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Performance management appraisal may fail due to judgment by top management and the supervisors. The top management and supervisors sometimes experience errors in judgment, such as the halo effect. The manager may observe a subordinate conducting the first task well and rate the employee high in all other duties, yet the opposite may also be possible. The first impression error is based on the first impression, which prompts the manager to rate the employee.
Other judgment errors by the top management include the similar effect, which infers that a manager rates the employee high when the employee exhibits identical traits. Among other perceptions, errors are comparison or the contrast effects in which the employee is rated based on the performance of others as opposed to set standards and criteria. Secondly, the central tendency error is where an employee is ranked at the midpoint of the rating scale applied. The management may also have a history of inflated performance ratings, which may affect the entire rating of the employees.
Some challenges faced in the performance management appraisal include quota or a forced distribution for performance ratings. Additionally, performance appraisal may experience poor feedback from the supervisors and a lack of appropriate information, insufficient observation, and information on the technical dimensions of the employee’s work. Poor documentation and a lack of proper time for measuring performance may also affect performance appraisal management. Inadequate training or appreciation for the performance management process among the management, mainly the supervisors, also affect performance appraisal management. Similarly, insufficient training on rating employee performance and lack of information on the employee’s performance standards is also performance appraisal.
Inadequate performance management systems characterized by poor systems may lack employee development programs such as employee training and development needs. The method may lack appropriate rewards and compensation plans such as retention, rewards, and bonuses. The system may also lack or have poor employee motivation techniques.
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