Measuring and rewarding performance is a critical function of the Human Resource department. The measurement should be conducted in a free and fair manner in which both the management and the employee have confidence. There are a number of measurement scales proposed by management pundits. All of them have their own advantages and disadvantages. BARS or Behaviorally anchored rating scales is one of them. BARS involves measuring the critical areas of performance in any job profile. The rating scales are designed to identify the areas of performance. The person who evaluates the employee during appraisal is expected to closely monitor the employee in his workplace. He later compares the performance of the employee vis-à-vis the rating scales.

There are different ways in effectively structuring a BARS system. They are: 

1. Identification of Critical Incidents: This step involves supervisors and other in authority identifying specific incidents of effective and unsatisfactory behavior. These incidents should be related to the job performance. 

2. Selection of performance dimensions: These incidents are further dissected into performance dimensions. An average of 5 to 7 performance dimensions is ideal. This classification is based primarily on the Critical incidents selected. 

3. Retranslation of the incidents: Another group of participants who are familiar with the job are asked to reclassify the critical incidents initially selected. This is done to safeguard against individual bias. There needs to be an agreement of 75% of the panel for the incident to be included in the rating procedure. 

4. Assignment of values to the incidents: The individual incidents are now rated based on the performance dimensions. The rating scale usually ranges from 1 to 7. A rating of 1 indicates an ineffective and unsatisfactory performance, while a rating of 7 indicates an effective or satisfactory performance. The ratings thus arrived at are then subjected to mean and standard deviations. Incidents which have standard deviations of 1.5 or less find a place in the final scales. 

5. Developing the Final rating document: The behavioral anchor for the ultimate performance dimensions is the subset of the incidents selected. The BARS in its final form is composed of a set of vertical scales and the corresponding incidents which endorse them.

While this system appears to be logical and with inherent safeguards against the effects of bias and preconception, it has its own share of advantages and disadvantages.

The advantages are that since the ratings are by people who are familiar with the working environment they have a greater chance of being accurate. This also involves participation by the workers to a considerable degree. It is also specific to the particular job function and rates behavior that can be observed easily.

However, critics point out that despite its intuitive appearance, the system has some inherent downsides. The designing of effective BARS is time-consuming in the first place. The behaviors used for rating are more activity oriented rather than result oriented. This leads to a situation where the supervisors will have to give a higher rating to employees who are just involved in an activity, but do not show results.