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Abstract

Performance appraisal system is used in the organizations to measure the effectiveness and efficiency of their employees. Performance Appraisal system is needed because every employee has a different attitude to handle the work. Performance Appraisal tends to improve the work performance, communication expectations, determining employee potential and aiding employee counseling. In this paper we present the review of some popular performance appraisal techniques along with their pros and cons. Ranking, Graphic Rating Scale, Critical Incident, Narrative Essays, Management By Objectives, Assessment Centers, BARS, 360 Degree and 720 Degree are some performance appraisal techniques.
International Journal of Engineering and Advanced Technology (IJEAT)
ISSN: 2249 8958, Volume-2, Issue-3, February 2013
617
Techniques of Performance Appraisal-A Review
Ashima Aggarwal, Gour Sundar Mitra Thakur
Abstract- Performance appraisal system is used in the
organizations to measure the effectiveness and efficiency of their
employees. Performance Appraisal system is needed because
every employee has a different attitude to handle the work.
Performance Appraisal tends to improve the work performance,
communication expectations, determining employee potential and
aiding employee counseling. In this paper we present the review
of some popular performance appraisal techniques along with
their pros and cons. Ranking, Graphic Rating Scale, Critical
Incident, Narrative Essays, Management By Objectives,
Assessment Centers, BARS, 360 Degree and 720 Degree are
some performance appraisal techniques.
Keywords- Ranking, Graphic Rating Scale, Critical Incident,
Narrative Essays, MBO, Assessment Centers, BARS, Human
Resource Accounting, 360 degree appraisal,720 degree appraisal.
I. INTRODUCTION
Performance appraisal has been synonymous with
performance review, performance evaluation, performance
assessment, performance measurement, employee
evaluation, personnel review, staff assessment, service
rating, etc. The development of performance appraisal has
four distinct phases. It is called TEAM (Technical,
Extended, Appraisal and Maintenance) approach [10].
Performance Appraisal is reviewing past performance,
rewarding past performance, goal setting for future
performance and employee development [14].
Employee‟s appraisal system may be considered one of
the indicators of the quality of Human Resource
Management in an organization. Properly designed and
realized process of employees‟ appraisal is not only the
necessary basis of successful employee performance
management, but also provides valuable information for
other human resource management functions [2].
Performance Appraisal is important because it helps in
Performance Feedback, Employee Training and
Development Decisions, Validation of Selection process,
Promotions & Transfers, Layoff Decisions, Compensation
Decisions, Human Resource Planning (HRP), Career
Development and Develop Interpersonal Relationship.
Some techniques that were used in the past are not use
during present time, like ranking, critical incident, narrative
essays. In all the way of work time, many of new advance
roads have been suggested for performance appraisal
technique like MBO, Assessment Centers, BARS, Human
Resource Accounting, 360 Degree and 720 Degree.
Manuscript received February, 2013
Ashima Aggarwal, Department of Computer Science and Engineering,
Lovely Professional University, Phagwara, Punjab, India.
Gour Sundar Mitra Thakur, Department of Computer Science and
Engineering, Lovely Professional University, Phagwara, Punjab, India.
II. DIFFERENT TECHNIQUES OF PERFORMANCE
APPRAISAL
There are two types of measures are used in performance
appraisal: Objective measures which are directly
quantifiable and Subjective measures which are not directly
quantifiable. Performance Appraisal can be broadly
classified into two categories: Traditional Methods and
Modern Methods. The performance appraisal methods are:
Traditional Methods
Traditional Methods are relatively older methods of
performance appraisals. This method is based on studying
the personal qualities of the employees. It may include
knowledge, initiative, loyalty, leadership and judgment.
A. Ranking Method
According to Dessler et al. (2011), ranking method is
ranking employees from best to worst on a particular trait,
choosing highest, then lowest, until all ranked [5].
B. Graphic Rating Scales
In 1922, Paterson working with the employees of the
Scott Company developed a graphic scale to provide the
reliability, consistency over time, usefulness and
practicality. Bradshaw in 1931 discussed improvements to
the graphic rating scale that included behaviorism to
anchor the scales and help better illustrate the trait [3]. In
1972, Flynn told that the five to nine scale points result in
the highest quality of ratings. According to Dessler et al.
(2011), Graphic Rating Scale is a scale that lists a number of
traits and a range of performance for each. The employee is
then rated by identifying the score that best describes his or
her level of performance for each trait [5].
