Top Traditional Methods of Performance Appraisal

This article throws light upon the top thirteen traditional methods of performance
appraisal. Some of the traditional methods are: 1. Confidential Report 2. Free form
Essay Method 3. Straight Ranking Method 4. Alternation Ranking Method 5. Paired
Comparison Method 6. Forced Distribution Method 7. Forced Choice Distribution
Method 8. Graphic Rating Scale Method 9. Checklist and Weighted Checklist and
Others.

1. Confidential Report:

It is mostly used in government organization. It is a detailed report prepared by

the employee�s immediate boss at the end of every year. This report highlights the
strengths and weaknesses of the subordinate. In this report the impression of the
subordinate in superiors mind is recorded. It does not offer any feedback to the
employee.

The appraise is not very sure why his ratings have deteriorated despite his best
efforts, why others are rated high as compared to him, how to rectify his mistakes
if any. The criteria for evaluation is not disclosed. The analysis done by a
superior may be subjective. As per the changes in law norms, now the negative
points of a confidential report are disclosed to the appraise.

A sample of confidential report is given below:

Confidential Report

2. Free form Essay Method:

In this method the rater is asked to express the strong as well as weak points of
the employee�s behaviour. This technique is normally used with a combination of the
graphic rating scale because the rater can elaborately present the scale by
substantiating an explanation for his rating.

While preparing the essay the rater considers following points:

a) Job knowledge and potential of the employee

b) Employee�s understanding of the company�s programmes, policies, objectives etc.

c) The employee�s relations with co-workers and superiors.

d) The employee�s general planning, organizing and controlling ability.

e) The attitudes and perceptions of the employee, in general.

Essay evaluation is a non-quantitative technique. This method is advantageous in at

least one sense, i.e., the essay provides a good deal of information about the
employee and also reveals more about the evaluator.

Still this method has some loopholes:

a) It is highly subjective and supervisor may write a biased report. The sycophants
will be evaluated more favourably than other employees.

b) Some evaluators may be poor in writing essays. Others may be superficial in

explanation and use flowery language which may not reflect the actual performance

c) It is a time consuming process, as one requires time to prepare an essay.

d) Desired information may not be available in a systematic way when required for
compilation

e) Some evaluators may skip the points to be highlighted in the essay.

3. Straight Ranking Method:

It is the oldest and simplest of performance appraisal by which the man and his
performance are considered as an entity by the rater. No attempt is made to
fractionalize the rate or his performance; the �whole man� is compared with the
�whole man� that is the ranking of a man in a work group is done against that of
another. The relative position of each man is tested in terms of his job
performance against that of another member of a competitive group by placing him as
number one or two or therein total group.

This is the simplest method of separating the most efficient from the least
efficient; and relatively easy to develop and use. The major limitation of this
method is that in practice it is very difficult to compare a single individual with
human beings having varying behavior traits.

This method tells only about the good aspects of the behavior of an individual but
what about the worse part. It is difficult to rate when one has to appraise a big
group. The ranking system does not eliminate snap judgments, nor does it provide us
with a systematic procedure for determining the relative ranks of subordinates. To
remedy this defect, the paired comparison technique has been evolved.

4. Alternation Ranking Method:

Ranking employees from best to worst on a trait or traits is another method for
evaluating employees. Since it is usually easier to distinguish between the worst
and best employees than to rank them, an alternation ranking method is most
popular. First, list all subordinates to be rated and then cross out the names of
any not known well enough to rank.

Then, on a form such as that in Exhibit 2.2, indicate the employee who is the
highest on the characteristic being measured and also the one who is the lowest.
Then choose the next highest and the next lowest, alternating between highest and
lowest until all the employees to be rated have been ranked.

Alternation Ranking Scale

5. Paired Comparison Method:

By this technique, each employee is compared every trait with all the other persons
in pairs one at a time. With this technique judgment is easier and simpler than
with the ordinary ranking method. The no. of times a person is compared to another
is tallied on paper. These no. s yield the rank no of each group.

