By the end of this topic, you should be able to:

– Discuss the meaning and uses of performance management in an organization

– Explain the performance management cycle

-Explain the concept of performance appraisal

– Explain the purpose of performance appraisal

-Discuss methods of conducting performance appraisal

-Explain the benefits of performance appraisal

-Explain the challenges in performance appraisal


Effective human resources management (HRM) is essential for optimally utilizing creativity and attaining individual as well as organizational goals. Leadership has to ensure proper integration of various activities and harmonious functioning directed towards organizational goals. High motivation is essential for ensuring commitment of human resources to the given objectives. The key to motivation lies in integrating organizational and individual goals. Therefore, a manager has to concentrate on basic HRM tasks such as planning, development, compensation and evaluation. Evaluation includes performance planning, appraisal and counselling. These are critical in effective HRM.


1.1  Concept of Performance Appraisal

The meaning of performance

Performance is often defined simply in output terms the achievement of quantified objectives. But performance is a matter not only of what people achieve but how they achieve it. The Oxford English Dictionary defines performance as: ‘The accomplishment, execution, carrying out, working out of anything ordered or undertaken.’ High performance results from appropriate behaviour, especially discretionary behavior, and the effective use of the required knowledge, skills and competencies.


The concept of performance has been expressed by human resource managers in terms of both behaviours and results. Behaviours emanate from the performer and transform performance from abstraction to action. Not just the instruments for results, behaviours are also outcomes in their own right i.e. the product of mental and physical effort applied to tasks and can be judged apart from results. This definition of performance leads to the conclusion that when managing performance both inputs (behaviour) and outputs (results) need to be considered. It is not a question of simply considering the achievement of targets, as used to happen in ‘management by objectives’ schemes. Competency factors need to be included in the process.

Meaning of Performance Appraisal

A performance appraisal (PA), also referred to as a performance review, performance evaluation,(career) development discussion, or employee appraisal is a method by which the job performance of an employee is documented and evaluated. Performance appraisal is the process by which a manager or consultant : examines and evaluates an employee’s work behavior by comparing it with preset standards; documents the results of the comparison; and  uses the results to provide feedback to the employee to show where improvements are needed and why. It is therefore a management tool which is helpful in. It is a tool for discovering, analyzing and classifying the differences among workers in relation to job standards in order to motivate and effectively utilizing human resources. It refers to the formal system of appraisal, in which the individual is compared with others and ranked or rated. Generally, appraisal is made by the supervisor or manager once or twice in a year. Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.


Performance appraisal is a term applied to a variety of processes that involve the assessment and development of an individual and their performance at work. While it is to a large extent about evaluating a person’s performance at work, three key issues are worth bearing in mind: first, Performance appraisal is a two-way process. As much as the employer wishes to measure and understand an employee’s performance, the employee wishes to gain something from the process; second, The appraisal process is about the development of staff as well as about assessing their performance; it is about exploring the appraisee’s potential for development in terms of their career; and finally, In appraisal there is an important issue about the extent to which one looks at the overall picture of the individual and what they bring to the workplace beyond doing the basic job tasks and activities. It is important to recognize that the appraisal process can be viewed from a number of different perspectives (e.g. the employee, line manager, senior manager etc.). All might have different views of the process and may have different goals in mind.


Characteristics of an Appraisal System

An effective Performance appraisal system must be accepted by all concerned. There should be a common and clear understanding of the distinction between evaluation and appraisal. Evaluation aims at ‘objective’ measurement, while appraisal includes both objective and subjective assessment of how well an employee has performed during the period under review. Thus performance appraisal aims at ‘feedback, development and assessment.’ The process of performance appraisal should concentrate on the job of an employee, the environment of the organization, and the employee him- or herself. These three factors are inter-related and inter-dependent. Therefore, in order to be effective, the appraisal system should be individualized, subjective, and qualitative and oriented towards problem-solving. It should be based on clearly specified and measurable standards and indicators of performance. Since what is being appraised is performance and not personality, personality traits which are not relevant to job performance should be excluded from the appraisal framework.