C. Critical Incident Method
The technique was formally codified by the works of Fitts
and Jones in 1947 for classifying pilot error experiences in
reading and interpreting aircraft instruments. Fitts and Jones
used the term “errors” rather than “critical incidents”. As
opposed to Fitts and Jones way of collecting data, data
gathering during task performance is now considered a
defining criterion for critical incident methods. The work of
John Flanagan in 1954 became the landmark critical
incident technique, after his title entitled “The Critical
Incident Technique” appeared in the psychological bulletin.
Flanagan (1954) defined the critical incident technique as a
set of procedures designed to describe human behavior by
collecting description of events having special significance
and meeting systematically defined criteria. Flanagan
originally used trained observers to collect critical incident
identification. Identification of the critical incidents during
task performance can be a individual process or a mutual
process between user and evaluator [9].According to Dessler
et. al.(2011),Critical Incident method is keeping a record of
Techniques of Performance Appraisal-A Review
618
uncommonly good or undesirable examples of an
employee‟s work related behavior and reviewing it with the
employee at predetermined times [5 ].
D. Narrative Essays
Evaluator writes an explanation about employee‟s
strength and weakness points, previous performance,
positional and suggestion for his (her) improvement at the
end of evaluation time. This technique mainly attempt to
focus on behavior [7].
Modern Methods
Modern Methods were devised to improve the traditional
methods. It attempted to improve the shortcomings of the
old methods such as biasness, subjectivity, etc.
E. Management by Objectives
In1954, Peter F. Drucker introduced “Management By
Objective” in his book “The Practice of Management”. It
comprises of three building blocks: object formulation,
execution process and performance feedback [17]. In
2000,Weihrich suggested a new model: the system approach
to MBO(SAMBO).SAMBO comprises seven elements:
strategic planning and hierarchy of objects, setting
objectives, planning for action, implementation of MBO,
control and appraisal, subsystems, and organizational and
management development[16].
F. Behaviorally Anchored Rating Scale (BARS)
BARS were introduced by Smith and Kendall in 1963
with the attention of researchers concerned with the issue of
reliability and validity of performance ratings. Behavioral
anchor scales are more informative than simple numbers.
Behaviorally anchored performance dimensions can be
operationally and conceptually can be distinguished from
one another [12]. Rater will act as observer not the judge.
BARS help rater focus on specific desirable and undesirable
incidents of work behavior which can serve as examples in
discussing a rating. BARS use behavioral statements or
concrete examples to illustrate multiple levels of
performance for each element of performance [6].
G. Humans Resource Accounting
The concept of human resource accounting was first
developed by Sir William Petty in 1691.But research into
true human resource accounting began in the 1960 by Rensis
Likert. Prof. Flamholtz defines human resource accounting
for people as an organizational resource. The main theory
underlying the HRA is: The people are valuable resources of
an organization or enterprise, information on investment and
value of human resource is useful for decision making in the
organization[15].This paper aims at analyzing the
application of human resource accounting in heavy
industries covering the period from 2001-2010.In1965, both
Cronbach & Glaser and Naylor & Shine developed models
for estimating the financial utility of personnel selection and
used the concept of „utility analysis‟. In 1966, Grojer and
Johnson embrace both HRA and UA, suggest the concept of
human resource costing and accounting (HRCA)[8].
Another method of human resource accounting is human
resource value accounting (HRVA).
H. Assessment Centers
The assessment center method, in its modern form, came
into existence as a result of AT & T Management Progress
Study by Bray, Campbell & Grant in 1974.Common job
simulations used in assessment centers are in basket
exercises, group discussions, simulations of interviews with
“subordinates” or “clients”, fact finding exercises,
analysis/decision making problems, oral presentation
exercises, written communication exercises[4].
I. 360 Degree
It is a popular performance appraisal technique that
involves evaluation input from multiple levels within the
firm as well as external sources.360 Degree feedback relies
on the input of an employee‟s superior, colleagues,
subordinates, sometimes customers, suppliers and/or
spouses[7].It provides people with information about the
effect of their action on others in the workplace. It provides
a notion of behavioral change might be elicited through a
process of enhanced self-awareness.[6].
J. 720 Degree
Rick Gal breath became dissatisfied with 360 degree
reviews. Gal breath started using the 720 degree and defined
it as a more intense, personalized and above all greater
review of the upper level managers that brings in the
perspective of their customers or investors, as well as
subordinates. 720 degree review focuses on what matter
most, which is the customer or investor perception of their
work [13].720 degree approach gives people a very different
view of themselves as leaders and growing individuals. 360
degree appraisal method is practiced twice. When the 360-
Degree appraisal is done, then the performance of the
employee is evaluated and having a good feedback
mechanism, the boss sits down with the employee again a
second time and gives him feedback and tips on achieving
the set targets [14].
III. OTHER TECHNIQUES
There are many other techniques such as 90 degree,180
degree,270 degree, balanced score card, mixed standard
scale, human resource costing and accounting, paired
comparison, forced distribution method, behavioral
observation scale, mixed standard scale, electronic
performance monitoring, confidential reports etc. are also
used for performance appraisal but not discussed in this
paper. Table 1 represents the summary of this paper.
IV. CONCLUSION
From this we conclude that there are many techniques
that used for performance appraisal. It is very difficult to say
that which technique is better than other technique because
it depends upon the type and size of organization. Each
technique has its own pros and cons.
International Journal of Engineering and Advanced Technology (IJEAT)
ISSN: 2249 8958, Volume-2, Issue-3, February 2013
619
Sl. No.
Technique
Key Idea
Advantages
Disadvantages
A.
Ranking
Method
Ranking employees from
best to worst on a
particular trait, choosing
highest, then lowest, until
all ranked.
1.Fastest
2.Transparent
3.Cost Effective
4.Simple and easy to use
1.Less objective
2. Morale problems who are not
rated at or near the top of the list.
3. Suitable for small workforce.
4. Workers strengths and
weakness cannot be easily
determined.
B.
Graphic Rating
Scales
A scale that lists a
number of traits and a
range of performance for
each, the employee is
then rated by identifying
the score that best
describes his or her
performance for each
trait.
1. Simple.
2. Easily constructed.
3. Ease of use.
4. Results are
standardized what allows
comparison to be made
between employees.
5. Reduce the personal
bias.
1. Rating may be subjective.
2. Each characteristic is equally
important in evaluation of the
employee‟s performance.
C.
Critical Incident
Keeping a record of
uncommonly good or
undesirable examples of
an employee‟s work
related behavior and
reviewing it with the
employee at
predetermined times.
1. Easy and economic to
develop and administer.
2. Based on direct
observations.
3. It is time tested and
provides more face time.
1. Time consuming and laborious
to summarize and analyze the
data.
2. Difficult to convince people to
share their critical incidents
through a survey.
3. Provides a personal perspective
of organizational issues.
D.
Narrative
Essays
Evaluator writes an
explanation about
employee‟s strength and
weakness points,
previous performance,
positional and suggestion
for his (her) improvement
at the end of evaluation
time.
1. Report actually shows
employee‟s performance.
2. Can Cover all factors.
3. Examples are given.
4. Provides feedback.
1. Time consuming.
2.Supervisor may write a biased
essay
3. Effective writers are very
difficult to find.
E.
Management by
Objectives
Employees are evaluated
how well they
accomplished a specific
set of objectives that have
been determined to
critical in the successful
completion of the job.
1. Easy to implement and
measure.
2. Employee motivated
as he is aware of
expected roles and
accountability.
3.Performance oriented
diagnostic system
4. Facilitates employee
counseling and guidance.
1. Difficult to employees agree on
goals.
2. Misses intangibles like honesty,
integrity, quality, etc.
3. Interpretation of goals may vary
from manager to manager, and
employee to employee.
4. Time consuming, complicated,
lengthy and expensive.
F.
Behaviorally
Anchored
Rating Scale
BARS combines
elements from critical
incident and graphic
rating scale approaches.
The supervisor rates
employees‟ according to
items on a numerical
scale.
1. Job behaviors describe
employee performance in
a better way.
2. More objective
3. More acceptances due
to participation of
managers and
employees.
1. Scale independence may not be
valid/ reliable.
2.Behaviors are activity oriented
rather than result oriented
3. Very time consuming for
generating BARS.
4. Each job will require creating
separate BARS scale.
G.
Human
Resource
Accounting(HR
A)
The people are valuable
resources of an
organization or
enterprise, Information
1. Ascertain the cost of
labor turnover.
2. Development of
human resources.
1. There are no specific & clear-
cut guidelines for finding cost and
value of human resources of an
organization.
Techniques of Performance Appraisal-A Review
620
on investment and value
of human resource is
useful for decision
making in the
organization
3. Planning and
execution of personnel
policies.
