1

Bishwajit Mazumder
Nursing Instructor
Dhaka Nursing College, Dhaka
E. mail: mbishwa@rocketmail.com
PERFORMANCE APPRAISALSYSTEM

Introduction:
Performance appraisal (PA) is an important management tool to assess
employees efficiency in the workplace, (Pearce & Porter 1986), as a structured
formal interaction between a subordinate and supervisor that usually takes the form of
a periodic interview (annual or semi annual) to evaluate the work performance. PA is
intended to engage, align, and coalesce individual and group effort to continually
improve overall organizational mission accomplishment (Grubb 2007). , performance
appraisal serves another important purpose by making sure that the bosss
expectations are clearly communicated. A good performance appraisal points out
areas where individuals need to improve their performance. The performance
appraisal process is commonly used to make sure that every member of the
organization sets and achieves effective goals.
Definition :
The term performance appraisal refers to the process by which an
individuals work performance is assessed. Performance appraisal has been defined as
the process of identifying, evaluating and developing the work performance of
employees in the organization, so that the organizational goals and objectives are
more effectively achieved, while at the same time benefiting employees in terms of
recognition, receiving feedback, catering for work needs and offering career guidance
(Lansbury, 1988).

Or,
Performance appraisal is the formal process of observing and evaluating an
employees performance (Erdogan, 2002).
Or,
Performance appraisal is the systematic evaluation of individuals with
respect to their performance on the job and their potential development.
(Beach, 1985: 205)

Concept of performance appraisal system:

Performance appraisal is a management tool which is helpful in motivating
and effectively utilizing human resources. Assessment of human potential is difficult,
no matter how well designed and appropriate the performance planning and appraisal
system is. The performance appraisal system should:
a. Be correlated with the organizational mission, philosophies and value system;
b. Cover assessment of performance as well as potential for development.
c. Take care of organizational as well as individual needs.
d. Help in creating a clean environment by linking rewards with achievements.
e. Generating information for the growth of the employee as well as of the
organization.
f. Suggesting appropriate person-task matching and career plans.
g. Feedback is an important component of performance appraisal. While positive
feedback is easily accepted, negative feedback often meets with resistance
unless it is objective, based on a credible source and given in a skillful manner.
.History & origin of Performance Appraisal system

The history of performance appraisal is quite brief. Its roots in the early 20th
century can be traced to Taylor's pioneering Time and Motion studies. As a distinct
and formal management procedure used in the evaluation of work performance,
appraisal really dates from the time of the Second World War - not more than 60 years
ago. Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale

of things historical, it might well lay claim to being the world's second
oldestprofession! There is, says Dulewicz (1989), "... a basic human tendency to make
judgments about those one is working with, as well as about oneself." Appraisal, it
seems, is both inevitable and universal. In the absence of a carefully structured system
of appraisal, people will tend to judge the work performance of others, including
subordinates, naturally, informally and arbitrarily. The human inclination to judge can
create serious motivational, ethical and legal problems in the workplace. Without a
structured appraisal system, there is little chance of ensuring that the judgements
made will be lawful, fair, defensible and accurate.

Why Appraise Performance?

Employers appraise performance for a number of reasons. Performance
appraisals frequently are used to support HR decisions involving merit increases,
promotions, termination, and layoffs.
Employers that plan to use a merit pay plan must have a performance appraisal system
that effectively and accurately assesses employee performance that the employer
wants to reward and is capable of differentiating among different levels of
performance. Merit pay decisions not based on an accurate and fair performance
appraisal system can lead to charges of discrimination, as well as employee
dissatisfaction with the pay system.
Performance appraisals also can be used to:
a. Motivate employee performance and improve productivity,
b. Facilitate employee growth and development, and
c. Identify current and future training needs.
d. Develop communication and working relationship.
e.

Analyze and review the performance of employees over a specified period of

time.

f.

See the gap between the actual and desire performance of the employees

g.

Help management team on how to exercise organizational control.

h. Identify potential for promotion and future performance.

i. Identify how individuals can be helped to improve their contribution in their

present job.
j. Appraisals help management with highlighting the star employees and reward
them accordingly.
k. Clarity , responsibilities and expectations are communicated to the employees
during such sessions. This also helps with reduction of grievances of
employees.

