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• It is a multi-rater appraisal and feedback system. 
• The individual is assessed by a number of people – superiors, subordinates, peers, customers etc. 
• The ASSESSMENT is performed on a SPECIALLY designed questionnaire which measures BEHAVIOURS critical for the performance in the role. 
• The appraisal is performed ANONYMOUSLY by various people
• The assessments are consolidated and shared with the CANDIDATE.

• It is single-tier appraisal and FEEDBACK system. 
• Candidate performs the self appraisal separately
• His line manager performs the appraisal separately
• They hold an appraisal meeting to discuss their reviews and agree on the ratings in various areas. 
• This is FOLLOWED by identifying the training and development NEEDS and an ACTION plan to improve the PERFORMANCE.

The purpose of the counselling interview conducted by the line manager is to help his subordinate in objectively analyzing his performance. The INFORMATION collected through the performance appraisal FORM and interview helps the manager in conducting this counselling interview. 

It helps the EMPLOYEE in: 

1. Understanding himself.
2. Improving his behaviour which helps his professional and interpersonal competence. 
3. Setting future goals and FORMULATING an action plan.
4. Finding out the alternatives to deal with problems.

The purpose of the counselling interview conducted by the line manager is to help his subordinate in objectively analyzing his performance. The information collected through the performance appraisal form and interview helps the manager in conducting this counselling interview. 

It helps the employee in: 

• Performance appraisal system assesses the candidate’s performance in VARIOUS areas. 
• It also helps in identifying the training needs of an employee
• The line manager gets an idea about the AREA of INTEREST of the candidate in which he wants to grow, his ability to take more RESPONSIBILITIES etc. 

All these put together help in chalking out the employee’s career progression in the organization.

All these put together help in chalking out the employee’s career progression in the organization.

The major criteria to assess the performance of EMPLOYEES are: 

1. Job Knowledge
2. Planning 
3. Ability to ORGANISE and utilize resources
4. Communication skills
5. Relationship with superiors, peers, subordinates & associates
6. Ability to make decisions
7. WINNING instinct – Can do attitude
8. TEAM working capabilities

The major criteria to assess the performance of employees are: 

KPI – Key performance INDICES, as the NAME suggests is a list of PARAMETERS against which the performance of an employee is MEASURED. These indices are USUALLY quantifiable in nature.

KPI – Key performance indices, as the name suggests is a list of parameters against which the performance of an employee is measured. These indices are usually quantifiable in nature.

The important components of a comprehensive performance appraisal system FORMAT are:

1. Identification of KPIs and target setting – periodically through a discussion between the employee and his line manger
2. Identification of personal qualities required for the current and HIGHER roles and developing them
3. Self appraisal – by the appraisee
4. Identification of FACTORS which have helped and hindered in achieving the set goals. 
5. Discussion about the performance and counselling of the appraisee by the appraiser
6. Identification of training needs for current and higher role. 
7. Setting up the goals and plan of ACTION
8. Assessment by the superior – training and development needs, any rewards or punishments.

The important components of a comprehensive performance appraisal system format are:

We can aim to achieve the following through 360 degree performance appraisal system: 

1. Information about the strengths and weaknesses of an EMPLOYEE in a particular role
2. Identification of TRAINING and development needs to perform better in the current role and prepare for the higher role. 
3. COLLECT data as an objective basis for REWARDS and other decisions
4. Basis for performance based pay or awards
5. Aligning individual and ORGANIZATIONAL goals

We can aim to achieve the following through 360 degree performance appraisal system: 

The main pre-requisites of a 360 degree appraisal system are: 

1. Commitment from the top management to continuously develop the competencies of the employees
2. Proper implementation of various HR systems
3. Willingness of the management to let the employees learn from each other and their own mistakes. 
4. Willingness of the management to spend time in providing feedback to their sub-ordinates
5. Willingness of the management to ACCEPT the feedback from their sub-ordinates and peers. 
6. Not too MANY status barriers and ego ISSUES
7. Openness of the people to accept feedback and use it for development
8. Feedback is not used for political advantage
9. Emphasis on teamwork in the organization
10. HR department is highly CREDIBLE
11. High degree of process orientation in the organization
12. High value to the values in the organization
13. Emphasis on building competencies

The main pre-requisites of a 360 degree appraisal system are: 

Following are the MAIN PHASES of a 360 degree appraisal system: 

1. Orientation – Information about the importance and details of the PROCESS is passed on to the participants. 
2. Questionnaire distribution
3. Monitoring and follow up
4. Data feeding and report generation
5. Conducting the workshop
6. COUNSELLING of EMPLOYEES

Following are the main phases of a 360 degree appraisal system: 

Graphic Rating Scales:

• This method is ALSO called as linear rating scales or simple rating scales method
• Judgement about the performance are recorded on a scale
• The appraisers are given the forms which carries the various CRITERIA on which the employees are to be rated
• It is a simple and quick method, which makes it popular

Ranking method:

• The employees are rated from best to worst on some characteristics
• The rater chooses the best and the worst employees from a group and rates them. 
• He then chooses the second best and worst set and goes on
• The reliability and validity of this method is under doubt as it may suffer from rater’s bias, fluctuating performances or varying standards. 

Paired comparison method:

• Under this method each employee is rated against all the members in the group. 
• It could be FAIRLY applied where the number of employees are less. 
• This method is time consuming. 
• The performance is compared to other employees rather than specific job criteria

Forced distribution method:

• This method is developed to prevent the raters from rating too high or too low. 
• In this method, the raters are required to spread their employee EVALUATIONS in a prescribed distribution. 
• It eliminates central TENDENCY and leniency biases.

Graphic Rating Scales:

Ranking method:

Paired comparison method:

Forced distribution method:

Many a times the performance appraisal system tries to assess the personality traits of its employees through their line MANAGER.

There are two TYPES of problems in this: 

• The employees do not OPEN up as they do not want any negative personality trait to be recorded in OFFICIAL records. 
• The line managers are not FULLY trained and capable of assessing the personality traits of employees.

Many a times the performance appraisal system tries to assess the personality traits of its employees through their line manager.

There are two types of problems in this: 

The main objectives of a performance appraisal system are: 

1. To increases the employee effectiveness by helping them understand their role better. 
2. To help the employees understand their STRENGTHS and weakness in the current role. 
3. To help the managers in identifying the training needs of their subordinates. 
4. To improve the relationship between the line manager and his team members by making them realize that they are dependent on each other for better performance. 
5. To help the line managers and their team members in improving the communication by discussing the problem in achieving the targets and finding the POTENTIAL solutions. 
6. To provide the employee an opportunity for self evaluation and self development which are important to achieve the goals. 
7. To prepare the employees for higher roles. 
8. To create a positive work atmosphere. 
9. To collect the information about each employee through personal MEETING which is USEFUL in making managerial decisions.

The main objectives of a performance appraisal system are: