TOPIC TEN:

PERFORMANCE APPRAISAL

MS CHONGO NAMUSAMBA
 PERFORMANCE APPRAISAL 

Performance appraisals are part of the broader

field of performance management. It is therefore
necessary to understand performance
management in order to fully understand
performance appraisal  
 Performance management can be defined as a strategic
and integrated approach to delivering sustained success to
organisations by improving the performance of the people
who work in them and by developing the capabilities of
teams and individual contributors (Armstrong and Baron,
1998).
 The purpose of Performance management is to get better results
from the organisation, teams and individuals by understanding
and managing performance within an agreed framework of
planned goals, standards and competence requirements. It is a
process for establishing shared understanding about what is to
be achieved, and an approach to managing and developing
people in a way that increases the probability that the goals of
the organisation will be achieved in the short run and also in the
long run.
 Performance appraisal refers to the systematic description
of the job-related strengths and weaknesses of an individual
or group (Gerald R. 2002: 19-20). It has also been defined as
the systematic evaluation of the individual with respect to
his performance on the job and his potential for
development (Beach, 1975).
Benefits of Performance Appraisals

 a) Performance evaluations assist decision-makers to

determine who should receive pay increases, transfers,
promotions, demotions or retrenchment. Often,
promotions are a reward for past performance. Many firms
actually grant part or all of their pay increases and
bonuses based upon merit, which is determined mostly
through Performance Appraisal
Benefits of Performance Appraisals

 b) The performance feedback allows the employee,

manager, and personnel specialists to intervene with
appropriate actions to improve performance. Poor
performance may indicate the need for retraining while
good performance may indicate untapped potential that
should be developed
Benefits of Performance Appraisals

 c) The performance feedback also guides career decisions

about specific career paths that one should investigate
Benefits of Performance Appraisals

 d) Performance appraisal assists the personnel department in

evaluating its activities. Good or bad performance implies strengths
or weaknesses in the personnel department’s staffing procedures.
Similarly poor performance may indicate errors in job analysis
information, Human Resource plans, or other parts of the Personnel
Management's information system. Reliance on inaccurate information
may have led to inappropriate hiring, training or counselling
decisions. Appraisals help diagnose errors in job designs
Benefits of Performance Appraisals

 e) Sometimes performance is influenced by factors outside

the work environment. These factors may include the
family, financial, health or other personal matters. If
uncovered through appraisals the personnel department
may be able to provide assistance.
Benefits of Performance Appraisals

f) Performance Appraisal provides the basis for validation of

prediction used in internal and external selection as well as
placement
Benefits of Performance Appraisals

 g) Performance Appraisal may be used to weed out

marginal or low performing managers and to serve as a
basis for modifying behaviour toward more effective
performance.
PURPOSES OF PERFORMANCE APPRAISAL

 Performance appraisal helps the management to take

decision about the salary increase of an employee.

 The continuous evaluation of an employee helps in improving

the quality of an employee in job performance.

 The Performance appraisal brings out the facilities available

to an employee, when the management is prepared to
provide adequate facilities for effective performance.
PURPOSES OF PERFORMANCE APPRAISAL

 It minimizes the communication gap between the

employer and employee.

 Promotion is given to an employee on the basis of

performance appraisal.

 The training needs of an employee can be identified

through performance appraisal.
PURPOSES OF PERFORMANCE APPRAISAL

 The decision for discharging an employee.

 Performance appraisal is used to transfer a person.

 The grievances of an employee are eliminated through

performance appraisal.

 The job satisfaction of an employee increases morale.

METHODS OF PERFORMANCE APPRIASAL

 1. ESSAY APPRAISAL In its simplest form, this technique asks the rater to
write a paragraph or more covering an individual's strengths, weaknesses,
potential, and so on. In most selection situations, particularly those involving
professional, sales, or managerial positions, essay appraisals from former
employers, teachers, or associates carry significant weight. The assumption
seems to be that an honest and informed statement -either by word of mouth
or in writing-from someone who knows a person well, is fully as valid as more
formal and more complicated methods.
 The biggest drawback to essay appraisals is their
variability in length and content. Moreover, since
different essays touch on different aspects of a man's
performance or personal qualifications, essay ratings are
difficult to combine or compare. For comparability, some
type of more formal method, like the graphic rating scale,
is desirable.
 The essay method reduces supervisory bias, halo effect, central
tendency and leniency problems. However, the supervisor may spend
formidable time writing separate essays about each employee.
Further essays are not very useful for evaluative purposes as no
common standard exists. Another drawback is the appraiser’s ability
to write. A good writer will earn the appraisee more marks while a
poor writer who may be appraising a good worker may make the
employee to earn low marks due to the inability to write.
2. RATING SCALES Rating scales are satisfactory for most
evaluation purposes because they provide a mathematical
evaluation of the employees' performance, which can be
used to justify compensation or job changes and to validate
selection instruments.
 a. The Graphic Rating Scale This involves using a scale to
measure or gauge an employee’s relation to a certain
attribute such as using initiative, punctuality, reliability,
ability to meet targets. Questions are formulated and
each question would then have a numerical scale
alongside it, similar to the one below:
 Never Rarely Half the Usually Always
Seldom Time
Sometimes

(0%) (25%) (50%) (75%) (100%)

For operative staff, typical qualities rated are:

 Quality and Quantity of work
 Job Knowledge
 Cooperativeness
 Dependability
 Initiative
 Industriousness
 Attitude

For management personnel, typical factors are analytical

ability, decisiveness, creative ability, leadership, initiative,
job performance, co-ordination, and emotional stability.
 The assessor gives the employee a score which most
closely approximates his degree in relation to the
question(s) and a total score is arrived at by adding
together all of the individual item scores on the appraisal
form. Although this method is quick and requires little
training, it is prone to rater errors.
 This technique may not yield the depth of an essay appraisal,
but it is more consistent and reliable. Typically, a graphic scale
assesses a person on the quality and quantity of his/her work (is
he outstanding, above average, average, or unsatisfactory?) and
on a variety of other factors that vary with the job but usually
include personal traits like reliability and cooperation. It may
also include specific performance items like oral and written
communication.
 The graphic scale has come under frequent attack, but
remains the most widely used rating method. It is cheaper
to develop and more acceptable to raters than the forced-
choice form. For many purposes there is no need to use
anything more complicated than a graphic scale
supplemented by a few essay questions.
 b. Non-Graphic Rating Scales Non-graphic scales may be used when
an explanation may need to be given to justify the point raised, e.g.
with regard to punctuality.

Never Rarely Half the Usually Always

Seldom Time
Sometimes

(0%) (25%) (50%) (75%) (100%)

Comment on your response with regard to punctuality
 Non-graphic scales are more valid than graphic rating scales as
they contain a brief description of each point on the scale
rather than simply high and low points of a scale. The rater can
give a more accurate description of the employee’s behaviour
on a particular attribute because a description clarifies each
level of the rating scale. It is a quick and less difficult method
for supervisors to use.
 c. Bars or Behaviourally Anchored Rating Scales This method is
designed to assess behaviour required to successfully perform a job.
The assumption is that personal behaviour will result in required
performance. Most bars use the term job dimension to mean those
broad categories of behaviour that make up a job. Each job will have
several bars. Bars are developed through the active participation of
both managers and job holders therefore increasing the likelihood of
the method being accepted. However, it takes time and commitment
to develop different bars for different jobs.
 3. FIELD REVIEW When there is reason to suspect rater bias, or when some
raters appear to be using higher standards than others, or when comparability
of ratings is essential, essay or graphic ratings are often combined with a
systematic review process. The field review is one of several techniques for
doing this. A member of the personnel or central administrative staff meets
with small groups of raters from each supervisory unit and goes over each
employee's rating with them to (a) identify areas of inter-rater disagreement,
(b) help the group arrive at a consensus, and (c) determine that each rater
conceives the standards similarly.
 This group-judgment technique tends to be fairer and
more valid than individual ratings and permits the central
staff to develop an awareness of the varying degrees of
leniency or severity -as well as bias- exhibited by raters in
different departments. On the negative side, the process
is very time consuming.
 4. COMPARATIVE METHODS They avoid the problem of central
tendency or crowding employees in some groups. They include:

 a. RANKING (INDIVIDUALS) Employees are ranked on a certain

attribute e.g. leadership skills, or on their sales performance. It
involves rating individuals by arranging them according to
merit, from the best to the poorest in terms of a specific
characteristic or of overall performance. No ties or balanced
scores are allowed.
 Advantages

 It is fast and easy to complete where few employees exist

II. A numerical evaluation given to the employees can be
directly related to and used to make other decisions such
as compensation changes or staffing considerations
Disadvantages