To illustrate the method, let us say we have five employees: Ms. Arti, Ms. Maria,
Ms. Rita, Mr. Ram, and Mr. Kumar. We list their names on the left-hand side of the
sheet. We compare Arti with Maria on whatever criterion we have chosen, say,
quality of work. If we feel Arti is more valuable than Maria, we put a tally (in
the given exhibit tally is shown by �+� and �-�signs) beside Arti�s name. We then
compare Arti with Rita, with Ram, and with Kumar. The process is repeated for each
individual.

The results are tabulated and ranks are assigned to each individual. The man with
the most tallies is the most valuable person, at least in the eyes of the rater;
the man with no tallies at all is regarded as the least valuable person. This
method is not suitable for large organizations.

Both ranking techniques, particularly when combined with multiple rankings (i.e.,
when two or more people are asked to make independent rankings of the same work
group and their lists are averaged), are among the best available for generating
valid order-of-merit rankings for salary administration purposes.

Quality of Work

6. Forced Distribution Method:

This method was evolved by Joseph Tiffin. This system is used to eliminate or
minimize rater�s bias so that all personnel may not be placed extreme ends.
Normally, the two criteria used here for rating are the job performance and
promotability. Further, a five -point performance scale is used without any mention
of descriptive statements. Workers are placed between the two extremes of �good�
and �bad� performance.

For instance, the workers of outstanding merit may be placed at the top 10% of the
scale. The rest may be placed at 20%-good, 40%-outstanding, 20%-fair and 10%-poor.
To be specific, the forced distribution method assumes that all top grade workers
should go to the highest 10%� grade; 2.0% employees should go to the next highest
grade and so on.

Another important factor in this method is promotability. Employees may be

classified according to their promotional merits. The scale for this purpose may
consist of three points namely, (quite likely promotional material, and may/ may
not be promotional material and quite unlikely promotional material.)

One strong positive point in favour of the forced distribution method is that by
forcing the distribution according to predetermined percentages; the problem of
making use of different raters with different scales is avoided. Further, this
method is appreciated on the ground that it tends to eliminate rater bias.

The limitation of using this method in salary administration however is that it may
result in low morale, low productivity and high absenteeism. Employees who feel
that they are productive, but find themselves placed in a grade lower than expected
feel frustrated and exhibit, over a period of time, reluctance to work.

Generally it is assumed that employee performance levels conform to a bell shaped

curve. For example, the following distribution in fig 2.1 might be assumed to
exist:

a. Excellent 10%.
b. Good 20%.
c. Average 40%.
d. Below average 20%.
e. Unsatisfactory 10%.

Forced Distribution on a Bell-Shaped Curve

7. Forced Choice Distribution Method:

This method was developed to eliminate bias and the preponderance of high ratings
that might occur in some organizations. The primary purpose of this method is to
correct the tendency of the rater to give extreme ratings.

This method makes use of several sets of pair phrases, two of which may be positive
and two negative and the rater is asked to indicate which of the four phrases is
the most and least descriptive of a particular worker. Actually, the statement
items are grounded in such a way that the rater cannot easily judge which
statements applies to the most effective employee.

Forced choice items.

Forced Choice Items
Forced Choice Items

The favorable qualities earn a plus credit and the unfavorable ones earn the
reverse. The worker gets an overall plus rating, when the positive factors override
the negative ones or when one of the negative phrases is checked as being
insignificantly rated.

The method has certain drawbacks such as while choosing from one of the statements,
the rater is unable to introduce personal bias or halo effect.

8. Graphic Rating Scale Method:

The term used to define the oldest and most widely used performance appraisal
method. A variety of traits may be used in these types of rating devices, the most
common being the quantity and quality of work. The rating scales can also be
adapted by including traits that the company considers important for effectiveness
on the job.

