Some of the problems of performance appraisal are:-

1. Differences among Raters 2. Confusing Performance and Potential 3. Rating Game 4. Faulty Assumptions 5. Psychological Blocks 6. Halo Effect 7. Error of Central Tendency 8. Leniency

9. Stereotyping 10. Recency Effect 11. Appraiser Discomfort 12. Lack of Objectivity 13. Manipulating the Evaluation 14. Judgement Error 15. Ineffective Organizational Policies and Practices 16. Cross Cultural Biases.

Problems of Performance Appraisal: Problems, Shortcomings  and What it fails?

Problems of Performance Appraisal – Differences among Raters, Confusing Performance and Potential & Rating Game

Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job. It is designed primarily to cover rank and file personnel on the other hand, performance appraisal mainly focuses on the performance and future potential of their employee.


Performance appraisals, although vary widely used, have well-recognized shortcomings and deficiencies. Measuring performance is a difficult-task. Giving someone else an honest candid evaluation based on that measurement is a stressful experience for most evaluators. Defensive behaviour on the part of the person being evaluated is common.

This is especially true if salary, promotion, or just keeping one’s job are at stake. In turn, this can lead to defensive behaviour on the part of the evaluator if the rating must be defended.

Thus, evaluation easily leads to an adversarial relationship in which both parties can feel threatened. Yet, the development function, to be performed effectively, requires trusting, collaborative relationship. The evaluator must give honest assessments. Shortcomings must be pointed out. The person being developed must be willing to accept criticism, must be candid in admitting weaknesses and areas for improvement.

Performance appraisal systems are subject to many errors.


The major ones are discussed below:

Problem # 1. Differences among Raters:

Differences among raters in their evaluations of performance leads to several errors. One is a dissimilarity in perception. Two raters observe an employee disagreeing with a supervisor. One perceives this negatively as insubordination. The other perceives it positively as a willingness to stand up for what one believes.

Different value systems can also play a part in how raters can disagree. One rater may feel that honest and ethical behaviour is paramount, no matter what the effect on profits. Another may have a bottom-line orientation that says any behaviour including the blatantly dishonest is permissible so long as it shows a profit.

Another kind of rater difference error is created if raters observe different aspects of behaviour. One rater sees the employee on the job where the individual feels comfortable and functions effectively. Another may see the individual only at the staff meetings where the employee is uncomfortable and does not show to best advantage.

Problem # 2. Confusing Performance and Potential:


Many rating systems that are supposed to be evaluating performance fall into the trap of measuring potential as well. This is a serious mistake that can unfairly penalize employees as well as give credit where it is not deserved. Measurement of potential is often an important aspect of any appraisal system, but the organization and the raters and the ratees involved need to be absolutely clear on the difference.

Problem # 3. Rating Game:

Performance appraisal methods either compare employees against one another, or compare employees against a standard. Within these two types there are numerous methods of appraisal. Some are simple such as straight ranking. Others are more complex, such as behavioural scales attempting to establish a success criterion by defining performance behaviours. Whatever may be the method, the rating procedure may become something like a game or contest.

Again, these methods lay emphasis on alikeness and conformity of human performance and ignore measurement of human values.

Rater Bias:


A number of problems with performance appraisal methods relate to rater bias, and rater concerns which are discussed below:

a. Halo Effect:

The “halo effect” is a tendency to let the assessment of an individual’s one trait influence the evaluation of that person on other specific traits.

Basing the entire appraisal on the basis of one perceived positive quality feature or trait in an individual leads to halo error. For instance, if an employee tends to be more conscientious or dependable, the appraiser may rate him high on many desirable attributes. Thus, the appraiser leaps from the specific to the general without adequate substantiation. He assumes that a man who performs one task well must be able to do anything well.


b. Horns Effect:

This is exactly opposite of halo effect. It refers to basing the evaluation on the basis of one negative quality or feature perceived. It is the tendency to allow one negative trait of the employee to colour the entire appraisal this results in an overall lower rating than may be warranted.

c. Leniency or Strictness Tendency or Constant Error:

Depending upon the appraiser’s own value system which acts as a standard, employees may be rated leniently or strictly. Such ratings do not carry any reference to actual performance of the employees. The differences obtained are due to differences in appraiser’s standards, not performance some appraisers consistently assign high values to all employees regardless of merit. This is leniency error. In strictness tendency a reverse situation occurs where all individuals are rated too severely and performance is understated.


