Performance evaluation is an essential component of any ideal organization. This employee appraisal process is used to assess employee performance, document the evaluation data, and recommend reward programs for the deserving people. This helps in identifying, fixing and improving different areas that eventually enable organizations to achieve goals and objectives from a human resource perspective. HR personnel and manager together use an appropriate appraisal method to identify champions in the team, motivate the potential winners and filter out employees that repeatedly fail to help their teams achieve the goals set for them.
HR managers help the organization in the entire spectrum of creating, managing, and cultivating employee performance management processes. The best way usually starts at finding the right performance management method, studying its strengths, weaknesses and tailoring it to the specific needs of your organization.
Here are the types of performance appraisal methods:
Management by Objectives (MBO):
MBO performance appraisal methods require the organization to establish quantifiable goals for the overall business and departments. The employees are provided with measurable and achievable goals, which will be monitored and evaluated in the next performance review. During the review, employees are encouraged to provide feedback to management about their own performance and future expectations.
Graphic Rating Scale:
Graphic rating scale performance appraisal methods being popular are used in most organizations since the method allows employees to be rated on specific behaviors or actual performances. The appraiser can be a manager, team leader, department head or the employee himself. Proper training to the evaluators can reduce bias and thus is considered low cost in its implementation.
360-degree feedback method of performance appraisal involves collecting feedback from every individual interacting with the employee during the course of work may it be customers or friends or supervisors of the employee. Collecting feedback and compiling data gives a clear insight into the personality traits of the employee and attitude towards work assigned. Though time-consuming, it eliminates bias and gives a clear picture of the employee’s competence to the management.
Critical Incident Method:
Critical incident method of performance appraisal is a time-consuming method of although it is considered very effective. The manager documents all the incidents of the employee’s effective and ineffective statements and behavior of the employee and at the time for the employee to be reviewed, the manager will pull out this file and formally record the incidents that occurred over the time period. The performance rating of the employee is done on the basis of such recorded incidents after a discussion with the employee. The managers should avoid the tendency to record only negative incidents instead of positive ones.
This method can also work well when specific jobs vary greatly from week to week, unlike, for example, a factory worker who routinely performs the same weekly tasks.
In a ranking method system (also called stack ranking), employees are ranked by the manager or supervisor. This system is a comparative method for performance evaluations. The manager will have a list of all employees and will first choose the most valuable employee and put that name at the top. Then the least valuable employee is chosen and add that name at the bottom of the list. With the remaining employees, this process would be repeated. Obviously, there is a lot of scope for bias and it may not work well in a larger organization, where managers may not interact with each employee on a day-to-day basis.
Fortune 500 Focus
Critics have long said that a forced ranking system can be detrimental to morale; it focuses too much on individual performance as opposed to team performance. Some say a forced ranking system promotes too much competition in the workplace. However, many Fortune 500 companies use this system and have found it works for their culture. General Electric (GE) used perhaps one of the most well-known forced ranking systems.
Behaviourally Anchored Rating Scales (BARS):
BARS method of performance appraisal is considered better than the traditional ones because it provides a more accurate gauge, clearer standards, better feedback, and consistency in evaluation. This method is designed to bring the benefits of both qualitative and quantitative data to the employee appraisal process. It compares an individual’s performance against specific examples of behavior that are anchored to numerical ratings.
Choose the right performance appraisal method which will help the employee as well as the organization’s performance. Keeping below points in consideration while selecting and implementing a suitable method.
- Define goals clearly.
- Provide real-time feedback.
- Enhance employee performance.
- Spot training and development needs.
- Offer insights on counter-productive tasks.
- Improve employee engagement and retention.
- Align individual performance with business goals.
- Transform the workforce into a strategic advantage.