4. Return on investment
on human resources.
5. Improve the
efficiencies of
employees.
2. The method measures only the
cost to the organization but
ignores completely any measure
of the value of the employee to the
organization.
3. The life of human resources is
uncertain and therefore, valuing
then under uncertainty seems
unrealistic.
H.
Assessment
Centers
Employees are evaluated
over a period of time; say
one or three days, by
observing their behaviors
across a series of selected
exercises or work
samples.
1. Concepts are simple.
2. Highly flexible
methodology.
3. Helps in selection and
promotion decisions and
for diagnosing employee
development needs.
4. Allow for the
measurement of multiple
attributes.
5. Exercise is hard to
fake.
1.Expensive and difficult to
manage
2.Requires a large staff
3. Requires a great deal of time.
4. Only a limited number of
people can be processed at a time.
5. Much cognitive loads o
assessors.
I.
360 Degree
It relies on the input of an
employee‟s superior,
colleagues, subordinates,
sometimes customers,
suppliers and/or spouses.
1. Excellent employee
development tool.
2.Accurate,reliable and
credible system
3.Legally more
defensible
4. More objective being
multi-rate system.
1. Time consuming and very
costly.
2. Sensitive to organization and
national culture.
3. May damage self-esteem of
employees if the feedback is
brutal.
4. Prone to political and social
games played by people.
5. Difficult to implement in cross-
functional teams.
6. Maintaining confidentiality may
pose challenge in small
organizations.
J.
720 Degree
360 degree appraisal
method is practiced
twice. When 360-degree
appraisal is done, then
the performance of the
employee is evaluated
and having a good
feedback mechanism, the
boss sits down with the
employee again a second
time and gives him
feedback and tips on
achieving the set targets.
1. Improved feedback
from more resources.
2.Team Development
3. Personal and
organizational
Performance
Development.
4. Responsibility for
career development.
5. Reduced
discrimination risk.
6. Improved customer
Service.
7. Training needs
assessment.
1. Exceptional Expectations for
the process.
2. Insufficient Information.
3.Design process downfalls
4. Failure to connect the process.
5. Insufficient training and process
understanding.
6. Focus on negatives and
weaknesses.
7.Requires commitment of top
management and the human
resources(time, finance, resources,
etc)
8.Paperwork(computer entry
overload)
9. Rater inexperience and
ineffectiveness.
Table1. Techniques of Performance Appraisal
International Journal of Engineering and Advanced Technology (IJEAT)
ISSN: 2249 8958, Volume-2, Issue-3, February 2013
621
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Ashima Aggarwal, Currently pursuing M.tech from Lovely Professional
University, Punjab, India, B.Tech (CSE). Area of interest is Fuzzy logic,
Data structures and Neural Networking.
Gour Sundar Mitra Thakur, Asst. Professor (CSE/IT), Lovely
Professional University, Punjab, India. B.Tech (C.S.E.), M.tech
(CS).Currently pursuing PhD from National Institute of Technology,
Durgapur in Mathematics, Areas of Interests are Fuzzy Logic and Fuzzy
Mathematics, Soft Computing, Intelligent Systems and Neural Networks.
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Organizations use many performance appraisal formats, but an ideal form still eludes us. This article moves closer to an ideal performance appraisal system. Research assessing all problems occurring with present performance appraisal systems produced 76 performance appraisal problems (reduced to 4 general categories). Performance appraisal systems are improved by rectifying common shortcomings (e.g. reducing biases, training those involved, using formats with research substantiation). However, the most important changes require 1) clarifying the goals of performance appraisal, 2) focusing on both results and behavior appraisals, 3) adding an appraisal category, 4) better timing, and 5) better involving constituencies.
