The document outlines various performance appraisal methods, tips, and samples to assist companies in evaluating employee performance effectively. It emphasizes the importance of structured feedback as a developmental tool, detailing the goals and processes for establishing a performance appraisal system, particularly in small businesses. Additionally, it discusses alternative evaluation strategies and the significance of consistent communication and documentation in the appraisal process.

1. Performance appraisal samples
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I. Contents of getting performance appraisal samples
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An employee performance appraisal is a process—often combining both written and oral
elements—whereby management evaluates and provides feedback on employee job
performance, including steps to improve or redirect activities as needed. Documenting
performance provides a basis for pay increases and promotions. Appraisals are also important to
help staff members improve their performance and as an avenue by which they can be rewarded
or recognized for a job well done. In addition, they can serve a host of other functions, providing
a launching point from which companies can clarify and shape responsibilities in accordance
with business trends, clear lines of management-employee communication, and spur re-
examinations of potentially hoary business practices. Yet Joel Myers notes in Memphis Business
Journal that "in many organizations, performance appraisals only occur when management is
building a case to terminate someone. It's no wonder that the result is a mutual dread of the
performance evaluation session—something to be avoided, if at all possible. This is no way to
manage and motivate people. Performance appraisal is supposed to be a developmental
experience for the employee and a 'teaching moment' for the manager."
PERFORMANCE APPRAISAL AND DEVELOPMENT
While the term performance appraisal has meaning for most small business owners, it might be
helpful to consider the goals of an appraisal system. They are as follows:
 To improve the company's productivity
 To make informed personnel decisions regarding promotion, job changes, and
termination

2.  To identify what is required to perform a job (goals and responsibilities of the job)
 To assess an employee's performance against these goals
 To work to improve the employee's performance by naming specific areas for
improvement, developing a plan aimed at improving these areas, supporting the
employee's efforts at improvement via feedback and assistance, and ensuring the
employee's involvement and commitment to improving her performance.
All of these goals can be more easily realized if the employer makes an effort to establish the
performance appraisal process as a dialogue in which the ultimate purpose is the betterment of
all parties. To create and maintain this framework, employers need to inform workers of their
value, praise them for their accomplishments, establish a track record of fair and honest
feedback, be consistent in their treatment of all employees, and canvas workers for their own
insights into the company's processes and operations.
A small business with few employees or one that is just starting to appraise its staff may choose
to use a pre-packaged appraisal system, consisting of either printed forms or software. Software
packages can be customized either by using a firm's existing appraisal methods or by selecting
elements from a list of attributes that describe successful employee's work habits such as
effective communication, timeliness, and ability to perform work requested. Eventually,
however, many companies choose to develop their own appraisal form and system in order to
accurately reflect an employee's performance in light of the business's own unique goals and
culture. In developing an appraisal system for a small business, an entrepreneur needs to consider
the following:
 Size of staff
 Employees on an alternative work schedule
 Goals of company and desired employee behaviors to help achieve goals
 Measuring performance/work
 Pay increases and promotions
 Communication of appraisal system and individual performance
 Performance planning
SIZE OF STAFF A small business with few employees may choose to use an informal approach
with employees. This entails meeting with each employee every six months or one year and
discussing an individual's work performance and progress since the last discussion. Feedback can
be provided verbally, without developing or using a standard appraisal form, but in many cases,
legal experts counsel employers to maintain written records in order to provide themselves with
greater legal protections. As a company increases its staff, a more formal system using a written
appraisal form developed internally or externally should always be used, with the results of the
appraisal being tied to salary increases or bonuses. Whether the appraisal is provided verbally or

