Methods of Performance Appraisal and 5 Important Ways to Communicate Appraisals

Introduction

Performance appraisal is a systematic evaluation of employees to assess their contribution to organizational goals and to make informed human resource decisions. According to Aamodt (2015), performance appraisal serves as both a developmental and evaluative tool, enabling organizations to enhance productivity while guiding employee growth. Two primary approaches dominate appraisal systems: objective measures and subjective measures. Each carries advantages and limitations, compounded by the potential for rating errors and biases.

Steps in the Appraisal Process

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Objective Measures

Objective measures are quantifiable indicators of performance, including metrics such as sales volume, number of units produced, absenteeism records, and error rates. Cascio (2010) explains that objective measures are valued for their perceived fairness and reliability since they rely on tangible, numerical data.

Sample Performance Appraisal Sheet

• Advantages: Objective measures reduce ambiguity, provide standardized benchmarks, and facilitate comparison across employees. For example, a sales team member’s performance can be assessed based on monthly revenue figures.
• Limitations: These measures often fail to capture contextual factors such as task difficulty, resource availability, or teamwork contributions. Cascio and Aguinis (2018) highlight that relying solely on objective criteria may undervalue employees in roles with qualitative or collaborative dimensions.

Subjective Measures

Subjective measures involve evaluators’ judgments of employee behaviors, competencies, or traits. Common methods include graphic rating scales, behaviorally anchored rating scales (BARS), and narrative evaluations.

• Advantages: Subjective methods capture nuances of behavior, teamwork, creativity, and adaptability that objective metrics miss. For roles without clear numerical outputs, subjective appraisal provides essential insights.
• Limitations: Subjective assessments are prone to evaluator bias and inconsistency. The same performance may receive different ratings depending on the rater’s perspective, standards, or relationship with the employee (Aamodt, 2015).

Errors and Biases in Rating

Several common errors distort appraisal accuracy:

1. 1. Halo Effect: Raters allow one positive trait (e.g., punctuality) to influence overall ratings.
   2. Horns Effect: A single negative attribute unduly lowers overall assessment.
   3. Leniency/Severity Bias: Some raters are consistently generous, while others are overly harsh.
   4. Central Tendency: Raters avoid extremes and cluster ratings around the midpoint.
   5. Recency Effect: Recent events overshadow an employee’s overall performance.
   6. Similarity Bias: Raters give higher scores to employees who share similar backgrounds, attitudes, or interests (Cascio, 2010).

Post-Appraisal Interview

Performance appraisal is incomplete without effective communication of results. The post-appraisal interview plays a pivotal role in ensuring employees understand their performance, receive constructive feedback, and develop action plans.

Purpose of Post-Appraisal Interview

According to Aamodt (2015), post-appraisal interviews aim to:

1. 1. Provide feedback on performance.
   2. Clarify expectations and objectives.
   3. Motivate employees by recognizing achievements.
   4. Identify developmental needs and create growth opportunities.

Effective Communication Strategies

1. 1. Preparation: Managers should review appraisal data carefully, ensuring examples support evaluations (Cascio, 2010).
   2. Two-Way Dialogue: Employees must actively participate, sharing perspectives on performance and challenges.
   3. Balanced Feedback: Highlight strengths alongside improvement areas to maintain motivation.
   4. Goal Setting: Establish specific, measurable, achievable, relevant, and time-bound (SMART) goals.
   5. Supportive Tone: Emphasize development, not punishment, to encourage constructive engagement (Cascio & Aguinis, 2018).

Common Challenges

• • Employee Resistance: Negative feedback may trigger defensiveness.
  • Managerial Discomfort: Some managers struggle to deliver criticism effectively.
  • Overemphasis on Evaluation: Excessive focus on ratings undermines developmental intent.

Best Practices

1. 1. Training for Managers: Equipping supervisors with communication and coaching skills.
   2. Regular Feedback: Continuous feedback prevents surprises during appraisal meetings.
   3. Documentation: Maintain detailed records to support appraisal discussions.
   4. Action-Oriented Approach: End interviews with agreed-upon steps for development (Aamodt, 2015).

Conclusion

Both objective and subjective measures are vital for holistic appraisal systems. However, organizations must recognize and mitigate rating biases to ensure fairness and accuracy. As Cascio and Aguinis (2018) argue, integrating multiple data sources and training raters can reduce errors, fostering more reliable appraisals.

References

Aamodt, M. G. (2015). Industrial/organizational psychology: An applied approach. Cengage Learning.

Cascio, W. F. (2010). Managing human resources: Productivity, quality of work life, profits. McGraw-Hill Education.

Cascio, W. F., & Aguinis, H. (2018). Applied psychology in human resource management. Pearson.