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Performance Appraisals is the assessment of individuals performance in a

systematic way. It is a developmental tool used for all round development of

the employee and the organization. The performance is measured against
such factors as job knowledge, quality and quantity of output, initiative,
leadership abilities, supervision, dependability, co-operation, judgment,
versatility and health. Assessment should be confined to past as well as
potential performance also. The second definition is more focused on
behaviors as a part of assessment because behaviors do affect job results.

Graphic Rating scale

Graphic Rating Scale is a type of performance appraisal method. In this

method traits or behaviors that are important for effective performance are
listed out and each employee is rated against these traits. The rating helps
employers to quantify the behaviors displayed by its employees

Characteristics of a good Graphic Rating scale are:

Performance evaluation measures against which an employee has to

be rated must be well defined.

Scales should be behaviorally based.

Ambiguous behaviors definitions, such as loyalty, honesty etc. should

be avoided

Ratings should be relevant to the behavior being measured. For

example, to measure English Speaking Skill rates should be fluent,
hesitant, and laboured instead of excellent, average and poor.


The method is easy to understand and is user friendly.

Standardization of the comparison criterias

Behaviors are quantified making appraisal system easier


Judgmental error: Rating behaviors may or may not be accurate as the

perception of behaviors might vary with judges
Difficulty in rating: Rating against labels like excellent and poor is
difficult at times even tricky as the scale does not exemplify the ideal
behaviors required for a achieving a rating.

Perception issues: Perception error like Halo effect, Recency effect,

stereotyping etc. can cause incorrect rating.

They are good at identifying the best and poorest of employees.

However, it does not help while differentiating the average employees.

Not effective in understanding the strengths of employees. Different

employees have different strong characteristics and these might
quantify to the same score

Alternate ranking

Alternate ranking is the performance appraisal method for employees where

assessor selects the best and worst employees based on certain
trait/criterion and ranks them accordingly. First, all employees involved in
ranking are listed. Then based on the established trait/criterion, assessor
selects best employee and puts him/her at the top of the ranking. Later,
assessor selects the employee whose performance is least and ranks him/her
as the last. The employees who are assessed as second highest and second
last are added again to the rank list from top and bottom. This alternating
ranking of highest and lowest, continues until all employees are ranked

An alternate type of performance appraisal is the ratings scale. This

methodology requires an employer to develop an in-depth grading system,
similar to the way students in school are assessed. This scale is then used to
evaluate an employee success within a variety of areas, such as technical
skill set, teamwork and communication skills. There is typically a minimum
required grade an employee must receive in order for the performance
appraisal to be considered a success. Those that do not make the grade are
often put on a performance improvement plan. This method is viewed by
some management theorists as an egalitarian way of measuring individual

Paired Comparison

Paired Comparison Analysis (also known as Pair wise Comparison) helps you
work out the importance of a number of options relative to one another.
This makes it easy to choose the most important problem to solve, or to pick
the solution that will be most effective. It also helps you set priorities where
there are conflicting demands on your resources. The tool is particularly
useful when you don't have objective data to use to make your decision. It's
also an ideal tool to use to compare different, subjective options, for
example, where you need to decide the relative importance of qualifications,
skills, experience, and team working ability when hiring people for a new role

Forced distribution

Each performance management process has rules for managers and

employees. One of the most criticized and controversial rule in many
systems is the forced distribution (also called stacked ranking). Many
organizations introduce the forced distribution because they want to reach
the visible differentiation among the performance of employees in the entire
business. GE in the era of Jack Welsh was the most famous user of forced
distribution. GE was limiting each category, and it required managers to act
on top and low performers. Today, most companies do not use the strict
forced ranking, but they have at least limits on certain performance
categories. The companies do not want to have the organization full of
excellent employees if the business is underperforming.Ranking of
employees is the emotional part for managers. HR Managers do enjoy many
discussions about the unfairness of the process for employees and
managers. The system pushes managers to choose an employee, who is
unlucky and his or her performance appraisal is needs improvement. No
one makes any complaints about the requirement to choose the employee,
who is better than the others.

Benefits of the Forced Distribution

The forced ranking has many benefits for the large organization. All costs are
under a control. HR can make an exact estimate of the development because
it knows the limits. The system sets the limits for managers. No exceptions
are allowed.
The system makes differences among employees. The top players (A players)
enjoy many benefits. Their careers are quick; their bonuses are high; they
enjoy salary increases. They enjoy benefits at costs of other employees, who
are not lucky to be "A players".

The system can produce a healthy pressure on employees. They are required
to increase their performance. The "A" players have to develop their skills
and competencies to stay at the top level. The employees clearly see that
managers act on low performers in the team. It is a motivation for the rest to
work hard.

