Performance appraisal is a systematic evaluation of an employee's performance and abilities to understand their potential for growth and development. It has several uses, including performance improvement, compensation adjustment, placement decisions, and identifying training and development needs. A performance appraisal involves establishing performance standards and measures, evaluating an employee, and providing feedback. However, rater biases like the halo effect and issues around legal constraints can present challenges. Past-oriented appraisal methods focus on evaluating past performance using tools like rating scales, checklists, and critical incident reports. Future-oriented methods emphasize setting goals and evaluating future potential through self-appraisals, management by objectives, psychological assessments, and assessment centers.

1. 1. Performance: It is the way in which someone or something functions/acts.
2. Appraisal: An expert assessment or estimation of the worth, value, or quality of a person or thing.
3. Performance Appraisal: Performance Appraisal is a systematic evaluation of employee’s performance
& to understand the abilities of his/her for further growth & development
4. Uses of Performance Appraisal:
a. Performance Improvement: Through feedback an appropriate action can be taken to improve
the performance.
b. Compensation Adjustment: Performance evaluation held decision makers to determine who
should receive pay increase.
c. Placement Decisions: Promotions transfer or demotions based on the past performance upon
which the placement decisions are made.
d. Training & Development Needs: Poor performance indicates retraining while good performance
indicates potential developments.
e. Career Planning & Development: Performance feedback guides career decision specific career
paths one should investigate.
f. Staffing Process Deficiencies: Good or bad performance indicates the strengths & weaknesses of
personnel dept. staffing process.
g. Informational Inaccuracies: Poor performance indicates errors in job analysis information of
HR Plans.
h. Job Design Errors: Poor performance can be a symptom of ill-conceived job design.
i. Equal Employment Opportunity: Accurate performance appraisal information’s indicates no
discrimination regarding internal placement decisions.
j. External Challenges: Like family, health or other financial factors need to be covered by HR
Dept. otherwise they can affect the performance of an individual.
k. Feedback to Human Resources: Good or bad performance indicates that how well HR function
is performing.
5. Elements of P.A:
a. Performance Standards:
i. Serves as benchmark
ii. Should be related to desired goal
iii. Before evaluation process employees should be made aware
iv. Should be in written form to make employees accountable.
b. Performance Measures:
i. Serves as a rating pool to measure performance
ii. Objective Performance Measures: Based on verifiable performance by others e.g. a phone
operator misdialing seven calls as per record
iii. Subjective Performance Measures: Based on evaluator’s personal opinions e.g. a phone
operator being judged for his/her spoken manners
6. Performance Appraisal Challenges:
a. Legal Constraints: It should be free from all illegal discrimination. The use of formed evaluation
by HR, should be reliable & valid
b. Rater Biases: The bias often occurs when the raters do not remain emotionally unattached while
they evaluate the employee performance
i. The Halo Effect: It occurs when the rater’s personal opinions about the employee
influences the measurement of performance
ii. The Error of Central Tendency: It occurs when the rater’s personal opinion doesn’t
accommodate the extremes e.g, very good or very bad

2. iii. Leniency & Strictness Bias: It occurs when the performance standards are
vague
and not comprehensively conceived/established
iv. Cross Cultural Biases: It occurs when the rater’s tend to apply their cultural expectations
to someone from different culture
v. The Recency (most recent) Effect: It occurs when the rater’s are affected by recent event
or action of the employee that is good or bad
vi. Reducing Rater Bias: It occurs through training , feedback & the proper selection
of
performance appraisal techniques
7. Past Oriented Appraisal Methods:
a. Rater Scales: It requires the rater to provide a subjective evaluation of an individual’s
performance along a scale from LOW to HIGH ( e.g, Excellent , Good, acceptable, fair or poor)
b. Check List: It requires the rater to select words or statement that describe the employee’s
performance & characteristics ( e.g, Employee listen others advice but seldom follow)
c. Forced Choice Method: It requires the rater to choose the most descriptive statement in each pair
of statement (+ or -) about employee being rated (e.g., Learns quickly …….. Works hard)
d. Critical Incident Method: It requires the rater to record statement that describe extremely good
or bad behavior related to job ( e.g., brief explanation of happened event)
e. Accomplishment Record: It is closely related to critical incident method. It includes a list
employee’s produced accomplishments (e.g., publications , speeches or other professional
activities)
f. Field Review Method: To provide the greater standardization in reviews some employers use
this method in which, the skilled representatives of the HR Dept go into the field and assist the
supervisors with their rating
g. Performance Tests & Observation: It is based on a tests of knowledge or skills that may include
paper, pencil or the actual demonstration of both. It may measure the potential rather than the
performance
h. Behaviorally Anchored Rating Scales: Family of evaluation approaches that identify & evaluate
relevant job related behaviors
i. Behavioral Expectation Scale (BES): It is primarily concerned with defining poor to
superior performance
ii. Behavioral Observation Scale (BOS): It primarily asks the rater to indicate the
frequency of identified behavioral anchors
i. Comparative Evaluation Approaches: It is the collection of different methods that compares on
person’s performance with other coworker. In other words a comparative appraisals
i. Ranking Method: It requires rater to place each employee in order for best to worst
ii. Forced Distribution: It requires rater to sort employee into different classifications
iii. Post Allocation Method: It requires rater to allocate a fixed no of points among
employees in the groups
iv. Paired Comparisons: It forces the rater to compare each employee with all other
employee in the group who are being rated
8. Future Oriented Appraisals: Focus is on future performance of the employees.
a. Self Appraisal:
i. Helps users to set personal goals for the future & used to determine areas of needed
improvement
ii. It can be useful evaluation technique if the goal of the evaluation is to further self
development
iii. When employees evaluate themselves, defensive behavior is less likely to occur & selfimprovement is thus more likely
b. Management by Objective (MOB):
i. It is one of the performance appraisal methods that included mutual objective setting &
evaluation basses on attainment of specific objective

3. ii. It is consist of goals that are objectively measurable & mutually agreed on by both, the
employee & the manager
iii. It is a process that converts organizational objectives into individual objective where org
overall objectives are used as guidelines from which departmental & individual objectives
are set
c. Psychological Appraisals:
i. Some orgs employ industrial psychologist for evaluation, they assess an individual’s
future potential
ii. This appraisal normally consists of
1. In-depth interviews
2. Psychological test
3. Discussion with supervisors
4. Review of other evaluations
d. Assessment Centers:
i. These are a form of standardized employee appraisal applied on the managers who have
the potential to perform more responsible jobs
ii. Often the members in the group first meet at training facility where they are individually
evaluated & the process puts selected employees through in depth
• Interview
• Psychological test
• Personal background histories
• Peer ratings by other attendees
• Leaderless group discussion
• Rating by psychologists & managers
• Simulated work experiences to evaluate their future potential