Methods of Performance Appraisal

Several techniques/methods of performance appraisal have been established to achieve the organizational goals, Organisational culture, its objectives, size, products, technology, etc., affect the selection of methods to be used. Techniques that are mostly used in organizations are as follows:

Method of Performance Appraisal copy

Traditional/Past-Oriented Methods of Appraisal

Traditional methods of performance appraisal focus on past performance. They aim at giving feedback to the employees pertaining to their activities which can be utilized for attaining bigger victories in the near future.

Traditional appraisal methods are as follows:

1. Graphic Rating Scales (GRS): A Graphic Rating Scale (GRS) is also called ‘linear or simple rating scale.

It provides a list to appraisers including various characteristics necessary for an effective performance like co-operation, flexibility, readiness, motivation, etc.

A five- or seven-point graphic rating scale includes each characteristic. Numbers and/or expressive words or phrases indicating the performance level are pointed in the rating scale.

The middle part of the rating scale is more often filled with words like “average”, “adequate”, “satisfactory”, or “meets standards”.

2. Straight Ranking Method: This is the most traditional and easiest method of performance appraisal.

By this method, every employee is provided with a rank starting from ‘best’ to ‘worst’ considering his overall performance. Simplicity is the key quality of this method.

It involves lesser administration and tends to provide a satisfactory solution to small enterprises having fewer employees.

Due to rank assignment, this method encounters various appraisal failures, specifically central tendency and human errors.

3. Paired Comparison Method: This method came into existence, continuation to the straight ranking method, with a view to offering an organized process for evaluating relative ranks of the employees is also known as “man-to-man appraisal”.

It is a useful method in which the employee who is supposed to be appraised, is compared With others, in a combination, one at a time. As many times, the person is compared with another one, it is counted on paper.

The appraiser must set a standard as a basis for appraising the employees.

4. Critical Incident Method: This method focuses on diagnosing those particular happenings (or circumstances) in which the employee has performed really well or those which need further enhancement.

It is a method asking for a narration of happenings but does not believe in providing ranks or ratings. It is sometimes combined with a rating type system.

5. Group Appraisal Method: It is usually seen that some appraisers use very high levels of standards for appraising their subordinates. However, it is not necessary to assess them as per such high standards.

It is generally seen that where the appraiser himself is excellent, he anticipates his subordinates also to be at the same level.

To overcome this problem, a group appraisal method is developed. This method considers the performance evaluation by a group of people holding information about the job and performance standards.

The appraiser provides the requisite awareness regarding his subordinates to the group members. Then, the group converses about the performance standards of the job and the actual performance of the subordinates.

6. Checklist Method: Under this method, the rater does not assess the performance of the employee. Rather, he prepares a report about his performance and final scores are given by the HR department.

A chain of questions is given pertaining to the employee’s actions. For the purpose of pointing out whether the answer to a question regarding an employee is assertive or not, the rater examines it possible that some questions may be given more or equal weightage. Normally, the questions are framed in a yes/no style.

7. Forced Choice Method: This method has the objective of rectifying the biasness of the rater to assign a constantly high or low rating to every employee.

It utilizes some sets of combined phrases or statements, where two can be positive and two can be negative. The rater is requested to point out the most and least narrative four phrases of a certain employee.

In fact, the phrases are prepared in such a manner that the rater cannot simply evaluate as to which phrase is applicable to the most efficient employee.

Commonly used phrases are:

  1. Grasp rapidly ————– Works sincerely.
  2. Dependable performance ————– Satisfactory performance.
  3. Generally late ————– Usually slow at work.

8. Forced Distribution Method (Forced Ranking Method): Leniency is one of the major errors in rating due to which many employees are given high ratings.

This method aims to remove the problems by persuading the rater to evenly distribute the rates on the rating scale.

This method relies on the assumption that the level of employee performance validates to a normal distribution forming a bell-shaped curve.

9. Field Review Method: In this method, the appraisee is assessed by someone external to his own department either from the commercial office or from the HR department.

