Introduction to management


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2. Ranking 

Method 

One of the simplest method of performance appraisal is ranking method. 

The supervisor evaluates all the subordinates under him on an overall 

basis and then rank orders them from exceptional to poor. Each rank 



 

304


indicates the position of an employee in relation to others under the 

same supervisor. In case these employees have worked under several 

supervisors each one of these supervisors ranks them according to his 

own assessment. Finally, all the ranks are grouped to see which one of 

the employees is rated low. An illustration of this is presented  in Figure 

given below, where five subordinates working under three supervisors 

are ranked. 

Subordinates  

Supervisors 

 

Mean 

Rank 

 A 



Ram 


2 4 3 

Sham 



1 2 1 

1.3 


Mohan 

3 1 2 


Bharat 


5 3 4 

Ravi 



4 5 5 

4.6 


One represents the highest rank. The individual ranking of three 

supervisors are added and they divided by the number of supervisors. 

The mean ranks are given in the last column. Since Sham gets rank of 

1.3, he is on an average, the best of all few subordinates. 

The difficulty of this system is that the rater is asked to consider ratee 

as a wholeman. It is quite obvious that human personally is very 

complicated and to ask a human being to pass a judgements on another 

human being in terms of saying he is ‘good’ or ‘bad’ is not only 

difficult but also undesirable. The subjectiveness of this method can be 

reduced by asking the appraiser to rank employee on certain desirable 

traits. 

3. 

Paired Comparison Method 


 

305


Pair comparison force raters to compare each employee with all the 

employees in the same group who are being rated. For every trait 

(quantity of work, quality of work and so on) every subordinate is 

paired with and compared to every other subordinate. 

Suppose there are five employees to be rated. In the paired comparison 

method one can make chart, as in following Figure, of all possible pairs 

of employees for each trait. Then for each trait indicate. (with a + or -), 

who is the better employee of the pair. Next the number of items an 

employee is rated better is added up. In Figure, employee B ranked 

highest (has the most + marks) for quantity of work, while employee A 

was ranked highest for creativity. 

For the trait ‘Quantity of Work’ 

 

As 


compared 

to 


A B C D E 

 A 


  +  +  –  – 

 B 


–    –  –  – 

 

 



C  – +  + – 

 D 


+  +  –    + 

 E 


+  +  +  – 

 

 



 

 

 



↓ 

     B 


ranks 

highest 


here 

For the trait ‘Creativity’ 

 

As 


compared 

to 


A B C D E 

 A 


  – – – – 

 

306


 B 

+    –  +  + 

 

 C 


+  +    –  + 

 D 


+  –  +    – 

 E 


+ –  – + 

 

 



↓ 

   A 


ranks 

highest 


here 

Note : + means ‘better than’; means ‘worse than’. For each chart add up 

the number of +’s in each column to get the highest ranked employee. 

4. 

Forced Distribution Method 

Some appraisers suffer from the constant error, i.e. they either rate all 

workers as excellent, average or poor. They fail to evaluate the poor, 

average or excellent employees clearly and cluster them closely around 

a particular point in the rating scale. The forced distribution system is 

devised to force the appraiser to fit the employees being appraised into 

predetermined ranges of scale. 

The forced distributor system is applicable to a large group of 

employees. This system is based on the presumption that all employees 

can be divided into five point scale of excellent, very good, average, 

acceptable and poor. 

For example, he may be asked to identify and rank employees according 

to the following percentages : 

  Percentage of Employees 

Ranking 

Remarks 

 10% 


Poor 

 20%  Acceptable 



 

307


 40% 

Average 


 20%  Very 

good 


 10% 

Excellent 

This method obviously eliminates the scope for subjective judgement as 

the part of the supervisors. Besides this, the system is easy to 

understand and administer. The objective of this technique is to spread 

out rating in the form of normal distribution. Many time this 

categorization is not found in work groups particularly when the group 

is comparatively small. 



5. Checklist 

Method 

In the checklist, the evaluator uses a list of behavioral descriptions and 

check-off those behaviors that apply to the employees. As Figure 

illustrates on page 15, the evaluator merely goes down the list and gives 

‘yes’ or ‘no’ responses. 

