Major limitations of performance appraisal methods are as follows: (i) Defensiveness of employees (ii) Hypercritical or “Horns” effect (iii) Emphasis on human performance without regard for human values (iv) Central tendency and leniency (v) Reluctance to “play God” (vi) Halo effect. !

(i) Defensiveness of employees:

The appraisal process frequently creates defensiveness among employees.

Since the supervisor’s appraisal influences the employee’s most vital job concerns— promotions, transfers and dismissal—the employee’s defensiveness during an appraisal interview often makes the procedure unproductive for both the supervisor and the subordinate.

(ii) Hypercritical or “Horns” effect:


It is the tendency of a superior to rate people lower than their performances justify. Following are some examples of this effect:

(I) The superior is a perfectionist. Because his expectation level is very high, he is more often disappointed and rates his people lower than he should.

(ii) The maverick or the non-conformist gets a low rating simply because he is different’.

(iii) The man who has recently failed may wipe out the effect of years of good work on his appraisal and be rated low on his recent behavior.


(iv) The man who is too meek, too passive or who lacks some traits we attach to good men may suffer in his ratings.

(v) The man who does not do the job as well as we remember we did it when we held that job may suffer more than those who do work unfamiliar to us.

(iii) Emphasis on human performance without regard for human values:

George S. Odiorne denounces all appraisal methods for their single inherent weakness values. that they lay emphasis on alikeness and conformity of human performance ignoring measurement of human values. All appraisal methods, according to him, are like quality control systems which force subordinates to conform to certain standards of physical performance without caring for human values which though far less tangible are essential ingredients in the whole process.

The result is that these appraisal methods rank both the benevolent and despotic managers equal if they are found equal in their physical achievements—no matter if their value systems are widely different. Rudolph Roess, who had personally supervised the execution of two million political prisoners in Germany, would thus be measured by many appraisal method as excellent a manager as Henri Ford because he proved himself no less sound in all of the managerial skills of organising, planning and control.

(iv) Central tendency and leniency:


The superior is frequently guilty of awarding average or more than average ratings to all his workers. He may award ‘average’ on the ground that it will not injure the rate and, at the same time, that it will not expose his lack of more definitive information.

The related limitation of leniency reflects a desire to err on the generous side to avoid controversy by giving each rate the benefit of the doubt. To meet this situation the ‘forced distribution system’ is used where the rate is instructed about the percentages of cases which should fall in each category on the rating scale. Thus, for example, on a scale of job knowledge’ the following percentages might be used:

Poor 10%, Below average 20%, Average 40%, Above average 20%, and Exceptionally good 10%.

In most instances, the expected distribution of cases is simply provided as a guide to the rate rather than as rigid rule.

(v) Reluctance to “play God”:


Some managers are unwilling to “play God” by judging others. Accepting the responsibility for being a judge for the future of another person causes severe anxiety in some people. The tendency to complete the appraisal form at the last moment when they are due and to treat the entire process casually may well be necessary to relieve the anxiety of the evaluator in the role of “judge”. Further, the aggrieved employee is invariably left with the feeling that the superior is arbitrary in his judgment. This is a very frustrating experience for an honest and impartial superior.

(vi) Halo effect:

It is the tendency of the superior to allow his good impressions of one or two important work characteristics of an individual to carry over the total evaluation. In such a case the superior rates all the characteristics of a person much higher than they should be. For example, if the superior is a person who is very fond of punctuality, a punctual worker may get a high rating on practically every factor though many factors have little to do with punctuality.

Following are some other examples of this effect:

(I)The man who has done good work in the distant past is assumed to be good in the recent past also.


(ii) Those who agree with us nod their heads hen we talk and as skilled flatterers get better ratings than their performance justifies.

(iii)The man who did an outstanding job last week or yesterday can offset mediocre performance over the rest of the year by this single act.

(iv) The man who pesters the boss but gets the work done may be rated lower than the silent, solitary dud.

Overcoming the limitations:

Companies generally take a two-pronged approach to overcoming the obstacles to effective appraisal they try to design the kind of system that will counteract tendencies to human errors and biases, and to train managers in the correct use of appraisal procedures.


A training programmer for managers generally covers such subjects as:

1. The nature of the halo effect and of central tendency errors, and how to guard against them.

2. The desirability of placing emphasis on observable behaviours, where possible, as opposed to emphasis on personal traits of the rates.