Evaluation Methods in Performance Appraisal

Companies that want to increase the productivity and success of their employees need to carry out performance appraisals. This is also expected to increase the overall level of employee success.

Over the years, a variety of performance appraisal methods have been used, some of which are better suited than others to meet modern demands. Each performance appraisal method has a different matrix and objectives.

What is Performance Appraisal?

Performance appraisal refers to the process of evaluating an employee's performance over a certain period of time. The purpose of performance appraisal is to assess ways to increase the success of each employee.

This is usually realized as an annual or quarterly process that involves evaluating employee performance and productivity against a set of goals set for that time period. By evaluating employee skills, strengths, and gaps, this process can also help in determining salary increases and promotions.

Traditional employee engagement methods focus more on measuring an employee's past performance rather than improving future work. This process is considered no longer to provide effective results.

For this reason, many organizations view the entire performance appraisal process as futile. However, by adapting performance appraisal methods to better accommodate modern demands, this process can be beneficial in the following ways.

• Define company goals clearly
• Provide real-time and effective feedback to all team members
• Increase employee performance and productivity
• Discover training and development needs
• Offers insight into counter-productive and ineffective tasks
• Increase employee engagement and retention
• Align individual performance with organizational goals
• Turning workforce into strategic advantage

Performance Appraisal Method

As time changes, performance appraisals have been carried out using modern methods. Several performance appraisal methods that can be adapted to business needs include the following.

1. Management by Objective (MBO)

Managers and employees need to work together to identify, plan, organize and communicate success goals. The manager identifies the goals to be achieved in order to assign great responsibility to the employee in terms of the results expected from him. During regular meetings, managers and employees discuss the progress achieved.

The use of progress measurements can be used as a guide to measure the level of employee contribution. While useful in determining productivity levels, this process usually emphasizes tangible, career-oriented goals. Therefore, intangible aspects of employee performance such as interpersonal skills or work commitment are often overlooked.

2. Behaviorally Anchored Rating Scale (BARS)

This method is often considered the most effective because it successfully provides qualitative and quantitative benefits from the performance appraisal process. In a Behaviorally Anchored Rating Scale (BARS) system, employers compare employee performance against specific examples of behavior based on a numerical rating.

This method provides quantitative and qualitative measurements, while incorporating intangible employee qualities into the assessment system. In general, BARS provides clear standards, improves feedback, and provides accurate performance analysis and consistent evaluation. The main weakness is that this creates a risk of distortion due to bias if done manually.

3. Critical Incident Method

In this method, employees are evaluated based on specific events known as “critical incidents.” The employee will be assessed as successful or failed in a particular task. Throughout the process, evaluators keep digital or physical journals where they store information from different incidents.

Although demanding manual assessment, this process is useful for monitoring individual employee growth. By keeping detailed records of positive achievements and opportunities within employee milestones. Employers can provide detailed information in their feedback thereby increasing opportunities for future development. These metrics can easily be reviewed during scheduled progress or through 1:1 meetings.

4. Psychological Assessment

This method is very useful when determining the hidden potential of employees. The focus of this assessment lies in evaluating future performance rather than the results of their work in the past.

In this performance appraisal method, qualified psychologists conduct various tests on employees, including in-depth interviews, psychological tests, and personal discussions. These tests aim to identify emotions, intelligence, and other traits that may influence an employee's future performance in an organization.

Although this method is thorough and in-depth, it is slow, complicated, and expensive. Furthermore, the quality of the results depends on the psychologist performing the procedure and various external influences that may influence the employee during testing (e.g. personal stress-related events) so results can sometimes be inconsistent.

5. 360 Degree Feedback

The annual performance appraisal method is outdated and no longer useful in general industry discussions. Workers need ongoing communication with team leaders and managers. A continuous feedback process such as 360 degree feedback is needed so that employees remain motivated and interested in learning from the results of their assessments.

In 360-feedback, many assessors are involved in evaluating someone's performance. Feedback from employees is collected by all agents in the organization with whom they interact, including superiors, coworkers, subordinates, and even customers.

Typically, this feedback is collected through online questionnaires designed specifically for appraisal needs. This ensures effective performance analysis with varying degrees of transparency as every employee in an organization assesses managers, peers, customers, suppliers and takes part in regular self-evaluations.

These are some of the performance appraisal methods that companies usually use for their employees. To help companies assess employee characteristics so that they develop according to their potential, the Customized Assessment Program is one of the right services to accurately evaluate individual potential profiles.