After reading this article you will learn about Performance Appraisal:- 1. Meaning of Performance Appraisal 2. Classification of Performance Appraisal 3. Characteristics 4. Advantages 5. Disadvantages 6. Limitations.

Meaning of Performance Appraisal:

Employee’s performance evaluation is a key part of the function of staffing, as the evaluation serves as a basis for judging the contributions and weakness of employees so that continuing efforts can be made to build a stronger and more effective organisation.

Performance appraisal is the process of reviewing an individual’s performance and progress in a job and assessing his potential. It is a systematic method of obtaining, analyzing a recording information about a person doing a specific job, rather than assessing the job itself as in the case of job analysis.

Performance appraisal is the assessment of the real and relative worth of the employees in a systematic and subjective way. The competence of the employee should be measured with reference to the established standard of the task assigned.


Performance appraisal could be seen as an objective method of judging the relative worth or ability of an individual employee in performing his tasks.

Classification of Performance Appraisal:

Performance appraisal may be classified under three categories, whereas:

1. Review of the performance:

This review was basically related to the need to improve the performance of individuals and thereby improve the effectiveness of the organisation as a whole.


2. Review of the potential:

It basically deals with the problems of predicting the level and type of work that the individual can prove his nature of job.


3. Review of reward:

These type of reward basically show, an improvement of his salary, power and status etc.

Characteristics of Performance Appraisal:

The characteristics of performance appraisal are given below:

1. The system must be bias-free:


The evaluator must be objective and the methods of appraisal must be fair and equitable. The atmosphere must be that of confidence and trust.

2. It must be relevant:

It should only measure behaviour that are relevant to the successful job performance and not any other personal traits.

3. It should be acceptable to all:


The performance standards as well as the appraisal methods should be developed by joint participation and joint collaboration.

4. It should be reliable; dependable; stable and consistent:

High reliability is essential for correct decision-making and validation studies. It should be sufficiently scientific, so that if an employee is evaluated by two different evaluators, then the result should be significantly the same.


5. It must be able to objectively differentiate between a good employee and an ineffective employee:

Rating an employee average does not adequately indicate the degree of effectiveness. So the technique must be sufficiently sensitive to pick up the difference between an effective and an ineffective employee.

6. It must be practical, sound, clear and unambiguous so that all parties concerned understand all its implications.

Advantages of Performance Appraisal:

1. It provides for uniform and systematic judgments by supervisors of the performance and conduct of each employee.


2. It will be useful in improving employee job performance by pinpointing the area or aspects that need improvement.

3. Performance appraisal viewed as a necessary vehicle for assessing management potential.

4. The information can be used as a basis for selecting employees for promotions or for individual merit wage or salary increase.

5. It will help to identify training and development efforts.

6. Performance appraisal helps the employee to overcome his weaknesses and improve his strength and thus enable him to improve his performance.

7. It will help in creating a desirable culture and tradition in the organization.


8. It can be used as a basis of sound personnel policy in relation to transfers and promotion; otherwise he may be transferred to another job.

Disadvantages of Performance Appraisal:

1. It is very much difficult to compile an appraisal form which can only and completely assess any employee.

2. There is every likelihood of the assessment of an employee being subjectively based on individual performers and prejudices of the superior. The assessment made by a generous superior will be as off the mark as that made by an over-critical one.

3. It is difficult to lay down ideal reference points so for as attributes of personality are concerned. In any case, such reference points, cannot strictly be defined.

4. Merit rating can be subject to many errors. When a rater is positively lenient, an individuals, performance is rated higher than actual.

Limitation of Performance Appraisal:


The following are the main limitations of performance appraisal:

1. Hallo effect:

It is a tendency to influence the evaluation of other traits by the assessment of one trait. Hallo is a circle of light around the sun or moon causes by refraction. A person may be good in one trait on which he is good is valued by his supervisor. Hallo effect takes place when traits are not clearly defined and are unfamiliar.

2. 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, or even objective 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 managers using them.


3. Frustration:

Employees who are rated better are not rewarded accordingly and therefore, they feel frustrated and their morale goes down.

4. Lack of cooperation:

Rating will be inaccurate and difficult to appraise the personnel in the right perspective if the rater is biased or he does not have adequate information about job and employees and full cooperation of management and subordinates.