essay method of performance appraisal example

What is the Essay Method for Performance Appraisals?

While some would label it as the “grandfather” of performance appraisal methods, the essay method is still a commonly used appraisal method in a variety of business models. The essay method, sometimes known as the “free-form method,” is a performance review system where a superior creates a written review of the employee’s performance.

These essays are meant to describe and record an employee’s strengths and weaknesses in job performance, identifying problem areas and creating a plan of action to remedy them. Whether the essay is written by the appraiser alone, or in collaboration with the appraisee, essays provide supervisors the opportunity to assess behaviors and performance with greater complexity and attention to detail.

There are many reasons that the essay method--which was one of the first methods used to evaluate performance--is still effective today.

One of the most noteworthy aspects of essay appraisals is their free-form approach to performance reviews. Whereas some employers can feel limited by rigid performance appraisal criteria, the essay method takes a far less structured stance than typical rating scale methods. In so doing, the appraiser is able to examine any relevant issue or attribute of performance that is pertinent to an employee’s job description or overall company growth.

The essay method assumes that not all employee traits and behaviors can be neatly analyzed, dissected, and rated--instead, it allows appraisers to place varied degrees of emphasis on certain qualities, issues, or attributes that are appropriate. Rather than being locked into a fixed system, this open-ended method gives supervisors the freedom of expression and critical thought. For appraisers, there exist special services such as StudyCrumb , which help in writing accurate essays.

When preparing an essay, a supervisor may consider any of the following factors of an employee as they relate to the company and employee relationship: potential and job knowledge, understanding of the company’s policies, relationships with peers and supervisors, planning and organization, and general attitudes and perceptions. This thorough, non-quantitative assessment provides a good deal more information about an employee than most other performance appraisal techniques.

However, as with all performance appraisal methods, there are a few limitations that the essay method suffers from that are worth examining.

One of the major drawbacks of the essay method is its highly subjective nature--they are often subject to bias, and it can be difficult to separate the assessment of the employee from the bias of the evaluator. While the essay can provide a good deal of information about the employee, it tends to tell more about the evaluator than the one being evaluated.

Another element that essays leave out (that other appraisal methods rely heavily on) is comparative results. Instead of utilizing standardized, numeric questions, these appraisals rely only on open-ended questions. While the essay method gives managers the ability to provide detailed and circumstantial information on a specific employee’s performance, it removes the component of comparing performance with other employees. This often makes it difficult for HR to distinguish top performers.

Overall, the appraisal method’s greatest advantage--the freedom of expression for the evaluator--can also serve as its greatest handicap. Even the actual writing of the reviews can upset or distort the process of employee appraisals, as the introduction of inconsistent, unorganized, or poor writing styles can distort and upset the review process. An employee may be unfairly helped or harmed by an evaluator’s writing ability. An evaluator can also find themselves lacking sufficient time to prepare the essay, and can write an essay hurriedly without accurately assessing an employee’s performance.

What is the essay method best used for?

Appraisal by essay is generally most effective in performance reviews for employees with atypical job descriptions or non-numerical goals. While other appraisals work well in analyzing performance for jobs that are subject to goals based on numbers, essays offer a more subjective analysis of performance for employees with managerial or customer service positions.

When analyzing production, the essay method is most effective in combination with another appraisal method. Using a graphic rating scale along with essay appraisals allows one method to focus solely on numbers, while the essay portion can be used to analyze other performance goals.

Doing essay appraisals right

Here are 3 things to strive for in order to set your company up for success in essay performance appraisals:

• Consistency.

Keeping a standard for style and length of essay appraisals can make the biggest difference in ensuring that your reviews are effective. Essays that are unstructured and unnecessarily complex can be detrimental to an employee’s rating, as well as using unspecific, flowery language that is not relevant to the employee’s performance. In order to remain efficient and effective, today’s evaluators should focus on making appraisal essays short and specific, ensuring that the entire review reflects the performance of the employee.

The appraiser should also ensure that they are making sufficient time in their schedule to prepare the essay. A busy evaluator may compromise an employee’s performance rating by writing a hurried essay, or running out of time to thoroughly assess employee performance. It’s important for all participants of essay appraisals to take enough time to write a consistent, accurate, and succinct review in order to set employees up for success.

2. Proficiency.

If you’ve chosen to use essay appraisals in your organization, it’s important to ensure that your appraisers possess the ability to write well. Even if an essay contains detailed, circumstantial information, it becomes difficult to extract valuable data from a poorly written essay. To ensure that nothing stands between an HR professional’s ability to assess an employee’s performance, evaluators should be trained as well-equipped writers.

Giving writing assistant tools or tips to supervisors can make all the difference in the accuracy and efficiency of an employee’s performance review.

2. Objectivity.

Subjectivity is both a strength and a weakness in essay appraisals. Not only are essays themselves often biased, but the misinterpretation of essays can even further distance the main evaluator from an accurate portrayal of an employee’s performance. Including objective standards in a performance review results in a more balanced and productive review process, and helps to eliminate the forming of incorrect conclusions about an employee’s behavior and performance.

Organizations often implement this goal by pairing essay appraisals with another appraisal method, such as graphic scale ratings, to draw more accurate conclusions and performance data. In so doing, evaluators can utilize all of the free expression and open-ended characteristics of an essay appraisal, while still maintaining accurate, easily translated results that are effective for the overall organization.

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11.2 Appraisal Methods

Learning objective.

• Be able to describe the various appraisal methods.

It probably goes without saying that different industries and jobs need different kinds of appraisal methods. For our purposes, we will discuss some of the main ways to assess performance in a performance evaluation form. Of course, these will change based upon the job specifications for each position within the company. In addition to industry-specific and job-specific methods, many organizations will use these methods in combination, as opposed to just one method. There are three main methods of determining performance. The first is the trait method , in which managers look at an employee’s specific traits in relation to the job, such as friendliness to the customer. The behavioral method looks at individual actions within a specific job. Comparative methods compare one employee with other employees. Results methods are focused on employee accomplishments, such as whether or not employees met a quota.

Within the categories of performance appraisals, there are two main aspects to appraisal methods. First, the criteria are the aspects the employee is actually being evaluated on, which should be tied directly to the employee᾿s job description. Second, the rating is the type of scale that will be used to rate each criterion in a performance evaluation: for example, scales of 1–5, essay ratings, or yes/no ratings. Tied to the rating and criteria is the weighting each item will be given. For example, if “communication” and “interaction with client” are two criteria, the interaction with the client may be weighted more than communication, depending on the job type. We will discuss the types of criteria and rating methods next.

Graphic Rating Scale

The graphic rating scale , a behavioral method, is perhaps the most popular choice for performance evaluations. This type of evaluation lists traits required for the job and asks the source to rate the individual on each attribute. A discrete scale is one that shows a number of different points. The ratings can include a scale of 1–10; excellent, average, or poor; or meets, exceeds, or doesn’t meet expectations, for example. A continuous scale shows a scale and the manager puts a mark on the continuum scale that best represents the employee’s performance. For example:

The disadvantage of this type of scale is the subjectivity that can occur. This type of scale focuses on behavioral traits and is not specific enough to some jobs. Development of specific criteria can save an organization in legal costs. For example, in Thomas v. IBM , IBM was able to successfully defend accusations of age discrimination because of the objective criteria the employee (Thomas) had been rated on.

Many organizations use a graphic rating scale in conjunction with other appraisal methods to further solidify the tool’s validity. For example, some organizations use a mixed standard scale , which is similar to a graphic rating scale. This scale includes a series of mixed statements representing excellent, average, and poor performance, and the manager is asked to rate a “+” (performance is better than stated), “0” (performance is at stated level), or “−” (performance is below stated level). Mixed standard statements might include the following:

• The employee gets along with most coworkers and has had only a few interpersonal issues.
• This employee takes initiative.
• The employee consistently turns in below-average work.
• The employee always meets established deadlines.

An example of a graphic rating scale is shown in Figure 11.1 “Example of Graphic Rating Scale” .

Essay Appraisal

In an essay appraisal , the source answers a series of questions about the employee’s performance in essay form. This can be a trait method and/or a behavioral method, depending on how the manager writes the essay. These statements may include strengths and weaknesses about the employee or statements about past performance. They can also include specific examples of past performance. The disadvantage of this type of method (when not combined with other rating systems) is that the manager’s writing ability can contribute to the effectiveness of the evaluation. Also, managers may write less or more, which means less consistency between performance appraisals by various managers.

Checklist Scale

A checklist method for performance evaluations lessens the subjectivity, although subjectivity will still be present in this type of rating system. With a checklist scale , a series of questions is asked and the manager simply responds yes or no to the questions, which can fall into either the behavioral or the trait method, or both. Another variation to this scale is a check mark in the criteria the employee meets, and a blank in the areas the employee does not meet. The challenge with this format is that it doesn’t allow more detailed answers and analysis of the performance criteria, unless combined with another method, such as essay ratings. A sample of a checklist scale is provided in Figure 11.3 “Example of Checklist Scale” .

Figure 11.1 Example of Graphic Rating Scale

Figure 11.2 Example of Essay Rating

Figure 11.3 Example of Checklist Scale

Critical Incident Appraisals

This method of appraisal, while more time-consuming for the manager, can be effective at providing specific examples of behavior. With a critical incident appraisal , the manager records examples of the employee’s effective and ineffective behavior during the time period between evaluations, which is in the behavioral category. When it is 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 disadvantage of this method is the tendency to record only negative incidents instead of postive ones. However, this method can work well if the manager has the proper training to record incidents (perhaps by keeping a weekly diary) in a fair manner. This approach 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.

Work Standards Approach

For certain jobs in which productivity is most important, a work standards approach could be the more effective way of evaluating employees. With this results-focused approach, a minimum level is set and the employee’s performance evaluation is based on this level. For example, if a sales person does not meet a quota of $1 million, this would be recorded as nonperforming. The downside is that this method does not allow for reasonable deviations. For example, if the quota isn’t made, perhaps the employee just had a bad month but normally performs well. This approach works best in long-term situations, in which a reasonable measure of performance can be over a certain period of time. This method is also used in manufacuring situations where production is extremely important. For example, in an automotive assembly line, the focus is on how many cars are built in a specified period, and therefore, employee performance is measured this way, too. Since this approach is centered on production, it doesn’t allow for rating of other factors, such as ability to work on a team or communication skills, which can be an important part of the job, too.

Ranking Methods

In a ranking method system (also called stack ranking), employees in a particular department are ranked based on their value to 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 he or she will choose the least valuable employee and put that name at the bottom of the list. With the remaining employees, this process would be repeated. Obviously, there is room for bias with this method, and it may not work well in a larger organization, where managers may not interact with each employee on a day-to-day basis.

To make this type of evaluation most valuable (and legal), each supervisor should use the same criteria to rank each individual. Otherwise, if criteria are not clearly developed, validity and halo effects could be present. The Roper v. Exxon Corp case illustrates the need for clear guidelines when using a ranking system. At Exxon, the legal department attorneys were annually evaluated and then ranked based on input from attorneys, supervisors, and clients. Based on the feedback, each attorney for Exxon was ranked based on their relative contribution and performance. Each attorney was given a group percentile rank (i.e., 99 percent was the best-performing attorney). When Roper was in the bottom 10 percent for three years and was informed of his separation with the company, he filed an age discrimination lawsuit. The courts found no correlation between age and the lowest-ranking individuals, and because Exxon had a set of established ranking criteria, they won the case (Grote, 2005).

Another consideration is the effect on employee morale should the rankings be made public. If they are not made public, morale issues may still exist, as the perception might be that management has “secret” documents.

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. In this system, every year managers placed their employees into one of three categories: “A” employees are the top 20 percent, “B” employees are the middle 70 percent, and “C” performers are the bottom 10 percent. In GE’s system, the bottom 10 percent are usually either let go or put on a performance plan. The top 20 percent are given more responsibility and perhaps even promoted. However, even GE has reinvented this stringent forced ranking system. In 2006, it changed the system to remove references to the 20/70/10 split, and GE now presents the curve as a guideline. This gives more freedom for managers to distribute employees in a less stringent manner 1 .

The advantages of a forced ranking system include that it creates a high-performance work culture and establishes well-defined consequences for not meeting performance standards. In recent research, a forced ranking system seems to correlate well with return on investment to shareholders. For example, the study (Sprenkel, 2011) shows that companies who use individual criteria (as opposed to overall performance) to measure performance outperform those who measure performance based on overall company success. To make a ranking system work, it is key to ensure managers have a firm grasp on the criteria on which employees will be ranked. Companies using forced rankings without set criteria open themselves to lawsuits, because it would appear the rankings happen based on favoritism rather than quantifiable performance data. For example, Ford in the past used forced ranking systems but eliminated the system after settling class action lawsuits that claimed discrimination (Lowery, 2011). Conoco also has settled lawsuits over its forced ranking systems, as domestic employees claimed the system favored foreign workers (Lowery, 2011). To avoid these issues, the best way to develop and maintain a forced ranking system is to provide each employee with specific and measurable objectives, and also provide management training so the system is executed in a fair, quantifiable manner.

In a forced distribution system, like the one used by GE, employees are ranked in groups based on high performers, average performers, and nonperformers. The trouble with this system is that it does not consider that all employees could be in the top two categories, high or average performers, and requires that some employees be put in the nonperforming category.

In a paired comparison system, the manager must compare every employee with every other employee within the department or work group. Each employee is compared with another, and out of the two, the higher performer is given a score of 1. Once all the pairs are compared, the scores are added. This method takes a lot of time and, again, must have specific criteria attached to it when comparing employees.

Human Resource Recall

How can you make sure the performance appraisal ties into a specific job description?

Management by Objectives (MBO)

Management by objectives (MBOs) is a concept developed by Peter Drucker in his 1954 book The Practice of Management (Drucker, 2006). This method is results oriented and similar to the work standards approach, with a few differences. First, the manager and employee sit down together and develop objectives for the time period. Then when it is time for the performance evaluation, the manager and employee sit down to review the goals that were set and determine whether they were met. The advantage of this is the open communication between the manager and the employee. The employee also has “buy-in” since he or she helped set the goals, and the evaluation can be used as a method for further skill development. This method is best applied for positions that are not routine and require a higher level of thinking to perform the job. To be efficient at MBOs, the managers and employee should be able to write strong objectives. To write objectives, they should be SMART (Doran, 1981):

• Specific. There should be one key result for each MBO. What is the result that should be achieved?
• Measurable. At the end of the time period, it should be clear if the goal was met or not. Usually a number can be attached to an objective to make it measurable, for example “sell $1,000,000 of new business in the third quarter.”
• Attainable. The objective should not be impossible to attain. It should be challenging, but not impossible.
• Result oriented. The objective should be tied to the company’s mission and values. Once the objective is made, it should make a difference in the organization as a whole.
• Time limited. The objective should have a reasonable time to be accomplished, but not too much time.

