This document outlines the process and considerations for designing a performance appraisal system, including methods, tips, and forms. It emphasizes the importance of selecting the right people, assessing the organization, and determining the intended purpose of the appraisal system to enhance its success. Various appraisal methods are described, each with their advantages and disadvantages, to assist organizations in improving performance management.

1. Designing performance appraisal system
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I. Contents of getting designing performance appraisal system
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Many agencies are taking a fresh look at their performance management systems as a means of
improving organizational and individual performance. Using a case example for illustration,
Mohrman and his colleagues offer agencies a framework for developing credible, workable
systems as well as considerable wisdom regarding the technical aspects of appraisal. This
framework includes approaches to design, the process of design, and the contextual realities
affecting appraisal.
This book's key contribution lies in how it points out the organizational realities of both the
design process and pursuing various approaches. For example, the authors discuss the problems
associated with loading a system with multiple purposes and conclude that:Designing a
performance appraisal system is a challenging process. This book offers approaches that may not
make it any easier, but will surely make it more likely to succeed.
Step 1
Step 1 in the design process is to select the right people to develop the design for the system. The
authors note that:
"Of course, in Federal agencies with bargain-ing unit employees, involving employees as system
users would mean involving their exclusive representatives".
Step 2

2. Next, a process to guide the design must be chosen (step 2); that is, consider whether to use a
consultant, a task force, and/or a centrally-controlled body.
Steps 3 and 4
Before designing the system, undertake an organizational assessment (step 3) and determine the
system's intended purpose (step 4). The primary objective of the organizational assessment is to
pinpoint the impetus for change, and the definition of purpose is to provide guideposts for the
designers. The authors emphasize the importance of step 4 when they state:
Steps 5, 6, and 7
Steps 5, 6, and 7 involve designing, implementing, and evaluating the system. Using the
information from steps 3 and 4, an organization should examine its culture and design a system
that is either in accord with it or capable of changing it. Experimenting first with implementation
is suggested, with certain questions to ask before choosing pilot sites. Finally, the organization
should follow an evaluation plan with an understanding of how to use the information it provides
to improve the system.
Of course, knowing how to implement a design process is necessary, but not sufficient, for
designing a credible system. Designers need to understand what their options are. The authors
devote several chapters to common appraisal methods and their consequences, determining who
appraises performance, designing a complete appraisal system, and implementing an appraisal
system. They include chapters on special appraisal concerns: tailoring appraisal systems for
different career paths, appraising the performance of professional employees, and designing
appraisal-driven reward systems.
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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

3. 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.
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

4. 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. 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

5. 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.
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