Following are the tools used by the organizations for Performance Appraisals of their employees.

1. Ranking
2. Paired Comparison
3. Forced Distribution
4. Confidential Report
5. Essay Evaluation
6. Critical Incident
7. Checklists
8. Graphic Rating Scale
9. BARS
10. Forced Choice Method
11. MBO
12. Field Review Technique
13. Performance Test

We will be discussing the most important performance appraisal tools and techniques in detail.

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

   1. Employees are ranked according to their performance levels.

   2. It is easier to rank the best and the worst employee.

   Limitations of Ranking Method

   1. 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.

   2. 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.

   3. When a large number of employees are working, ranking of individuals become a difficult issue.

   4. There is no systematic procedure for ranking individuals in the organization. The ranking system does not eliminate the possibility of snap judgements.

2. Forced Distribution method

   This is a ranking technique where raters are required to allocate a certain percentage of rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10 percent, bottom 20 percent etc). Both the number of categories and percentage of employees to be allotted to each category are a function of performance appraisal design and format.

   The workers of outstanding merit may be placed at top 10 percent of the scale, the rest may be placed as 20% good, 40% outstanding, 20% fair and 10% fair.

   Advantages of Forced Distribution

   1. This method tends to eliminate raters bias

   2. By forcing the distribution according to pre-determined percentages, the problem of making use of different raters with different scales is avoided.

   Limitations of Forced Distribution

   1. The limitation of using this method in salary administration, however, is that it may lead low morale, low productivity and high absenteeism.

      Employees who feel that they are productive, but find themselves in lower grade(than expected) feel frustrated and exhibit over a period of time reluctance to work.

3. Critical Incident techniques

   Under this method, the manager prepares lists of statements of very effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees or the job.

   The manager maintains logs of each employee, whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the worker’s performance.

   Example of a good critical incident of a Customer Relations Officer is :March 12 - The Officer patiently attended to a customers complaint. He was very polite and prompt in attending the customers problem.

   Advantages of Critical Incident techniques

   1. This method provides an objective basis for conducting a thorough discussion of an employees performance.

   2. This method avoids recency bias (most recent incidents are too much emphasized)

   Limitations of Critical Incident techniques

   1. Negative incidents may be more noticeable than positive incidents.

   2. The supervisors have a tendency to unload a series of complaints about the incidents during an annual performance review sessions.

   3. It results in very close supervision which may not be liked by an employee.

   4. The recording of incidents may be a chore for the manager concerned, who may be too busy or may forget to do it.

4. Checklists and Weighted Checklists

   In this system, a large number of statements that describe a specific job are given. Each statement has a weight or scale value attached to it. While rating an employee the supervisor checks all those statements that most closely describe the behaviour of the individual under assessment. The rating sheet is then scored by averaging the weights of all the statements checked by the rater.

   A checklist is constructed for each job by having persons who are quite familiar with the jobs. These statements are then categorized by the judges and weights are assigned to the statements in accordance with the value attached by the judges.

   Advantages of Checklists and Weighted Checklists

   1. Most frequently used method in evaluation of the employees performance.

   Limitations of Checklists and Weighted Checklists

   1. This method is very expensive and time consuming

   2. Rater may be biased in distinguishing the positive and negative questions.

   3. It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employees characteristics, contributions and behaviours.