Performance appraisals can be negatively impacted by psychological factors like halo effects, recency bias, and different evaluation standards that skew how supervisors rate employees; common biases include only looking at recent performance, blaming/praising employees for things outside their control, and using subjective terms inconsistently. The document also provides details on various performance appraisal methods like ranking, rating scales, checklists, and critical incident reports, as well as their advantages and disadvantages.

1. Factors affecting performance appraisal
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I. Contents of getting factors affecting performance appraisal
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Performance appraisals are supposed to evaluate the performance of a worker, reward good
performance with promotions and pay raises and set goals to help employees continue to
improve. In reality, however, performance appraisals are affected by a wide range of
psychological factors. Even when supervisors are working with a well-defined guideline to
evaluate workplace performance, they can easily fall off track with results disadvantageous to
both the worker and the company.
The Halo and the Horns
The Halo Effect, sometimes subdivided into the halo and the horns arises from the human
tendency to overgeneralize. A worker who is good or outstanding in one or two areas will
receive a "halo"; his supervisor will believe he is good in all areas because of a few noticeable
strong points. Similarly, a worker who is seen as weak in one or two area can get saddled with
"horns"; his supervisor will overlook his strong points in his performance appraisal and tend to
see everything he does as lacking.
The Matthew Effect
The Matthew Effect is somewhat similar to the halo effect, but more permanent. Sometimes, a
worker is permanently judged based on an early performance evaluation. If she did well on the
early evaluation, she will be more trusted than other employees and all of her work will be seen

2. in a favorable light. If she did poorly, she will have a very hard time earning trust or a positive
evaluation from her boss, who will judge all her future actions in light of an early impression.
Standards of Evaluation
One especially tricky performance appraisal factor is standards of evaluation. Many companies
use subjective terms like "excellent," "good" and "fair" to characterize performance, but these
terms may mean very different things to different people. If a company has two different
evaluators, this can lead to serious bias; a more or less average worker who performs all of his
job duties correctly may receive a "good" rating with one evaluator but only an "average" or
"fair" rating with the other.
General Biases
There are many ways a supervisor can skew everyone's evaluations. Some supervisors exhibit
the central tendency, rating everyone as about average and only deviating in extreme
circumstances. By contrast, an evaluator exhibiting a leniency bias would rate everyone fairly
high, perhaps out of a desire to be nice or a desire to avoid confronting unhappy employees.
An evaluator might also only look at recent performance, exhibiting a recency bias. An
opportunity bias can also skew results, with evaluators blaming or praising employees for things
that were actually out of their control. For example, a salesman could have declining sales
numbers do to a sharp economic downturn, poor product quality or poor inventory management,
none of which would be his fault.
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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.

3. 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

4. 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

5. 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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