Updated November 22, 2023
Introduction to Performance Appraisal Methods
Everyone loves appreciation, and everyone loves to be appreciated, so the company appreciates someone; it does not keep it a secret, and the organizations express their appreciation in the form of what we call performance appraisal or performance reviews. Performance appraisals are also known as performance reviews or the performance evaluation used by the companies to assess an employee’s performance and appreciate him/her for his/her precious and dedicated contribution to the organisation’s growth. Thus, the performance appraisals can be defined as the process of evaluating an employee’s performance and personality as per the organization’s set of standards like versatility, quality of work, efficiency, cooperation, and teamwork, etc.
The companies are expected to put their best efforts into implementing the performance appraisal methods to feel satisfied and happy with the company policies and feel motivated to work more. It comes with its own strengths and weaknesses. There is no universally or globally accepted method of appraisal approved by any organization. However, Strauss and Sayles’s classification of appraisal methods is a widely accepted method for performance appraisal.
As per the Strauss and Sayles classification, there are traditional and modern methods of performance appraisal. The key difference between the traditional methods and the modern methods of performance appraisal is that traditional methods of appraisal are more work-oriented or goal-oriented and does not pay attention to employee’s other strengths, whereas the modern method of performance appraisal focuses on employee’s personality traits like creativity or leadership skills etc.
Top 5 Performance Appraisal Methods
There are different methods for evaluating an employee’s performance, and these methods are broadly classified as traditional and modern methods of performance appraisal.
Now let us try to understand the best of implemented performance appraisal methods used by the organizations for effective performance appraisals:
1. Management by Objective (MBO)
MBO does not comprise of feedbacks, and thus it is less time-consuming. Rather management by objective focuses on self-introspection by the employee as the employee is well aware of the standards which are taken into consideration while evaluating performance. The employee targets to perform better as the employee and the employer both are aware of their goals and deliverables towards the organization, and hence management by objective is one of the fair methods of performance appraisals. As the goals are already known to the employee, the employee tends to perform better for his/her appraisal and recognition, and thus there is no need for constant feedback. This method saves the effort of the employer and helps the employee to improve and excel by self-evaluation.
2. 360-Degree Feedback Method
This method of performance appraisal is very useful for startups as it involves collecting feedback from each and every individual who interacts with the employee during the course of work. These individuals could be customer or friends, or supervisors of the employee. Collecting feedback and gathering data gives a clear insight into the employee’s personality traits and attitude towards work assigned. This method is time-consuming, although it gives the overall performance card of the employee, and the management can plan the career development accordingly with the help of the data collected. This method benefits both the employee and the organization as the constant feedback would help understand the employee and his work approach better, helping them grow. The advantage of this method is that it is cost-effective and gives a clear picture of employee’s performance.
3. Assessment Centered Method
The organization basically uses this method of evaluation for evaluating managers who are subsequently going to deal with their juniors. The assessment-based method judges the employee as per the different situations and analyses their overall behavior like acceptability, openness, tolerance towards fellow employees and certain situations, etc. and performance. It includes various kinds of business games like big basket games etc., to assess the performance of the employee. Thus this method is best to evaluate the performance of the employees at a senior level.
4. Behaviourally Anchored Rating Scale Method
This method has been recognized as the most effective performance appraisal methods and gives the most precise result. It is the combination of essay evaluation method and rating scale method which makes it a bit expensive performance appraisal method; however, it assures the best results. In this method of performance appraisal, the employee is anchored as a good, average or poor employee based on the overall performance and behavior evaluation. The human resource department is also involved in this method, and they are informed about the employee’s behavior ad performance simultaneously.
5. Critical Incident Method
This is a pretty lengthy and time-consuming method of performance appraisal, although it is very effective. As per this approach of performance appraisals, the manager documents all the incidents of statements and behavior of the employee and maintains a log of such incidents which are critical or displays the ineffective behavior of the employee and the performance rating of the employee is done on the basis of such recorded incidents after a discussion with the employee. The managers are expected to maintain the log of both outstanding incidents and critical incidents, and also, the manager is expected to be fair while making the decisions.
It must be chosen wisely by the organizations such that it benefits both the employee and the organization. The future is a mixture of technology, and the effectiveness of these performance appraisal methods will depend on how the organization will use the technology to benefit both employees and the organization. Employees are the most valuable asset for any organization, and it is crucial for the organization to make its policy employee-friendly to keep them motivated and satisfied. A happy employee will lead to a satisfied customer and a growing business. The policies must be tailored to keeping the employees in mind, and they must be flexible enough to incorporate timely amendments. Thus it must be fair and innovative enough to value both for a bright future and higher business turnover.
This is a guide to Performance Appraisal Methods. Here we have discussed the brief overview and top 5 Performance Appraisal Methods with a detailed explanation. You may look at the following articles to learn more –