Once a checklist is complete, it is usually evaluated by the staff of 

personnel department, not the manager doing the checklist. Therefore, 

the rater does not actually evaluate the employee’s performance. He 

merely records it. An analyst in the personnel department then scores 

the checklist, often weighting the factors in relationship to their 

importance. The final evaluation can then be returned to the rating 

manager for discussion with the subordinate, or someone from the 

personnel department can provide feedback to the subordinates. 

Sample of checklist for appraising Sales Clerks 

  

Yes 


No 

1. 


Are supervisors orders usually followed?.......... .......... 

2. 


Does the individual approach customers.......... .......... 

 

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 promptly? 

3. 


Does the individual suggest additional  .......... .......... 

 

merchandise to customers? 



4. 

Does the individual keep busy when not.......... .......... 

 servicing 

the 


customers? 

5. 


Does the individual lose his or her  

.......... .......... 

 temper 

in 


public? 

6. 


Does the individual volunteer to help  .......... .......... 

 other 


employee? 

6. 

Critical Incident Appraisal 

With the critical incident method, the supervisor keeps a log of 

desirable or undesirable examples or incidents of each subordinates 

work related behaviour. Then every six months or so, the supervisor and 

subordinates meet and discuss the latters’ performance using the 

specific incidents as examples. 

This method can always be used to supplements another appraisal 

techniques and in that role it has several advantages. It provides you 

with specific and hard facts for explaining the appraisal. It ensures you 

to think about the subordinates’ appraisal all during the year because 

the incidents must be accumulated. Keeping a running list of critical 

incidents should also provide concrete examples of what especially your 

subordinate can do to eliminate any performance deficiencies. 

Given below are a few typical incidents from a checklist for the 

appraisal of an individual in purchase department : 

• 

Displayed unpleasant behaviour to a supplier. 



• 

Consistently absent from work. 



 

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• 

Refused to work over-time when asked for. 

• 

Talked rudely and abruptly on the telephone. 



• 

Created a disturbance with loud speaking. 

• 

Accepted inferior quality goods from a supplier. 



• 

Failed to follow a chain of command. 

• 

Suggested a new method to work. 



• 

Accepted inferior quality goods. 

• Developed 

new 



procedure that reduced paper work. 

• 

Rejected a bid that was unreasonably priced. 



• 

Helped fellow employees to solve their problems. 



7. Behaviorally 

Anchored Rating Scales (BARS) 

This method assists upon accurate measurement and improvement of job 

performance through feedback to appraisees. It provides statements of 

standards against which the performance of an appraisee is evaluated. 

These standards are put on the scales in BARS. There is one scale for 

each significant broad performance area or job dimension. While 

developing BARS, small group discussions are conducted with would-be 

appraisers and appraisees with a view to identifying the significant 

dimensions of a job which need to be evaluated. Different job 

dimensions identified in this way tend to form varied behaviorally 

anchored scales. For example, for a managerial position, the significant 

job dimensions may include : planning, organizing, controlling, 

leadership, motivation, communication and coordination. 

Frequently, the scale is presented vertically with “excellent” 

performance at the top and “very poor” performance at the bottom. 

There are a number of scale points ranging between five and nine in 

between these two extremes. Suppose, five job dimensions have been 


 

310


identified in a particular job. There will be five scales in the appraisal 

format, each having several anchors illustrating varied amounts of 

performance along the scales. These scales may also embody statements 

to facilitate the clarity of the job dimension being evaluated. To cite an 

example of BARS for the position of an equipment operator-one job 

dimension in this position is verbal communication. The excellent 

performance on this scale may contain the following statements : checks 

verbal instructions against written procedures, checks to ensure he/she 

heard others correctly, brief replacements quickly and accurately—

giving only relevant information. On the other hand, a very poor 

performance on this scale may contain the following statements : not 

answers when called, refuses to brief replacements, gives a person 

relieving him/her inaccurate information deliberately. The appraiser is 

required to indicate on each scale the level of performance he/she 

visualizes is revealed by the appraisee’s typical job behaviour. While 

doing so, he/she makes use of the behavioural anchors and dimensions— 

clarification statements as guidelines and cues to recall the appraisee’s 

job behaviour. Explicitly, it is not possible for the appraisers to place 

behavioural statements embracing all dimensions of job performance on 

the scales. Therefore, they merely indicate specific behavioural 

examples which can be recalled for each appraisee at appropriate levels 

on the scale. In this way, these added anchors represent their own 

examples and rationale for an appraisal at a particular level. 