Such problems arise because of varying performance standards among appraisers and because of different interpretations of observed employee performances and behaviours.

d. Central Tendency:

Central tendency is the most commonly found error which occurs when a rater assigns mostly middle-range scores or values to all individuals being appraised. Extremely high or extremely low evaluations are avoided by assigning “average ratings” to all.

Usually central tendency is caused by lack of information, or lack of knowledge about the employee and his behaviour the rater wants to avoid commitment or involvement or he may not have sufficient time at his disposal. Such tendency distorts the evaluations and obviates their value.


e. First Impressions:

Raters may identify some specific qualities or features of the rater and quickly form an overall impression about him. The identified qualities or features may not provide adequate base for appraisal.

f. Stereotyping:

Stereotyping is a standard mental picture that an appraiser holds about an individual according to the category whom he represents. For instance (sex, caste, age and other factors) “women”, “politicians”, “old people”‘ “Marwadis”, “Sardarjees”, “children”, “poets” ……………….. and so on. Stereotyping results in an oversimplified view of the individual and may blur the rater’s perception and assessment of the individual’s performance on the job.

The most common errors in evaluation are:

(1) Drawing the wrong conclusions about an individual’s capabilities on the basis of his performance and


(2) Overemphasizing one or two attributes.

How these errors occur may become clear through the following examples:

I. Type Casting:

When an individual is found to perform a task well, he is given the same over and over again. When this happens, same individuals may shy away from doing an outstanding job through fear of being stuck with a permanent assignment.

II. Magnifying Merits:

Sometimes superiors have a tendency to magnify a subordinate’s merits, but sometimes the subordinate himself tries to convince his superior of the obstacles he has overcome to complete the task.


III. Recency Error:

In recency error there is a tendency to base ratings on what is most easily remembered, that is, the most recent behaviour. Thus, rating is influenced by most recent behaviour ignoring the commonly demonstrated behaviours during the entire appraisal period. Recent behaviour may well not be characteristic of the total period, especially if employees are aware of the approximate date when they will be evaluated.

IV. Spillover Effect:

This refers to allowing past performance to influence the evaluation of present performance.

V. Proximity:

This refers to appraising similarly those items next to each other on the review form.


VI. Similarity Error:

This error occurs when the appraiser perceives the employee as himself – “He is like me”. Affiliation with those holding similar views makes it difficult for appraisers to be objective.

VII. Personal Bias:

Perhaps the most important error of all arises from the fact that very few people are capable of carrying out objective judgements entirely independent of their values, prejudices and stereotypes. Thus, evaluations can be influenced by factors such as an employee’s racial or ethnic background, physical attractiveness, religion, manner of dress, social standing, etc. which are normally of little significance for the achievement of organizational goals.

Biases of this kind can operate without the rater being aware of what is happening or the biases may be conscious and intentional. Furthermore, an individual rater may permit personal feelings to weigh heavily in evaluations. These may not operate often, but it is important to recognize their existence and the fact that ratings can contain this type of error.

VIII. Desire to be Accepted:


The rater is concerned with the desire to be accepted. “If I rate my subordinate’s performance as poor, how am I going to get his cooperation? After all, both of us have to work together for long and I cannot afford to strain the relation”.

IX. Concern with Self-Protection:

The rater is concerned with his own protection. “If I rate him well, he will rate me well and not create any problem for me”.

X. Fear of Playing God:

The rater is reluctant to play God by determining the future of the employees. He will lose his job if I rate him again as a poor performer”. “He may not be considered for promotion if I give him poor ratings”. Such concerns tend to make the raters to be lenient. Some raters feel uneasy criticizing a subordinate’s performance and are anxious lest their adverse appraisal might hold up a salary increase or an unwanted transfer.

