METHODS OF

PERFORMANCE
APPRAISAL

Presented By : Sandhya
Madhu
 DEFINITION
 Performance appraisal, also
known as employee appraisal,
is a method by which the job
performance of an employee is
evaluated (generally in terms of
quality, quantity, cost and time).
Performance appraisal is a part
of career development

 Performance appraisals are

regular reviews of employee
performance within organizations
COMPARING PERFORMANCE
APPRAISAL & PERFORMANCE
MANAGEMENT

 Performance appraisal
• Evaluating an employee’s current and/or past
performance relative to his or her performance
standards.

 Performance management
• The process employers use to make sure employees
are working toward organizational goals.
 OBJECTIVES OF PERFORMANCE
APPRAISAL

 review the performance .

 judge the gap between actual and the desired performance.
 strengthen the relationship and communication between
superior – subordinates and management – employees.
 diagnose the strengths and weaknesses of the individuals so as to
identify the training and development needs of the future.
 provide feedback to the employees regarding their past
performance.
 Provide clarity of the expectations
 Reduce the grievances of the employees
METHODS OF PERFORMANCE
APPRAISAL
 FREE ESSAY METHOD
 It is also called ‘free form’ appraisal method. The appraiser
is required to write an essay or a brief narrative that best
describes the performance of the employee being
appraised.

 Usually, the appraiser is asked to describe employee

strengths and weaknesses. Managers also provide
feedback to the employees and suggest performance
improvement plans.
ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Provide opportunity to  Time consuming

highlight unique  Quality of performance
characteristics of the appraisal influenced by
employee being the writing skills of the
appraised manager
 Allows for more  Trends to be subjective
flexibility for the rater since manager may not
 Most effective when focus on relevant
combined with other aspects of job
methods performance
 GRAPHICS RATING SCALE

 This is the most commonly used method of

performance appraisal. In it one of the each person
is rated on a continuous scale. These factors are
employee characteristics & employee contribution
which includes qualities such as initiative,
leadership, cooperativeness, dependability,
industry, attitude.
Graphic Rating
Scale
with Space
for Comments
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Simple  Each point on the scale

 Most widely used may have different
 Easy to develop meaning for different
raters
 Provides numerical
 May result in
score for performance
subjectivity
 Allows comparison of
scores between
individuals
 FIELD REVIEW METHOD
 The appraiser goes to the field and obtains the information
about work performance of the employee by way of
questioning the said individual, his peer group, and his
superiors.

Performance Subordinate Peers Superior Customer

Dimension
Leadership ^
Communication ^ ^
Interpersonal ^ ^
skill
Decision ^ ^ ^
making
Technical skill ^ ^ ^
Motivation ^ ^ ^
 FORCED-CHOICE METHOD
 In this ranking method it attempts to correct a
rater’s tendency to give consistently high or
consistently low rating to all the employees. This
method uses objective reporting & minimum
subjective rating.
Regularity Most Least
Always regular
Inform in advance
for delay
Never regular
Remain absent
Neither regular nor
irregular
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Helps discriminate  Difficult to construct

between good & poor pairs of favourable or
performers unfavourable items
 Reduces bias &
subjectivity
 More objective
CHECKLIST METHOD

 Checklist describing behavior of the employees on job.

 Contains a list of statements on the basis of which the rater
describes job performance .
 Checks if behavior is positive or negative to each statement
 Employee performance rated on the number of positive checks.
 Negative checks are not considered
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Minimizes biases &  Require time & efforts

errors to develop
 Facilitates comparison  Checklist items have to

of performance be changed as the

between employees nature of jobs change
 Help in identifying
over time
 Raters do not know the
training needs of
employees weights assigned to
each statement,
creating a barrier to
effective performance
feedback
 CRITICAL INCIDENT METHOD

 Continuous appraisal method

 Supervisor continuously records in a specially
designed notebook.
 Rating on basis of critical events.
 Includes both negative and positive points.
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Covers the entire  Difficult for the

appraisal period & evaluator to observe &
therefore guards note down all instances
against errors related of favourable &
to behaviour sampling unfavourable employee
or focusing on last few performance
weeks of performance  Managers must be
only trained observers in
order to be objective
 MANAGEMENT BY OBJECTIVE
 Involves setting specific measurable goals with each
employee and then periodically reviewing the progress
made.

