Performance Evaluation: Definition, Steps, Methods

Performance Evaluation: Definition, Steps, Methods

To appraise performance effectively, a manager must be aware of the specific job expectations, monitor the employee’s behavior and results, compare the observed behavior and results to expectations, and measure the match between them.

In most cases, a manager should also provide feedback to employees, a process that can produce strong reactions.

Performance evaluations are extremely important to an organization, although they may be difficult to conduct. They tell organizations whether their selection methods are right.

They demonstrate where training, development, and motivational programs are needed and later help to assess whether these have been effective.

Many organizational policies and practices are evaluated, in large part, through their impact on performance.

Performance evaluations, after all, are the basis on which managers make decisions about compensation, promotion, and dismissal.

They also use feedback about people’s performance to recognize them for a job well done and motivate them.

In short, managers find it very difficult to identify and encourage organizational effectiveness without a good judgment of the employee’s performance.

Formal performance evaluations are so important that most organizations systematically carry them out.

Definition of Performance Evaluation

Performance evaluation means many things to many people. It is a measurement process, an exercise in observation and judgment; it is a feedback process.

It is a control device that the organization uses to accomplish its predetermined goals.

Performance refers to an employee’s accomplishment of assigned tasks. Performance means doing a job effectively and efficiently.

Performance evaluation is the process by which a manager or consultant examines and evaluates an employee’s work behavior by comparing it with preset standards, documents the results of the comparison, and uses the results to provide feedback to the employees to show where improvements are needed and why.

Performance evaluation is that part of the performance assessment and management process in which an employee’s contribution to the organization during a specified period of time is assessed.

Performance evaluation is the assessment of an individual’s performance in a systematic way.

The such appraisal also has been called employee rating, employee evaluation, performance review, performance evaluation, and results appraisal.

It is widely used for administering wages and salaries, giving performance feedback, and identifying individual employee strengths and weaknesses.

Performance evaluation is a systematic process of evaluating how well employees are performing their jobs. The appraisal is based on results obtained by the employee in his/her job, not on the employee’s personality characteristics.

It is a developmental tool used for the all-round development of the employee and the organization.

The performance is measured against job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, cooperation, judgment, versatility, and health. Assessment should be confined to the past as well as potential performance also.

Performance evaluation is a system of reviewing and evaluating an individual or team’s job performance. An effective system assesses accomplishments and evolves development plans.

Performance management is a process that significantly affects organizational success by having managers and employees work together to set expectations, review results, and reward performance.

Its goal is to provide an accurate picture of past and/or future employee performance. To achieve this, performance standards are established.

Performance evaluation is the systemic evaluation of the individual respect for this performance on the job and his potential for development.

According to Gary Dessler, “Performance evaluation means evaluating an employee’s current and/or past performance relative to his performance standards.”

According to Keith Davis, “Performance evaluation is the process by which organizations evaluate individual job performance.”

Performance means to do something, and appraisal means to decide the value of the work done.

Thus Performance evaluation means deciding the value of the work done by an individual. Traditionally Performance evaluation has been used as a control mechanism for salary administration, reward, promotion, and punitive actions.

Performance evaluation;

  • is the systematic evaluation of the performance of employees and understanding of the abilities of a person for further growth and development,
  • is a process of evaluating an employee’s performance in a job in terms of its requirements,
  • is the process of evaluating the performance of employees, sharing that information with them, and searching for ways to improve their performance,
  • provides the basis for assessment of employee contributions, coaching for improved performance, and distribution of economic rewards,
  • refers to the outcome of the behavior of employees.

Thus, Performance evaluation means deciding the value of work done by an individual. It is a process by which organizations evaluate individual job performance.

Each employee should receive a thoughtful and accurate appraisal. The success of the process depends on the supervisor’s willingness to complete a constructive and objective appraisal and on the employee’s willingness to respond to constructive suggestions and work with the supervisor to reach future goals.

Characteristics of an Effective Performance Evaluation

Performance evaluations measure progress and help a person set professional goals. The annual Performance evaluation is something employees and managers alike often fear.

Yet, it can be a source of motivation and reward if both parties are knowledgeable about how a Performance evaluation works.

This is also an opportunity for an employee to share with his/her manager about professional goals and career aspirations.

