The most critical aspect of performance appraisal is the methodology adopted to measure – learn everything you must know about performance appraisal methods. Read on!
Performance Appraisal Methods
Performance appraisal methods are the different ways in which organizations are able to enhance the performance of the employees. The performance appraisal process can be made more effective and rewarding by using a good performance appraisal method. The performance appraisal methods identify an employee’s job contribution.
Also Read: Voice echoing | A complete guide
What are performance appraisal methods?
Performance appraisal methods are different appraisal processes adopted by organizations to evaluate their employees. Each performance appraisal method has its own advantages and disadvantages which may be suited to one organization and not to another. There is no single method suitable for all organizations.
Defining performance appraisal methods
Performance appraisal methods can be defined as the practice of evaluating employees based on their job performance and providing feedback in order to enhance their productivity. These performance appraisal methods can be widely classified into traditional methods and modern methods, with modern methods, more widely accepted.
What is the modern method of performance appraisal?
The modern method of performance appraisal is more focused on evaluating an employee based on their work results. They are more inclined towards an employee’s job performance rather than the personality traits. Modern performance appraisal methods are said to be more objective.
Why is a strong performance appraisal system critical?
A strong performance appraisal system is considered critical to enhancing the organization’s productivity, growth, and performance. Strong performance appraisal methods help managers to understand the development needs of their employees through the 360-degree feedback method. We will discuss these reasons in further detail below,
Effective appraisals system help in employee development
Performance appraisal system applied effectively in an organization helps majorly in the development of the employees. Performance appraisal methods identify the strengths and weaknesses of the employees which in turn helps in identifying training needs. Appraisals systems contribute to the further growth of employees.
The performance appraisal method is useful in identifying problem areas
Performance appraisal methods are used to identify problem areas so that they can be rectified in time to avoid any major mishappenings. Early intervention helps in better performance and enhanced productivity. The appraisal method used by each organization is not the same.
Performance appraisal system increases productivity
The performance appraisal system is known to increase productivity by motivating high-performing employees and assessing the issues faced by low-performing employees. The 360-degree feedback method is useful in enhanced performance. Effective appraisal systems should be in place in each organization to increase employee and organization productivity.
Performance appraisal systems help in motivating employees
Performance appraisal systems involve meetings between the manager and the employee to discuss the job performance on a regular basis. Performance appraisal methods give managers an opportunity to reward their high-performing employees and motivate them to improve further. Recognizing the hard work of the employees is essential.
How to set up effective performance appraisal methods?
Setting up effective performance appraisal methods is essential for an organization to grow. There are several things to keep in mind while adopting performance appraisal methods. The best type of performance appraisal methods involves 360-degree feedback to rectify mistakes in time.
Performance evaluation methods should comprise the development plan
Employee valuation systems need a development plan in place to give desired results. Performance evaluation methods involve a development plan mutually agreed upon between both the manager and the employee. It helps employees get a direction in their work and a job standard.
Performance evaluation system inclusive of rewards and recognition
A very important thing to keep in mind before picking up performance evaluation methods is to motivate and encourage the employees. Ensure that the performance evaluation system recognizes the hard work of each and every employee and has a reward system in place.
Effective performance appraisal systems should align with the company’s needs
Performance appraisal systems must be in accordance with the needs of the company. Understand what is the required outcome of the performance appraisal method and then start setting it up with the goal in mind. Take inputs from everyone to improve it further.
Performance management model must consist of continuous feedback
Continuous feedback in a performance management model is a must in order to avoid bigger mishappenings. Managers must intervene when they see something wrong happening which saves time and effort for everyone. Instead of just giving negative feedback, include corrective actions as well.
Appraisal models with managers as mentors
Appraisal models wherein managers act as mentors are very effective. Employees should feel free to come up to their managers and talk in case of any work issues. As mentors, managers can help employees devise future plans to help them become more productive and this is one of the foundations of strong performance appraisal methods.
7 important types of appraisals
Over the years, several performance methods have been utilized by different organizations. Some of these appraisal methods are more suited than others. As the times have passed, performance evaluation methods have evolved. Let us go through the different types of appraisals one by one below,
The 360-degree performance appraisal method
The 360-degree appraisal definition suggests that the employee should be evaluated based on the reviews of the employee’s circle of influence such as peers, managers, clients, etc. 360-degree appraisal system provides continuous feedback that helps employees learn from their performance result and stay motivated.
360 appraisal example is when managers, clients, suppliers, peers, customers, etc are all included in the performance appraisal system making the entire process transparent.
Trait appraisal method
Supervisors and managers are required to rate employees based on specific traits exhibited by each employee. Trait appraisal is particularly popular with customer service departments. It focuses on a simple checklist of behavioral qualities such as communication, customer service, business etiquette, helpfulness, dependability, punctuality, etc.
Employee evaluation methods rate employees as excellent, satisfactory, needs improvement, etc. The biggest drawback of trait appraisal is that it is subject to supervisor personal bias.
MBO performance appraisal method
In the MBO performance appraisal method, both employees and managers sit together to identify, plan, and organize goals for the upcoming appraisal year. These goals are considered as job standards for that particular employee.
Employee performance is calculated based on the goals achieved in the given duration and is incorporated to be part of the company’s performance appraisal methods. MBO examples can be seen in many organizations. MBO appraisal emphasizes career-oriented and tangible goals but often ignores interpersonal skills, job commitment, etc.
