Performance criteria are very critical part of the appraisal system. They must be relevant, measurable, well understood, easy to understand, unambiguous, and acceptable to all the concerned parties. So, human resource management gives extra care and attention in setting such criteria. Performance criteria may be set by various ways, but it is better to use multiple sources to select the criteria. The sources may be the following:
(a) The owner or owner manager or manager through a careful analysis and thoughtful exercise of their judgement.
(b) A committee of experts may be engaged to set the criteria for evaluation.
(c) An outside consultant may be engaged to develop standards for the performance measures.
(d) Others’ criteria can be used as our criteria for evaluation. What others’ in the same field of operations are using could be employed as the measure of performance i.e. adopt local or indigenous practices.
(e) Performance criteria developed by intuition of the evaluator, no standard performance measures are set.
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