After an employee has been selected for a job, has been trained to do it and has worked on it for a period of time, his performance should be evaluated. Performance Evaluation or Appraisal is the process of deciding how employees do their jobs. Performance here refers to the degree of accomplishment of the tasks that make up an individual’s job. It indicates how well an individual is fulfilling the job requirements. Often the term is confused with efforts, which means energy expended and used in a wrong sense. Performance is always measured in terms of results. A bank employee, for example, may exert a great deal of effort while preparing for the CAIIB examination but manages to get a poor grade. In this case the effort expended is high but performance is low.
Performance appraisal is a method of evaluating the behaviour of employees in the workspot, normally including both the quantitative and qualitative aspects of job performance. It is a systematic and objective way of evaluating both work-related behaviour and potential of employees. It is a process that involves determining and communicating to an employee how he or she is performing the job and ideally, establishing a plan of improvement.
The main characteristics of performance appraisal may be listed thus:
i. The appraisal is a systematic process involving three steps:
a. Setting work standards.
b. Assessing employee's actual performance relative to these standards.
c. Offering feedback to the employee so that he can eliminate deficiencies and
improve performance in course of time.
ii. It tries to find out how well the employee is performing the job and tries to establish
a plan for further improvement.
iii. The appraisal is carried out periodically, according to a definite plan. It is certainly not a one shot deal.
iv. Performance appraisal is not a past-oriented activity, with the intention of putting poor performers in a spot. Rather, it is a future oriented activity showing employees where things have gone wrong, how to set everything in order, and deliver results using their potential in a proper way.
v. Performance appraisal is not job evaluation. Performance appraisal refers to how well someone is doing an assigned job. Job evaluation, on the other hand, determines how much a job is worth to the organisation and therefore, what range of pay should be assigned to the job.
vi. Performance appraisal is not limited to ‘calling the fouls’. Its focus is on employee development. It forces managers to become coaches rather then judges. The appraisal process provides an opportunity to identify issues for discussion, eliminate any potential problems, and set new goals for achieving high performance.
vii. Performance appraisal may be formal or informal. The informal evaluation is more likely to be subjective and influenced by personal factors. Some employees are liked better than others and have, for that reason only, better chances of receiving various kinds of rewards than others. The formal system is likely to be more fair and objective, since it is carried out in a systematic manner, using printed appraisal forms.
Individual Evaluation Methods
Under the individual evaluation methods of merit rating, employees are evaluated one at
a time without comparing them with other employees in the organisation.
1. Confidential report: It is mostly used in government organisations. It is a descriptive report prepared, generally at the end of every year, by the employee’s immediate superior. The report highlights the strengths and weaknesses of the subordinate. The report is not databased. The impressions of the superior about the subordinate are merely recorded there. It does not offer any feedback to the appraisee. The appraisee is not very sure about why his ratings have fallen despite his best efforts, why others are rated high when compared to him, how to rectify
his mistakes, if any; on what basis he is going to be evaluated next year, etc. Since the report is generally not made public and hence no feedback is available, the subjective analysis of the superior is likely to be hotly contested. In recent years, due to pressure from courts and trade unions, the details of a negative confidential report are given to the appraisee.
2. Essay evaluation: Under this method, the rater is asked to express the strong as
well as weak points of the employee’s behaviour. This technique is normally used with a combination of the graphic rating scale because the rater can elaborately present the scale by substantiating an explanation for his rating. While preparing the essay on the employee, the rater considers the following factors: (i) Job knowledge and potential of the employee; (ii) Employee’s understanding of the company’s programmes, policies, objectives, etc.; (iii) The employee’s relations with co-workers and superiors; (iv) The employee’s general planning, organising and controlling ability; (v) The attitudes and perceptions of the employee, in general.
Essay evaluation is a non-quantitative technique. This method is advantageous in
at least one sense, i.e., the essay provides a good deal of information about the
employee and also reveals more about the evaluator. The essay evaluation method
however, suffers from the following limitations:
i. It is highly subjective; the supervisor may write a biased essay. The employees
who are sycophants will be evaluated more favourably than other employees.
ii. Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee. It is very difficult to find effective writers nowadays.
iii. The appraiser is required to find time to prepare the essay. A busy appraiser may write the essay hurriedly without properly assessing the actual performance of the worker. On the other hand, appraiser takes a long time, this becomes uneconomical from the view point of the firm, because the time of the evaluator (supervisor) is costly.
Critical incident technique: Under this method, the manager prepares lists of statements of every effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers’ behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance. An example of a good critical incident of a sales assistant is the following:
July 20 – The sales clerk patiently attended to the customer’s complaint. He is
polite, prompt, enthusiastic in solving the customer’s problem.
On the other hand, the bad critical incident may appear as under:
July 20 – The sales assistant stayed 45 minutes over on his break during the
busiest part of the day. He failed to answer the store manager’s call thrice.
He is lazy, negligent, stubborn and uninterested in work.
This method provides an objective basis for conducting a thorough discussion of an
employee’s performance. This method avoids recently bias (most recent incidents
get too much emphasis). This method suffers, however, from the following limitations:
i. Negative incidents may be more noticeable than positive incidents.
ii. The supervisors have a tendency to unload a series of complaints about
incidents during an annual performance review session.
iii. It results in very close supervision which may not be liked by the employee.
iv. The recording of incidents may be a chore for the manager concerned, who
may be too busy or forget to do it.
Most frequently, the critical incidents method is applied to evaluate the performance
of superiors .

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