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Traditional methods of Performance

Methods of Performance Appraisal
 Traditional methods of Performance Appraisal

1.Rating Scales Method

Rating Scales Method is commonly used method for assessing the

performance of the employees and well-known traditional method of
performance appraisal of employees. 

Depending upon the job of employee under this method of appraisal traits
like attitude, performance, regularity, accountability and sincerity etc, are
rated with scale from 1 to 10. 1 indicates negative feedback and 10
indicates positive feedback as shown below.
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Attitude of employee towards his superiors, colleagues and customers

 1  2 3   4 5  6  7  8  9  10 

Extremely poor Excellent

Quality and accuracy of Work

 1  2 3   4 5  6  7  8  9  10 

Extremely poor Excellent

Patients Counseling and Diagnosis

 1  2 3   4 5  6  7  8  9  10 

Extremely poor Excellent

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Under this method of performance appraisal, employee may be assessed by

his superiors, colleagues, subordinates or sometimes by his customers which
all depends on nature of the company or job which is added where the
employee.
Appraiser is a person who appraises employee will give rating for every trait
given by marking or choosing number basing on his observation and
satisfaction. ultimately all numbers chosen or marked will be added to
determine highest score gained by employee. Employee who scored more
points will be treated as top performer following  descending scored
employees will be treated as low performer and the least scored employee
will be treated as non-performers.
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2. Essay appraisal method

This traditional form of appraisal, also known as “Free Form method” involves a
description of the performance of an employee by his superior. The description is
an evaluation of the performance of any individual based on the facts and often
includes examples and evidences to support the information. A major drawback of
the method is the inseparability of the bias of the evaluator.

Under this method, the rater is asked to express the strong as well as weak points
of the employee’s behavior. This technique is normally used with a combination of
the graphic rating scale because the rater can elaborately present the scale by
substantiating an explanation for his rating
 Cont…
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While preparing the essay on the employee, the rater considers the
following factors :

•Job knowledge and potential of the employee;

•Employee’s understanding of the company’s programmes, policies,
objectives, etc.;
•The employee’s relations with co-workers and superiors;
•The employee’s general planning, organizing and controlling ability;
•The attitudes and perceptions of the employee, in general.
 Con……..
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Essay evaluation is a non-quantitative technique. This method is

advantageous in at least one sense, i.e., the essay provides a good deal of
information about the employee and also reveals more about the evaluator.
The essay evaluation method however, suffers from the following limitations:

•It is highly subjective; the supervisor may write a biased essay. The
employees who are sycophants will be evaluated more favorably then other
employees.
•Some evaluators may be poor in writing essays on employee performance.
Others may be superficial in explanation and use flowery language which
may not reflect the actual performance of the employee. It is very difficult
to find effective writers nowadays.
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• The appraiser is required to find time to prepare the essay. A busy

appraiser may write the essay hurriedly without properly assessing the
actual performance of the worker. On the other hand, appraiser takes a
long time, this becomes uneconomical from the view point of the firm,
because the time of the evaluator (supervisor) is costly.
 3. Ranking method
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It is the oldest and simplest formal systematic method of performance appraisal in

which employee is compared with all others for the purpose of placing order of worth.
The employees are ranked from the highest to the lowest or from the best to the
worst.
In doing this the employee who is the highest on the characteristic being measured
and also the one who is L lowest, are indicated. Then, the next highest and the next
lowest between next highest and lowest until all the employees to be rated have been
ranked. Thus, if there are ten employees to be appraised, there will be ten ranks from
1 to 10.
The employees ranked in the top group usually get the rewards (raise, bonus,
promotion), those not at the top tend to have the reward withheld, and those at the
bottom sometimes get punished
 Con…….
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Why and when do we use the ranking method

Managers have to make evaluative decisions, such as who is the
employee of the month, who gets a raise or promotion, and who  gets
laid off. So when we have to make evaluative decisions, we generally
have to use ranking.
However, our ranking can, and when possible should, be based on other
methods and forms. Ranking can also be used for developmental
purposes by letting employees know where they stand in comparison to
their peers—they can be motivated to improve performance. For
example, when one of the authors passes back exams, he places the
grade distribution on the board. It does not in any way affect the current
grades—but it lets students know where they stand, and he does it to
motivate improvement
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Paired comparison