Characteristics of an effective Performance evaluation are;

  • Explain the appraisal process.
  • Clarify job expectations.
  • Review and update job skills.
  • Review accomplishments and goals.
  • Final steps and rewards.

Explain the appraisal process.

In the appraisal meeting between a manager and an employee, the manager should first explain the purpose and the process of the Performance evaluation.

Generally, a Performance evaluation is conducted to clarify job expectations, set goals for improvement of weaknesses, and reward for accomplishments and overall performance.

The manager’s job is to explain the steps involved during and after the Performance evaluation.

Clarify job expectations

A mutual understanding of job expectations is essential to an effective Performance evaluation. Absence of mutual understanding, the appraisal meeting could spiral downward because the manager and employee might be working from completely different viewpoints.

A review of the job description and employee skills, qualifications, and responsibilities should precede the actual Performance evaluation.

Review and update job skills.

It is important to review the skills of employees and update them accordingly. The manager discusses any improvements necessary and praises the employee for acquiring the new skill.

The manager determines what additional skills the employee can learn during the next evaluation period by setting reasonable goals for professional development. The employee should feel free to provide input throughout the Performance evaluation.

Employees should be provided with a self-appraisal form. If this is the case, the employee will come to the Performance evaluation meeting with the completed self­appraisal.

Review accomplishments and goals.

Accomplishments throughout the evaluation year will be enumerated. If there are quantifiable goals established for the review period, the manager and the employee determine if the goals have been met.

Often, a “management by objective” technique is used to track specific goals, progress, and completion of each quarter. Using this technique simplifies the Performance evaluation because there are intermediate assessments made during the evaluation period.

Final steps and rewards

An overall appraisal score may be discussed during the meeting, or it may be calculated after the manager has had an opportunity to consider the employee input.

In addition, the manager should indicate whether or not the employee will be entitled to an increase in pay or bonus, if applicable. Many employers use a scale that determines a percentage increase in Performance evaluation scores.

Whenever possible, the manager should inform the employee of the type or amount of increase to expect for his/her performance during the year.

What are the Objectives of Performance Evaluation / Appraisal?

Performance evaluation can be used both for evaluating employees’ performance and developing them. If many serve two-fold purposes- telling the employee where he stands and using the data for personnel decisions concerning promotion, pay, etc.

The HR developmental objectives focus on finding individual strengths and weaknesses, developing healthy superior-subordinate relations, and offering appropriate training and counseling to the employees.

Overall performance evaluation of employees is done in order to achieve the following objectives:

  1. To effect promotions based on competence and performance.
  2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily.
  3. To assess the training and development needs of employees.
  4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed.
  5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.
  6. To improve communication, performance evaluation provides a format for dialogue between the superior and subordinate and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee.
  7. Finally, performance evaluation can be used to determine whether HR programs such as selection, training, and transfers have been effective or not.

7 Steps of the Performance Evaluation Process

7 Steps of Performance Evaluation Process
  1. Job Analysis.
  2. Establishing performance standards.
  3. Communicating the standards.
  4. Determining the actual performance.
  5. Matching the actual with the desired performance.
  6. Discussing results.
  7. Decision making.

1. Job Analysis

The first step in the process of performance appraisal is job analysis.

Defining the job and analysis ensures that the employer and subordinates agree on his or her duties and job standards.

2. Establishing performance standards

The second step in the performance appraisal process is setting up the standards, which will be used as the base to compare the employees’ actual performance.

This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives.

The standards set should be clear, easily comprehensible, and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.

3. Communicating the standards

Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization.

The employees should be informed, and the standards should be clearly explained to them. This will help them understand their roles and know what is expected from them.

The standards should also be communicated to the appraisers or the evaluators. If required, the standards can also be modified at this stage itself, rendering the relevant feedback from the employee or the evaluators.

4. Determining the actual performance

The most difficult part of the Performance appraisal process is determining the actual performance of the employees, that is the work done by the employees during the specified period of time.

It is a continuous process that involves monitoring performance throughout the year.

This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in employees’ work.

5. Matching the actual with the desired performance

The actual performance is matched with the desired or standard performance. The comparison tells the deviations in the performance of the employees from the standards set.

