The document discusses common errors that can occur during performance appraisals, including halo effect, horn effect, central tendency bias, strict/lenient rating, latest behavior effect, personal bias, initial impression bias, spillover effect, and contrast effect. It explains that human performance is complex to measure and evaluate, leading to errors. The document recommends improving understanding of performance appraisal processes, developing skills in observing employee behavior, and designing training programs to help raters accurately assess performance.

1. OUTCOME-5
PERFORMANCE APPRAISAL
& PRODUCTIVITY
Dr. Manishankar Chakraborty
Business Studies Department
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2. INTRODUCTION
 PERFORMANCE RATING ERRORS
 Human behavior is a complex phenomenon; thus, it is difficult to precisely
measure or evaluate human’s performance. Due to the difficulties associated with
the subject, the performance evaluators may make significant errors during the
evaluation process. Being aware of these pitfalls can make the process more
objective and could also reduce the unpleasantness that is caused as a consequence
of a poorly administered performance appraisal. These common rating errors are
explained below (see Henderson, 1989):
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3. HALO EFFECT
 Halo effect occurs when the evaluator attaches too much significance to a single factor of
performance and gives similar ratings on other performance elements. Thus, overall evaluation is
significantly influenced by a single factor. Such a perception undermines the importance of other
elements and leads to an unbalanced performance assessment of the individual.
 For example, a manager rates a worker very high on quality because of her immaculate
attention to details and lack of defects in her work. Then assuming the individual to be an overall
high performer based on the quality of her work output, the manager rates her very high on
efficiency, responsibility, punctuality, etc. without taking an objective look at her performance in
these areas.
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4. HORN EFFECT
 Horn effect means that the employee’s performance is completely
appraised on the basis of a negative quality or feature perceived. This
results in an overall lower rating than may be warranted. “He is not
formally dressed up in the office; “He may be casual at work too”.
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5. CENTRAL TENDENCY
 Some evaluators or performance appraisers tend to avoid problematic
situations and, thus, "play safe" by rating around the golden mean - the
average. This may be also done to avoid the necessity to justify scoring
across the two extremes as some systems expect managers to specify
additional comments as they give too high or too low ratings to
employees. This rating error is known as the central tendency bias, which
is regarded as an easily rationalized escape from making a valid appraisal.
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6. STRICT RATING
 In Strict Rating, employees are rated consistently lower than the
normal or average; being constantly overly harsh in rating
performance qualities.
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7. LENIENT RATING
 Lenient or Leniency Rating reflects an inclination to inflate all
employees’ performance evaluation. In other words, there is a
tendency to evaluate everyone favorably, as some evaluators tend to
avoid negative arguments with employees who receive below-average
ratings. In Lenient Ratings, performance evaluators rate their
subordinates very liberally, which may make even average performers
seem like star performers, attaining very high performance scores.
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8. LATEST BEHAVIOR
 Latest Behavior Rating (sometimes termed as Recency Effect
Rating) is a rating bias, which is influenced by the most recent
behavior ignoring the commonly demonstrated behaviors during the
entire appraisal period. Thus, a person who has worked very hard and
excelled throughout the year, but for some inadvertent reasons had
faced performance issues in the last weeks or month may at times get
a poor appraisal from the supervisor.
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9. PERSONAL BIAS
 Personal beliefs, attitudes, assumptions, experiences, preferences and
lack of understanding about a person, class or a phenomenon can lead to
an unfair evaluation, which is off from reality. Examples of personal bias
include a bias against a race, ethnicity, religion, age, sex, or assuming that
certain type or class of people are not suitable to perform a specific job or
function etc. For instance, an assumption that young workers are faster
and more efficient than old workers would make it more probable to give
a higher efficiency rating to a younger worker than an old worker.
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10. INITIAL IMPRESSION
 Initial Impression (or primacy effect) Rating is based on initial or
first impressions; failing to recognize most consistently demonstrated
behaviors during the entire appraisal period. Performance evaluators
form an overall impression about the person being evaluated based on
some particular characteristics identified by them. The identified
qualities and features may not provide adequate base for appraisal.
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11. SPILLOVER EFFECT
 The present performance is evaluated much on the basis of past
performance. “The person who was a good performer in distant past
is assured to be okay at present also”. This means allowing past
performance appraisal ratings to unjustly influence current ratings.
Past performance ratings, good or bad, result in a similar rating for
the current period, although demonstrated behavior doe not deserve
the rating, good or bad.
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12. CONTRAST EFFECT
 This type of bias occurs when the evaluator rates employees one after another,
rating of an exceptional performer or a very poor performer could affect the
subsequent ratings of other individual(s). For instance, let's suppose that an
evaluator has just rated an outstanding performer and is now evaluating an
individual who is also a good performer but there seems to be a contrasting
difference between the abilities and output of the two individuals. This significant
difference in performance or employee competencies could lead the supervisor to
rate the second individual as an average performer.
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13. HOW TO OVERCOME
ERRORS
 To overcome or minimize the aforementioned rating errors, a number of preventative
measures could be taken. Henderson, 1989, suggested two educational opportunities for
reducing performance evaluation errors:
 Improving the level of understanding of the entire performance appraisal’s process.
 Developing skills in observing employee behavior and results achieved.
 Designing information and training programs that support evaluators to accurately
measure and rate employees’ performance.
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