The evaluators are given a graph and asked to rate the employees on each of the
characteristics. The number of characteristics can vary from one to one hundred.
The rating can be a matrix of boxes for the evaluator to check off or a bar graph
where the evaluator checked off a location relative to the evaluators rating. Under
this method, a printed form, as shown below, is used to evaluate the performance of
an employee.

Model of a Graphic Rating Scale

From the graphic rating scales, excerpts can be obtained about the performance
standards of employees. For instance, if the employee has serious gaps in
technical- professional knowledge; lacks the knowledge to bring about an increase
in productivity; is reluctant to make decisions on his own; declines to accept
responsibility; fails to plan ahead effectively; wastes and misuses resources etc.,
then it can safely be inferred that the standards of performance of the employee
are dismal and disappointing.

The rating scale is the most common method of evaluation of an employee�s

performance today. One positive point in favour of the rating scale is that it is
easy to understand, easy to use and permits a statistical tabulation of scores of
employees. When ratings are objective in nature, they can be effectively used as
evaluators.

The graphic rating scale may, however, suffer from a long-standing disadvantage,
i.e., it may be arbitrary and the rating may be subjective. Another pitfall is that
each characteristic is equally important in evaluation of the employee�s
performance and so on.

Graphic Rating Sheet and Performance Rating Scales

9. Checklist and Weighted Checklist:

The term used to define a set of adjectives or descriptive statements. A checklist

represents, in its simplest form a set of objectives or descriptive statements
about the employee and his behaviour. If the rater believes strongly that the
employee possesses a particular listed trail, he checks the item; otherwise, he
leaves the item blank.

A more recent variation of the checklist method is the weighted list. Under this,
the value of each question may be weighted equally or certain questions may be
weighted more heavily than others. The following are some of the sample questions
in the checklist.

Example 2.1:
a. Is the employee really interested in the task assigned? Y/N
b. Do his colleagues respect him? Y/N
c. Does he respect his superiors? Y/N
d. Does he make frequent mistakes? Y/N
The rating score from the checklist helps the manager in evaluation of the
performance of the employee. Apart from the ease to operate this method has some
limitations. The rater may be biased in distinguishing positive and negative
questions. He may assign biased weights to the questions. Another limitation could
be that it is time consuming and costly. Finally it is difficult for the manager to
assemble, analyse and weigh a number of statements about the employee�s
characteristics, contributions and behaviors.

10. Critical Incident Method:

The term used to describe a method of performance appraisal that has lists of
statements of very effective and very ineffective behavior for employees. These
critical incidents or events represent the outstanding or poor behavior of
employees on the job. The lists have been combined into categories, which vary with
the job.

Once the categories have been developed and statements of effective and ineffective
behavior have been provided, the evaluator prepared a log for each employee. During
the evaluation period, the evaluator recorded examples of critical behaviors in
each of the categories, and the log is used to evaluate the employee at the end of
the evaluation period.

Critical Incidents for an Assistant Plant Manager

Kumar, who has been rated as somewhat unreliable, fails to meet several deadlines
during the appraisal period. His supervisor makes a note of these incidents and is
now prepared with hard, factual data:� Kumar, I rated you down on reliability
because, on three different occasions over the last two months, you told me you
would do something and you didn�t do it.

Instead of arguing over traits, the discussion now deals with actual behavior.
Possibly, Kumar has misunderstood the supervisor or has good reasons for his
apparent �unreliability.� If so, he now has an opportunity to respond. His
performance, not his personality, is being criticized.

He knows specifically how to perform differently if he wants to be rated higher the

next time. Of course, Kumar might feel the supervisor was using unfairly high
standards in evaluating his performance. But at least he would know just what those
standards are.

There are, however, several drawbacks to this approach. It requires that

supervisors jot down incidents on a daily or, at the very least, a weekly basis.
This can become a chore. Furthermore, the critical incident rating technique need
not, but may, cause a supervisor to delay feedback to employees. And it is hardly
desirable to wait six months or a year to confront an employee with a misdeed or
mistake.
Finally, the supervisor sets the standards. If they seem unfair to a subordinate,
he might not be more motivated if he at least has some say in setting, or at least
agreeing to, the standards against which he is judged.

