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1. Significance of performance appraisal
In this file, you can ref useful information about significance of performance appraisal such as
significance of performance appraisal methods, significance of performance appraisal tips,
significance of performance appraisal forms, significance of performance appraisal phrases … If
you need more assistant for significance of performance appraisal, please leave your comment at
the end of file.
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• performanceappraisal123.com/1125-free-performance-review-phrases
• performanceappraisal123.com/free-28-performance-appraisal-forms
• performanceappraisal123.com/free-ebook-11-methods-for-performance-appraisal
I. Contents of getting significance of performance appraisal
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During the hiring process, recruiters and hiring managers tell employees when and how they will
receive performance appraisals. Employees trust employers to follow through on all promises --
from paying employees on time to giving employees holidays off to evaluating their
performance. Therefore, conducting performance appraisals is an important consideration when
it comes to placing value on the company’s human capital.
Compensation
Salary and wage increases often are based on performance appraisal results. Untimely appraisals
can throw off compensation practices and cause more work for payroll processing. In addition,
employees mark their calendars for annual increases and potential bonuses. Preventable delays in
delivering employee performance appraisals cause frustration among employees and additional
work for payroll processing clerks responsible for calculating retroactive and pro rata increases.
Satisfaction
Employees look for opportunities elsewhere whenever they feel unappreciated or when they have
reason to believe their employer doesn’t think highly of the work they perform. When
supervisors procrastinate on performance appraisals, it conveys the message that employees
aren’t important enough to set aside sufficient time to conduct evaluations. An untimely
performance appraisal essentially says the work employees perform isn’t critical to the business
model and that other matters take priority over employees. Human capital is your largest

2. investment and an on-time performance appraisal is the best way to demonstrate your
appreciation for an employee’s effort.
Improvement
Most employees perform at an average level. If you use Jack Welch’s practice of differentiation,
roughly 10 percent of your workforce is operating at a marginal level. This suggests that better
than half of your workforce will need to make performance improvements at some time during
the working relationship. Untimely performance appraisals further delay performance
improvement. The sooner you let employees know how to improve their performance, the sooner
you can see the results from improvements.
Productivity
Factors such as compensation, satisfaction and performance, when combined, seriously impact
your organization’s productivity. Employees who exhibit signs of low job satisfaction and low
employee morale are less productive. In turn, low productivity affects your company’s business
cycles because it becomes difficult to meet customer demands. Like dominoes, untimely
performance appraisals disrupt employee productivity, which ultimately presents obstacles in
achieving organizational goals.
Liability
The failure to conduct a performance appraisal or to conduct a timely performance appraisal can
increase your organization’s exposure to claims regarding unfair employment practices. If your
supervisors and managers put off the performance appraisals, employees begin to wonder why
they haven’t received an appraisal. When employees file formal complaints about discriminatory
employment practices, courts may take into consideration the manner and timeliness with which
supervisors evaluate employee performance.
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III. Performance appraisal methods

3. 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.
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

4. 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. 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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