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Limitations of performance appraisal

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1. Shifting standards: Performance appraisal should be based on uniform and fair standards, lest employees might get confused and the organization might not be able to decide as to who is suitable.
2. Different patterns of rating: Managers differ in rating style – some rate harshly whereas others are quite lenient. This can be reduced the acceptability of the appraisal results. Therefore, this subjectivity can be moderated through a ‘multi-layer appraisal system’, where the immediate superior initiates the report which is reviewed by the next up to the higher level managers.
3. Central tendency: Many appraisal forms require the appraiser to justify outstanding or poor assessments. Thus many appraisers may prefer an easier path of rating most people as ‘average’.
4. First impression: Some appraisers may form an overall impression based on some specific qualities or features of the employee in the first meeting. Making assessment on such a short time-span and inadequate knowledge is incorrect.
5. Latest behaviour: At times, the appraisal is influenced by the most recent behaviour, ignoring the most commonly engendered behaviour during the entire period.
6. Halo effect: Some appraisers have a tendency to rate high/low on all performance measures based on one of the employees characteristics. For example, an employee who is just an average work performer but is very good in football and plays golf may be given high overall rating. One who does not shave regularly may be assessed, as lazy at workplace also. This can be reduced by rating employees on each of the performance measures.
7. Horn effect: Highly critical bosses have a tendency to compare performance of their subordinates with ‘what they did’. This is not correct because the performance also depends upon the situation. For example, a salesman now operates in a ‘buyer’s market’ as against the ‘seller’s market’ of yesteryears.
8. Stereotyping (Rater’s bias): Some appraisers have a standard mental picture about a person because of that person’s gender, colour, taste, religion, age, style of clothing, political view etc. Stereotyping results in an oversimplified view. Such assessments are based on false assumptions/ feelings rather than facts.
9. Spill-over effect: This entails allowing past performance to influence present evaluation. In some organizations, when an employee reports on transfer, his earlier reports are also transferred along. This biases the mind of the new boss.

Titany answered the question on September 20, 2021 at 11:00

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Limitations of performance appraisal

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