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Performance appraisal programs
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I. Contents of getting performance appraisal programs
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You can't just hire employees and assume they will do their job. They need guidance, oversight
and periodic reviews to let them know what is expected of them, and to make sure they deliver
their best performance. Companies that have effective performance management programs
increase productivity, identify top performers and motivate employees to work harder. They can
also ensure that their strategic business goals align with hiring and talent development plans.
But companies can only achieve these benefits if they approach performance management as an
ongoing process rather than a single annual event.
One way to build an effective performance management program is to follow these four steps:
Begin by defining role-based competencies and behaviors for every employee so they know
exactly what is expected of them. These competencies should include the five or six qualities that
define success for every member of the organization, as well as job-specific skills and
responsibilities for each individual. This process should occur as soon as a person is hired, and
should be revisited annually.
"If you do this, you will get immediate performance improvements because employees will
know what their boss expects of them," says Dick Grote president of Grote Consulting Corp. in
Frisco, Texas.

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Decide how often you want managers to deliver performance reviews. Most companies stick to
an annual assessment, but others choose to do them quarterly or following important projects.
Frequent reviews can make the assessment process more fluid and give managers the opportunity
to address negative behaviors before they affect an employee's productivity. However, it can be
time-consuming and difficult for managers and HR teams to manage so many meetings
consistently.
Many companies today supplement traditional performance reviews with online talent
management tools. Programs, such as Rypple, allow managers and peers to give feedback and
acknowledgement of an employee's work, and to track performance ratings in online databases
that can be used to generate talent management reports and metrics.
(And don't forget that old-fashioned, lower-tech feedback also is valuable. A quick conversation
or email about what an employee did well or not so well in a meeting can have lasting impact.
Don't overorchestrate the performance management process such that informal coaching
moments get lost.)
If you are planning to conduct one formal annual review with all employees, consider scheduling
them at the same time that the leadership team is completing the annual business plan. This way
employee development goals can be aligned with strategic business goals for the year.
Once you decide when and how frequently you want to deliver assessments, hold managers
accountable for completing them by a deadline, and make meeting that deadline part of their own
performance assessment.
Before the assessment, managers should take the time to evaluate their team. Use some sort of a
rating system, say a 1-to-5 scale (with 5 being the highest score), to assess employees for each
goal, competency, and accomplishment they set at the beginning of the year.
Note: When managers give these reviews to employees, they should be clear about what these
ratings mean. If a "3" is an acceptable performance rating, make sure employees know that,
Grote says. Otherwise anything less than a "5" can be unnecessarily discouraging.
In the assessment meetings, managers should be as honest as possible with employees. They
shouldn't feel like they need to sandwich bad reviews with compliments, or that they need to
come up with problems for high-performing employees. If an employee is delivering good
performance, they deserve to hear that, Grote says. And if an employee is doing a bad job, the
manager should be frank with them about what they are doing wrong, and what they need to do
to save their job.

3.
To validate their assessment, managers should be prepared to provide examples of why they
gave each rating. This ensures managers choose ratings thoughtfully, it demonstrates to
employees why they are getting that rating, and it reduces the chance that employees will contest
the assessment.
When the meeting is over, managers should secure acknowledgement from the employee in
writing that they had an opportunity to review the evaluation—even if they didn't agree with it.
On the designated deadline for completion, the HR director should collect these assessments,
then use the data to set their own talent goals for the coming year.
Performance assessments generate a tremendous amount of valuable data—but it only adds value
if it is incorporated into the human resources-planning process, Grote says. "It's the manager's
job to assess individuals, but it's HR's job to make strategic decisions based on those
assessments."
Along with supporting compensation decisions, this data can be used to justify new training
programs, identify candidates for fast track career development and help define long-term
succession planning.
If you are going to take the time to conduct these reviews and rate your entire staff on their
performance, then take advantage of the data. If you simply file the assessments away in a
drawer you are wasting an opportunity to improve the business, and to increase the strategic
value of the HR function.
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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

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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

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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

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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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