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What is Performance Appraisal? All Methods Explained6 min read

December 10, 2019 5 min read
Performance Appraisal

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What is Performance Appraisal? All Methods Explained6 min read

Read­ing Time: 5 min­utes

Whether you’re in the Human Resource Depart­ment of your com­pa­ny or not, it is impor­tant to know “What is Per­for­mance Appraisal”. With an under­stand­ing of the con­cept and the meth­ods applied, you can be in a bet­ter position.

What is Performance Appraisal?

Per­for­mance Appraisal is a peri­od­ic review of an employ­ee’s job per­for­mance. The process eval­u­ates and quan­ti­fies an employ­ee’s per­for­mance lead­ing to salary revi­sion and pro­mo­tion if applic­a­ble. The fre­quen­cy and terms of the appraisal process vary from com­pa­ny to com­pa­ny. Usu­al­ly, the Human Resource Team dis­cuss­es the terms and con­di­tions with the can­di­date at the time of their joining.

Methods of Performance Appraisal

Traditional Methods:

  • Ranking

It is the old­est of all meth­ods and involves rank­ing indi­vid­u­als from high­est to low­est. An employ­ee with the best per­for­mance gets the high­est rank while the one with the worst gets the low­est rank. If there are 10 employ­ees in a com­pa­ny, then the Rank­ing sys­tem will rank them from 1 to 10. 

Despite being sim­ple, com­pa­nies with high­er employ­ee strength pre­fer not to use it since it fails to quan­ti­fy the relativity.

  • Paired Comparison

In this method, an employ­ee is com­pared with oth­ers on a one-on-one basis for a par­tic­u­lar trait. Here the num­ber of times an employ­ee is rat­ed bet­ter decides his final ranking.

The lim­i­ta­tion of this method lies in scalability.

  • Grading Scale

Here, cat­e­gories of per­for­mance are defined for appraisal. For exam­ple poor, sat­is­fac­to­ry and out­stand­ing; there may be more than 3 cat­e­gories. This method is not com­plete­ly objec­tive as the rater may put a large num­ber of peo­ple in one category.

  • Forced Distribution

This method for­mu­lates the employ­ees’ per­for­mance into a sta­tis­ti­cal dis­tri­b­u­tion i .e.10, 20, 40, 20 & 10%. It proves help­ful when it comes to review­ing the per­for­mance of a large num­ber of employees.

  • Forced Choice

Forced Choice Method, found­ed by J.P. Guil­ford is based on a series of groups of state­ments — pos­i­tive and neg­a­tive. The rater sees which state­ments match an indi­vid­ual most appro­pri­ate­ly. Here are some exam­ples of the statements:

Pos­i­tive — Respon­si­ble and can exe­cute prop­er­ly, Skill­ful and can lead in the best way.

Neg­a­tive — Lacks ini­tia­tive and proac­tive­ness, Can­not rely upon, often miss­es deadlines.

  • Checklist

The Human Resource Team jots down a list of ques­tions that are rel­e­vant to the respon­si­bil­i­ties and over­all per­for­mance of an indi­vid­ual. Against each ques­tion, the rater fills the answer as yes or no. The final review takes place on the basis of the aggre­gate responses.

The major draw­back of this method is that it is time-inten­sive because it involves prepar­ing dif­fer­ent sets of ques­tions for dif­fer­ent teams.

  • Critical Incidents Methods

It usu­al­ly revolves around select­ed crit­i­cal inci­dents and behav­iors that help in know­ing whether an employ­ee’s per­for­mance is good or not. Here the rater apprais­es peo­ple who are capa­ble of per­form­ing in crit­i­cal sit­u­a­tions. Time-con­sump­tion and sub­jec­tiv­i­ty to the sit­u­a­tion are the draw­backs of this method.

  • Graphic Scale Method

Also known as the lin­ear rat­ing method, it is the eas­i­est method of Per­for­mance Appraisal. The process is car­ried out through print­ed form. It lists traits like reli­a­bil­i­ty and effi­cien­cy and a range of oth­er per­for­mance char­ac­ter­is­tics. Each of these char­ac­ter­is­tics is then rat­ed from poor to out­stand­ing. Most­ly, a five-point scale is adopt­ed in this method.

  • Essay Evaluation Method

In this method, the review­er works on an elab­o­rate descrip­tion explain­ing an employee’s per­for­mance. He describes the neg­a­tives, pos­i­tives and the scope of improve­ment along with sug­ges­tions. It is the sim­plest method that does not require any spe­cial for­mat or techniques.