Setting MBOs with Employees

(click to see video)

An example of how to work with an employee to set MBOs.

To make MBOs an effective performance evaluation tool, it is a good idea to train managers and determine which job positions could benefit most from this type of method. You may find that for some more routine positions, such as administrative assistants, another method could work better.

Behaviorally Anchored Rating Scale (BARS)

A BARS method first determines the main performance dimensions of the job, for example, interpersonal relationships. Then the tool utilizes narrative information, such as from a critical incidents file, and assigns quantified ranks to each expected behavior. In this system, there is a specific narrative outlining what exemplifies a “good” and “poor” behavior for each category. The advantage of this type of system is that it focuses on the desired behaviors that are important to complete a task or perform a specific job. This method combines a graphic rating scale with a critical incidents system. The US Army Research Institute (Phillips, et. al., 2006) developed a BARS scale to measure the abilities of tactical thinking skills for combat leaders. Figure 11.4 “Example of BARS” provides an example of how the Army measures these skills.

Figure 11.4 Example of BARS

Figure 11.5 More Examples of Performance Appraisal Types

How Would You Handle This?

Playing Favorites

You were just promoted to manager of a high-end retail store. As you are sorting through your responsibilities, you receive an e-mail from HR outlining the process for performance evaluations. You are also notified that you must give two performance evaluations within the next two weeks. This concerns you, because you don’t know any of the employees and their abilities yet. You aren’t sure if you should base their performance on what you see in a short time period or if you should ask other employees for their thoughts on their peers’ performance. As you go through the files on the computer, you find a critical incident file left from the previous manager, and you think this might help. As you look through it, it is obvious the past manager had “favorite” employees and you aren’t sure if you should base the evaluations on this information. How would you handle this?

Table 11.3 Advantages and Disadvantages of Each Performance Appraisal Method

Key Takeaways

• When developing performance appraisal criteria, it is important to remember the criteria should be job specific and industry specific.
• The performance appraisal criteria should be based on the job specifications of each specific job. General performance criteria are not an effective way to evaluate an employee.
• The rating is the scale that will be used to evaluate each criteria item. There are a number of different rating methods, including scales of 1–5, yes or no questions, and essay.
• In a graphic rating performance evaluation, employees are rated on certain desirable attributes. A variety of rating scales can be used with this method. The disadvantage is possible subjectivity.
• An essay performance evaluation will ask the manager to provide commentary on specific aspects of the employee’s job performance.
• A checklist utilizes a yes or no rating selection, and the criteria are focused on components of the employee’s job.
• Some managers keep a critical incidents file . These incidents serve as specific examples to be written about in a performance appraisal. The downside is the tendency to record only negative incidents and the time it can take to record this.
• The work standards performance appraisal approach looks at minimum standards of productivity and rates the employee performance based on minimum expectations. This method is often used for sales forces or manufacturing settings where productivity is an important aspect.
• In a ranking performance evaluation system, the manager ranks each employee from most valuable to least valuable. This can create morale issues within the workplace.
• An MBO or management by objectives system is where the manager and employee sit down together, determine objectives, then after a period of time, the manager assesses whether those objectives have been met. This can create great development opportunities for the employee and a good working relationship between the employee and manager.
• An MBO’s objectives should be SMART: specific, measurable, attainable, results oriented, and time limited.
• A BARS approach uses a rating scale but provides specific narratives on what constitutes good or poor performance.

Review each of the appraisal methods and discuss which one you might use for the following types of jobs, and discuss your choices.

• Administrative Assistant
• Chief Executive Officer
• Human Resource Manager
• Retail Store Assistant Manager

1 “The Struggle to Measure Performance,” BusinessWeek , January 9, 2006, accessed August 15, 2011, http://www.businessweek.com/magazine/content/06_02/b3966060.htm .

Doran, G. T., “There’s a S.M.A.R.T. Way to Write Management’s Goals and Objectives,” Management Review 70, no. 11 (1981): 35.

Drucker, P., The Practice of Management (New York: Harper, 2006).

Grote, R., Forced Ranking: Making Performance Management Work (Boston: Harvard Business School Press, 2005).

Lowery, M., “Forcing the Issue,” Human Resource Executive Online , n.d., accessed August 15, 2011, http://www.hrexecutive.com/HRE/story.jsp?storyId=4222111&query=ranks .

Phillips, J., Jennifer Shafter, Karol Ross, Donald Cox, and Scott Shadrick, Behaviorally Anchored Rating Scales for the Assessment of Tactical Thinking Mental Models (Research Report 1854), June 2006, US Army Research Institute for the Behavioral and Social Sciences, accessed August 15, 2011, http://www.hqda.army.mil/ari/pdf/RR1854.pdf .

Sprenkel, L., “Forced Ranking: A Good Thing for Business?” Workforce Management, n.d., accessed August 15, 2011, http://homepages.uwp.edu/crooker/790-iep-pm/Articles/meth-fd-workforce.pdf .

Human Resource Management Copyright © 2016 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

The Essay Method of Performance Appraisal

by Danielle Smyth

Published on 9 Aug 2019

The question of how to effectively gauge an employee’s performance on the job has been answered many times in many different ways, but there’s certainly no one agreed-upon method recommended by the human resources industry. Most experts agree that performance management is a critical part of having a successful business in today’s world and that effectively managing, developing and evaluating employees leads to a more efficient workforce and better company culture.

However, it’s deciding how to implement it within a certain company structure that can be challenging, and implementation is key to keeping the process effective rather than disruptive. The essay method of performance appraisal can be a great choice due to its thorough, thoughtful and unobtrusive nature.

Secrets to Effective Performance Appraisals

The truth is that effective performance appraisals take time. They take up the manager’s time, the employee’s time and the time of human resources, and they can potentially take up the time of teammates and co-workers who are asked about projects and collaboration.

For them to mean something, the process needs to be taken seriously, but that always must be balanced against the forward motion of the company and the day-to-day workloads of the employees in question.

Methods of Performance Appraisal

There are a number of methods used in today’s industries to evaluate employees. All of them require some sort of performance standard to be set at first and then an evaluation over a set period of time against that standard.

Some methods of review can be more effective than others, but some also require more dedicated time and thought from the manager or other evaluator. Some of the more common methods include the checklist method, the comparison or forced distribution method and the essay method.

Checklist Method of Performance Appraisal

With the checklist method, an employee is judged against a list of criteria. The criteria have been developed for the level or job of the employee, and usually all employees at similar levels are evaluated against it.

• Yes/no checklists simply ask the evaluator to determine whether the employee exhibits the behavior defined in each criterion: for example, “comes to work on time,” “frequently contributes to group discussions” or “meets daily safety requirements.” It’s important to make sure that all criteria are phrased so that a "yes" is the desired answer because it can be very easy to confuse an evaluation when this isn’t the case. This provides a very simple and straightforward way of judging performance but won’t get into much nuance of individual strengths and weaknesses and may not do much to differentiate one employee from another.
• Leveled checklists ask the evaluator to rate the employee on some sort of scale for each criterion. This could be a scale from one to five where five is optimal, or it could be a verbal scale with levels like “needs improvement,” “meets expectations” and “exceeds expectations.” Criteria might be “completes work within the timeline,” “collaborates with other departments” or “shows technical expertise.” These scaled ratings provide more nuance into each individual employee and should help highlight strengths as well as areas for improvement, but they require the manager to take more time to understand the performance within the department.

Comparison or Forced Distribution Methods

Comparison or forced distribution methods rate employees comparatively and against each other. This can be done in cases where an organization is rather flat, and it makes sense to compare a collection of employees together. The downside is that it can create a false sense of competition within employee groups or can result in bad attitudes.

• Paired evaluations give the evaluator a set of employee comparisons and asks him to choose who is the better employee. This is normally done within a department. For example, a department of four employees would end up with six pairs for comparison, and the evaluator (or team) would then select the best employee within each pair. For larger departments, this can be time consuming for the evaluators.
• Rankings simply ask the evaluator to rank employees from best to worst. This method is fully based on the perception of the evaluator and is not entirely popular because it is not systematic and can be easily affected by undiscovered bias on the part of the evaluator. It is, however, relatively easy to do for any manager who knows the team well.
• Forced distribution methods focus on the fact that most evaluators tend to rate their employees well. It requires the evaluators to meet a set distribution within their evaluations such that each evaluation finds poor performers as well as excellent ones. While this can be a way to identify areas for improvement, it can also be read as having to meet a quota with ratings, which can lead to dissent.

Essay Evaluation Method

The essay method is a fairly straightforward approach in which the manager or evaluator writes a descriptive essay about each employee. The essay would cover the employees' achievements throughout the evaluation period as well as their strengths and weaknesses. The essay format gives the evaluators the flexibility to focus on whatever they personally find important about the individual’s performance.

However, the essay method can be time consuming for the manager, and it requires a certain level of writing skill for the evaluation to be meaningful. It also is unlikely to be systematic, which can make it difficult to compare evaluations from person to person.

Performance Appraisal Essays

The performance evaluation essay is maybe the most interesting of the methods, as it allows a manager to genuinely express thoughts about the employee in question rather than having to work with a template or list of criteria or comparisons.

There are advantages to this, mainly in allowing the appraisers to focus on what they feel is important for each individual whom they are evaluating. The downside of this apparent freedom is because the entire essay is subjective based on the evaluator’s approach, it becomes difficult to obtain any big-picture conclusions about the department, and it can be difficult to compare employees within a certain group.

The key to a successful performance appraisal essay is the writing skills of the person assembling it . Her attention to basic essay structure and her descriptions of the behaviors on which she focuses will determine whether the right message will get across during the evaluation, both to the employee and to the team of other managers and human resources employees who may be involved with ratings, promotions and improvement plans. Some attention to basic essay-writing principles should help the evaluator construct an essay that will be meaningful to all parties involved.

" id="basic-essay-writing " class="title"> Basic Essay Writing

The following are essential to the writing of an effective performance appraisal essay:

• Preparation: For any essay, the first step is to gather information about the topic at hand. In this case, the manager should take the time to review past performance, current expectations and future needs for each employee whom he intends to evaluate. Review the employee’s achievements this year and examine reports and project records to get a full picture of performance.
• Evaluation: Once the information is at hand, it’s important to spend time connecting the dots to figure out what story the essay needs to tell about the employee’s performance. Identify any changes in the employee’s performance over the evaluation period and establish a list containing the behaviors that have been commendable and in which areas the employee could use improvement.
• Creation: Construct the essay in a manner that suits the manager’s writing style. Be sure to use professional, fair language and describe in words the successes and challenges of the employee’s work over this time period. 

Writing the Essay

The essay should open with an introduction summarizing the work completed by the employee during the evaluation period. Be sure to note key projects and pay attention to ongoing work as well as completed jobs. This is the time to discuss what the employee has done and recognize his overall contribution to the business. For example:

Jon successfully supported the infrastructure team, the McAce project and the office renovations project with technical drawings and materials lists as requested. He personally was able to complete the ventilation upgrade project, which ran over schedule but came in under budget. He submitted all monthly reports on time and took a training course this year to improve his skills at AutoCAD.

Highlight Employee Successes

The next portion of the essay should highlight some real successes for the employee. Mention his strengths and any areas where he has shown visible improvement over past performance. In this portion, focus less on what was done and more on how it was done. To continue the example:

Jon’s skill at estimation has improved greatly over the past year, with only one of his personal projects running over budget (as compared to at least 50 percent the previous year). This makes it much easier for the department to manage our overall budget appropriately and is greatly appreciated. Jon has been described as “friendly” and “personable” by his teammates, who have no problem approaching him when they need a drawing or have a question. He also had huge success with his contributions to the McAce project, which would have fallen behind schedule without his work.

Outline Areas for Improvement

After calling out successes, take some time to consider areas in which the employee needs improvement. For employees currently meeting all expectations, consider their future career path: Are there areas they need to develop in order to move into a new position? For employees whose performance may not be up to par, try to address it fairly and be straightforward and logical.

A number of Jon’s projects ran over schedule this year. It appears that Jon’s technical understanding of the work at hand could perhaps use some development. One such corrective action might be making sure to check with operators and maintenance personnel before launching a new project concept to make sure the problem at hand is actually being solved. Also, while Jon’s open personality makes him approachable, it can also lead to Jon taking extra-long breaks for conversation throughout the day, which can disturb some employees from their work.

Note that the criticisms are couched calmly in specific language that isn’t accusatory or angry and that the behaviors described correlate to an undesirable outcome. In some cases, a corrective action should be suggested. In other cases, it’s best to wait until the final step and develop a path forward with the employee in question.

" id="create-a-forward-plan " class="title"> Create a Forward Plan

The essay should end with a forward plan for the employee, involving any additional training or development she may need to meet current expectations as well as some sort of idea of the next step in her career.

The final step in the performance assessment essay is, of course, reviewing the essay with each employee. It’s best to give the employee a chance to read the evaluation and then open the floor to any questions the employee might have about what’s been written.

If an employee wants to challenge an assertion, she can be encouraged to write a short essay in return discussing why she might disagree with the essay. It’s important to discuss the successes and give recognition where it’s due as well as the challenges in order to ensure the employee understands.

Performance Appraisal

Ivan Andreev

Demand Generation & Capture Strategist

ivan.andreev@valamis.com

October 24, 2018 · updated April 5, 2024

12 minute read

What is a performance appraisal?

The purpose of a performance appraisal.

• How to organize a performance appraisal process

Performance appraisal examples

Performance appraisal methods.

• 5 Modern method of performance appraisal

A performance appraisal is the periodic assessment of an employee’s job performance as measured by the competency expectations set out by the organization.

The performance assessment often includes both the core competencies required by the organization and also the competencies specific to the employee’s job.

