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.
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.
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.
- 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.
- 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.
Raters may fail to evaluate performance accurately due to lack of knowledge and experience. Post appraisal interview is often handled ineffectively.
Performance appraisal loses most of its value when the focusof management is on punishment rather than on development of employees.
- Multiple Objectives
Raters may get confused due to two many objectives or unclear objectives of performance appraisal.
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.
- 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:
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.
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.
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.
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.