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Performance appraisal is one of the most effective evaluation criteria which most of the companies follow to evaluate their employees performance in a given period of time. Most of the times, Appraisal evaluation result is directly linked to compensation and benefits. So, it is very critical both from employer and employee perspective.

Appraisal process starts with goal setting for a stipulated period followed by goal execution, evaluation, discussion with appraise and formal closure process.

Broadly, there are three types of appraisals.

1.Objectives and Goals Method:

In this method, objectives and goals measured in quantitative terms are preset in the beginning of the appraisal cycle which are agreed by the appraise. Measurement is done against actual at the end of the period. The rating to be awarded is determined by below formula.

Rating = Actual performance/Objectives & Goals

This is the most transparent process used by many organizations.


1. Goal-setting takes place with the active participation of the appraise.

2. Since the objectives and goals are pre-determined and in quantitative terms, there is no ambiguity exist in the process.


1. In the absence of express acceptance of the goals and objectives by the individual, their consent and willingness are taken for granted.

2. Benchmark Method:

Actual performance of all peers is measured  and aggregated, average standard is arrived at. This average standard is taken as benchmark to judge the performance of an individual concerned. The rating in this method is decided as follows.

Rating = Actual performance of a person / Average Standard


1. Individual's performance compared to the performance of peers indicates the extent of his/her contribution to the overall growth of the organization.

2. There is least scope for subjectivity and bias.


1. The individual differences are overlooked.

2. Tough to implement in large organizations as the head count is large, comparison becomes unfair in most of the cases.

3. This method wont take care of difficulty levels of work environments like simple, medium, complex etc.

3. Rater's Expectations Method:

When evaluating the performance of an individual, one's capacity is taken into consideration. The objective is to find out if a person has performed to his fullest ability. Whether a person has utilized all his knowledge and skills determines the rating to be awarded.

Rating = Actual Performance/Rater's Expectations


1. A person's performance is measured with respect to one's capacity instead of any comparative yardstick.


1. Even if a person performs well, rater may increase the expectations after the actual performance. This results in awarding a lower rating to an individual than what he/she deserves.

2. In the absence of compensation/salary differential, this method of evaluation proves to be most ineffective way, especially for outstanding performers.

3. High chances of favoritism and discrimination by the appraiser.

I personally feel, none of the above methods give comfort level to both employees and organization at the same time. There is always a scope for good performers not getting deserved benefit and non-performers do get the benefit which they don't deserve.

Most of the times, organizations do follow multiple methods of evaluation in order to derive the benefits of different methods.

Now a days, companies do have techniques like skip level meetings where you can skip your immediate manager and discuss the concerns with next level person. Arbitration is other process where employees can raise the concerns regarding the performance evaluation to an arbitration body to address the issues.

This body further investigate the case and settle the issue.

Remember that nothing in this world is perfect and we strive our self to come close to perfect :cool:


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