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Why performance appraisal is important

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I. Contents of getting why performance appraisal is important

The performance appraisal may be one of the few times during the year where an employee and
the reviewer, typically the employee's supervisor, can sit down and have a lengthy face-to-face
discussion about all aspects of the job. Thus, the appraisal can serve a number of important
functions. If done effectively, the appraisal can offer a large degree of satisfaction for both the
employee and the reviewer.
Giving and Receiving Feedback
An effective employee appraisal provides an opportunity to give feedback as well as receive it.
The employee receives important information as to what areas of the job she is performing well
and those that need improvement, so she knows exactly where she stands. The reviewer can also
receive feedback from the employee that can help her make improvements in the work
environment. The reviewer may also uncover issues that could be impeding employees from
performing their best, and she can take corrective measures if necessary.
Setting Goals
In addition to reviewing performance based on previously established goals, the performance
appraisal is also a good time to establish new goals. If deficiencies are identified during the
appraisal, the reviewer and employee can work together to establish new goals as well as develop
a plan to reach them. For example, if a salesperson missed his sales quota for the year, he and the
reviewer can establish a plan to reach next year's quota by increasing call activity by a certain

Improving Communication
Employee appraisals are important for improving communications between the employee and
reviewer. By speaking openly about the job performance and issues that may be affecting it, the
employee and reviewer can develop a sense of trust that may have been lacking. Employees who
previously did not feel comfortable approaching the reviewer with a problem may become more
likely to voice her concerns, which can prevent a small issue from escalating into a major
problem over time.
Measuring Recruitment Efforts
Performance appraisals can provide key information that can help evaluate recruiting practices.
For example, if a high percentage of workers who were hired within a recent time frame scored
well on their appraisals, the company may conclude that its recruiting process is working
effectively. On the other hand, the presence of many poor performers may indicate that the
recruiting efforts are missing the mark and the hiring process may need an overhaul.

III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors

determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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