The appraiser, often a supervisor or manager, will provide the employee with constructive, actionable feedback based on the assessment. This in turn provides the employee with the direction needed to improve and develop in their job.

Based on the type of feedback , a performance appraisal is also an opportunity for the organization to recognize employee achievements and future potential.

The purpose of a performance appraisal is two-fold: It helps the organization to determine the value and productivity that employees contribute, and it also helps employees to develop in their own roles.

Benefit for organization

Employee assessments can make a difference in the performance of an organization. They provide insight into how employees are contributing and enable organizations to:

• Identify where management can improve working conditions in order to increase productivity and work quality.
• Address behavioral issues before they impact departmental productivity.
• Encourage employees to contribute more by recognizing their talents and skills
• Support employees in skill and career development
• Improve strategic decision-making in situations that require layoffs, succession planning, or filling open roles internally

Benefit for employee

Performance appraisals are meant to provide a positive outcome for employees. The insights gained from assessing and discussing an employee’s performance can help:

• Recognize and acknowledge the achievements and contributions made by an employee.
• Recognize the opportunity for promotion or bonus.
• Identify and support the need for additional training or education to continue career development.
• Determine the specific areas where skills can be improved.
• Motivate an employee and help them feel involved and invested in their career development.
• Open discussion to an employee’s long-term goals.

Career development plan template

This template helps employees and bosses plan together for career growth: set goals, assess skills, and make a plan.

How to organize a performance appraisal process

Conducting a performance review with an employee requires skill and training on the part of the appraiser. The negative perception that is often associated with the performance appraisal is due in part to a feeling of being criticized during the process.

A performance appraisal is meant to be the complete opposite. Often, the culprit is in the way the appraisal is conducted via the use of language.

The way the sender of a message uses language determines how the other person interprets the message once received. This can include tone of voice, choice of words, or even body language.

Because a performance appraisal is meant to provide constructive feedback, it is crucial that appropriate language and behavior are used in the process.

Human Resources (HR) are the support system for managers and supervisors to be trained in tactfully handling the appraisal process.

The performance appraisal process:

• The assessment process is usually facilitated by Human Resources, who assist managers and supervisors in conducting the individual appraisals within their departments.
• An assessment method should be established.
• Required competencies and job expectations need to be drafted for each employee.
• Individual appraisals on employee performance are conducted.
• A one on one interview is scheduled between the manager and employee to discuss the review.
• Future goals should be discussed between employee and manager.
• A signed-off version of the performance review is archived.
• Appraisal information is utilized by human resources for appropriate organizational purposes, such as reporting, promotions, bonuses or succession planning.

Let’s take a look at one example of a Manager speaking to an employee during a performance appraisal. Below are three versions of the same example.

Compare the difference in language and behavior and how it can change the end-result:

1. An appropriate appraisal example with mixed feedback

“We can start the review by looking at how each project went for you this quarter. Does that sound OK? First, every project you have worked on in the last four months has met the expected deadline and were all within their budgets. I see one project here was even early. They were all implemented successfully. Well done. You have succeeded in the criteria expected of a Project Manager here at ABC Company. Let’s take a look at a few areas where you might be able to develop your project management skills further. In Project A, B, and C, a few team members expressed that they were unsure what to begin working on in the first few meetings and felt that they were engaging in their tasks a bit late. When they tried to express this in later meetings, they felt there was hostility towards them. For upcoming Projects D, E, and F, is there anything that can be done to get team members up and running more quickly? Could more detailed task planning be completed prior to the project kick-off?”

Debrief : This example removes the errors from the first example and puts them in a more constructive light.

• The appraisal begins by involving the employee and making them feel like a valued part of the process.
• The appraiser focuses on measurable outcomes, such as each individual project, instead of broad, baseless generalizations.
• Positives are the focus of the assessment.
• Areas for improvement are offered in a constructive and neutral format by referring to specific events in the employee’s day-to-day tasks.
• The employee is given the opportunity to problem-solve the situation and contribute to their own sense of self-development.
• Constructive solutions are offered so the employee has a clear idea on what they can do better next time.

2. An inappropriate negative appraisal example

“Let’s talk about some of the problems. You are never proactive when it comes to the start of a new project. Things are left too late and there are often complaints. I have heard that your attitude has been less than positive during project meetings. You seem to have things going on at home right now, but they shouldn’t be intruding on your work.”

This example is extreme, but it conveys most of the errors that can occur in a performance review.

• The appraisal begins with a negative. It has been shown that starting with the positives can set the tone for the appraisal and helps employees feel more receptive to feedback.
• The appraiser speaks in a negative, accusatory language and bases the assessment on assumption instead of measured facts. An appraisal needs to be based on measured facts.
• The appraiser makes the discussion personal; a performance review should remain focused on the contributions of the employee to the job and never be about the individual as a person.
• Phrases like “ you are ” or “ you always ” are generalizations about the employee; a performance appraisal needs to be about specific contributions to specific job tasks.

3. An appropriate appraisal example for underperformers

“I wanted to talk to you today about your performance during the last quarter. Looking at the completed project schedules and project debriefs here, I see that each of the five projects was kicked off late. Team members reported having trouble getting the resources and information they needed to start and complete their tasks. Each project was delivered a week or more late and had considerable budget creep. Project A was over by $7000. Project B was over by $9,000, for example. These budget overages were not authorized. I think we really have potential to turn this around and I really want to see you succeed. The role of Project Manager requires you to kick-off projects on-time, make sure your team members have the resources they need, and it’s crucial that any budget issues or delays are discussed with myself or the other Manager. For the upcoming projects this month, I’d like you to draft a project plan one week prior to any project kick-off. We can go over it together and figure out where the gaps might be. Did you have any suggestions on how you might be able to improve the punctuality of your projects or effectiveness of how they are run?”

Debrief : This example deals with an employee who seems to be struggling. The appraiser unfortunately has a lot of negative feedback to work through, but has successfully done so using appropriate language, tone and examples:

• The feedback does not use accusatory language or tone, nor does it focus on the person. This is especially important at the start of a performance review when the topic is being introduced. Being accusatory can make an employee feel uncomfortable, upset or defensive and set the wrong tone for the rest of the review. Comments should remain focused on the employee’s work.
• The comments are constructive and specific. The appraiser uses specific examples with evidence to explain the poor performance and does not make general, unsubstantiated comments. Making general, broad comments like “Your projects have a lot of problems and are always late” are unfair as they cannot be proven. The tone also creates hostility and does not help the employee to solve the problem.
• The appraiser offers a positive comment about improving the situation and also a specific solution to improve the performance. The point of a performance review is to motivate and help an employee, not cut them down.
• The appraiser asks for the input of the employee on how to solve the problem. This empowers the employee to become more involved in their skill development and ends a negative review on a positive note.

4. The inflated appraisal example

“I don’t think we have too much to talk about today as everything seems just fine. Your projects are always done on time and within budget. I’m sure you made the right decisions with your team to achieve all of that. You and I definitely think alike when it comes to project management. Keep up the great work.”

Debrief : This example appears like a perfect performance appraisal, but it’s actually an example of how to inappropriate:

• The feedback glosses over any specifics regarding the employee’s actual work and instead offers vague, inflated comments about everything being great. Feedback needs to refer to specific events.
• Any mention of trouble on the team is ignored. A performance review needs to discuss performance issues before they become serious later on.
• The appraiser compares the employee to himself. This could be referred to as the “halo effect”, where the appraiser allows one aspect of the employee to cloud his or her judgement.
• Nobody is perfect; every appraisal should offer some form of improvement that the employee can work towards, whether it is honing a skill or learning a new skill.

There are many ways an organization can conduct a performance appraisal, owing to the countless different methods and strategies available.

In addition, each organization may have their own unique philosophy making an impact on the way the performance assessment is designed and conducted.

A performance review is often done annually or semi-annually at the minimum, but some organizations do them more often.

5 Modern methods of performance appraisal

There are some common and modern appraisal methods that many organizations gravitate towards, including:

1. Self-evaluation

In a self-evaluation assessment, employees first conduct their performance assessment on their own against a set list of criteria.

The pro is that the method helps employees prepare for their own performance assessment and it creates more dialogue in the official performance interview.

The con is that the process is subjective, and employees may struggle with either rating themselves too high or too low.

2. Behavioral checklist

A Yes or No checklist is provided against a series of traits. If the supervisor believes the employee has exhibited a trait, a YES is ticked.

If they feel the employee has not exhibited the trait, a NO is ticked off. If they are unsure, it can be left blank.

The pro is the simplicity of the format and its focus on actual work-relate tasks and behaviors (ie. no generalizing).

The con is that there is no detailed analysis or detail on how the employee is actually doing, nor does it discuss goals.

3. 360-degree feedback

This type of review includes not just the direct feedback from the manager and employee, but also from other team members and sources.

The review also includes character and leadership capabilities.

The pro is that it provides a bigger picture of an employee’s performance.

The con is that it runs the risk of taking in broad generalizations from outside sources who many not know how to provide constructive feedback .

4. Ratings scale

A ratings scale is a common method of appraisal. It uses a set of pre-determined criteria that a manager uses to evaluate an employee against.

Each set of criteria is weighted so that a measured score can be calculated at the end of the review.

The pro is that the method can consider a wide variety of criteria, from specific job tasks to behavioral traits. The results can also be balanced thanks to the weighting system. This means that if an employee is not strong in a particularly minor area, it will not negatively impact the overall score.

The con of this method is the possible misunderstanding of what is a good result and what is a poor result; managers need to be clear in explaining the rating system.

5. Management by objectives

This type of assessment is a newer method that is gaining in popularity. It involves the employee and manager agreeing to a set of attainable performance goals that the employee will strive to achieve over a given period of time.

At the next review period, the goals and how they have been met are reviewed, whilst new goals are created.

The pro of this method is that it creates dialogue between the employee and employer and is empowering in terms of personal career development.

The con is that it risks overlooking organizational performance competencies that should be considered.

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Performance Appraisal: A Guide to Methods, Examples and Process

Performance appraisals are essential yet often misunderstood. This blog post is the best guide to navigating this crucial area. Whether you’re an HR expert or a new manager, this guide will provide clear insights. We’ll explore effective methods, share practical examples, and break down the appraisal process step by step. 

Join us as we simplify the complex, helping you maximize the potential of every team member. Let’s get started and enhance your understanding of performance evaluations.

What is Performance Appraisal?

Performance Analysis is a way of giving employees feedback about their work. It’s not meant to be a punishment but to help them see what they’re good at and where they can improve. Using this feedback, employees can do their jobs better and feel good.

Evaluating how well employees are doing their jobs is important for companies. It helps the higher management decide who should get a raise or a better job and who needs more training. It also helps find people who are good at their jobs and might be good leaders in the future. 

Purpose of Performance Appraisal

Benefits for the Organization

• Decision-making : Appraisals provide key information to make informed decisions about salary increments, promotions, and sometimes terminations. It helps ensure that these decisions are objective and based on quantifiable data.
• Identifying Training Needs : Organizations can design targeted training and development programs by evaluating an employee’s strengths and areas for improvement. This ensures that training resources are utilized where they will have the most impact.
• Succession Planning : Appraisals help organizations identify potential leaders and individuals who can be groomed for senior roles. Recognizing talent early makes it possible to prepare for future leadership changes.
• Reinforcing Organizational Values and Objectives : Performance appraisals help align individual goals with the objectives of the organization, ensuring that everyone works towards a common vision. They also provide a platform for reinforcing organizational values.
• Feedback Loop : A well-structured appraisal system gives managers feedback on how their teams function, highlighting areas of concern and potential operational improvements.

Benefits for Employees

• Skill Development : Appraisals often highlight areas where employees can enhance their skills. Recognizing these areas allows employees to take active steps to acquire new knowledge, which can help in career advancement.
• Career Growth : An honest, constructive appraisal can pave the way for career progression and growth discussions. It serves as a platform for employees to discuss their aspirations and future roles within the organization.
• Motivation and Job Satisfaction : Receiving recognition for good work can significantly boost an employee’s morale. Recognizing and rewarding high performers motivates them and can set a benchmark for others.
• Clear Communication : Performance reviews allow employees to discuss concerns, provide feedback, and clarify their roles. This two-way communication can foster a positive working relationship between managers and team members.
• Personal Development : Beyond job-specific feedback, appraisals often touch upon soft skills and personal attributes. Insights into these areas can benefit employees’ personal growth, helping them become better team players and more effective communicators.

Organizing a Performance Appraisal Process 

Step 1: Defining Clear Performance Criteria

It’s essential to have clear, measurable criteria against which performance is evaluated. This foundational step ensures objectivity in evaluations and helps employees know what’s expected. Whether it’s project completion, sales targets, or soft skills, clarity helps set the stage for focused efforts.

Step 2: Communicating Expectations

Once criteria are established, ensure that employees are aware of them. This proactive communication helps employees align their efforts with organizational objectives. Transparent dialogue can minimize uncertainties and give rise to a well-informed workforce.

Step 3: Providing Training and Guidance

Training helps employees with the tools and knowledge needed to meet their performance criteria. Beyond just formal training sessions, guidance can be continuous feedback or resources that help employees navigate challenges and improve their skills.

Step 4: Collecting Relevant Data

Gather data that reflects an employee’s performance. This could be quantitative metrics like sales figures or qualitative inputs like peer feedback. Comprehensive data collection ensures that evaluations are thorough and based on real evidence.

Step 5: Scheduling and Conducting Appraisal Meetings

Timely appraisal meetings are crucial. Schedule them in advance, giving employees enough notice to prepare. During the session, maintain a constructive environment where both parties can discuss performance openly and candidly.

Step 6: Offering Constructive Feedback

Feedback should be balanced, highlighting both strengths and areas of improvement. Constructive feedback is solution-oriented, helping employees understand how to grow while appreciating their successes.

Step 7: Setting Goals and Development Plans

Based on feedback, establish goals for the next review period. These should be realistic yet challenging. Accompany goals with a development plan—actions the employee can take to achieve these objectives.

Step 8: Documenting the Appraisal

Keep a record of the appraisal discussion, noting key points, feedback, and agreed-upon goals. This documentation serves as a reference, ensuring both parties remember the details and can revisit them if needed.

Step 9: Following Up and Monitoring Progress

Performance management is ongoing. Regularly check in with employees, tracking their progress toward set goals. The checks carried out in between can address potential issues early, offer additional support, and ensure continued alignment with performance expectations.

