A performance management process involves an assessment or an analysis of what has been achieved and forms a basis for career planning, potential development, performance agreements and development plans like Douglas Mc. Gregor suggested that emphasis should be on analysis and not on appraisal.

Performance management process is forward looking. Performance assessments depend upon the ability to judge a performance which further depends upon specification of clear standards and avoidance of unnecessary projections.

Perfect assessments can never completely be a reality and is susceptible to various errors or problems like halo effect which means the manager acquires a tendency of generalizing few experiences with the other aspects of performance and the problems of poor perception, selectivity and poor interpretation. For overcoming these problems the following remedial measures can be adopted:

• Ensuring that all the managers and employees understand the concept of performance and learn to differentiate between good performances with not so good ones.
• Encouraging managers to define and agree upon the standards and establishing different measures of effectiveness.
• Training managers to base their assessments and judgments after carefully scrutinizing the relevant data.

The different techniques which may be adopted for assessing the performance of employees in an organization are:

1. A holistic analysis of performance: The proponents of this approach believe that performance management is all about analyzing performance instead of assessing it. This technique aims at reaching an agreement for future action or development after carefully analyzing the strengths or possible weaknesses. Few organizations like BP Amoco implement this method of performance assessment for providing a feedback to the staff where they are good at.

2. Narrative Assessment: This is in the form of a written summary of views about different levels of performance achieved and is normally prepared by the managers. This technique lacks consistency in the criterion used for assessments as different managers will consider different aspects of performance.

3. Ratings: Many organizations like ICICI Bank and GE use ratings for assessing the performance of their employees for making pay related decisions. Through this method the quality of performance or the competence level achieved by an employee in a particular skill can be assessed by evaluating it on a scale against certain parameters which may be qualitative (behavioral) or quantitative. Since, performance is a subjective concept; it is difficult to achieve consistency in the ratings which are offered by different managers. Regular trainings and peer reviews may help in promoting consistency in the ratings.

4. Forced Distribution: In this method, the manager is forced to offer his ratings according to the pattern of a normal curve. This technique rests on the basic assumption that the employees’ performance levels fall under a normal statistical distribution.

5. Forced Ranking: In this method the employees are assigned ranking on the basis of categories. Since the concept of performance is vague so the rankings should be accompanied by meaningful performance data.

6. Quota Systems: Quota system specifies the distribution of ratings and accordingly adjusts the ratings of managers after an event for ensuring that the quota in each level is met.

Performance assessment is a very crucial yet a very difficult process. A combination of various assessment methods can yield good results.