A performance appraisal system should be: Goal  oriented i.e. The job description and the performance goals should be structured, mutually decided and accepted by both management and employees; Reliable and consistent in that it should include both objective and subjective ratings to produce reliable and consistent measurement of performance; Practical and simple format aimed at fulfilling its basic functions. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information; Regular and routine since an appraisal system is expected to be formal in a structured manner, informal contacts and interactions can also be used for providing feedback to employees.


An effective appraisal system should also be participatory and open hence involve the employee’s participation, usually through an appraisal interview with the supervisor, for feedback and future planning. During this interview, past performance should be discussed frankly and future goals established. A strategy for accomplishing these goals as well as for improving future performance should be evolved jointly by the supervisor and the employee being appraised. Such participation imparts a feeling of involvement and creates a sense of belonging. Both positive and negative rewards should also be part of the performance appraisal system. Otherwise, the process lacks impact. The process should also incorporate timely feed back. Unless feedback is timely, it loses its utility and may have only limited influence on performance. Feedback must be impersonal if it is to have the desired effect. Personal feedback is usually rejected with contempt, and eventually de-motivates the employee. Feedback must be noticeable i.e. the staff member being appraised must be made aware of the information used in the appraisal process. An open appraisal process creates credibility.


Relevance and responsiveness Planning and appraisal of performance and consequent rewards or punishments should be relevant and responsive i.e. oriented towards the objectives of the programme in which the employee has been assigned a role. For example, if the objectives of a programme are directed towards a particular client group, then the appraisal system has to be designed with that orientation. In addition, Responsibility for the appraisal system should be located at a senior level in the organization so as to ensure commitment and involvement


Performance Management

Performance management is a systematic process for improving organizational performance by developing the performance of individuals and teams. It is a means of getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. Performance management processes exist for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It focuses people on doing the right things by clarifying their goals and is owned and driven by line management.

The overall aim of performance management is to establish a high performance culture in which individuals and teams take responsibility for the continuous improvement of business processes and for their own skills and contributions within a framework provided by effective leadership. Specifically, performance management is about aligning individual objectives to organizational objectives and ensuring that individuals uphold corporate core values. It provides for expectations to be defined and agreed in terms of role responsibilities and accountabilities (expected to do), skills (expected to have) and behaviours (expected to be). The aim is to develop the capacity of people to meet and exceed expectations and to achieve their full potential to the benefit of themselves and the organization. Importantly, performance management is concerned with ensuring that the support and guidance people need to develop and improve are readily available.


Characteristics of Performance Management

Performance management is a planned process of which the primary elements are agreement, measurement, feedback, positive reinforcement and dialogue. It is concerned with measuring outputs in the shape of delivered performance compared with expectations expressed as objectives. In this respect, it focuses on targets, standards and performance measures or indicators. It is based on the agreement of role requirements, objectives and performance improvement and personal development plans. Performance management focuses on future performance planning and improvement rather than on retrospective performance appraisal. It functions as a continuous and evolutionary process, in which performance improves over time. It provides the basis for regular and frequent dialogues between managers and individuals about performance and development needs. It is mainly concerned with individual performance but it can also be applied to teams.


It is also concerned with inputs and values. The inputs are the knowledge, skills and behaviours required to produce the expected results. Developmental needs are identified by defining these requirements and assessing the extent to which the expected levels of performance have been achieved through the effective use of knowledge and skills and through appropriate behaviour that upholds core values. Performance management is a continuous and flexible process, which involves managers and those whom they manage acting as partners within a framework that sets out how they can best work together to achieve the required results. Performance management is an important part of the reward system through the provision of feedback and recognition and the identification of opportunities for growth. It may be associated with performance or contribution-related pay, but its developmental aspects are much more important.


Performance Appraisal and Performance Management

It is sometimes assumed that performance appraisal is the same thing as performance management. But there are significant differences. Performance appraisal can be defined as the formal assessment and rating of individuals by their managers at, usually, an annual review meeting. In contrast, performance management is a continuous and much wider, more comprehensive and more natural process of management that clarifies mutual expectations, emphasizes the support role of managers who are expected to act as coaches rather than judges, and focuses on the future.


Performance appraisal has been discredited because too often it has been operated as a top-down and largely bureaucratic system owned by the HR department rather than by line managers. It has been perceived as a means of exercising managerial control. Performance appraisal tends to be backward looking, concentrating on what had gone wrong, rather than looking forward to future development needs. Performance appraisal schemes existed in isolation. There is little or no link between them and the needs of the business. Line managers have frequently rejected performance appraisal schemes as being time-consuming and irrelevant. Employees have resented the superficial nature with which appraisals have been conducted by managers who lack the skills required, tend to be biased and are simply going through the motions. The differences between them are set out in the following table.

Performance Appraisal Process

The process of performance appraisal follows a set pattern i.e. an employee’s performance is periodically appraised by his superiors. The following are the main steps of an appraisal programme:

Step 1: Establish performance standards:

At the time of designing a job and formulating a job description, performance standards are usually developed for a position. These standards should be clear , and objective enough to be understood and measured. Weights and points are to be given to each factor of these standards and should be indicated on the appraisla form. These are used for appraising the performance of employees.

Step2:Communicate performance epectationb to employee:

It is difficult for employees to guess what is expected of them, hence the standards of performance should be communicated to the employees. To make communications effective, ‘ffedback’ is necessary from the subordinates to the manager. Satisfactory ffedback ensures that the information communicated by the manager has been received and understood in the way as it was intended.

Step 3: Determine what performance is:

To determine what actual perormance is, it is necessary to acquire information about it. We should be concerned with how we measure and what we measure. Four sources of information are frequently used to measure performance :personal observation, statistical reports, oral reports and written reports.

Step 4: Compare actual performance with standards:

The employee’s appraisal is done and s/he judged in terms of potentiaal for growth and advancement. Attempts are made to note the deveiations between standard performance and actual performance .

Step 5: Discuss the appraisal with the employee:

The results of the appraisal are discussed periodicallywith the employees where strong points, weak points,   and difficulties are indicated and discussed so that performance is improved. The information that the subordinate receives about his/her assessment has a great impact on his subsequent performance. Conveying good news is easy both for the manager and subordinate but it is considerably difficult when performance has been below expectation.



Step 6: Initiate corrective action, if necessary:

Corrective action can be of two types. One is immediate and deals mainly with symptoms. The other is basic and looks deep into the causes. Immediate corrective action is often described as “putting out fires”, whereas basic corrective action gets to the source of deviation and seeks to adjust the difference permanently. Counseling may be done or special assignments may be set. People may be sent for formal training courses, and decision-making responsibility and authority may be delegated to the subordinates. Attempts may also be made to recommend for salary increase or promotion, if it is required in light of the appraisals.


The performance appraisal process can be summarized as below

1.2  Purpose of Performance Appraisal

Performance appraisal is an important tool of HR management, and is used for a variety of purposes including: to appraise the quality of performance of different employees. It includes knowledge of the work, ability to do the work efficiently, spirit of coordination, dependability, punctuality, enthusiasm, self-confidence, leadership qualities etc. The appraisal procedure is standardized so that the management may rate all employees on the same qualities by the same method of measurement. Performance appraisal is also useful in training especially deciding the type and nature of training programmes for employees. It helps in placement of employees properly and also finding the ‘misfit’ who may be transferred to the right place. Performance appraisal also forms an unbiased and systematic basis for increase in wages of employees as well as identifying employees who may be considered for promotion.


