Evaluating an employee’s current and/or past performance relative to his or her performance
standards is known as performance appraisal. On the other hand, performance appraisal as
any procedure that involves (a) setting work standards (b) assessing the employee’s actual
performance relative to those standards and (c) providing feedback to the employee with the
aim of motivating him or her to eliminate performance deficiencies or to continue to perform
above par.
Necessity of Appraising performance :
There are four reasons to appraise subordinates performance.
 First, from a practical point of view, most employers still base pay and promotional
decisions on the employee’s appraisal. However, the minimum level of performance
does need to be recorded to be eligible for promotions.
 Second, appraisal play an integral role in the employer’s performance management
process. It does little good to translate the employer’s strategic goals into specific
employee’s goals, if performance don’t review periodically.
 Third, the appraisal lets the boss and subordinate develop a plan for correcting any
deficiencies, and to reinforce the things the subordinate does right.
 Fourth, appraisals should serve a useful career planning purpose.
Appraisal method :
The manager generally conducts the appraisal itself with the aid of a predetermined and
formal tool like one or more of those described next. The two basic considerations in
designing the actual appraisal tool are what to measure and how to measure it (1). What to
measure, measures the employee’s performance in terms of generic dimensions such as
quality, quantity and timeliness of work. In terms of how to measure there are various
methodologies, including graphic rating scales, alternation ranking method, forced
distribution method etc. Above methods are discussed below in brief.
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Graphic rating scales :
The graphic rating scale is the simplest and most popular method for appraising performance.
A graphic rating scales lists traits (such as quality and reliability) and a range of performance
values (from unsatisfactory to outstanding) for each trait. The supervisor rates each
subordinate by circling or checking the score that best describes his or her performance for
each trait. The assigned values for the traits are then totaled.
Acceptable rating scales should have the following characteristics:
 Performance dimensions should be clearly defined.
 Scales should be behaviorally based so that a rater is able to support all ratings with
objective, observable evidence.
 Abstract trait names such as "loyalty," "honesty," and "integrity" should be avoided
unless they can be defined in terms of observable behaviors.
 Points, or anchors, on each scaled dimension should be brief, unambiguous, and
relevant to the dimension being rated. For example, in rating a person's flow of words,
it is preferable to use anchors such as "fluent," "easy," "unimpeded," "hesitant," and
"labored," rather than "excellent," "very good," "average," "below average," and
"poor."
Advantages:
 Standardization of content permitting comparison of employees.
 Ease of development use and relatively low development and usage cost.
 Reasonably high rater and ratee acceptance.
Disadvantage :
A disadvantage of such rating scales is that they are susceptible to rating errors which result
in inaccurate appraisals. Possible rating errors include halo effect, central tendency, severity,
and leniency. The halo effect occurs when a rating on one dimension of an appraisal
instrument substantially influences the ratings on other dimensions for the same employee.
As a result of the halo effect, an employee is rated about the same across all performance
dimensions. Central tendency is a lack of variation or difference among ratings of different
subordinates, wherein most employees tend to be rated as average. Leniency refers to an
evaluator's tendency to rate most employees very highly across performance dimensions,
whereas severity refers to the tendency to rate most employees quite harshly.
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Alteration ranking method :
Ranking employees from best to worst on a trait or traits is anther option. Since it is usually
easier to distinguish between the worst and best employees, an alteration ranking method is
most popular. So, in alteration ranking method, ranking employees from best to worst on a
particular trait, choosing highest, then lowest, until all are ranked.
Advantages of Ranking Method
 Employees are ranked according to their performance levels.
 It is easier to rank the best and the worst employee.
Limitations of Ranking Method
 The “whole man” is compared with another “whole man” in this method. In practice,
it is very difficult to compare individuals possessing various individual traits.
 This method speaks only of the position where an employee stands in his group. It
does not test anything about how much better or how much worse an employee is
when compared to another employee.
 When a large number of employees are working, ranking of individuals become a
difficult issue.
 There is no systematic procedure for ranking individuals in the organization. The
ranking system does not eliminate the possibility of snap judgments.
Paired comparison method :
The paired comparison method helps to make the ranking method more precise. In this
method, ranking employees by making a chart of all possible pairs of employees for each
trait and indicating which is the better employee of the pair.
Forced Distribution method :
The forced distribution method is similar to grading on a curve. With this method,
predetermined percentages of ratees are placed in various performance categories. Foe each
trait (quality of work, creativity and so on) place the employee’s card in the appropriate
performance category.
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Advantages of Forced Distribution
 This method tends to eliminate raters bias
 By forcing the distribution according to pre-determined percentages, the problem of
making use of different raters with different scales is avoided.
Limitations of Forced Distribution
 The limitation of using this method in salary administration, however, is that it may
lead low morale, low productivity and high absenteeism.
 Employees who feel that they are productive, but find themselves in lower grade(than
expected) feel frustrated and exhibit over a period of time reluctance to work.
Management by objectives (MBO):
Management by objectives (MBO) involves setting specific measurable goals with each
employee and then periodically discussing his/her progress toward these goals. The term
MBO almost always refers to a comprehensive organization-wide goal setting and appraisal
program that consist of six main steps:
 Set the organization goals. Establish organization-wide plan for next year and set
goals.
 Set departmental goals. Here department heads and their superiors jointly set goals for
their departments
 Discuss and allocate department goals. Department heads discuss the department's
goals with all subordinates in the department (often at a department-wide meeting)
and ask them to develop their own individual goals; in other words, how can each
employee contribute to the department's attaining its goals.
 Define expected results (set individual goals). Here, department heads and their
subordinates set short-term performance targets.
