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Performance appraisal ratings
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I. Contents of getting performance appraisal ratings
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If you've worked under the annual ritual of ratings and rankings, you know how tough it is, both
from the managerial side and the employee side. It is very hard to hear that you are rated average
and low in the rankings, and it's equally tough to take part in setting the ranking in your
organization. And it also doesn't help you all that much to find out you were rated "exceeds
expectations." What does it all really mean?
This method of appraisal has received a fair amount of press lately. The Wall Street Journal had
an above-the-fold article on page B1 on Microsoft abandoning their ranking system, which they
called the "stack." Bloomberg BusinessWeek ran an article on performance reviews. Letters to
the editor ensued after both articles, and there have been even more since.
How do these systems work? They are supposed to start at the beginning of the year with setting
goals and specific objectives. These goals should be measurable, attainable, and all the other
attributes of good goal setting. They should also be paid attention to, but often they are not. For
instance, when reviewing my employees with my manager one time at AT&T, I noted that one of
my employees met all his objectives set for the year and did much more, so I had rated him
"exceeds expectations." Her response? She told me those things didn't matter. She said that this
employee didn't really go out of his way to get to know others, rarely spoke up in meetings, and
when he did, he spoke so slowly that it drove people crazy (even though they knew that English
was his third language!). I never really got an explanation of what did matter besides social
networking and speaking faster, but I managed to salvage a "met expectations" rating for that
particular employee, which wound up saving his job, since a downsizing came shortly thereafter.

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But that was hopefully an isolated incident. Goals and objectives are thus set for the year, and
when the annual performance appraisal comes around, each employee is rated based on the scale
of "does meet expectations" to "exceeds expectations." Sometimes numbered scales are used,
such as 1 (low) to 5 (high). These ratings are generally done by the supervising manager, and as
in the case above, frequently reviewed with the management one level above that. Then a set
organization's managers get together to review everyone's ratings again, and the ranking begins.
This is where it tends to get, shall we say, interesting.
Some of what takes place depends on the size of the organization where the ranking is taking
place. This varies by company, but I've seen it done with a group as small as 15 and as large as
50. When you are ranking professional, white collar positions, it becomes extremely difficult to
determine if employee X, who was a sales person, should be ranked higher or lower than
employee Y, who produces marketing collateral. It is also difficult when one manager wants to
measure on pure counts, such as how many customized pricing approvals were created, and
another wants to measure how much revenue was brought in. Both are quantifiable measures, but
when a salesperson is dependent on the pricing organization producing customized pricing that is
within a reasonable range for their client, the quantity of pricing advisories becomes less
important than the quality of them. These kinds of situations virtually always lead to heated
discussions, even acrimony.
These ranking sessions, though, can hold the future of each employee in their hands. This was
the case with my downsizing example above. It is also the case when the company goes further,
and always eliminates the bottom X percentage (usually 10 percent) of the rankings in each
organization. Yes, there will always be laggards who underperform, and maybe it is best to
simply fire them. However, often, with good management and some training, these laggards can
become good, solid performers. But beyond that, if you continue to eliminate the bottom 10
percent each year, it is not long before you are no longer cutting fat; you are now cutting bone.
Does this continue to make sense? I think not.
As noted in the Bloomberg BusinessWeek article, performance reviews should not be done once
a year. They need to be done frequently, with determinations made on the need for additional
training or perhaps a transfer to a different organization that better suits the skills of an employee
before it gets to the point that the employee may be slated for firing. A manager's job is not
simply to get work done through others; a manager is also responsible for developing his or her
employees, helping them reach their full potential, whether it is within that organization or
another one. This is not a once-a-year item to check off a list. Good managers, those who are true
leaders, are constantly evaluating their employees, having developmental conversations with
them, and working with them to constantly improve performance and perhaps taking on more
responsibility and gaining additional exposure within the company.

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In many companies today, performance appraisals are all about what is going wrong. That should
be turned around, so that there is more of a conversation of what is going right, and if it isn't,
how that can be fixed. It should not be about simply getting rid of those who aren't up to par; let's
work to see if we can help those employees through training or additional education before we
determine the next round of layoffs.
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III. Performance appraisal methods
1.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
i. Employees are ranked according to their performance
levels.
ii. It is easier to rank the best and the worst employee.
Limitations of Ranking Method
i. The “whole man” is compared with another “whole man”
in this method. In practice, it is very difficult to compare
individuals possessing various individual traits.
ii. This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
iii. When a large number of employees are working, ranking
of individuals become a difficult issue.
iv. There is no systematic procedure for ranking individuals
in the organization. The ranking system does not eliminate
the possibility of snap judgements.
2. Rating Scale

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Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages – Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages – Rater’s biases
3. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages – economy, ease of administration, limited
training required, standardization. Disadvantages – Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings
4. Critical Incidents Method
The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages – Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

5.
5. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage – It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.
6. Behaviorally Anchored Rating Scales
statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages – helps overcome rating
errors. Disadvantages – Suffers from distortions
inherent in most rating techniques.
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