What are the common problems in performance appraisal?

Performance appraisal embodies every element of good staff management, and offers a precise way to develop the people working within your organization. The goal is to use performance appraisals as a coaching or development tool—essentially, as a vehicle to inspire communication about work-related issues. Because performance appraisal ratings involve human judgment, they are subject to human error. Here are some of the common pitfalls of performance appraisal, and how to avoid them.      1.  Halo Effect The Problem: A manager or supervisor allows a general favorable impression of an employee to influence his or her judgment on each separate factor in the performance appraisal process. The Solution: The rater should consider each factor independently of all other factors, rather than rating the employee at the same level on all (or most) factors in an appraisal. No employee’s behavior can be the same on the variety of skills that the rating scales measure.      2.  Recency Effect The Problem: A staff member’s recent outstanding contribution or untimely mistake just prior to a performance review colors the manager’s perception of the employee’s performance for the entire appraisal period. (A similar pitfall, the Unforgettable Effect, occurs when an employee does something so extraordinary, either positively or negatively, that its impressions last for a long time, to the advantage or disadvantage of the employee.) The Solution: An alert manager compensates for lack of perspective by careful documentation.      3.  Manager Preference The Problem: Personal friends of managers get better ratings than their performance justifies. Conversely, managers rate employees lower than they deserve when conflicts of manner, style and personality exist. The Solution: Managers avoid the tendency to rate favored employees higher than they deserve because of their manner and personality.      4.  Effect of Past Record The Problem: The employee who has performed well in the distant past is assumed to be acceptable in the recent past also. Previous good work tends to carry over into the new period being appraised. The Solution: Once again, observation and documentation of the employee’s performance will give an accurate account of the performance period under scrutiny.

5.  Leniency Effect The Problem: A manager tends to rate everyone high. This error is usually committed when managers feel uncomfortable about communicating negative feedback or do not want to hurt the employee’s feelings. (A related problem, the Central Tendency, occurs when a manager rates all employees as average by choosing the middle rating. The Central Tendency is perhaps the most serious error of all; it closes the door to an employee’s growth and improvement on a job, because no strengths or weaknesses are identified.) The Solution: Understanding the constructive purposes of performance appraisal and acquiring effective skills in giving negative feedback should reduce the tendency to commit this error.      6.  Carelessness The Problem: Managers make quick guesses based on first impressions of an employee’s performance. The Solution: Managers commit significant time to observing staff members and forming judgments based on their observations. Major decisions are often based on performance rating, and ill-considered ratings will contribute unreliable information and   detract from the organization’s goals.      7.  Irrelevant (and Illegal) Standards The Problem: Evaluations are dependent on the rater’s personal preferences, prejudices and biases. The rater who has a biased or prejudiced attitude toward certain groups of people looks for behavior in these groups that confirms his or her prejudices. The Solution: When rating employees, the manager must consider the same relevant behaviors for all employees supervised. Social status, race, sex, age or other non-performance factors should not affect performance appraisal ratings. Careful observation, description and documentation of actual performance on an ongoing basis reduce the tendency for bias by emphasizing job performance over a period of time.