T RADITION AL VS M ODERN

M ETH ODS OF P ERFORMAN C E

AP P RAI S AL
SUBJECT: HUMAN RESOURCE MANAGEMENT
DEFINITION OF PERFORMANCE APPRAISAL
According to Newstrom, It is the process of evaluating the
performance of employees, sharing that information with
them and searching for ways to improve their performance.
Meaning
Performance appraisal is the step where the
management finds out how effective it has been at hiring and
placing employees .
A Performance appraisal is a process of evaluating an
employees performance of a job in terms of its requirements.
Methods of Performance Appraisal
Traditional Methods
Modern Methods

Traditional Methods
1. Paired comparison
: Employee comparisons are
performed
usually
on
the
basis
of
overall performance,
whereas job-evaluations are
usually on the basis of skill, knowledge, and
time required in their performance
2. Graphic Rating scales : A scale that measures a
subject's attitude concerning an object by requiring

the subject to make a mark on a line in which the

end points are identified by adjectives such as
"excellent" and "very poor."
3. Forced choice Description method : Forced-choice
method appraisal was developed by psychologists for
the U.S. Army in World War II, and was subsequently
adopted wide in industry.The rater has a form on
each item consisting of a group of statements
pertaining to subordinates. The rater checks two of
the four statements, one which he feels is the most
characteristic and the other least characteristic of
the person he is rating.
4. Critical Incidents : The critical incident method of
performance appraisal involved identifying and
describing specific events (or incidents) where the
employee did something really well or something
that needs improvement.
5. Field Review Method : This is an appraisal done by
someone outside employees own department
usually from corporate or HR department.
6. Ranking : Under the ranking method, the manager
com-pares an employee to other similar employees,
rather than to a standard measurement. An offshoot
of ranking is the forced distribution method, which is
similar to grading on a curve. Predetermined
percentages of employees are placed in various
performance
categories,
for
example, excellent,above average, average, below
average, and poor

Modern methods

 Assessment Centers : This method is mainly

used to evaluate executive and supervisory
potential. Here employees are taken to a place
away from work and a series of tests and
exercises are administered. For example,
assesses are asked to participate in; in-basket
exercise, simulations, group exercise and role
plays. Performance of the employee is
evaluated in each of these tests and feedback
is provided to the ratee, in terms of strengths
and weaknesses.
Human Asset Accounting Method : This
method evaluates an employee's performance
in relation to the contribution of an employee
in monetary terms. Here the rater evaluates
the employee in terms of cost of retaining the
employee and the benefits the organization
derives from him/her. The following factors are
taken into account in this method .
(1)Cost of training the employee.
(2)Quality of product or service rendered.
(3)Accidents, damages, errors, spoilage,
wastages, etc.
(4)The time spent in appraising the employee.
360-Degree appraisal system : 360 Degree
Feedback is a system or process in which

employees receive confidential, anonymous

feedback from the people who work around
them. This typically includes the employee's
manager, peers, and direct reports.