To the employee, A properly designed performance appraisal system can: help each employee understand more about their role and become clear about their functions; be instrumental in helping employees to better understand their strengths and weaknesses with respect to their role and functions in the organization;  increase mutuality between employees and their supervisors so that every employee feels happy to work with their supervisor and thereby contributes their maximum to the organization; act as a mechanism for increasing communication between employees and their supervisors; help employees internalize the culture, norms and values of the organization, thus developing an identity and commitment throughout the organization; help prepare employees for higher responsibilities in the future by continuously reinforcing the development of the behaviour and qualities required for higher-level positions in the organization;  be instrumental in creating a positive and healthy climate in the organization that drives employees to give their best while enjoying doing so; and assist in a variety of personnel decisions by periodically generating data regarding each employee.




1.3  Methods of Conducting Performance Appraisal

There are several techniques of performance appraisal, each with some strong points as well as limitations. Some of the commonly used performance appraisal techniques are summarized below:

(i) Essay appraisal method

The assessor writes a brief essay providing an assessment of the strengths, weaknesses and potential of the subject. In order to do so objectively, it is necessary that the assessor knows the subject well and should have interacted with them. Since the length and contents of the essay vary between assessors, essay ratings are difficult to compare.

(ii) Graphic rating scale

A graphic scale ‘assesses a person on the quality of his or her work (average; above average; outstanding; or unsatisfactory).’ Assessment could also be trait centered and cover observable traits, such as reliability, adaptability, communication skills, etc. Although graphic scales seem simplistic in construction, they have application in a wide variety of job responsibilities and are more consistent and reliable in comparison with essay appraisal. The utility of this technique can be enhanced by using it in conjunction with the essay appraisal technique.

(iii) Field review method

Since individual assessors differ in their standards, they inadvertently introduce bias in their ratings. To overcome this assessor-related bias, essay and graphic rating techniques can be combined in a systematic review process. In the field review method, ‘a member of the HRM staff meets a small group of assessors from the supervisory units to discuss each rating, systematically identifying areas of inter-assessor disagreement.’ It can then be a mechanism to help each assessor to perceive the standards uniformly and thus match the other assessors. Although field review assessment is considered valid and reliable, it is very time consuming.

(iv) Forced choice rating method

Unlike the field review method, the forced-choice rating method does not involve discussion with supervisors. Although this technique has several variations, the most common method is to force the assessor to choose the best and worst fit statements from a group of statements. These statements are weighted or scored in advance to assess the employee. The scores or weights assigned to the individual statements are not revealed to the assessor so that she or he cannot favour any individual. In this way, the assessor bias is largely eliminated and comparable standards of performance evolved for an objective. However, this technique is of little value wherever performance appraisal interviews are conducted.

v)360-degree (multi-rater) assessment process

360-degree feedback, also known as ‘multi-rater feedback’, is employee development feedback that comes from colleagues, peers and managers in the organization, as well as self-assessment, and sometimes sources such as clients, volunteers or other stakeholders. Senior managers (including executive directors) are responsible for assessing the performance of other employees but often do not receive adequate feedback themselves. 360-degree feedback allows the individual to understand how his or her effectiveness as an employee, manager, or coworker is viewed by others.

(vi) Critical incident appraisal method

In this method, a supervisor describes critical incidents, giving details of both positive and negative behaviour of the employee. These are then discussed with the employee. The discussion focuses on actual behaviour rather than on traits. While this technique is well suited for performance review interviews, it has the drawback that the supervisor has to note down the critical incidents as and when they occur. That may be impractical, and may delay feedback to employees. It makes little sense to wait six months or a year to discuss a misdeed, a mistake or good display of initiative.

(vii) Management by objectives

The employees are asked to set or help set their own performance goals. This avoids the feeling among employees that they are being judged by unfairly high standards. This method is currently widely used, but not always in its true spirit. Even though the employees are consulted, in many cases management ends up by imposing its standards and objectives. In some cases employees may not like ‘self-direction or authority.’ To avoid such problems, the work standard approach is used.

(viii) Work standard approach

In this technique, management establishes the goals openly and sets targets against realistic output standards. These standards are incorporated into the organizational performance appraisal system. Thus each employee has a clear understanding of their duties and knows well what is expected of them. Performance appraisal and interview comments are related to these duties. This makes the appraisal process objective and more accurate. However, it is difficult to compare individual ratings because standards for work may differ from job to job and from employee to employee. This limitation can be overcome by some form of ranking using pooled judgment.