How­ev­er, the essay method also has some lim­i­ta­tions. Lack of struc­ture is a major draw­back. It often leads to dif­fer­ences in the length and con­tent of descrip­tions. Also, the final appraisal depends on the writ­ing skills of the rater rather than the actu­al performance.

  • Field Review Method

Usu­al­ly, this method is handy when the review­er rat­ings are biased. An offi­cial from the HR team car­ries out the review process.

  • Confidential

 Gov­ern­ment orga­ni­za­tions major­ly reap the ben­e­fits of this method. It is often con­duct­ed for an office trans­fer or a salary hike. The report­ing man­ag­er or super­vi­sor heads the appraisal meet­ing con­duct­ed. The appraisal is based on strengths, atti­tude, char­ac­ter, atten­dance, behav­ior and a few more traits of the employee.

Modern Methods:

  • Management by Objectives

The mod­ern meth­ods of assess­ing employ­ees’ per­for­mance came into exis­tence to over­come the flaws of tra­di­tion­al process­es. The first of the new meth­ods that are used wide­ly is called Man­age­ment by Objec­tives (MBO). It is a process where­in the senior and sub­or­di­nate man­agers of a com­pa­ny joint­ly decide the com­mon goals to assess the per­for­mance of each individual.

How­ev­er, this approach is also not free of draw­backs. MBO can be time-con­sum­ing. Man­agers and sub­or­di­nates should not lack trust in each oth­er for this method to work. More­over, it can lead to set­ting up of unre­al­is­tic tar­gets if the man­age­ment tends to dom­i­nate decisions.

  • 360 Degree Feedback

As the name sug­gests, this method of per­for­mance appraisal involves the col­lec­tion of feed­back about an employ­ee from all. His or her man­ag­er, sub­or­di­nates, peers and also clients fill out a ques­tion­naire. Then the apprais­ers use this feed­back of the ques­tion­naire for appraisal.

  • Assessment Centre Method

In this case, the assessee par­tic­i­pates in a series of activ­i­ties, tasks and work exer­cis­es. This helps to draw infer­ences on the lev­el of per­for­mance. After record­ing the results, the apprais­ers meet and col­late their obser­va­tions around the strengths and weak­ness­es of the employ­ees to review them.

  • Behaviorally Anchored Rating Scale (BARS)

BARS cov­ers the advan­tages of nar­ra­tives, crit­i­cal inci­dents, as well as quan­tifi­able rat­ings through a scale hav­ing spe­cif­ic behav­ioral exam­ples. As a result, the employ­ee gets bet­ter appraisals.

  • Psychological Appraisals

The employ­ee’s future per­for­mance usu­al­ly deter­mines the base of his/her appraisal and not their past. A pan­el of psy­chol­o­gists car­ries out dif­fer­ent sets of tests to rec­og­nize an employee’s traits.

Sim­i­lar to that of crit­i­cal inci­dents method, time-con­sump­tion and biased results are the major drawbacks.

  • Human Resource Accounting Method

This method explic­it­ly eval­u­ates an employee’s per­for­mance through the mon­e­tary ben­e­fits that he or she brings to the com­pa­ny. With this in mind, the orga­ni­za­tion often com­pares the cost of the employ­ee and the prof­it the employ­ee brings to the organization.

How to Prepare for a Performance Appraisal?

  • Review your Performace

Reflect­ing on what you did espe­cial­ly what you achieved dur­ing the review peri­od is extreme­ly impor­tant. Accord­ing­ly, com­pile a report of the tasks under­tak­en and results achieved. This should be com­ple­ment­ing your Key Respon­si­bil­i­ty Areas (KRAs)by all means.

  • Know your Strengths and Weaknesses

Self-eval­u­a­tion will always help you in the long run. Being well versed with your strengths and weak­ness­es will def­i­nite­ly help you to be con­fi­dent and ask for the defined rewards.

  • Jot down goals for the next year and your Plan of Action

First­ly, pre­pare a list of goals that you think will add val­ue to the busi­ness. Sec­ond­ly, for­mu­late a prop­er plan of action for the stat­ed goals. Last­ly, decide how to exe­cute it.

  • Be open

Our respons­es cer­tain­ly are based on our sit­u­a­tions. There­fore, the lack of pos­i­tive feed­back should not elic­it neg­a­tive respons­es. Most impor­tant­ly, try to find the rea­son behind con­struc­tive take­aways and feed­backs. Even­tu­al­ly, work on them and strive to be better.

Isha is a post graduate in Economics and has a passion to curate great content for web users. She has a research and writing background in Higher Education, Jobs and Digital Marketing space.
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