Components of performance appraisal system:

Key performance areas, self-appraisal, performance analysis, performance
ratings and counseling are the important components of a performance appraisal
system oriented to development of human resources in an organization. The appraisal
format should be designed in consonance with the objectives of the performance
appraisal system, and generate information on a number of important aspects,
including (Rao, 1985):
a. Identification of key performance areas:
The first step in an appraisal process is identifying key performance areas
and setting targets for the next appraisal period. This may be done either
through periodic discussions or at the beginning of the year, as in research
institutions.
b. Self-appraisal by the subject:
At the end of the appraisal period, employees appraise their own
performance against the key performance areas, targets and pre-identified
behavior. Information on these issues is provided in an appraisal format. The
employees also write their self-evaluation reports and hand them to their
supervisors.
c. Analysis:
The supervisor reflects on the performance of the employee, and identifies
the factors which facilitated or hindered the employee's performance. The
manager then calls the employee for a discussion to better understand his or
her performance and provide counseling on further improvements. During this
discussion, appraisal records (such as notes, observations, comments, etc.) are

exchanged. The manager then gives a final rating and recommendations

regarding the developmental needs of the individual. These are shown to the
subject and his or her comments are recorded on the appraisal form. The
appraisal form is then transmitted to the personnel department for the
necessary administrative action. The personnel or human resource
development department uses these forms for identifying and allocating
training, rewards and other activities.
d. Identification of training needs:
The use of a development-oriented performance appraisal system is based on
a good understanding of the concept of human resources development. The
need for developing employee capabilities, the nature of capabilities to be
developed, and the conditions under which these capabilities can be developed
have to be appreciated. During the discussion between the supervisor and the
employee, the development needs of the subject are identified and goals set for
the next period.
e. Identification of qualities:
The supervisor may also identify the qualities required for current as well as
future tasks, and assess the employee's potential and capabilities to perform
jobs at higher responsibility levels in the organization.

Characteristics of performance appraisal system:

Performance appraisal cannot be implemented successfully unless it is
accepted by all concerned. There should be a common and clear understanding of the
distinction between evaluation and appraisal. As Patten (1982) argues, 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, 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.
Some of the important considerations in designing a performance appraisal system
are:
a. Goal: The job description and the performance goals should be
structured, mutually decided and accepted by both management and
employees.
b. Reliable and consistent: Appraisal should include both objective and
subjective ratings to produce reliable and consistent measurement of
performance.
c. Practical and simple format: The appraisal format should be
practical, simple and aim at fulfilling its basic functions. Long and
complicated formats are time consuming, difficult to understand, and
do not elicit much useful information.
d. Regular and routine: While 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.
e. Participatory and open: An effective appraisal system should
necessarily 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.
f. Rewards : both positive and negative - should be part of the
performance appraisal system. Otherwise, the process lacks impact.
g. Feedback should be timely: Unless feedback is timely, it loses its
utility and may have only limited influence on performance.
h. Impersonal feedback: 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.

i. Feedback must be noticeable: The staff member being appraised

must be made aware of the information used in the appraisal process.
An open appraisal process creates credibility.
j. Relevance and responsiveness: Planning and appraisal of
performance and consequent rewards or punishments should be
oriented towards the objectives of the program in which the employee
has been assigned a role. For example, if the objectives of a program
are directed towards a particular client group, then the appraisal system
has to be designed with that orientation.
k. Commitment: Responsibility for the appraisal system should be
located at a senior level in the organization so as to ensure commitment
and involvement throughout the management hierarchy.

