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1. Challenges of performance appraisal
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I. Contents of getting challenges of performance appraisal
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A performance appraisal allows you as a business owner to offer constructive feedback to your
employees and even determine if an increase in compensation is appropriate. By using a set of
standard rating criteria for each employee, you can help ensure fairness in the process. However,
a number of challenges must be overcome to maximize the effectiveness of the appraisal process.
Appraiser Inexperience
If you're a new business owner or are implementing an appraisal system for the first time, you
may not be comfortable with the appraisal process, which may create awkwardness during the
review. A way to overcome this is to follow a standardized review format that you will use for
every employee. This will help ensure that you're treating each employee equally, and will help
you become comfortable with the process more quickly.
Employee Resistance
An appraisal process can make employees uncomfortable, as they may not enjoy the close
scrutiny or view the whole procedure as a negative endeavor. You can help alleviate this by
explaining the procedure at the beginning of the appraisal. You can even consider giving the
appraisal guidelines to employees ahead of time so that they have a better idea of what to expect.
Appraiser Bias

2. Even though you're the boss, you are still human and subject to personal biases. You can also be
swayed by an employee's recent performance while overlooking actions that may have taken
place earlier in the appraisal period. You can overcome bias by making notes of employee
actions throughout the appraisal period so that you can refer to them when preparing your
evaluation.
Not Linked to Rewards
An employee may have done an excellent job during the appraisal period, which you
acknowledge during the review. However, your business may be experiencing tough times or
you may have limited resources to offer a significant pay raise. This can create disgruntlement
and reduced productivity, as the employee may feel that there's no point in making an extra effort
if it isn't properly rewarded.
Not Focused on Development
You may have a tendency to focus on areas that need improvement during your appraisal but fail
to provide suggestions as to ways the employee can improve. As a result, the employee may feel
that the purpose of the appraisal is to point out only what is wrong. If there are negative points in
the review, be sure to work with the employee to develop an improvement plan.
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III. Performance appraisal methods
1.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. 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 tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
i. Employees are ranked according to their performance
levels.
ii. It is easier to rank the best and the worst employee.
Limitations of Ranking Method
i. The “whole man” is compared with another “whole man”
in this method. In practice, it is very difficult to compare
individuals possessing various individual traits.

3. ii. This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
iii. When a large number of employees are working, ranking
of individuals become a difficult issue.
iv. There is no systematic procedure for ranking individuals
in the organization. The ranking system does not eliminate
the possibility of snap judgements.
2. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages – Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages – Rater’s biases
3. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages – economy, ease of administration, limited
training required, standardization. Disadvantages – Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

4. 4. Critical Incidents Method
The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages – Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.
5. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage – It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.
6. Behaviorally Anchored Rating Scales
statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages – helps overcome rating
errors. Disadvantages – Suffers from distortions
inherent in most rating techniques.

5. III. Other topics related to Challenges of performance appraisal (pdf
download)
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