Performance Appraisal Examples

Example of an Appropriate Appraisal with Mixed Feedback

Appraisal for Employee: Sarah

Positive Feedback: 

People said Sarah is a great worker! She works hard and is curious about her job. She did a great job leading a team project and ensured everyone worked well together. She’s also good at solving problems and making our department work better.

Areas for Improvement: 

Sarah works well with others but sometimes needs help to make better decisions. She has also missed some deadlines, which has made projects take longer. If she manages her time better, she will be more productive.

Action Plan:

We made a plan to help Sarah improve how she organizes her work. She will go to workshops to learn how to manage her time better. We also want her to talk to her team members more often to share ideas. We aim to help Sarah improve at her job by giving her help and guidance.

Example of an Inappropriate Negative Appraisal

Appraisal for Employee: John

Negative Feedback: 

John could be doing better at work this year. He has trouble finishing things on time, and his work should improve. This is causing projects to be late. Also, John doesn’t seem very interested in his work, making the team feel less excited and productive.

Why It’s Inappropriate: 

John’s evaluation only focuses on his weaknesses and doesn’t suggest ways to improve. John’s performance review can make his employees feel bad and stop them from improving. Instead of helping, it makes him feel worse, and he doesn’t recognize anything good he did.

Example of an Appropriate Appraisal for Underperformers

Appraisal for Employee: Alex

Constructive Feedback: 

Alex has faced challenges in meeting performance expectations during the past quarter. We know he’s been doing more work because some of his coworkers are not there, which may have been difficult for him. Despite these difficulties, Alex has displayed resilience and a willingness to learn.

We will help Alex do better by giving him more training and resources. We will work together by setting goals and checking his progress. We will talk to help him overcome any problems.

Action Plan: 

Alex will have someone experienced in his job to help him get better. We will teach him how to manage his time and tasks better so he can do his job well. We will give him the tools he needs to succeed.

Methods of Performance Appraisal

Self-evaluation

Self-evaluation, as the name suggests, involves individuals assessing their own performance. This method encourages employees to reflect on their achievements, challenges, and areas of improvement. Self-evaluations can offer invaluable insights as individuals often know their strengths and weaknesses best. When paired with evaluations from supervisors, they provide a comprehensive view of performance. However, ensuring that employees are honest and objective in their assessments is essential to avoid overly optimistic or overly critical evaluations.

Behavioral Checklist

A behavioral checklist is a systematic approach where specific behaviors that contribute to job success are listed. Evaluators then mark whether or not an employee exhibits these behaviors. The checklist is usually based on observable behaviors, making it relatively objective. For instance, for a customer service role, behaviors like “listens patiently to customer complaints” or “responds promptly to queries” might be on the list. The primary advantage is its clarity and consistency, but it can sometimes overlook finer details or the broader context in which an employee operates.

360-degree Feedback

This is a holistic approach to performance appraisals. Feedback is gathered from multiple sources, including supervisors, peers, subordinates, and even external stakeholders like clients. The 360-degree feedback method offers a well-rounded view of an employee’s performance, tapping into diverse perspectives. While its comprehensive nature is a strength, it’s also time-consuming and challenging to compile. Moreover, anonymity is crucial to ensure honest feedback without fear of backlash.

Rating Scale

One of the most commonly used methods, the rating scale, involves evaluating employees against a set standard on a scale. For instance, on a scale of 1 to 5, where 1 means ‘Poor’ and 5 means ‘Excellent’. The categories might include criteria like teamwork, communication skills, punctuality, etc. While the rating scale method is straightforward, it can sometimes be overly simplistic.

Management by Objectives (MBO)

Coined by Peter Drucker in the 1950s, MBO is a results-oriented approach. Here, managers and employees collaboratively set specific, measurable objectives for a period. At the end of this period, managers assess how well these objectives have been met. MBO aligns individual performance with organizational goals, fostering a sense of ownership and clarity. However, it demands clear communication and an understanding of the objectives set. Additionally, it’s essential to ensure that goals are realistic and within the employee’s control.

Empowering Growth through Effective Performance Appraisals

Performance appraisals are key processes in the business world, helping companies and their employees grow and succeed together. We’ve looked at many ways to do these reviews, and it’s clear that different methods work best for different organizations. It’s like picking the right tool for the job. The most important thing is to have clear, open conversations about performance. 

When done right, these reviews can be a powerful way to boost motivation and help everyone do their best work. 

To sum up, think of performance appraisals as a two-way street – they help employees grow and, in turn, make the whole company stronger.

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How to Conduct a Great Performance Review

• Frank V. Cespedes

What to do before, during, and after the meeting.

The purpose of performance reviews is two-fold: an accurate and actionable evaluation of performance, and then development of that person’s skills in line with job tasks. For recipients, feedback has intrinsic and extrinsic value. Across fields, research shows that people become high performers by identifying specific areas where they need to improve and then practicing those skills with performance feedback.

Dissatisfaction with performance appraisals is pervasive. They are seen as time-consuming, demotivating, inaccurate, biased, and unfair. A McKinsey survey indicates most CEOs don’t find the appraisal process in their companies helps to identify top performers, while over half of employees think their managers don’t get the performance review right. A Gallup study is more negative: Just one in five employees agreed that their company’s performance practices motivated them.

• Frank V. Cespedes is a senior lecturer at Harvard Business School and the author of Sales Management That Works: How to Sell in a World That Never Stops Changing (Harvard Business Review Press, 2021).

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8.2: Techniques of Performance Appraisal

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2. What practices are used in the performance appraisal process?

Organizations use numerous methods to evaluate personnel. We will summarize several popular techniques. Although countless variations on these themes can be found, the basic methods presented provide a good summary of the commonly available techniques. Following this review, we will consider the various strengths and weaknesses of each technique. Six techniques are reviewed here: (1) graphic rating scales, (2) critical incident technique, (3) behaviorally anchored rating scales, (4) behavioral observation scales, (5) management by objectives, and (6) assessment centers.

Graphic Rating Scales

Certainly, the most popular method of evaluation used in organizations today is the graphic rating scale . One study found that 57 percent of the organizations surveyed used rating scales, and another study found the figure to be 65 percent. 5 Although this method appears in many formats, the supervisor or rater is typically presented with a printed or online form that contains both the employee’s name and several evaluation dimensions (quantity of work, quality of work, knowledge of job, attendance). The rater is then asked to rate the employee by assigning a number or rating on each of the dimensions. An example of a graphic rating scale is shown in Table 8.1 .

By using this method, if we assume that evaluator biases can be minimized, it is possible to compare employees objectively. It is also possible to examine the relative strengths and weaknesses of a single employee by comparing scores on the various dimensions.

However, one of the most serious drawbacks of this technique is its openness to central tendency, strictness, and leniency errors. It is possible to rate almost everyone in the middle of the scale or, conversely, at one end of the scale. In order to control for this, some companies have assigned required percentage distributions to the various scale points. Supervisors may be allowed to rate only 10 percent of their people outstanding and are required to rate 10 percent unsatisfactory, perhaps assigning 20 percent, 40 percent, and 20 percent to the remaining middle categories. By doing this, a distribution is forced within each department. However, this procedure may penalize a group of truly outstanding performers or reward a group of poor ones.

Critical Incident Technique

With the critical incident technique of performance appraisal, supervisors record incidents, or examples, of each subordinate’s behavior that led to either unusual success or unusual failure on some aspect of the job. These incidents are recorded in a daily or weekly log under predesignated categories (planning, decision- making, interpersonal relations, report writing). The final performance rating consists of a series of descriptive paragraphs or notes about various aspects of an employee’s performance (see Table 8.2 ).

The critical incident method provides useful information for appraisal interviews, and managers and subordinates can discuss specific incidents. Good qualitative information is generated. However, because little quantitative data emerge, it is difficult to use this technique for promotion or salary decisions. The qualitative output here has led some companies to combine the critical incident technique with one of the quantitative techniques, such as the rating scale, to provide different kinds of feedback to the employees.

Behaviorally Anchored Rating Scales

An appraisal system that has received increasing attention in recent years is the behaviorally anchored rating scale (BARS). This system requires considerable work prior to evaluation but, if the work is carefully done, can lead to highly accurate ratings with high inter-rater reliability. Specifically, the BARS technique begins by selecting a job that can be described in observable behaviors. Managers and personnel specialists then identify these behaviors as they relate to superior or inferior performance.

An example of this is shown in Exhibit 8.4 , where the BARS technique has been applied to the job of college professor. As shown, as one moves from extremely poor performance to extremely good performance, the performance descriptions, or behavioral anchors, increase. Oftentimes, six to ten scales are used to describe performance on the job. Exhibit 8.4 evaluates the professor’s organizational skills. Other scales could relate to the professor’s teaching effectiveness, knowledge of the material, availability to students, and fairness in grading. Once these scales are determined, the evaluator has only to check the category that describes what she observes on the job, and the employee’s rating is simultaneously determined. The BARS technique has several purported advantages. In particular, many of the sources of error discussed earlier (central tendency, leniency, halo) should be significantly reduced because raters are considering verbal descriptions of specific behaviors instead of general categories of behaviors, such as those used in graphic rating scales. In addition, the technique focuses on job-related behaviors and ignores less relevant issues such as the subordinate’s personality, race, or gender. This technique should also lead to employees being less defensive during performance appraisals, because the focus of the discussion would be actual measured behaviors, not the person. Finally, BARS can aid in employee training and development by identifying those domains needing most attention.

On the negative side, as noted above, considerable time and effort in designing the forms are required before the actual rating. Because a separate BARS is required for each distinct job, it is only cost-efficient for common jobs. Finally, because the technique relies on observable behaviors, it may have little applicability for such jobs in such areas as research science (and sometimes management), where much of the work is mental and relevant observable behaviors are difficult to obtain.

Behavioral Observation Scales

The behavioral observation scale (BOS) is similar to BARS in that both focus on identifying observable behaviors as they relate to performance. It is, however, less demanding of the evaluator. Typically, the evaluator is asked to rate each behavior on a scale from 1 to 5 to indicate the frequency with which the employee exhibits the behavior. Evaluation of an employee’s performance on a particular dimension is derived by summing the frequency ratings for the behaviors in each dimension.

For example, in Table 8.3 we can see an example of a form to evaluate a manager’s ability to overcome resistance to change. The rater simply has to circle the appropriate numbers describing observed behaviors and get a summary rating by adding the results. The BOS technique is easier to construct than the BARS and makes the evaluator’s job somewhat simpler. Even so, this is a relatively new technique that is only now receiving some support in industry.

Management by Objectives

A popular technique for evaluating employees who are involved in jobs that have clear quantitative output is management by objectives (MBO). Although the concept of MBO encompasses much more than just the appraisal process (incorporating an organization-wide motivation, performance, and control system), we will focus here on its narrower application to evaluating employee performance. MBO is closely related to the goal-setting theory of motivation.

Under MBO, individual employees work with their supervisor to establish goals and objectives for which they will be responsible during the coming year. These goals are stated in clear language and relate to tasks that are within the domain of the employee. An example of these goals for a sales representative is shown in Table 8.4 . Following a specified period of time, the employee’s performance is compared to the preset goals to determine the extent to which the goals have been met or exceeded.

Several advantages of MBO have been observed. These include the ability to do better planning; improved motivation, because of knowledge of results; fairer evaluations, done on the basis of results rather than personality; improved commitment through participation; and improved supervisory skills in such areas as listening, counseling, and evaluating. On the negative side, however, MBO has been criticized because it emphasizes quantitative goals at the expense of qualitative goals and often creates too much paperwork. It is difficult to compare performance levels among employees because most are responsible for different goals. Sometimes the implementation of MBO goals are autocratic and therefore ineffective or even counterproductive. As discussed in the study of motivation, goals must be accepted to be effective. Finally, in order to be successful, MBO implementation must have constant attention and support from top management; MBO does not run itself. In the absence of this support, the technique loses legitimacy and often falls into disrepair.

Assessment Centers

A relatively new method of evaluation is the assessment center . Assessment centers are unique among appraisal techniques in that they focus more on evaluating an employee’s long-range potential to an organization than on her performance over the past year. They are also unique in that they are used almost exclusively among managerial personnel.

An assessment center consists of a series of standardized evaluations of behavior based on multiple inputs. Over a two- or three-day period (away from the job), trained observers make judgments on managers’ behavior in response to specially developed exercises. These exercises may consist of in-basket exercises, role- playing, and case analyses, as well as personal interviews and psychological tests. An example of an assessment center program is shown in Table 8.5 .

On the basis of these exercises, the trained observers make judgments on employees’ potential for future managerial assignments in the organization. More specifically, information is obtained concerning employees’ interpersonal skills, communication ability, creativity, problem-solving skills, tolerance for stress and ambiguity, and planning ability. This technique has been used successfully by some of the largest corporations in the United States, including AT&T, IBM, and General Electric.

Results from a series of assessment center programs appear promising, and the technique is growing in popularity as a means of identifying future managerial potential. For example, Coca-Cola USA experimented with using assessment centers to select its managerial personnel. After a detailed study, the company found that those selected in this way were only one-third as likely to leave the company or be fired than those selected in the traditional way. Although the assessment center approach added about 6 percent to the cost of hiring, the lower turnover rate led to large overall savings. 6

Some problems with the technique have been noted. In particular, because of the highly stressful environment created in assessment centers, many otherwise good managers may simply not perform to their potential. Moreover, the results of a poor evaluation in an assessment center may be far-reaching; individuals may receive a “loser” image that will follow them for a long time. And, finally, there is some question concerning exactly how valid and reliable assessment centers really are in predicting future managerial success. 7 Despite these problems, assessment centers remain a popular vehicle in some companies for developing and appraising managerial potential.

ethics in practice

Tesla’s Performance Review

At Tesla, the automotive giant, the standards are set extremely high for their employees. In 2017, Tesla conducted its annual performance reviews as it does each year. Due to the review process, the company sees both voluntary and involuntary departures. During the review process, the managers discuss “results that were achieved, as well as how those results were achieved” with their employees.* Tesla also has a performance recognition and compensation program that includes equity rewards as well as promotions in some cases, along with the constructive feedback.