 Performance review and measure the results. Department heads compare actual
performance for each employee with expected results.
 Provide feedback. Department heads hold periodic performance review meetings with
subordinates to discuss and evaluate progress in achieving expected results.
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ACR : Annual confidential report
Once every year, a manager prepares annual confidential reports for each subordinate who
reports to him. In these reports, he talks of the highs and lows of the employee’s performance
in the past year. This report is tabulated and documented by the human resources department
and forwarded to management for a decision on the employee’s future in the organization.
The drawback here is that the employee does not get the chance to make improvements on his
performance as this report is kept confidential.
360 Degree Feedback
A popular contemporary appraisal technique is the 360 degree feedback. In this method,
employees are evaluated by colleagues, customers, subordinates, other interested parties an
supervisors. The major advantage of this technique is that it offers the employee a glimpse of
how others view his performance in various relationships critical to his job. It also allows a
better chance to compare different perspectives in the evaluation process. Biased evaluators,
poor alignment with goals and negative employee feelings are among cons of this approach.
(2)
Critical Incident Method :
With the critical Incident method, the supervisor keeps a log of positive and negative
examples (critical incidents) of a subordinate’s work related behavior. Every six months or
so, supervisor and subordinate meet to discuss the latter’s performance, using the incidents as
examples.
This method has several examples. It provides examples of good and poor performance the
supervisor can use to explain the person’s rating. It makes the supervisor think about the
subordinate’s appraisal all during the year. It’s common to accumulate incidents that relate to
the employee’s performance goals.
Advantages of Critical Incident techniques
 This method provides an objective basis for conducting a thorough discussion of an
employees performance. (3)
 This method avoids recent bias (most recent incidents are too much emphasized)
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Limitations of Critical Incident techniques
 Negative incidents may be more noticeable than positive incidents.
 The supervisors have a tendency to unload a series of complaints about the incidents
during an annual performance review sessions.
 It results in very close supervision which may not be liked by an employee.
 The recording of incidents may be a chore for the manager concerned, who may be
too busy or may forget to do it.
Behaviorally Anchored rating scales :
A behaviorally anchored rating scale is an appraisal tool that anchors a numerical rating
scale with specific behavioral examples of good and poor performance. It thus combines the
benefits of narratives, critical incidents, and quantified (graphic rating type) scales. BARS
differ from other rating scales in that scale points are specifically defined behaviors. Also,
BARS are constructed by the evaluators who will use them. There are four steps in the BARS
construction process:
 Listing of all the important dimensions of performance for a job or jobs
 Collection of critical incidents of effective and ineffective behavior
 Classification of effective and ineffective behaviors to appropriate performance
dimensions
 Assignment of numerical values to each behavior within each dimension (i.e., scaling
of behavioral anchors)
Sample of BARS
INTERPERSONAL SKILL DESCRIPTION: Develops and maintains a friendly rapport with
others; demonstrates a sensitivity to their feelings; respects the dignity of others and responds
with empathy to their own sense of self-worth.
Ratings 1 and 2: Demonstrates the ability to get along well with subordinates, managers, and
peers; strives to achieve work group objectives. Can express own ideas, thoughts, and
feelings and considers the needs, ideas, and feelings of others.
Ratings 3 and 4: Demonstrates the ability to apply factors of effective listening, on a one-toone basis, such as displaying interest, not interrupting when another is speaking, and
withholding judgments. Consistently provides honest (both positive and negative) feedback
and provides constructive criticism when appropriate(4).
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Ratings 5 and 6: Demonstrates the ability to consistently consider and respond to the needs
and ideas of others which encourages and stimulates further communication. Effectively
listens in group or one-to-one situations involving distractions, stress, complex information,
or when the person speaking is emotional/distraught. Creates/maintains a positive working
environment that encourages expression of thoughts, ideas, and feelings.
Evaluation of Appraisal Methods:
Determining the best appraisal method or form to use depends on the objectives of the
organization. A combination of the methods and forms is usually superior to any one used by
itself. For developmental objectives, the critical incidents, MBO methods work well. For
administrative decisions, a ranking method based on the evaluative methods and especially
graphic rating scale or BARS forms works well(5). Remember that the success of the
performance appraisal process does not just lie in the formal method or form used once or
twice a year. It depends on the manager’s human relations skills in ongoing critical incidents
coaching, and on effective measures of performance that are accurate so that everyone
knows why they are rated at a given level (evaluative), as well as how to improve (develop)
for the next assessment. PerformanceReview.com is a website that has been designed to help
managers write complete and effective performance appraisals online. The site offers
practical advice to guide managers through the appraisal process.
Conclusion
A part of human resource management is performance appraisal to improve corporate
performance, all the while harming the targeted individuals and even undermining the
commitment and energy of the survivors. Developing clear, realistic performance standards
can also reduce communication problems in performance appraisal feedback among
managers, supervisors, and employees. A comparison of methods is represented with
attention to the key features of each performance appraisal method. These features play an
important role in successful appraisal of employees. Appraisal plays an integral role in the
employer’s performance management process. It does little good to translate the employer’s
strategic goals into specific employee’s goals, if performance don’t review periodically. The
represented framework helps human resource managers to select their suitable method with
attention to methods’ features and apply it in organization and be sure of doing appraisal
successfully.
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References
1) Human Resource Management by Gary Dessler, 11th Edition, 2008
2) http://smallbusiness.chron.com/pros-cons-performance-appraisal-methods-39497.html
3) http://www.managementstudyguide.com/performance-appraisal-tools.htm
4) http://www.explorehr.org/articles/Performance_Appraisal/Performance_Appraisal_M
ethods.html
5) http://www.sagepub.com/upm-data/45674_8.pdf
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