The result can show the actual performance being more than the desired performance or the actual performance is less than the desired performance depicting a negative deviation in the organizational performance.

It includes recalling, evaluating, and analyzing data related to employee performance.

6. Discussing results

The appraisal result is communicated and discussed with the employees on a one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems, and the possible solutions are discussed to problem-solve and reach a consensus.

The feedback should be given with a positive attitude as this can affect the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.

7. Decision making

The last step of the process is to make decisions that can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers, etc.

4 Methods of Performance Evaluation

Methods of Performance Evaluation

4 Methods of Performance Evaluation;

  1. Category rating methods.
  2. Comparative methods.
  3. Behavioral/objective methods.
  4. Narrative methods.

Category Rating Methods

The simplest methods for appraising performance are category rating methods, which require a manager to mark an employee’s level of performance on a specific form divided into categories of performance.

The graphics rating scale and checklist are common category rating methods.

  1. Graphics Rating Scale.
  2. Checklist.

Graphics Rating Scale

The graphic rating scale is a scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employee’s level of performance for each trait.


The checklist is composed of a list of statements or words. Raters check statements most representative of the characteristics and performance of employees.

This method requires the rater to select statements or words that describe the employee’s performance and characteristics.

He does not evaluate employee performance. The rater is usually the immediate supervisor. He just supplies reports about Performance Appraisals, and the HR department does the final rating.

But without the rater’s knowledge, the HR department may assign weights to different items on the checklists according to each item’s importance. The result is called a weighted checklist. The weight is the average score of the raters prior to using the checklist.

The weights allow the rating to be quantified to determine total scores. This method’s limitations include using personality criteria instead of performance criteria, misinterpretation of checklist items, and the usage of improper weights by the HR department.

These statements are ordered progressively in terms of more or less of some property. An example-

  1. David always goes to John.
  2. David often goes to John.
  3. David sometimes goes to John.
  4. David never goes to John.

Limitations of checklist

  • It suffers from biases on the part of the rater because he cannot distinguish between positive and negative questions.
  • A separate checklist must be prepared for different classes of jobs. It is expensive and time-consuming.

Comparative Methods

Comparative methods require that managers directly compare the performance of their employees against one another.

For example, the computing supervisor would compare a data-entry operator’s performance with that of other data-entry operators. Comparative techniques include ranking, paired comparison, and forced distribution.

  1. Ranking: The ranking method consists of listing all employees from highest to lowest in performance. The primary drawback of the ranking method is that the size of the differences among individuals is not well defined. For example, there may be little difference in performance between individuals ranked second and third but a big difference in performance between those ranked third and fourth. The ranking scale gives rank by value, such as-.
    Very Good
    Not Bad
    Very Bad
  2. Forced Distribution: Forced distribution performance appraisal method in which ratings of employees’ performance are distributed along a bell-shaped curve. It is similar to grading on a curve; predetermined percentages of rates are placed in various performance categories.
    • Example:
      • 15% high performers.
      • 20% of high-average performers.
      • 35% average performers.
      • 20% of low-average performers.
      • 15% low performers.

3. Behavioral/Objective Methods

In an attempt to overcome some of the difficulties of the methods just described, several different behavioral approaches have been used.

Behavioral approaches hold promise for some situations in overcoming some of the problems with other methods.

  1. Behavioral Rating Approaches: Behavioral rating approaches attempt to assess an employee’s behaviors instead of other characteristics. Some of the different behavioral approaches are behaviorally anchored rating scales (BARS), behavioral observation scales (BOS), and behavioral expectation scales (BES).
  2. Management by Objectives (MBO): Management by objectives (MBO) specifies the performance goals that an individual hopes to attain within an appropriate length of time. The objectives that each manager sets are derived from the overall goals.

4. Narrative Methods

Managers and HR specialists frequently are required to provide written appraisal information.

Documentation and description are the essences of the critical incident, the essay, and the field review methods.

  1. Critical Incident.
  2. Essay.
  3. Field Review.
  4. 360° Feedback or Multi-source Appraisal.

These records describe an employee’s actions rather than indicating an actual rating.

Critical Incident

In the critical incident method, the manager keeps a written record of both highly favorable and unfavorable actions in an employee’s performance.