The departure of employees during the review period is not unique to Tesla; however, in 2017 there was a large exodus of approximately 700 employees following their employee reviews. Elon Musk, who recently has stepped down from the role of chairman and has been under scrutiny for his behavior,* saw the media coverage of this news as “ridiculous.”

“You have two boxes of equal ability, and one’s much smaller, the big guy’s going to crush the little guy, obviously,” states Musk. “So, the little guy better have a heck of a lot more skill or he’s going to get clobbered. So that is why our standards are high . . . if they’re not high, we will die.”

Overall, approximately 17 percent of their employees were promoted, almost half in manufacturing. As Tesla continues to grow and develop new vehicles, it is consistently pushing the boundaries and pushing its employees to new limits. Performance reviews are of the highest importance for Tesla’s business to succeed; the company needs the best people with the best skills. It is constantly growing and attempting to “suck the labor pool dry” to fill positions at many of its locations and factories.

• What factors do you feel could have changed in Tesla’s approach to its performance reviews?

considered to combat these issues?

Sources: K. Korosec. “Tesla Fires Hundreds of Workers After Their Annual Performance Review.” Fortune , October 14, 2017, http://fortune.com/2017/10/13/tesla-fires-employees/ ; D. Muoio. “Tesla fired 700 employees after performance reviews in the third quarter.” Business Insider , November 1, 2017, https://www.businessinsider.com/tesl...eviews-2017-11 ; J. Wattles. “Elon Musk agrees to pay $20 million and quit as Tesla chairman in deal with SEC.” Money , September 30, 2018, https://money.cnn.com/2018/09/29/tec...ec-settlement/ index.html.

Comparison of Appraisal Techniques

It is important to consider which appraisal technique or set of techniques may be most appropriate for a given situation. Although there is no simple answer to this question, we can consider the various strengths and weaknesses of each technique. This is done in Table 8.6 . It is important to keep in mind that the appropriateness of a particular appraisal technique is in part a function of the purpose for the appraisal. For example, if the purpose of the appraisal is to identify high potential executives, then assessment centers are more appropriate than rating scales.

As would be expected, the easiest and least expensive techniques are also the least accurate. They are also the least useful for purposes of personnel decisions and employee development. Once again, it appears that managers and organizations get what they pay for. If performance appraisals represent an important aspect of organizational life, clearly the more sophisticated—and more time-consuming—techniques are preferable. If, on the other hand, it is necessary to evaluate employees quickly and with few resources, techniques such as the graphic rating scale may be more appropriate. Managers must make cost-benefit decisions about the price (in time and money) they are willing to pay for a quality performance appraisal system.

concept check

• What are the techniques and scales used in performance appraisals?
• What are MBOs, and how do they relate to performance appraisals?
• What are assessment centers?

8 performance appraisal methods you should be aware of

Performance Reviews

Performance appraisals form an essential part of the HR department as they provide important and useful information for the assessment of employee’s performance, skill, knowledge, and overall ability. These appraisals are not only used to eliminate behavior and productivity issues, but also to motivate employees to contribute more. There are many modern performance appraisal methods that organisations can implement depending on their preference: most have their specific advantages as well as limitations. Let us have a look at some of them in more detail.

What are the different performance appraisal methods?

Graphic Rating scale:

A graphic rating scale lists the traits each employee should have and rates workers on a numbered scale for each trait. The scores are meant to separate employees into tiers of performers, which can play a role in determining promotions and salary adjustments.  The method is easy to understand and quite user friendly. It allows behaviors to be quantified making appraisal systems much easier.

What are the methods of performance evaluation in Graphic rating scale?

However, the scale has disadvantages that make it difficult to use as an effective management tool. Even with intense training, some modern performance appraisal methods will be too strict. Some will be too lenient, and others may find it hard to screen out their personal agendas. Although it is good at identifying the best and poorest of employees, it does not help while differentiating between the average employees.

Analyse performance of employees working on Project A from April to June 2017

Essay Performance Appraisal method:

Essay Appraisal is a traditional form of Appraisal also known as “Free Form method.” It involves a description of the employee’s performance by his superior which needs to be based on facts and often includes examples to support the information. Under this method, the rater is asked to express the strengths and weaknesses of the employee’s performance.

What are the techniques of performance appraisal in the Essay Performance Appraisal method?

This technique is normally used with a combination of the graphic rating scale in one of the modern methods variants, because the rater or feedback giver can present the scale in more detail by also giving an explanation for his rating. While preparing the essay on the employee, the rater also needs to consider specific job knowledge, understanding of the company’s policies and objectives, relations with peers, ability to plan and organize, attitude and perception of employees in general.

The Essay performance appraisal methods are non-quantitative and highly subjective. While it provides a good deal of information about the employee, it takes a lot of time of the appraiser which is not always feasible.

Checklist Scale performance appraisal method:

Under this method, a checklist of statements of traits of the employee in the form of Yes or No based questions is prepared. If the person giving the feedback believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank. Here the rater only does the reporting or checking and the HR department does the actual evaluation after observing details over a period of time – and it does not allow detailed analysis of the overall performance.

Critical Incidents method:

In this method, managers prepare lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.

What is a performance appraisal in Critical Incidents method

At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance. It provides an objective basis for feedback and conducts a thorough discussion of an employee’s performance appraisal process – hence also known as cost accounting method.

Although this method avoids recency bias , there is a tendency for manager and employee both to focus more on the negative incidents than otherwise.

Work Standards performance appraisal method:

In this technique, management establishes the goals openly and sets targets against realistic output standards. These standards are incorporated into the organizational performance appraisal system . Thus each employee has a clear understanding of their duties and knows well what is expected of them. Performance appraisal and interview comments are related to these duties. This makes the appraisal process objective and more accurate. It works best in long-term situations for human resources teams, as it considers performances during that duration and eliminates time consuming processes.

However, it is difficult to compare individual ratings because standards for work may differ from job to job and from employee to employee. It does not allow for reasonable deviations.

Ranking Appraisal:

Here the manager compares an employee to other similar employees, rather than to a standard measurement predefined for employee productivity. The employees are ranked from the highest to the lowest or from the best to the worst. The problem here is that it does not tell how much better or worse one is than another. Also it cannot be used for a large number of employees, or feedback.

Attention to detail

Management by objectives (MBO) methods of performance review are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress, and drive their future performance. The MBO method of performance review concentrates on actual outcomes.

What makes MBOs efficient is the ability to set SMART Goals i.e. set goals that are Specific, Measurable, Actionable, Relevant and Time-bound.

The problem of judgmental performance evaluation inherent in the traditional methods of employee performance appraisal process led to some organisations to go for objective evaluation by developing a technique known as “Behaviorally Anchored Rating Scale (BARS)” around the 1960s. This performance appraisal method is considered better than the traditional ones because it provides advantages like a more accurate gauge, clearer standards, 360 degree feedback, and consistency in evaluation.

The BARS method is designed to bring the benefits of both qualitative and quantitative data to the employee appraisal process. It compares an individual employee’s performance against specific examples of behaviour that are anchored to numerical ratings.

Although even this method has its limitations as it is often accused of being subject to unreliability and leniency error.

Performance appraisal process is already being considered a necessary evil . Thus companies need to be careful while selecting out of these appraisal methods and accept feedback on improving the process. The method should be able to provide value to the company starting from the review period as well as the employees and managers.

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8.6 Performance Appraisal Methods

In this section, we will discuss some of the main methods used to assess performance. However, before discussing these methods, we must discuss how they approach the assessment of individual performance. Some methods focus on the employee’s specific traits in relation to the job. For these methods, the objective is to capture whether or not the employees possess the KSAO’s required for the job. An example would be to assess whether a salesperson is outgoing or whether the accounts payable clerks are conscientious and pay attention to detail.

Another way to approach the assessment of performance is to look at individual actions within a specific job. This focus on behaviour, for example, would try to measure whether the salesperson uses a certain protocol when approaching customers or whether the accounts payable clerk follows up on her phone calls. The focus is on ‘what employees actually do’ as opposed to ‘who the employee is’ (for the trait methods). Comparative methods compare one employee with other employees. Finally, results methods are focused on objective employee accomplishments. Note that many organizations will use these methods in combination.

Graphic Rating Scale

The graphic rating scale , a trait method, is perhaps the most popular choice for performance evaluations. This type of evaluation lists the traits required for the job and asks the source to rate the individual on each attribute such as dependability and creativity. For example, the ratings can include a scale of 1–10; excellent, average, or poor; or exceeds, meets, or does not meet expectations.

The disadvantage of this type of scale is that it is quite subjective. Thus, many organizations use a graphic rating scale in conjunction with other appraisal methods to further solidify the tool’s validity. For example, some organizations use a mixed standard scale, which is similar to a graphic rating scale. This scale includes a series of mixed statements representing excellent, average, and poor performance, and the manager is asked to rate a “+” (performance is better than stated), “0” (performance is at stated level), or “−” (performance is below stated level). Mixed standard statements might include the following:

• The employee gets along with most coworkers and has had only a few interpersonal issues.
• This employee takes initiative.
• The employee consistently turns in below-average work.
• The employee always meets established deadlines.

Essay Appraisal

In an essay appraisal , the evaluator answers a series of questions about the employee’s performance in essay form. This can be a trait method and/or a behavioural method, depending on how the manager writes the essay. These statements may include strengths and weaknesses about the employee or statements about past performance. They can also include specific examples of past performance. The disadvantage of this type of method (when not combined with other rating systems) is that the manager’s writing ability can contribute to the effectiveness of the evaluation. Also, managers may write less or more, which means less consistency between performance appraisals by various managers.

Checklist Scale

A checklist method for performance evaluations lessens the subjectivity, although subjectivity will still be present in this type of rating system. With a checklist scale, a series of questions are being asked and the manager simply responds yes or no to the questions, which can fall into either the behavioural or the trait method, or both. Another variation to this scale is a check mark in the criteria the employee meets and a blank in the areas the employee does not meet. The challenge with this format is that it does not allow for more detailed answers and analysis of the performance criteria unless combined with another method, such as essay ratings.

Critical Incident Appraisals

While Critical Incident Appraisals are more time-consuming to develop, they can be effective because they provide specific examples of behaviour to anchor the ratings. With a critical incident appraisal , the manager records examples of the employee’s effective and ineffective behaviour during the time period between evaluations, which is in the behavioural category. When it is 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 disadvantage of this method is the tendency to record only adverse incidents instead of positive ones. However, this method can work well if the manager has the proper training to record incidents (perhaps by keeping a weekly diary) in a fair manner. This approach 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.

Work Standards Approach

A work standards approach could be the more effective way of evaluating employees for certain specific jobs in which productivity is essential. With this results-focused approach, a minimum level is set and the employee’s performance evaluation is based on this level. For example, if a salesperson does not meet a quota of $1 million, this would be recorded as nonperforming. The downside is that this method does not allow for reasonable deviations. For example, if the quota is not met, perhaps the employee just had a bad month but normally performs well. This approach works best in long-term situations, in which a reasonable measure of performance can be over a certain period. For example, in an automotive assembly line, the focus is on how many cars are built in a specified period, and therefore, employee performance is measured this way. Since this approach is centred on production, it does not allow for rating of other factors, such as ability to work on a team or communication skills, which can be important parts of the job.

Ranking Methods

In a ranking method system  (also called relative method), employees in a particular department are ranked based on their performance. This system is a comparative method for performance evaluations. This method is stack ranking of employees based upon individual performance appraisal ratings (numeric or classification). A performance distribution chart is developed to show what percentage are rated as poor, marginal, meets, and exceeds with respect to performance. Senior management of larger organizations sometimes conduct this method of ranking to determine if a company wide action is warranted – to cull poor performers and/or increase emphasis on performance improvement plans.

“ 8.6 Performance Appraisal Methods ” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

Human Resources Management Copyright © 2023 by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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8.2 Techniques of Performance Appraisal

• What practices are used in the performance appraisal process?

Organizations use numerous methods to evaluate personnel. We will summarize several popular techniques. Although countless variations on these themes can be found, the basic methods presented provide a good summary of the commonly available techniques. Following this review, we will consider the various strengths and weaknesses of each technique. Six techniques are reviewed here: (1) graphic rating scales, (2) critical incident technique, (3) behaviorally anchored rating scales, (4) behavioral observation scales, (5) management by objectives, and (6) assessment centers.

Graphic Rating Scales

Certainly, the most popular method of evaluation used in organizations today is the graphic rating scale . One study found that 57 percent of the organizations surveyed used rating scales, and another study found the figure to be 65 percent. 5 Although this method appears in many formats, the supervisor or rater is typically presented with a printed or online form that contains both the employee’s name and several evaluation dimensions (quantity of work, quality of work, knowledge of job, attendance). The rater is then asked to rate the employee by assigning a number or rating on each of the dimensions. An example of a graphic rating scale is shown in Table 8.1 .

By using this method, if we assume that evaluator biases can be minimized, it is possible to compare employees objectively. It is also possible to examine the relative strengths and weaknesses of a single employee by comparing scores on the various dimensions.

However, one of the most serious drawbacks of this technique is its openness to central tendency, strictness, and leniency errors. It is possible to rate almost everyone in the middle of the scale or, conversely, at one end of the scale. In order to control for this, some companies have assigned required percentage distributions to the various scale points. Supervisors may be allowed to rate only 10 percent of their people outstanding and are required to rate 10 percent unsatisfactory, perhaps assigning 20 percent, 40 percent, and 20 percent to the remaining middle categories. By doing this, a distribution is forced within each department. However, this procedure may penalize a group of truly outstanding performers or reward a group of poor ones.

Critical Incident Technique

With the critical incident technique of performance appraisal, supervisors record incidents, or examples, of each subordinate’s behavior that led to either unusual success or unusual failure on some aspect of the job. These incidents are recorded in a daily or weekly log under predesignated categories (planning, decision-making, interpersonal relations, report writing). The final performance rating consists of a series of descriptive paragraphs or notes about various aspects of an employee’s performance (see Table 8.2 ).

