Performance Appraisal- Meaning, definition, process, methods,essentials and problems.

Problems in Performance Appraisal/Limitations of Performance Appraisal

1.Errors in rating

Performance appraisal  may  not  be  valid  indicator of performance and potential of employees due to the following types of errors:

a) Halo effect

The halo error occurs when one aspect of the subordinate’s performance affects the rater’s evaluation of other performance dimensions. If a worker has few absences, his supervisor might give the worker a high rating in all other areas of work. Similarly, am employee might be rated high on performance simply because he has good dress sense and comes to office punctuality.

b) Stereotyping

Stereotyping is a mental picture that an individual holds about a person because of that person’s sex, age, religion, caste etc. by generalizing behavior on the basis of such blurred images, the rater grossly overestimates or underestimates a person’s performance. For example, employees from rural areas might be rated poorly by raters having a sophisticated urban background, if they view rural background negatively.

c) Central Tendency

 It means  assigning average ratings  to all the employees in order  to avoid commitment or involvement.This is adopted  because  the rater  has not  to justify  or clarify  the average  ratings.  As a result,  the  ratings  are  clustered around  the midpoint.

d)  Constant Error

Some evaluators tend to be lenient  while others  are strict in assessing performance. In the first case, performance is overrated (leniency   error) while in  the  second   type it is underrated  (strictness  error).   This  tendency may be avoided by holding  meetings so that  the raters  understand  what  is required  of them.

e) PersonalBias

 Performance appraisal may become invalid because the rater dislikes an employee. Such bias  or prejudice may arise  on the basis  of regional  or religiousbeliefs and habits  or interpersonal conflicts. Bias may also be the result  of time. Recent experience or first  impression of the rater  may affect the evaluation.

f)  Spill Over Effect

 This  arises  when past  performance affects  assessment of present   performance.   For  instance,  recent  behaviour  or  performance  of an employee may be used  to judge  him. This is called recency.

  1. Lack of Reliability

  Reliability implies   stability   and  consistency  in  the measurement. Lack of consistency over time and among different raters  may reduce the reliability of performance appraisal. Inconsistent use  of measuring standards and lack  of training  in appraisal  techniques may also  reduce  reliability. Different qualitiesmay not be givenproper wetghtage.  Factors like initiativeare highlysubjective and cannot  be quantified.

  1. Poor appraisal forms

The appraisal process might also be influenced by the following factors relating to the forms that are used by raters:

  • The rating scale may be quite vague and unclear
  • The rating form may ignore important aspects of job performance.
  • The rating form may contain additional, irrelevant performance dimensions.
  • The forms may be too long and complex.
  1. Incompetence

Raters  may fail to evaluate  performance accurately due  to lack of knowledge  and  experience.  Post  appraisal   interview is  often  handled ineffectively.

  1. NegativeApproach

Performance appraisal loses most of its value when the focusof management is on punishment rather  than  on development of employees.

  1. Multiple Objectives

 Raters  may get confused due  to two many  objectives or unclear  objectives of performance appraisal.

  1. Resistance

Trade  unions  may resist  performance appraisal on the ground that it  involves discrimination  among  its  members.  Negative ratings   may  affect interpersonal relations and industrial relations particularly when employees/unions do not have faith  in the system  of performance appraisal.

  1. Lack of Knowledge

The staff appraising performance of employees might not be trained and  experienced enough  to make  correct  appraisal.

Essentials of an Effective Performance Appraisal System

Performance appraisal system should be effective as a number of crucial decisions are made on the basis of score or rating given by the appraiser, which in turn, is heavily based on the appraisal system. An appraisal system, to be effective, should possess the following essentials characteristics:

1.Mutual Trust

 An  atmosphere     of mutual    trust    and   confidence    should   be created    in  the   organisation      before   introducing      the   appraisal      system.    Such   an atmosphere    is necessary    for frank  discussion    of appraisal.    It also  helps  to obtain  the faith  of employees    in the  appraisal    system.   Performance   appraisal     is an  emotional process   involving  feelings   of fairness   and  equal  treatment.    The  human   element   in it must   be  considered     if it is to serve  the  individual    and  organisational    purposes.

