Performance appraisal is defined as a systematic process to assess an employee's personality and job performance against predefined standards. The objectives are to promote employees based on performance, identify training needs, and make decisions regarding pay and incentives. The process involves establishing standards, communicating them, measuring performance, comparing to standards, providing feedback, and making decisions. Traditional methods include rating scales and rankings while modern methods use management by objectives and 360-degree feedback. Potential benefits are identifying employee strengths and areas for improvement, making promotion decisions, and motivating improved performance. However, issues can arise if managers are unqualified, it creates a negative experience, relies on subjective human assessments, and increases stress for all involved.

1. MBA Finance(2019-21)
- Rashi
Bisaria

3.  About Performance Appraisal
o Meaning
o Objectives
 Process of Performance Appraisal
 Methods/Techniques of Performance Appraisal
o Traditional
o Modern
 Issues in performance appraisal
Advantages
Disadvantages

4. • Performance Appraisal is defined as a systematic process in
which the personality and performance of an employee is
assessed by the supervisor or manager, against predefined
standards, such as knowledge of the job, quality and quantity
of output, leadership abilities, attitude towards work,
attendance, cooperation, judgment, versatility, health, initiative
and so forth.
• It is also known as performance rating, performance
evaluation, employee assessment, performance review, merit
rating, etc.

5. 1
• To promote the employees, on the basis of performance
and competence.
• To identify the requirement for training and development of
employees.
2
• To take a decision regarding the hike in employees pay,
incentives etc.
• To help employees in understanding where they stand in
terms of performance.
3
• To identify the strengths and weaknesses of employees to
place right men on right job
• To increase the growth and development of an
organisation.

6. Establishin
g
performanc
e
standards Communicat
ing
standards
and
expectations
Measure
the actual
performa
nce
Comparin
g with
standards
Discussing
results(fee
dback)
Decision
making

7. Traditional Methods
• Confidential report
• Paired comparison
• Graphic rating
• Straight Ranking
• Critical incident
• Essay method
Modern Methods
• Management by
objectives
• Psychological Appraisal
• Assessment Centres
• 360-Degree Feedback

8. • Poorly Trained Managers
• Not used for performance improvement
• Performance Appraisals are annual
• Recency Effect
• Comparison rating
• Varying standards

9. A systematic performance
appraisal system helps
the managers to properly
identify the performance
of employees in
a systematic manner and
their areas of talent and
areas where they are
lacking.
Potential employees are
often given promotions on
the basis of or the results
of performance
appraisals. People who
have high ratings get
promotions.
It creates healthy
competition among
employees as they will
try to improve their
performance and score
better than their
colleagues.
It helps the management to
place the right employees
for the perfect jobs
depending on their skills in
particular areas.
Performance appraisal
serves as a motivation
tool. Through
evaluation it very well
motivates a person for
better job and helps
him to improve his
performance in the
future.

10. • Managers are sometimes not qualified enough to
correctly assess the employees and their abilities. Thus,
these mistakes can be very detrimental to the growth of
the company.
• If not done right, they can create a negative experience.
• They are based on human assessment and are subject
to greater errors and biases.
• They can create a very stressful environment for
everyone involved.