The problems inherent in performance appraisal may be listed thus:
1. Judgement errors: People commit mistakes while evaluating people and their performance. Biases and judgments errors of various kinds may spoil the show. Bias here refers to distortion of a measurement. These are of various types: First impressions (primacy effect): The appraiser’s first impression of a candidate may color his evaluation of all subsequent behavior. In the case of negative primacy effect, the employee may seem to do nothing right; in the case of a positive primacy effect, the employee can do no wrong (Harris, p.192).
ii.Halo: The Halo error occurs when one aspect of the subordinate’s performance affects the rater’s evaluation of other performance dimensions. If a worker has few absences, his supervisor might give the worker a high rating in all other areas of work. Similarly, an employee might be rated high on performance simply because he has a good dress sense and comes to office punctually!
iii. Horn effect: The rater’s bias is in the other direction, where one negative quality of the employee is being rated harshly. For example, the ratee rarely smiles, so he cannot get along with people!
iv. Leniency: Depending on rater’s own mental make-up at the time of appraisal, raters may be rated very strictly or very leniently. Appraisers generally find evaluating others difficult, especially where negative ratings have to be given. A professor might hesitate to fail a candidate when all other students have cleared the examination. The leniency error can render an appraisal system ineffective. If everyone is to be rated high, the system has not done anything to differentiate among employees.
v. Central tendency: An alternative to the leniency effect is the central tendency, which occurs when appraisers rate all employees as average
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