11. Group Appraisal Method:

In this method, an employee is appraised by a group of appraisers. This group

consists of the immediate supervisor of the employee, other supervisors who have
close contact with the employee�s work, manager or head of the department and
consultants.

The head of the department or team manager and the immediate boss may act as the
coordinator for the group activities. This group uses any one of multiple
techniques discussed earlier. The immediate supervisor enlightens other members
about the job characteristics, demands, standards of performance, etc.

Then the group appraises the performance of the employee, compares the actual
performance with standards, find out the deviations, discusses the reasons
therefore suggests ways for improvement of performance, prepares an action plan,
studies the need for change in the job analysis and standards and recommends
changes, if necessary.

This method eliminates personal bias to a large extent as multi raters evaluate the
performance, but this is a very time consuming process.

12. Field Review Method:

Where subjective performance measures are used; there is scope for rater�s biases
influencing the evaluation process. To avoid this, some employees use the field
review method. Here, a well-trained, skilled representative of the HR department
goes into the field and assists line supervisors with their ratings of their
respective subordinates.

The HR specialist requests from the immediate supervisor specific information about
the employee�s performance. Based on this information, the expert prepares a
report, which is sent to the supervisor for review, changes, approval and
discussion with the employee who is being rated. The ratings are done on
standardized forms. The ratings drawn from this appraisal method are more reliable.
However, the use of HR experts makes this approach costly and impractical for many
organizations.

13. Narrative Forms:

Some employers use narrative forms to evaluate personnel. For e.g., the forms used
in exhibit 2.8 presents the performance improvement plan used by one multinational
company to evaluate the progress and development of its exempt employees.

The supervisor is asked to:

i. Rate the employees performance in terms of standards and
ii. Present critical example and an improvement plan designed to aid the employee
in meeting or exceeding these position standards.

A Summary Performance appraisal discussion then focuses on problem -solving.

Performance Improvement Plan
Performance Improvement Plan

Work-standards approach:
Instead of asking employees to set their own performance goals, many organizations
set measured daily work standards. In short, the work standards technique
establishes work and staffing targets aimed at improving productivity. When
realistically used, it can make possible an objective and accurate appraisal of the
work of employees and supervisors.

To be effective, the standards must be visible and fair. Hence a good deal of time
is spent observing employees on the job, simplifying and improving the job where
possible, and attempting to arrive at realistic output standards.

It is not clear, in every case, that work standards have been integrated with an
organization performance appraisal program. However, since the work-standards
program provides each employee with a more or less complete set of his job duties,
it would seem only natural that supervisors will eventually relate performance
appraisal and interview comments to these duties. I would expect this to happen
increasingly where work standards exist. The use of work standards should make
performance interviews less threatening than the use of personal, more subjective
standards alone.

The most serious drawback appears to be the problem of comparability. If people are
evaluated on different standards, how can the ratings be brought together for
comparison purposes when decisions have to be made on promotions or on salary
increases? For these purposes some form of ranking is necessary.

Management, Performance Appraisal, Performance Management, Traditional Methods,

Traditional Methods of Performance Appraisa

Modern Methods of Performance Appraisal - MANAGEMENT BY OBJECTIVES - ASSESSMENT

CENTRES - BEHAVIORALLY ANCHORED RATING SCALES

Performance Appraisal
�Performance Appraisal
�History & origin of Performance Appraisal
�Objectives of Performance Appraisal
�Benefits of Performance Appraisal
�Performance Appraisal Process
�Performance Appraisal Rating Factors

?Traditional methods of Performance Appraisal

?Modern Methods of Performance Appraisal
?360 Degrees Performance Appraisal
�Potential Appraisal
�Performance Counseling

ASSESSMENT CENTRES

An assessment centre is a place to evaluate an individual potentiality and

performance, so as to position he/she in the core functional areas. normally,
organisations outsource assessment centres instead of making them by their own.