Further, an aggrieved employee is invariably left with a feeling that the superior is arbitrary in his judgement. This is a very frustrating experience for an honest and impartial superior.


Blum and Naylor discuss the sources of bias which are beyond rater’s control-

XI. Opportunity Bias:

This results when the amount of output is influenced by factors beyond the control of employees. Some employees have better working conditions, supportive supervisors, more experienced co-workers, and hence their output may be greater than others working on identical tasks.

For instance, one salesman may have better display facilities, a better sales counter, and a more conducive geographic location than the other. In such circumstances, a comparison of the performance of two employees will have limitations.

XII. Group Characteristic Bias:

The characteristics of an individual’s group make a dent in his performance. Cohesive groups with high morale can produce more than less cohesive groups with low morale. Since the individual’s performance is greatly determined by the group’s definition of a fair day’s work, this factor must be kept in mind while evaluating the individual employee’s performance.

XIII. Knowledge of Predictor Bias:

A rater’s knowledge of the performance of an employee on predictors can influence his appraisal ratings. An employee who topped in the selection list might leave the impression that he is the best among the employees, and hence may railroad the rater to better evaluation despite a moderate performance. The rater should never be permitted to have access to the employee’s selection data.

Problems of Performance Appraisal – Barriers which have Impact on the Employee’s Performance Appraisal Programmes

Although the word ‘performance appraisal’ has been well recognised but it suffers from various shortcomings and limitations. There are certain barriers which work against the effectiveness of appraisal system.

The barriers which have impact on the appraisal programmes are:

1. Faulty Assumptions,

2. Psychological Blocks, and

3. Technical Pitfalls.

1. Faulty Assumptions:

Faulty assumptions of the parties concerned like supervisor and his subordinate in appraisal system does not work properly.

These assumptions work against an appraisal system in the following manner:

(a) The assumption that managers will make fair and accurate appraisals of subordinates is untenable. McFarland feels that both supervisors and subordinates show tendencies to avoid formal appraisal processes.

(b) Another faulty assumption is that managers take a particular system as perfect and feel that once they have been launched should continue and should be utilised in every project. They expect too much from it, and rely too much on it or blame for their faults. It should be remembered that, such system can provide perfect, absolutely defensible appraisals devoid of subjectively.

(c) Managers sometimes assume that personnel opinion is better than appraisal and they find little use of systematic appraisal and review procedure. However, the “management by instinct” assumption is not valid and leads to bias, subjectivity and distorted decisions based on partial or inaccurate evidence.

(d) Manager’s assumptions that the employees want to know frankly where they do stand and what their superiors think about them are not correct and valid. In fact, subordinates resist to be appraised and their reaction against appraisal has often been intense.

2. Psychological Blocks:

It is an acceptable fact that the value of any tool, including performance appraisal, lies largely on skills of the users. Therefore, the utility of performance appraisal depends upon the psychological characteristics of managers, no matter what method is being used. There are several psychological blocks which work against the effectiveness of an appraisal system.

These are manager’s feeling of insecurity, appraisal, as an extra burden, their being excessively modest or skeptical, their feeling to treat their subordinate’s failure as their deficiency, disliking of communicating poor performance to subordinates and so on. Because of these psychological barriers, managers do not tend to become impartial or objective in evaluating their subordinates, thereby the basic purpose of appraisal.

3. Technical Pitfalls:

The design of performance appraisal forms has received detailed attention from psychologist, but the problem of adequate criteria still exists. There are two main technical difficulties which fall under Technical pitfalls.

They are:

(i) The criteria problem and

(ii) The distortions

that reduce the validity of results.

(i) Criterion Problem:

A criterion is the standard of performance the manager desires of his subordinates and against which he compares their actual performance. This is the weakest point in appraisal procedure. Criteria are hard to define in measurable terms.

