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Limitations of Performance Appraisal

1) Personal Bias : The biggest limitation of performance Appraisal is subjectivity. Due to human element in Appraisal, there is always a fear of one's own opinion coming in the way of Appraisal.
(2)  Halo Effect : The tendency of an individual to rate an employee consistently high due to some earlier good performance rather than his existing performance is called as carrying a halo around oneself.
(3)  Horn Effect : The tendency of a superior to rate a subordinate lower than his performance justifies due to some recent/earlier failures.
(4)  Lack of Uniform Standards : The standards used by different departments in the organisation may not be the same, hence, rating becomes unscientific and employees suffer. Some rates are too liberal while others are too strict causing lack of uniformity.
(5)  Appropriate Appraisal Technique : Selection of appropriate appraisal technique is important to give the correct result. Some of the techniques are time-consuming and costly and so avoided. If wrong techniques are applied performance appraisal results may prove defective.
(6)  Wrong Appraisal by Superior : Superiors have continuous and daily relations with the subordinates, giving accurate ratings may lead to spoiling relations with them which the superiors may want to avoid, hence higher rating to the subordinates.
(7)  Stress on Individual and not on Performance : Performance Appraisal must lay stress on the performance of the individual and not on his individual and not on his personal characteristics. Many a times this is overlooked and the personnel characteristics comes in the way of his performance appraisal.
(8)  Central Tendency : Many a times to be on the safer side the rater would put the rate on average scores. This happens because of 2 reasons — first of all if the rater does not want low scores to the ratee. Secondly, if he himself is not competent and would not like to show his incompetency.
(9)  Lack of Importance to Self-Development : Performance Appraisal is not for witch hunting but for finding out strengths as well as weaknesses. The strengths can be consolidated upon and the weaknesses too be removed through appropriate training. However, this aspect is not given importance and so the main objective of performance appraisal is neglected.
(10)  Lack of Communication and Participation with Employees : Performance appraisal is not complete without communicating to the employee the results of the appraisal and also give him a chance to give his opinion, otherwise it is a one-sided affair without participation of employee and will not lead to their development.
(11)  Time-Consuming and Huge Paperwork : Performance appraisal is a continuous job for the superiors. There is need to continuously observe the subordinates, keep records, fill documents, write reports, hence time-consuming and costly.

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