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Methods of Performance Appraisal

There are various means and ways of evaluating the performance of an employee over a specific time period. Performance appraisals are a quantifiable method of understanding and engaging with employees in the workplace. Appraisals help determine workplace activities in a number of ways. Managers can use these performance reviews as a means to understand the overall satisfaction of employees in the workplace, how the overall objectives are being met and how the employee is performing to reach those objectives, through measurable goals and strategies. Traditional methods of performance management include the rating scale method, the Essay appraisal method, the ranking method, and the critical incidents method. All of which are explained below.

Rating Scale method

Creating a scaling method is commonly used for assessing the performance of the employees and is a well known method of performance appraisal for employees. Many companies and organisations, such as Adobe and Microsoft have since dropped this form of performance review as they cite it is not beneficial to employees in the long term. However, depending on the company culture, this method may be better suited to some companies than others. Under this method of performance appraisal, employee may be assessed by his superiors, colleagues, employees or sometimes by customers. An appraiser is a person who will be giving the feedback to the employee in question, by rating each trait given. Ultimately all numbers chosen or marked will be added to determine highest score gained by employee. An employee who scores the most overall points will be viewed as a “star performer”, descending scores imply employees will be treated as “low performers” and the least scored employees will be seen as “ non-performers”. Its crucial that management work with these non-performers to understand how they can go about improving their output.

Essay Appraisal Method

This traditional form of appraisal, asl known as “free form method” involves a description of the performance of the employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often include examples and evidences to support the information. A major disadvantage to this method is the inseparability of the bias of the evaluator. Under this method, the rater is asked to express the strong as well as weak points of the employees behavior. This technique is normally used with a combination of the graphic rating scale because the rater can elaborately present the scale by substantiating an explanation for his rating. Essay evaluation is a non-quantitative technique. It is advantageous in that it reveals a great deal about both the employee and the manager.  

Ranking Method

Under ranking method, the manager compares an employee's rating to other similar employee ratings. This creates a “force distribution method”, which is similar to grading on a curve. Predetermined percentages of employee are placed in various performance categories, for example superstar, good, average, below average or not met. The employees ranked in the top group usually get star performer ratings and will generally be rewarded (extra leave days, bonus, etc), those not at the top tend to have the reward withheld, and those at the bottom will be closely monitored to understand why they are not performing. Manager have to make evaluative decisions, such as who is the employee of the month, who gets a raise or promotion, and who will, ultimately, be laid off. Ranking can also be used for developmental purposes by letting employee know where they stand in comparison to their peers - they can be motivated to improve performance.

Paired comparison

A better technique of comparison than the straight ranking method, is paired comparision. This method compares each employee with all other in the group, one at a time. after all the comparison on the basis of the overall comparisons, the employees are given the final rankings.

Critical incidents method

This technique involves managers preparing lists of statement of very effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees on the job. The manager maintains logs of each employee over the past review period (quarterly, bi annually or yearly). At the end of the rating period, these recorded critical incidents are used in the evaluation of the employee's performance (e.g. 20th Aug - the customer service agent fully understood the customer's complaint. She was polite, prompt, enthusiastic and solved the customer's problem in a quick and timely manner). This method provides an objective basis for conducting a thorough discussion of an employee's performance.

There are various methods organisations can use to evaluate the effectiveness of their workforce. In today's rapidly changing and disruptive work environment, it is crucial that managers make the most out of the performance reviews in order to engage and motivate their employees, drive professional growth, and ultimately, optimise productivity. In order to get the most out of the performance appraisal, both managers and employees need to get into the right mindset.