Method of performance appraisal

Performance appraisal or merit rating is one of the oldest and most universal practices of management. It refers to all the formal procedures used in working organisations to evaluate the personalities and contribution and potential of group members.

Performance appraisal is an objective assessment of an individual’s performance against well-defined benchmarks.

Criteria for Performance appraisal

There are a number of performance criteria, which may be used to measure the proficiency of an employee. These criteria may be classified into two main categories:

  • Objective Criteria
  • Subjective Criteria

Amount of quality of production, work sample tests, length of service, amount of training necessary, absenteeism, accidents etc., are all examples of objective criteria ratings of employees job proficiency by their superiors.

Method of performance appraisal

The various methods of performance appraisal may broadly be classified into two categories:

  1. Trait-based appraisal
  2. Appraisal by results

Appraisal 1: Trait-based methods of appraisal

Managers have been evaluated against standards of personnel traits and work characteristics. The traits generally considered are as follow:

  • Job-knowledge
  • Ability to get along with people
  • Analytical competence
  • Leadership
  • Judgement
  • Initiative

The main methods of performance appraisal based on the traits of employees are given below:

performance appraisal
performance appraisal

Method 1: Ranking Method

Under this method an employee is compared with all other employees in the group and placed in a simple rank order. In this way all individuals are rated from the best to the worst. This method is very simple and natural and it is the oldest method. This method is useful if the number of employee is very small.

Method 2: Paired Comparison Method

This is a variation of the ranking method. In this method, the rather compares each individual in the group with every other individual. The final ranking of each worker is determined by the number of times he was judged better than the others. The number of pairs to be made can be determined by the following formula.

Numbers of pairs = N (N-1)/2

Where N stands for the number of person to be rated. This is an improvement over the ranking method.

Method 3: Graphic Rating Method

A graphic scale is a chart that presents the list of qualities and the range of degree for each quality. Numerical values are assigned to each quality on the scale. The basic idea behind this type of scale is to provide the rather with a continuum representing varying degrees of a particular trait.

Graphic rating scale are widely used for rating employees. These scales provide information on the size of differences in ratings and help to overcome the problem of a large number of ratings. It is easy to construct and administer the scales.

Method 4: Forced Distribution Method

Under this method certain categories of ability are established and certain percentages of marks are assigned for each grade.

This method overcomes the limitation of piling up of rating on one side of the scale. It minimizes the bias of the rather. But employees are rated for overall performance and not for individual traits.

Method 5: Forced Choice Description

In this method, a number of statements describing the employees are prepared and the rather is forced to choose among the descriptive statements. The statements may be both favorable and unfavorable

For example, a forced choice block may be as follows:

  • He is hard working
  • He is not dependable
  • He gives clear instructions
  • He shows favoritism towards some employees.

Method 6: Checklist Method

A checklist is a list of statements that describe the worker and his behavior. Each statement is assigned a weight or value depending upon its importance. The rather writes yes or no against each statement depending upon whether it is applicable to the worker being rated or not.

A specimen checklist is given below:

  1. He is punctual                                                            (Yes/No)
  2. He has through knowledge of the job                    (Yes/No)
  3. He can easily locate faults                                       (Yes/No)
  4. He does not discriminate among employees       (Yes/No)

Method 7: Critical incidents Method

Under this method certain key factors that make the difference between success and failure are identified. These critical incidents are converted into scales. The superior then observes are records instances and events of on-the-job behavior falling under any of the identified factors.

In this way a concrete performance record based on actual happenings is obtained. For example, the critical incidents in the career of an employee may be as follows:

  • Suggested Improvement in work method
  • Refused to obey orders
  • Violated the established rule
  • Averted a serious accident.

Appraisal 2: Appraisal by results

Trait-based appraisal is simple and economical. But it is very reliable because of the subjectivity and basis on the part of raters. Managers feel that performance is in itself the most reliable indicator of quality and potential. This feeling has led to the growth of appraisal by results.

This method under plays traits and other characteristics, focusing on performance results. The process of result-orientated appraisal consists of the following steps:

  • The superior and each of his subordinates jointly establish the subordinate’s tasks and responsibilities.
  • The subordinate prepares a plan for a specified period, e.g., six months or one year.
  • Through mutual consultation, the final target to be achieved by the subordinate and superior’s supporting role are fixed.
  • At the end of the specified period, the superior makes an appraisal of the subordinate on the basis of mutually agreed criteria.
  • Superior discusses the result and his evaluation with the subordinate. Corrective actions, if necessary, are suggested and mutually agreed upon targets are fixed for future.

At last words, performance appraisal offers competitive advantage to a firm by improving performance, helping make correct decisions, ensuring legal compliance, minimizing job dissatisfaction and employee turnover and ensuring consistency between organisational strategy and behavior.

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