The external evaluator checks the employee’s past records and takes an interview of the person and his superior. This method is mostly used to make decisions regarding promotions at the executive level.

Modern/Future-Oriented Methods of Appraisal

Modem methods of performance appraisal focus on future performance. These methods evaluate employees’ capabilities for achievement and define standards for both short- and long-term performance.

Various modem methods of performance appraisal are as follows:

1. Behaviourally Anchored Rating Scales (BARS): BARS are often known as the behavioral expectation scale.

The rating points on this rating scale are established by the statements of efficient or inefficient behaviors. They are termed as behaviorally anchored because the scale shows a series of narrative behavioral statements, ranging from worst to best.

A rater must point out which behavior explains an employee’s performance in the best possible manner.

2. Management by Objectives (MBO): The concept of MBO was first given by Peter F. Drucker. It is an individual appraisal method that determines task-related results rather than behaviors or activities.

It is also termed as appraisal by results. Its main goal is to improve the performance of the organization by linking the organizational and subordinates’ objectives.

Employees are provided various inputs in order to get an idea about their objectives, allotted timeframe for completing the job, etc.

MBO involves regular evaluation and feedback in order to reach the target. MBO includes collective goal-setting in which both the superiors and subordinates come together and establish goals.

Subordinates are provided an opportunity to take part in goal-setting for their relevant work areas. Thus, it minimizes ambiguity and maximizes job precision.

One more significant aspect of MBO is collective evaluation. While giving feedback about performance, both the superiors and subordinates are concerned, in order to discuss the issues and barriers, which took place in performing their duties.

3. Psychological Appraisals: Big organizations generally hire full-time industrial psychologists. When psychologists are asked to evaluate, they evaluate a person’s future capability instead of his past performance.

The appraisal usually includes psychological tests, in-depth interviews, conversation with supervisors, and a review of other assessments.

Afterward, the psychologists complete the analysis of the employee’s logical, emotional, motivational, and other job-related characteristics that determine individual capability. This helps in forecasting the future performance of the employee.

4. Human Resource Accounting: This method adds up some monetary value to the workforce of an organization. This process includes the assessment of the goodwill of an organization.

It can be enhanced by establishing a system in order to carry out regular assessments of particular variables. These variables are categorized into two forms, i.e., key variables intervening variables.

The key variables are the strategies, rules m regulations of an organization, including its leadership policy abilities and behavior of an employee, etc.

Intervening variables include commitments, attitudes, encouragements, interpret relations, communication, and decision-making.

This method is not a well-known method of performance assessment. Nevertheless, this method is mostly used for analyst group performance, instead of individual performance.

5. 360-Degree Performance Appraisal: It is used to evaluate the performance of employees and managers based on the feedback obtained from the individuals who work along with them.

It can be taken as an organized collection and review of performance data of a person or a group extracted from a number of stakeholders.

Through this method, the employees hold the chance to review the manager, which is not possible in traditional performance appraisals. It is an objective and realistic method, which is free from biasness.

6. Assessment Centres: Assessment centers are mainly used for the assessment of managerial or administrative capacity.

It is a central point where managers may appear jointly to contribute to job- related exercises assessed by trained evaluators.

The basic purpose is to assess managers periodically, says one to three days, with the help of observation and evaluation of their actions across the cycle of chosen exercises or work samples.

Assessees are asked to take part in workgroups (without leaders), in-basket exercises, computer simulations, role-playing, and other parallel activities that require the same qualities for successful performance as required in the actual work.

Once the recording of observations is completed, the raters gather to discuss these observations and take final decisions on the basis of these discussions.

Traditional versus Modern Appraisal Methods

Table: Traditional versus Modern Appraisal Methods

Basis of Difference Traditional Methods Modern Methods
1. Guiding Values Individualistic, Control oriented, Documentary Systematic, Development, Problem solving
2. Leadership Styles Directional, Evaluative Facilitative, Coaching
3. Frequency Occasional Frequent
4. Formalities High Low
5. Rewards Individualistic Grouped, Organisational

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