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Performance appraisal criteria
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I. Contents of getting performance appraisal criteria
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You know that expecting a salesclerk to wire your storeroom or balance your books is
unreasonable, but determining which criteria you should use to evaluate the performance of an
employee isn't always obvious. Small-business owners often find this especially challenging, as
employees frequently change roles to meet the changing needs of the business. Clarifying your
evaluation criteria as roles change and documenting your employees' responses will help you
build and maintain a strong team.
Personalize General Criteria
It's easy to find generic employee evaluation forms, but you should take the time to personalize
the forms you use. Make the job skills section relevant to your specific needs. For example, if
you manufacture games, your sales reps not only should understand the games, but they should
be visiting stores and demoing the products to increase your games' visibility in stores. Similarly,
punctuality is essential for your store manager but might be less important for your buyer. Begin
by listing your employee's duties, and then break those duties down into measurable steps.
"Selling," as an example, breaks down into such steps as "greets customers," "listens well," and
"effectively demonstrates merchandise."
Focus on Team Skills
Beyond job skills, evaluate additional areas such as motivation, initiative, employee relations,
team work and dependability. These more abstract qualities often impact the quality of your team
at least as much as basic job skills. Consider an employee with excellent team skills who comes
up with fantastic new promotional ideas and motivates coworkers to effectively enact them, but

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who also consistently mislabels products. You can use this information to readjust that
employee's job description to more reasonably align with demonstrated skills. Conversely, you
can use it as an opportunity to work with the employee to identify why accurately labeling is
difficult and modify your systems in response. In either case, the evaluation process can be used
to create a stronger team and a more effective system.
Measurement
Each of your criteria should be easily measurable and supported by observed facts over the
evaluation period. This enables you to assess growth, such as when your employee's sales
statistics show significant improvement over time. It also helps to concretely reveal problems,
such as chronic lateness subsequent to an employee's divorce. Working out an appropriate
evaluation period prevents you from overemphasizing recent events. You don't want to give an
employee a raise based on a single fantastic sale, nor do you want to penalize a strong employee
for a bad week.
Employee Rights
Review criteria must not violate any of your employees' rights. You know that you can't
discriminate based on gender, age, disability or religion and your policies probably don't
intentionally violate any of these, but changing an Orthodox Jewish employee's schedule to
require Saturday work or penalizing a pregnant employee for lifting restrictions could be
construed as discriminatory. In addition, your employees have the right to know the evaluation
criteria you are using in advance so that they have a reasonable opportunity to meet your
expectations, and so that they have time to address areas of weakness with you prior to a formal
review.
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III. Performance appraisal methods

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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

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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

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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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