When a “critical incident” involving an employee occurs, the manager writes it down. A list of critical incidents is kept during the entire rating period for each employee. The critical incident method can be used with other methods to document the reasons why an employee was rated in a certain way.

The US Army first used the critical Incident Method during World War Two. Now it is widely used in business organizations to appraise employee performance.

Under this method, the manager keeps a written record of highly favorable and unfavorable employee actions. The focus is on the key behaviors that make the difference between doing a job effectively or ineffectively. The statements are called critical incidents.

The supervisor records these incidents during the evaluation- period for each employee. Both positive and negative incidents are recorded. Supervisors keep a log with positive and negative examples (critical incidents) of subordinates’ work behavior.

Advantages of the Critical Incident Method

  1. This method is extremely useful for giving employees job-related feedback.
  2. It also reduces recency biases.
  3. It identifies rare events that might be missed by other methods that only focus on common and everyday events.
  4. Data are collected from the respondent’s perspective and in his or her own words.
  5. It provides an objective basis for conducting a discussion of an individual’s performance.
  6. It forces the supervisor to evaluate subordinates on an ongoing performance basis. Drawbacks

This method suffers from some limitations, which are listed below:

  1. It is difficult to rate or rank employees relative to one another,
  2. There may occur variations in how managers define a ‘critical incident,’
  3. Most employee actions are not observed and may become different if observed,
  4. Supervisors often do not record incidents as they occur,
  5. Negative incidents are more noticeable than positive ones,
  6. Very close supervision is required, which employees may not like,
  7. It is time-consuming and burdensome for managers to write down the critical behaviors of a large number of subordinates throughout the year.
  8. Respondents may not be accustomed to or willing to take the time to say (or write) a complete story when describing a critical incident.


The essay, or “free-form” appraisal method, requires the manager to write a short essay describing each employee’s performance during the rating period.

The rater is usually given a few general headings to categorize comments. The intent is to allow the rater more flexibility than other methods do.

As a result, the essay is often combined with other methods.

The rater writes a narrative describing an employee’s strengths, weaknesses, past performance, potential, and suggestions for improvement. It is simple and requires no complex forms or extensive training to complete. It can provide a good deal of information about an employee.

Because essays are unstructured, they are likely to vary widely in terms of length and content. Some raters are better writers than others. It contains a subjective evaluation of the reported behavior of an individual and may affect such important decisions as promotion and layoff.

No attempt is made to evaluate an employee in a quantitative manner.

Field Review

This approach can include the HR department as a reviewer or a completely independent reviewer outside the organization.

In the field review, the outside reviewer becomes an active partner in the rating process. The outsider interviews the manager about each employee’s performance and then compiles the notes from each interview into a rating for each employee.

Then the rating is reviewed by the supervisor for needed changes. This method assumes that the outsider knows enough about the job setting to help supervisors give more accurate and thorough appraisals.

In this method, a skilled representative of the human resource department goes into the field and assists supervisors with their ratings. The personnel specialists solicit from the immediate supervisor specific information about the employee’s performance.

Then the experts prepare an evaluation based on this information. The evaluation is sent to the supervisor for review, changes, approval, and discussion with an employee who was rated.

Since the skilled professional is completing the evaluation form, reliability and comparability are more likely, but the usage of skilled professionals makes this approach costly and impractical for many firms.

And since the supervisor is the primary source of information, bias may still exist.

360° Feedback or Multi-source Appraisal

360-degree feedback, also known as multi-rater feedback, multisource feedback, or multi-source assessment.

Most often, 360-degree feedback will include direct feedback from an employee’s subordinates, peers, and supervisor(s), as well as a self-evaluation.

It can also include, in some cases, feedback from external sources, such as customers and suppliers, or other interested stakeholders.

360-degree evolution means the evaluation of an employee will be assessed based on the ideas of many other different people, for example, customers, suppliers, peers, and direct reports. If the assessee is a manager, his/her staff will often be asked for feedback on how she manages to do his task.

It can use 360-degree evolution, and the process must be implemented by the managers of the Human Resources Department.

So that the subordinate reviewers (or staff) are made sure that all their assessments of performance are kept anonymous.

