Various Methods of Performance Appraisal

HRM 501 – Strategic Human Resource Management

Submitted to
Awal Al Kabir
Associate Professor

Submitted by
Sadia Afrin
5th batch
Id 1516

Department of Management Studies

Faculty of Business Studies

Date – 05/02/2020
Qualitative Methods
1. Critical Incident Method
Advantage:
Helps to identify rare events which might be missed by other methods as they focus only on
common events.
Cost effective and provides rich information
Respondent’s perspective is taken into account
Respondents are not forced into any framework

Disadvantage:
Many incidents may go unreported or might not be precise as the reporting of incidents relies
on memory of the respondent.
Biasness might creep in towards the incidents that happened recently.
The incidents narrated may not be representative of everyday situation that takes place during
the job.

Example:
January 20 - Sales clerk patiently attended to the customers complaint. He is polite,
prompt, enthusiastic in solving the customers’ problem
January 20 - The sales assistant stayed 45 minutes beyond his break during the busiest
part of the day. He failed to answer store manager’s call thrice. He is lazy, negligent, stubborn
and uninterested in work

2. Paired Comparison Method

Advantages
It helps the manager to set priorities where there
are conflicting demands on the organization's
resources.
It is not a popular evaluation system as the
employer does not want to encourage
discrimination.
It is useful in companies which have a limited
number of promotions or funds.
Disadvantages
It is particularly useful where priorities are
not clear.
It is particularly useful where the appraiser
does not have objective data to base this on.
The comparison is all evasive and not job-
specific.

Example:
If there are 5 employees A-E, A will be compared individually to B, to C and similarly to the
remaining employees. If A is better than be a “+” will be marked against his name, and if he is
not as good as C, a “- “will be marked. The total number of decisions in this case will be 10. The
number of decisions can be calculated by the formula N(N-1)/2, where N represents the total
number of employees being evaluated. Employee C has the most “+” and hence will receive
more incentives.
 3. MBO (Management by Objective)
Advantages
Easy to implement and measure.
Employee motivated as he/she is aware of
expected roles and accountability.
Performance oriented diagnostic system.
Facilitating employee counseling and
guidance.
More useful for managerial positions.
Disadvantages
Difficult to employees to agree on goals.
Missing intangibles like honesty, integrity and
quality.
Time consuming, complicated, lengthy and
expensive.
Interpretation of goals may vary from manager
to manager and employee to employee.
Not applicable to all jobs.

Quantitative Methods
1. Rating Scale Method
Advantages
Ease of administration and explanation
Fast and transparent

Disadvantages
It is subject to the halo and recency effects (although rankings by 2 or more raters
can be averaged to help reduce biases).
Employees’ strengths and weaknesses cannot be easily determined in the absence of
fixed criteria.
It may be more opinion-based than fact-based.
It is not suitable for large workforce.
Morale problems for employees who are not rated at or near the top of the list.

Example:
Analyze performance of employees working on Project A from April to June 2017
Extremely poor Bad Average Good Very Good
Attention to detail
Knowledge
Teamwork
Initiative
Creativity
 2. Weighted Checklist Method
Advantages
Simplicity: ease of administration
Less expensive and less time consuming
Limited training required of rater

Disadvantages
Susceptibility to rater’s biases (especially the halo effect)
Difficult for the manager to assemble, analyze and weigh a number of statements
about the employee’s characteristics, contributions and behaviors
Misinterpretation of checklist items
Use of improper weights by the HR department
Not allowing the rater to give relative ratings

Example:
No Yes
Gives complete attention to detail
Has complete knowledge of the product
Works well with the team
Takes initiative
Has creative approach to solving problems

3. 360 Degree Performance Appraisal

Advantages
Giving all a voice in the process.
Providing comprehensive and rich feedback
which is gathered from multiple perspectives.
More valid, reliable and objective for being a
multi-rate system.
Identifying professional gaps and suitable
development activities.
Increasing self-awareness and improving self-
development.
Complementing TQM initiatives by emphasizing
internal/external customers and teams.
Disadvantages
Time consuming, costly and complex in
administration.
Employees may focus on the negative.
Not having enough reviewers.
Receiving feedback from multiple sources can
impose an environment of suspicion and
intimidation if the information is not openly
and honestly managed.
Maintaining confidentiality may pose
challenge in small organizations.
Requirement of training and significant efforts
in order to achieve efficient working of 360-
degree feedback system.
Assuring fair process (avoiding politics, Sensitive to organization and national culture.
favoritism, chance observation).

Common in both category:

BARS (Behaviorally Anchored Rating Scale)
Advantages Disadvantages
Using behavioral statements or concrete examples Scale independence may not be valid/
to illustrate multiple levels of performance for each reliable.
element.
Helping the rater to focus on specific desirable and Behaviors are activity oriented rather than
undesirable incidents of work behavior which can result oriented.
serve as examples in discussing a rating.
Helping to overcome rating errors (lessening the Development is time-consuming and
subjectivity of the performance evaluation). expensive.
More acceptances due to participation of managers Each job will require creating separate BARS
and employees. scale.

Example: