A comparison study between traditional and modern methods of

Performance Appraisal System

Edward Flippo , a well-established figure in Human Resource Management defines performance

appraisal as the systematic periodic and impartial rating of an employee’s excellence in the

matters pertaining to his present job and his potential for a better job. Performance appraisal is a

successful process when it benefits the employee, the manager and as well as the organization as

a whole. The employee tends to develop a deeper understanding of their on-job roles and his/her

strengths, weaknesses and developmental needs. Also, the goals of the employee become clear

and concrete when they get a chance to discuss their career objectives and gain direction. The

process of Performance appraisal is also crucial for managers as it serves as an opportunity for

them to interact and exchange opinions with employees, motivate them and coach them better.

The organizations also receive up to date information about its employee’s performance and

aspirations which can be used further to plan succession and better develop both employees and

organization parallelly.

The literature on performance appraisal has seen many milestone changes since 1980’s. Till

1980’s the focus was to develop sound rating scales and test their psychometric properties.

During the 1980s there was a shift towards the cognitive characteristics of the raters (Fieldman,

1981; Landy and Farr, 1980). They developed models on how raters judge the employee,

attribution errors, stereotyping and all the different biases leading to faulty judgment. The major

development of Performance appraisal system took place when researches suggested that context

in which appraisal occurs is important to understand. This was because appraisal takes place in a
social context, therefore there must be imperative components present that influence and

determine the success and failure of the process.

George Strauss and Leonard R.Sayles have classified performance appraisal methods into two

broad categories which are most commonly used in all organizations, Traditional Methods and

Modern Methods. The key difference between traditional and modern methods is how traditional

methods focus more on an individual’s personal traits and modern method focus on traits of an

employee’s job achievement.

Traditional Methods of Performance Appraisal

Essay or Free Form is a short essay written by the evaluator based on the employee’s

performance. It can be a narrative about the employee’s strengths, weaknesses and past

performance. It should be concrete and mostly has suggestions for improvement. However easy

to use the essays can be also widely depend on the writing skills of the rater and how he/she

perceives the individual to be personally. Thus, it contains a lot of rater’s biases. Also, absence

of quantitative data reduces the subjectivity of the method. Critical Incident method is similar
to essay method, here the appraiser keeps a detailed record of all the crucial job behaviors of the

employees. These behaviors can be polarized both ways, exceptionally good or low. Later on,

these incidents form the premises on the basis of which evaluation takes place. Along with being

a very time-consuming process it is not continuous. The incident may be important to employee

behavior but not help determine job performance, this is a major drawback of method. As an

advantage of this method is providing description and proofs of the behavior sometimes only

some negative events can be prioritized which dooms the process overall.

Straight Ranking Method is one of the simplest forms of ranking, when the employer ranks the

subordinates from the best of worst, with only providing rank orders. The method does not

justify how and why does the person stand where it does. It also does not explain how the person

can move up ranks and improve. The method also does not keep in mind the behavioral aspects

and personal traits of the subordinates. In order to evolve some drawbacks, Paired comparison

Method was formulated where employees are compared with each other but only two at a time

usually based on one trait only. As each employee will be ranked again and again it becomes a

very cumbersome process which is not possible for large organizations.

Force Distribution Method was introduced by Tiffen. This method forces the raters to

distribute scores such that they confirm to a normal distribution. Again, like other methods, this

is also very difficult to use when appraising a large organization.

Checklist method as the name suggest the data uses a checklist to weigh and evaluate the

performance of an employment. The list of questions is usually long and thus the process takes

time. Also, the gathering and interpreting the data is teddies process. Felid review method is a

method which requires the managers to answer detailed questions about his subordinate’s
performance, work progress strengths and weakness. This evaluation is done by a third person

therefore it is subjective to the evaluator’s skills, competences perception.

As traditional method tend to be time consuming these cannot be carried out in larger

organizations due to time constraints. Also, many of these above mentions are subjective to

rater’s skill set and judgement for evaluation. Therefore, practitioner felt a need to shift towards

job traits of employee under evaluation. The modern methods lay emphasis on aspects of job

achievement making the process objective. Depending on the objectivity alone one can say that

the modern method of a appraisals are less biased. Some of the modern methods are explained.

Assessment center method in assessment centers multiple assessment takes place through

incorporating role playing, business games and in-basket exercises. This method can be traced

back to 1930s when Germany used this to appraise army officers. With its spread to US, UK it

became popular in India in 1960s. Companies like Hindustan liver, Modi Xerox have adopted it.

These assessments are conducted by trained evaluators and experienced managers. Along with a

summarized report for each individual feedback is also provided. This is one of the most

important stage which is not incorporated in traditional methods. These assessments are done for

appraisals and also help determine future needs. All these exercises are derived by on-job needs

and thus painting a realistic picture. As a group of assessors are involved evaluation cannot be

biased or skewed, in-fact different perspectives can help better feedbacks. However, the

technique limits the number of individuals that can participate and therefore is not a god option
for a large organization. Also, it might lead unhealthy competitions among employees during

DAC.

360 Degree Appraisal as the name suggests data is collected from all sources which play and

role in job performance. There are managers, subordinates, peers as well as customers, this has

proven to enhance overall performance (Atwater et al., 1995; Reilly et al., 1996). This perhaps

the only method that incorporates reviews from customers. It provides a holistic 360◦ view of an

individual’s performance. General Electric Company (USA) developed this method in 1992 and

is now popular with Indian companies like Reliance Industries, Wipro Corporations, Infosys

Technologies, Thermax and Thomas Cook. All the appraisers answer survey questionnaire about

the employee, this information is then collected and presented in form of a report. This report

highlights feedback and potential growth areas. Mostly computerized these require lesser time

than traditional Essay or Critical Incident reports. Despite its efforts to reduce biases, this method

is still subjected to biases by the appraiser. If the peer or manager dislike the employee, they may

tend to provide a negative review despite the employee’s good performance. Researches have

shown that when ratings were low, employees reacted negatively, expressed anger, and rejected

the feedback results (Brett and Atwater (2001).

Management By Objective

Peter. F. Drucker conceptualized management by objective in 1954 to overcome the problem of

appraiser bias. The manager and employee set goals with respect to organization goals, areas of

responsibility and then these set the criteria for evaluation. This is the only method which

evaluation. This is the only method which allows continuous and long dialogues of interaction

between employee- manager. These should always be seen from motivational point of view. A

serious problem arises when unrealistic goals are set or the goals are ill-defined or vague. For
example, a goal like “will try to be better at managing” is an unmeasurable goal. Also, the

process of setting goals can cause tension between the employee and the manager thus

weakening their relationship. This process is also very time consuming and might hinder with the

daily process of organization.

It can be clearly understood how traditional methods of performance appraisal did not fulfill the

objective for which performance appraisal is done. They are deficit in providing feedback and

highlighting areas of development and enhancing the potential growth areas which are the need

of the hour. Goal- setting is now a defined periodic process which is done by every employee

and organization, traditional methods failed to incorporate this basic process and were skewed

towards fulfillment of broad organization goals by the employee. Adding to this, using

traditional methods the employee could not focus on self-development and self-growth which the

modern methods encourage.

Employers have realized how Employment engagement is important to retention and

development employees. Traditional methods failed to understand now to engage employee.

Modern methods are inclusive, employee himself and managers, peers all take part in this

process and thus employee engagement increases. The employee feels acknowledged and looked

after which increases performance and commitment towards the organization. Traditional

method can be said to be individualistic whereas modern methods are much more systematic.

They follow a step by step process and defined criteria for evaluation which cannot be changed

by the evaluator. Also, traditional methods tend to follow an evaluative style. Modern methods

enhance scope of coaching and follow a motivating style. Modern method focusses on problem

solving and answer questions such as how and why, which traditional methods do not provide.
Therefore, modern methods can be called Developmental. Another key difference is how

traditional methods are occasional and a one-time process and modern methods are frequent and

a continuous on-going process. Lastly the rewards of the appraisal are yielded by the employee

only, when following a traditional approach. Wherein using the modern approach, the employee,

manager and the organization all yield benefits.

Performance feedback is a very important aspect of performance appraisal process which was

lacking in traditional methods of appraisal. Researches show how tasks that are performed to

satisfy one’s wishes and aspirations (promotion tasks) benefit from positive feedback. Therefore,

an ideal contemporary method of appraisal show include feedback.

References

Appraising the state of performance appraisal, John Edmonstone, University of Keele, Keele,

UK

From Van Dijk, D., Schodl, M.M., 2015. Performance Appraisal and Evaluation. In: James D.

Wright (editor-in-chief), International Encyclopedia of the Social & Behavioral Sciences,

2nd edition, Vol 17. Oxford: Elsevier. pp. 716–721

Performance Management/Appraisal: Good Practice Guide, NHS in Scotland/Management

Development Group, Edinburgh, 1993.

Towards a Sound Performance Appraisal System: An Agenda for Action, Vol.4, No.1, 2013