There are two important methods of performance appraisal which are used by modern organizations. The first is Management by Objectives which represents result-oriented appraisal. The second is the Behavioural- Anchored Rating Scale which is based on behavior-rating, the behavior of the subordinates.
(i) Management by Objectives
It was Peter Drucker who proposed a goal-setting approach to performance appraisal which he called ‘Management by Objectives and Self Control’. This approach was further strengthened by Douglas Mc. Gregor. McGregor was concerned with the fact that most traditional appraisal systems involved ratings of traits and personal qualities that he felt were highly unreliable. Besides, the use of such trait ratings produced two main difficulties: (1) The manager was uncomfortable about using them and resisted making appraisals, and (2) it had a damaging effect on the motivation and development of the subordinate.
The goal-setting approach or “Management by Objectives” (MBO) is the same as the behavioral-approach to subordinate appraisal, actually called “work planning and review” in the case of General Electric Co., U.S.A. Under this approach, an employee is not appraised by his recognizable traits, but by his performance with respect to the agreed goals or objectives. Thus, the essential feature of this approach is the mutual establishment of job goals.
The goal-setting approach has done away with the judgmental role of the superiors in the appraisal of their subordinates. It has led to greater satisfaction, greater agreement, greater comfort, and less tension and hostility between the workers and the management. This approach is considerably superior to the traditional approach of performance appraisal. It emphasizes the training and development of individuals. It is a problem-solving approach rather than a tell-and-sell approach. This approach has also got a built-in device of self-appraisal by the subordinates because they know their goals and the standards by which their performance will be measured.
(ii) Behaviourally Anchored Rating Scales
Behaviourally Anchored Rating Scales (BARS) are designed to identify the critical areas of performance for a job and to describe the more effective and less effective job behavior for getting results. Performance is evaluated by asking the rater to record specific observable job behavior of an employee and then to compare the observations with a “behaviorally anchored rating scale”. As a result, the supervisor will be in a position to compare the employee’s actual behavior with the behavior that has been previously determined to be more or
Empirical studies of behaviourally anchored rating scales (BARS) have provided a fertile ground for study by both theorists and practitioners. The BARS experience has helped to clarify three major controversies of the appraisal process. One was the previously discussed issue of rating content (trait vs. job-related). The second controversy involved the multidimensional nature of performance. The administrative uses of appraisal had
encouraged rating systems to produce an overall measure of performance, which tended to mark differences in performance in the key result areas (“performance dimension”) critical to job results. The third controversy involved the issue of the most effective way to anchor the rating scales (numerical or behavioral). By anchoring the scales behaviourally, the BARS approach was expected to produce more valid and reliable results by reducing measurement errors (leniency, halo effect, central tendency, and so on).