Sources of information in performance appraisal system:

The performance appraisal system is schematically illustrated inthis figure.
In general, the Performance appraisal (Scheneier, Richard & Lloyd 1986) is
concerned with three possible measures namely assessing results, behaviors, and
personal characteristics. Each dictates a specific type of appraisal format based on
competency or job related behavior. These forms of appraisals are made by single or
multi rater (two or more of supervisor/ peer/self/subordinate/outsider). The figure
explains the classification of the traditional methods of performance appraisal. It is
based on qualitative features, quantitative dimensions and is objective in nature. The
former two elements take the category of either an absolute or a relative standard.
These forms of appraisals are normally made by a supervisor, team members, peers,
self, a subordinate or even an outsider. Organization managements establish
performance standards and devise instruments and methods that can be used to
measure and appraise an employees performance.

a. Supervisor Appraisal
Performance appraisal done by an employees manager and often reviewed
by a manager one level higher.
b. Peer Appraisal
Performance appraisal done by ones fellow employees, generally on forms
that are complied into a single profile for use in the performance interview conducted
by the employees manager
c. Self-Appraisal
Performance appraisal done by the employee being evaluated, generally on
an appraisal form completed by the employee prior to the performance review.
d. Subordinate Appraisal
Performance appraisal of a superior by an employee, which is more
appropriate for developmental than for administrative purposes.

e. Team Appraisal
Performance appraisal, based on TQM concepts, that recognizes team
accomplishment rather than individual performance.

Procedure and Measuring of Performance appraisal system :

a. Identify performance criteria:
The number of appraisal criteria for each position is from 3 10 criteria.
The standards set should be clear, easily understandable and in measurable terms
The appraisal criteria can be changed but must be the authority for approval and
must be implemented for the relevant level before applying.
HR department and nurse manager will set up weight of each criteria and must be
approved directors.
b. Communicating performance criteria:
Human Resource department should inform this procedure to all level of
management and nurses.
The nurses should be informed and the standards should be clearly explained in
order to help them understanding their roles and to know what exactly is expected
from them.
Performance criteria should also be communicated to the appraisers or the
evaluators and if required.

c. Measuring performance
i. Prepare.
HR dept. should prepare all materials, notes agreed tasks and records of
performance, achievements, incidents, reports etc anything pertaining to
performance and achievement.

10

ii. Inform the appraise:

To ensure the appraise is informed of a suitable time and place and
clarify purpose and type of appraisal.
Give the appraise the chance to assemble data and relevant performance
and achievement records and materials.
iii. Review and measure
HR dept. and nurse managers / supervisors review the activities, tasks,
objectives and achievements one by one, keeping to distinct separate items
one by one.
iv. Agree an action plan
An overall plan should be agreed with the appraise, which should take
account of the job responsibilities and review strengths and weaknesses.
The plan can be staged if necessary with short, medium and long term
aspects, but importantly it must be agreed and realistic.
d. Comparing with desired criteria
The actual performance is compared with the desired or performance
criteria.
The result can show the actual performance being more than the desired
performance or, the actual performance being less than the desired
performance depicting a negative deviation in the organizational
performance.
E. Discussing results
The result of the appraisal should be communicated and discussed with the
employees.

The feedback should be given with a positive attitude as this can have an
effect on the employees future performance.
The purpose of the meeting should be to solve the problems faced and
motivate the employees to perform better.
The results, the problems and the possible solutions are discussed with
the aim of problem solving and reaching consensus

11

.Method & Technique of performance appraisal system:

There are several different types of performance appraisal strategies to
choose from. Knowing there are options available should give you the flexibility to
find the right type of appraisal method for each department or even specific employee
within your organization. Here are a few different types of appraisal methods:

12

(Gary Roberts and Michael Pregitzer)

a. Tradition Methods:
There are several techniques of performance appraisal, each with some
strong points as well as limitations. Oberg (1972) has summarized some of the
commonly used performance appraisal techniques.
(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) 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
iii) Critical incident appraisal method
In this method, a supervisor describes critical incidents, giving details of
both positive and negative behavior of the employee. These are then
discussed with the employee. The discussion focuses on actual behavior
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

13

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.

iv) 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.
v) 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
(Monga, 1983). 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.
v. 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 centred 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

14

essay appraisal. The utility of this technique can be enhanced by using it in

conjunction with the essay appraisal technique.
vii)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.
(vii) 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.
(viii) Ranking methods
Some of the important forms of ranking for performance appraisal are
given below, based on Oberg, 1972; and Monga, 1983:
1. Alteration ranking method:
The individual with the best performance is chosen as the ideal
employee. Other employees are then ranked against this employee in

