Performance appraisal: definition and methods
Performance appraisal is the systematic evaluation of an employee's work and potential against set standards, by traditional methods (ranking, rating scales) or modern ones (MBO, 360-degree).
Meaning, purposes and common errors
Performance appraisal is the systematic and periodic evaluation of how well an employee does the job and of the person's potential for growth, measured against set standards. It is used for pay increments, promotion and transfer decisions, to find training needs, to give feedback, to motivate, and to check whether selection was sound. Raters must avoid errors: the halo effect (one strong trait colours the whole rating), leniency or strictness, central tendency (rating everyone average), the recency error (judging only the last few weeks) and personal bias.
The appraisal process
Traditional methods
| Method | How it works |
|---|---|
| Ranking | Staff placed in order from best to worst |
| Paired comparison | Each employee compared with every other, one pair at a time; most 'wins' ranks highest |
| Grading | Each placed in a defined grade: excellent, good, fair, poor |
| Graphic rating scale | Traits such as hygiene, punctuality and quality rated on a scale (e.g. 1 to 5) |
| Checklist | Yes/no statements, e.g. 'Wears cap and apron at work' |
| Forced choice and forced distribution | Rater picks the best-fitting statement; or a fixed share of staff must fall in each grade |
| Critical incident | Supervisor records specific good and bad events as they happen |
| Essay (free form) and confidential report | A written description of the worker; the annual confidential report in government service |
Modern methods
| Method | How it works |
|---|---|
| Management by Objectives (MBO) | Goals agreed jointly by employee and superior; results judged against them (Peter Drucker, 1954) |
| Behaviourally anchored rating scale (BARS) | Each point on the scale is tied to an example of real behaviour; joins rating scale and critical incidents |
| 360-degree feedback | Ratings from superior, co-workers, juniors, customers and the employee herself |
| Assessment centre | Candidates do group tasks, role plays and in-tray exercises watched by trained assessors; used for managers |
| Human resource accounting | Staff are valued in money terms: cost of hiring and training against their contribution |
Scoring a cook on a graphic rating scale
A hostel mess rates each cook on five traits, 1 (poor) to 5 (excellent). Bands: 90% and above Excellent; 75-89% Good; 60-74% Fair; below 60% Poor. A cook scores: hygiene 5, quality of food 4, punctuality 3, teamwork 4, speed 4. Find her grade.
- Maximum score = 5 traits × 5 = 25
- Her total = 5 + 4 + 3 + 4 + 4 = 20
- Percentage = 20 ÷ 25 × 100 = 80%
- 80% falls in the 75-89% band
Grade: Good (80%). Feedback: praise hygiene; work on punctuality, her lowest trait.
Put hygiene and portion control on the appraisal form and cooks will treat them as part of the job. A critical incident record (e.g. served the wrong diet, or caught a spoiled batch) gives fair, specific feedback.
2 marks: “What is 360-degree appraisal?” A modern method in which an employee is rated by superiors, co-workers, juniors, customers and herself, giving an all-round view.
5 marks: “Explain the purposes of performance appraisal.” Increments, promotion and transfer decisions, training needs, feedback and improvement, motivation, validating selection, records; add common errors.
10 marks: “Define performance appraisal. Explain the traditional and modern methods of appraisal.” Define; draw the process; explain 6-8 traditional and 4-5 modern methods with kitchen examples; mention rater errors; conclude.
Traditional = R-P-G-R-C-C (Rank, Pair, Grade, Rate, Checklist, Critical incident). Modern = M-B-3-A (MBO, BARS, 360, Assessment centre).