Ambiguity, vagueness and generality of criteria are difficult hurdles for any process to overcome. Traits too present ambiguity. A particular trait is hard to define and variations of interpretation easily occur among different manager’s using them.

(ii) Distortions:

Distortions occur in the form of biases and errors in making the evaluation. Such distortions may be introduced by an evaluator consciously or unconsciously.

The following are the possible distortions:

(a) Halo Effect:

In which the rater is influenced by rater’s one or two outstandingly good or bad performance and he evaluates the entire performance accordingly.

(b) Central Tendency:

This error occurs when the rater marks all or almost all his personnel as average. He fails to discriminate between superior and inferior persons.

(c) Constant Errors:

Some errors are constant. Similarly, there are easy raters and tough raters, in all phase of life. Some raters rate everyone high, others tend to rate low. Some rate on potential rather than on recently observed performance. In such a situation the result of two raters are hardly comparable.

Rater’s Liking and Disliking:

Manager’s being human beings they have strong liking for some or to their close one. Here, the rating will be influenced by personal factors and emotions and raters tend to give high rating to person whom they like and low rating to those whom they dislike.

Problems of Performance Appraisal – 15 Major Problems Faced while Appraising an Employee’s Performance

The major problem in performance appraisal is:

1. Rating Biases-The problem with subjective measure (is that rating which is not verifiable by others) has the opportunity for bias.

The rater biases include:

(a) Halo effect,

(b) The error of central tendency,

(c) The leniency and strictness biases,

(d) Personal prejudice, and

(e) The recency effect.

(a) Halo Effect:

It is the tendency of the raters to defend excessively on the rating of one trait or behavioural consideration in rating all other traits or behavioural considerations. One way of minimising the halo effect is appraising all the employees by one trait, before going to rate on the basis of another trait.

(b) The Error of Central Tendency:

Some raters follow play safe policy in rating by rating all the employees around the middle point of the rating scale and they avoid rating the people at both the extremes of the scale. They follow play safe policy because of answerability to management or lack of knowledge about the job and person he is rating or least interest in his job.

(c) The Leniency and Strictness:

The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any purpose. Equally damaging one is assigning consistently low rates.

(d) Personal Prejudice:

If the rater dislikes any employee or any group, he may rate them at the lower end, which may distort the rating purpose and affect the career of these employees.

(e) The Recency Effect:

The raters generally remember the recent actions of the employee at the time of rating and rate on the basis of these recent actions — favourable or unfavourable — rather than on the whole activities.

2. Perceptual Set:

Appraiser’s social and psychological background like beliefs, values, community, ethical group and the like would form a perceptual set about the appraise. This perceptual set affects the performance rating.

3. Influence of Previous Ratings:

Previous performance ratings of the-appraise, when made available to the appraiser, would influence the mindset of the-appraise while appraising the current performance.

2. Failure of the superiors in conducting performance appraisal and post-performance appraisal interviews.

3. Most part of the appraisal is based on subjectivity.

4. Less reliability and validity of the performance appraisal techniques.

5. Negative ratings affect interpersonal relations and industrial relations system.

6. Influence of external environmental factors and uncontrollable internal factors.

7. Feedback and post appraisal interview may have a setback on production.

8. Management emphasizes on punishment rather than development of an employee in performance appraisal.

9. Some ratings particularly about the potential appraisal are purely based on guess work. The other problems of performance appraisal reported by various studies are-

10. Relationship between appraisal rates and performance after promotions was not significant.

11. Some superiors completed appraisal reports within a few minutes.

12. Absence of inter-rater reliability.

13. The situation was unpleasant in feedback interview.

14. Superiors lack that tact of offering the suggestions constructively to subordinates.

15. Supervisors were often confused due to too many objectives of performance appraisal.

However, some of these problems of performance appraisal can be averted by appraising performance through computers.