A paired comparison is usually a method in which a certain employee, and

his/ her job is compared with another employee of a similar post, and his/
her job. Usually, such paired comparisons are made on the grounds of the
overall performance of an individual. Once the ratings are provided, the
scores are derived by taking the mean and the standard deviation from all of
the scores to come to a standard which would be used to measure all future
comparisons.
 Paired Comparison Method
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FOR THE TRIT- QUALITY OF WORK FOR THE TRIT- CREATIVITY

Employee rated Employee rated

As A B C D E As A B C D E
Compared Anny Maria Carol David Nancy Compared Anny Maria Carol David Nancy
to to
A
Anny
+ + A
Anny
B
Maria
_ _ _ _ B
Maria
+ - + +
C
Carol
_ + + _ C
Carol
+ + _ +
D
David
+ + _ + D
David
+ - + -
E
Nancy
+ + + _ E
Nancy
+ - - _

Maria Rank Highest Here Anny Rank Highest Here

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5. Critical incidents methods

This technique of performance appraisal was developed by Flanagan and Burns.

The manager prepares lists of statements of very effective and ineffective
behavior of an employee. These critical incidents or events represent the
outstanding or poor behavior of employees on the job. The manager maintains
logs on each employee, whereby he periodically records critical incidents of the
workers behavior. At the end of the rating period, these recorded critical
incidents are used in the evaluation of the workers’ performance.

 
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An example of a good critical incident of a sales assistant is the following:

July 20 – The sales clerk patiently attended to the customers complaint.

He is polite, prompt, enthusiastic in solving the customers’ problem.
 
On the other hand the bad critical incident may appear as under:
July 20 – The sales assistant stayed 45 minutes over on his break during
the busiest part of the day. He failed to answer the store manager’s call
thrice. He is lazy, negligent, stubborn and uninterested in work.
 6. Confidential report system
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Confidential report system is well known method of performance appraisal

system mostly being used by the Government organizations. In this method
of appraising system,  subordinate is observed by his superiors  regarding his
performance in the job and on his duties done. Thereafter Superior writes
confidential report on his performance, mainly on his behavior in the
organization and conduct and remarks if any.
Confidential reports will be kept confidential and will not be revealed to
anyone and finally confidential reports will be forwarded to the top
management officials for taking decision against person on whom confidential
report has made. Confidential reports are the main criteria for promoting or
transferring of any employee mainly in the government sector
 Cont………
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. All governmental organizations example judiciary, police Department and other

government departments in our are using confidential reports method as a tool to know
about the employee and to take any decision connecting to him.

Procedure of confidential report system

The superiors who appraises their subordinates performance, behavior and other key
issues will be kept in the form of writing on paper, which is called as confidential report.
 Confidential report should not be sent openly on a paper, it must be kept in a sealed
cover to send it to decision-making authorities. Only authorized persons are allowed to
open the sealed covers which consists of confidential reports. Confidential reports shall
not be handed over in loose sheets to the subordinates.
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Key factors assessed in Confidential Report writing

•Character and conduct of an employee

•Absenteeism of an employee
•Knowledge of an employee
•His nature and quality of work
•Punctuality of employee
•Unauthorized absenteeism or leave without permission
•Behavior of an employee with colleagues, superiors and with public
•Ability of supervision and controlling 
•His/her integrity and honesty
•If any complaints against employee
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7. Checklist method
The rater is given a checklist of the descriptions of the behavior of the
employees on job. The checklist contains a list of statements on the basis of
which the rater describes the on the job performance of the employees.
Another simple type of individual evaluation method is the checklist. A
checklist represents, in its simplest form, a set of objectives or descriptive
statements about the employee and his behavior. If the rater believes strongly
that the employee possesses a particular listed trait, he checks the item;
otherwise, he leaves the item blank. A more recent variation of the checklist
method is the weighted list. Under this, the value of each question may be
weighted equally or certain questions may be weighted more heavily than
others.   
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The following are some of the sample questions in the checklist :    
   Is the employee really interested in the task assigned?    Yes/No
      Is he respected by his colleagues (co-workers)               Yes/No
      Does he give respect to his superiors?                           Yes/No     
      Does he follow instructions properly?                             Yes/No
      Does he make mistakes frequently?                               Yes/No
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8. Graphic Rating Scale