3. in writing, a small business owner needs to provide consistent feedback on a regular basis so that
employees can improve their work performance.
ALTERNATIVE WORK SCHEDULES Employees working alternative work schedules—
working at home, working part-time, job-sharing, etc.—will most likely need to have their
performance appraised differently than regular full-time staffs in order to be fairly evaluated. An
alternative work schedule may require different duties to perform a job and these new
responsibilities should be incorporated into the appraisal. A small business owner should also be
careful to ensure that these employees are treated fairly with regard to both the appraisal and
resulting promotions.
COMPANY GOALS AND DESIRED PERFORMANCE
The performance of employees, especially in a smaller firm, is an essential factor in any
company's ability to meet its goals. In a one-person business, goal-setting and achieving is a
matter of transforming words into action, but moving the business towards its goals in a larger
firm means that the employer has to figure out each person's role in that success, communicate
that role to them, and reward or correct their performance. It also means that the appraisal should
incorporate factors such as collaborative ability and sense of teamwork, not just individual
performance.
MEASURING/ASSESSING PERFORMANCE Once a list of tasks and attributes is developed, a
small business owner or manager needs to determine how to measure an employee's performance
on these tasks. Measurement provides another objective element to the appraisal. Ideally,
measurement would be taken against previous performance, whether of the individual employee,
the group, or the company at large. If a company is just developing its appraisal system or does
not have a baseline performance to measure against, it should develop realistic goals based on
business needs or on the similar performance of competitors.
PAY INCREASES AND PROMOTIONS When developing an appraisal system, a small
business owner needs to consider the connection between the appraisal and pay increases or
promotions. While performance feedback for development/improvement purposes may be given
verbally, a written summary of the individual's work performance must accompany a pay
increase or promotion (or demotion or termination). It is crucial, therefore, that a manager or
small business owner regularly document an employee's job performance.
The method of pay increases impacts the appraisal as well. If a small business uses merit-based
increases, the appraisal form would include a rating of the employee on certain tasks. If skill-
based pay is used, the appraisal would list skills acquired and level of competency. Appraisals

4. and resulting salary increases that take into account group or company performance should
include the individual's contributions to those goals.
COMMUNICATING THE SYSTEM A performance appraisal system is only effective if it is
properly communicated and understood by employees. When devising an appraisal system for
his or her company, an entrepreneur may want to consider involving staff in its development.
Supporters contend that this promotes buy-in and understanding of the plan, as well as ensuring
that the appraisal takes into account all tasks at the company. If the small business owner is
unable to involve her staff, she should walk through the system with each employee or manager
and have the manager do the same, requesting feedback and making adjustments as necessary.
COMMUNICATING PERFORMANCE AND PLANNING
Part of the appraisal system is the actual communication of the performance assessment. While
this assessment may be written, it should always be provided verbally as well. This provides an
opportunity to answer any questions the employee may have on the assessment, as well as to
provide context or further detail for brief assessments. Finally, the employee and the
entrepreneur or manager should make plans to meet again to develop a plan aimed at improving
performance and reaching agreed-upon goals for the following review period. This planning
session should relate company and/or group goals to the individual's tasks and goals for the
review period and provide a basis for the next scheduled review.
TYPES OF APPRAISALS AND ASSESSMENT TERMS
TRADITIONAL In a traditional appraisal, a manager sits down with an employee and discusses
performance for the previous performance period, usually one year. The discussion is based on
the manager's observations of the employee's abilities and performance of tasks as noted in a job
description. The performance is rated, with the ratings tied to salary percentage increases.
However, as David Antonioni notes in Compensation & Benefits , "The traditional merit raise
process grants even poor performers an automatic cost of living increase, thereby creating
perceived inequity…. In addition, most traditional performance appraisal forms use too many
rating categories and distribute ratings using a forced-distribution format." Antonioni suggests
the appraisal form use just three rating categories—outstanding, fully competent, and
unsatisfactory—as most managers can assess her best and worst employees, with the rest falling
in between.
SELF-APPRAISAL Somewhat self-explanatory, the self-appraisal is used in the performance
appraisal process to encourage staff members to take responsibility for their own performance by
assessing their own achievements or failures and promoting self-management of development
goals. It also prepares employees to discuss these points with their manager. It may be used in

5. conjunction with or as a part of other appraisal processes, but does not substitute for an
assessment of the employee's performance by a manager.
EMPLOYEE-INITIATED REVIEWS In an employee-initiated review system, employees are
informed that they can ask for a review from their manager. However, cautions Ellyn E. Spragins
in Inc. , "The on-demand appraisal isn't meant to replace a conventional semiannual review, but
it promotes an attitude of self-management among workers and often makes critiques more
honest." Adherents to this type of review process contend that it promotes regular
communication between staff and managers. Detractors, though, note that it is dependent on the
employees' initiative, making it a less than ideal alternative for some workers with quiet, retiring
personalities or confidence issues.
360 DEGREE FEEDBACK 360 degree feedback in the performance appraisal process refers to
feedback on an employee's performance being provided by the manager, different people or
departments an employee interacts with (peer evaluation), external customers, and the employee
herself. This type of feedback includes employee-generated feedback on management
performance (also known as upward appraisals). As a company grows in size, a small business
owner should consider using 360 degree feedback to appraise employees. Communication in a
business of ten people varies wildly from that of a company of 100 persons and 360 degree
feedback ensures that an employee's performance is observed by those who work most closely
with her. Small business owners or managers can either include the feedback in the performance
review or choose to provide it informally for development purposes.
==================
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.

6. 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

7. 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

8. 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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