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The Comprehensive Resource for Designing and Implementing MSG Processes As organizations strive to make the best possible decisions on critical issues such as compensation, succession planning, staffing, and outplacement, they have increasingly turned to multisource feedback (MSF) for answers. But while use of MSF (or 360-degree) systems has proliferated rapidly, understanding of its complexities has not—and many companies are moving forward with MSF amid a dangerous void of systematic research and discussion on this powerful process. The Handbook of Multisource Feedback provides the most comprehensive compendium available of current knowledge and practice in MSF. The volume's diverse group of contributors—which includes renowned academics, practitioners, and applied researchers—represents the acknowledged thought leaders in the current and future practice of MSF. Through their multiple perspectives, they identify best practices in the design and implementation of MSF processes and offer key guidelines for decision making when using MSF The book offers solid grounding in the nuts and bolts of MSF data collection and reporting, providing a process model that leads the reader step-by-step through each phase of an MSF system. It details the developmental and decision-making uses of multisource feedback, describing MSF applications for improving executive development, organization development and change, teams, performance management, personnel decision, and more. And it addresses the realities of system forces that influence MSF processes, including legal, ethical, and cross-cultural issues. The Handbook of Multisource Feedback will provide an ideal one-stop reference for practitioners, researchers, consultants, and organizational clients who need to understand the challenges of using multisource feedback. The Editors David W. Bracken, is director of research consulting at Mercer Delta Consulting group, LLC. His twenty-two years of practice have included multisource feedback systems, individual and organizational assessments, performance management, and management development. Carol W. Timmreck, is an organization development consultant at Shell Oil Company. She is a cofounder of the Multisource Feedback Forum, a consortium of organizations with active MSF processes. Allen H. Church, is a principal consultant in management consulting services at PricewaterhouseCoopers, specializing in multisource feedback systems and organizational surveys. He is also an adjunct professor at Columbia University. The complete guide to MSF systems Handbook of Multisource Feedback offers a comprehensive, multiperspective look at the most current knowledge and practice in multisource feedback (MSF) systems. Drawing from extensive research and practice, a diverse group of distinguished contributors presents the "best practices" in the field and offers pragmatic guidelines for decision making at each step of design and implementation of an MSF process. Contributors include: David Antonioni Leanne E. Atwater H. John Bernardin Scott A. Birkeland Walter C. Borman David W. Bracken Stephane Brutus W. Warner Burke Allan H. Church Jeanette N. Cleveland Victoria B. Crawshaw Anthony T. Dalessio Maxine A. Dalton Mark R. Edwards Ann J. Ewen James L. Farr John W. Fleenor Marshall Goldsmith Glenn Hallam Michael M. Harris Sally F. Hartmann Jerry W. Hedge Laura Heft Mary Dee Hicks George P. Hollenbeck Robert A. Jako Richard Lepsinger Jean Brittain Leslie Manuel London Anntoinette D. Lucia Dana McDonald-Mann Carolyn J. Mohler Kevin R. Murphy Daniel A. Newman David B. Peterson Steven G. Rogelberg James W. Smither Jeffrey D. Stoner Lynn Summers Carol W. Timmreck Carol Paradise Tornow Walter W. Tornow Catherine L. Tyler Brian O. Underhill Ellen Van Velsor Nicholas L. Vasilopoulos Kiran Vendantam Janine Waclawski David A. Waldman Alan G. Walker Tom Wentworth Alicia J. Winckler David J. Woehr Francis J. Yammarino
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Although behaviorally anchored rating scales (BARS) have both intuitive and empirical appeal, they have not always yielded superior results in contrast with graphic rating scales. The present study examined the issue of how behavioral descrip tions are anchored. Subjects scaled anchors describ ing teaching performance in a college classroom using either a graphic rating procedure or a pair- comparison procedure. The two different methods resulted in scale anchors with different properties, particularly with respect to item dispersions. It was proposed that the choice of an anchoring procedure depends on the nature of the actual rating process.
Currently pursuing PhD from National Institute of Technology
  • Gour Sundar
  • Mitra Thakur
  • Asst Professor Punjab
  • India B Tech
Gour Sundar Mitra Thakur, Asst. Professor (CSE/IT), Lovely Professional University, Punjab, India. B.Tech (C.S.E.), M.tech (CS).Currently pursuing PhD from National Institute of Technology, Durgapur in Mathematics, Areas of Interests are Fuzzy Logic and Fuzzy Mathematics, Soft Computing, Intelligent Systems and Neural Networks.
  • F J Landy
  • J L Barness
Landy F.J. & Barness J.L.,Scaling Behavioral Anchors,West Publishing Co.,1978.
Appraisal is an indicator of the quality of human resource management in organizations in slovakia
  • I J Blstakova
Blstakova I.J.,"Employees" Appraisal is an indicator of the quality of human resource management in organizations in slovakia",MegaTrend Review:The International Review of Applied Economics,vol.7(2),2010.
Performance Appraisal-how to improve its effectiveness
  • A V Elverfeldt
Elverfeldt A.V.,Performance Appraisal-how to improve its effectiveness,University of Twenty,Enschede,2005.