BARS are useful for varied reasons. Their major characteristic relates to 

behavioural orientation. They are based on job behaviour—what 

individuals really do on their jobs, which is within their control. 

Attachment of behavioural anchors to different scales enables the 

appraisees to understand what they must do to organizing the dimension 



 

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of a managerial job may include the following : assigns/delegates tasks, 

identifies alternative approaches to resource applications, coordinates 

human, financial and material resource applications and divides unit 

objective into identifiable tasks and sets due dates. This feature of 

specificity of these scales also enables the appraisers to provide relevant 

feedback to appraisees why they received a particular level of appraisal, 

and what they can do to improve their performance. This quality of the 

scale minimizes subjectivity in appraisal as well as also enables the 

appraisees to overcome their anxiety related to such appraisals. 

BARS also provide participation to both appraisee and appraiser in their 

development. They become familiar with different aspects of the job as 

a result of discussions of job dimensions and anchors in small group 

meetings. This understanding provides guidelines to the appraiser while 

observing performance and enables the appraisee to judge the 

expectations of his/her superior. Any conflict between he appraiser and 

appraisee over the desired performance can be clarified in subsequent 

discussions. The participation of their ultimate users in the design of 

BARS also ensures their commitment to this method of appraisal. 

As BARS are based on quantity measures, an attempt may be made to 

relate appraisal scores to current wage and salary structure with a view 

to ascertaining varying extents of rewards to different behaviors. Thus, 

the management may link different levels of merit raises to different 

ranges of scores on BARS. In addition, certain job dimensions can be 

singled out for bonus administration and allied purposes. Last but not 

the least, the scales can also be used to identify behavioural criteria to 

facilitate selection decisions, construct selection tests and specify 

behavioural training objectives. Explicitly, the job dimensions in BARS 

can help in formulating training courses, and the behaviour anchors can 



 

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indicate the specific behaviors to be learned in different content areas. 

The poor performance areas can be pinpointed to improve performance. 

Notwithstanding these advantages, BARS form a time-consuming 

method. Although it is promising, much more research is required to 

demonstrate its ability to eliminate certain types of rater errors. 

8. 

Management by objectives (MBO) Method : 

This method of appraisal was introduced and made popular by Peter 

Drucker (1961). Management by objectives requires the manager to get 

specific measurable goals with each employee and then periodically 

discuss his or her progress towards these goals. You could engage in a 

modest MBO program with subordinates by jointly setting goals and 

periodically providing feedback. However, the term MBO almost always 

refers to a comprehensive, organisationwide goal setting and appraisal 

program that consist of following steps : 

(i) 

Set the organization’s goal : Establish on organisationwide plan 

for next year and set goals. 



(ii) Set departmental goals : Here department/heads and their 

superiors jointly set goals for their departments. 



(iii) Discuss departmental goals : Department heads discuss the 

department’s goals with all subordinates in the department and 

ask them to develop their own individual goals; In other words, 

how can each employee contribute to the department’s attaining 

its goals. 

(iv) Define expected results : Here department heads and their 

subordinates set short-term performance targets. 



 

313


(v)  Performance reviews : Department heads compare the actual 

performance of each employee with expected results. 



(vi) Provide 

feedback 

Department heads hold periodic performance 

review meetings with subordinates to discuss and evaluate the 

latters’ progress in achieving expected results. 

MBO, thus, is a performance-oriented system. A well thought out MBO 

system provides the following benefits to the organization. 

(i) 

The setting up of objectives provides a basis for coordinating 



between and among various units of the organization. 

(ii) 


It establishes a linkage between the performance of the individual 

and organizations. Hence, both move in the achievement of same 

objectives. 

