6 Types of Performance Appraisal Methods to Consider

By Marianne Chrisos - Last Updated on January 6, 2020
Types of Performance Appraisal Methods

Modern performance management methods are important to employee performance. Getting the most out of your employees requires them having an understanding of the requirements and expectations that go along with their jobs, the specific goals they are working towards, and an understanding of how they are performing in the eyes of their supervisors.

Modern performance appraisal methods help drive employee productivity and engagement and allow for the best employer-employee communication to ensure that both parties feel good about the role, the goals, the impact, and the expectations.

It also helps to give employees a sense of direction and understanding of where their career might be going with a particular business. Consistent, clear communication about expectations, potential areas of improvement, and places of excellence can give employees more confidence and lead to better employee retention. Effective employee reviews conducted with the appropriate performance appraisal methods can lead to more productive employees, as well as help to retain talent, all helping your business save money in the long run.

Effective modern performance appraisal methods

Here are some methods of performance appraisal to consider for your organization.

1. Management by objectives

One primary method of employee appraisal is management by objectives or MBO. This method has managers and employees work together to identify and plan goals and proactively check in on progress. Though this method is often more time consuming and expensive than methods of performance appraisal in HRM, it’s very thorough and can establish better, more positive relationships between supervisors and employees.

2. 360-degree feedback

For companies who don’t believe that reviews should be only once a year, the 360-degree method helps to establish more consistent, continuous feedback. This helps keep employees more motivated and encourages more communicative relationships. It also offers a more holistic type of feedback – not only do managers review employees, but employees appraise managers, peers, customers, suppliers, and perform a self-evaluation. This provides businesses with a healthy amount of data for accurate assessment and growth.

3. Assessment center method

For this appraisal, employees are asked to take part in situational exercises including work groups, simulations, and role-playing exercises that would ensure and measure success in a role. This can take place, as the name suggests, at an assessment center. This can offer insight into an employee’s personality and skills such as adaptability, problem-solving, tolerance to change, business ethics, and more. While it can often be utilized during the initial hiring and recruitment phase to assess compatibility with a role or a business culture, it can also be useful as a way to assess performance once hired and is a successful way to gauge the potential for promotion, leadership, and other career moves.

4. Behaviorally Anchored Rating Scale

The BARS method is a combined qualitative and quantitative performance appraisal method that compares employee performance with specific examples of behavior that are related to certain numerical ratings. This method of performance appraisal offers clear standards, better feedback, and quality analysis of employee performance that’s very consistent.

5. Psychological appraisals

This isn’t a particularly common way of assessing employee performance, but it’s an interesting and insightful method. It helps employees to analyze the potential of an employee’s future performance, which can be very helpful when setting goals and working on promotion decisions. For this method, psychological tests are conducted, such as in-depth interviews, psychological assessments, and other information gathering techniques to get an in-depth understanding of an employee’s emotional, intellectual, and social traits. It’s a laborious process that often requires the assistance or oversight of a psychologist, but it can produce high-quality, insightful, meaningful results.

6. A human resource accounting method

At the end of the day, everyone in an organization has a role and a cost. Does that person’s salary help to justify their role? Does their salary drive them to make a proportionate impact on the business? This cost account method looks at the employee’s performance through the lens of monetary value or revenue for a company. Ultimately, if an employee’s contributions are monetarily sufficient as deemed by this assessment, then their performance review would be a positive one. Employees who rank lower on this method often lead managers to have to make strategical decisions about training, hiring, and other factors that affect the overall business.

Since appraisals and employee reviews are often linked to things like salary increases or monetary bonuses, it’s important that employers find use the method that helps them assess the information that’s most important and beneficial to them as an organization. It’s also important that the method helps employees align their individual goals with the overarching company goals, as employees are often the most engaged and productive when they understand how their contributions are making an impact on the big picture or the bottom line. For your best business results – and happier, more productive employees – find the performance appraisal method that works for your organization and invest in making it a meaningful solution for your business.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a c...

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