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Performance appraisal

5 Effective Performance Appraisal Methods

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Performance Appraisal methods help companies evaluate their employee’s work periodically. The main aim of this exercise is to find out ways to improve employee productivity. If you are wondering about ‘what are the methods of performance appraisal’ that a manager can adopt to measure the work done by their subordinates, we will discuss a few of them in the below paragraphs.

Management by objectives (MBO) performance appraisal method

Management by Objectives (MBO) is among the most progressive methods of performance appraisals. Under this technique, Managers and employees first set goals and objectives for an appraisal period. Managers communicate to their subordinates about these goals and the timeline for achieving them. They then meet at the end of the evaluation period to check the employee’s progress in achieving those objectives. The manager uses this metric to measure the employee’s contribution level and areas where they need to make further progress. This method focuses more on career-oriented goals and doesn’t pay too much attention to the intangible aspects of an employee’s performance.

360-degree feedback

360-degree feedback is among the most preferred among the different performance appraisal methods. It focuses on creating a continuous feedback mechanism between employees and their superiors. This 360-degree performance appraisal methods help to measure an employee’s performance based on feedback from multiple stakeholders. The HR managers of a company get in touch with the managers, customers, peers and subordinates of an employee. They seek inputs from these parties over the performance of the employee over a fixed evaluation period. This is one of the few performance appraisal methods that involve other parties to measure the performance of their employees.

Behaviorally anchored rating scales (BARS)

Behaviourally Anchored Rating Scales (BARS) are among the most effective performance appraisal methods. It helps to evaluate how an employee has performed in the organization. It focuses on bringing out the quantitative and qualitative aspects of an employee’s performance appraisal. BARS is very different from other traditional methods of performance appraisal. It measures an employee’s performance with the help of behavioural examples that they can rate through the numerical scale. It incorporates the intangible standards into the rating scale within the company. This method is particularly effective in providing an accurate performance analysis. It helps the management to obtain clear standards on which to measure an employee’s performance.

Human resource (cost) accounting method

The human resource (Cost) accounting method is one of the leading performance appraisal methods used by some companies. It helps to measure the overall performance of an employee through the monetary benefits the work has yielded for a company. This accounting method helps to compare two essential aspects of an employee’s performance. It focuses on the cost of retaining an employee (salary and other benefits) and the monetary gain from their contribution to the organization. The difference between these two is the focal point of evaluating any member within the business. It uses metrics like overhead cost, unit-wise service value or interpersonal relationships between manager and employee to measure their performance over some time.

Psychological appraisals

Psychological appraisal is one of the modern methods of performance appraisal for any employee. It focuses on finding the hidden potential within an employee to predict their future performance. The company hires Psychologists to conduct different tests on employees to find out their behavioural trains, emotions and intellectual capabilities. These include in-depth interviews, one-on-one discussions and psychological tests. This performance appraisal method is effective in the long run because it covers various intangible aspects of an employee’s behaviour. However, it is time-consuming and costly. Another drawback of this performance appraisal method is that it depends totally on the ability of a psychologist and the accuracy of their findings.

What is the best method of performance appraisal

The various methods of performance appraisal that companies use to evaluate their employees have their own merits. But the best method is one that delivers actionable insights for the management regarding feedback on their employee’s performance. It should also provide inputs to improve employee performance and productivity in the long run.

Traditional VS modern methods of performance appraisal

There is always a debate on the effectiveness of both traditional and modern methods of performance appraisal. Traditional methods of performance appraisal focus more on an individual’s personality traits. These include the ability to take initiative, punctuality, dependability, integrity, intelligence, creativity and leadership potential. But modern methods of performance appraisal focus on an employees’ work results over the evaluation period. They give a greater emphasis to achievements on the job compared to the personality traits of an employee.

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