Effective performance appraisal system

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I. Contents of getting effective performance appraisal system

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Performance appraisal is an important process for any organization, large or small. The

effectiveness of a company's performance appraisal efforts will depend on a number of

factors, including how well documented and communicated the process is, training for managers

and supervisors, the evaluation and analysis of results and ongoing improvement efforts.

Documented Process

Effective performance appraisal is formal and not left to chance. More than just asking

supervisors and managers to evaluate staff, effective systems provide step-by-step guidance and

standardized evaluation forms for all managers to evaluate all employees. This not only lends to

consistency, but also allows the results of the evaluations overall to be reviewed and compared to

identify areas of strength and areas where there may be opportunities for improvement. Making

the process as easy as possible for managers to follow will help ensure that performance

appraisal is effective.

Communication

Communicating the performance appraisal process, not only to new managers but on an ongoing

basis, can help remind all supervisors that the process exists, what it is, how it works and where

to get advice and assistance if needed. In addition, business leaders and human resources staff

should make sure managers and supervisors understand why performance appraisal is important-

-to employees, managers and the organization.

Training

Supervisors and managers don't automatically know how to conduct performance

appraisals. In addition, processes and philosophies at companies differ, so training and education

is critical. Training should take place regularly to provide refreshers and updates on any changes

to the process or the evaluation forms.

Evaluation of Results

While performance appraisal generally focuses on one individual, looking at the aggregated

results of performance appraisals can tell a company a lot about the general level of performance

of its staff, areas where there may be training or development needs and trends within and

between departments.

Follow-Up and Performance Improvement

The greatest affect on performance appraisal effectiveness is how the business uses the results.

Employees both individually and across the organization should use the appraisal system as a

tool to improve performance.

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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

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

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

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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