Limitation of the Forced Distribution

The forced distribution can kill innovations in the organization. The

employees do not focus on being innovative; they focus on being visible in
the organization. The manager has to be informed about every step. The
organization is full of presentations and status reports. Nobody reads them
and follows. However, the reports and presentations exist, because they
have to exist. No deliverables, no excellent performance rating.

The forced ranking usually depends on the visibility of the employee in the
organization. The employee, who joins many important meetings, has a
higher chance to receive the excellent rating. Some people learn to live in
the matrix quickly. They are always seen as stars, but they have no real
results to prove it.The forced distribution usually stops working after few
cycles. The low performers are out of the organization, and the manager has
to choose new low performers. The manager starts to rotate the low
performance ranking or starts to protect the last low performer in the team.
The same situation happens to "A players". The manager is worried to rank
the A player as the B player.

The forced ranking can have a destroying impact on the friendliness of the
corporate culture. Employees do not cooperate; they protect their ideas and
do not share them with others. The team without inspiring discussion is not a
functioning team.


Each HR leader should do a quick evaluation of the performance

management system used in the organization. The forced distribution can
help in the moment, when the organization has to make a quick turn-around.
However, it should not be in place for a long time. It stops working.The
organizations focused on innovations should leave the forced distribution as
soon as possible. They should utilize other modern ways of providing instant
and quick feedback to employees. The forced ranking and innovation cannot
exist at one place.If your organization runs the forced distribution
performance model for a long time, you should consider if inputs to other
strategic HR processes are still valid.
Critical incident method

The critical incident method of performance appraisal involved identifying

and describing specific events (or incidents) where the employee did
something really well or something that needs improvement. It's a technique
based on the description of the event, and does not rely on the assignment
of ratings or rankings, although it is occasionally coupled with a ratings type
The use of critical incidents is more demanding of the manager since it
requires more than ticking off things on a form -- the manager must actually
write things out. On the other hand critical incidents can be exceedingly
useful in helping employees improve since the information in them is more
detailed ans specific than in methods that involve rating employees.

Some managers encourage employees to record their own critical incidents

(where the employee excelled, situations that did not go well). That's an
interesting variation that places more responsibility with the employee, and
also does not require the manager to have been present when the incident

Generally, it's important that incidents be recorded AS THEY OCCUR, and not
written at or around the annual performance review. Delaying the recording
of critical incident reports (either good incidents or not so good) means a loss
of detail and accuracy

Narrative Method
The narrative method of documenting and reviewing performance involves
writing a story to describe the performance of an employee. The best way
to clarify this method is to show you an example of a simple, short narrative.
The following is a narrative written for receptionist and switchboard operator

Clarence works well under pressure and handles phone calls efficiently and
effectively. His ability to stay on top of both calls and in-person visitors is a
bonus, and several clients have commented on how polite and helpful he is.
On occasion Clarence has misdirected calls, resulting in a few customers
feeling theyve gotten the runaround. This is probably due to not having had
the roles of staff properly explained to him.

Clarence has shown the ability to learn new skills and a desire to take on
additional responsibilities.
I consider Clarence a valuable employee and someone who might train to do
more advanced tasks to be considered for promotion.

In this very short example, Clarences major job responsibilities are covered,
with comments about each. Narratives need not be limited to descriptions of
job behavior or abilities, but can also include plans for training and
promotion and results of problem diagnostics and performance problem

The narrative method is exceedingly flexible. A narrative can be about

almost anything and can be written on a supplied form, typed into a
computer, or just written longhand. It can be composed of one single general
narrative or it can be structured using pre-designated categories. For
example, a narrative form might include categories like Punctuality and
Attendance, Interaction with Customers, and Sales Success or use any
categories relevant to a particular employees work. The narrative can be
structured in almost any way, with many categories or very few.

Narratives can also include some basic rating elements, so the information
recorded can be summarized. Its not uncommon for a narrative to contain
an overall summary section, which requires the narrator to indicate whether
the persons overall performance is in need of improvement, satisfactory, or
excellent. Those ratings, however, are not the focus of the process. The
narrative is the focus.

The narrative method is exceedingly flexible. A narrative can be about

almost anything and can be written on a supplied form, typed into a
computer, or just written longhand. It can be composed of one single general
narrative or it can be structured using pre-designated categories.

You can use various methods for coming up with the final narrative for an

The worst way to do it is to sit in your office, write the narrative, and then
stick it in front of the employee at the review meeting for his or her
signature. That completely misses the point, which is for you and the
employee to work together to identify and solve problems.

