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Posted by Farhaan Panagar on Jun 18, 2009 | 7 Comments
The meaning of the word ³appraisal´ is ³to fix a price or value for something´. This is used in finance in terms
such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance
appraisal is a process in which one values the employee contribution and worth to the organisation.

Employees across the entire organisation are appraised of their performance. This could be done annually,
twice a year, periodically depending the need of the organisation. Performance appraisal is a systematic and
orderly evaluation of performance of employees at work by their superiors or others who are familiar with the
techniques of performance appraisal. A performance appraisal is a formal review of employee performance. At
a performance appraisal, objectives or targets are agreed between manager and employee. At each
subsequent appraisal, current and past performance is compared and targets are reviewed.

Performance appraisals are essential for the effective management and evaluation of staff. Appraisals help
develop individuals, improve organizational performance, and feed into business planning. Formal performance
appraisals are generally conducted annually for all staff in the organization. Each staff member is appraised by
their line manager. Performance appraisals are also essential for career and succession planning. Performance
appraisals are important for staff motivation, attitude and behaviour development, communicating
organizational aims, and fostering positive relationships between management and staff. Performance
appraisals provide a formal, recorded, regular review of an individual¶s performance, and a plan for future
development. In short, performance and job appraisals are vital for managing the performance of people and
organizations.

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In 360-degree performance reviews, many different types of people are consulted about an employee¶s
performance. This includes customers, suppliers, peers and direct reports. In the case of a manager,
employees are often asked to give ³upward feedback´ on how well they are being managed. If 360-degree
performance reviews are performed, a Human Resources manager should coordinate the process, so that
subordinate reviewers (i.e., employees) are assured that their performance reviews are kept anonymous.
The aim is to find the gap between one¶s own appraisal and the perceptions of others. This will in turn enable a
professional to analyse his strengths and shortcomings and accordingly improve his performance. While it is
true that the system serves as an excellent process since it reduces biases, it is not always successful. It is
necessary to create the right culture in the company before introducing the system. If many people are
unhappy or their morale is low, the situation can turn disastrous as some staffers will become obvious targets.

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The 360-degree appraisal significantly differs from the traditional supervisor-subordinate performance
evaluation. Rather than having a single person play judge, a 360-degree appraisal acts more like a jury. The
people who actually deal with the employee each day create a pool of information and perspectives on which
the supervisor may act. This group of individuals is made up of both internal and external customers.
åsing 360-degree appraisals provides a broader view of the employee¶s performance. The most obvious
benefit of the 360-degree appraisal is its ability to corral a range of customer feedback. Because each
customer offers a new, unique view, it produces a more complete picture of an employee¶s performance. ånlike
with supervisors, employees can¶t hide as easily in 360-degree appraisals because peers know their behaviors
best and insist on giving more valid ratings. In addition to providing broader perspectives, the 360-degree
appraisal facilitates greater employee self-development. It enables an employee to compare his or her own
perceptions with the perception of others on the employee¶s skills, styles, and performance.

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Peer-to-peer employee performance evaluations require employees at the same level to review each other.
The thinking behind peer-to-peer employee performance evaluations is that nobody knows a worker¶s ability
better than his or her co-workers. While this can be an effective review format for some groups of workers (for
example, a team of doctors working on a research project together, where specific content knowledge is
required), it can also cause controversy because of the way it affects future group dynamics. When evaluating
the use of these types of employee performance evaluations, consider the maturity level of the employees
involved and the long-term effects that could result from the source of negative reviews getting back to the
team members.

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Self-Assessment performance reviews are effective when combined with any of the other three types of
performance reviews. With this type of review, employees are asked to rate themselves, often using the same
form that a manager will use to review them. Self-assessment performance reviews help make the employees
an active part of the process and provide a vehicle for them to reflect on their own performance prior to the
formal review.
Studies have shown that employees are usually harder on themselves in self-assessment performance
reviews, than their managers and generally give themselves lower ratings. Having employees do self
assessment performance reviews prior to a manager¶s review can set a positive tone for the meeting, as the
manager will often have better things to say than the employee has said about him or herself.

4   2  3

Down-Top employee performance evaluations tend to be one of the most common and most effective method,
because they involve the assessment of an employee by its subordinate. Down to top employee performance
evaluations are most useful when given by an employee¶s immediate subordinate ± someone who works with
that employee everyday and knows his or her strengths and weaknesses. The Down-Top employee
performance evaluation becomes less effective when given by a Human Resources manager who has only
second-hand knowledge of an employee¶s performance.

