Irrespective of companies, the Performance Appraisal Systems are broadly of two types: (i) Goals/ KRAs based (ii) Competencies/ skills based. Some companies have a mix of the two, by allocating weights to each. For example, Goals/ KRAs may carry 60 % weight & the Competencies/ skills may have the balance 40%. The distribution of weights may differ as per employee level. For example, in the case of Managers, Goals/ KRAs may have 80% weight & for their subordinates, it could be only 40%. Reason for the same is 'employee development'. Development plans are based on competencies/ skill gaps & there is a bigger need to focus on the same for employees with lesser experience. The senior lot are fairly developed & it is time that they deliver as per goals.
Hope it gives you a fair idea, Alankrita, about the basis of design of performance appraisal systems. Well, that is an introduction only since the full design is a complex process, involving interplay of many variables, and based solely on the maturity of HR processes of an organization.
15th February 2013 From India, Delhi