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Performance appraisals of Employees are necessary to understand each employees abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance.

The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.


According to Flippo, "performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job."

- Compensation Decision - Promotion Decision - Training and Development Programmes - Feedback - Personal Development

Process of Performance Appraisal

Establishing Performance Standards

Communicate the Standards

Measure Actual Performance

Compare Actual Performance with Standards and Discuss The APPRAISAL

Taking Corrective ACTIONS, If Necessary


- Individual Evaluation Methods. - Multiple Person Evaluation Method. - Other Methods


Confidential Report Essay Evaluation Critical Incidents Checklists Graphic Rating Scale

Confidential Report

It is a descriptive report prepared generally at the end of every year by the employees immediate superior. The report highlights the Strength and Weakness of the employee.


This technique is normally used with a combination of Graphic rating Scale. It provides a good deal of information about the employee and also reveals more about the evalutaor


Under this, manager prepares lists of statements every effective and ineffective behaviour of an employees on the job. These incidents or events represent the outstanding or poor behaviour of employees on the job

Checklists and weighted checklists

Is the employees really interested in the task assigned ? Yes/NO Does he respect his superiors? Yes/NO Does he follow instruction properly? Yes/NO Does he make Mistakes frequently ? Yes/NO


Graphic Rating Scale (most common) _____ _____ _____ _____ _____ Very Average Excellent Poor

2. Multiple-person evaluation techniques

Ranking method:- 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 expressed in terms of his numerical rank.They are ranked according to levels of performance on highest to lowest .It is difficult to rank the average employees.

Limitations:It is diffficult to compare indivisuals possessing varied behavioural traits. It speaks only about performance in groups. When a large number of employees are working,ranking of indivisuals become a vexing issue.


this method,each worker is compared with all other employees in the group for every trait. For instance,when here are five employees A is compared with B,B is compared with C,D,E and arrived at a decision who is better or worse.Hence, fifteen decisions are to be taken here.
Limitation:- It cannot be applied when the group is





this system,the rater is asked to appraise the employees according to a predetermined distribution scale.The two criteria used for rating here are job performance and promotability.In this grade is assigned such as 10%outstanding merit,20%-good,40%-average,20%-fair and 10%-poor.While in promotability factor,its scale consists of three factors-quite likely promotional material,may/maynot be promotional material and quite unlikely promotional material.
Limitation:-People who feel they are productive but find



themselves in a lower grade feel frustrated and will be reluctant to work.

3.Prevalent Methods

Group Appraisal Human Resource Accounting Assessment Centre Field Review Method

Group Appraisal

In this method performance is evaluated by multiple raters. In this method, An employee is appraised by a group of appraisers. In this method employee compares the actual performance with standards, find out the deviations, discusses the reasons therefore, suggests ways for improvement of performance, they prepare an action plan, studies the need for change if necessary

Human Resource Accounting

HRA is a sophisticated way to measure effectiveness of personnel mgt activities and the use of people an organization in financial terms. HRA process shows the investment the organization makes in its people and how the value of these changes over time. Value of employees increased by investments made by the comp to improve the quality of its human resources such as training, development, and skills acquired by employees over the period of time through experience,& employee performance is evaluated in terms of costs and contributions of employee.

Assessment Centre

This method of appraising was first applied in German Army in 1930. This is not a technique of performance of appraisal by it self. In this approach, individuals from various dept are brought together to spend two or three days working on individual or group assignments similar to the ones they would be handling when promoted.

Field Review Method

Where subjective performance measures are used there is a scope for raters biases influencing the evaluation process. To avoid this some employees use the field review method.

Problems with Performance Appraisal




First Impressions Error Halo Horn Effect Leniency Central tendency Stereotyping Recency Effect

Characteristics Of an` Effective Appraisal System

Relibility and Validity Relatedness Standardisation Practical viability Open Communication Employee access to results Training to appraisers

Its all about 360 degree