likely to fail. This creates an entirely new menu of problems that await him, such as extra time monitoring, coaching, counselling, disciplining, and perhaps terminating this individual plus, the organisation has lost an employee who probably was performing satisfactorily in his original position and became just a marginal person in the newly filled position.
Problems for the Employee who is not Promoted
By promoting the wrong person, the employer has most likely also upset at least one other person in the department – namely, the person who deserved to move up the ladder.
This person is likely to be upset and believes that promotions in the department are unfair and arbitrary. These types of feelings eat away an employee’s motivation, commitment, and performance — which means one of the best employees, is now dissatisfied.
Problems for the Rest of the Team
Employees get a strong sense of which co-workers are actually deserving of promotions.
When they see a promotion decision that ignores a truly outstanding coworker, they too develop doubts about the role of equity and merit in the department.
Such doubts can chip away at their attitudes and job behaviours as well. Thus, when the wrong person is promoted, dissatisfaction is promoted throughout the department. So, promotion policy must be linked with the employees’ performance.
Promotion Policy in Large-Scale Company
The promotion policy for officers/executives and supervisory levels (called PS Grades) of a large-scale company having manufacturing units all over India is given hereunder:
1. Promotion policy shall cover all promotions made in PS Grade posts and shall apply to all Units, Business Groups/Functional Directorates, Corporate, and other Offices of the company.
2. The PS Grades shall be divided into two broad cadres:
- The unit cadre comprises executives in the Scales PS I to PS VI.
- The corporate cadre comprises executives in the Scales PS VII and above.
Promotion in the Unit Cadre shall be organized in respective Units. Promotion in the Corporate Cadre shall be organised in the Corporate Office.
3. For purpose of promotion and career planning of executives, the scales of pay can be codified in the following groups:
4. There can be two systems of promotion within the executive positions in the company i.e., promotions within the groups and between the groups.
All the promotions made in accordance with this promotion policy will be from one scale of pay to the next without skipping any scale of pay.
5. The promotion norms shall consist of two parts:
- Eligibility Factors: Which include a qualifying period, qualification norms, attendance, conduct, and prescribed standards in Performance Appraisal.
- Suitability Factors: Which includes an interview and an assessment of the potential of the executive in his own channel of promotion or for a post other than in his own channel of promotion.
6. Promotions within the group can be:
- Unit Cadre: Promotions within the groups will be made by the Competent Authority on the recommendations of DPC. Ordinarily, there should be no vacancy constraint for promotions within the groups, for executives fulfilling the prescribed norms.
- Corporate Cadre: All Promotions in the Corporate Cadre, i.e. Group V shall be subject to the availability of vacancies and the organisational need to fill them.
7. These promotions shall be made in accordance with the above eligibility and suitability factors and will be based on the availability of vacancies and the organisational need to fill up such vacancies.
In considering the promotion of an executive from one group to another, merit will be the primary consideration, which will include an assessment of the executive’s potential and aptitude for a higher managerial position.
8. Executives who have outstanding reports for three consecutive years shall be considered for promotion in accordance with the qualifying periods prescribed for the outstanding category.
However, the outstanding ratings of these executives shall be reviewed in detail before such consideration by the respective Performance Review Committees constituted for that purpose under the Performance Appraisal System.
As a Company norm, the top-ranking 10% to 20% will constitute outstanding performers. This will be Unit-wise, Grade-wise.
The low performers who fail to fulfil the prescribed eligibility norms for 3 successive years shall be counselled by the Committee(s).
This is in addition to the counselling done by their respective Reporting Officers as laid down in the Appraisal System.
The Committee(s) may also recommend developmental training and/or a change of job to enable such low performers to improve their performance.
9. Promotions shall be processed once a year in the month of May/June. The qualifying period shall be reckoned as the First of July in the current year.
Subject to fulfillment of other promotion norms, promotion orders shall be released effectively from 1st July only. Promotions with retrospective effects are totally discouraged.
Exceptions should have prior approval from the Director, of Personnel. An interview shall be conducted in all cases of promotion by the Departmental Promotion Committee or the Selection Committee, as the case may be.
For considering promotions in the same or similar disciplines in the Unit Cadre, a Division may be taken as a unitary channel of promotion wherever this is practicable. Otherwise, the unit could be taken as a channel of promotion.
10. Mechanics of Promotion: The Committee shall arrive at the recommendations on the basis of the following factors:
5 Marks shall be allotted for each completed year of service in the present grade for promotions from PS I through PS IV 3 Marks shall be allotted for each completed year of service in the grade for promotion from PS V to PS VI and above.
Marks for the Performance Appraisal may be calculated as under:
The weighted Total Appraisal Score is to be divided by 5 for each of the three preceding years and averaged out.
In the Interview, the Committee will assess the candidate’s merit including his potential and aptitude for higher responsibilities.
The DPC or Selection Committee as the case may be, shall make its recommendations in the order of merit arrived at on the basis of the total marks obtained by the candidates.
For this purpose, the DPC or Selection Committee, as the case may be, shall also draw up an integrated assessment, in which the candidate shall be ranked in order of merit.
This order of merit will be reckoned as the order of seniority in the promoted grade for future promotion.
11. Rotation: It includes:
- Candidates Promoted from the Supervisory to the Executive Group as also from Executive to Senior Executive Group should be invariably given a new assignment different from what they have been doing.
- Ordinarily, an executive is expected to acquire experience in at least two disciplines/areas of work units for consideration for promotion to PS VI,
- Mobility of executives from one unit to another as per the need of the organisation will be a consideration for promotions.
12. Probation: All promoted candidates shall be on probation for a period of one year.
13. Zone of Consideration for Intergroup Promotion: For each vacancy, normally 4 eligible candidates in order of seniority as above will be called for an interview.
14. Promotions to PS III: Not more than 50% of the positions available in PS III shall be filled from PS II. This shall not be more than 25% in high-tech areas, CNC, R&D, and Designs.
15. Reservations: Reservations for SC/ST shall be made in accordance with the presidential Directives.
16. Interpretation: The interpretation of the Personnel Directorate shall be final in respect of this Policy and Rules. Promotion audit, wherever necessary, will be made by the Personnel Directorate.
17. Savings: The management reserves the right to change, alter, modify, add to or delete any or all the clauses of this Promotion Policy including the declaration of a Promotion Holiday.