  1. ix) Ranking methods

Some of the important forms of ranking for performance appraisal are:

(a) Alteration ranking method: The individual with the best performance is chosen as the ideal employee. Other employees are then ranked against this employee in descending order of comparative performance on a scale of best to worst performance. The alteration ranking method usually involves rating by more than one assessor. The ranks assigned by each assessor are then averaged and a relative ranking of each member in the group is determined. While this is a simple method, it is impractical for large groups. In addition, there may be wide variations in ability between ranks for different positions.

(b) Paired comparison: The paired comparison method systematizes ranking and enables better comparison among individuals to be rated. Every individual in the group is compared with all others in the group. The evaluations received by each person in the group are counted and turned into percentage scores. The scores provide a fair idea as to how each individual in the group is judged by the assessor.

(c) Person-to-person rating: In the person-to-person rating scales, the names of the actual individuals known to all the assessors are used as a series of standards. These standards may be defined as lowest, low, middle, high and highest performers. Individual employees in the group are then compared with the individuals used as the standards, and rated for a standard where they match the best. The advantage of this rating scale is that the standards are concrete and are in terms of real individuals. The disadvantage is that the standards set by different assessors may not be consistent. Each assessor constructs their own person-to-person scale which makes comparison of different ratings difficult.

(d) Checklist method: The assessor is furnished with a checklist of pre-scaled descriptions of behaviour, which are then used to evaluate the personnel being rated The scale values of the behaviour items are unknown to the assessor, who has to check as many items as she or he believes describe the worker being assessed. A final rating is obtained by averaging the scale values of the items that have been marked.

(e) Behaviorally anchored rating scales (BARS): This is a relatively new technique. It consists of sets of behavioral statements describing good or bad performance with respect to important qualities. These qualities may refer to inter-personal relationships, planning and organizing abilities, adaptability and reliability. These statements are developed from critical incidents collected both from the assessor and the subject.

(f) Assessment centres: This technique is used to predict future performance of employees were they to be promoted. The individual whose potential is to be assessed has to work on individual as well as group assignments similar to those they would be required to handle were they promoted. The judgment of observers is pooled and paired comparison or alteration ranking is sometimes used to arrive at a final assessment. The final assessment helps in making an order-of-merit ranking for each employee. It also involves subjective judgment by observers.


A performance appraisal system could be designed based on intuition, self-analysis, personality traits, behavioral methods and result-based techniques. Different approaches and techniques could be blended, depending on the goals of performance appraisal in the organization and the type of review. For example, management by objectives, goal-setting and work standard methods are effective for objective coaching, counseling and motivational purposes. Critical incident appraisal is best suited when supervisor’s personal assessment and criticism are essential. A carefully developed and validated forced-choice rating can provide valuable analysis of the individual when considering possible promotion to supervisory positions. Combined graphic and essay form is simple, effective in identifying training and development needs, and facilitates other management decisions.


Attributes considered in evaluating performance

There are many personality traits which could be considered when evaluating performance, and methods to facilitate such consideration include scaling methods that differentiate employees on a series of given traits. The important personality traits fall into two categories: personal qualities and demonstrated qualities.


Personality traits include: Adaptability, Appearance and bearing, Decisiveness, Dependability, Drive and determination,Ingenuity,Initiative,Integrity,Loyalty,Maturity,Tenacity,Verbal expression and Ability to express oneself clearly and concisely in writing. Demonstrated Performance Qualities include; Professional knowledge, Administrative ability, Responsibility for staff development, Foresight, Delegation, Motivation, Morale and Control

