Performance Appraisal

Sathyajith S
sathyajith.s@hotmail.com

Performance Appraisal

“Performance appraisal is the systematic, periodic and impartial rating of employee’s

excellence in matters pertaining to his present job and potential for better job.”
-Edwin B Flippo

Objectives of performance Appraisal

• Work development objectives

Job fixation according to capacity, interest, aptitude etc.
To carry out job evaluation
To implement performance feedback
To serve as a basis for job redesign
• Career development objective
Serve as basis for training
Serve as basis for transfer
Serve as basis for promotion
Serve as basis for salary and wage administration

Performance Appraisal Process

1. Establishing standards
2. Communicating standards to employees
3. Measuring actual performance
4. Comparing actual with standards
5. Discussion of result with employees
6. Corrective action if any

Methods of performance appraisal

 Traditional methods
Modern Methods

Ranking method
Confidential report
Rating scales Assessment centre
Grading method Management By Objectives
Check list method 360 degree performance appraisal
Critical incident method Behaviorally Anchored Rating Scale
Free essay method Human Resource Accounting
Field review method
Work sample tests
Nominations etc.

The methods of performance appraisal are mainly divided into two such as traditional
methods and modern methods. Most commonly used traditional and modern methods
are explained below:

I Traditional Methods

1. Ranking method

A person is ranked against others on the basis of certain traits and

characteristics. A list is prepared for ranking the workers in order of their
performance on the job so that an excellent employee is at the top and the poor
at the bottom.

2. Confidential report

In most of the govt. departments and public enterprises, performance appraisal

is done through annual confidential report. The confidential report is written
for a unit of one year and relates to the performance, ability and character of
the employee during that year.

3. Rating Scales

The rating scale is the simplest and most popular method for appraising
performance. A rating scale lists traits and range of performance values for
each trait. The supervisor rates each subordinate by circling or checking the
score that best describes his performance for each trait. The assigned values
for the traits are then totalled.

4. Grading method
 Under this system, certain features like analytical abilities, cooperativeness,
dependability, job-knowledge etc. are selected for evaluation. The employees
are given grades according to the judgement of the rater. The grades may be
such as: A-Outstanding, B-Very good, C-Satisfactory, D-average, and E-
Below average etc.

5. Check list method

Under this method, the supervisors are provided with printed forms containing
descriptive questions about the performance of employees. The supervisor has
to tick against most preferable one. After ticking these questions the forms are
sent to the personnel department where final rating is done.

6. Critical incident method

This method attempts to measure the worker’s performance in terms of certain

events or incidents that occur in the course of work. The assumption in this
method is that the performance of the employee on the happening of critical
incidents determines his failure or success. The supervisor keeps a record of
critical incidents at different times and then rates him on this basis.

7. Free essay method

Under this method, the supervisor writes a report about the employee which is
based on his assessment. The supervisor continuously watches the
subordinates and writes his assessment in the report. While preparing an essay
on the employee, the rater generally considers the following factors: job
knowledge and potential of employees, relation with co-workers and
supervisors, traits and attitude, understanding of company’s programmes,
policies etc.

8. Field review method

Here, an expert form the personnel department interviews line supervisors to

evaluate their respective subordinates. There is no rating from the factors or
degrees, but overall ratings are obtained.

9. Work sample tests

In this method employees are given from time to time work related tests which
are then evaluated.

10. Nominations

Under the nominations method, appraisers are asked to identify the

exceptionally good and poor performers, who are signed out for special
treatment.
II Modern methods

1. Assessment centre

An assessment centre is a central location where the managers and executives

may come together to participate in job related exercises evaluated by the
trained observers. HUL and Crompton Greaves are popular companies who
use assessment centres for performance appraisal.

2. Management by Objectives

In MBO set specific measurable goal with each employee and then
periodically discuss his progress towards these goals.

3. 360 degree performance appraisal

The 360 degree technique is a systematic collection of performance data on an

individual and group, derived form a number of stakeholders- the stakeholders
being the immediate supervisors, team members, peers and self.

4. Behaviourally Anchored Rating Scale

A behaviourally anchored rating scale combines the benefit of critical

incidents and rating scales. The steps of behaviourally anchored rating scale
are:

1. Generate critical incidents from past

2. Develop performance dimensions
3. Reallocate incidents
4. Scale the incidents

5. Human Resource Accounting

Under this method, performance is judged in terms of cost and contributions

of employees. Cost of human resurce consists of expenditure on HRP,
recruitment, selection, training, compensation etc. The contribution of human
resource is the money value of labour productivity or value added by human
resources. Difference between cost and contribution will reflect on
performance of employees.