Performance Appraisal
Performance Appraisal
• An objective assessment of an individual’s
performance against well defined
benchmarks.
• Performance Appraisal is the systematic
evaluation of the performance of employees and
to understand the abilities of a person for further
growth and development.
• Objectives of Performance
Appraisal
Effecting promotions & transfers,
assessing training needs, awarding
pay increases/lay-off low performers
• Establish Job Expectations
Informing employees what is expected
of him, discussion with superior to
review major duties
What to evaluate?
• Quality
• Quantity
• Timeliness
• Cost effectiveness
• Need for supervision
• Interpersonal impact
• Community service
Who are the raters?
• Immediate supervisor
• Subordinates
• Peers
• Clients
• Rating Committees
Methods of Appraisal
• Past-oriented Methods Also known as
• Rating Scales: The numerical scale is prepared that
represents the job evaluation criterion such as the output,
initiative, attendance, attitude, dependability, etc. and ranges
from excellent to poor. Thus, each employee is given the
rating based on his performance against each set criteria and
then the consolidated score is computed accordingly. The
rating scales are one of the easiest traditional methods
• Checklist: A checklist of employee traits in the form of
statement is prepared where the rater put a tick mark in “Yes”
or “No” column against the trait checked for each employee.
• Forced Distribution Method: This method of performance
appraisal is based on the assumption that employee’s job
performance conforms to the normal distribution curve i.e. a
bell shaped curve. Hence, the rater is compelled to put
employees on each point on the scale. It is seen that cluster
of employees is placed at the highest point on a rating scale.
• Critical Incidents Method: Under this method, the critical
behavior of each employee that make a difference in the
effective or non-effective performance is recorded by the
supervisor and is taken into consideration while evaluating
his performance.
• Behaviorally Anchored Rating Scale: The descriptive
statements about employees’ behavior, both effective and
ineffective are put on the scale points, and the rater is
asked to indicate which behavioral point describes the
employee behavior the best.
• Field Review Method: Under this method, the
performance evaluation of an employee is done by
someone who does not belong to his department or is
usually from the corporate office or the HR department.
The outsider reviews the performance of an employee
through his records and holds interviews with the assesse
and his superiors.
• Performance Tests and Observations: The test either
written or oral is conducted to test the knowledge and
the skills of employees. Sometimes the employee is
asked to demonstrate his skills in the given situation and
then he is evaluated on that basis.
• Confidential Reports: The confidential reports are
mostly prepared by the government departments,
wherein the employee is evaluated on some of the
following parameters:
• Attendance
• Leadership
• Self-expression
• Ability to work with others
• Initiative
• Technical ability
• Integrity
• Responsibility, etc.
• Essay Method: Under this method, the detailed
description of the employee performance is written by
the rater. The performance of an employee, his
relations with other Co-workers, requirements of
training and development programs, strengths and
weaknesses of the employee, etc. are some of the
points that are included in the essay. The efficiency of
this traditional method of performance appraisal
depends on the writing skills of the rater.
• Cost Accounting Method: In this method, the
employee’s performance is evaluated in monetary
terms, i.e. how much cost company is incurring on
keeping the employee and how much he is
contributing to the firm in terms of his output.
• Comparative Evaluation Approaches: Under this
method, several comparative analysis are done,
wherein the performance of one employee is
compared with that of another Co-worker, and the
rating is determined accordingly. The Ranking
Method and the Paired Comparison Methods are the
usual comparative forms used in this approach.
• Ranking Method: In the Ranking Method, superiors
give the rank from best to worst, to their subordinates
on the basis of their merits. Here, the detailed
description of why best or why the worst is not given.
• Paired Comparison Method: Under this method,
the performance of each employee is compared with
the other employee and then the decision on whose
performance is better is made.
Methods of Appraisal
• Future Oriented
Methods Also
known as
• Management by Objectives(MBO): This concept was
given by Peter.F.Drucker, according to him, the
performance of an employee can be assessed on the
basis of the targets achieved by him as set by the
management of an organization.
• Firstly, the management sets the goals and
communicate the same to the employees, and then the
performance of an employee is compared against these
set goals and is evaluated on this basis.
• In case the employee is not able to achieve the pre-
established goals, then management decides on a new
strategy or policy that should be undertaken for the
accomplishment of unattainable goals.
• Psychological Appraisals: This is one of the most
frequently used modern methods of performance
appraisal, wherein the psychologist assesses the
employee’s potential for the future performance rather
than the past one.
• Under this method, the psychologist conducts the in-
depth interviews, psychological tests, discussions with
the supervisors and the reviews of other evaluations.
• This assessment is done to determine the intellectual,
emotional, motivational and other related
characteristics of an employee that is necessary to
predict his potential for the future performance.
• Assessment Centres: The assessment
center is the central location where the
managers come and perform the job
exercises.
• Here the assessee is requested to participate
in in-basket exercises, role playing,
discussions, computer simulations, etc. Where
they are evaluated in term of their persuasive
ability, communication skills, confidence,
sensitivity to the feelings of others, mental
alertness, administrative ability, etc.
• 360-Degree Feedback: It is a feedback
method wherein the details of an
employee’s performance is gathered from
other stakeholders such as superiors,
peers, team members and self. In this
method, the employee is asked about
himself, i.e. what he feels about his
performance, and then accordingly he can
realize his strengths and weaknesses.
Also, the peers or team members are
asked about assessee’s performance
through which the employee knows about
what others feel about him and can
overcome his disbeliefs if any. Thus, this
method is used to have a detailed
evaluation of an employee from all the
perspectives.
• 720-Degree Feedback: This is an
another feedback method, wherein
the assessment is done not only by
the stakeholders within the company
but also from the groups outside the
organization. These external groups
who assesses the employee’s
performance are customers,
investors, suppliers and other
financial institutions.
• It is one of the most crucial modern
methods of performance appraisal
because this is the only group that
determines the success of the
organization as a whole.
