Performance Appraisal Method 

A. Multiple Person Evaluation Method 

1. Ranking Method - ranking the employee from the most efficient to the least capable on 
each trait or quality to be used in judging the employees’ performance or just simply 
ranking the employee from best to worst. 

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2. Paired comparison method - consist of asking an evaluator to consider only two  individuals
at one time and to decide who is better. Then another pair of names is  presented to the
evaluator for another evaluation. An employee’s position in the final  ranking is
determined by the number of times that employee is chosen over the other  employees. 
3. Forced Distribution - is a method of performance appraisal that ranks employees through 
forced distribution. The rater is asked to rate employees in some fixed distribution of 
categories such as superior, above average, average, below average, and poor. 

B. Individual Evaluation Methods 

1. Critical Incident Method - is a method in which the manager writes down positive and 
negative performance behavior of employees throughout the performance period. 2.
Checklist and Weighted Checklist Method - Checklist is a set of objectives or descriptive 
statements. If the rater believes that the employee possesses a trait listed, the rater 
checks the item; if not the rater leaves it blank. This method describes a performance 
appraisal method where the rater, familiar with the jobs being evaluated, prepares a
large  list of descriptive statements about effective and ineffective behavior on jobs. 3.
Graphic Rating Scales - the oldest and most widely used method for performance 
appraisal. The scales may specify five points, so a factor such as job knowledge might be 
rated from 1 (poorly informed about work duties) to 5 (has complete mastery of all
phases  of the job). 
4. Behaviorally Anchored Rating Scales (BARS) - is used to describe a performance rating 
that is focused on specific behaviors or sets as indicators of effective or ineffective 
performance. It is a combination of the rating scale and critical incident techniques of 
employee performance evaluation. 
5. Management by Objective (MBO) - is a process in which managers and their subordinate
set objectives for the employee to achieve within a specific rating period. It focuses 
attention on what must be accomplished (goals) rather than how it is accomplished 
(methods). Reward is given based on the result or output. 
6. Multi-rater Assessment or the 36-degree Performance Feedback - is a system or process 
in which employees receive confidential, anonymous feedback from people who work 
around them, their immediate superiors, peers, customers, or suppliers. 

7 Tips for Creating a World-class Appraisal System 

1. Design the form first. The appraisal form is a lightning rod that will attract everyone’s 
attention. Design the form early and get a lot of feedback on it. 
2. Build your company’s values into your form. Performance appraisal is a means not
end.  Values become real only when people are held accountable for living up to them. 3.
Assure ongoing communication during development. Circulate drafts and invite users to 
make recommendations. Keep the development process visible through announcements 
and house-organ bulletins.

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4. Train all appraisers. Performance appraisal (PA) requires a multitude of skills-behavioral 
observation and discrimination, goal setting, developing people, confronting  unacceptable
performance, persuading, problem-solving and planning. 
5. Orient all appraisers. The program’s purposes and procedure must be explained in 
advance to all who will be affected by it. 
6. Use the results. If the results of the performance appraisal are not visibly used in making 
promotion, salary changes, employee movement, training and termination decisions, 
people will decide that it is merely an exercise and therefore is just a waste of time. 
7. Monitor and revise the program. Audit the quality of appraisals, the extent to which
the  system is being used, and the extent to which the original objectives have been met. 

Performance Appraisal Problems and Solutions 

1. Halo Effect 
The Problem: A manager or supervisor allows a general favorable impression
of  an employee to influence his or her judgment on each separate factor in
the  performance appraisal process. An unfriendly employee will often be
rated  unsatisfactory for all traits rather than jus pertaining to interpersonal
relation. 
The Solution: The rater should consider each factor independently of all other 
factors, rather than rating employee at the same level on all (most) factors in 
appraisal. 
2. Recency Effect 
The Problem: Recent events tend to have an unusually strong influence on 
performance evaluation. Outstanding contribution or untimely mistake just
prior  to a performance review colors the manager’s perception of the
employee’s  performance for the entire appraisal period. 
The Solution: An alert manager compensates for lack of perspective by careful 
documentation and to make refinements in the design of the appraisal
method,  as well as improving the skills of the raters. 
3. Previous Performance Bias 
 The Problem: The employee who has performed well in the distant past
assumed  to be acceptable in the recent past also. Previous good work tends to
carry over  into the new period being appraised. 
The solution: Once again, observation and documentation of the employee’s 
performance will give accurate account of the performance period under scrutiny. 4.
Leniency/ Harshness/ Strictness Errors 
The Problem: Some managers tend to give mostly favorable ratings while
others  tend too evaluate the same performance unfavorably. This error is
usually  committed when managers feel uncomfortable about communicating
negative  feedback or do not want to hurt the employee’s feelings. 
The solution: Understanding the constructive purposes of performance
appraisal  and acquiring effective skills in giving negative feedback should
reduce the  tendency to commit this error. Raters can assess their own harsh
and lenient 

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rating tendencies by examining or rating forcing a normal distribution to avoid
this  error. 
5. Central Tendency 
The Problem: Central tendency occurs when a manager rates all employees as 
average by choosing the middle rating. The central tendency closes the door to
an  employee’s growth and improvement on a job, because no strengths and 
weaknesses are identified. 
The solution: Ranking employees can avoid this error because all employees
must  be ranked and, thus, cannot all be rated as average. 
6. Carelessness 
The Problem: Manager make quick guesses based on first impressions of an 
employee’s performance. 
The Solution: Managers commit significant time observing staff members and 
forming judgments on their observations. Major decisions are often based on 
performance rating, and ill-considered ratings will contribute unreliable 
information and detract from the organization’s goals. 
7. Bias 
The Problem: Individual differences among ratees in terms of characteristics
like  age, race, sex, and religious and political affiliations. Evaluations are
dependent  on the rater’s personal preferences, prejudices, and biases. The
rater who has  biased or prejudice attitude toward certain groups of people
looks for behavior in  these groups that confirms his or her prejudices. 
The Solution: When rating employees, the manager must consider the same 
relevant behaviors for all employees supervised. Individual difference and
other  nonperformance factors should not affect performance appraisal
ratings. Careful  observation, description, and documentation of actual
 performance on an  ongoing basis reduce the tendency for bias by emphasizing
job performance over  a period of time. 
Feedback or Appraisal Interview

This is an interview in which the supervisor and subordinates review the appraisal and 
make plans to remedy deficiencies and reinforce strengths. It provides an opportunity to
identify  the subordinate’s feelings more thoroughly and thus improve communication
between  supervisor and the employee. 

Annual discussions of performance should include: 

1. Review of overall progress; 
2. Discussion of problems that were encountered; 
3. Discussion of sources of ineffective performance; 
4. Agreement about how performance can be improved; 
5. Discussions on how current performance fits with long-range career goals; 6. Specific
action plans for the coming year and how to reach short and long term objectives.