“Destination Adventure!” is a prosperous travel agency having its eminent presence in the world of adventures. It is an active travel company, which organizes customized trips of small personalized groups with personalized staffing from the beginning to end. The company has become successful in the last few years. The company organizes summer camps and different other adventure camps during the year for attracting more and more customers. It values its relationship with the customers. It emphasizes on providing quality services, which occupy the customers senses and their imagination to discover places, nature, culture, etc. (Destination Adventure, 2008).
The company has expanded its operations and due to this, the number of employees inside the company has also increased. The company has to design new policies and regulations for the performance appraisal of the employees. The basic requirements of an effective performance appraisal system are mutual trust between the employees and the management, clear objectives, standardization of appraisal system, validity & reliability, periodically review and updation. The company is facing some problems in evaluating the performance of employees. The decision making process after the performance evaluation has become inconsistent for the managers (Mamoria & Gankar, 2002). The main problems that the company is facing are:
Errors in rating: It may arise in the performance appraisal and affect the decision making due to the following types of errors:
Halo effect: It is the tendency of rating an employee consistently high or low on the basis of overall notion. This error can be minimized by rating all the employees on one trait before taking up another trait.
- Stereotyping: It implies making a mental picture of a person on the basis of age, sex, caste or religion. It results in an over-simplified perspective and blurs the assessment of job performance.
- Central tendency: It refers to allotting average ratings to all the employees in order to avoid commitment and involvement. This is followed because the rater has not to justify the average ratings. As a result, the ratings are clustered around the midpoint.
- Constant error: Some evaluators try to become lenient in assessing performance, which leads to overrating of performance while strictness in assessing leads to underrating of performance.
- Personal bias: This kind of biasness may occur due to regional or religious beliefs and habits or interpersonal conflicts.
- Spill over effect: This comes up when past performance affects the assessment of present performance.