 It is not developmental because employees do not receive

feedback about their performance with regard to strengths,
weaknesses or future direction II. It assumes all employees in
the organisation can be ranked from the best to the worst III.
There is no common standard of performance by which to
compare employees from various departments
 For comparative purposes, particularly when it is necessary to
compare people who work for different supervisors, individual
statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons
involve an overall subjective judgment to which a host of
additional facts and impressions must somehow be added.
There is no single form or way to do this.
 Comparing people in different units for the purpose of,
say, choosing a service supervisor or determining the
relative size of salary increases for different supervisors,
requires subjective judgment, not statistics. The best
approach appears to be a ranking technique involving
pooled judgment. The two most effective methods are
alternation ranking and paired comparison ranking.
 Alternation ranking:

In this method, the names of employees are listed on the left-hand side of
a sheet of paper - preferably in random order. If the rankings are for salary
purposes, a supervisor is asked to choose the "most valuable" employee on
the list, cross his/her name off, and put it at the top of the column on the
right hand side of the sheet. Next, he/she selects the "least valuable"
employee on the list, crosses his/her name off, and puts it at the bottom of
the right-hand column. The ranker then selects the "most valuable" person
from the remaining list, crosses his/her name off and enters it below the
top name on the right-hand list, and so on.
 Paired-comparison ranking: Raters here pair employees and choose one as superior in
overall job performance. The employee is given a positive comparison total and a
certain percentage of the total positive evaluation as follows: The No. of
comparisons will be
= N (N-1) where (N = population)
2

While the method is quick and easy where few (2 at a time) employees are being rated,

it is time consuming where many employees are being rated. Moreover, employees are

compared to each other on overall performance rather than on specific job criteria.
 Both ranking techniques, particularly when combined with
multiple rankings (i.e., when two or more people are
asked to make independent rankings of the same work
group and their lists are averaged), are among the best
available for generating valid orderof-merit rankings for
salary administration purposes.
 5. FORCED DISTRIBUTION The supervisor is forced to
distribute the employees to predetermine groups like 10%
should be excellent, 20% good, 40% average, 20% below
average and 10% very poor. Like the field review, this
technique was developed to reduce bias and establish
objective standards of comparison between individuals,
but it does not involve the intervention of a third party.
 Although there are many variations of this method, the most common one
asks raters to choose from among groups of statements those which best fit
the individual being rated and those which least fit him/her. People with high
scores are, by definition, the better employees; those with low scores are the
poorer ones. Since the rater does not know what the scoring weights for each
statement are, s/he cannot play favorites. He simply describes his people,
and someone in the personnel department applies the scoring weights to
determine who gets the best rating.
 The rationale behind this technique is difficult to fault. In practice, however,
the forced-choice method tends to irritate raters, who feel they are not being
trusted. An additional drawback is the difficulty and cost of developing forms.
Consequently, the technique is usually limited to middle and lower
management levels where the jobs are sufficiently similar to make standard
or common forms feasible. Finally, forced-choice forms tend to be of little
value- and probably have a negative effect- when used in performance
appraisal interviews.
 The practice of forced distribution is that job performance
is the basic factor in determining an employee’s value to
an organisation and that other elements like co-operation
and personality are worth considering only in so far as
they contribute to performance.
 6. THE CRITICAL INCIDENTS METHOD

Supervisors first collect critical incidents that reflect especially

favourable job performance (such as completing a major assignment
ahead of schedule) and then they scale the incidents. Lastly they
construct the checklist scale. Scaling incidents involves presenting the
incidents to a group of people who are familiar with the job in question
who then assign scale values to each incident according to its assessed
desirability.
 The checklist scale is drawn up containing only those
items judged to indicate 'good' or 'poor' performance on
the job. Workers are rated according to whether or not
they have shown any of the incidents/behaviours listed
and a total score calculated.
 Advantages: 1.

The method does not involve complicated statistical

procedures. It is concerned with actual on the job
behaviours, which have been observed in particular
organisational circumstances
 2. Supervisors are only required to indicate whether or not
workers have or have not been observed to behave in a
particular way as opposed to being forced to make
judgements/rankings of the personal characteristics of
their subordinates
 Here the evaluator uses the most memorable incidences associated
with the employee whether they happened recently or sometimes
ago. For instance: always reporting to work in time, finishing a major
assignment ahead of time etc. There are, however, several drawbacks
to this approach. It requires that supervisors jot down incidents on a
daily or, at the very least, a weekly basis. This can become a chore.
Furthermore, the critical incident rating technique need not, but
may, cause a supervisor to delay feedback to employees.
 Finally, the supervisor sets the standards. If they seem
unfair to a subordinate, might he not be more motivated
if he at least has some say in setting, or at least agreeing
to, the standards against which s/he is judged.
 7. MANAGEMENT BY OBJECTIVES (MBO)

