What is Performance Appraisal? All Methods Explained6 min readReading 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
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.
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.
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.
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 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.
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.
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.
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.
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.
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.