Job Knowledge —Technical and/or Specialized—possible considerations:

• shows exceptional knowledge in methods, materials, and techniques; applies in a resourceful and practical manner
• stays abreast of development(s) in field and applies to job
• “keeps up” on latest material in her special field
• participates in professional or technical organizations pertinent to her activities

Performance on Human Relations

Ability to Communicate —possible considerations:

• gives logical, clear-cut, understandable instructions on complex problems
• uses clear and direct language in written and oral reporting
• organizes presentations in logical order and in order of importance
• provides supervisor and subordinates with pertinent and adequate information
• tailors communications approach to group or individual
• keeps informed on how subordinates think and feel about things

Results Achieved through Others —possible considerations:

• develops enthusiasm in others that gets the job done
• has respect and confidence of others
• recognizes and credits skills of others
• coordinates well with other involved groups to get the job done

The critical incident method provides useful information for appraisal interviews, and managers and subordinates can discuss specific incidents. Good qualitative information is generated. However, because little quantitative data emerge, it is difficult to use this technique for promotion or salary decisions. The qualitative output here has led some companies to combine the critical incident technique with one of the quantitative techniques, such as the rating scale, to provide different kinds of feedback to the employees.

Behaviorally Anchored Rating Scales

An appraisal system that has received increasing attention in recent years is the behaviorally anchored rating scale (BARS). This system requires considerable work prior to evaluation but, if the work is carefully done, can lead to highly accurate ratings with high inter-rater reliability. Specifically, the BARS technique begins by selecting a job that can be described in observable behaviors. Managers and personnel specialists then identify these behaviors as they relate to superior or inferior performance.

An example of this is shown in Exhibit 8.4 , where the BARS technique has been applied to the job of college professor. As shown, as one moves from extremely poor performance to extremely good performance, the performance descriptions, or behavioral anchors, increase. Oftentimes, six to ten scales are used to describe performance on the job. Exhibit 8.4 evaluates the professor’s organizational skills. Other scales could relate to the professor’s teaching effectiveness, knowledge of the material, availability to students, and fairness in grading. Once these scales are determined, the evaluator has only to check the category that describes what she observes on the job, and the employee’s rating is simultaneously determined. The BARS technique has several purported advantages. In particular, many of the sources of error discussed earlier (central tendency, leniency, halo) should be significantly reduced because raters are considering verbal descriptions of specific behaviors instead of general categories of behaviors, such as those used in graphic rating scales. In addition, the technique focuses on job-related behaviors and ignores less relevant issues such as the subordinate’s personality, race, or gender. This technique should also lead to employees being less defensive during performance appraisals, because the focus of the discussion would be actual measured behaviors, not the person. Finally, BARS can aid in employee training and development by identifying those domains needing most attention.

On the negative side, as noted above, considerable time and effort in designing the forms are required before the actual rating. Because a separate BARS is required for each distinct job, it is only cost-efficient for common jobs. Finally, because the technique relies on observable behaviors, it may have little applicability for such jobs in such areas as research science (and sometimes management), where much of the work is mental and relevant observable behaviors are difficult to obtain.

Behavioral Observation Scales

The behavioral observation scale (BOS) is similar to BARS in that both focus on identifying observable behaviors as they relate to performance. It is, however, less demanding of the evaluator. Typically, the evaluator is asked to rate each behavior on a scale from 1 to 5 to indicate the frequency with which the employee exhibits the behavior. Evaluation of an employee’s performance on a particular dimension is derived by summing the frequency ratings for the behaviors in each dimension.

For example, in Table 8.3 we can see an example of a form to evaluate a manager’s ability to overcome resistance to change. The rater simply has to circle the appropriate numbers describing observed behaviors and get a summary rating by adding the results. The BOS technique is easier to construct than the BARS and makes the evaluator’s job somewhat simpler. Even so, this is a relatively new technique that is only now receiving some support in industry.

Management by Objectives

A popular technique for evaluating employees who are involved in jobs that have clear quantitative output is management by objectives (MBO). Although the concept of MBO encompasses much more than just the appraisal process (incorporating an organization-wide motivation, performance, and control system), we will focus here on its narrower application to evaluating employee performance. MBO is closely related to the goal-setting theory of motivation.

Under MBO, individual employees work with their supervisor to establish goals and objectives for which they will be responsible during the coming year. These goals are stated in clear language and relate to tasks that are within the domain of the employee. An example of these goals for a sales representative is shown in Table 8.4 . Following a specified period of time, the employee’s performance is compared to the preset goals to determine the extent to which the goals have been met or exceeded.

Several advantages of MBO have been observed. These include the ability to do better planning; improved motivation, because of knowledge of results; fairer evaluations, done on the basis of results rather than personality; improved commitment through participation; and improved supervisory skills in such areas as listening, counseling, and evaluating. On the negative side, however, MBO has been criticized because it emphasizes quantitative goals at the expense of qualitative goals and often creates too much paperwork. It is difficult to compare performance levels among employees because most are responsible for different goals. Sometimes the implementation of MBO goals are autocratic and therefore ineffective or even counterproductive. As discussed in the study of motivation, goals must be accepted to be effective. Finally, in order to be successful, MBO implementation must have constant attention and support from top management; MBO does not run itself. In the absence of this support, the technique loses legitimacy and often falls into disrepair.

Assessment Centers

A relatively new method of evaluation is the assessment center . Assessment centers are unique among appraisal techniques in that they focus more on evaluating an employee’s long-range potential to an organization than on her performance over the past year. They are also unique in that they are used almost exclusively among managerial personnel.

An assessment center consists of a series of standardized evaluations of behavior based on multiple inputs. Over a two- or three-day period (away from the job), trained observers make judgments on managers’ behavior in response to specially developed exercises. These exercises may consist of in-basket exercises, role-playing, and case analyses, as well as personal interviews and psychological tests. An example of an assessment center program is shown in Table 8.5 .

On the basis of these exercises, the trained observers make judgments on employees’ potential for future managerial assignments in the organization. More specifically, information is obtained concerning employees’ interpersonal skills, communication ability, creativity, problem-solving skills, tolerance for stress and ambiguity, and planning ability. This technique has been used successfully by some of the largest corporations in the United States, including AT&T, IBM, and General Electric.

Results from a series of assessment center programs appear promising, and the technique is growing in popularity as a means of identifying future managerial potential. For example, Coca-Cola USA experimented with using assessment centers to select its managerial personnel. After a detailed study, the company found that those selected in this way were only one-third as likely to leave the company or be fired than those selected in the traditional way. Although the assessment center approach added about 6 percent to the cost of hiring, the lower turnover rate led to large overall savings. 6

Some problems with the technique have been noted. In particular, because of the highly stressful environment created in assessment centers, many otherwise good managers may simply not perform to their potential. Moreover, the results of a poor evaluation in an assessment center may be far-reaching; individuals may receive a “loser” image that will follow them for a long time. And, finally, there is some question concerning exactly how valid and reliable assessment centers really are in predicting future managerial success. 7 Despite these problems, assessment centers remain a popular vehicle in some companies for developing and appraising managerial potential.

Ethics in Practice

Tesla’s performance review.

At Tesla, the automotive giant, the standards are set extremely high for their employees. In 2017, Tesla conducted its annual performance reviews as it does each year. Due to the review process, the company sees both voluntary and involuntary departures. During the review process, the managers discuss “results that were achieved, as well as how those results were achieved” with their employees.* Tesla also has a performance recognition and compensation program that includes equity rewards as well as promotions in some cases, along with the constructive feedback.

The departure of employees during the review period is not unique to Tesla; however, in 2017 there was a large exodus of approximately 700 employees following their employee reviews. Elon Musk, who recently has stepped down from the role of chairman and has been under scrutiny for his behavior,* saw the media coverage of this news as “ridiculous.”

“You have two boxes of equal ability, and one’s much smaller, the big guy’s going to crush the little guy, obviously,” states Musk. “So, the little guy better have a heck of a lot more skill or he’s going to get clobbered. So that is why our standards are high . . . if they’re not high, we will die.”

Overall, approximately 17 percent of their employees were promoted, almost half in manufacturing. As Tesla continues to grow and develop new vehicles, it is consistently pushing the boundaries and pushing its employees to new limits. Performance reviews are of the highest importance for Tesla’s business to succeed; the company needs the best people with the best skills. It is constantly growing and attempting to “suck the labor pool dry” to fill positions at many of its locations and factories.

• What factors do you feel could have changed in Tesla’s approach to its performance reviews?
• How can a high-pressure environment affect an employee’s performance? What factors should be considered to combat these issues?

Sources: K. Korosec. “Tesla Fires Hundreds of Workers After Their Annual Performance Review.” Fortune , October 14, 2017, http://fortune.com/2017/10/13/tesla-fires-employees/; D. Muoio. “Tesla fired 700 employees after performance reviews in the third quarter.” Business Insider , November 1, 2017, https://www.businessinsider.com/tesla-fired-700-employees-performance-reviews-2017-11; J. Wattles. “Elon Musk agrees to pay $20 million and quit as Tesla chairman in deal with SEC.” Money , September 30, 2018, https://money.cnn.com/2018/09/29/technology/business/elon-musk-tesla-sec-settlement/index.html.

Comparison of Appraisal Techniques

It is important to consider which appraisal technique or set of techniques may be most appropriate for a given situation. Although there is no simple answer to this question, we can consider the various strengths and weaknesses of each technique. This is done in Table 8.6 . It is important to keep in mind that the appropriateness of a particular appraisal technique is in part a function of the purpose for the appraisal. For example, if the purpose of the appraisal is to identify high potential executives, then assessment centers are more appropriate than rating scales.

As would be expected, the easiest and least expensive techniques are also the least accurate. They are also the least useful for purposes of personnel decisions and employee development. Once again, it appears that managers and organizations get what they pay for. If performance appraisals represent an important aspect of organizational life, clearly the more sophisticated—and more time-consuming—techniques are preferable. If, on the other hand, it is necessary to evaluate employees quickly and with few resources, techniques such as the graphic rating scale may be more appropriate. Managers must make cost-benefit decisions about the price (in time and money) they are willing to pay for a quality performance appraisal system.

Concept Check

• What are the techniques and scales used in performance appraisals?
• What are MBOs, and how do they relate to performance appraisals?
• What are assessment centers?

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[20] Performance appraisal methods: Here’s how to pick the best one!

• Post author: Shayanne Hill
• Post published: April 6, 2022
• Post category: Growth / Human Resources / Performance management
• Reading time: 35 mins read

A performance appraisal cycle in any company can get tricky. There are so many different methods that can be used. Hence, as a team leader or startup founder, it is your responsibility to use the right performance appraisal methods for your employees. This will in turn ensure better performance management and overall higher productivity.

What can you expect from this blog?

I have collated an extensive list of appraisal methods just for you! I have also included the pros and cons for each of these. So now you won’t have to worry about another performance appraisal ever again.

Download an employee evaluation template for free by clicking here!

What is a performance appraisal.

• Why are performance appraisals important?
• Download an employee evaluation template for your business now!!!

Difference between performance appraisal and performance management

• Traditional versus modern methods of performance appraisal?
• Straight ranking method
• Free-form or essay method
• Rating scales
• Confidential Report
• Paired comparison method
• Forced distribution method
• Forced choice method
• Grading scale
• Checklist method
• Field review method
• Critical incident method
• MBO or Management by objectives
• 360-degree feedback method
• 720-degree feedback method
• Behaviorally anchored rating scale (BARS)
• Assessment Centre method
• HR Cost accounting method

Self-Appraisals

• Psychological appraisals
• Common errors in Performance appraisal
• Choosing the right appraisal method for my business

So now on to the most basic question of all,

A performance appraisal is a systematic and timely process whereby the performance of an employee’s job is evaluated. It is also often referred to as a performance review, performance evaluation or employee appraisal.

Firstly, employers use performance appraisals to evaluate the performance of employees. Following that, the report generated after is used to help in employee development by recommending the next steps.

What is a performance appraisal method?

These methods are tools and techniques used to evaluate employee performance. Different organizations use different methods based on what they want to get out of these reviews.

Here, the person conducting the review and giving feedback is called the appraiser. On the other hand, the person receiving the feedback or appraisal is called the appraisee.

Why is a performance appraisal important?

There are many benefits that come out of employee reviews. Right from helping an employee and their manager understand where the employee is excelling or falling short in the work. Reviews also help plan strategies that will help develop the employee’s skill set post appraisal.

Employee reviews also help boost the morale of the employee because the reviews show them you care about the employees. It can further help align the goals and ambitions of the individual employee with that of the company.

Performance appraisals are a structured way of understanding which employees are meeting their goals based on key results achieved!

Download an employee evaluation questionnaire now!! For FREE!

This questionnaire is well researched. It covers various parameters such as 

• Employee’s soft skills
• Job-related knowledge
• Ability to apply knowledge to the job

You can also rate the employee’s overall performance in an aggregated, yet easy to calculate score and rank your employees accordingly.

Performance management for starters is an entire process, including all of the following,

• Planning – Setting goals for an employee
• Monitoring – Helping them achieve those goals through constant feedback and guidance
• Appraisal – Evaluating the work of the employee, which is a performance appraisal
• Feedback – Closing the loop with feedback (or as many people are now calling it feed-forward) on their performance
• Next steps – Planning for the next steps to ensure employee growth and development

Performance appraisal as you can see, on the other hand, is just one step in the entire performance management cycle. But this one step has a lot of importance, as it affects all of the other areas within performance management.

Traditional performance appraisal methods versus modern performance appraisal methods

According to Strauss and Sayles (George Strauss and Leanord Sayles, writers of the book ‘Behavioral Strategies for Managers), there are two major classifications of performance appraisal methods, They are,

• Traditional methods of performance appraisal
• Modern methods of performance appraisal

Strauss and Sayles say that the major difference between the two is that traditional methods give more importance to the personality traits of the employee, factors such as initiative, dependability, drive, creativity and so on. On the other hand, modern methods focus on the job.

This also means that modern methods place more importance on job achievements. Also, they are more objective in nature and often tend to be more worthwhile.

You could also check out our blog on “ OKR The Ultimate Guide: Learn how to create goals for your team ” to understand how to check better goals for your team 

Traditional performance appraisal methods

As we have seen previously there are 2 major classifications of appraisal methods. Here below is a list of traditional methods, and the pros and cons of each of them. Then will also help you choose which of these methods will be most useful in your organization.

Straight ranking method for performance appraisal

This method is as simple as the name suggests. The employer or manager basically ranks all the employees based on their performance and various other parameters. It is one of the oldest and simplest forms of employee review.

Employees are ranked from best to worst or highest or lowest on various factors. In this way, the employer understands which are the topmost-performing and lowest-performing employees in the team.

