Performance appraisal and the applications in building useful appraisal practices in PECC 1

vietnam national university, HANOI
hanoi school of business







Tran Thu Ha






Performance appraisal and the
applications in building useful
appraisal practices in pecc 1





master of business administration thesis

Hanoi - 2007
vietnam national university, HANOI
hanoi school of business





Tran Thu Ha





Performance appraisal and the
applications in building useful
appraisal practices in pecc 1







Major: Business Administration
Code: 60 34 05

Master of business administration thesis




Supervisors:
1. Vu Huy Thong, ph.d
2. ha nguyen, mba





Hanoi – 2007

v
TABLE OF CONTENT

Abstract……………………………………………………………………………i
Tóm tắt……………………………………………………………………………ii
Acknowledgements……………………………………………………………….iv
Table of content………………………………………………………………… v
Executive summary…………………………………………………………………….viii
INTRODUCTION ____________________________________________________ 1
1. NESCESSITY OF THE THESIS _______________________________________ 1
2. PURPOSE ____________________________________________________________ 1
3. KEY RESEARCH AREA ______________________________________________ 2

4. METHODOLOGY ____________________________________________________ 2
5. CONTRIBUTION OF THE THESIS ____________________________________ 2
6. OUTLINE ____________________________________________________________ 3
CHAPTER 1: LITERATURE REVIEW _______________________________ 4
1.1 PERFORMANCE APPRAISAL _______________________________________ 4
1.1.1 What is performance? ______________________________________ 4
1.1.2 Performance appraisal _____________________________________ 6
1.1.3 Performance appraisal’s critiques____________________________ 10
1.1.4 Benefits of performance appraisal ___________________________ 12
1.2 PERFORMANCE APPRAISAL APPROACHES ______________________ 15
1.2.1 Trait approaches _________________________________________ 15
1.2.2 Behavioral approaches ____________________________________ 18
1.2.3 Result approaches ________________________________________ 21

vi
1.3 RESPONSIBILITY FOR PERFORMANCE __________________________ 23
1.4 MODERN APPROACHES __________________________________________ 25
1.4.1 306-degree feedback ______________________________________ 25
1.4.2 Appraisals of team performance _____________________________ 25
1.5 PROBLEMS OF APPRAISAL APPROACHES _______________________ 26
1.6 SUM UP OF THE APPROACHES ___________________________________ 28
1.7 PERFORMANCE APPRAISAL IN PRACTICES _____________________ 29
1.8 METHODOLOGY __________________________________________________ 32
CHAPTER 2: FINDINGS ___________________________________________ 34
2.1 OVERVIEW OF PECC 1 ____________________________________________ 34
2.1.1 An overview ____________________________________________ 34
2.1.2 Company analysis ________________________________________ 35
2.2 RESULT FROM SECONDARY RESEARCH ________________________ 37
2.3 RESULT FROM PRIMARY _________________________________________ 39
2.3.1 Patterns of the survey samples ______________________________ 40

2.3.2 The content of the survey ____________________________________
2.4 FINDINGS _________________________________________________________ 58
CHAPTER 3. RECOMMENDATIONS _______________________________ 63
3.1 RECOMMENDATIONS FOR PECC 1 _______________________________ 63
3.1.1 Short term recommendations _______________________________ 64
3.1.2 Long term recommendations _______________________________ 73
3.2 ACTION PLAN _____________________________________________________ 76
3.3 CONTRIBUTIONS TO PERFORMANCE APPRAISAL ______________ 79

vii
3.3.1 Contributions to performance appraisal practices _______________ 79
3.3.2 Contributions to performance appraisal theory _________________ 80
CONCLUSION _____________________________________________________ 81
REFERENCES _____________________________________________________ 82
APPENDIXS ________________________________________________________ 83
APPENDIX A: QUESTIONAIRE
APPENDIX B: THE ORGANIZATIONAL CHART OF PECC 1