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Top-down employee performance evaluations tend to be the most common and most effective, because they
involve the assessment of an employee by a direct manager. Top-down employee performance evaluations are
most useful when given by an employee¶s immediate supervisor ± someone who works with that employee
everyday and knows his or her strengths and weaknesses. The top-down employee performance evaluation
becomes less effective when given by a Human Resources manager who has only second-hand knowledge of
an employee¶s performance.
One offshoot of top-down employee performance evaluations are ³matrix´ employee performance evaluations,
where multiple managers rate the same employee. This is a good choice when the employee works for multiple
managers, or engages in various fixed-time length projects

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Traditional performance appraisals, as discussed above, can be both subjective and simplistic. At times,
they can also be deemed to be ³political´. In an attempt to improve this methodology, some companies
have turned to 360-degree appraisals. 360 appraisals pool feedback from a department¶s internal and
external customers to ensure a broader, more accurate perspective of an employee¶s performance.
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360-degree performance appraisals offer an alternative by which organizations may gain more useful
performance information about employees. Because all clients/customers an employee comes into
contact with can conceivably have input into the performance appraisal, this methodology can also makes
them more accountable to their customers. åsing a courtroom metaphor, one could say that, rather than
having a single person play judge, a 360-degree appraisal acts more like a jury. People who actually deal
with the employee each day have an opportunity to create a pool of information from which the appraisal
is written. Internal clients may include supervisors, subordinates, co-workers, and representatives from
other departments. External customers may include clients, suppliers, consultants and customers.
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Given the use of a wide variety of sources for information in the 360-appraisal process, this method
provides a broader view of the employee¶s performance. Frequently, the employee on whom the
appraisal is being done (the ratee) will feel that the process is more fair.
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Very often, an employee¶s peers know their behaviors best. Consequently, employees cannot hide as
easily in 360-degree appraisals.
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360-degree appraisal enables an employee to compare his or her own perceptions of their work
performance with the perception of others. As such, the method facilitates employee self-development.
Feedback from one¶s peers is more likely to lead to changed behaviors.
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A 360-degree appraisal process provides a formalized communication link between the employee being
evaluated and their customers. These people now have feedback into the employee¶s performance rating.
As such, the process is likely to make the employee more accountable to his or her various internal and
external customers. Furthermore, organizations can also use this feedback to create more customer-
oriented goals for the following year.
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One issue employers must solve in implementing a 360-degree appraisal program is determining how
many raters should be involved. Next, the organization must decide who should do the rating. Generally
speaking, less than five raters limits the perspective while more than ten raters is likely to make the
appraisal system complex and time consuming. A firm would be well advised to develop a workable
definition of what constitutes a peer, an internal customer, an external customer, a supervisor, etc. For
example, to be useful, the customer ought to be one who has significant interactions with the ratee.
Some organizations permit the ratee to develop a list of key internal and external customers that he or
she interacts with. The ratee then recommends five to ten of these individuals to serve as raters. In this
process, the supervisor still retains the ultimate responsibility for the appraisal and therefore ensures that
appropriate raters are selected. The ratee is thus prevented from stacking the deck with supportive
customers.
Another option has the raters selected at random from the ratee¶s team by a computer-generated system.
Those selected are then notified by E-mail to participate in the appraisal.
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An organization contemplating the use of the 360-degree process must keep in mind that reviewing that
organization¶s employees¶ performance is not the customer¶s business. To ensure the customers¶
cooperation, the process should be a mutually beneficial process.
Furthermore, the various external customers would ideally evaluate the ratee only on the behaviors or
work incidents that they have directly observed. This, of course, also holds for internal raters.
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Once all raters have supplied their appraisals, the employee¶s supervisor is generally responsible for
summarizing the data and determining the final performance rating. After summarizing the data, the
supervisor conducts the formal appraisal interview with the ratee.
Another variation of the summary process makes the ratee responsible for summarizing the feedback
data from the raters. The ratee then submits a summary analysis to his or her supervisor. The ratee and
the supervisor then meet to determine the ratee¶s final performance rating and development plan.
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Organizations must decide whether the feedback from the various raters should be kept anonymous or be
identified to the employee. Sometimes raters give fuzzy feedback because of the fear that the feedback
might come back to them.
One rule rule might be that no rater can give negative feedback in the appraisal unless that rater has
previously given the feedback directly to the ratee. Most organizations should start with a policy of
confidentiality until sufficient understanding, maturity and organizational trust is achieved
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