A more productive way is for you and the employee to prepare for the review
meeting by making notes and jotting down phrases that describe the
employees performance. Those notes become the basis for the review
discussion. During that discussion, you work with the employee to draft a
narrative that both of you feel is accurate, fair, and useful for both of you.


The term "BARS" is an acronym which stands for "Behavior- ally Anchored
Rating Statements."As the name implies, BARS are oriented toward
describing behavior as opposed to traits.

Throughout the process of development of BARS there is a con-stand

emphasis on making them observable, measurable and relevant.

The BARS standards take the form of "examples" of behavior which would
typify the performance of an individual who would merit various adjective

Each performance level is "anchored" by several BARS statements.

These statements act as a dictionary or thesaurus. That is, they serve to

define the various levels of performance in more readily observable terms.
Each BARS statement is essentially a synonym for the corresponding
adjective performance level. That is, they describe typical behaviors which
an individual would have to routinely exhibit in order to warrant being rated
at the level.
One of the problems in establishing performance standards revolves around
the issues of perspective and visibility. Typically, individual supervisors have
not supervised enough Employees of a given grade level to develop a
reliable picture of what organizational consequences correspond to various
kinds of job behavior. On the other hand, the behavior of the individual on a
particular assignment is not visible to enough different supervisors to allow
for the application of an institutional perspective by consensus. The BARS
technology allows this gap to be bridged how the BARS Standards

The BARS standards were developed through a series of workshops held with
auditors and supervisors at each grade level. The workshop participants were
asked to write behavioral statements describing instances of high, average,
and low performance in each of the eight job dimensions. The pool of draft
BARS statements were then put through a process called "retranslation". This
was done by preparing a questionnaire for each grade level which asked
respondents to ex- amine the appropriateness of each statement to the
specific job dimension and to rate the performance level the statement
represented on a scale from 1 to 7. The questionnaires were sent to a
representative sample of 50 auditors in each grade level (7-14). The first
analysis performed on the questionnaire data dealt with the issue of
applicability of the statements to a particular dimension. Any statement
which was confirmed as belonging under its target dimension by less than
90% of the respondents was discarded. The second analysis was aimed at
establishing the performance level which the statements represented. While
respondents were asked to rate the statements from 1 to 7, their ratings
seemed to cluster into only 5 levels of performance, therefore it was decided
that asking supervisors to distinguish seven levels of performance was not
realistic and that the final set of standards should utilize only five levels.

It narrative definitions of those levels are as follows:

EXCEPTIONAL: Continuously exceed position requirements at a high enough

level to not only be highly competitive for greater responsibility but also
warrant special commendation. SUPERIO_R: Consistently above position
description standards for present grade, warrants consideration for greater

PROFICIENT: Acceptable level of competence, generally equal to the position

description standards expected of a fully- qualified incumbent.
BORDERLINE: Borderline level of competence warrants close monitoring,
special counseling and/or coaching. Pro- longed operation at this level
warrants possible probation and/or not granting a within-grade increase.

UNACCEPTABLE: Unsatisfactory should be considered for re- assignment,

removal and reduction in grade or outplacement. Selection of statements
was done empirically. The two criteria for selection were:

Mean rating close to a cluster midpoint, and --a standard deviation of less
than 1 (i.e. low scatter around the mean). Finally, the BARS statements were
edited to eliminate those which appeared redundant with other statements
at that level and those which conflicted within or across grades. How to Use
the BARS Performance Standards? ~- -- The Performance Standards are used
to access the individual's performance against standards applicable to
his/her current grade level. These standards are descriptions of the quality of
performance defined for auditors of different grade levels within each of the
eight job dimensions. As mentioned above, five levels of performance have
been defined; Exceptional, Superior, Proficient, Borderline and Unacceptable.
By themselves, however, such terms as "Exceptional", "Superior",
"Borderline" etc. have very little meaning. They are all relative terms. Each
individual will tend to have his/her own subjective definitions. Identical
performance might be rated "Exceptional" by one person and "Superior" or
"Proficient" by another person. In order to avoid such inequities, there is a
need for standards which represent uniform, agreed upon definitions for the
various performance levels. In this system these standards are the BARS. A
sample set of BARS appears in Exhibit 3. To use the BARS, the rater would
examine each performance level. After reading the anchoring statements for
that level, the rater will mentally pose the question of whether the per- son
being evaluated normally exhibits the kinds of behaviors which are
represented by the BARS examples for that level. This is explicitly a process
of extrapolation. The individual will rarely mirror the exact behaviors referred
to in the anchoring statements. Therefore the BARS statements serve as
"examples" or "benchmarks" of behavior not as standards which allow a
direct, one-to-one comparison to be made. If the rater determines that the
ratee has exhibited the kind of behavior descriptive in the anchoring
statements for that level, the next task is to make a judgment concerning
the approximate percent of time they performed at that level. These
proportional time designations can be made in 5% increments, for example,
08, 5%, 10% etc., up to 100%. Gathering data on the distribution of
performance rather than just the anodal category offers the advantages of;
alleviating the rater's problem in describing "mixed" performance.
The BARS approach offers several key advantages:

Its behaviorally based. The BARS system is totally focused on

employee performance. Ideally, it removes all uncertainty regarding
the meaning of each numerical rating.

Its easy to use. The clear behavioral indicators make the process
easier for the manager to carry out and the employee to accept.

Its equitable. With its heavy emphasis on behavior, the evaluation

process comes across as fair.

Its fully individualized. From the standpoint of consistency within a

company, BARS is designed and applied individually and uniquely for
every position.

Its action-oriented. With an understanding of the specific performance

expectations and standards of excellence, employees can much more
easily take steps to improve their performance, and theyre more likely
to do so as a result.

BARS drawbacks to the BARS approach:

The process of creating and implementing BARS is time-consuming,

difficult, and expensive. Each BARS form must be created from scratch
for every position in the company.

Sometimes the listed behaviors still dont include certain actions

required of the employee, so managers can have difficulty as signing a

Its high maintenance. Jobs change over time, which means that BARS
requires a high degree of monitoring and maintenance.

Its demanding of managers. In order to successfully conduct BARS

evaluations, managers need detailed information regarding the actions
of their employees. Gathering such data can be quite time-consuming,
and many managers end up letting this slide.

Behaviorally Anchored Rating Scales are used to rate employee performance.

On a scale from five to nine, employees are appraised based on quantifiable
ratings, critical incidents of performance and overall narratives. All of these
are combined in order to give someone either a poor, moderate or good
performance rating. BARS were created due to the rampant dissatisfaction
that was associated with more subjective appraisal methods. The primary
benefit of using BARS is that they are more accurate than other systems.
There is far less chance for BARS to be affected by leniency, discrimination or
unreliability because a focus is being placed on specific behaviors an
employee does as opposed to rating someone on generalizations. Employers
will need to follow several specific steps in order to accurately create their

Management by objectives (MBO)

Management by objectives (MBO) is a management model that aims to

improve performance of an organization by clearly defining objectives that
are agreed to by both management and employees. According to the theory,
having a say in goal setting and action plans should ensure better
participation and commitment among employees, as well as alignment of
objectives across the organization. The term was first outlined by
management guru Peter Drucker in 1954 in his book "The Practice of

Need for Management by Objectives (MBO)

The Management by Objectives process helps the employees to

understand their duties at the workplace.

KRAs are designed for each employee as per their interest,

specialization and educational qualification.

The employees are clear as to what is expected out of them.

Management by Objectives process leads to satisfied employees. It

avoids job mismatch and unnecessary confusions later on.

Employees in their own way contribute to the achievement of the goals

and objectives of the organization. Every employee has his own role at
the workplace. Each one feels indispensable for the organization and
eventually develops a feeling of loyalty towards the organization. They
tend to stick to the organization for a longer span of time and
contribute effectively. They enjoy at the workplace and do not treat
work as a burden.

Management by Objectives ensures effective communication amongst

the employees. It leads to a positive ambience at the workplace.
Management by Objectives leads to well defined hierarchies at the
workplace. It ensures transparency at all levels. A supervisor of any
organization would never directly interact with the Managing Director
in case of queries. He would first meet his reporting boss who would
then pass on the message to his senior and so on. Every one is clear
about his position in the organization.

The MBO Process leads to highly motivated and committed employees.

The MBO Process sets a benchmark for every employee. The superiors
set targets for each of the team members. Each employee is given a
list of specific tasks.

Limitations of Management by objectives Process

It sometimes ignores the prevailing culture and working conditions of

the organization.

More emphasis is being laid on targets and objectives. It just expects

the employees to achieve their targets and meet the objectives of the
organization without bothering much about the existing circumstances
at the workplace. Employees are just expected to perform and meet
the deadlines. The MBO Process sometimes do treat individuals as
mere machines.

The MBO process increases comparisons between individuals at the

workplace. Employees tend to depend on nasty politics and other
unproductive tasks to outshine their fellow workers. Employees do only
what their superiors ask them to do. Their work lacks innovation,
creativity and sometimes also becomes monotonous.