2. Reliability and validity

Appraisal system should be provide consistent, reliable and valid information and date, which can be used to defend the organization even in legal challenges. If two appraisers are equally qualified and competent to appraise an employee with the help of the same appraisal technique, their ratings should agree with each other. Appraisals must also satisfy the condition of validity, by measuring what they are supposed to measure. For example, if appraisal is made for potential of an employee for promotion, it should supply the information regarding potentialities of the employee to take up higher responsibilities.

3. Clear Objectives

 The  objectives   and  uses  of performance    appraisal    should be made  clear  and  specific.   The  objectives   should   be relevant,   timely  and  open.  The appraisal    system  should   be fair  so that  it is beneficial to both  the individual   employee and  the  organisation.    The  system   should   be  adequately    and   appropriately    linked with  other   subsystems     of human    resource    management.

4. Job relatedness

The appraisal system should measure the performance and provide information in job related activities/areas.

5. Standardisation

Well-defined performance   factors    and   criteria   should   be developed.   These  factors  as well as appraisal   form,  procedures    and  techniques   should be  standardised. It will  help  to  ensure   uniformity    and  comparison     of ratings.   The appraisal    techniques     should   measure    what  they  are  supposed     to  measure.    These should    also  be  easy  to  administer     and   economical    to  use.   Employees    should   be made   fully  aware   of performance    standards     and  should   be  involved   in  setting  the standards.

6. Training

 Evaluators    should   be given  training   in philosophy    and  techniques of appraisal.     They  should   be  provided   with  knowledge    and   skills   in  documenting appraisals,     conducting    post   appraisal    interviews,    rating   errors,    etc.

7. Documentation

  The  raters   should   be required    to justify   their  ratings. Documentation    will  encourage     evaluators     to  make   conscious     efforts   minimising personal    biases.   It will  also  help  to impart   accountability   for  ratings.

8. Feedback and Participation

Most employee want to know how well they are performing the job.A good appraisal system provides the needed feedback on a continuing basis. The appraisal interviews should permit both the parties to learn about the gaps and prepare themselves for future. Managers should clearly explain their performance expectations to their subordinates in advance of the appraisals period. Once this is know, it becomes easy for employees to learn about the yardsticks and if possible, try to improve their performance in future.

9. Individual Differences

 While  designing    the  appraisal     system,    individual differences    in organisations    should   be  recognised.    Organisations    differ  in terms  of size,  nature,    needs   and   environment.    Therefore,    the  appraisal     system   should   be tailor-made    for the particular    organisation.   The needs  of ratees   in terms   of feedback, mobility,   confidence    and  openness    should   also  be  considered.

10. Post Appraisal Interview

 After  appraisal,     an  interview   with  the  employee should  be arranged.    It is necessary   to supply  feedback,   to know  the  difficulties   under which   the  employees    work   and   to  identify   their   training    needs.    The  rater   should adopt   a problem-solving    approach    in the  interview   and  should   provide   counseling for  improving   performance.

11. Review and Appeal

 A mechanism    for review  of ratings   should   be provided. The review  may  be made  by a committee   consisting   of line  executives   and  personnel experts.   The  committee    will see whether   the  raters   are  unusually    strict   or lenient.   It may compare   ratings  with  operating   results   and  may  require   the raters   to give specific examples   or tangible  proof.  Differences   if any are discussed    and  dissent   is recorded. Provision   must   be  made   for  an  appeal   in  case  the  employee/ratee    is  not  satisfied with  the  ratings.

Performance Appraisal- Meaning, definition, process, methods,essentials and problems.

2 thoughts on “Performance Appraisal- Meaning, definition, process, methods,essentials and problems.

    1. Please visit Entrance Exam Section on our website. We have uploaded notes and MCQS on HRM for first three units.Soon will be uploading rest of the units.

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