1
INTRODUCTION
1. NESCESSITY OF THE THESIS
PECC 1 is a state own company which is going to be equitized at the end of 2006.
This reality put them under the pressure of improving and strengthening all of their
resources in order to survive. Currently, the turn over rate is quite high. The
company now facing the threat of losing its intellectual blood especially the
employees who have the long time experience tend to switch to higher positions in
EVN. With newly graduations, they often leave the company after working for
PECC 1 in 2 or 3 years because their objective is just gaining the experience. PECC
1 is now lacking of skillful engineers who can help the company to carry and
manage big projects. Through the current surface of PECC 1, the student thinks
that these issues are related to human resource management of the company. There
are many different explanations for the leaving employees; however, there is a
common explanation that they will receive a higher salary package. The level of
new packages according to them is worthy to their efforts. That means the current
salary package PECC 1 has not made them feel satisfy in some way or we can say
that the current performance appraisal of PECC 1 has some disadvantages.
Therefore, if PECC 1 wants to keep their current staffs and attract more talents, they
have to revise their current performance appraisal system then improve it. Besides,
PECC 1 also want to develop a standard performance appraisal system in order to
enhance the strength of their current human resources. From through the knowledge
and experience of this MBA course, the student thinks that PECC 1 can settle their

problems through improving the human resource management overall, especially
focusing in performance appraisal system.
2. PURPOSE
The first objective of this thesis is helping PECC 1 to handle their current problems
and improve its current performance appraisal practices through analyzing the

2
PECC 1 from the angle of a performance appraisal perspective. This thesis will goes
from the performance appraisal theories, withdraw the best performance appraisal
practices then suggest some recommendations that fit with PECC 1. The
recommendations will be given out by finding the answers for these following
questions:
 How do employees feel about the current performance appraisal of PECC 1?
 In fact, how effective the appraisal system of PECC 1 was?
 What will be the effective ways for PECC 1 in gather the information that
useful for appraisal process?
 Whether can we develop some new appraisal practices in PECC 1? If yes,
what are they?
The second objectives is the contributions to performance appraisal in both
applications in theory and practices for Vietnamese companies that have the similar
issues as PECC 1.
3. KEY RESEARCH AREA
This research focuses on reviewing the performance appraisal theories and
analyzing the current problems of PECC 1 from the angle of performance
management. How to apply the performance appraisal approaches into PECC 1
appropriately.
4. METHODOLOGY
The methodology will be base on: (i) deep research by collecting the data from
internet, reviewing all the studies related to the performance practices and analyze
the PECC 1’s performance appraisal policy; (ii) quantitative survey that can help to

find out the employees’ opinion on the current performance appraisal of PECC 1.
5. CONTRIBUTION OF THE THESIS
The student hopes this thesis will help students who are interested in researching on
the performance appraisal practices in the future. And the most important thing is

3
that this thesis can help those companies who are in the same situation as PECC 1
can draw out the appropriate practices for them.
6. OUTLINE
The thesis includes three chapters.
 Chapter 1: Literature review
This chapter will provide the summary of performance appraisal theories. The
author will come from the definitions to methods to measure appraisal as well as the
development trend in using the performance appraisal.
 Chapter 2: Findings
This chapter will provide the findings from both secondary and primary researches.
The important thing of this chapter is to clarify the current problems of PECC 1.
 Chapter 3: Recommendations
From the problems that have been drawn out from Chapter 2. This chapter comes to
recommendations for both short-term and long term. Besides, the student wants to
give out some contributions to performance appraisal practices that can apply in
Vietnamese companies that have the same problems as PECC 1.

4
CHAPTER 1: LITERATURE REVIEW
As we all know that almost employees will be paid based on their performance and
appraising employees performance is considered as the most difficult and important
of the managers’ job, so before researching and analyzing about performance
appraisal we should answer the question below.
1.1 PERFORMANCE APPRAISAL
1.1.1 What is performance?

People often say she is high performance or he is poor performance. In addition, the
term “performance” progressively is considered as the word to express how well an
employee does his job. Experts define performance as “how well an employee is
fulfilling the requirements of the job”
1
. Through this definition, we can see that if an
employee wants to complete a job he needs to have not only a basic knowledge on
this job but the more important is the attitude. “To fulfill the requirements of the
job” means the employee should find out the right ways to do this job. So in
general, performance is seen as the result of the combination by the three factors:
effort, ability and direction. Effort refers to how hard a person works. Ability is
along with the person’s capability. Direction refers to how well the person knows
the expectations on the job.