1.4  Benefits of Performance Appraisal

The main reason for the utilization of performance appraisals is performance improvement at individual level and ultimately at organizational level. Other fundamental reasons include: as a basis for employment decisions; as criteria in research; to aid with communication; to establish personal objectives for training” programs, for transmission of objective feedback for personal development; a means of documentation to aid in keeping track of decisions and legal requirements; and in wage and salary administration. Additionally, they can aid in the formulation of job criteria and selection of individuals “who are best suited to perform the required organizational tasks”. Other potential benefits include: Facilitation of communication: Enhancement of employee focus through promoting trust: Goal setting and desired performance reinforcement: Performance improvement and Determination of training needs:


Communication in organizations is considered an essential function of worker motivation. It has been proposed that feedback from PAs aid in minimizing employees’ perceptions of uncertainty. Fundamentally, feedback and management-employee communication can serve as a guide in job performance. Behaviors, thoughts, and/or issues may distract employees from their work, and trust issues may be among these distracting factors. Such factors consume psychological energy of an employee and can lower job performance and cause workers to lose sight of organizational goals. Properly constructed and utilized performance appraisals have the ability to lower distracting factors and encourage trust within the organization.


Organizations find it efficient to match individual worker’s goals and performance with organizational goals. Performance appraisals provide room for discussion in the collaboration of these individual and organizational goals. Collaboration can also be advantageous by resulting in employee acceptance and satisfaction of appraisal results. Well-constructed performance appraisals can be valuable tools for communication with employees as pertaining to how their job performance stands with organizational expectations. “At the organizational level, numerous studies have reported positive relationships between human resource management (HRM) practices and performance improvement at both the individual and organizational levels.


Employee training and development are crucial components in helping an organization achieve strategic initiatives. It has been argued that for performance appraisals to truly be effective, post-appraisal opportunities for training and development in problem areas, as determined by the appraisal, must be offered. Performance appraisals can especially be instrumental for identifying training needs of new employees. Finally, performance appraisals can help in the establishment and supervision of employees’ career goals.

1.5Challenges of Performance Appraisal

Despite all the potential advantages of formal performance appraisals, there are some challenges. Determining the relationship between individual job performance and organizational performance can be a difficult task. Generally, there are two overarching problems from which several complications spawn. One of the problems with performance appraisals is they can have detrimental effects to the organization(s) involved if the appraisals are not used appropriately. The second problem is they can be ineffective if the system does not correspond with the organizational culture and system. Complications stemming from these issues are as follows:


Traditional performance appraisals are often based upon a manager’s or supervisor’s perceptions of an employee’s performance and employees are evaluated subjectively rather than objectively. Therefore the review may be influenced by many non-performance factors such as employee ‘likeability’, personal prejudices, ease of management, and/or previous mistakes or successes. Reviews should instead be based on data-supported, measurable behaviors and results within the performer’s control.


Quite often, individuals have negative perceptions of performance appraisals receiving and/or the anticipation of receiving performance appraisals can be uncomfortable and distressful and potentially cause “tension between supervisors and subordinates”. If the appraisee does not trust their employer, appraiser or believe that they will benefit from the process it may become a futile exercise.


Performance appraisals should provide accurate and relevant ratings of an employee’s performance as compared to pre-established criteria/goals (i.e. organizational expectations). However, supervisors will sometimes rate employees more favorably than that of their true performance in order to please the employees and avoid conflict. Managers who have had unsatisfactory experiences with inadequate or poorly designed appraisal programs may be skeptical about their usefulness while other managers may not like to play the role of a judge and be responsible for the future of their subordinates or they may be uncomfortable about providing negative feedback to the employees. This tendency can lead them to inflate their assessments of the workers’ job performance, giving higher ratings than deserved.


When performance appraisals are not carried out appropriately, legal issues could result that place the organization at risk. Performance appraisals are used in organizational disciplinary programs as well as for promotional decisions within the organization. The improper application and utilization of performance appraisals can affect employees negatively and lead to legal action against the organization.


Performance goals and performance appraisals systems are often used in association. Negative outcomes concerning the organizations can result when goals are overly challenging or overemphasized to the extent of affecting ethics, legal requirements, or quality. Moreover, challenging performance goals can impede employees’ abilities to acquire necessary knowledge and skills. Especially in the early stages of training, it would be more beneficial to instruct employees on outcome goals than on performance goals.


