Performance appraisal is the process of evaluating an employee’s performance of a job in terms of its requirements. It is the process of evaluating the performance of employees, sharing the results of the evaluation with them and looking out for ways to improve their performance.

Organizations make use of different appraisal systems for the appraisal of their employees. However, any modern appraisal system and its results determines the 

  1. Pay hike, perks, bonus, rewards, allowances etc
  2. Promotions and recognitions, transfer, dismissal etc
  3. Identification of training needs
  4. Areas for improvement and development purposes.


Performance Appraisal for the employee

Here the performance of the employee is assessed with the help of certain tangible particulars with respect to competencies, effectiveness and key result areas. The performance appraisal lets the employee know the expectations of the organization out of him, how far he has delivered, his involvement in the organization, his areas for personal development and so on. The performance appraisal and its indicators will determine an employee’s pay hike, promotion etc.

Performance Appraisal for Organization

Performance appraisal is used as a tool in measuring efficiency or effectiveness of employees at work place. The organization makes use of this tool for organizational control. The organization can make use of the system to provide employee feedback, increase harmony, improve effectiveness, bring about growth and development and nurture a learning culture in the organization.

A generic performance appraisal process

A normal performance appraisal process would involve 6 steps. Let us have a look at them.

  • Setting the performance benchmarks
  • Communication of the benchmarks to the employees.
  • Measuring the achievements.
  • Comparing the achievements with the bench marks set.
  • Discussing the results with the employees
  • Taking up action based on results- Rewards/Corrective.


There are two modern types of appraisals which need our attention. They are

  1. Management by Objectives (MOB).

It is a kind of method in which the employer sets a list of objectives and makes assessments on their performance and finally makes a reward on the basis of the results achieved.

Here the assessment is more quantitative in nature and is on the basis of the results achieved, without much consideration for the efforts and other intangible factors.

  1. 360 degree appraisals.

This is a method in which the employees will give very confidential assessments about the performance of their colleague.  An employee shall be assessed by his superior, subordinate, and his peers and sometimes even by a customer through his feedback.  However, of late there are several organizations that resort to the 360 degrees appraisal system.

If the appraisals are not done right, they may create a negative experience for the employee as well as the employer.

Here are some common errors which creep in to create inaccurate results.

    1. Halo effect– When a candidate is found low or high and has been rated so in one or more areas, there is a tendency to rate the candidate similarly in all other areas without due consideration to the merit.
    2. Recency effect– The tendency to rate someone solely based on his recent behavior, forgetting the old.
    3. Spill-over effect– Tendency to rate someone on the basis of the past performance, rather than the current one.
    4. Central tendency– Tendency or habit to rate almost everyone in the average band, and looking for the safer side.
    5. Leniency-Tendency to overrate someone on emotional grounds than is warranted.
    6. Perception– The standards of evaluation like fair, good and excellent mean different for different people.


However, if appraisals are carried out sans errors, it stands good for the employer as well as the employees. Both get an opportunity to grow and improve.





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