1
Rue, Leslie W. & Byars, Lloyd L. “ Supervision: Key Link to Productivity”, Firth edition 1996, p.205

5
Figure 1.1 illustrates these relationships: (Rue and Byars, 1996)

People often confuse between performance and effort. However, the core different,
which helps us to distinguish effort and performance, is that performance stresses
more on the result while effort refers to how hard we try to get that result. Of
course, the performance of a person somewhat depends on the effort but if the
efforts were not use for a specific job, the performance will never be recognized.
From the figure above, Rue and Byars also mentioned the Environmental Factors.
Environmental Factors include work facilities and equipment, the relations among
employees; the restrictive policies affect the job… The factors are not under the
direct control of employee and can affect employee’s performance. For example,
let’s image about an artist working in the Creative department of an Advertising
company, what will happened if he has to follow very strict rules, and his
teammates have not cooperated or supported him well? In this situation, clearly, he
cannot do anything to change the rules as well as make his teammates change their
thinking about him. He will feel disappointed, he doesn’t want to devote effort for
the job even he likes it, he will work under his capability, and maybe he will go
against the setting direction  this leads to a bad result both in his works and
other’s.

Additionally, through that figure we can see, if an employee wants to get to a
certain level of performance, he has to present his effort, ability and direction to
Environmental
factors
Effort
Direction
Ability
Performance

6
some extend. If an employee puts forth a great deal of effort, has above average
ability but does not have a good understanding about the job, the probable result
would be unsatisfactory performance. If an employee understands about the
expectation of the job, works very hard but does not have any ability to do the job
 the result will be very poor. Therefore, the key to obtain good performance is to
encourage effort by employees, to develop their ability and to clear communication
about the expectations on the job. There are some several means using to enhance
the employees direction, one of them is performance appraisal.
1.1.2 Performance appraisal
The history of performance appraisal is quite brief. Its roots in the early 20th
century can be traced to Taylor's pioneering Time and Motion studies. However,
this is not very helpful, for the same may be said about almost everything in the
field of modern human resources management.
As a distinct and formal management procedure used in the evaluation of work
performance, appraisal really dates from the time of the Second World War - not
more than 60 years ago. From that on, appraisals gradually began to be used as a
tool for motivation.
Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of
things historical, it might well lay claim to being the world's second oldest
profession!

1

Performance appraisal is a process by which a superior evaluates and judges the
work performance of a subordinate. Performance appraisal systems include the
processes and procedures involved in implementing, managing, and communicating
the events involved in performance appraisal. In many cases, it is a formal process
and is a part of the personnel management policy. Numerous organizations employ
a formal or informal assessment system that measures employee performance and
contribution (Carroll & Schneier, 1982). Coens and Jenkins (2000) suggest that


1


7
performance appraisal is a mandated process in which, for a specified period of
time, all or a group of an employee's work behaviors or traits are individually rated,
judged, or described by a rater and the results are kept by the organization. Karol
(1996) considered performance appraisal to include a communication event
scheduled between a manager and an employee expressly for the purposes of
evaluating that employee's past job performance and discussing relevant areas for
future job performance. DeNisi, Cafferty, and Meglino (1984) indicated that
performance appraisal is an exercise in social perception and cognition embedded in
an organizational context requiring both formal and implicit judgment.
A variety of components may be included in the performance appraisal process.
Landy and Farr (1980) presented a model of performance appraisal that included 13
interacting factors: position characteristics, organization characteristics, and the
purpose of the rating, the rating process, scale development, the rating instrument,
rater and ratee characteristics, the observation and storage of performance data, the
retrieval and judgment of that performance, analysis of this information,

performance description and in the end, personnel action. According to Mohrman,
Resnick-West and Lawler (1989) there are four activities in the performance
appraisal cycle in organizations: (i) defining what performance is or should be; (ii)
measuring and evaluating performance; (iii) feeding information about that
performance back to the individual; and (iv) providing information to other
organizational systems that use it. Latham and Wexley (1981) listed similar
requisite components but added a review of legal requirements, development of an
appraisal instrument, selection and training of observers, and praise or reward for
performance. Regardless of the definition or the specific components included,
performance appraisal in most organizations is formal, structured, and required. The
process is generally defined to include an interview between the rater and the ratee
as well as performance documentation required by the formal evaluation system.
One descriptor left out of most definitions is that performance appraisal is often