[This method of performance appraisal is being opted by the RBI (Reserve Bank of
India) for assessment of its officers]

An assessment center typically involves the use of methods like social/informal

events, tests and exercises, assignments being given to a group of employees to
assess their competencies to take higher responsibilities in the future. Generally,
employees are given an assignment similar to the job they would be expected to
perform if promoted. The trained evaluators observe and evaluate employees as they
perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centers are interpersonal
skills, intellectual capability, planning and organizing capabilities, motivation,
career orientation etc. assessment centers are also an effective way to determine
the training and development needs of the targeted employees.

Nearly 30% companies seek assessment center services while moving an employee from
executive position to managerial position. 20% companies said they use the center's
services when seeking a position on senior management level.

As per the TJinsite, the premium research website promoted by TimesJobs.com survey,
more than 80% of the surveyed employers predict an increased use of assessment
centres in near future because of their expertise and unbiased in assessing an
individual fit and biggest limitation comes from the lack of skilled assessors to
perform the assessment task effectively.

Facts [+]

AssessPeople Ltd. is a workforce assessment company, based at Chennai, India, and

having wings at all metros across country. They are a pioneer in India to use
internet as a platform to design, administer, and provide the results to
organizations.

BEHAVIORALLY ANCHORED RATING SCALES

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which

combines the graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of behavioral statements
describing important job performance qualities as good or bad (for eg. the
qualities like inter-personal relationships, adaptability and reliability, job
knowledge etc). These statements are developed from critical incidents.

In this method, an employee�s actual job behaviour is judged against the desired
behaviour by recording and comparing the behaviour with BARS. Developing and
practicing BARS requires expert knowledge.

A behaviorally anchored rating scale is an employee appraisal system where raters

distinguish between successful and unsuccessful job performance by collecting and
listing critical job factors. These critical behaviors are categorized and
appointed a numerical value which is used as the basis for rating performance.

Extremely good 7 Can expect trainee to make valuable suggestions for increased
sales and to have positive relationships with customers all over the country.
Good 6 Can expect to initiate creative ideas for improved sales.Above average

5 Can expect to keep in touch with the customers throughout the year. Average
4 Can manage, with difficulty, to deliver the goods in time. Below average
3 Can expect to unload the trucks when asked by the supervisor. Poor
2 Can expect to inform only a part of the customers. Extremely poor
1 Can expect to take extended coffee breaks and roam around purposelessly.

HUMAN RESOURCE ACCOUNTING METHOD

Human Resource Accounting is a method to measure the effectiveness of personnel

management activities and the use of people in an organization.HRA is the process
of Assigning, budgeting, and reporting the cost of human resources incurred in an
organization, including wages and salaries and training expenses.
Human resources are valuable assets for every organization. Human resource
accounting method tries to find the relative worth of these assets in the terms of
money. In this method the Performance appraisal of the employees is judged in terms
of cost and contribution of the employees. The cost of employees include all the
expenses incurred on them like their compensation, recruitment and selection costs,
induction and training costs etc whereas their contribution includes the total
value added (in monetary terms). The difference between the cost and the
contribution will be the performance of the employees. Ideally, the contribution of
the employees should be greater than the cost incurred on them.

MANAGEMENT BY OBJECTIVES

The definition of MBO, as expressed by its foremost proponent, Dr. George S.

Odiorne,

�Management by objectives is a process whereby the superior and subordinate

managers of an organisation jointly identify its common goals, define each
individual�s major areas of responsibility in terms of the results expected of
him, and use these measures as guides for operating the unit and assessing the
contribution of each of its members.�

Much of the initial impetus for MBO was provided by Peter Drucker (1954) and by
Douglas McGregor (1960). Drucker first described management by objectives in 1954
in the Practice of Management. Drucker pointed the importance of managers having
clear objectives that support the purposes of those in higher positions in the
organisation. McGregor argues that by establishing performance goals for employees
after reaching agreement with superiors, the problems of appraisal of performance
are minimised. MBO in essence involves the setting out
clearly defined goals of an employee in agreement with his superior. Carroll and
Tosi (1973), in an extensive account of MBO, note its following characteristics:

1.The establishment of organisational goals.