The components of this evaluation are as follows;

  • Self-evaluation
  • Subordinate’s appraisal
  • Peer appraisal and
  • Superior’s appraisal

The advantages of this evaluation are as follows;

  • Offer a more comprehensive view of the performance of employees.
  • Improve Credibility of performance appraisal.
  • Such a colleague’s feedback will help strengthen self-development.
  • Increase the responsibility of employees to their customers.
  • The mix of ideas can give a more accurate assessment.
  • Opinions gathered from lots of staff are sure to be more persuasive.
  • Not only should a manager make assessments of their staff performance, but other colleagues should do too.
  • People who undervalue themselves are often motivated by feedback from others.
  • If more staff takes part in the process of performance evaluation, the organizational culture of the company will become more honest.

Uses of Performance Evaluation / Appraisal

Performance evaluation serves two types of objectives one is to make the evaluation decisions, and the other is to provide the needed assessment source for the training and development if there is a gap between actual and expected performance.

For many organizations, the primary goal of an appraisal system is to improve performance.

A properly designed and communicated system can help achieve organizational objectives and enhance employee performance.

Performance evaluation data are potentially valuable for use in numerous human resource functional areas.

  1. Performance improvement.
  2. Compensation adjustments.
  3. Placement decisions.
  4. Training and development needs.
  5. Career planning and development.
  6. Staffing process deficiencies.
  7. Informational inaccuracies.
  8. Job-design errors.
  9. Equal employment opportunity.
  10. External challenges.
  11. Feedback to human resources.
  12. Compensation programs.
  13. Internal employee relations.
  14. Assessment of employee potential.

Performance improvement

Performance feedback allows the employee, the manager, and personnel specialists to intervene with appropriate actions to improve performance.

Compensation adjustments

Performance evaluations help decision-makers determine who should receive pay raises. Many firms grant part or all of their pay increases and bonuses on the basis of merit, which is determined mostly through Performance evaluations.

Placement decisions

Promotions, transfers, and demotions are usually based on past or anticipated performance. Often promotions are a reward for past performance.

Training and development needs

Poor performance may indicate a need for retraining. Likewise, good performance may indicate the untapped potential that should be developed.

Career planning and development

Performance feedback guides career decisions about specific career paths one should investigate.

Staffing process deficiencies

Good or bad performance implies strengths or weaknesses in the personnel department’s staffing procedures.

Informational inaccuracies

Poor performance may indicate errors in job analysis information, human resource plans, or other personnel management information system parts.

Reliance on inaccurate information may have led to inappropriate hiring, training, or counseling decisions.

Job-design errors

Poor performance may be a symptom of ill-conceived job designs. Appraisals help diagnose these errors.

Equal employment opportunity

Accurate Performance evaluations that actually measure job-related performance ensure that internal placement decisions are not discriminatory.

External challenges

Sometimes performance is influenced by factors outside the work environment, such as family, financial, health, or other personal matters. If these factors are uncovered through appraisals, the human resource department may be able to provide assistance.

Feedback to human resources

Good or bad performance throughout the organization indicates how well the human resource function is performing.

Compensation Programs

Performance evaluation results provide the basis for decisions regarding pay increases.

Internal Employee Relations

Performance evaluation data are also frequently used for decisions in areas of internal employee relations, including motivation, promotion, demotion, termination, layoff, and transfer.

Assessment of Employee Potential

Some organizations attempt to assess employee potential as they appraise job performance.

Benefits of Performance Evaluation

The benefits of appraisals may be listed under three headings as follows:

Advantages to Appraiser

  1. It sharpens the appraiser’s control over his own activities. A systematic appraisal will give the executive a better idea of his strengths and weaknesses in his department, enabling him to make more effective work assignments. Moreover, the appraisal activity will give him new insight into his operations, which may lead to improvements in the department and organization.
  2. Clear-cut responsibility for results: Sometimes, there are differences in understanding on the part of the manager and his subordinate executives as to just what their authority and responsibilities are. Drawing up a checklist of the subordinate’s responsibilities and the scope of his position will reduce any possible misunderstanding as to performance goals.
  3. Perspective in sizing up subordinates: A systematic appraisal program means that there will be relaxed discussions with subordinate personnel regarding their strengths and weaknesses. This type of interview results in a more judicious evaluation and is far superior to the crisis discussion when something has gone wrong.
  4. An objective basis for discussing salary and promotion: When an employee comes to his office with a request for a wage raise or promotion, the appraisal record and the last appraisal interview provide an objective basis for discussion. This will serve to avoid embarrassment.
  5. Aid to effective recruitment: An executive who follows systematic appraisal procedures will be able to discuss past hiring with the personnel department on the basis of tangible results. And he can be much more specific in setting up job specifications when he has to go outside the company for staff recruitment.