8
dreaded by participants. Folger and Lewis (1993) suggest that performance
appraisals typically engender the same degree of enthusiasm as paying taxes.
“Appraisal, it seems, is both inevitable and universal. In the absence of a carefully
structured system of appraisal, people will tend to judge the work performance of
others, including subordinates, naturally, informally and arbitrarily. The human
inclination to judge can create serious motivational, ethical and legal problems in
the workplace. Without a structured appraisal system, there is little chance of
ensuring that the judgments made will be lawful, fair, defensible and accurate.
Performance appraisal systems began as simple methods of income justification.
That is, appraisal was used to decide whether or not the salary or wage of an
individual employee was justified”
1
.
In fact, conducting performance appraisals is often a frustrating human resource
management task

2
. Edward Lawler, one management guru also stated in one of his
paper that the performance appraisal systems are not the motivations of individuals
as well as the effective guiding to their development except the reason which
initiated the conflicts between supervisors and employees. If we focus on the
traditional performance review we can withdraw that this way of reviewing will put
power in supervisor’s hand, only they have the right to evaluate employees. But
today things have been changed; the sources of information that determines the
employee’s performance will not only from supervisor’s opinion, it is also gathered
from peers, customers …These information will provide the real picture about the
performance of that employees. However, performance appraisal often perceived as
a negative and disliked activity but still organization don’t stop doing it. Because
most of organizations, after reviewing the process, are led to one conclusion: if they
want to develop and become a great organization, having a fair of performance
appraisal system is needed. For that reason, developing an effective performance
appraisal system has been and will continue to be a high priority of human resource


1

2
Mondy, R. Wayne; Noe, Robert M. & Premeaux, Shane R. “ Human resource management”, Seventh
edition 1998, p.336


9
management. In this effort, performance appraisal must not be seen as an end in
itself but rather the means to influence performance management.
For many organizations, the primary goal of a performance system is to improve
performance. In fact, performance appraisal data are potentially valuable for use in

virtually every human resource functional area such as:
 Human resource Planning: a well-designed appraisal system provides a
profile of the organization’s human resource strengths and weaknesses to
support the promotion process.
 Recruitment and Selection: performance appraisal ratings maybe helpful in
predicting the performance of job applicants. These data may them provide
benchmarks for evaluating applicants responses obtained through behavior
description interviews. Also, in validating selection against which test scores
are compared.
 Training and Development: a performance appraisal should point out an
employee’s specific needs for training and development. A performance
system does not guarantee that employees will be properly trained and
developed. The task of determining training and development needs,
however, is aided when appraisal data are available.
 Career planning and Development: career planning and development may be
viewed from either an individual or an organization viewpoint. In either
case, performance appraisal data are essential in assessing the person’s
potential. Managers may use such information to counsel subordinates and
assist them in developing and implementing their career plans.
 Compensation: performance appraisal results provide a basis for rational
decisions regarding pay adjustments. Most managers believe that
outstanding job performance should be rewarded tangibly with pay
increases. They believe that what you reward is what you get. To encourage
performance, a firm should design and implement a fair performance

10
appraisal system and then reward the both most productive workers and
team.
 Internal employee relations: performance appraisal data are also frequently
used for decisions in several areas of internal employee relations, including

motivation, promotion, demotion, termination, layoff and transfer. An
employee performance in one job maybe useful for in determining his or her
ability to perform another job on the same level, as required in the
consideration of transfers.
 Assessment of employee potential: some organizations attempt to assess
employee potential as they appraise job performance. The best predictors of
future behaviors are said to be past behaviors. However, an employee’s past
performance in a job may not accurately indicate future performance in a
higher level or different position.
In conclusion, we can withdraw the purpose of performance appraisal: (i) to
improve employee performance in the present job, (ii) to prepare employees for
future opportunities that may arise in the organization, then (iii) to provide a record
of employee performance that can be used as a basic for future management
decisions.
1.1.3 Performance appraisal’s critiques
Few issues in management stir up more controversy than performance appraisal.
Many reputable sources - researchers, management commentators, and
psychometricians - have expressed doubts about the validity and reliability of the
performance appraisal process. Some have even suggested that the process is so
inherently flawed that it may be impossible to perfect it (see Derven, 1990
1
, for
example).