Problems of Performance Appraisal – 8 Major Problems: Appraiser Discomfort, Lack of Objectivity, Horn Error, Leniency, Central Tendency Error and a Few Others

Performance appraisal is always flooded with criticisms, and is criticized in most of the organizations. Appraisees are generally unhappy with ratings of the appraisers. One of the reasons might be inad­equate training of the raters or appraisers. Other reasons may be ascribed to appraiser discomfort, lack of objectivity, halo error, leniency or strictness, central tendency error, recent behaviour bias, personal bias (stereotyping), and manipulating the evaluation.

1. Appraiser Discomfort:

It has been evidenced that many performance appraisal reports neither motivate the appraisees nor provide effective guidance to them. Rather, the reports create conflicts between the appraisees and appraisers that lead to dysfunctional organizational environment. It is also seen that appraisers do this job as an obligatory duty. But they should treat them as a tool for organizational development, derive pleasure, and love to do this. Organizational climate can effect this attitudinal change.

2. Lack of Objectivity:

Some human characteristics or factors such as appearance, attitude, and personality cannot be measured as these are subjective in nature. Moreover, they have little to do with the performance of an employee. The subjectivity poses problem to the appraisal method, though it cannot be totally avoided.

Mondy (2009) opines that employee appraisal based primarily on personal characteristics may place the evaluator and the company in untenable positions with the employee and equal employment opportunity guidelines. The firm may be hard-pressed to show that these factors are job-related.

3. Halo/Horn Error:

During appraisal, one performance feature or incident often influences the other features or incidents. Generally, one positive feature results in high ratings of other features, thus making the overall rating very high. Halo errors mainly occur in immeasurable or subjective features such as obedience, sobriety, devotion, etc.

Similarly, horn error occurs when the appraisee, considering one negative feature, rates other features or incidents at a lower level. In fact, no appraiser should mix up one feature with other features. Thus, generalization must be cautiously avoided.

4. Leniency or Strictness:

Some appraisers, while appraising, compromise with strictness, and become very lenient and accordingly rate very high than the actual ranking. In fact, they intend to keep away from controversy. This sort of leniency makes an under performer equivalent to a good performer. Let us recall that, ‘there is nothing so unequal as the equal treatment of unequals,’ as ‘different folks should get different strokes.’

If the appraiser is lenient, he/she cannot identify some deficiencies that can otherwise be corrected after identification. Thus, leniency error leads to working with unidentified deficiencies and prohibiting a person from individual development.

Organizations cannot conduct training programmes for the underperformers for leniency errors committed by the appraisers. Again, some appraisers are unduly stricter than they should be. This results in strictness error, as appraisees get lower rankings than they should. Both leniency and strictness errors are chronic problems in performance appraisal. Many organizations follow a system of normalizing the ratings.

5. Central Tendency Error:

Many organizations design their appraisal forms seeking the appraisers to mark or tick against attributes. Generally, appraisers evaluate appraisees near the average or in the middle of the scale. Appraisers avoid controversy as employees are rated in the fully satisfactory range.

6. Recent Behaviour Bias:

Formal appraisal is conducted generally once in a year. During appraising the appraisers, remember any good work done, commendable behaviours exhibited, and remarkable contribution to the company only in the recent past. They cannot keep in mind the good or adverse behaviours exhibited in the beginning of the appraisal period, unless they are recorded. Recent behaviour bias is a natural happening as they flash in the memory easily; but it is difficult to recapitulate what happened in the distant past.

7. Personal Bias (Stereotyping):

Similarities and dissimilarities between the appraiser and appraisee often influences the appraisal system. Pitfalls in the appraisal system occurs when gender, caste, creed, colour, race, and ethnicity of the appraisee influences the appraiser. Some appraisees may get favoured while someone else may not.

Managers establish a high image about those who bear similarities, and rate them comparatively higher while the other group is rated lower than they should be. Mondy (2009) confirms that mild-mannered employees may be appraised more harshly because they do not seriously object to the results. But appraisers take care when they appraise out-spoken employees.

8. Manipulating the Evaluation:

Nepotism and preferential treatment continue to influence the performance appraisal of employees. A supervisor having interest to promote or give a pay hike to a subordinate close to him can manipulate the entire appraisal. He rates the subordinate higher and gives high performance evaluation points/grades which the subordinate may not deserve at all.