Management by Objectives (MBO) is a developmental

approach to performance appraisal. Developmental
approaches offer specific, goal oriented, jobs related
guidelines and behaviour for performance improvement.
 MBO Involves the Following Steps

 Performance planning: The employee and supervisor mutually

establish a list of goals designed to accomplish the needs of the
business, further develop the employee and broaden his/her basic
responsibilities. The objective should be quantifiable and measurable,
challenging yet achievable, expressed in writing and in clear, concise
and unambiguous language, and the employees should participate in
the setting them. The objectives and action plans must serve as a
basis for regular discussions between the manager and the employee.
 Developing an action plan indicating how these objectives are to be achieved

 Allowing the employee to implement the action plan

 Review: Periodically the supervisor and employee should conduct a formal

appraisal interview to review the employee’s actual performance against
objectives

 Taking corrective action whenever necessary

 Personal development plan (PDP). It is prepared jointly by an employee and

supervisor for the purpose of improving proficiency and preparing for
additional deficiencies and building
 on strengths through specific training measures during a
particular time period.  Establishing objectives for the future
MBO is both advantageous and disadvantageous. For instance
while it focuses on performance results rather than personal
characteristics, the time and effort required implementing it is
extensive. High standards set may be difficult and unrealistic to
achieve. Objectives for new jobs are difficult to set.
 8. WORK-STANDARDS APPROACH The work-standards approach is set
by the managers. This is used mostly for production workers and is a
form of goal setting for the employees. It involves setting a standard
or expected level of output and then comparing each employee’s
performance to the standards. The work standards should reflect
average output of a typical employee. Standards technique
establishes work and staffing targets aimed at improving productivity.
When realistically used, it can make possible an objective and
accurate appraisal of the work of employees and supervisors.
 To be effective, the standards must be visible and fair. Hence a good deal of
time is spent observing employees on the job, simplifying and improving the
job where possible, and attempting to arrive at realistic output standards.

 Methods used to set standards include:

 Average production of work groups

 Performance of specially selected employees

 Time study

 Work sampling

 Expert opinion
 The advantage of this method is that the review is based
on timely objective factors. The most serious drawback
appears to be the problem of comparability. If people are
evaluated on different standards, how can the ratings be
brought together for comparison purposes when decisions
have to be made on promotions or on salary increases? For
these purposes some form of ranking is necessary.
 360 DEGREE APPRAISALS 360 degree appraisals involve the
appraisee receiving feedback from people (named or
anonymous) whose views are considered helpful and
relevant. The feedback is typically provided on a form
showing job skills/abilities/attitudinal/behavioural
criteria and some sort of scoring or value judgement
system. The appraisee should
 also assess themselves using the same feedback
instrument or form. 360 degree respondents can be the
appraisee's peers, up-line managers/execs, subordinate
staff, team members, other staff, customers, and
suppliers - anyone who comes into contact with the
appraisee and has opinions/views/reactions of and to the
appraisee.
 10. THE CHECKLIST METHOD A checklist for completion by job
holders is similar to a questionnaire but response requires fewer
subjective judgements and tends to be the YES and NO variety.
Checklists cover as many as 100 activities; job holders tick
those tasks that are included in their jobs. The advantages of
this method are that it is flexible, can provide in-depth
information and is easy to organize and prepare. The
disadvantage is that it can be time consuming and the results
are not easy to analyse.
CHALLENGES / ERRORS IN PERFORMANCE
APPRAISAL
 1. LEGAL CONSTRAINTS Performance Appraisals must be free from
discrimination and should not violate laws such as the Equal Employment
Opportunity or any laws such as wrongful dismissal (discharge), layoffs,
demotions or failure to promote. An appraisal system should be fair to all
irrespective of race, sex, national origin, disability, minorities, age, etc.
CHALLENGES / ERRORS IN PERFORMANCE
APPRAISAL

