With a huge dependency on the workforce for the growth and survival of the company in a knowledge-based industry, keeping a close watch on the individual and group movements of a team is vital. Identifying the gap between the actual and the expected results, diagnosing the causes for the same and taking rectification measures to overcome them is therefore inevitable in the service industry.

One of the major tools to keep a close watch on the employee movement is through the performance appraisal system. Different types of appraisal systems exist within an organisation. The appraisal systems are formulated to meet the changing demands of the company thereby ensuring its effectiveness. In the traditional system of performance appraisal, the employee is asked to fill out the answers to the set questions which is then followed by the supervisory comments on the same. Complete dependence on this kind of a system is dangerous as it can be a product of personal bias. In the traditional system the supervisor and the subordinate come face-to-face and lay down their case to recognise the key areas of improvement. Most of the companies resort to this method to diagnose the problems in the individual performance on a personal level, within the team and with the customer.

To reduce the chances of personal bias, many Fortune 500 companies and Indian companies like Wipro, Maruti, etc have adopted a 360-degree appraisal system, especially at the senior levels of management. With the huge responsibilities lying on the top management in the company growth, identifying personal flaws in a group and customer relationship becomes more crucial. In a 360-degree system of performance appraisal the individual is rated by the supervisor, peer, subordinate and customer. In most cases the customer rating is based on surveys that identify the strengths and weaknesses of the individual. This system of appraisal, if done effectively, leaves little room for distortion. The one-to-one discussion which generally follows the individual rating gives a better understanding of the individual strengths and weaknesses and methods of improvement.

Another method of diagnosing individual performance problems is by keeping a close watch over individual movements at all times by the supervisor and stating the areas of improvement on a real time basis. This is the most effective of all tools as it ensures the daily activities are directed to the company objectives and steps for overcoming the gaps in the expected and actual performance are bridged through proper training and developmental activities. Appraisal is effective only when it is done on a continuous basis.

Analytical tools like ADDIE analyses the expected and the actual performances, designs the tools for bridging the gap between them, develops the tool according to the company needs, implement them through training and developmental programs and evaluate its success or failure on the basis of feedbacks.

Diagnosing performance problems helps to negate the unconstructive characteristics to a large extent thereby creating an innovative and capable team of employees who directs every action to the overall objectives of the firm.