Similarly, the supervisor may not like another person who is argumentative, outspoken, and confronts often. In such cases, the supervisor evaluates him lower than the actual. If that person is close to an influential person and happens to be a member of any protected group, he exerts pressure and the smooth working of the department is disturbed.

In either case, the system is distorted and the very purpose of performance appraisal remains unachieved. Mondy (2009) mentions a study in which it is revealed that more than 70 per cent of respondents opined that inflating or lowered ratings are ‘unintentional’.

Problems of Performance Appraisal – Inconsistent Rating, Halo Effect, Personal Bias, Average Rating, Impact of Job, Inaccurate Evaluation, Provoke Conflict and a Few Others

Performance appraisal is the systematic evaluation of an employee’s job performance (in terms of the requirements of the job and potential for development). Originally a device to provide guidance to man­agement in selecting employees for promotion or salary increases, performance appraisals are now used as a training and coaching device to help employees at all levels to improve their performance.

The sys­tem of appraisal earlier did not generate confidence among the employees. In most cases, the employees did not know that they were being appraised and how they were appraised by their superiors. The companies did not have the practice of informing the employees the results of such apprais­als.

It was in confidential reports/records, which were maintained for the purpose. Such practices were found to be causing resent­ment among employees towards the system of appraisal being maintained in the organization.

There are certain barriers to effective performance appraisal.

They are:

1. Inconsistent rating – There are chances of inconsistent ratings. Different standards may be followed by different supervisors for evaluation. If the standards are not clear and subjective, there are chances that the supervisors may follow different standards for different employees.

2. Halo Effect – An employee may be appraised on the general impression i.e., Halo effect that the evaluator has about the employee. A high rate is given to favoured employees whereas unfriendly employees are rated low. In this case the superior appraises the person on certain positive qualities only. The negative traits are ignored. It does not represent a true picture about the employee.

3. Personal bias – There are possibilities of personal bias.

4. Average Rating – The top managers are required to give reasons to justify the ratings assigned, if the ratings are very high or very low. Hence In order to avoid the possibility of giving a high or low rate, that may lead to conflict, the evaluators may opt for average rating.

5. Impact of Job – There is a tendency amongst the evaluator to give a high rating to highly paid jobs. Hence a senior employee may get a higher rating than a junior employee.

6. Error of similarity – Most of the time the evaluator look for those qualities in subordinates which he himself possesses. Those who show the similar characteristics are rated high.

7. Inaccurate Evaluation – There is a lack of training in appraisal techniques. Hence due to lack of knowledge and skills, the raters may fail to evaluate performance accurately.

8. Provoke conflict – Existence of personal bias, favoritism, lack of objectivity and clarity in the appraisal system evoke conflict, dissatisfaction among the employees. Trade unions also show antipathy towards the performance appraisal system.

9. Psychological Pressure – Performance appraisal process put psychological pressure on the work force to improve their performance. They feel that their work and performance is continuously under scanner, which negatively impacts their morale and creates tension and frustration. This may affect the performance of the highly efficient workers who actually perform well, but is affected by the appraisal process.

Problems of Performance Appraisal – 4 Major Errors Faced while Evaluating the Performance and Potential of Employees: Judgement, Poor Appraisal and a Few Others

Performance appraisals are intended to evaluate the performance and potential of employees. Still these may not be valid indicator of what these are intended to assess because of a variety of limitations on their uses. The problems that affect the validity and dependability of the performance appraisal systems are called performance appraisal errors.

