Performance Appraisal Methods

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It is a systematic evaluation of an individual with respect to performance on the job and

individuals potential for development.
Definition 2: Formal System, Reasons and Measures of future performance
It is formal, structured system of measuring, evaluating job related behaviors and outcomes to
discover reasons of performance and how to perform effectively in future so that employee,
organization and society all benefits.
Meaning of Performance Appraisals
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Performance Appraisals is the assessment of individuals performance in a systematic way. It is a

developmental tool used for all round development of the employee and the organization. The
performance is measured against such factors as job knowledge, quality and quantity of output,
initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility and
health. Assessment should be confined to past as well as potential performance also. The second
definition is more focused on behaviors as a part of assessment because behaviors do affect job
results.
Performance Appraisals and Job Analysis Relationship
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Describe the job relevant

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Reward Management
Objectives of Performance Appraisals

Use of Performance Appraisals
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Performance Appraisal Process

1. Objectives definition of appraisal
2. Job expectations establishment
3. Design an appraisal program
4. Appraise the performance
5. Performance Interviews
6. Use data for appropriate purposes
7. Identify opportunities variables
8. Using social processes, physical processes, human and computer assistance
Difference between Traditional and Modern (Systems)

approach to Appraisals
Categories
Traditional Appraisals
Modern, Systems Appraisals
Guiding Values
Individualistic, Control
oriented, Documentary
Systematic, Developmental,
Problem solving
Leadership Styles
Directional, Evaluative
Facilitative, Coaching
Frequency
Occasional
Frequent
Formalities
High
Low
Rewards
Individualistic
Grouped, Organizational
TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS

Numerous methods have been devised to measure the quantity and quality of performance
appraisals. Each of the methods is effective for some purposes for some organizations only.
None should be dismissed or accepted as appropriate except as they relate to the particular
needs of the organization or an employee.
Broadly all methods of appraisals can be divided into two different categories.
Past Oriented Methods
Future Oriented Methods

Past Oriented Methods
1. Rating Scales: Rating scales consists of several numerical scales representing job related
performance criterions such as dependability, initiative, output, attendance, attitude etc. Each
scales ranges from excellent to poor. The total numerical scores are computed and final
conclusions are derived. Advantages Adaptability, easy to use, low cost, every type of job can
be evaluated, large number of employees covered, no formal training required. Disadvantages
Raters biases
2. Checklist: Under this method, checklist of statements of traits of employee in the form of
Yes or No based questions is prepared. Here the rater only does the reporting or checking and
HR department does the actual evaluation. Advantages economy, ease of administration,
limited training required, standardization. Disadvantages Raters biases, use of improper weighs
by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two or more
are given and the rater indicates which statement is true or false. The rater is forced to make a
choice. HR department does actual assessment. Advantages Absence of personal biases
because of forced choice. Disadvantages Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a high point on a
rating scale. Rater is compelled to distribute the employees on all points on the scale. It is
assumed that the performance is conformed to normal distribution. Advantages Eliminates
Disadvantages Assumption of normal distribution, unrealistic, errors of central tendency.
5. Critical Incidents Method: The approach is focused on certain critical behaviors of
employee that makes all the difference in the performance. Supervisors as and when they occur
record such incidents. Advantages Evaluations are based on actual job behaviors, ratings are
supported by descriptions, feedback is easy, reduces recency biases, chances of subordinate
improvement are high. Disadvantages Negative incidents can be prioritized, forgetting
incidents, overly close supervision; feedback may be too much and may appear to be
punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective behaviors
determine the points. They are said to be behaviorally anchored. The rater is supposed to say,
which behavior describes the employee performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions inherent in most rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees own
department usually from corporate or HR department. Advantages Useful for managerial level
promotions, when comparable information is needed, Disadvantages Outsider is generally not
familiar with employees work environment, Observation of actual behaviors not possible.
8. Performance Tests & Observations: This is based on the test of knowledge or skills. The
tests may be written or an actual presentation of skills. Tests must be reliable and validated to
be useful. Advantage Tests may be apt to measure potential more than actual performance.
Disadvantages Tests may suffer if costs of test development or administration are high.
9. Confidential Records: Mostly used by government departments, however its application in
industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report
(ACR) and may record ratings with respect to following items; attendance, self expression, team
work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness etc.
The system is highly secretive and confidential. Feedback to the assessee is given only in case of
an adverse entry. Disadvantage is that it is highly subjective and ratings can be manipulated
because the evaluations are linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description in detail
within a number of broad categories like, overall impression of performance, promoteability of
employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses
and training needs of the employee. Advantage It is extremely useful in filing information gaps
about the employees that often occur in a better-structured checklist. Disadvantages It its
highly dependent upon the writing skills of rater and most of them are not good writers. They
may get confused success depends on the memory power of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary returns yields
to his or her organization. Cost to keep employee, and benefit the organization derives is
ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers. The
usual techniques used may be ranking methods and paired comparison method.
Ranking Methods: Superior ranks his worker based on merit, from best to worst. However

how best and why best are not elaborated in this method. It is easy to administer and
explanation.
Paired Comparison Methods: In this method each employee is rated with another
employee in the form of pairs. The number of comparisons may be calculated with the help of
a formula as under.
N x (N-1) / 2
Future Oriented Methods
1. Management By Objectives: It means management by objectives and the performance is
rated against the achievement of objectives stated by the management. MBO process goes as
under.
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
Advantage It is more useful for managerial positions.
Disadvantages Not applicable to all jobs, allocation of merit pay may result in setting shortterm goals rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees
potential for future performance rather than the past one. It is done in the form of in-depth
interviews, psychological tests, and discussion with supervisors and review of other evaluations.
It is more focused on employees emotional, intellectual, and motivational and other personal
characteristics affecting his performance. This approach is slow and costly and may be useful for
bright young members who may have considerable potential. However quality of these appraisals
largely depend upon the skills of psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviors across a series of select exercises or work samples. Assessees are
requested to participate in in-basket exercises, work groups, computer simulations, role playing
and other similar activities which require same attributes for successful performance in actual
job. The characteristics assessed in assessment center can be assertiveness, persuasive ability,
communicating ability, planning and organizational ability, self confidence, resistance to stress,
energy level, decision making, sensitivity to feelings, administrative ability, creativity and mental
alertness etc. Disadvantages Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in
simulated situations. Those who are not selected for this also may get affected.
Advantages well-conducted assessment center can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content validity and
predictive ability are said to be high in assessment centers. The tests also make sure that the
wrong people are not hired or promoted. Finally it clearly defines the criteria for selection and
promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance
data on an individual group, derived from a number of stakeholders like immediate supervisors,
team members, customers, peers and self. In fact anyone who has useful information on how an
employee does a job may be one of the appraisers. This technique is highly useful in terms of
broader perspective, greater self-development and multi-source feedback is useful. 360-degree
appraisals are useful to measure inter-personal skills, customer satisfaction and team building
skills. However on the negative side, receiving feedback from multiple sources can be
intimidating, threatening etc. Multiple raters may be less adept at providing balanced and
objective feedback.
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