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Merit rating and its methods

Short answer

Merit rating evaluates performance for promotion, pay, and training decisions. Traditional methods include graphic scales, ranking, and critical incidents; modern methods include MBO, 360-degree appraisal, and assessment centres. Clear standards and trained raters reduce bias.

Define merit rating. State and describe the various methods of merit rating.

Merit rating

Merit rating (performance appraisal) is the systematic evaluation of an employee's performance, qualities and potential on the job, usually by the supervisor, in order to take decisions on promotion, pay, transfer, training and development.

Objectives: reward good performers, identify training needs, improve fairness in promotion, give feedback and improve performance.

Methods of merit rating

A. Traditional methods

  1. Ranking method: Employees are ranked from best to worst. Simple, but ignores the degree of difference.
  2. Paired comparison: Each employee is compared with every other, one pair at a time.
  3. Grading method: Predefined grades (outstanding, good, average, poor) are assigned.
  4. Graphic rating scale: Traits like quality, attendance and initiative are rated on a scale, e.g. 1 to 5. Most common.
  5. Checklist method: The evaluator ticks statements that describe the employee.
  6. Forced distribution: Employees are placed in fixed percentages (e.g. 10% excellent, 20% good, 40% average...).
  7. Critical incident method: Records important positive and negative behaviours.
  8. Essay (free-form) method: A written description of strengths and weaknesses.
  9. Field review: An expert from HR reviews the rating.

B. Modern methods

  1. Management by Objectives (MBO): Performance is compared with agreed goals.
  2. 360-degree appraisal: Feedback from supervisor, peers, subordinates and customers.
  3. Behaviourally Anchored Rating Scale (BARS).
  4. Assessment centre: Employees are observed in simulated tasks.
  5. Human resource accounting: Values the contribution of employees in money terms.

Valid appraisal needs clear standards, trained raters and feedback to avoid bias (halo effect, favouritism).

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