Introduction to Human Resource Management

Chapter 10 : Performance Appraisal

Concept of Performance Appraisal, Objectives of Performance Appraisal, The Appraisal Process, The Appraisers, Self Appraisal, Supervisors, Peers, Customers, Clients, Subordinates, Performance Appraisal Methods, Management by Objectives, Graphic Rating Method, Work Standards Approach, Essay Appraisal, Critical Incident Method, Forced Choice Rating Method, Point Allocation Method, Ranking Method, Checklist, Behaviourally Anchored Rating Scale, 360 Degree Performance Appraisal, Team Appraisals, Balanced Scorecards, The Appraisal Interview, Challenges of Appraisal Interview, Pitfalls in Performance Appraisal, Uses of Performance Appraisal, Ethics of Performance Appraisal

Chapter Summary

Performance appraisal measures the qualitative and quantitative aspects of job performance. An appraisal evaluates not only the employee's performance but also his potential for development. The primary objectives of an appraisal are – to assess past performance, to identify training needs, to set and agree on future objectives and standards, and to facilitate the achievement of these goals.

In many situations, the appraiser is the supervisor of the person who is to be rated. However, companies may also use multiple raters to evaluate performances (360 degree appraisal). Peer and self-evaluations are on the increase, as are customer or client evaluations. Some appraisal systems use subordinate or reverse appraisals and team rating techniques.

Different methods are used for appraising performance. In the straight ranking method, employees are ranked from the best to the worst on the basis of their performance. Management by Objectives involves an agreement between a superior and his employee on the employee's performance objectives for a specified period and a periodic review of the extent to which the employee is able to accomplish those objectives.

Under the graphic rating scale method, an employee's performance is rated on a scale ranging from high to low. In the checklist approach, the rater is given a set of positive or negative descriptive statements that best describe employee performance and characteristics. When weights are assigned to each of the items on the checklist, depending on the importance of each item, it is known as a weighted checklist.

In the essay method of appraisal, the appraiser writes an essay describing an employee's past performance, strengths, weaknesses, potential and provides suggestions for future development. Under the critical incident method, the appraiser evaluates performance on the basis of a record of unusually favorable or unfavorable instances of the employee's performance.

The forced choice method is a kind of checklist, which requires the appraiser to rank the statements from the one that best describes the employee to the one that describes him least well. Weights (which are unknown to the appraiser) are attached to these statements, which help in evaluation. Under the point allocation method, the rater has to allocate a fixed number of points among all the employees in a group.

This method brings out the relative differences in the performance of employees. Each employee is compared with all the other employees in the same group in the paired comparison method. Among the modern methods, BARS or the Behaviorally Anchored Rating Scale has scale values attached to a group of anchors under each dimension and the employee is rated on the scale.

This system demands active participation of both the appraiser and the appraisee. The 360 degree appraisal method reduces subjectivity in that the individual is appraised by his peers, customers/clients and subordinates apart from the supervisor. The balanced scorecard method, which is being adopted by more and more corporates, helps align individual efforts to organizational goals and objectives.

The team appraisal system involves the appraisal of each team member by every other member of the team, to improve the overall effectiveness of the team. The appraisal interview is characterized by performance-related feedback which is intended to improve employee performance and promote development.

Some rater biases that impede objective evaluation are the halo effect, the error of central tendency, leniency and strictness biases, cultural bias, stereotyping, perceptual set, the recency and primacy effects. Such biases can be reduced by providing suitable training and feedback to raters, and through proper selection of performance appraisal techniques. A performance appraisal system also acts as an audit and helps in revamping HR processes and systems for improved performance.

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