1


11
At the other extreme, there are many strong advocates of performance appraisal.

Some view it as potentially " the most crucial aspect of organizational life"
(Lawrie, 1990
1
).
Between these two extremes lie various schools of belief. While all endorse the use
of performance appraisal, there are many different opinions on how and when to
apply.
There are those, for instance, who believe that performance appraisal has many
important employee development uses, but scorn any attempt to link the process to
reward outcomes such as pay rises and promotions.
This group believes that the linkage to reward outcomes reduces or eliminates the
developmental value of appraisals. Rather than an opportunity for constructive
review and encouragement, the reward-linked process is perceived as judgmental,
punitive and harrowing. For example, how many people would gladly admit their
work problems if, at the same time, they knew that their next pay rise or a much-
wanted promotion was riding on an appraisal result? Very likely, in that situation,
many people would deny or downplay their weaknesses.
Nor is the desire to distort or deny the truth confined to the person being appraised.
Many appraisers feel uncomfortable with the combined role of judge and
executioner.
Such reluctance is not difficult to understand. Appraisers often know their
appraisees well, and are typically in a direct subordinate-supervisor relationship.
They work together on a daily basis and may, at times, mix socially. Suggesting that
a subordinate needs to brush up on certain work skills is one thing; giving an
appraisal result that has the direct effect of negating a promotion is another.
The result can be resentment and serious morale damage, leading to workplace
disruption, soured relationships and productivity declines.
On the other hand, there is a strong rival argument which claims that performance
appraisal must unequivocally be linked to reward outcomes. Matthew Effect

1


12
supposes that when an employee receives the same appraisal results year in and year
out it will make them disappointed. The advocates of this approach say that
organizations must have a process by which rewards - which are not an unlimited
resource - may be openly and fairly distributed to those most deserving on the basis
of merit, effort and results.
There is a critical need for remunerative justice in organizations. Performance
appraisal - whatever its practical flaws - is the only process available to help
achieve fair, decent and consistent reward outcomes.
It has also been claimed that appraisees themselves are inclined to believe that
appraisal results should be linked directly to reward outcomes - and are suspicious
and disappointed when told this is not the case. Rather than feeling relieved,
appraisees may suspect that they are not being told the whole truth, or that the
appraisal process is a sham and waste of time.
Experts also say that In-group Out-group Theory-Managers tend to judge
employees that they favor more positively and out-groupers in a less positive
manner. According to this theory: (i) In-groupers: Exhibit Effort and Ability
Sometimes have a bad day or things are done in bad timing; (ii) Out-groupers:
Exhibit Laziness and Incompetence
There is nothing perfect and the showing of the bad sides just gives us more ideas
on how to improve the performance appraisal. In fact, performance appraisal has a
lot of benefits not only to organizations but also to supervisors and employees.
1.1.4 Benefits of performance appraisal
According to Rue and Byars, appraising the performance does not only make
benefit for the organization but also for managers and employees. Here are some
benefits:

1.1.4.1 Benefits to Organization
 Provides an evaluation of the organization’s human resources: clearly when
we see the appraisal system is used to evaluate performance of employees

13
and even managers  the results from the appraisal system reflect the
capacity of human resource of an organization.
 Gives the organization basic for making future human resource decisions: the
data withdrawn from appraisal system can give managers a detail picture of
employee’s capacity as well as potential of him. The date can help the
employee to get an exact reward or a higher position.
 Increases the potential of the organization’s present human resources for
meeting the present and future needs of the organization: the results of
appraisal system shows the capability of each employee as well as the
potential of them so human resource department can actively carry the
promotion or rotation, selection actions
 Improve employee morale: with a transparent appraisal system, employee
can see that they will be paid appropriately to their effort so they will work
more effectively. This system also points out the attitude and team-work
spirit so each staff will have to work follow ethic.
1.1.4.2 Benefits to Supervisors
 Provides the supervisor with a clearer picture of the employee understands of
what is expected to the job: at the beginning of a specific job, employee
always receive the guidance and the requirements on the job that can help
them to complete it. But in fact, there will be something that make the
employee go under the requirements or over expected. When comparing the
result of the job with the requirements through appraisal system, supervisor
can see whether the employee understand the requirements of the job or not.
 Gives the supervisor input into each employee’s development: because
supervisor is the person who directly assesses the employee performance.

