The document discusses the objectives of performance appraisal, which include measuring an employee's progress toward company goals on an ongoing basis. It outlines several key performance indicators that can be measured, such as quantity, quality, timeliness, and cost-effectiveness. The document also describes various methods that can be used to assess performance, including manager appraisals, self-appraisals, peer appraisals, and critical incident reports.

1. Objective of performance appraisal
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I. Contents of getting objective of performance appraisal
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Once an annual ritual, performance appraisal has become a continuous process by which an
employee’s understanding of a company’s goals and his or her progress toward contributing to
them are measured. Performance measurement is an ongoing activity for all managers and their
subordinates.
Performance measurement uses the following indicators of performance, as well as assessments
of those indicators.
1. Quantity: The number of units produced, processed or sold is a good objective indicator of
performance. Be careful of placing too much emphasis on quantity, lest quality suffer.
2. Quality: The quality of work performed can be measured by several means. The percentage of
work output that must be redone or is rejected is one such indicator. In a sales environment, the
percentage of inquiries converted to sales is an indicator of salesmanship quality.
3. Timeliness: How fast work is performed is another performance indicator that should be used
with caution. In field service, the average customer’s downtime is a good indicator of timeliness.
In manufacturing, it might be the number of units produced per hour.
4. Cost-Effectiveness: The cost of work performed should be used as a measure of performance
only if the employee has some degree of control over costs. For example, a customer-service

2. representative’s performance is indicated by the percentage of calls that he or she must escalate
to more experienced and expensive reps.
5. Absenteeism/Tardiness: An employee is obviously not performing when he or she is not at
work. Other employees’ performance may be adversely impacted by absences, too.
6. Creativity: It can be difficult to quantify creativity as a performance indicator, but in many
white-collar jobs, it is vitally important. Supervisors and employees should keep track of creative
work examples and attempt to quantify them.
7. Adherence to Policy: This may seem to be the opposite of creativity, but it is merely a
boundary on creativity. Deviations from policy indicate an employee whose performance goals
are not well aligned with those of the company.
8. Gossip and Other Personal Habits: They may not seem performance-related to the employee,
but some personal habits, like gossip, can detract from job performance and interfere with the
performance of others. The specific behaviors should be defined, and goals should be set for
reducing their frequency.
9. Personal Appearance/Grooming: Most people know how to dress for work, but in many
organizations, there is at least one employee who needs to be told. Examples of inappropriate
appearance and grooming should be spelled out, their effects upon the employee’s performance
and that of others explained, and corrective actions defined.
Performance indicators must be assessed by some means in order to measure performance itself.
Here are some of the ways in which performance is assessed from the aforementioned indicators.
10. Manager Appraisal: A manager appraises the employee’s performance and delivers the
appraisal to the employee. Manager appraisal is by nature top-down and does not encourage the
employee’s active participation. It is often met with resistance, because the employee has no
investment in its development.
11. Self-Appraisal: The employee appraises his or her own performance, in many cases
comparing the self-appraisal to management's review. Often, self-appraisals can highlight
discrepancies between what the employee and management think are important performance
factors and provide mutual feedback for meaningful adjustment of expectations.
12. Peer Appraisal: Employees in similar positions appraise an employee’s performance. This
method is based on the assumption that co-workers are most familiar with an employee’s
performance. Peer appraisal has long been used successfully in manufacturing environments,

3. where objective criteria such as units produced prevail. Recently, peer appraisal has expanded to
white-collar professions, where soft criteria such as “works well with others” can lead to
ambiguous appraisals. Peer appraisals are often effective at focusing an employee’s attention on
undesirable behaviors and motivating change.
13. Team Appraisal: Similar to peer appraisal in that members of a team, who may hold different
positions, are asked to appraise each other’s work and work styles. This approach assumes that
the team’s objectives and each member’s expected contribution have been clearly defined.
14. Assessment Center: The employee is appraised by professional assessors who may evaluate
simulated or actual work activities. Objectivity is one advantage of assessment centers, which
produce reviews that are not clouded by personal relationships with employees.
15. 360-Degree or “Full-Circle” Appraisal: The employee’s performance is appraised by
everyone with whom he of she interacts, including managers, peers, customers and members of
other departments. This is the most comprehensive and expensive way to measure performance,
and it is generally reserved for key employees.
16. MBO (Management by Objectives): The employee’s achievement of objective goals set in
concert with his or her manager is assessed. The MBO process begins with action statements
such as, “reduce rejected parts to 5 percent.” Ongoing monitoring and review of objectives keeps
the employee focused on achieving goals. At the annual review, progress toward objectives is
assessed, and new goals are set.
There are as many indicators of performance as there are companies and jobs. The various
assessment methods can be used in combinations. It is important to choose indicators that align
with your company’s goals and assessment methods that effectively appraise those indicators.
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III. Performance appraisal methods

4. 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

5. 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

6. 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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