1. Set the organization’s goals.

2. Set departmental goals.

3. Discuss departmental goals.

4. Define expected results (set individual goals).

5. Performance reviews.

6. Provide feedback
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Participative goal-  Time-consuming

setting enhances  Superior & subordinate
employee commitment ma y collude to set
 Ongoing feedback & easy targets
coaching result in  Fail in an autocratic
higher motivation system
 Employees know how  May lead to emphasis
they are contributing to on short-term
overall organizational objectives
performance
 RANKING METHOD
 This method requires the manager to rank or list all
employees from highest to lowest on a trait or
dimension of performance. It is two types such as
1. Alteration method :In this system supervisor indicia
list of all employees then he select the best
performance number – 1 and the worst
performance number – n, then the second best
number, and the worst no (n-1).
2. Paired comparison method: In this each employee
is compared every trait all other persons in pairs
one at a time. In this judgment is simpler than the
ordinary ranking method.
RANKING METHOD
 Ranking
employees
from best to
worst on a
particular
trait,
choosing
highest, then
lowest, until
all are
ranked
ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVA NTAGES

 Simple and  Size of difference

uncomplicated between two ranks is
 Best result not well-defined
 Motivation  Difficult to use with
large group of
employee
 Employee’s rank is
relative to others with
whom he/she is
compared
ASSESSMENT CENTER METHOD
 Use of methods like social/informal events, tests and
exercises, assignments being given to a group of employees
 Assignment similar to the job expected.

 The trained evaluators observe and evaluate employees as

they perform the assigned jobs.
The major competencies that are judged in assessment
centers are—
• interpersonal skills,
• intellectual capability,
• planning and organizing capabilities,
• motivation,
•career orientation etc.
ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Comprehensive  Require expertise to develop

evaluation  Development time can be

 Valid, better, predictor

lengthy
 Requires higher rate of
 Multiple uses
participation
 More information for  Time consuming

decision making  Cost more

 Involves more people

 Requires more room for

administration
 360 DEGREE PERFORMANCE
METHOD
360-degree Appraisal is an assessment process used to
improve managerial effectiveness by providing the manager
with a more complete assessment of their effectiveness, and
their performance and development needs.
Example of company use 360 degree method
Wipro

Infosys

Reliance

Maruti industries
HCL technologies
360 DEGREE PERFORMANCE
ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 Applying this valuable  Poor implementation of

information, they can 360 tool negatively
take steps to effects motivation
continuously improve  Use of the feedback as
their effectiveness on stand alone without
the job. follow-up
 The organization can  Feedback not linked to
develop appropriate organizational goal or
skills to consistently value
reflect company values
720 DEGREE PERFORMANCE
APPRAISAL
 Considered an “all-round” appraisal, the 720 degree
performance appraisal gives an employee more
than feedback from one person.
 This appraisal gives the employee a lot of feedback
generally from anywhere from 5 to 8 people, to
provide the employee with an all round assessment
of his or her on the job performance.
 720 degree as the name suggests is 360 degree
twice
 It provide for two round of feedback (a pre and
post ) or a feedback approach which is done again
after nine to twelve months.
720 CANTAINS -
 Key skill/capability type
 Skill component/element

 Question number (purely for reference and ease of

analysis)
 Specific feedback questions

 Tick box and grade box (ideally a,b,c,d or excellent

,good, not good, poor or rate out of 5 to 10.
 ADVANTAGES & DISADVANTAGES
ADVANTAGES
 Improved feedback from
more sources
 Team development
 Personal & organizational
performance development
 Training need assessment
 Improve customer service
DISADVANTAGES
 Exceptional expectation
for the process
 Insufficient information
 Design process
downfalls
 Failure to connect the
process
 Focus on negative &
weakness
 BALANCE SCORECARD METHOD
 The balance scorecard is a planning and
management system that is used extensively in
business and industry, government, and nonprofit
organizations worldwide to align business activities
to the vision and strategy of the organization,
improve internal and external communication, &
monitor organization performance against strategic
goal.
FOUR PERSPECTIVES OF BSC
 Financial
 Customer

 Internal Business
processes
 Learning and Growth
 ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES

 To measure company’s  Forethought

performance.
 Information is limited in
 To determined the scorecard.
health of stakeholder.
 In the from of metrics.
 To match with desired
outcomes.
PROBLEMS IN PERFORMANCE
APPRAISAL

 Error of central tendency,

 Leniency and strictness biases

 Personal prejudice,

 Recency effect

 Primacy effect /first impression

 Stereotyping

 Sampling error

 Lack of rater preparedness

HOW TO AVOID APPRAISAL
PROBLEMS
 Understand the potential
problems, and solutions
 Use the right appraisal tool.
Each tool has its own pros and
cons.
 Train supervisors to reduce
rating errors such as halo,
leniency, and central tendency.
 Have raters compile positive and
negative critical incidents as
they occur.
 :::DON'T LET EMPLOYEES
COME INTO THE
PERFORMANCE
APPRAISAL BLINDLY OR
LEAVE BLINDLY, WITHOUT
A SENSE OF DIRECTION
OR ACCOMPLISHMENT!:::