These are as follows:

(a) Judgement Error

(b) Poor Appraisal Forms

(c) Lack of Rater Preparedness

(d) Ineffective Organizational Policies and Practices

(a) Judgement Error:

Raters commit mistake due to biasness and inadequate training while evaluating people and their performance. These errors are also called as Rater Errors. The following types of judgement errors/rater errors may emerge during performance evaluation.

i. First Impression (Primacy Effect):

It occurs when a manager or evaluator bases his or her entire assessment of an employee or applicant on the first impression that the employee or applicant made. It can be either positive or negative. In case of positive primacy effect, the rate is considered to be doing everything and a good performer. But in case of negative primacy effect, the rate is considered to be doing nothing and a bad performer.

ii. Latest-Behaviour (Recency Effect):

Here the rater gives over emphasis on recent performance. The rates are evaluated more on the results of the past four weeks than on six months’ average behaviour. Many employees being well aware about this difficulty and knowing the date of evaluation, make their business to be visible and noticed in many positive ways for several weeks in advance.

iii. Halo Effect:

Halo error occurs when a rater assigns ratings for several dimensions of performance on the basis of an overall general impression of the rate. The individual’s performance is completely appraised on the basis of a perceived positive quality, feature or trait.

The reasons of halo error are- a rater may make an overall judgment about a worker and then conforms all dimensional ratings to that judgement and/or a rater may make all ratings consistent with the worker’s performance level on a dimension that is important to the supervisor.

iv. Horn Effect:

The individual’s performance is completely appraised on the basis of a negative quality or feature perceived. This results in an overall lower rating than may be warranted. “He/She is not formally dressed up in the office. He/She may be casual at work too”! Another example may be the individual rarely smiles. Hence it is judged that he/she has not good interpersonal relations.

v. Stereotyping:

It is a mental picture the rater holds about rate because of the rates sex, age, religion, and caste, etc. The rater generalizes the rates behaviour on the basis of above characteristics and that leads to overestimation or underestimation of the rates performance. For example, a rate having Kshatriya caste is considered to be aggressive in achieving the organization’s goals and usually gets high rating.

vi. Central Tendency:

Appraisers rate all employees as average performers. That is, it is an attitude to rate people as neither high nor low and follow the middle path. For example, a professor, with a view to play it safe, might give B grade to all the students in a class, regardless of the differences in individual performances.

vii. Leniency:

This occurs when ratings are restricted to the high portion of the rating scale. Some raters consider everything as good and they are lenient raters. The leniency error can render a system ineffective. If everyone in the organization is to be rated high, the system has not done anything to differentiate among the employees.

viii. Strictness:

This occurs when ratings are restricted to the low portion of the rating scale. Some raters consider everything as bad and they are strict or harsh raters.

Central tendency errors, leniency errors and strictness errors are as a whole known as “Restriction of Range Error”.

ix. Spill Over Effect:

The present performance is evaluated much on the basis of past performance. “The person who was a good performer in distant past is assured to be okay at present also”.

x. Contrast Effect:

This error occurs when evaluation of a rates performance is affected by comparisons with other people recently encountered. The rater lets another employee’s performance influence the ratings that are given to someone else.

For example, when the performance of an average employee is evaluated immediately after the performance of an outstanding employee, the supervisor might end up rating the average person as “below average” or “poor”.

Elimination of Judgement Errors/Rater Errors:

The performance evaluation process becomes a failure due to the occurrences of various errors committed by the raters. Hence organizations are trying to help the raters to more accurately observe, recall, and report behaviour.

This requires- providing proper training to the raters to conduct effective performance appraisal, motivating the raters to use the system effectively, and providing opportunity to observe their subordinates’ performance carefully.

(b) Poor Appraisal Forms:

The appraisal forms used by the raters also affect the appraisal process on the basis of the below mentioned factors:

i. The rating scale may be quite vague and unclear. Problems with evaluation standards arise because of perceptual differences in the meaning of the words used to evaluate employees. Thus good, adequate, satisfactory, and excellent may mean different things to different evaluators.

ii. The rating form may contain additional and irrelevant performance dimensions.

iii. The rating form may ignore important aspects of job performance.

iv. The forms may be too long and complex.

(c) Lack of Rater Preparedness:

The raters may not be adequately trained to carry out performance management activities. This becomes a serious problem when the technical competence of a rate is going to be evaluated by a rater who has limited functional specialization in that area. The raters may not have sufficient time to carry out appraisals systematically and conduct thorough feedback sessions.