This is the very popular, traditional method of performance appraisal. Under this
method, core traits of employee pertaining to his job are  carefully defined like Attitude,
Knowledge of Work, Managerial Skills, Team Work, Honesty, Regularity, Accountability,
Interpersonal relationships, Creativity and Discipline etc.

Theses traits are allotted with numerical scale to tabulate the scores gained by
appraise (employee) in  performance assessment  relating to his job by appraiser
(employer) and sum-up to determine the best performer.  Appraiser ticks  rating of
particular trait depending upon his endeavor in his job. Score vary form employee to
employee depending up on his performance levels and endeavor in his job.
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This method is popular because it is simple and does not require any writing ability. The
method is easy to understand and use. Comparison among pairs is possible. This is
necessary for decision on salary increases, promotion, etc.
Example of Graphic Rating Scales Method

Performance Trait  Excellent  Good  Average  Fair  Poor

Attitude  5  4  3  2 1
Knowledge of Work  5  4  3  2  1
Managerial Skills  5  4  3  2  1
Team Work  5  4  3  2  1
Honesty  5  4  3  2  1
Regularity  5  4  3  2  1
Accountability  5  4  3  2  1
Interpersonal relationships  5  4  3  2  1
Creativity  5  4  3  2  1
Discipline  5  4  3 2  1
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9. Forced Distribution
The system is 20 to 22 years old, and most big organizations started waking up to
this form of performance appraisal in the late '90s. The bell curve is nothing but
a graphical representation of the fact that everybody's performance is not the
same. Some employees will be outstanding, some average, and others at the
bottom.
Irrespective of whether or not the bell curve is the most appropriate
representation of performance or human behavior, some believe that it is the
most viable option, especially in services-driven sectors, which have large
workforces.
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The system requires the managers to evaluate each individual, and rank them
typically into one of three categories (excellent, good, poor).
 Modern Methods of Performance Appraisal

1.An assessment centre

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This method was used to appraise army

officers in Germany way back in 1930s.
The concept was adapted from army to
business arena in 1960s. This method is
mainly used to evaluate executive and
supervisory potential. Here employees
are taken to a place away from work and
a series of tests and exercises are
administered.
In simple words, Assessment centers are
a series of exercises commonly used by
employers to test skills not readily
assessable from an interview alone.
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A) In Basket Exercise
In basket exercise method in the assessment Centre also known as the in-tray
exercise method.
In-basket represents day-to-day decision-making situation, which a
manager is likely to face in written form from various sources. The in basket
contains variety of memos, correspondence, telephone message, notes,
requests etc.

The contents are designed after thorough job analysis. The participant is
then asked to deal with each of them within a limited period of time,
putting his reaction as much as possible in writing. Based on the
participant’s reaction, his general activity level, problem analysis,
planning and organizing, time management, delegation, concern for
priorities etc., can be assessed.
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B) Competency Based Interview

Competency-based interviews and also called situational interviews or

behavior interviews according to certain structures.
The interviewer has a collection of questions that each concentrates on a
particular skill or ability of competency and the answers will be compared with
the pre-established criteria.

Some of the key elements of competency-based interviews:

Communication, Conflict resolution, Decisiveness Independence, Flexibility
Adaptability, Problem-solving, Resilience, Organization, Teamwork
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C) Case Study

A case study in the assessment centre method is projected by giving case

studies to the competencies, that is giving them reports, situations to deal
with and come up with accurate results. Documents would also be given to
analyze them and to come up with proper decision-making skills based on
the information given. 
A skill that you need to work on a case study exercise:
• Analytical and statistical and logical analysis of problems
• Formulating to a decision and committing to a decision
• Profound oral communication skills For discussing the
recommendations. etc
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D) Role Play

Role-play exercise used in assessment Centre works in such a way that the
employers would keenly observe the competencies by giving them role-play
to see how would they cope up with the work situation.
The employers of the organization would observe certain skills in the
competencies are as follows:
Work under pressure
Assertiveness
Achieving goals
Customer focus
Interpersonal effectiveness
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E. Group Discussion

Group discussion in an assessment Centre is executed With a small group

of competencies. To know about the abilities and skills of the
competencies and also to see how the competencies work In a team
given. 

