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Importance and Types of Appraisal Systems

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The students who have their speciality in human resource while pursuing their masters have to study every aspect of the salary calculations of the employees and performance appraisals of the employees. They need to have the understanding of all the aspects of the incentives and the appraisals. The performance appraisal is not often, or it may be at some times in any organisation. But the employer needs to have a face-to-face discussion with the employees for their appraisals and increments. It serves some functions. If done effectively, the appraisal can offer a large degree of satisfaction for both the employee and reviewer.


Appraisal system serves us as following:

  • Giving and receiving feedback

The effective appraisal offers the opportunity to give feedback as well as receive it. The employee receives important information as to what areas of the job he or she is performing well and which are the areas that require improvement. It helps the employees to know where they stand. It also helps them to know the actual feedback from the employee which can be helpful for making improvements in the work environment.

  • Set the targets

In addition to reviewing performance based on the goals that are established previously. The appraisal is also considered to be a good time for the establishment of new goals. If deficiencies are identified during the appraisals, the reviewer and the employee can work together to establish new goals as well as developed a plan to reach them.

  • Improvement in communication

Employee appraisals are important for the improvement of communications between the different levels of management. There can be problems in the working of the organisation if there is open talk about it, there can be lacking trust among the employees. Employees who previously did not feel comfortable approaching the manager with a problem may become more likely to voice the concerns, which can prevent a small issue from escalating into a major problem over time.

  • Recruitment efforts

Performance appraisals can provide key information that can help evaluate recruiting practices. For instance, if a high percentage of workers who were hired within a recent time frame scored well on their appraisals, the company may conclude whether its recruiting process is working effectively or not. On the other hand, the presence of many poor performers may indicate that the recruiting efforts are missing the required factor and the hiring process may require an overhaul.


Employee appraisal systems help the managers evaluate employee job performance and develop a fair system of pay increases and promotes appraisals can help staff members to improve their performance and assist companies in recognition of the functions of the job to fit better in the position of the employee.

Here are the different types of appraisal systems:

  • Trait-focused performance appraisal

The trait-focused system centres on the attributes such as helpfulness, dependability and punctuality. Supervisors rate employees by indicating their specific traits that each employee exhibits. There is a simple checklist for the ratings such as excellent, satisfactory, needs improvement or some other similar options. This system is traditionally popular for the departments of customer service. These type of evaluations are based on the personal bias of the supervisors. However, the majority of the employees end up with the marks of satisfactory, which defines the reliability and accuracy of the systems.

  • Behaviour-focused performance appraisal

This system judges the actions of the employees with the use of the rating scale to measure the specific behaviours. There is the use of four types of rating scales such as graphic rating scales, behaviourally anchoring rating scales, forced choice scales and mixed standard scales. It also judges behaviour on a sliding scale from “excellent” to “poor”, average employees results should cluster in the middle with poor employees near the bottom and exceptional employees near the top.

  • Straight ranking

The straight ranking method compares employees to each other, ranking them from best to worst. While it is easy to point out from the top level to bottom level performers and those who are left in the middle can prove harder to put in that order. Customer service centre would be a good example of this type of performance appraisal. In this, the employees are ranked as per their performance according to the achievement of the targets.

  • Unstructured method

Many older performance evaluations relied on the personal qualities of the employees as reported by a supervisor. The unstructured method relies directly on the subjective opinion of the supervisor without any rating scale. This type of evaluation might simply be a statement or description from a manager to a question scale. The unstructured method is unreliable because it is contingent on personality chemistry.

  • Paired comparison

This method compares each employee with every other employee in a group. According to human resource management, it is considered as the most reliable method because it is based on a systematic method of comparison and evaluation. Paired comparisons work best in the situations where only one employee will be promoted where each is compared and ranked against the others on the various factors until one stands out.

  • Checklist and grading

The grading method uses standard with the use of the alphabets such as from A to F in different categories for the rating of each employee, while this method relies on a list of yes or no questions. In each of these evaluation types, the specific standards are set in advance and defined as the evaluation of the categories.

  • Psychological appraisals

These types of appraisals assess the intellectual ability of the employees, emotional stability, analytical skills and other psychological traits with the use of objective psychological evaluation processes. These evaluations are useful in preparing and developing training methods and for the placement of the employees in appropriate teams.

  • Management by objective

Modern evaluation methods try to remove some of the subjectivity and bias inherent in traditional methods. Management by objective appraisals requires the employee and the supervisor to agree on a set of objectives before the evaluation. The process relies on goal setting and its feedback to be successful.

  • 360-degree feedback

It requires the employer to survey co-worker, supervisors, subordinates and even customers about each action of the employees. The multiple feedback channels offer the objective perspectives of behavioural traits and actions. The worker can set the goals for self-development, which will advance their career and benefit the organisation.

Interviewing the appraisal

There is often misunderstanding as to how an appraisal should be conducted. Appraisal sometimes perceives their annual appraisal as a threat. However, this can be overcome if the appraisal system is well-constructed and seen to be fair to the individual and consistent across the organisation. A typical negative response to appraisals is that they are confrontational. It can be due to the lack of agreement on performance or poor explanation by management. Additionally, it is sometimes seen as a judgement which is based on the perspective of the manager.

The greatest problem with the appraisal is that they are often regarded as a nuisance. At best, appraisals may be considered an annual event, the results of which quickly become out of date. Moreover, it can also be viewed as a bureaucratic exercise for the satisfaction of the organisation. As a resultant, the main purpose of an appraisal is of identifying individual and organisational performance, and the improvement is ignored.

Basics to the successful application of appraisal systems are the appraisal interview. A formal appraisal interview is an integral part of appraisal and performance management. The interview must be organised properly and carefully. Before the interview, the appraiser, who should be the immediate supervisor must prepare the correct and relevant documentation.

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