It is a process of assessing, summarizing and developing the work performance of an employee. In order to be effective and contractive, the performance manager should make every effort to obtain as much objective information about the employee’s performance as possible. This helps to find out the need of training required by employees--sometimes for promotion and some time for demotion


An iterative process of goal-setting, communication, observation and evaluation to support, retain and develop exceptional employees for organizational success


The history of performance appraisal is quite brief. But this is not very helpful for the same may be said about almost everything in the field of modern Human resource management. As a distinct and formal

management procedure in the evaluation of work performance, appraisal really dates from the time of the Second World War – not more than 60 years ago. Yet in a border sense the practice of performance appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world’s second oldest profession.

DEFINITION RANDELL: Organizations attempting to develop their staff appraisal and development procedures are strongly advised to keep the activities of performance, not only but also in paperwork, procedure and responsibility. All employing organizations carry out some form of performance with their implications for design and conduct of appraisal schemes and emphasis appropriate training of staff involved.

HEYEL: “It is the process of evaluation of the performance and qualifications of the employees in terms of the requirements of the job for which he is employed, for purpose of administration including placements, selection for promotion, providing financial rewards and other action which require differential treatment among the members of a group as distinguished from action affecting all members equally.”

Nature of Performance Appraisal: • The Managerial personnel analyses the assessment of employee performance. • The appraisal mainly based on employee performance.

THEORETICAL PERSPECTIVE OF THE STUDY Performance appraisal are considered to be the vital tool, to measure the performance of an employee and use the information collected, to optimize the resource of individuals in an organization. It is systematic evaluation of individuals with respect to their task performance and their

potential for development individually and collectively. It refers to the assessments of an employee’s actual performance, behaviour on jobs and his/her potential for further performance. The main purposes of appraisal are to assess training need to effect promotion and to give high pay.

We may say that appraising the performance of an individual has been known as merit rating, but in recent years, we may closure different terminologies have been used to denote this process such as performance appraisal, performance review, performance evaluation, employee appraisal, progress appraisal report, personal preview and so on.

ESSENTIALS OF GOOD APPRAISAL SYSTEM: 1. It must be easily understandable. If the system is too complex or time consuming it may be anchored to the ground by its own dead – weight of complicated forms which nobody but the experts understand. 2. It must have the support of all the people who administer the process of performance of sales, service evaluation. 3. The system should be open and participate. Not only should it provide feedback to the employees on their performance. It should

also involve then in the goal setting process. planning performance better. 4.

This helps in

The system should be both valid and reliable. The validity of ratings is the degree to which they are truly indicative of the tonic merit of employees. The reliability of ratings is the consistency with which the ratings are made, either by different raters at different times. Both validity and reliability result from objective database.


The system should have built-in-incentive that is a reward should follow satisfactory performance. Many authors, however,

advocate against a direct linkage between appraisal and rewards. In their opinion, such a connection throttles downward communication of performance appraisal because superiors do not like being questioned by disgruntled subordinate in the event of an adverse appraisal. 6. The systems have genuine follow-up mechanism to identify employees’ growth needs. In the absence of such mechanism, every employee would view the post appraisal interviews, as a more eyewash or as an exercise by meet to force its views on him.


The system should make the employee fell that has been treated in a supportive manner, some authors hold the view that even the best conducted performance appraisal and review interview do not make the interviewee feel that he has been treated in a supportive manner. In a study, it was revealed that for 82% of subordinate personnel involved, the performance review was an ego-deflating experience.


The system should be periodically evaluated to be sure that is continuing to meet its goals. Not only there is the danger that subjective criteria may become more salient than the objective standards originally established, there is the further danger that the system may become rigid in a tangle of rules and procedures, many of which are no longer useful.

PURPOSE OF APPRAISAL: 1. 2. 3. 4. Helps promotions. Aids to training and development program Develop international relationship Wages or salaries administration

5. 6. 7. 8. 9.

Employee’s development Employees effectiveness Identifying the strength and weakness Serves as an feedback to the employee It provides rational foundation for the payment of piece-work wages, bonus and so on


Helps management to do planning such as fixing targets, responsibilities.



Objectives of Performance Appraisal Establish job expectations Design an appraisal programme Appraise performance Performance interview

Use appraisal data of appropriate purpose

CRITERIA OF PERFORMANCE APPRAISAL: Performance criteria for objective:  Quantity and quality of output in a given period  Amount of training necessary  Ratings by supervisors  Number of achievements reached in a given period

Performance criteria for sales targets:

 Every sales executive should give a minimum output designed

by company.


Performance criteria for service technicians targets :
 Every service executive should perform a minimum output

designed by the company.

 The service executive should do installation with a minimum output of quantum as designed by the company.


Performance criteria for Service Engineers :  They should see the effective loading of the software parameters in the installations of machines


Performance criteria for Branch Managers :  Return on capital employed  Gain or loss in sales volume  Effective rendering of service to the customers PRINCIPLES OF PERFORMANCE APPRAISAL:  Any activity off task can be measured by; some combination of cost, time and quality indices.  Measurement systems provide productivity.  Professional work is measured in a group.  Managers are appraised by effectiveness of their managerial compliance.  The ultimate measurement is the measurement of effectiveness. METHODS OF PERFORMANCE APPRAISAL


TRADITIONAL 1. Rating Scales 2. Check list 3. Forced Choice Method 4. Critical Incident Method 5. Forced Distribution Method 6. Behavioral anchored rating scales 7. Field review method 8. Performance test and observations 9. Annual confidential reports 10. Essay method 11. Cost accounting approach 12. Comparative evaluation approach

MODERN 1. Assessment centre 2. Management by objectives 3. Psychological appraisal 4. The 360o appraisal technique 5. Human asset accounting method

PROBLEM IN PERFORMANCE APPRAISAL The problem with subjective measure is the rating which is not verifiable by others and has the opportunity for bias. The rate biases include: (a) halo effect (b) the error of central tendency, (c) the leniency and strictness biases (d) personal prejudice, and (e) the recent performance effect (a) Halo Effect: It is the tendency of the raters to depend excessively on the rating of one trait or behavioral consideration in rating all others traits or behavioral considerations. One way of minimizing the halo effect is

appraising all the employees by one trait before going to rate on the basis of another trait. (b) The error of Central Tendency: Some raters follow play safe policy in rating by rating all the employees around the middle point of the rating scale and they avoid rating the people at both the extremes of the scale. They follow play safe policy because of answerability to management or lack of knowledge about the job and person he is rating or least interest in his job. (c) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any purpose. Equally damaging one is assigning consistently low rates. (d) Personal Prejudice: If the rater dislikes any employee or any group, he may rate them at the lower end, which may distort the rating purpose and affect the career of these employees. (e) The Recent performance Effect: The raters generally remember the recent actions, of the employee at the time of rating and rate on the basis of these recent actions favorable or unfavorable than on the whole activities.

Other factors that are considered as problems are: Failure of the superiors in conducting performance appraisal and post performance appraisal interview is based on subjectivity and less reliability and validity of the performance appraisal techniques. Negative ratings affect interpersonal relations and industrial relations system. Influence of external environmental factors and uncontrollable internal factors. Feedback and post appraisal interview may have a setback on production. Management emphasizes on punishment rather than development of an employee in performance appraisal. Some ratings particularly about the potential appraisal are purely based on guess work.

The other problems of performance appraisal reported by various studies are: * Relationship between appraisal rates and performances after promotions was not significant. * Some superiors completed appraisal reports within a few minutes. * Absence of inter-rater reliability. * The situation was unpleasant in feedback interview. * Superiors lack that tact of offering the suggestions constructively to

subordinates. * Supervisors were often confused due to too many objectives of performance appraisal. Advantages of Performance Appraisal through Computers: There will be an objective analysis of traits of both the superior and subordinate and a chance to subordinate to express his views even after performance appraisal. An employee shall express his emotional needs and his value system which may not be possible direct face to face with superior. Communication through computer overcomes the communication barrier between the superior and subordinate. Computer based appraisal will remove the inherent weakness of the appraisal system that is subjective assessment of vague and abstract performance targets, unclear guidelines for appraisal etc. Sources: Internet sources and relevant Human resource books: --------------------------------------------------------------------------------------------