Psychological approaches to performance management
Psychological appraisals focus on evaluating the employee’s future performance by determining their hidden potential. This type of appraisal approaches performance management in a slow manner making performance appraisal methods costly and complex.
These tests evaluate an employee’s emotion, intellect, and other related traits which could affect the future performance of the employees in the organization. This type of performance appraisal system is not always accurate as the results can be inaccurate sometimes.
Behavior-based employee evaluation systems
These performance appraisal methods and appraisals systems are considered to be the most effective as it brings out both the qualitative and quantitative benefits of the employees’ performance appraisal system. The behaviorally anchored rating system helps in providing clear standards, improved feedback, consistency in evaluation, and accurate performance analysis.
The primary drawback of this kind of employee performance appraisal system is the risk of result tampering due to employee bias in the organization.
Cost accounting method of formal appraisal
The cost accounting method evaluates an employee’s performance based on the monetary benefits they yield to the company. The monetary benefit is calculated by comparing the cost incurred on keeping the employee in the organization to the monetary benefits reaped from that particular employee.
The formal appraisal considers factors such as quality, overhead cost, interpersonal relationships, etc. Such type of performance appraisal methods are not very effective due to its cost dependency.
Assessment center performance review system
This kind of performance review system creates a set of diverse exercises that simulates various work environment components. The main idea behind this type of performance appraisal method is to assess how employees behave in certain kinds of situations and the effect of these situations on their performance. The drawback of this kind of appraisal management system is that it is a long and exhaustive process that can be expensive.
5 top performance measurement tools and techniques
Performance appraisal methods are vital for an organization’s growth process. To make the employee appraisal system effective, managers need several tools and techniques to receive on-time and crucial feedback. Let us look more into the 5 top performance measurement tools and techniques,
360 appraisal feedback
360 appraisal feedback is a very efficient technique that evaluates employees based on the review received from the employee’s circle of influence such as customers, suppliers, peers, managers, etc.
Performance appraisal 360 one of the popular multidimensional performance appraisal methods that reduces the possibility of bias as it involves getting feedback from multiple people. This performance evaluation instrument makes sure that the employee is receiving continuous feedback that keeps them motivated and eager to learn.
Investing in performance appraisal tools to build motivation
It is common knowledge that happy and motivated workers perform better. Performance-based evaluation systems which generate happy and motivated employees can be created in several ways.
Pep talks and appreciation emails are proven methods that can keep the employees motivated. Performance appraisal tools such as gamification can be used to your advantage by methods like leaderboards, status bars, badges, etc to improve performance appraisal methods.
Personality trait appraisal
Trait-based performance appraisal methods give both quantitative and qualitative benefits. The performance management methods use tools that assess employees based on different personality traits.
This not only helps in evaluating the work but also considers different other aspects such as punctuality, teamwork, business etiquette, etc. The Personality trait appraisal is best to assess the overall performance of an employee in an organization rather than just the work performance and results-based evaluation.
Performance evaluation tools focusing on work essence
The KPIs (Key Performance Indicators) selected by managers should not only measure success but also consider the steps taken to achieve success. Performance evaluation tools that focus on actions are more useful in motivating employees, improve productivity, enhance performance, fix work problems, etc.
Performance evaluation methods looking only at results will cause low-performing employees to grow distant and leave them with little to no knowledge at the end.
Performance evaluation methods must have a direct approach
The performance evaluation methods adopted by the organization must have a direct and transparent approach. Performance management techniques include letting employees know what defines success.
Both managers and employees must have access to the goal sheet which gives a clear picture of what is expected from them. The best performance appraisal methods ensure that the employees are receiving continuous feedback and seek guidance if needed.
Also Read: Remote work habits | A comprehensive guide
The best type of performance appraisal involves below best practices
Methods of performance appraisal have evolved to suit the needs of the organization. Employees are no more judged based on their personality traits. The current performance appraisal methods are more result-based. The best types of performance appraisal methods involve the following practices,
Include 360 performance appraisal
360 degree performance appraisal definition states that it is a multidimensional performance evaluation method that assesses an employee based on the feedback collected from the employee’s circle of influence such as managers, peers, clients, etc. The 360 degree appraisal method is considered to be very effective.
Usage of different performance appraisal instruments
Different performance appraisal instruments can be used to make the performance measurement methods more effective. Appraisal instruments are useful in measuring the employee performance against the set standards and provide ratings accordingly. The rating is not a result of one single parameter but multiple parameters.
Results-based performance appraisal
Adopt a result based performance appraisal method which focuses on the accomplishments and completed assignments by the employee. Traditional performance evaluation models were more personality trait-based but the modern performance methods take up a more result-based approach. Managers check how many goals were achieved by the employee.
HR appraisal system should provide concrete examples
HR appraisal system adopted by the organization should provide concrete examples supporting both achievements and low performance. These performance appraisal methods should be communicated to the employee throughout the review process. Providing specific examples helps in supporting your feedback and shows that the managers have done their homework.
An ideal appraisal system adopts tactful communication practices
Ideal appraisal systems should focus on motivating their employees rather than bringing them down. While providing negative feedback use thoughtful communication to build up your employees. Performance methods should train managers to help their employees find ways to improve productivity further.