For example, if there are 5 members in the team (for simplicity- A, B, C, D & E). The employer will then assign ranks to each of them. Much like this, A-3, B-2, C-1, D-5, E-4 (1 being the best and 5 being the worst).

• Easy to use. Especially in smaller teams.
• The team lead understands who is better than who.
• Ranking helps identify the top performers in the group.
• This method does not explain how much an employee is better than another
• Not scalable. Because the bigger the team, the more challenging it is to rank.

Essay method for performance appraisal

The essay method is also known as the free-form method. Here, the manager or the appraiser writes an essay or statement about the employee. The major focus here is to write about the strengths and weaknesses of the employee on the job. The statement also focuses on the different steps that could be taken to rectify the drawbacks in the employee’s performance.

There are 2 ways in which this essay is written. On one hand, it could be single-handedly written and framed by the appraiser. On the other hand, the appraiser could work on it in collaboration with the employee in question.

As the name suggests, this method is fairly unstructured. As a result, the manager is free is talk about all the factors and concerns that need to be addressed in the employee evaluation. This is also extremely personal in nature, and if used in collaboration with other appraisal methods, it can prove to be very insightful.

The appraiser is not limited to a set of questions. He can also then assign varying weightage to different areas of importance and work as needed.

The test allows for a great deal of freedom of expression, in terms of being able to write about the employee’s job and achievements.

This method is not so easy to administer. This is because an administer of this method could find it extremely time-consuming and difficult.

The essay method is also extremely subjective in nature, and not very easy to compare across different employees. The result of this test is also often limited to the language skills and abilities of the appraiser.

Very often, the biggest advantage of this method- freedom of expression- becomes a challenge when the manager isn’t able to express him/herself very well.

Rating scales for performance appraisal

Rating scales as performance appraisal methods are quite commonly used among employers. It is required to rate employees on a particular scale based on various factors and traits.

Rating scales could either be numeric in nature (e.g. 1 to 5, where 5 is the best and 1 is the worst) or alphabetic in nature (a, b, c, d, e, where e= excellent, c=satisfactory and so on…).

Rating scales could also have narrative options to choose from (e.g. “acceptable behaviour”, “fails to complete tasks assigned in a given time” etc.)

Pros and cons:

A major advantage here is that appraisers can apply this method to any job role. However, each of the variants of the rating scale come with their own set of pros and cons.

Say, for example, a 3-level rating scale could be very simple to administer, but may not be complex enough to address the subtle nuances of complex jobs. On the other hand, even a 5-level scale may not be effective as very often, managers tend to have a tendency to choose the central option or drift upwards of the choices.

Confidential Report for performance appraisal

As the name suggests, this form of performance appraisal is highly confidential. The immediate supervisor of the employee is usually the one who writes the report. Many times, only this particular supervisor and upper-level management have access to this report. Yup, you read that right. Even the employee whom the report is about does not get access to this review.

The main focus is performance evaluation and not performance improvement. While private-sector organizations do not usually use this method, it is quite common in public companies and government organizations.

• It is a very detailed and qualitative assessment
• Useful to decision-makers, especially when it comes to providing transfers, salary hikes etc.
• Generally submitted only once a year, so not much load of work on the manager
• Since it’s submitted only once a year, there is no continuous evaluation of the employee, hence low scope for employee development
• Employees themselves don’t have access to the report and as a result, cannot take any corrective measures wherever required
• Highly subjective and open to biases

Paired comparison method as a performance appraisal method

In this form of appraisal, each employee in a team is compared to every single other employee in that team. Say, for example, the team is made up of A, B, C, D & E, then A is compared with B, C, D & E. The appraiser will then repeat the same thing for all the other employees.

Here, the number of times an employee fares better than other team members is noted down and eventually, ranks are given accordingly. 

The number of pairs formed can be calculated by n(n-1)/2. In the case of the above example, 5(5-1)/2=10 pairs will be formed.

• A better version of the straight ranking method we saw earlier in this blog
• All employees are compared based on similar parameters and hence relatively fair as a process
• Very time consuming
• This method is not scalable, as in larger organizations it might be impractical to compare so many employees with each other.

Forced distribution method for performance appraisal

We all know what a Normal distribution in statistics is (more famously known as the ‘Bell Curve’). Here, appraisers fit all their employees within a bell curve based on their performance on the job. Appraisers have been using this method widely used in large organizations since the 1990s. In this method is it believed that employee performance within a team or an organization conforms to a bell curve.

For example, it says that, roughly, 10% of your employees are really bad, 15% are satisfactory, 50% are average, 15% are good and 10% are excellent. In the most basic form of this method, managers fit employees into 5 categories, excellent, good, average, satisfactory and bad.

In this case, most employees get put into the average section. The excellent employees are rewarded, while the bad ones are put into performance improvement programs

• In the rating method, we had seen that most managers usually tend to give all employees average or above-average ratings. This method helps overcome that problem.
• This method reduces some scope for bias
• May encourage healthy competition among team members
• Helps pinpoint the extremely good employees and the ones that need serious help to buck up
• People often tend to question if the bell curve is an appropriate representation of human behaviour and the method is sometimes seen as outdated or old
• There is a lack of transparency in this method as only the appraiser knows why they slotted the employees the way they did

Forced choice method for performance appraisal

In comparison to the forced distribution method, this one is pretty simple to understand and execute. An employer is given is series of statements and they must mention if those statements are true or false for a given employee. Different statements may carry varying weightage. This would depend on the importance of that statement and the overall appraisal aim.

Examples of statements here could include, “The employee finishes all the tasks assigned on time” or “The employee often reaches the office late”

• Objective approach since options are true or false
• Save the time of the appraiser.
• Scalable since the answers are only true or false.
• Since evaluators aren’t aware of the weightage of each statement until the final result arrives, it is considered quite fair.
• The creation of set statements may be time-consuming, especially in larger companies that have many and varying job roles.

Performance appraisal using the Grading scale

In this method, the appraiser gives the employee a grade for each parameter. The grades often look like this

• Above average
• Below average
• Unsatisfactory

The evaluator judges the performance of the employee based on the job achievements across various factors and considerations.

• Very simple to administer
• Does not take up much time for the administer
• Paints a very clear picture of how the employee has performed over the said span of time
• Since this system does not require any reasoning for the choice of grade, the method can be considered to lack transparency

Checklist method as a performance appraisal method

This is an extremely simple appraisal method as it only requires the appraiser to tick mark statements that are applicable to a given employee. In a more recent version of this method, the makers of the test assign different weightage to each statement based on how important they are. Based on the answers and the weightage, a score a calculated and assigned to the employee.

• Extremely easy to administer.
• Saves a lot of time.
• Objective, since it only required a tick mark near each statement.
• Difficult to implement in big organizations that have many and varying roles.
• Selecting and not selecting a statement is very limiting as an appraisal method. The appraiser may need to club this method with another for better insights.
• Since the evaluator does not provide reasons, it is difficult to understand why he or she selected or didn’t select a particular statement.

Performance appraisal using the field review method

In this method, the appraisee does not receive an appraisal from their immediate supervisor or manager like in most cases. Instead, a member of the HR department or from the corporate team evaluates the employee.

The appraiser conducts interviews both with the appraisee as well as with their supervisor and also observes the employee as they work. This gives the appraiser an all-around qualitative yet objective view of the way the employee works.

• There isn’t much pressure on the appraisee, since their direct supervisor isn’t the evaluator.
• An outsider who doesn’t work continuously with the employee does not know how the employee works on a daily basis.
• An outsider is also not familiar with the employee’s day-to-day working conditions that would in turn drive his/her behaviour at work.
• Performance appraisal and management are important aspects of employee engagement and the essence of that is completely lost in this method of appraisal.

Critical incident method as a performance appraisal method

In this method, the appraiser asks the employee a set of questions pertaining to bast behaviours or incidents. The appraisee then describes the incident in great detail explaining all the factors that played a role in the unfolding of that incident.

The appraiser gathers information about various incidents that occurred while on the job -> Collects facts about these incidents -> Analyses the data collected -> Determine the underlying issues -> Reports the evaluation and presents potential solutions.

The focus here lies not just on the hard skills but also on the soft skills of the employee. It helps define the appraisee’s knowledge, skill-sets, attitude and many other attributes that drive their behaviour. The focus is also on the employee’s ability to perform in critical situations, either where they have done excellently well or fail to do so.

• Unlike other methods, this appraisal method focuses on rare, unusual events and how the employee performs in such scenarios.
• A cost-effective method.
• Does not restrict the appraiser or the appraisee to any framework.
• Takes into consideration the appraisee’s side of the incident.
• This method can be extremely subjective.
• Time-consuming for the evaluator and hence not a scalable option (in larger organizations).

Modern performance appraisal methods

So far we have looked at all the possible traditional appraisal methods you can use in your company. Now we shall see a list of modern methods along with the pros and cons of each of them.

MBO or Management by objectives for performance appraisal

Management by objectives, also very commonly called MBO, is an appraisal method where managers and subordinates usually sit together and come up with a set of goals and objectives. Once these goals are decided upon, the 2 have regular meetings and follow-ups to track progress.

This method is generally used in high performing teams, by the use to setting S.M.A.R.T. goal s for employees and ensuring the achievement of these goals. The focus during this process is on setting tangible goals that can be monitored.

See also our blog on goal setting by clicking here -> “Goal setting for startups and SMEs: Set goals in 7 steps”

• Since the manager and subordinate sit together to set goals, there is a mutual agreement on the workload and employees do not feel overburdened.
• Periodical follow-ups ensure continuous tracking and review of the work being done. Continuous feedback automatically results in higher efficiency.
• There is no ambiguity in terms of the work that has to be done and the feedback received.
• Employee participation in goal setting makes them feel motivated and also part of the larger organization.
• Goals can be aligned with employees’ career ambitions and hence allows employees to develop their career as well.
• Requires continuous involvement of top management and hence can be time-consuming for them.
• Limited application as goals once set may rarely be subject to any change, and also may not be suitable for all roles within an organization.

Performance appraisal using the 360-degree feedback method

The 360-degree feedback method of employee appraisal is becoming extremely popular within organizations. In this method, basically, the employee receives feedback or appraisal from all around i.e. 360-degrees.

What this essentially means, is that, every single area the employee interacts with, one person from that area provides feedback. Say, for example, a sales representative is up for appraisal. This person will get feedback from their immediate supervisor, a peer (another sales rep they work closely with), a couple of clients the sales rep has worked with and sometimes even a subordinate.

Exactly as the name suggests, the feedback mechanism is quite literally an all-around, 360-degree system.

You could also check out our blog “ How Balanced Scorecard [BSC] can unlock peak performance for you “

• Since the feedback is taken from so many people, it is extremely thorough.
• No chance of any bias or partiality.
• Different aspects of the employee’s work get reviews through this method.
• It can help improve productivity and work relationships.
• Increases transparency across the various departments within the organization.
• Subordinates or peers could resort to dishonest (tending towards only good) feedback in order to safeguard professional relationships.
• Extremely time-consuming process.

Performance appraisal using the 720-degree feedback method

This method is identical to the 360-degree feedback mechanism with one single exception. Here, the 360-degree feedback is done twice. The first time, the feedback is shared with the employee with the intention of developing a performance improvement plan for the appraisee.

The second time, the 360-degree review is done, the focus is on checking the success of the performance improvement plan and then better it if needed.

The pros and cons of the 720-degree review and similar to that of the 360-degree review method.

Performance appraisal method –  Behaviorally anchored rating scale (BARS)

This performance appraisal method uses a more descriptive way to rate employees. Instead of simply putting out a statement and having the appraiser choose options like excellent, above average, average, below average and unsatisfactory, the options themselves are more informative.

• Since the options are so specific, there is almost no space for subjectivity here
• Results turn out to be very accurate.
• Saves time for the appraiser.
• Completely individualised. This means that every role will have statements specific to them.
• The last positive point mentioned can also prove to be the first problem because it becomes difficult to create the test for larger organizations that have many and varying roles.
• Managers tend to select average or above-average responses, so responses might not be 100% accurate.

Assessment Centre method for performance appraisal

The assessment centre method is also often used in various selection procedures to ensure that candidate is the right person for a job. This could be used in the case of inter-department transfers etc. Assessment centres combine a variety of different activities such as role-plays, interviews, group activities, presentations and so on to ensure an overall analysis of an employee.

A combination of the results of all the above-mentioned activities is used to get a very deep understanding of the employee and their development in the company.

• Very in-depth report.
• Accuracy levels are high because of the multiple and all-around reviews.
• This method is highly adaptable to various job profiles and roles.
• Creates high employee engagement and is completely different from regular monotonous appraisal methods.
• Extremely time-consuming.
• Can be an expensive affair, since it involves so many different activities for each employee.

Check out our salary increment breakup to understand how to divide salary increment across employees in a fair way!

Hr cost accounting method as a performance appraisal method.

Just as the name suggests- accounting- this method tracks employee performance from a monetary standpoint. How?

Calculate the cost of retaining the employee (more commonly known as the employee’s CTC or cost to company). Then compare this with the value generated by the employee in terms of the service provided and the work done. Do this by considering the improvement in revenue generated during the review period, sales deals closed by the employee, increase in subscriber count and so on (obviously these are more for marketing or sales employees).

This method is ideal for start-ups and small businesses, especially since one employee’s performance plays such a huge role in the growth (or lack thereof!) of the company.

• It is an accurate and objective method since it is quantitative and doesn’t take into consideration people’s opinions
• Helps determine the monetary value the employee adds to the company and hence helps make changes (if needed) to the employee’s salary package.
• An easy method to compare 2 or more employees based on monetary value-added.
• There are no specific guidelines to measure the value of human resources within an organization.
• Human Resources accounting is based on assumptions that may not always hold true. For example, you would assume that an employee will continue to work for you over a fixed period of time, which may or may not be true.

The name here itself is pretty self-explanatory. The employee writes their own review. So I’m going to jump straight to the pros and cons for this one!

• Ownership of the appraisal is placed on the employees, so they feel important. Maybe even motivated to do better.
• Managers will get insights into why an employee works the way they do. This may otherwise be rare in other forms of appraisals.
• Employees feel more engaged as this method calls for the employee to communicate more about their performance. This may help managers work better in coming up with performance improvement plans.
• Here, perceptions could be very skewed, because employees could end up being overly lenient or extremely hard on themselves. In both cases, the review is pointless. So, no objectivity.
• Resentment may arise if negative feedback is not taken well.

