Performance appraisal means evaluating an employee’s current or past Performance relative to the person’s performance standards. Appraisal involves:

(i) Setting work standards
(ii) Assessing the employee’s actual performance relative to these standards
(iii) Providing feedback to the employees with the aim of motivating that person to eliminate deficiencies or to continue to perform above par.

Managers usually conduct the appraisal using a predetermined and formal method. Various methods of appraisal include:-

1. Graphic rating scale method.

2. Alternate ranking method

3. Paired comparison method

4. Forced distribution method

5. Critical incident method

6. Narrative forms

7. Behaviorally anchored rating scales

8. Management by objective (MBO)

9. 360 degree feedback.

Graphic rating scale method:- The graphic rating scale method is the simplest and most popular technique for appraising performance. A graphic rating scale list traits (such as quality and reliability) and a range of performance values (from unsatisfactory to outstanding) for each trait. Subordinates are rated by circling of checking the score that best describes his or her performance for each trait. Then the total of assigned value is calculated.

Alternate ranking method:- This method involves ranking employees from best to worst on a particular trait, choosing highest, then lowest until all are ranked. Since it is easier to distinguish between the worst and best employees and alternate ranking is quite popular. First, list all subordinates to be rated. Then indicate the employee who is the highest on the characteristic being measured and also the one who is lowest. The process continues till all the employees are ranked on similar fashion.

Paired comparison method:- Paired comparison method helps make the ranting method more precise. For every trait (quality of work, quality etc), Pairs are made and every subordinate is compared with every other subordinate.

Forced distribution method:- Forced distribution method is similar to grading on a curve. With this method, manager place predetermined percentage or rates in to performance categories. For example you may decide to distribute employees as follows:

15% high performance

20% High average performance

30% average performance

20% low average performance

15% low performance

Forced distribution means tow things for employee: Not everyone can get an A; and ones performance is always rated relative to ones peers. One practical, one practical, if low-tech, way to do this is to write each employee’s name on a separate index card. Then for each trait (quality of work, creativity etc.) managers place the employee’s card in the appropriate performance category.

Critical Incident Method:- Critical incident method involves keeping a record of uncommonly good or undesirable examples of an employee’s work related behavior and reviewing it with the employee at predetermined time.

Narrative Forms:- The final written appraisal is often in narrative form. A person’s supervisor is asked (i) to rate the employees performance for each performance factor or skill (ii) to write down examples and (iii) an important plan. This aids the employee to understand where his or her performance was good or bad and how to improve that performance.

Behaviorally Anchored Rating Scales is an appraisal method that aims at combining the benefits of narrative critical incidents and quantified ratings by anchoring a quantified scale with specific narrative example of good and poor performance.