Sometimes the raters may not be competent to do the evaluations owing to a poor self-image and lack of self-confidence. They may also get confused when the objectives of appraisal are somewhat vague and unclear.

(d) Ineffective Organizational Policies and Practices:

Very often many organizations do not suitably reward the sincere appraisal report put in by a rater. This reduces the motivation to do the job thoroughly and sincerely. Management sometimes views the ratings negatively given by the raters. This implies a sign of failure on the part of raters or as an indication of employees’ discontent.

So, most employees receive satisfactory ratings, despite poor performance. Normally, the raters immediate supervisor must approve the ratings. However, in actual practice, this does not happen. As a result the raters “go off the hook” become dissatisfied and cause considerable damage to the rating process.

Changing Scenario of Performance Management:

A recent research reveals that now days the “Engagement Reviews” are gaining momentum and taking the place of performance management. An individual’s approach towards work speaks the volumes about his/her contribution to the organization and the best way to assess an employee’s productivity.

The more the employees are engaged, the more they are passionate about their own future in particular and future of the organization in general. Engagement reviews may bring in an additional dimension of relevant performance indices, which can be a useful process of letting employees understand their opportunity areas and work towards developing them.

Hence as per the HR experts, it is necessary to strengthen the existing performance management process by having a strong component of the engagement matrix.

Problems of Performance Appraisal – Grey Areas in Performance Appraisal

The ideal approach to performance evaluation is that in which evaluator is free from personal biases, prejudices and idiosyncrasies. This is because when evaluation is objective, it minimizes the potential capricious and dysfunctional behaviour of the evaluator, which may be detrimental to the achievement of the organizational goals.

However, a single foolproof evaluation method is not available. Inequities in evaluation often destroy the usefulness of the performance system resulting in inaccurate, invalid appraisals, which are unfair too. There are many significant factors, which deter or impede objective evaluation.

These factors are:

Problem # 1. Halo Error:

It occurs when the rater allows one aspect of a man’s character or performance to influence his entire evaluation. It is the tendency of many raters to set their rating is excessively influenced by one characteristic rather than on all subsequent characteristics.

This problem often occurs with employees who are especially friendly or unfriendly toward the supervisor. For example, an unfriendly employee will often be rated unsatisfactory for all traits rather than just for trait “gets along well with others”. Being aware of this problem is a major step toward avoiding it. Supervisory training can also alleviate the problem.

Problem # 2. Central Tendency:

Many supervisors have a central tendency when filling in rating scales. For example, if the rating scale ranges from 1 to 7, they tend to avoid the highs (6 and 7) and lows (1 and 2) and rate most of their people between 3 and 5. If you use a graphic scale, this central tendency could mean that all employees are simply rated “average”. Such a restriction can distort the evaluations, making than less useful for promotion, salary or counselling purposes. Ranking employees instead of using a graphic rating scale can avoid this central tendency problem because all employees must be ranked and this cannot all be rated averages.

Problem # 3. Leniency or Strictness:

The leniency bias results when raters tend to be easy in evaluating the performance of employees. Such raters see all employee performance as good and rate it favourably. The strictness bias is the opposite; it results from raters being too harsh in their evaluation. Sometimes, the strictness bias results because the rater wants others to think he or she is a ‘tough judge’ of people’s performance. Both leniency and strictness errors more commonly occur when performance standards are vague.

Problem # 4. Cross Cultural Biases:

Every rater holds expectations about human behaviour that are based on his or her culture. When people are expected to evaluate others from different cultures, they may apply their cultural expectations to someone who has a different set of beliefs or behaviours. In many Asian cultures the elderly are treated with greater respect and are held in higher esteem than they are in many western cultures.

If a young worker is asked to rate an older subordinate, this culture value of “respect and esteem” may bias the rating. Similarly, in some Arabic cultures, women are expected to play a very subservient role, especially in public. Assertive women may receive biased rating because of these cross-cultural differences. With greater cultural diversity and the movement of employees across international borders, this potential source of bias becomes more likely.