(iii)  It becomes easy to implement because those who carry out the 

plans also participate in setting up these plans. 

(iv)  Each employee becomes aware of the exact task that he is 

supposed to perform leading to better utilization of capacity and 

talent. 


(v)  The communication chain between and among employees and 

units are clearly established facilitating information sharing. 

(vi) The 

performance appraisal is built in the system itself. It provides 

the guidelines for self as well as evaluation by the supervisor 

against the set tasks and goals. 

(vii)  It facilitates the task of employee guidance and counseling. 

Limitations 


 

314


Notwithstanding the above merits, the result oriented procedure has 

several limitations. The procedure is impracticable in situations where 

the superior is decisive and seldom bothers to involve the subordinates 

in goal-setting goals. Moreover, the procedure stresses tangible goals 

(i.e. production) and ignores intangible goals (i.e. morale). This may 

also cause concealment of poor performance, distortion of data and the 

fixation of low goals. 

MBO is a time-consuming. Taking the time to set objectives, to measure 

progress and to provide feedback can take several hours per employee 

per year, over and above the time you spent doing each person’s 

appraisal. 

Setting objectives with the subordinate sometimes turns into a tug of 

war with you pushing for higher quotas and the subordinate pushing for 

lower ones. 



18.5  Limitations of Performance Appraisal

 

The ideal approach to performance evaluation is that in which evaluator 

is free from personal biases, prejudices and idiosyncracies. This is 

because when evaluation is objective, it minimizes the potential 

capricious and dysfunctional behaviour of the evaluator which may be 

detrimental to the achievement of the organizational goals. However a 

single fool proof evaluation method is not available. Inequities in 

evaluation often destroy the usefulness of the performance system—

resulting in inaccurate, invalid appraisals, which are unfair too. There 

are many significant factors which deter or impede objective evaluation. 

These factors are : 

(i) Halo 

Error 

 


 

315


It  occurs when the rates allows one aspect of a man’s character or 

performance to influence his entire evaluation. It is the tendency of 

many raters to set their rating be excessively influenced by one 

characteristic rather than on all subsequent characteristics. 

This problem often occurs with employees who are especially friendly 

or unfriendly toward the supervisor. For example, an unfriendly 

employee will often be rated unsatisfactory for all traits rather than just 

for trait “gets along well with others”. Being aware of this problem is a 

major step toward avoiding it. Supervisory training can also alleviate 

the problem. 



(ii) Central 

Tendency 

Many supervisors have a central tendency when filling in rating scales. 

For example, if the rating scale ranges from 1 to 7, they tend to avoid 

the highs (6 and 7) and lows (1 and 2) and rate most of their people 

between 3 and 5. If you use a graphic scale, this central tendency could 

mean that all employees are simply rated “average”. Such a restriction 

can distort the evaluations, making than less useful for promotion, 

salary or counseling purposes. Ranking employees instead of using a 

graphic rating scale can avoid this central tendency problem because all 

employees must be ranked and this cannot all be rated averages. 



(iii)  Leniency or Strictness 

The leniency bias results when raters tend to be easy in evaluating the 

performance of employees. Such raters see all employee performance as 

good and rate it favourably. The strictness bias is the opposite; it results 

from raters being too harsh in their evaluation. Sometimes, the 

strictness bias results because the rater wants others to think he or she is 



 

316


a ‘tough judge’ of people’s performance. Both leniency and strictness 

errors more commonly occur when performance standards are vague. 



(iv)  Cross cultural biases 

Every rater holds expectations about human behaviour that are based on 

his or her culture. When people are expected to evaluate others from 

different cultures, they may apply their cultural expectations to someone 

who has a different set of beliefs or behaviors. In many Asian cultures 

the elderly are treated with greater respect and are held in higher esteem 

than they are in many western cultures. If a young worker is asked to 

rate an older subordinate, this culture value of “respect and esteem” 

may bias the rating. Similarly, in some Arabic cultures, women are 

expected to play a very subservient role, especially in public. Assertive 

women may receive biased rating because of these cross cultural 

differences. With greater cultural diversity and the movement of 

employees across international borders, this potential source of bias 

becomes more likely. 



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