2.The setting of individual objectives in relation to organisational goals.
3.A periodic review of performance as it relates to organisational goals. Effective
goal-setting and planning by top management.
4.Organisational commitment.
5.Mutual goal-setting.
6.Frequent individual performance reviews.
7.Some freedom in developing means of achieving objectives.

MBO is, thus, a method of mutual goal-setting, measuring progress towards the
goals, taking action to assure goal attainment, feedback, and participation. It is
a resultoriented philosophy, enabling an employee to measure progress toward a goal
which the employee often has helped to set. In the goal-setting phase of MBO, a
superior and subordinate discuss job performance problems and a goal is agreed
upon. Along with mutual goal-setting, a major component of MBO is the performance
review session between the superior and subordinate, which takes place regularly to
evaluate progress towards specified goals.

The key features of management by objectives are as under:

1.Superior and subordinate get together and jointly agree upon .the list the
principal duties and areas of responsibility of .the individual�s job.
2.The subordinate sets his own short-term performance goals or .targets in
cooperation with his superior.
3.They agree upon criteria for measuring and evaluating .performance.
4.From time to time, as decided upon, the superior and .subordinate get together to
evaluate progress towards the .agreed-upon goals. At those meetings, new or
modified goals .are set for the ensuing period.
5.The superior plays a supportive role. He tries, on a day-to-.day basis, to help
the subordinate achieve the agreed upon .goals. He counsels and coaches.
6.In the appraisal process, the superior plays less of the .role of a judge and
more of the role of one who helps the .subordinate attain the organisation goals or
targets.

The MBO process

MBO as a mutual goal setting exercise is most appropriate for technical,

professional, supervisory, and executive personnel. In these positions, there is
generally enough latitude and room for discretion to make it possible for the
person to participate in setting his work goals, tackle new projects, and discover
new ways to solve problems. This method is generally not applied for lower
categories of workers because their jobs are usually too restricted in scope. There
is little discretionary opportunity for them to shape their jobs.

MBO may be viewed as a system of management rather than an appraisal method. A

successful installation of MBO requires written mission statements that are
prepared at the highest levels of top management. Mission statements provide the
coherence in which top-down and bottom-up goal setting appear sensible and
compatible. MBO can be applied successfully to an organisation that has sufficient
autonomy, personnel, budget allocation, and policy integrity. Managers are expected
to perform so that goals are attained by the organisation. Too often MBO is
installed top-down in a dictatorial manner with a little or no accompanying
training. If properly implemented, it serves as a powerful and useful tool for the
success of managerial performance.

MBO is a tool that is inextricably connected with team building so that the work
commitment of team members can be increased and their desire to excel in
performance can be inspired. It is important to have effective team work among a
group of managers or a group of subordinates. The group of employees or
subordinates must be looked upon as a team that needs to be brought together. Goals
should be set by manager-subordinate pairs, and also by teams. The basic superior
subordinate relationship in an organisation is in no way undermined in this concept
of team goal setting. Lines of responsibility, authority, and accountability remain
clear.

Customer feedback method

This method is truly one of the modern methods of performance appraisal system.
Customer feedback method is used, especially for sales staff who deal with sales
activity in the organisation. Under this method of appraisal system, customer
feedback is directly linked with employee performance. This method of assessment
could be unbiased and reliable since customers who are outsiders may give correct
judgement about employee performance than the insiders who are superiors.

Companies like Cognizant and Wipro software solutions are using customer feedback
method to assess the performance of their sales staff in order to hike salaries.

Some industry experts say placing a higher weightage on customer feedback may fail
to motivate employees because customer feedback may vary from customer to customer.
Depending on the current state of mind, psychology and perception of the customers
may give different feedback for same degree of sales service.