Applied Theory

Qus.1 The performance appraisal system in any organization has to face some
major challenges, which lead to potential errors in individual appraisals. Discuss the
factors affecting the appraisal process at an individual level.
Ans. Performance appraisals are one of the most important and often one of the
most mishandled aspects of management. Typically, we think of performance
appraisals as involving a boss evaluating a subordinate.
The some of the factors affecting the appraisal process at an individual level is given
below:
(a). Halo effect: In this case, the appraiser allows a single characteristic of the
appraisee to dominate his/her judgment of the employee performance. This may
lead to either a positive report or a negative report on the performance of the
employee.

(b).Stringency effect: In In this case, the appraiser tries to be very strict in rating the
appraisee, since he/she feels that the rules and standards of the organization are not
strict enough. This might result in dissatisfaction among the appraisees, as they feel
that the evaluation is biased and unfair.

(c).Leniency effect: In this case, the appraiser tends to give high ratings and only
positive feedback to the appraisee, irrespective of his/her actual performance,
probably to maintain a cordial relationship with the appraisee.

(d).Primacy effect: In this case, the appraiser tends to be influenced by the behaviour
or outcomes displayed at the beginning of the appraisal period and this leads to a
distorted evaluation.

(e).Recency effect: During an annual appraisal, the appraiser tends to be influenced

by the performance of the employee over the previous 2-3 months of the appraisal
period, and tends to neglect his/her performance level in the preceding nine months.

(f).Culture: In some cases, the culture of the organization or the country, can
influence the appraiser to rate the appraisee in a particular manner.

(g).Central tendency effect: Considered as one of the most common errors in

employee performance rating, in this case, the appraiser tends to give ratings in the
middle of the performance scale, to all the appraisees
(h).Perceptual set: This is the tendency of the appraiser to have an expectation of the
performance level, which might hamper his/her perception and judgment of the
actual performance.

(i).Stereotyping: In this case, the appraiser judges an employee, based on the group
he/she belongs to and his/her perception of that group. Stereotyping is a potential
error in personality analysis.

(j).Fundamental attribution error: Apart from internal factors, an employee’s

performance may be affected due to some external factors, which are beyond his/her
control. However, the appraiser may underestimate the influence of external factors
and overestimate the influence of internal factors, while judging the behaviour/
performance of the employee.