The main motive of group discussion are as follows:

To see the leadership skills in the competency
To see the confidence
To check the strength of the character
To see how the competency would consider other opinions
Logical arguments
Strong communication skills
Teamwork
Commercial awareness
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F. Projective Techniques
The projective technique under assessment centre method is a series of
relatively Project issues, concerns organization.

There are various kinds of projective techniques and assessment centers.

Different organizations choose different types of projective techniques to
project competencies and their issues and concerns.
G. Business Games
It can also be effective for self assessment. The candidate might select from a
checklist of different response option or chose different approaches and take
different paths through simulation.

The simulation could branch through different stimulus presentation. This

type of self assessment would help differentiate an employer as unique and
sophisticated in their approach to candidate.
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Advantages of Assessment Centre

It is a fair and accurate way of selecting a candidate.

It not only helps in selecting the right candidate for the position but also
enhances the knowledge of the participants and boosts their thinking
procedure and also improves their efficiency at work.

It gives an opportunity for individuals who are talented and couldn’t
exhibit their talent because their job never demanded it.

They enable interviewers to assess existing performance as well as

predict future job performance.

It gives the candidates a better insight into the role they have applied for
as the tests are similar to the role.
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Disadvantages of Assessment Centre

AC is very costly and time-consuming. The assessment centre will take
at least three days for each assessor one day for training, at least one
day for assessing, and one more for making a decision.

ACs requires highly skilled observers as the observers may bring in

their own perceptions and biases while evaluating.

Those who receive poor assessment might become de-motivated and

might lose confidence in their abilities.

A personal characteristics examined via assessment centre exercises

cannot be measured accurately even over a period of three or four
days.
 2. Behaviorally anchored rating scales
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Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which

combines the graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of behavioral
statements describing important job performance qualities as good or bad (for
eg. the qualities like inter-personal relationships, adaptability and reliability, job
knowledge etc). These statements are developed from critical incidents.
In this method, an employee’s actual job behavior is judged against the desired
behavior by recording and comparing the behavior with BARS. Developing and
practicing BARS requires expert knowledge.
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Based on the Employees performance and behavior, employees are anchored in

different slots of good, average and poor
An Example of Behaviorally Anchored Rating Scale (BARS)
Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for increased sales
and to have positive relationships with customers all over the
country.

Good 6 Can expect to initiate creative ideas for improved sales.

Above average 5 Can expect to keep in touch with the customers throughout the year.

Average 4 Can manage, with difficulty, to deliver the goods in time.

Below average 3 Can expect to unload the trucks when asked by the supervisor.

Poor 2 Can expect to inform only a part of the customers.

Extremely poor 1 Can expect to take extended coffee breaks and roam around
purposelessly.
 3.Human resource accounting method
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Human Resource Accounting is a method to measure the effectiveness of

personnel management activities and the use of people in an organization.HRA
is the process of Assigning, budgeting, and reporting the cost of human
resources incurred in an organization, including wages and salaries and training
expenses.

Human resources are valuable assets for every organization. Human

resource accounting method tries to find the relative worth of these assets
in the terms of money. In this method the Performance appraisal of the
employees is judged in terms of cost and contribution of the employees.
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The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training
costs etc whereas their contribution includes the total value added (in
monetary terms). The difference between the cost and the contribution
will be the performance of the employees. Ideally, the contribution of the
employees should be greater than the cost incurred on them
 4.Management by objectives
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This is an objective type of evaluation which falls under modern approach of

performance appraisal. In MBO method of performance appraisal, manager
and the employee agree upon specific and obtainable goals with a set
deadline. With this method, the appraiser can define success and failure
easily.
Much of the initial impetus for MBO was provided by Peter Drucker (1954)
and by Douglas McGregor (1960). Drucker first described management by
objectives in 1954 in the Practice of Management.

