Study Notes for Performance Appraisal Methods Part -1

By BYJU'S Exam Prep

Updated on: September 13th, 2023


Performance Management is the managerial process that deals with the various dimensions of the performance of the employees which include the identification of the resources to be provided to the employees, evaluation of the employees at regular intervals of time and delivering feedback to them, planning the rewards and incentives, etc.

  • Performance Appraisal deals with the evaluation part of performance management.
  • It involves the systematic evaluation of an employee with regard to their contribution to the organization. Performance appraisal takes the behaviour, attitude, skillset and knowledge improvement, learning potential and other factors into consideration.
  • Performance appraisal is the process of assessment of the job performance of the employees by taking specific metrics into consideration by the supervisors or any other assigned team members.
  • It involves the comparison of the performance of an employee with their own performance and with the performance of the other employees over a specific period of time.

Objectives of Performance appraisal

  • Helping the organization over promotions, salary increments, incentives, internal job transfers, terminations, improving training modules, etc.
  • Providing evaluation feedback to employees, to state what is required from them and what are the areas they need to improve.
  • Creating a friendly environment by assessing the difficulties faced by the employees and motivating them.
  • To monitor the performance of the employees.

Methods of Performance appraisal


Traditional methods

The traditional methods of performance appraisal are as follows:

1. Ranking method: In this method, the employees are ranked by taking their performance levels and other characteristics into consideration.

  • Very useful to divide a good and an average performer.
  • Can be used easily for a small set of employees.
  • The ranking becomes difficult when a large set of employees have similar characteristics.

2. Grading method: In this method, different grades are given to the employees based on their contribution to the organization.

  • Grades may be in the form of alphabets (A, B, C, D, E, F..) or in words like excellent, very good, moderate, bad, very bad, worst or excellent, good, bad.
  • Based on the grades given, promotions, hikes, training, etc. are planned.

3. Paired comparison method: In this method, the appraiser compares two employees and marks the better performer. The process is continued until all the employees are compared with one another in this manner.

  • After the entire process is completed, ranking is given to all the employees based on the number of times that the employee has been marked as a better performer.
  • This method is very difficult for an organization that has a large number of employees.

4. Forced choice method: In this method, the appraiser is given a set of statements and asked to select one statement which defines the employee.

  • Let us consider the following three statements,
    • He/ She is a team player.
    • He/ She needs to be trained to improve the skill set.
    • He/ She completes the assigned tasks in time.
  • The appraiser has to select one statement as a part of the evaluation process.
  • This is a time-consuming method.

5. Graphical rating method: In this method, different characteristics of the employees are rated. The appraiser rates the employees on each characteristic in the form of points like 1, 2, 3, 4, 5, 6, 7 or in the form of excellent or average or bad, etc.

  • Let us consider two characteristics like efficiency and training. If an employee performs very well in the training sessions, then that employee will be given the rating as 6 or 7 on 7 point scale.
  • If the same employee performs poorly on the project related tasks, then that employee will be given 2 points or 1 point for efficiency.

6. Forced distribution method: In this method, the appraiser has to distribute the employees into five levels like excellent, very good, average, very bad and worst performers.

  • For example, if there are 1000 employees, the appraiser has to distribute the employees into various categories as per their performance levels.
  • If there are 200 excellent performers, they fall into the excellent category. If the performance levels of another 200 employees are not up to the mark, then they fall into the very bad category. This method is continued until every employee is distributed into some category.

7. Checklist method: In this method, all the characteristics in the question form are written in order and two options yes and no is given to the appraiser for every question. The appraiser has to tick the yes box when the given characteristic is found and no box when it is not.

  • All the responses are counted, and a final rating is obtained.
  • It is a time taking process and not accurate.

8. Essay method: In this method, the appraiser writes about the characteristics of the employee in his own words in the form of an essay.

  • With this, the strong and weak points can be easily known.
  • But the essay depends on the writing skills of the appraiser. Sometimes, there may be a chance of weak areas getting more highlighted than the strong areas of an employee. This may demotivate the employee.

9. Critical incidents method: In this method, the performance of the employees during critical incidents is taken into consideration.

  • All the critical tasks performed by each employee are written and are compared with each other by the appraisal team.
  • The rating is done based on the severity of the critical incident.

10. Field review method: In this method, the appraiser takes the help of subordinates and supervisors to rate an employee.

  • This method is mostly used during the promotions and increments.
  • It is a time-consuming process.

We hope UGC NET Study Notes for Performance Appraisal Methods Part -1 is helpful to prepare “Traditional methods of Performance Appraisal”. You can also read UGC NET Study Notes for Performance Appraisal Methods Part -2 to learn “Modern methods of Performance Appraisal” and also for quick revision of both the Performance Appraisal methods.

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