1. Halo Effect
The rater may base the full appraisal on the basis or one positive quality which was found out earlier. For e.g. If a person is evaluated on one quality i.e. emotional stability and if he scores very high in the case of emotional stability, then the rater may also give him high scores (marks or grades) for other qualities such as intelligence, creativity etc., even without judging these characteristics.
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2. Problem of Leniency or Strictness
Many raters are too lenient (not strict) in their ratings. High scores may be given to all employees, even if they have no merit. Also a reverse situation may take place, where all employees are rated very strictly and very low scores are given.
3. Central Tendency
Sometimes a rater gives only middle range scores to all individuals. Extremely high or low scores are avoided. This is called Central Tendency.
4. Personal Bias
Performance appriasal is affected by personal bias of the rater. If the rater has good relations with the ratee (an employee who is getting rated), he may give higher scores to the ratee, even though the ratee does not deserve such high scores. So personal bias may lead to favoured treatment for some employees, and bad treatment to others.
5. Paper Work
Some supervisors complain that performance appraisal is pointless paper work. They complain because many times, performance appraisal reports are found only in the files. It does not serve any practical purpose. In other words, the performance appraisal reports are not used by some organisations. They are conducted just as a formality or for the name sake.
6. Fear of Spoiling Relations
Performance appraisal may also affect superior-subordinate relations. An appraisal makes the superior more of a judge than a coach. So, the subordinate may have a feeling of suspicion and mistrust, about the superior.
7. Evaluate performance not person
The rater should evaluate the performance, i.e. output, new ideas, extraordinary efforts, etc. and not the person. In reality, the person is evaluated and not his performance. It should be noted that failure is an event and a not a person.
8. Horn Effect
Sometimes the raters may evaluate on the basis of one negative quality. This results in overall lower rating of the particular employee. For e.g. "He does not shave regularly. Therefore, he must be lazy at work."
9. Spillover Effect
In this case, the present performance appraisal is greatly influenced by past performance. A person who has not done a good job in the past is considered (assumed) to be bad for doing present work.
10. Latest Behaviour Effect
The rating is also influenced by the most recent behaviour. The rater may ignore an average behaviour during the full appraisal period.