Modern & Actionable Performance Appraisal Methods

Modern & Actionable 📈

Performance Appraisal Methods 

📌 What is Performance Appraisal?

Grote (2002) describes performance appraisal as a formal management tool that helps evaluate the performance quality of an employee.

According to Karol (1996) performance appraisal includes a communication event planned between a manager and an employee specifically for the purpose of assessing that employee’s past job performance and discussing areas for future improvement.

📌  Process of Performance Appraisal

Below is the basic process of traditional Performance Appraisal.

    Different organizations use different methods to conduct their performance appraisals. It depends on the job roles and the nature of the organization.

However, the traditional methods of employee engagement are no longer yielding effective results. They focus more on measuring an employee’s past performance, rather than improving future work, which is why many organizations view the entire process as futile. However, by adapting their performance appraisal methods to be more accommodating to modern demands, the performance appraisal process can be extremely beneficial in,

• Defining company goals clearly 
• Providing real-time and effective feedback to all team members 
• Enhancing employee performance and productivity 
• Spotting training and development needs 
• Offering insights into counter-productive and ineffective tasks 
• Improving employee engagement and employee retention 
• Aligning individual performance with organizational goals 
• Transforming the workforce into a strategic advantage

📌  Modern & Actionable Performance Appraisal Methods

According to the SpriggHR (2020), there are seven modern Performance Appraisal methods highlighted. 

① Management by Objective (MBO)

In this approach, the management defines the organizational goals and conveys them to the members with the intention to achieve each objective.

Figure 1: Source: www.businessstudynotes.com

② Behaviorally Anchored Rating Scale (BARS) 

This method is often thought of as being the most effective, as it succeeds in bringing out both the qualitative and quantitative benefits of the performance appraisal process. In the Behaviorally Anchored Rating Scale (BARS) system, the employer compares employee performance with specific behavioral examples that are anchored to numerical ratings. 

Figure 2: Source: www.aihr.com

③ Critical Incident Method

In this method, an employer evaluates an employee based on certain events, known as “critical incidents”, in which the employee either succeeded tremendously or failed in any given task. Throughout the process, the evaluator maintains a digital or physical journal in which they store the information from the different incidents. 

Figure 3: Source: www. marketing91.com

④ Assessment Centre Method

This performance appraisal method assesses employee performance in social-related situations. Employees are asked to take part in situational exercises (in-basket exercises, workgroups, simulations, role-playing exercises, etc.) that aim to highlight their potential success in various roles and bearing various responsibilities.

Figure 4: Source: www.storage.googleapis.com

 

⑤ Psychological Appraisals

This method is particularly useful when determining the hidden potential of employees because it focuses on evaluating an employee’s future performance rather than the results of their past work. In this performance appraisal method, qualified psychologists conduct a variety of tests on employees, including in-depth interviews, psychological tests, and private discussions. These tests aim to identify an employee’s emotion, intellect, and other related traits that could affect their future performance in an organization.  

⑥ Human-Resource (Cost) Accounting Method

The cost accounting method involves the analysis of an employee’s performance through the monetary benefits they yield to the company. This measurement is usually obtained by comparing the cost of retaining an employee to the monetary benefits (contributions) the organization has ascertained from that specific employee. 

⑦ 360-Degree Feedback

A common industry discussion is that the annual performance appraisal method is outdated and no longer useful. Workers need ongoing communication with team leaders and managers, and continuous feedback processes like 360-degree feedback, to stay motivated and interested in learning from the results of their performance appraisals.  

References:

Grote, R. C. (2002). The performance appraisal question and answer book: A survival guide for managers. New York: American Management Association.

Karol, T.(1996).The Perception of the Employees toward the Outcomes and Detriments of Performance Appraisal System, Business & Economics Research Journal, 1996, Vol. 2 Issue 3, pp 87-108

SpriggHR Blog (2020) 7 Modern & Actionable Performance Appraisal Methods. [blog entry] 22 June 2020. SpriggHR Consulting. Available from https://sprigghr.com/blog/performance-reviews-1-on-1s/7-modern-performance-appraisal-methods/ [Accessed 7 December 2021].

Businessstudynotes Blog (2021) Process of MBO (Management by Objectives) – Explained with Examples. [blog entry] 19 August 2021. Businessstudynotes. Available from https://www.businessstudynotes.com/hrm/principle-of-management/steps-in-process-of-management-by-objectives/ [Accessed 7 December 2021].

AIHR Blog (2021) Behaviorally Anchored Rating Scale: A Full Guide with Examples. [blog entry]. Businessstudynotes. Available from https://www.aihr.com/blog/behaviorally-anchored-rating-scale/ [Accessed 7 December 2021].

AIHR Blog (2021) Behaviorally Anchored Rating Scale: A Full Guide with Examples. [blog entry]. Businessstudynotes. Available from https://www.aihr.com/blog/behaviorally-anchored-rating-scale/ [Accessed 7 December 2021].