Advantages to Appraisee

  1. How am I doing: The periodic review tells the subordinate where he stands in the organization. This is one of the most important results of the appraisal activity. The discussion of his record as a whole over an extended period enables the subordinate to see his job and his performance in that job in a true perspective.
  2. Specific development of subordinates: The appraisal activity should help the subordinate improve performance. It is a guide for coaching and a basis for suggesting further training to help the subordinate expand his presentation skills.

Benefits to the organization:

  • To plan and adjust compensation packages for employees.
  • To identify training and development needs for the potential employee.
  • To provide a career plan for the employee.
  • To motivate the employees through an objective appraisal.

Disadvantages or Limitations of Performance Evaluation

In spite of the merits of Performance evaluation, it may create a negative experience if it is not done properly. The major limitations are as follows:

  1. Performance evaluations are very time-consuming and can be overwhelming to managers with many employees.
  2. Sometimes, a strict appraisal may affect the goodwill between seniors and juniors. When different departments in the same company use different methods of appraisal, it becomes very difficult to compare among the employees.
  3. They are based on human assessment and are subject to rater’s errors and biases.
  4. PA can be a waste of time if not done appropriately.
  5. Many bosses do not wish to spoil their relations with subordinates by giving a poor appraisal. They provide higher grades which is not justified; this is an injustice to a really deserving employee.
  6. They can create a very stressful environment for everyone involved.
  7. The objective of the PA is to evaluate and develop employees. One PA system cannot achieve both objectives. The particular system of appraisal should clarify .before it is designed and should be discussed with all managers and employees to gain their commitment.
  8. Feedback is an important element of PA. Performance feedback lets employees know how well they have performed in comparison with the standards of the organization. While positive feedback is easily accepted, negative feedback often meets with resistance unless it is objective, based on a credible source, and given in a skillful manner. Managers are often uncomfortable discussing performance weaknesses directly with employees. Managers fear confrontation when presenting negative feedback. Many employees tend to become defensive when their weaknesses are pointed out. Employees tend to have an inflated assessment of their own performance.

Who is Responsible for Conducting Performance Evaluation?

Performance evaluations can be done by anyone familiar with the performance of individual employees. The following may be raters;

  • The immediate supervisor.
  • The peer.
  • Group Appraisals.
  • Appraisals by subordinates.
  • Multiple Raters.
  • Self-appraisal.
  • 360-degree appraisal or feedback.

The immediate supervisor

The immediate supervisor is the right person to make an evaluation of his subordinates. He or she is probably most familiar with the individual’s performance, and in most jobs, he has had the best opportunity to observe actual job performance.

The immediate supervisor is probably best able to relate the individual’s performance to organizational objectives. Immediate supervisor keeps performance log writing their employee’s accomplishment. These logs provide specific examples to use when rating performance.

The peer

Employees’ co-workers, explicitly familiar with the jobs involved, conduct peer evaluations mainly because they are doing the same thing.

They are the most aware of co-workers’ day-to-day work behavior and should be given the opportunity to provide the management with some feedback.

Here coworkers provide input into the employee’s performance. Peer evaluations facilitate teamwork and satisfactory interpersonal skills among employees rather than impelling individuals to appear to be the best employee when under a supervisor’s observation.

Group Appraisals

In group appraisal, the judgment of the immediate superior is supplemented by the different slants of other executives.

TQM and other participative management approaches emphasize teamwork and team performance rather than individual performance.

Appraisals by subordinates

Here the subordinates evaluate their superiors.

Subordinates know firsthand the extent to which the supervisor actually delegates, how well he or she communicates, the type of leadership style he or she is most comfortable with, and the extent to which he or she plans and organizes.

Large firms use it, where managers have many subordinates. In a small firm, where managers have few subordinates, it is easy to identify who said what. Thus, considerable openness is necessary before subordinate appraisals can pay off. Pitfalls are obvious.

