Topic 2.3 – Performance Appraisal


1. Performance Appraisal and its components.
2. Appraisal Formats and Sources
3. The Role of Performance Appraisal

1. Performance Appraisal

Performance Appraisal
Performance Appraisal

Performance appraisal – is the process of identification, measurement, and management of human resources performance in organizations.

Performance Identification is determining which areas of work the manager should be examining when measuring performance. Rational and legally defensible identification requires a measurement system based on job analysis. The appraisal system, then, should focus on performance that affects organizational success rather than performance-irrelevant characteristics such as race, age, or sex.

Performance Measurement entails making managerial judgments of how “good” or “bad” employee performance was.
Performance measurement must be consistent throughout the organization.
That is, all managers in the organization must maintain comparable rating standards.

Performance Management is a process by which managers and employees work together to plan, monitor and review an employee’s work objectives and overall contribution to the organization.

2. Appraisal Formats and Sources

Competency Model
Competency Model

Competency model – Set of competencies associated with a job (related to experience, knowledge and personality).

●  Competencies – Characteristics associated with successful performance →
●  Dimension – A measurable extent of performance characteristics that determines effective job performance

Appraisal formats can be classified in two ways:


(1) by the type of judgment that is required (relative or
absolute) and
(2) by the focus of the measure (trait, behaviour, or outcome).

Relative judgment
Relative judgment

RELATIVE judgment – supervisors compare an employee’s performance to the performance of other employees doing the same job (compare coworkers).

ABSOLUTE judgment – supervisors make judgments about an employee’s performance based solely on performance standards.

Absolute judgment
Absolute judgment
Trait Appraisal
Trait Appraisal

TRAIT appraisal – supervisor make judgments about worker characteristics that tend to be consistent and enduring.
“-” have been criticized as too ambiguous and create conscious or unconscious bias.


BEHAVIOURAL appraisal – supervisors assess a worker’s behaviours.

Behavioural Appraisal
Behavioural Appraisal

OUTCOME appraisal – supervisors assess the results achieved by workers. Normally based on the objectives: number of total sales, number of products produced, number of tables served, etc.

Sources of the Appraisal
● self-review – A performance appraisal system in which workers rate themselves.
● peer review – A performance appraisal system in which workers at the same level in the organization rate one another.
● subordinate review – A performance appraisal system in which workers review their supervisors.

3. The Role of Performance Appraisal

Manager – Worker Relationships
Performance Management:

  • past-oriented activity – criticizes or praises workers for their performance in the preceding year
  • future-oriented view – what workers can do to achieve their potential in the organization.

This means that managers must provide workers with feedback and coach them to higher levels of performance —> Training and Development and DISCHARGES

Why Performance Appraisal is important? If done effectively Performance Appraisal is: 

  • ●  the key to developing employees and improving their performance.
  • ●  the criteria against which selection systems are validated
  • ●  the typical basis on which personnel decisions, such as terminations, are legally justified.
  • ●  the measure of practical control of the company’s strategy.

And from the employee point of view?

Employee Point of View
Employee Point of View

Challenges to Effective Performance Measurement

Managers confront at least five challenges:
●  Rater errors and bias (halo-error, the tendency to rate similarly across dimensions)
●  The influence of liking (like or dislike for other reasons)
●  Organizational politics (continues evaluations)
●  Whether to focus on the individual or the group
●  Legal issues (clear and written instructions)

360 Feedback
360 Feedback

Performance Appraisal Improvement – 360 degrees Feedback
●  Explore the causes of performance problems.
●  Direct attention to the causes of problems.
●  Develop an action plan and empower workers to reach a solution.
●  Direct communication at performance and provide effective feedback.