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Methods of Merit Rating: Traditional and Modern Methods

After reading this article you will learn about the traditional and modern methods of merit rating of employees.

Traditional Methods of Merit Rating:

The various traditional methods used are mentioned below:

(i) Ranking Method:

It is the simplest, oldest and most conventional method of merit rating. Every employee is judged as a whole without distinguishing the rates from his performance.

In this method a list is then prepared for ranking the workers in order of their performance on the job so that an excellent employee is at the top and the worst at the bottom. It permits comparison of all employees in any single rating group regardless of the type of work.

The difficulty of this method is that it is very difficult to compare persons on the whole when they differ in qualities, attitudes, etc. This method only gives the idea about the standing of various people and not the actual difference among them. This method however does not indicate specific strengths and weaknesses between two or more workers. This technique is used in those enterprises where there are few workers.

(ii) Paired Comparison Method:

In this method every person Is compared trait wise, with other persons one at a time, the number of times one person is compared with others is recorded on a piece of paper. These numbers help in yielding rank of employees.

For example, if there are five persons to be compared. A’s performance is first compared with that of B to determine who has better performance, then A is compared with C, D and E in turn and performance is recorded.

Later B is compared to C, D and E, since he has already been compared with A. Afterwards C is compared with D and E and so on. The results of these comparisons are tabulated and a rank is assigned to each employee. The number of comparisons can be worked out with the formula.

Number of Comparisons = N (N-1)/2 Where N is total number of employees to be evaluated.

This method gives more reliable rating than straight ranking. But it will be suitable only when the number of persons is small.

(iii) Grading System:

Under this system certain features like analytical ability, cooperativeness, dependability, job knowledge, etc. are selected for evaluation. The employees are given grades according to the judgement of the rater.

The grades may be such as:

A-outstanding; B-very good: C-satisfactory; D-average E-below average, etc. The actual performance of every employee is rated with various grades in the mind of the rater.

(iv) Forced Distribution Method:

Some evaluators suffer from a constant error i.e. either they rate all workers as good, average or poor. They do not evaluate the employees properly. This system minimises rater’s bias so that all employees are not equally rated.

This system is based on the presumption that all employees can be divided into five categories. Outstanding, above average, average below average and poor. The main aim in this system is to spread ratings in a number of grades. This method will be useful only when the group of employees is large. It is also easy to understand and simple to apply.

(v) Check List Method:

In this technique the supervisors are provided with printed forms containing descriptive questions about the performance of workers. The supervisor has to answer in yes or no. After putting answers to these questions the forms are sent to Personnel Department where final rating is done. Various questions in the form may be weighted equally or certain questions may be given more weightage than others.

The check list may contain such questions:

1. Is the employee hard working? (Yes/No)

2. Is he regular on the work? (Yes/No)

3. Does he co-operate with his superiors? (Yes/No)

4. Does he maintain his equipment/machines well? (Yes/No)

5. Does he obey instructions well? (Yes/No)

The supervisor’s bias is the main characteristic of this method because he can distinguish between positive and negative questions. It is also difficult to put all possible questions in the checklist because it will make the check list lengthy.

(vi) Critical Incident Method:

This method measures worker’s performance in terms of certain events or incidents that occur in the course of work. The assumption in this method is that the performance of an employee/worker on the happening of critical incidents determines his failure or success. The supervisor keeps a record of critical incidents occurring at different times and then rates him on this basis.

Examples of critical incidents are:

(i) Refused to follow instructions without a detailed discussion with superiors.

(ii) Refused to follow instructions even when these were made clear.

(iii) Increased his efficiency despite resentment from other workers/employees.

(iv) Showed presence of mind in saving a worker when sudden fire broke out.

(v) Performed a difficult task even though it was outside has regular duties.

(vi) Displayed a courteous behaviour to a supplier.

(vii) He helped fellow employees in solving their problems.

The only difficulty in this method is that outstanding incidents may not regularly occur. Moreover, negative incidents may be more noticeable than the positive ones. The supervisor may not record an incident immediately and forget it later on. It may be a difficult for a supervisor to decide whether an incident is critical or not.

(vii) Free Essay Method:

In the free essay method the supervisor writes a report about the worker which is based on is assessment about performance of workers. The supervisor continuously watches the workers or subordinates and writes his assessment in the report. The covered are the behaviour with employees, job knowledge, employee traits, development requirements for future, etc.

In this method the supervisor will be able to provide a detailed account of the employee’s performance. The system may suffer from human bias because of likings or dis-likings of the supervisor for specific workers. The other limitation of this technique is that an appraiser may not be able to express his judgement in appropriate words and it will limit the utility of appraisal reports.

Modern Methods of Merit Rating:

The modern methods used in merit rating are as follows:

(i) Management by Objectives:

The management by objective or management by results was developed by Peter Drucker who emphasised that performance of each job should be directed towards the achievement of whole business objectives.

According to George S. Ordisrue, “The system of management by objectives can be described as a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individual’s major areas of responsibility in terms of results expected of him, and use these measures as guides for members.”

Peter Drucker pointed out that objectives are required in every area where performance and results directly and vitally affect the survival and chances of success of the business.

In the MBO system of merit rating the superior and subordinate sit together and set the goals to be achieved by the latter in a particular period of time. The work to be performed becomes a goal for performance evaluation.

The employees periodically meet their supervisor to evaluate the progress of their goals. If required, these are revised. Frequent feedback and superior subordinate interaction are important features of this system.

MBO, as a technique of evaluation, may not provide good results if the goal setting is hasty and over ambitious. Lack of proper feedback between the superior and subordinate may also adversely affect the application of this technique.

(ii) Assessment Centre Method:

The assessment centre method was first used in German Army and later in British Army. The purpose was to assess people in particular situations. The evaluators record their assessment regarding various people when they perform in an actual situation.

This method is utilized, generally, to determine the suitability of persons for first supervisory levels. It also helps in determining training and development requirements of employees.

The distinguishing characteristics training and development requirements of employees. The distinguishing characteristics normally assessed are: organizing and planning ability, getting along with other, quality thinking, resistance to stress, orientation to work etc.

The assessment centre ratings are said to be influenced by the participant’s interpersonal skills. The employees who generally perform well in a normal situation may become conscious under stimulated situations.

The supervisors who nominate employees to assessment centres normally do not favour people who are aggressive, intelligent, and independent even though these qualities are essential for higher level positions.

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Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.