In most cases, subordinates are in no position to know what is really required of an executive. They may be too young or inexperienced to realize the extent of their superior’s responsibilities.

Multiple Raters

In multiple appraisals, the subordinate personnel is appraised independently by several other qualified officers. Staff personnel generally consolidate the results of such multiple evaluations.

If a person has ten supervisors, nine having rated him excellent and one poor, we can discount the value of the one poor evaluation.

For individuals who have received ten appraisals during their first five or six years in the service, there is less chance that one or two poor evaluations will seriously influence decisions made on the basis of these Performance evaluations.


Self-evaluation is the best method of Performance evaluation if it can be systematically introduced. It means the way in which an individual views him.

When employees evaluate themselves, defensive behavior is less likely to occur. As a self-development tool, it forces employees to think about their strengths and weaknesses and set goals for improvement.

360-degree appraisal or feedback

It is a process in which supervisors, peers, subordinates, customers, and the like evaluate the individual. It is difficult for supervisors to have extensive job knowledge of each of their employees. Multisource feedback recognizes that the manager is no longer the sole source of Performance evaluation information.

Many managers simply do not know how their employees truly view them and the work they have done. When using 360-degree feedback for administrative purposes, managers must anticipate a potential problem.

Differences among the raters can present a challenge. Bias can just as easily be rooted in customers, subordinates, and peers as in a boss.

Really maintains that 360- Degree is better for development and feedback purposes rather than salary or other administrative uses.

What Are the Criteria for Performance Evaluation?

There are a number of criteria that can be used to appraise the performance of different classes of employees in an organization.

An organization must decide what criteria it will use for evaluation.

Does it want a system based on evaluating individual traits, behaviors, or job results?

This decision depends in part on who is being evaluated and how the organization intends to use the Performance evaluation.


Trait-based information identifies a subjective character trait of the employee.

Early graphics rating scales evaluated workers on individual traits or personal characteristics which were presumably related to job performance. Initiative, attitude, creativity, aggressiveness, reliability, and personality are examples of traits on which employees have been rated.

One problem with trait ratings is that the traits themselves are difficult to define and may be subject to varying interpretations by evaluators. Most of the traits are ambiguous, and they are very vague to use when making performance-based HR decisions.


Behavior-Based information focuses on specific behaviors that lead to success.

Rating employees according to job behaviors is based on the assumption that there are effective and ineffective behaviors and that these have been identified for each job or type of job.

Behaviors are judged effective or ineffective in terms of the results the behaviors produce (either desirable or undesirable). Evaluating employees along behavioral dimensions is especially important for employee development purposes.

Job Result

It considers employee accomplishments. This approach works well for jobs in which measurement is easy and obvious.

Examples of job results indexes are the volume of sales in terms of money, the amount of scrap, and the quantity and quality of work produced. When such quantitative results are not available, evaluators tend to use appraisal forms based on employee behaviors and/or personal characteristics.

Results indexes such as turnover, absenteeism, grievances, profitability, and production rates can be used to evaluate the performance of organization units.

Guidelines for effective performance evaluation interviews

  1. Emphasize positive aspects of employee performance.
  2. Tell each employee that the evaluation session is to improve performance, not to discipline.
  3. Conduct the performance review session in private with minimum interruptions.
  4. Review performance formally at least annually and more frequently for new employees or those who are performing poorly.
  5. Make criticisms specific, not general and vague.
  6. Focus criticisms on performance, not personality characteristics.
  7. Stay calm and do not argue with the person being evaluated.
  8. Identify specific actions the employee can take to improve performance.
  9. Emphasize the evaluator’s willingness to assist the employee’s efforts and to improve performance.
  10. End the evaluation sessions by stressing the positive aspects of the employee’s performance.


Evaluation of an employee is one of the universal practices of management. It is applied formally or informally to all employees.

Most organizations have some form of Performance evaluation of their employees. Organizations require consistent levels of high performance from their employees in order to survive in a highly competitive environment.

Once the employees have been selected, trained, and motivated, they are then appraised for their performance.

Performance evaluation is the step where the management finds out how effective it has been at hiring and placing employees. If problems are identified, steps are taken to communicate with employees and to remedy them.