15

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.
2. 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.
b. Modern Method:
i) 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.
Some of the important features and advantages of MBO are:

16

1. Motivation Involving employees in the whole process of goal setting and

increasing employee empowerment. This increases employee job satisfaction
and commitment.
2. Better communication and Coordination Frequent reviews and interactions
between superiors and subordinates help to maintain harmonious relationships
within the organization and also to solve many problems.
3. Clarity of goals
4. Subordinates tend to have a higher commitment to objectives they set for
themselves than those imposed on them by another person.
5. Managers can ensure that objectives of the subordinates are linked to the
organizations objectives.

ii) 360 Degree:

All the persons who interact with any employee during the course of her
work are taken as stakeholders in this method. The stakeholders comprise of
the immediate boss, the immediate subordinates, top management and all the
people with whom the employee interacts for work. All these people provide
feedback on her work and working style. The feedback thus obtained helps
the employee improve her performance.
iii) 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.

17

iv) Assessmentcenters:
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 orderof-merit ranking for each employee. It also involves subjective judgment by
observers.
V) 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.
vi) 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.

18

Process of performance appraisal system:

Performance appraisal involves an evaluation of actual against desired

performance. It also helps in reviewing various factors which influence
performance. Managers should plan performance development strategies in a
structured manner for each employee. In doing so, they should keep the goals
of the organization in mind and aim at optimal utilization of all available
resources, including financial. Performance appraisal is a multistage process
in which communication plays an important role.

1. Establishin
g
slandered
2.
Communicating

8.
Development

3. Planning
7. Decision
making

6. Feed back

Process of P/A

4. Monitoring
performance

19

5. Appraising

Craig, Beatty and Baird (1986) suggested an eight-stage performance appraisal

process:
a. Establishing standards and measures:
The first step is to identify and establish measures which would differentiate
between successful and unsuccessful performances. These measures should be under
the control of the employees being appraised. The methods for assessing performance
should be decided next. Basically, management wants to:
Know the behavior and personal characteristics of each employee.
Assess their performance and achievement in the job.
There are various methods available for assessing results, behavior and
personal characteristics of an employee. These methods can be used
according to the particular circumstances and requirements.
b. Communicating job expectations:
The second step in the appraisal process is communicating to employees the
measures and standards which will be used in the appraisal process. Such
communication should clarify expectations and create a feeling of involvement.
c. Planning:
In this stage, the manager plans for the realization of performance
expectations, arranging for the resources to be available which are required for
attaining the goals set. This is an enabling role.

20

d. Monitoring performance:
Performance appraisal is a continuous process, involving ongoing feedback.
Even though performance is appraised annually, it has to be managed 'each
day, all year long.' Monitoring is a key part of the performance appraisal
process. It should involve providing assistance as necessary and removing
obstacles rather than interfering. The best way to effectively monitor is to walk
around, thus creating continuous contacts, providing first-hand information,
and identifying problems, which can then be solved promptly.
e. Appraising:
This stage involves documenting performance through observing, recalling,
evaluating, written communication, judgment and analysis of data. This is like
putting together an appraisal record.
f. Feedback:
After the formal appraisal stage, a feedback session is desirable. This session
should involve verbal communication, listening, problem solving, negotiating,
compromising, conflict resolution and reaching consensus.
g. Decision making:
On the basis of appraisal and feedback results, various decisions can be
made about giving rewards (e.g., promotion, incentives, etc.) and punishments
(e.g., demotion). The outcome of an appraisal system should also be used for
career development.
h. Development of performance:
The last stage of performance appraisal is 'development of performance,' or
professional development, by providing opportunities for upgrading skills and
professional interactions. This can be done by supporting participation in
professional conferences or by providing opportunities for further study. Such
opportunities can also act as incentives or rewards to employees.

21

Phases of Performance Appraisal system:

There are four phases of performance appraisal system. These are as follows:
a.
b.
c.
d.

