Focus on Applied Limitations of MBO, Bars and HRA: A Critical Review

From the origin of the Performance appraisal (PA) concept the process still facing very real problems, while overcoming those issues may not guarantee success but failure is certain if managers ignore them. Organizations only focus on those outcomes which can be measured, not those outcomes that matter. The significant reason for the failure of any PA techniques moves around the fair rating which seems to be gradually decreasing in Indian companies. Initially Drucker's Management by Objectives (MBO) concept was adopted particularly related to performance appraisal but later the reality of behavior approach was adopted to provide the decisive information about where employee fails and to suggest corrective measures. Later the companies are initiated to maintain the expenses made of human resources are witnessed that their decisions are influenced by financial information and ideology has caused for emergence of HRA concept to record useful financial data about employees which is further utilized as PA technique to measure employees’ performance. If so Human resource accounting (HRA) will be useful to record financial data about employees. Managerial decisions are justified and acceptable provided with all types of information about employee. Performance appraisal technique aid managers to make crucial decisions about their human resources. Any appraiser should thoroughly understand the limitations and risk involved before adopting a technique.

The aim is to ascertain limitations observed by the researchers while dealing with PA techniques such as, MBO, BARS & HRA. Total eighteen (18) articles were drawn for the study using Judgmental sampling technique. Although theories express their limitations but one need be aware of about their implementation issues to understand the reality. It is still difficult to gain a clear perspective on the efficacy of MBO, BARS & HRA in terms of corporate and individual performance.