Drucker pointed the importance of managers having clear objectives that

support the purposes of those in higher positions in the organization.
McGregor argues that by establishing performance goals for employees
after reaching agreement with superiors, the problems of appraisal of
performance are minimized. MBO in essence involves the setting out clearly
defined goals of an employee in agreement with his superior
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Carroll and Tosi (1973), in an extensive account of MBO, note its following
characteristics:

1.The establishment of organizational goals.

2.The setting of individual objectives in relation to organizational goals.
3.A periodic review of performance as it relates to organizational goals.
Effective goal-setting and planning by top management.
4.Organizational commitment.
5.Mutual goal-setting.
6.Frequent individual performance reviews.
7.Some freedom in developing means of achieving objectives.
 The key features of management by objectives are as under:
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1.Superior and subordinate get together and jointly agree upon the list the principal
duties and areas of responsibility of the individual’s job.
2.The subordinate sets his own short-term performance goals or targets in cooperation
with his superior.
3.They agree upon criteria for measuring and evaluating performance.
4.From time to time, as decided upon, the superior and subordinate get together to
evaluate progress towards the agreed-upon goals. At those meetings, new or modified
goals are set for the ensuing period.
5.The superior plays a supportive role. He tries, on a day-to-day basis, to help the
subordinate achieve the agreed upon goals. He counsels and coaches.
6.In the appraisal process, the superior plays less of the role of a judge and more of the
role of one who helps the subordinate attain the organization goals or targets.
 MBO process

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Organizational
objective set

MBO for
Employee
the next
objective
period
set
begin

Achieved Progress
Reward Monitor

Performance
Evaluating
 5. 360 degree appraisal: 
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The 360 evaluation feedback method was first used in the 1940s. The 360
method provides each employee the opportunity to receive performance
feedback from his or her supervisor, peers, staff members, co-workers and
customers.

360-degree feedback or multi-source feedback is an appraisal or performance

assessment tool that incorporates feedback from all who observe and are
affected by the performance of a candidate.
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•Top management
The top management usually evaluates the middle level managers. However,
in a small organization they also evaluate the performance of the lower level
managers and senior employees.
•Immediate Superior
The immediate superior is in a very good position to evaluate the
performance of his subordinates. This is because they have direct and
accurate information about the work performance of their subordinates.
•Peers / Co-workers
Peer or colleagues also evaluate each other’s performance. They work
continuously with each other, and they know each other’s performance. Peer
evaluation is used mostly in cases where team work is important.
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•Subordinates
The Subordinates can also evaluate the performance of his superior. Now-a-
days students are asked to evaluate the performance of their teachers.
•Self Appraisal
In the self-appraisal, a person evaluates his own performance. He should be
honest while evaluating himself. This results in self-development.
•Customers
Customers can also evaluate the performance of the employees who interacts
with them. This evaluation is best because it is objective. It is also given a lot
of importance because the customer is the most important for the business.
Organizations use customer appraisals to improve the strengths and remove
the weaknesses of their employees.
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In addition to these six parties, appraisal can also be done by an

Appraisal Panel. This panel consists of 5 to 6 different types of members.
Outside Consultants are also used for conducting appraisals. In some
cases, Personnel Development also conducts an appraisal of employees
and managers.
360 Degree Appraisal is becoming more popular because many parties
are available for evaluation. Therefore, there is no “bias” or “halo effect’.
Hence the evaluation will become more realistic.
 6. Customer feedback method
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This method is truly one of the modern methods of performance appraisal system.
Customer feedback method is used, especially for sales staff who deal with sales activity in
the organization. Under this method of appraisal system, customer feedback is directly
linked with employee performance. This method of assessment could be unbiased and
reliable since customers who are outsiders may give correct judgment about employee
performance than the insiders who are superiors.
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QUESTIONS