Problems of Performance Appraisal

Performance appraisal technique is very beneficial for an organization for taking decisions regarding salary
fixation, demotion, promotion, transfer and confirmation etc. But, it is not freed from problem In spite of
recognition that a completely error-free performance appraisal can only be idealized a number of errors
that extensively hinder objective evaluation. Some of these problems are as follows:

1. Biasness in rating employee: It is the problem with subjective measure i.e. the rating which will not
be verified by others. Biasness of rater may include:
(a) Halo Effect: It is the propensity of the raters to rate on the basis of one trait or behavioral
consideration in rating all other traits or behavioral considerations. One way of minimizing the
halo effect is appraising all the employees by one trait before going to rate on the basis of another
trait.
(b) The Central Tendency Error: It is the error when rater tries to rate each and every person on
the middle point of the rating scale and tries not to rate the people on both ends of the scale that
is rating too high or too low. They want to be on the safer side as they are answerable to the
management.
(c) The Leniency and Strictness Biases: The leniency biasness exists when some raters have a
tendency to be generous in their rating by assigning higher rates constantly. Such ratings do not
serve any purpose.
(d) Personal prejudice: If the raters do not like any employee or any group, in such circumstances
he may rate him on the lower side of the scale, the very purpose of rating is distorted which might
affect the career of employees also.

(e) The Recent Effect: The raters usually retain information about the recent actions of the employe e
at the time of rating and rate on the basis of recent action taken place which may be favorable or
unfavorable at that point of time.
2. The superiors may be unsuccessful in conducting performance appraisal of employees and post
performance appraisal interviews.3. The performance appraisal is mostly based on subjective assessment.
4. The performance appraisal techniques have a low reliability and validity in terms of result.
5 Ratings an employee on the negative side may disturb interpersonal relations and industrial relations
system.
6. Appraisers opinion on the performance of the employee may lead to setback on production.
7. An organization may give emphasis to punishment if an employee has not done a good job rather
than providing training.
8. Few ratings are based on guess work.

Various other problems of performance appraisal are:

There was a significant relationship between rating by superior and performance after promotions.
Appraisal reports were completed within a short period of time.
The circumstances were very unpleasant in feedback interview.
The Subordinates were not given suggestion in a manner which may be helpful to them.