Supervisor observes the employee everyday in every assignment that why he
can know what skill employee needs for development and he can help the
employee drawing out an appropriate development plan.

14
 Improves the productivity of morale of the supervisor’s employees: appraisal
result can provide to employee with a fair assessment. Employee will
understand that the supervisor’s evaluation is fair and based on what they do,
supervisor will never victimize anyone if they work morally.
 Helps the supervisor identify capable replacements for higher-level jobs
within the supervisor’s work unit: the mission of supervisor is not only
evaluating the employees but also evaluating other supervisors. The way
they assess each other is not different with the way applied for employees,
the result will appear on the appraisal system. Off course, this data can be
use in the supervisor’s work unit for replacements for higher-level.
1.1.4.3 Benefits to Employee
 Allows the employee to present ideas for improvement: with each appraisal
system their will be a bilateral communication, not only supervisor’s opinion
about the employee’s performance but also they will receive feedback from
employees about the accurate level of the system. In each form of appraisal,
there always be a part reserving for employee comment and the result which
gives out by the appraisal system will have direct affect to incentives so
employee will actively find out the ideas to improve both the system and
themselves.
 Provides the employees with an opportunity to change his or her behavior:
the more important of appraisal system is the comment from the supervisor
as well as the advices for each employee if he wants to improve himself. So
no matter the result, it’s only meaningful if it can show the employee how to
increase his capability.
 Lets the employee know how the supervisor feels about his or her

performance: clearly in each appraisal form there is a part for supervisor to
make comment. At the end, this comment will give to the employee. Each

15
employee will receive different comment from the supervisor so employee
can know what their supervisor think about him honestly.
From the analyses above, we can withdraw the important of having an appraisal
system. However, the more important thing is how to develop an appropriate system
that can help organization to utilizing its human resource. There are many appraisal
practices that have been applied worldwide; the use of each method depends on the
attributes of an organization as well as the purpose of the leaders of that
organization. So now, we come to study on appraisal practices.
1.2 PERFORMANCE APPRAISAL APPROACHES
Ideally, performance appraisal should be directly related to job success. However,
locating or creating the satisfactory measures of job success can be difficult. There
are many jobs for which performance measures can be developed with a greater
degree of difficulty. In addition, job performance is often influenced by factors
outside the employee’s control. For example, the performance of a machine
operator is partially influenced by the age and condition of the equipment. For these
reasons and others, performance appraisals are often based on personal
characteristics and other subjective factors. In practice, the most common set of
personal characteristics of appraisal criteria are traits, behaviors and task outcomes.
Correctively to this set of appraisal criteria, experts have developed three
approaches: trait approaches, behavioral approaches and result approaches. We will
go through these approaches orderly.
1.2.1 Trait approaches
The trait approaches are used to mainly measure important characteristics that an
employee may possess that are vital for job performance. Many employees in
organization are evaluated on the basis of certain traits such as attitude, appearance,
initiative, and so on. However, many of the traits commonly used are subjective and

may be either unrelated to job performance or virtually impossible to define.
According to this approach, many appraisal methods have been stated out and the

16
most commonly used methods are: graphic rating scale, essay method, forced-
distribution, ranking, pair-comparison.
1.2.1.1 Graphic rating scale method
Graphic rating scale method was defined as a widely used performance appraisal
method that rates employees according to defined factors. Using this approach,
judgments about performance are recorded on a scale. The scale is divided into
categories, normally 5 to 7 in number, that are often defined by a adjectives, such
as outstanding, average or unsatisfactory. Although an overall rating maybe
provided, the method generally allows for the use of more than one performance
criteria. The factors chosen for evaluation are typically of two types: job-related and
personal characteristics. Traits are taken and are put in scale form which the rater
marks a corresponding box that signifies the degree to which that characteristic is
possessed.
The advantages of this method are:
(i) simple to use: from the requirements of the job, you can draw all the traits
and criteria that need for the job.
(ii) provides a quantitative rating for each employee: you have a detail range
for evaluation so the result will be illustrated through numbers.
However, there are also some disadvantages:
(i) standards are may be unclear (see the detail at section 1.5)
(ii) halo effect; central tendency; leniency and bias can also be problems (see
the detail at section 1.5)

