Challenges and Errors in Performance Appraisal

PSYCH-105 Industrial Psychology

Chapter 17: Performance Appraisal

Unit 1

Unit 2

Unit 3

Unit 4


Challenges in Performance Appraisal

1. Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. It should be quantifiable or measurable.

2. Create a rating instrument

Inter-rater reliability is generally very low between managers at any organization. What one manager considers to be “acceptable” performance, another may consider “not meeting expectations.” This can be a challenge for any organization and is made more of a challenge in situations where the criteria used are subjective and not based on any measurable performance outcomes.

3. Lack of competence

Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively. 

4. Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e., one trait influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal process. Therefore, the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees. 

5. Resistance

The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her. 

Common Errors in Performance Evaluation





Contrast effect

Tendency of a rater to evaluate people in comparison with the other individuals rather than against the standards for the job


First impression error

Tendency of a rater to make an initial positive or negative judgment of an employee and alloy that first impression to colour or distort later information


Halo/ horns effect

Inappropriate generalizations from one expect of an individual’s performance to all areas of that person’s performance. It is a tendency to let our assessment of an individual on one trait influences our evaluation of that person on other specific traits.


Central tendency

The inclination to rate people in the middle scale even when their performance clearly warrants a substantially higher or lower rating 


Negative and positive skew

The opposites of central tendency: the rating of all individuals as higher or lower that their performance warrants


Attribution bias

The tendency to attributes performance failings to factors under the control of the individual and performance success to external causes


Recency effect

The tendency of minor events that have happened recently to have more influence on the rating then major events of many months ago



The tendency to generalize across groups and ignores individual differences



Rater tends to rate every employee at the upper end of the scale regardless to the actual performance of the employee. When a rater is overly severe, he is said to be making an error of negative leniency, while easy raters make the error of positive leniency.

Author – Dr. Niyati Garg

Please Share:

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top
Scroll to Top