Problems of Performance Appraisal

Performance appraisal technique is very beneficial for an organization for taking decisions regarding salary fixation, demotion, promotion, transfer and confirmation etc. But, it is not freed from problem In spite of recognition that a completely error-free performance appraisal can only be idealized a number of errors that extensively hinder objective evaluation. Some of these problems are as follows:
    1.     Biasness in rating employee:It is the problem with subjective measure i.e. the rating which will not be verified by others. Biasness of rater may include:
(a) Halo Effect:
It is the propensity of the raters to rate on the basis of one trait or behavioral
consideration in rating all other traits or behavioral considerations. One way of minimizing the halo effect is appraising all the employees by one trait before going to rate on the basis of another trait.
(b) The Central Tendency Error:
It is the error when rater tries to rate each and every person on the middle point of the rating scale and tries not to rate the people on both ends of the scale that is rating too high or too low. They want to be on the safer side as they are answerable to the management.
(c) The Leniency and Strictness Biases:
The leniency biasness exists when some raters have a tendency to be generous in their rating by assigning higher rates constantly. Such ratings do not serve any purpose.
(d) Personal prejudice:
If the raters do not like any employee or any group, in such circumstances he may rate him on the lower side of the scale, the very purpose of rating is distorted which might affect the career of employees also.
(e) The Recent Effect:
The raters usually retain information about the recent actions of the employee
at the time of rating and rate on the basis of recent action taken place which may be favorable or unfavorable at that point of time.
2. The superiors may be unsuccessful in conducting performance appraisal of employees and post performance appraisal interviews.
3. The performance appraisal is mostly based on subjective assessment.
4. The performance appraisal techniques have a low reliability and validity in terms of result.
5.  Ratings an employee on the negative side may disturb interpersonal relations and industrial relations system.
6. Appraisers opinion on the performance of the employee may lead to setback on production.
7. An organization may give emphasis to punishment if an employee has not done a good job rather than providing training.

8. Few ratings are based on guess work.