Limitations of performance appraisal
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I. Contents of getting limitations of performance appraisal
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The following are the limitations of performance appraisal:
1. Halo effect
In this case the superior appraises the person on certain positive qualities only. The negative
traits are not considered. Such an appraisal will no give a true picture about the employee. And
in some cases employees who do not deserve promotions may get it.
2. Horn effect
In this case only the negative qualities of the employee are considered and based on this
appraisal is done. This again will not help the organization because such appraisal may not
present a true picture about the employee.
3. Central tendency
In this case the superior gives an appraisal by giving central values. This prevents a really
talented employee from getting promotions he deserves and some employees who do not deserve
any thing may get promotion.
4. Leniency and strictness

Some bosses are lenient in grading their employees while some are very strict. Employee who
really deserves promotions may loose the opportunity due to strict bosses while those who may
not deserve may get benefits due to lenient boss.
5. Spill over effect
In this case the employee is judged positively or negatively by the boss depending upon the past
performance. Therefore although the employee may have improved performance, he may still
not get the benefit.
6. Fear of loosing subordinates and spoiling relations
Many bosses do not wish to spoil their relations with their subordinates. Therefore when they
appraise the employee they may end up giving higher grades which are not required. This is a n
injustice to really deserving employees.
7. Goodwill and techniques to be used
Sometimes a very strict appraisal may affect the goodwill between senior and junior. Similarly
when different departments in the same company use different methods of appraisal it becomes
very difficult to compare employees.
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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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