17

Figure 1.2: an example of Rating scales form

In that Figure, job-related factors include quality and quantity of work, whereas
personal factors include such attributes as initiative, application.
1.2.1.2 Essay method
In the essay method, the rater simply writes a brief narrative describing the
employee’s performance. This method tends to focus on extreme behavior on the
employee’s work rather than routine day to day performance. Ratings of this type
depend heavily on the evaluator’s writing ability. Some supervisors, because of
their excellent writing skills, can make even a marginal worker sound like a top

18
performance
1
. Comparing essay evaluations might be difficult because no common
criteria exist. But some managers believe that the essay method is not only the most
simple but also best approach to employee evaluation because through the essay the
strengths and weakness are described in sentence form and along with theses
descriptions, suggestions for improvement measures are also written out. And the
essay can help to provides opportunity to point out unique characteristics of
employee as well as provide a set-back due to it being unstructured and totally
dependent on the appraisers writing ability.
1.2.2 Behavioral approaches
When an individual’s task outcome is difficult to determine, a common procedure is
to evaluate the person’s task-related behavior. For example, if you want to evaluate
the individual in teamwork you can evaluate some appropriate behaviors like
developing others, teamwork and cooperation or customer service orientation.
Desired behaviors may be appropriate as evaluation criteria because of the belief
that if recognized and rewarded, they will be repeated. Behavioral approaches are
more so action based and are an excellent source of information for employee
development. There are some commonly used methods such as: Critical incident,
Behaviorally anchored rating scale, Behavioral observation scale

1.2.2.1 Critical incident method
Critical incident method is a performance appraisal technique that requires a written
record of highly favorable and highly unfavorable employee work behavior. When
such an action affects the department’s effectiveness significantly, positively or
negatively, the manager will write it down. It is called a critical incident. In another
way we can say that critical incident is the record of behaviors of the employer that
gives an example of effective as well as ineffective job performance.


1
Mondy, R. Wayne; Noe, Robert M. & Premeaux, Shane R. “ Human resource management”, Seventh
edition 1998, p.348


19
At the end of the appraisal period, the rater uses these records along with other data,
to evaluate employee performance. With this method, the appraisal is more likely to
cover the entire evaluation period.
The advantages of this method are:
(i) helps specify what is “right” and “wrong” about the employee’s
performance: because the critical incident provides employees with the
example of effective and ineffective job’s performance so employees can
understand what they should do and what they should avoid
(ii) forces supervisor to evaluate subordinates on an ongoing basis: because
this method helps to record all the actions so it require the continuous in
recording, that why supervisor has to keep recording everything in every
assignment, everyday.
The only one disadvantage is: this method is very difficult to rate or rank employees
relative to one another. Because each employee has to complete a different
assignment so the actions they take will be very different from each other. So the

record of actions of each employee will be varied  it’s hard to compare
employees.
1.2.2.2 Behaviorally anchored rating scale method (BARS)
Behaviorally anchored rating scale method is a performance appraisal method that
combines elements of the tradition rating scale and critical incident method through
anchoring a qualified scale with specific narrative examples of good and poor
performance.
Developing a BARS can be more time-consuming than developing other appraisal
tools, such as graphic rating scales. But BARS can also have some important
advantages:
(i) a more accurate gauge. People who know the job and its requirement
better than anyone else develop BARS. The result should therefore be a good
gauge of performance on that job

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(ii) clearer standards. The critical incident along the scale help to clarify what
is mean by extremely good performance, average performance, and so forth.
(iii) feedback. The critical incident may be more useful in providing
feedback to appraisees than simply informing them to their performance
rating and not providing specific behavioral examples.
(iv) independent dimension. Systematically clustering the critical incidents
into five or six performance dimensions (such as knowledge and judgment”)
should help to make the dimensions more independent of one another. For
example, a rater should be less likely to rate an employee high on all
dimensions simply because he or she was rated high in “conscientiousness”.
(v) consistency. BARS evaluation also seems to be relatively consistent and
reliable in that different rates’ appraisals of the same person tend to be
similar.
1.2.2.3 Behavioral observation scale
Behavioral observation scale method is similar to the BARS method in the approach

with the use of the scale. It differs by asking the rater not what most represented
behavior but the frequency of each behavior.
Figure 1.4: Example of Behavioral observation scale method: