Effectiveness of performance appraisal

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I. Contents of getting effectiveness of performance appraisal

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Many employers value the need for a performance appraisal process for workers but some
question the effectiveness of this common management tool. A cost and productivity-conscious
small-business owner must evaluate all business operations to ensure that he isn't wasting time
on ineffective and time-consuming activities, and that includes performance appraisals.
Identification
A performance appraisal, also called an employee review, is a one-on-one meeting between
manager and employee during which the employer gives his opinion of the employee's work
over a period of time. The purpose is to get the employee to improve his behavior and
productivity going forward, which in concept should improve the overall productivity of the
company.
Types
Managers use a variety of different methods for conducting performance appraisals. One popular
method is the 360-degree evaluation where the worker's colleagues and clients contribute
feedback. The critical incident method of appraisal evaluates the employee based on a few key
incidents. Another method is self-assessment, which allows the employee to evaluate and rate
himself.
Effectiveness

The ongoing 2001 Watson Wyatt Human Capital Index study found that companies that
implemented 360-degree reviews, a popular and accepted method, actually experienced a 10.6
percent reduction in business value after implementing this appraisal process. According to
management consultants Clint O. Longenecker and Stephen J. Goff, the effectiveness of
performance appraisals are a matter of perspective. The effectiveness of each system depends on
each individual organization's chosen methods and the metrics used to indicate success.
Considerations
The effectiveness of the performance appraisal process is partially dependent on how effectively
the manager conducts the review meeting. For instance, if the manager provides an overly
negative appraisal of the employee's performance without balancing the feedback with positive
comments or encouragement, that could alienate the employee or cause him to perceive the
process as unfair. The effectiveness of the appraisal process may also depend on the personalities
and motivations of each individual worker.
Expert Insight
The ultimate goal of a performance appraisal is to leave all parties involved in a better position
than they were in before the meeting. A negative opinion of the appraisal by just one party
whether by the supervisor or the employeecould create ineffective results. As Longenecker and
Goff say, an ideal system is one that is "accepted by managers and subordinates alike and also
fulfill the needs of human resource departments."
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III. Performance appraisal methods

1. 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.

2. 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.

3. 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 Raters biases

4. 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

5.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
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
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.
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.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. 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.

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