Preparing Phase
Writing Phase
Delivering Phase
Producing Phase

a. Preparing Phase:
The preparation process comprises:
Reviewing own observation by going through the employee work record of
the current review cycle vis--vis the employee JD and the goals set.
Gathering information from different sources.
b. Writing Phase:
The writing phase of the performance appraisal process comprises
completing the Performance Appraisal Form.
Before filling the form, the appraiser should be sure that s/he has got
proper training in that regard.
c. Delivering Phase:
Delivery phase involves exposing the appraisal report to the employee
through a one-to-one private meeting. It involves:
Meeting the employee in private;
Discussing the employee's strengths first, covering each point in detail
in order to set a positive tone to start the discussion.
Apprising the employee of the weaknesses surfaced during the review
period and discussing with her/him their reasons and proposing the
strategy for improvement with keen interest;
Making necessary changes in the report, if felt appropriate, during the
discussion;
Allowing the employee to read the final report through ample time
offered to do so.
d. Producing Phase:

22

This phase comprises:

Asking the employee to sign the Performance Appraisal Form;
Assure the employee that his or her signature indicates that he or
she has read the appraisal and that a discussion has taken place, and
does not signify that the employee agrees with the appraisal
The employee may take a few days before signing the appraisal
form. However, if after a reasonable period of time the employee
still refuses to sign the form, the appraiser may note on the form
that the employee has refused to sign.
A copy of the final signed performance appraisal should be given to
the employee for his or her record.

Uses of performance appraisal system:

A properly designed performance appraisal system can (Rao, 1985):
a. Help each employee understand more about their role and become clear
about their functions;
b. Be instrumental in helping employees to better understand their strengths
and weaknesses with respect to their role and functions in the organization;
c. Help in identifying the developmental needs of employees, given their
role and function; 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;
d. Act as a mechanism for increasing communication between employees
and their supervisors. In this way, each employee gets to know the expectations of
their superior, and each superior also gets to know the difficulties of their subordinates
and can try to solve them. Together, they can thus better accomplish their tasks;
e. Provide an opportunity to each employee for self-reflection and
individual goal-setting, so that individually planned and monitored development takes
place;

23

f. Help employees internalize the culture, norms and values of the

organization, thus developing an identity and commitment throughout the
organization;
g. Help prepare employees for higher responsibilities in the future by
continuously reinforcing the development of the behavior and qualities required for
higher-level positions in the organization;
h. Be instrumental in creating a positive and healthy climate in the
organization that drives employees to give their best while enjoying doing so; and
i. Assist in a variety of personnel decisions by periodically generating data
regarding each employee.

Problems of Performance Appraisal system:

The performance appraisal systems tend to have several problems. Raters
evaluations are often subjectively biased by their cognitive and motivational states
(DeNisi& Williams, 1988; Longenecker et al., 1987), and supervisors often apply
different standards with different employees which results in inconsistent, unreliable,
and invalid evaluations (Folger et al., 1992). In order to create better systems,
researchers have traditionally focused on validity and reliability (Bretz et al., 1992) by
designing newer forms of performance appraisals (e.g., behavioral-based systems
that better define specific essential job functions of employees or 360-degree
feedback mechanisms that allow for cross-validation via multiple raters). However,
despite these recent advances in evaluation design, critics continue to argue that
performance appraisal systems are not consistently effective (Atkins & Wood, 2002;
DeNisi&Kluger, 2000).
The employee reactions to appraisals can be an important condition to
improve the employees performance. Recently, scholars have begun to argue that
employee emotions and perceptions are importantin determining the efficacy of
performance appraisal systems.

24

These are as follows:

a.Appraisal discomfort
b. Lack of objectivity
c.Leniency/strictness
d. Central tendency
e.Halo error/Horn error
f. Recent behavior bias
g. Personal bias
h. Manipulating the evaluation
i. Employee anxiety

a. Appraisal discomfort:
Performance appraisal process cuts into managers time. Experience can
be unpleasant when employee has not performed well.
b. Lack of objectivity:
In rating scales method, commonly used factors such as attitude,
appearance, and personality are difficult to measure. Factors may have little
to do with employees job performance. Employee appraisal based primarily
on personal characteristics may place evaluator and company in untenable
positions .
c. Leniency/Strictness :
Leniency - Giving undeserved high ratings
Strictness - Being unduly critical of employees work performance
Worst situation is when firm has both lenient and strict managers and does
nothing to level inequities .
d. Central Tendency :

25

Many a times to be on the safer side the rater would put the rate on
average scores. This happens because of 2 reasons first of all if the rater
does not want low scores to the rate. Secondly, if he himself is not competent
and would not like to show his incompetency.
e. Halo error/Horn error:
Halo error - Occurs when manager generalizes one positive performance
feature or incident to all aspects of employee performance resulting in
higher rating
Horn error - Evaluation error occurs when manager generalizes one
negative performance feature or incident to all aspects of employee
performance resulting in lower rating
f. Recent behavior bias:
Employees behavior often improves and productivity tends to rise several
days or weeks before scheduled evaluation. Only natural for rater to
remember recent behavior more clearly than actions from more distant past.
Maintaining records of performance
g. Personal bias:
Personal preferences of the supervisor will bias performance appraisals
also. There is a tendency to judge others more positively when they are like
oneself. There is also a tendency to place most weight on the events that
have occurred most recently. This is called regency syndrome. The
supervisor should be careful to consider events and behaviors that occurred
throughout the entire period covered by the review.
h. Manipulating evaluation:
Sometimes, managers control virtually every aspect of appraisal process
and are in position to manipulate system.

26

Example: Want to give pay raise to certain employee. Supervisor may give
employeea undeserved high performance evaluation.
i. Employee anxiety:
Evaluation process may create anxiety for appraised employee.
Opportunities for promotion, better work assignments, and increased
compensation may hinge on results

Advantages of Performance Appraisal:

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.

Providing feedback to employees about their performance

Determining who gets promoted
Facilitating layoff or downsizing decisions
Encouraging performance improvement
Motivating superior performance
Setting and measuring goals
Counseling poor performers
Determining compensation changes
Encouraging coaching and mentoring
Supporting manpower planning or succession planning
Determining individual training and development needs
Determining organizational training and development needs
Confirming that good hiring decisions are being made
Providing legal defensibility for personnel decisions
Improving overall organizational performance

a. Providing Feedback:
Providing feedback is the most common justification for an organization to
have a performance appraisal system. Through its performance appraisal process the
individual learns exactly how well she did during the previous twelve months and can
then use that information to improve her performance in the future. In this regard,
performance appraisal serves another important purpose by making sure that the
bosss expectations are clearly communicated.

27

b. Facilitating Promotion Decisions:

Almost everyone in an organization wants to get ahead. How should the
company decide who gets the brass rings? Performance appraisal makes it easier for
the organization to make good decisions about making sure that the most important
positions are filled by the most capable individuals.
c. Facilitating Layoff or Downsizing Decisions:
If promotions are what everybody wants, layoffs are what everybody wishes
to avoid. But when economic realities force an organization to downsize, performance
appraisal helps make sure that the most talented individuals areretained and that only
the organizations marginal performers are cutloose.
d. Encouraging Performance Improvement:
How can anyone improve if he doesnt know how hes doing right now? A
good performance appraisal points out areas where individuals need to improve their
performance.
e. Motivating Superior Performance:
This is another classic reason for having a performance appraisal system.
Performance appraisal helps motivate people to deliver superior performance in
several ways. First, the appraisal process helps them learn just what it is that the
organization considers to be superior. Second, since most people want to be seen as
superior performers, a performance appraisal process provides them with a means to
demonstrate that they actually are. Finally, performance appraisal encourages
employees to avoid being stigmatized as inferior performers (or, often worse, as
merely average).

e. Setting and Measuring Goals:

28

Goal setting has consistently been demonstrated as a management process

that generates superior performance. The performance appraisal process is commonly
used to make sure that every member of the organization sets and achieves effective
goals.

a. Counseling Poor Performers:

Not everyone meets the organizations standards. Performance appraisal
forces managers to confront those whose performance is not meeting the companys
expectations.
b. Determining Compensation Changes:
This is another classic use of performance appraisal. Almost every
organization believes in pay for performance. But how can pay decisions be made if
there is no measure of performance? Performance appraisal provides the mechanism
tomake sure that those who do better work receive more pay.
c. Encouraging Coaching and Mentoring:
Managers are expected to be good coaches to their team members and
mentors to their protgs. Performance appraisal identifies the areas where coaching
is necessary and encourages managers to take an active coaching role.
d. Supporting Manpower Planning:
Well-managed organizations regularly assess their bench strength to make
sure they have the talent that in their ranks that they will need for the future.
Companies need to determine who and where their most talented members are. They
need to identify the departments that are rich with talent and the ones thatare suffering
a talent drought. Performance appraisal gives companies the tool they need to make
sure they have the intellectual horsepower required for the future.

29

e. Determining Individual Training and Development Needs:

If the performance appraisal procedure includes a requirement that
individualdevelopment plans be determined and discussed, individuals can then make
good decisions about the skills and competencies they need to acquire to make a
greater contribution to the company. As a result, they increase their chances of
promotion and lower their odds of layoff.
f. Determining Organizational Training and Development Needs:
Would the organization be better off sending all of its managers and
professionals through a customer service training program or one on effectivedecision
making? By reviewing the data from performance appraisals, training and
development professionals can make good decisions about where the organization
should concentrate company-wide training efforts.
g. Validating Hiring Decisions:
Is the company hiring stars, or is it filling itself with trolls? Only when the
performance of newly hired individuals is assessed can the company learn whether it
is hiring the right people.
h. Providing Legal Defensibility for Personnel Decisions:
Almost any personnel decisiontermination, denial of a promotion, transfer
to another departmentcan be subjected to legal scrutiny. If one of these is
challenged, the company must be able to demonstrate that the decision it made was
not based on the individuals race or handicap or any other protected aspect. A solid
record of performance appraisals greatly facilitates legal defensibility when a
complaint about discrimination is made.
i. Improving Overall Organizational Performance:

30

This is the most important reason for an organization to have a performance

appraisal system. A performance appraisal procedure allows the organization to
communicate performance expectations to every member of the team and assess
exactly how well each person is doing. When everyone is clear on the expectations
and knows exactly how he is performing against them, this will result in an overall
improvement in organizational success.

Role of nurse manager in performance appraisal system:

Essentially, performance execution consists of major responsibilities for the
manager. The first is to create the conditions that motivate people to perform at an
excellent level. The other is to eliminate performance problems when they arise. The
manager also has some other responsibilities in the performance execution phase of
the process. The nurse manager has eight primary responsibilities in the performance
assessment :
a. Review the original list of competencies, goals, objectives, and key
position responsibilities.
b. Prepare a preliminary assessment of the employees performance over the
entire year.
c. Review the individuals list of accomplishments and the self appraisal.
d. Prepare your final assessment of the employees performance.
e. Write the official performance appraisal using the appraisal form.
f. Review the appraisal with your manager and obtain concurrence.
g. Determine any revisions needed to the employees key position
responsibilities, goals, objectives, competencies, and development plans for the next
appraisal period.
h. Prepare for the performance review meeting.

Conclusion:
In sophisticated, well-managed organizations, performance appraisal is the
single most important management tool. No other management process has as much

31

influence over individuals careers and work lives. Used well, performance appraisal
is the most powerful instrument that organizations have to mobilize the energy of
every employee of the enterprise toward the achievement of strategic goals. Used
well, performance appraisal can focus every persons attention on the organizations
mission, vision, and values. It provides a basis for identifying and correcting
disparities in performance. Thus, it is activities oriented and is a rational, formalized,
legitimate test using observation and judgment. Systematically, PA reviews each
employees work performance during a specific period, evaluates and records it for
future reference

Reference:
1.
2.
3.
4.

http://appraisal.naukrihub.com/technique-performance-appraisal.html.
http://appraisal.naukrihub.com/process.htm.
http://www.hruilties.com/2011/05/performance-appraisal
Gorte D.(2002) The Performance Appraisal Question and Answer Book:
survival guide for manager.

5. 2. Dr. Bandaranayake D.(2000) Assessing performance Management Human

Resource for Health & Development
6. 3. Performance Appraisal Evaluation: Report of findgins and
Recommendation(2005), Ghana.
7. 4. Performance appraisal system(2001), State of Hawii, Depeartment of
Human Resources Development