Halo Effect Halo Effect is when a rater’s overall positive or

negative impression of an individual employee leads to rating
him or her the same across all rating dimensions. This is
when a manager really likes or dislikes an employee and
allows their personal feelings about this employee to
influence their performance ratings of them.
Leniency Error Leniency error is when a raters’ tendency is
to rate all employees at the positive end of the scale
(positive leniency) or at the low end of the scale (negative
leniency).This can happen when a manager over-emphasizes
either positive or negative behaviours.
 Central Tendency Error Central tendency error is the raters’
tendency to avoid making “extreme” judgments of employee
performance resulting in rating all employees in the middle
part of a scale. This can happen either when a manager is not
comfortable with conflict and avoids low marks to avoid dealing
with behavioural issues or when a manager intentionally forces
all employees to the middle of the scale
 Recency Error Recency error is the rater’s tendency to allow more recent
incidents (either effective or ineffective) of employee behaviour to carry
too much weight in evaluation of performance over an entire rating period.
This can be extreme on both ends of the spectrum. Either an employee just
finishing a major project successfully or an employee may have had a
negative incident right before the performance appraisal process and it is on
the forefront of the manager’s thoughts about that employee. It is for this
reason that keeping accurate records of performance throughout the year to
refer back to during performance appraisal time is so important.
 First Impression Error First impression error is the rater’s
tendency to let their first impression of an employee’s
performance carry too much weight in evaluation of
performance over an entire rating period. An example of this
would be a new employee joining the organization and
performing at high levels during their “honeymoon” period
and then possibly losing some of that initial momentum
Similar-to-me Error Similar-to-me error is when the rater’s tendency is
biased in performance evaluation toward those employees seen as similar to
the raters themselves. We can all relate to people who are like us but
cannot let our ability to relate to someone influence our rating of their
employee performance. Since human biases can easily influence the rating
process, it is important to create objective measures for rating
performance. Observing behaviours and using available technology to help
track performance can take some of the biases out of the rating process.
 2. RATER BIASES a. The Halo Error – this takes place when the rater

allows one aspect of a person’s character or performance to influence

the entire evaluation. It is expected that one cannot be very good or

very poor in all aspects. This error can be minimized by educating the

raters to make them aware of the problem. The supervisors can also be

asked to judge all the subordinates on a single factor or trait before

going on to the next factor.

 b. The Error of Central Tendency – this refers to the
reluctance to give extreme ratings (either very poor or
excellent). Instead the rater marks each employee near the
centre of the rating sheet, showing an inability to distinguish
between or among them (a form of range restriction). For
instance, on a rating scale of 1-5, a rater may rate all
employees as 3 – distorting the score to make each
employee appear average.
 c. The Leniency and Strictness Bias I. The Leniency Bias
results when evaluators tend to be positively lenient in
their appraisal of an individual, causing the performance
of employees to be overstated and rated higher than they
should be.
 Similarly, the Strictness Bias is just the opposite – it results from
raters being too harsh in their evaluations, sometimes to be seen
as tough judges. This tendency underrates performance, giving the
individual a lower appraisal standard than they deserve. If all
individuals in an organisation were appraised by the same person,
there would be no problem. Difficulty arises when we have
different evaluators, some lenient and others strict, making
judgements on the same set of employees.
 Cross-cultural Biases When people are expected to
evaluate others from different cultures, they may apply
their cultural expectations to someone who has a different
set of beliefs e.g. Arabic culture expects women to play a
very subservient role especially in public. Similarly,
Eastern cultures award more respect and esteem to the
elderly compared to western cultures.
 e. Personal Prejudice A rater's dislike for a group or class
of people may distort the ratings those people receive
e.g. male supervisors often give undeservedly low ratings
to women who hold traditionally male jobs. Such
prejudice prevents effective evaluations and may even
violate anti-discrimination laws.
 Similarity Error (“similar-to-me” mistake). Occurs when
evaluators rate other people in the same way that the
evaluators perceive themselves, e.g. the evaluator who
perceives himself as aggressive may evaluate others
looking for aggressiveness. Those who demonstrate this
characteristic tend to benefit, while others who may lack
it may be penalised.
 The Recency Effect Subjective performance ratings are
affected strongly by the employee’s most recent actions -
either good or bad - as they are more likely to be
remembered by the evaluator. Where subjective
performance measures must be used, biases can be
reduced through training, feedback, and the proper
selection of PA techniques.
 3. LOW APPRAISER MOTIVATION If an evaluator knows that
a poor appraisal could significantly hurt the employees
future (e.g. opportunities for promotion, salary increases,
etc) the evaluator may be reluctant to give a realistic
appraisal.
 4. APPRAISAL ACCEPTANCE The employees may not accept
the appraisal result and evaluators may have difficulties
“selling” the results to the.

 5. LACK OF ORGANISATIONAL SUPPORT This happens

when the organisation does not act on feedback received
from the evaluation.
CONCLUSION

None of these methods is mutually exclusive. All of these

performance assessment methods can be used in conjunction with
others in the list, depending on situation and organizational policy.
Where any of these processes is used, the manager must keep a
written record, and must ensure agreed actions are followed up. To
achieve the best results, employees will be motivated by providing
feedback on how they are doing.