Analyzing the performance of an employee based on various factors is known as Performance Appraisal. This is done to assess the work quality of an employee, and this is for the betterment of employee as well as the organization.
Performance appraisal is nothing but a systematic way of analyzing the performance of an employee on different grounds that will further provide HRs and Organizations an assessment regarding their productivity.
Now since you have understood about the performance appraisal, let us get to know about the methods that are used during this process –
What are performance appraisal methods?
There are several performance appraisal methods.
Managers and industry experts have stated their thesis regarding the same and have provided us with numerous performance appraisal methods.
Based upon the performance appraisal reports, business takes different decisions related to Promotions, Training & Development, Confirmations, Competency Building, Compensation Reviews, Evaluation of HR programs, Communication Improvements, Feedback and Grievances and so on.
Here in this article, we have brought a few of the most convenient and widely used performance appraisal methods. So let’s start one by one –
18 Best Rated Performance Appraisal Methods
1) 360 Degree Feedback method for Performance Appraisal
One of the best future-oriented performance appraisal methods that will be quite effective. With the help of this technique, HRs can have the systematic collection of the data related to the performance of an individual through different stakeholders such as-
- Team Members
- Customers, etc.
So, anyone who can update the HR department about the performance of that employee plays a key role in this performance appraisal method.
With the help of multi-source feedback of this method, 360-degree performance appraisal offers a broader perspective of that employee. Businesses should opt for this to gauge the interpersonal skills, team building skills, and customer satisfaction capabilities of employees.
2) Assessment Center method
This method is used to test an employee based on social conditions.
Employers use this method to assess their employee to know how they will perform in a specific situation. This method is used to test managers whose job is to interact with different personalities daily.
Employers get to know about the personality of their employees through this method.
This is again a future-oriented Performance Appraisal Method that helps in the forecasting of future performance of employees.
3) Ranking Method for Performance Appraisal
This one is a past-oriented method for performance appraisal.
It is a simple yet effective method for performance appraisal where two employees are compared on different grounds, and this process goes on and on till the last two employees are compared.
Finally, a ranking is developed, which ranks all the employees for their performance. Supervisors will rank the employees based on different metrics.
4) Grading method
As the name suggests, this performance appraisal method provides employees with the grades depending upon their overall performance in a specific sector.
Hence this one is again a past-oriented method. Grading is based upon a variety of numerical scales that decide excellent to poor grading of employees. Different parameters upon which grading is base include-
- Dependency, etc
5) Critical Incident Technique
Again a past-oriented method of performance appraisal, which is also the best-described method for performance appraisal.
Here in this method, employees’ performance is well described in some critical behaviors of the employees. Both positive and negative points are written. It gives the employer an option to get to know about their employees’ performance in detail.
Actual job behaviors play a key role in this evaluation.
6) Forced-choice method for Performance Appraisal
Don’t confuse this method with the critical incident technique.
Here in this method, both positives and negatives of an employee are written, and then a final grading is provided to the employee basis on the assessment. This method requires time and effort, but it can effectively assess an employee and provide unbiased results.
In this, the rater is forced to choose from the statements and should decide which statement is true and which one is false.
7) Human Asset counting method
You can also name it as a commercial method for performance appraisal.
In this method, employees are assessed based on their performance in deciding the commercial state of the company.
They are assessed based on total leads generated by them, total revenue generated by them, their customer relationship, and so on. This method is extremely helpful for the growth of any company or organization.
8) Check-list method
This one is a past-oriented method for performance appraisal.
A few grounds are prepared in this method by the HR department, and then every employee is tested on those grounds.
If their performance is positive on those grounds, then they will receive a check otherwise un-check.
The HR department further analyzes this data, and a final report of employees’ performance is generated.
9) Graphics rating scale method for Performance Appraisal
This is a graphical representation of employees’ performance appraisal.
The employees are rated based on different performance characteristics traits. Scores are provided to the employees based on their past performance in a specific area, and then the scores are added, and a final result is prepared.
So, this one is also a past-oriented method of performance appraisal for businesses.
10) Essay Method
It is similar to the critical incident technique where a detailed summary of employees’ performance is prepared, which contains all the positives and negatives of employees.
This detailed report is further used to analyze the employees based on different grounds.
As the working suggests, this method is also decided upon past activities of the employees. The rater will write down the description of the employees in a detailed fashion. Different criteria covered in this performance appraisal method are-
- Overall impression of a performance
- Existing Capabilities
- Qualifications in performing jobs
- Strengths and Weakness
- Training needs of employees
11) Management by objective Method
Now, we are again enlisting a future-oriented method of performance appraisal here.
We would name it one of the fairest performance appraisal methods. Here employees are provided with specific goals that are to fulfill, and the employees will be assessed based on their performance.
This gives a chance to the employees to improve their performance appraisal score as they have a goal to fulfill. Different parameters around which MBO method works are-
- Establishing goals for the employees
- Deciding a performance standard
- Comparison of actual goals with the actual achievement of the employees
- Establishing new goals for the goals not achieved
12) Behaviorally Anchored Rating Scales (BARS)
This is a behavior analysis method where employees’ behavior is assessed on different grounds.
This one is again a past-oriented method of performance appraisal. Various performance dimensions are set, and then employees’ behavior is assessed regarding the same.
This is, again, an effective performance appraisal method that can assess the behavior of employees.
13) Psychological Method
With the help of this method, HR departments can evaluate the future performance potential of the employees. Processing of this method is based upon interviews, psychological tests, and productive discussions with the supervisors.
Different characteristics of employees that play a key role in the psychological evaluation of the employees are-
With the help of this method, organizations can find out the talents that will be highly productive for them in the future. All in all, this one is, again, an effective future-oriented method of performance appraisal.
14) Paired Comparison Method
This method revolves around the rating of each employee with another employee in a paired form.
It is used for comparing the performance of one employee with other co-workers. This one is again a past-oriented method of performance appraisal.
15) Performance Tests
Sometimes employees have more potential than their performance in an organization, and this appraisal method is effective in gauging that.
Performance tests are based upon the skills and knowledge of the employees.
Such tests can be written or practical presentations of the skills of the employees.
16) Confidential Records as a Performance Appraisal Method
In this method, a proper Annual Confidentiality Report (ACR) is made for employees.
The report comprises ratings based upon different parameters such as-
- Technical ability
- Reasoning ability
- Resourcefulness etc
17) Cost Evaluation Method
In this method, performance appraisal is done as per the returns an organization is getting from an employee.
Cost evaluation is done by gauging-
- Cost to keep the employee
- Benefits that Organization gets
This one is again past-oriented method that is quite effective for small businesses that need to have a tight check upon their monetary returns.
18) Field Review Method
When an assessment is done by someone outside the department of an employee, then it is termed as Field Review method of performance appraisal.
It is mainly done by corporate or HR department. This method is very effective in managerial level positions.
Here is a video by Marketing91 on Top Performance Appraisal Methods.
The methods mentioned above are popular among the organizations, and they have been reliable for their results. These methods will help you in analyzing your employees on different grounds and assessing them if they are suitable for a designation or not.
Which method do you find the most effective one? Did we miss any other method that you find more result driven for Performance Appraisal? Share with us in the comments below.