Performance appraisal systems, and the premises of which they are based, may not have the transferability for effectual utilization in other countries or cultures. Performance “appraisal is be deeply rooted in the norms, values, and beliefs of a society. Appraisal reflects attitudes towards motivation and performance (self) and relationships (e.g. peers, subordinates, supervisors, organization), all of which vary from one country to the next”. Therefore, appraisal should be in conjunction with cultural norms, values, and beliefs in order to be operative. The deep-seated norms, values and beliefs in different cultures affect employee motivation and perception of organizational equity and justice. In effect, a performance appraisals system created and considered effectual in one country may not be an appropriate assessment in another cultural region.


Computers have been playing an increasing role in performance appraisal for some time. There are two main aspects to this. The first is in relation to the electronic monitoring of performance, which affords the ability to record a huge amount of data on multiple dimensions of work performance which facilitates a more continuous and detailed collection of performance data in some jobs. The second aspect is in mediating the feedback process, by recording and aggregating performance ratings and written observations and making the information available on-line; many software packages are available for this. The use of information technology in these ways undoubtedly helps in making the appraisal process more manageable, especially where multiple rating sources are involved, but it also raises many questions about appraisees’ reactions and possible effects on performance appraisals outcomes.

Rater Errors

Mistakes made by raters are a major source of problems in performance appraisal. There is no simple way to completely eliminate these errors, but making raters aware of them through training is helpful. Ratter errors are based on the feelings and it has consequences at the time of appraisal. Rater errors include: Use of varying standards which occurs when a manager appraises (evaluates) his or her employees using different standards and expectations for employees who are performing similar jobs. Recency effects occur where the manager rates the employee according to the last performance, Example: When a supervisor rates based just in the performance of the employee in the last week. Primacy errors occur when the person who evaluating gives more weight according to information he received first. Central Tendency errors occur when the manager evaluate every employees within a narrow range, as the average because he or she is dismissing the differences in the performance that employees have done. Leniency errors occur where the manager rates all employees are at the high end of the scale.


Other rater errors are rater bias where the manager rates according to his or her values and prejudices which distort rating. Those differentiations can be made due to the ethnic group, gender, age, religion, sex, appearance e.t.c. Halo Effect is where a manager rates an employee high on all items because of one characteristic that he or she likes. Example: If a worker has few absences but the supervisor has a good relationship with that employee, the supervisor might give to the employee a high rating in all other areas of work, in order to balance the rating. Horns Effect is the opposite to the Halo effect and Horns effect occurs when a manager rates an employee low on all items because of one characteristic that he or she dislikes. Sampling may also lead to some errors e.g. When the rater evaluates the performance of an employee relying only on a small percentage of the amount of work done.


Managing Challenges of Performance Appraisals

Although performance appraisals can be so easily biased, certain steps that can be taken to improve the evaluations and reduce the margin of errors through: Training that involves creating an awareness and acceptance in the people conducting the appraisals that within a group of workers, they will find a wide range in difference of skills and abilities; providing feedback to raters, managers who evaluated their subordinates should be provided with feedback, including information on ratings from other managers to  reduce  leniency errors. In addition, Subordinate Participation should be encouraged. By allowing employee participation in the evaluation process, there is employee-supervisor reciprocity in the discussion for any discrepancies between self-ratings and supervisor ratings, thus, increasing job satisfaction and motivation.


Review Questions

  1. Distinguish between performance appraisal and performance management
  2. Explain five methods of conducting performance appraisal in an organization
  3. Briefly describe the performance appraisal process
  4. Outline the importance of performance appraisal in an organization
  5. Discuss the challenges of performance appraisal



1.Armstrong,M.,(2006), A Handbook of Human Resource Practice (10th Ed),Koganpage.London

  1. Dessler& Cole (2011), Human Resources Management in Canada (11th Ed) Pearson Canada Inc.

3.Joshi, M.,(2013),Human Resource Management (1st Ed), Manmohan.


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