Performance appraisal using psychological appraisals

Psychological appraisals are generally more future-focused as opposed to reviewing the past performance of the employee. What I mean here is that psychological appraisal methods are used to understand the potential of employees, what they might be good at but their current job doesn’t showcase it.

These are a series of tests and interviews conducted by trained psychologists. They include in-depth interviews, tests, discussions and so on.

• Since these tests are conducted by psychologists, there is no scope for any bias to creep in.
• Information becomes available not just about the employee’s past job achievements, but also about their potential.
• Lack of trained professionals to conduct the tests and assessments.
• Results could get skewed because of nervous and anxious employees.

Common errors made during a performance appraisal cycle

There are many different performance appraisal methods as we have seen so far. But there are also many errors that are common to a lot of these methods.

Yeah, I know, to err is human! But as a small business owner, manager or team leader, you need to make sure you do your best for the sake of your employees and your company. And, being aware of these errors is the first step toward rectifying them.

So, here are some of the errors and biases you must be aware of during an employee review process.

Stereotyping

Stereotyping occurs when a bunch of concepts or ideas get attributed to a particular set of people over a period of time. These ideas then play a role and affect the way people behave towards these sets of people. Stereotypes could be based on race, gender, religion etc.

In the case of performance appraisals, the appraiser can very easily let such a bias come in the way of honest feedback.

Halo effect

When someone says halo, you automatically think of an angel, no? Pretty much in the same, the halo effect implies that your perception of a person always tends to be on the positive side.

Usually, this happens when an appraiser notices that an employee is doing very well in one aspect of their job, and generalises it to everything else they do. You think better of them than they actually are. This could translate into overly positive feedback and reviews. So, employees will never truly understand how they are performing.

Single deficiency focus

This is also often referred to as the “horns effect” exactly the opposite of the “halo effect”.

As the name very clearly says, here, the appraiser gets hung up on a single problem, error, deficiency on the appraisee and generalises that across all areas.

Distribution errors

While the halo effect and the single deficiency error talk specifically about biases that affect a single employees review, the distribution error affects the overall review of all the employees. Let’s see how distribution errors play a role in performance appraisals. The overall reviews get skewed in this way as shown in the graph.

There are 3 types of distribution errors as mentioned below:

Centrality errors: Here, all the reviews tend to be average. Most of the employees get average feedback. The problem here is that the poor performers get feedback better than they deserve, while top performers don’t get good enough reviews.

Leniency errors: Leniency errors refer to when a manager gives all the appraisees good or above-average reviews/appraisals.

Recency errors

This is a very common error made by managers and supervisors during performance appraisals. In this case, the appraiser’s reviews get affected based on any event that may have occurred in the recent past with the employee in question.

Say, for example, if an employee recently broke their own sales target which resulted in a very high number of new clients for the company, the appraiser will let that one incident impact the entire review, leading to an overall positive response. Whereas on the other hand, if the same employee were to get into an argument with another employee before the performance appraisal, then that would negatively affect the overall review.

Attribution error

Attribution is a process whereby, a manager tends to make assumptions about an employee’s motives. This leads to extremely subjective responses by the appraiser for the appraisee.

An example of this situation would be, if an employee gave a negative answer for something related to the job, the manager would assume that the employee has negative feelings towards his/her job.

Choosing the right performance appraisal methods for your small business

Different methods are targeted toward different results. How you select which appraisal method is best for your company depends totally on the kind of reviews you’re looking for and the end goal. Factors such as

• Number of employees to appraise
• The budget allocated for the task
• Time within which the review must happen
• Level of expertise of the person conducting the appraisal

Employee appraisal and employee performance management and key elements of employee engagement. So, selecting the right appraisal method also becomes very important.

Once you have selected the method or methods best suited to your company, you need to implement it well and ensure that a robust performance improvement plan follows the appraisal. But be sure to reward your top-performing employee too 😉

Performance appraisal Methods – FAQs

The most common methods of employee performance appraisal are

1. 360-degree feedback

2. Rating scales

3. Grading scales

4. MBOs i.e. Management by objectives

5. Self-Assessment

Click here to see the whole list of modern and traditional performance appraisal methods

Performance appraisal is basically when a manager or supervisor evaluates an employee’s performance on their job over a period of time. Appraisal methods can typically be classified into two categories- Traditional methods and Modern methods of performance appraisal.

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.

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•  Guest Posts

7 Practical Performance Appraisal Methods for the Modern Workforce

Discover practical and effective performance appraisal methods for the modern workforce. Learn how to assess employee performance, provide meaningful feedback, and enhance productivity.

Table of Contents

Performance appraisal methods are the way to determine employee skillsets, growth, and progress in your company. They’re also commonly known as performance evaluation methods.

It’s important to go about performance appraisal for employees regularly to stay current on your employees’ contributions to your company.

There’s a need for an evaluation process for both your business and employees. That’s because the process helps both understand employee strengths . You’ll know who to delegate to, who to promote, who to train, lay off, and so forth.

This post discusses the purpose of a performance appraisal, its benefits, some methods, and examples of how to apply them. Get ready to discover the power of performance appraisal methods in optimizing your organization's performance and maximizing employee potential.

Let’s get started!

What are performance appraisal methods?

Performance appraisal methods refer to the systematic approaches organisations use to evaluate and assess the performance of their employees.

These methods provide a structured framework for measuring and analyzing various aspects of employee performance, such as job knowledge, skills, productivity, and overall contributions to the organization.

Performance appraisal methods serve as a means to gather objective and subjective feedback, set performance expectations, recognize and reward achievements , identify areas for improvement, and make informed decisions regarding promotions, rewards, and training opportunities.

The purpose of a performance appraisal

Performance appraisals aim to help organizations gauge employee productivity and determine their value. They also help employees assess their performance and identify areas they need to work on.

Advantages for the business

Here are some benefits your business stands to gain from a performance appraisal.

• Companies perform appraisals to sometimes determine which employee in the team is up for a promotion based on their overall performance.
• Evaluation helps organizations reveal which employee deserves better compensation, for instance, a salary raise or a bonus, and so forth.
• Businesses can identify their employees' weaknesses and figure out how to help them. This could be through setting up training programs.
• Based on a performance appraisal, a company may discover that they need to change certain aspects of their selection processes so they can end up with better employees.
• Performance appraisals also help employers provide feedback to their employees on their performance, strengths, and weaknesses.

Advantages for employees

Employees also benefit from performance appraisals. Here’s why they value appraisals and why you should do them.

• It makes them feel recognized by the organization. This is especially so when they get rewarded or commended for their achievements. In fact, if you have platforms for employee advocacy , you can get employees to write about their promotions on social media too.
• By identifying their weaknesses, they can identify areas of their duties they need training on. This fosters career advancement.
• Performance appraisals allow employers to discuss potential long-term goals with their employees.
• Employees become more motivated when they’re aware of what their objectives are. These are revealed more clearly during performance appraisals
• Employees look forward to appraisals as they can be eligible for promotions or bonuses. Happy employees can become brand ambassadors and help with ambassador marketing to grow your brand.

7 performance appraisal methods to follow in 2023

Now that you know why your business needs performance appraisals regularly, here are some modern methods of performance appraisal you should try in 2023.

1. 360-degree feedback method

It’s also known as a multi-rater feedback method and is an objective performance appraisal method. Here, a human resource administrator collects feedback about an employee from their work circle.

This includes their manager, supervisor, team members, customers, and other external parties they regularly interact with.

And why is this method effective?

This method gives a holistic view of the employee’s performance which helps in the appraisal process

It’s also less biased since it does not rely on information from a single source. If the feedback provided by most people aligns, it makes it more reliable for the human resource administrator.

Some components of a 360-degree performance review include:

• Self-assessment: Here, the employee is given a chance to look back on their processes and understand their capabilities. Certain questions are asked and they can respond to these based on the recollection of their processes.
• Manager assessment: The employee’s immediate supervisor reviews their performance and submits their review. Reviews from other senior managers the employee may have worked under are also considered here.
• Peer reviews: These are assessments from team members and close colleagues. This part of the review helps assess how well employees work as part of a team, how driven and motivated they are when performing tasks, their reliability, timeliness, and more.
• Subordinate review: Subordinates should be able to give feedback on their senior. These can get sensitive, as fear may be involved.
• Customer reviews: These are reviews from internal customers that directly relate to the business or any external clients who interact with the employee regularly.

Here are examples of questions you can ask your selected participants for a more effective appraisal outcome:

1. What three words would you use to compliment [employee name]?

2. What would you say is [employee name]’s greatest weakness? Remember to keep your criticism constructive.

3. What core values do you see [employee name] regularly demonstrating?

4. Do you believe [employee name] is driven and motivated in the way they perform their tasks?

5. How does [employee name] demonstrate [company value] in the workplace?

2. HR accounting method

This performance appraisal method can either be cost-based or value-based.

The cost-based approach assesses an employee's monetary contributions to the business against the business’s retention costs. Retention costs include salaries, overhead, replacement, and retirement costs.

The value-based model weighs an employee’s monetary and non-monetary contribution to the company against their costs.

They both then gauge their performance based on this comparison. This performance appraisal method is especially ideal for small businesses where the business continuity depends on how well an employee performs.

In larger companies, this model aims at helping human resource managers plan more effectively. You can also use this appraisal method to determine how much more to pay an employee.

3. Self-evaluation method

This method puts the onus of evaluation on the employee and involves them in the process. Employees assess their contributions to the company against set metrics.

Here, the employee is in charge of their development. They can ask performance review questions about their roles and become aware of their processes.

This method has some benefits for the employee. While they’re evaluating themselves, they can identify some of their strengths and weaknesses and know what they need to work on more.

Other benefits include:

• Fewer discrepancies: If your self-appraisal is different from your supervisor's, you can discuss and identify discrepancies in the process.
• Higher engagement: Employees are more engaged in this process, which fosters collaboration between managers and subordinates. It also makes employees feel valued.
• Motivation: Self-evaluation helps with employee motivation, as they’re more in control of their failures and success.
• Personal and professional growth: Employees get time to self-reflect, and critique their own methods and behavior to gain insight.

While self-evaluation leaves the bigger appraisal task to employees, managers are also part of the process. After they’ve written their self-evaluation reports, employees sit with their managers to discuss them.

Some benefits of this appraisal method for managers include:

• Managers are able to assess performances from the employee’s perspective.
• Self-assessments highlight any misunderstandings between managers and their subordinates.
• Managers are also able to collect feedback about how to improve employee performance and motivation beyond remuneration.

Here are a few examples of employee self-evaluation questions you can share with your teams.

• What are your job responsibilities?
• Are there any tasks in your job description that you no longer perform?
• What’s the easiest/most difficult part about your job?
• What accomplishments are you most proud of?
• What makes you good at the work you do?

4. Management by Objectives (MBO) method

In this method, managers and employees set a specific appraisal period. They then identify employee performance goals to focus on during this period and communicate them to each other. They all then work towards these objectives and set up periodic meetings to discuss progress.

This performance appraisal method assesses if employee objectives are SMART (specific, measurable, achievable, realistic, and time-sensitive). Employee objectives are meant to align with the company’s overall long-term goals.

By the end of the set period, employees are evaluated, and success is rewarded with bonuses, promotions, salary increments, etc. Failures are met with either more training, transfers, and so on.

This employee performance management method of appraisal keeps employees committed as they’re clear on what they’re working towards. It works best for appraising employees in senior management positions.

If you’re wondering how to start with MBO appraisal, know that it doesn’t have to be specific initially. You can start with general objectives as you get clearer on your company goals.

Some digital marketing management by objectives examples include:

• Increase lead generation by 25% every month
• Increasing social media engagement rate by 5%
• Get website visitors to spend more time on your site by five more minutes etc.
• Improve LinkedIn prospecting rates by 30%

Other examples of human resource objectives include:

• Improve employee retention rate by 25%
• Improve employee satisfaction by 10%
• Set up employee training programs

5. Behaviorally Anchored Rating Scale (BARS) method

This method takes employee performance and compares it with behavioral patterns that are based on numerical ratings. This way, you’ll get both quantitative and qualitative results from your appraisal.

The first step towards creating a BARS is collecting critical incidents of typical workplace behavior. Then, edit them and remove repetitive behavior.

Reclassify remaining incidents and assign scales to them. For instance, on a scale of 1 to 5, 1 could represent does not meet set standards and five could represent exceeds standards.

Then, develop a set of incidents for evaluation of workplace behavior.

A practical example of a team leader performance assessment could be:

• Scale 1: Makes inappropriate comments
• Scale 3. Stays silent during a team altercation
• Scale 5: Moderates team members during the disagreement

6. Rating scale method

This method uses numerical ratings on items such as leadership skills, dependability, timeliness, organizational skills, etc. to measure the performance of employees. Some rating scale examples include Likert scales and star ratings.

It’s a simplified performance appraisal method reviewers use to rate employees on a scale from poor to excellent.

It’s not as effective as the behaviorally anchored scales, which are more in-depth and specific. However, you can use it to perform a quick evaluation.

One downside to this method is that it does not take into account employee performance over time. It only captures their performance at the time of evaluation, which may not be an accurate reflection of employee growth.

Here’s an example of a rating scale performance appraisal.

Under this rating method, employees may be assessed by their supervisors, managers, subordinates, and sometimes even their customers—just like the 360-degree feedback method.

This all depends on the company or the role you play. The appraiser will then give their rating by choosing a number or item on the scale based on their observation of your work and their satisfaction.

For instance, the item in question could be “ the attitude of an employee toward their customers .” An appraiser can choose any number on a scale of 1 to 10, 1 being poor and 10 being excellent .

7. Assessment center method

This method uses stimulating exercises like company simulations, psychological tests, role-playing, and interviews, to evaluate employee behavior.

Through these exercises, employers get to know each employee’s personality based on aspects such as adaptability, timeliness, and tolerance.

You’ll then be able to identify what your employees’ strengths are, whether they have great leadership skills, organizational skills, and so forth.

This method is also used in most hiring processes.

Here’s the process you follow when coming up with an assessment center.

• Pre-assessment: Here, you decide on the objectives of the performance appraisal, find reviewers, design exercises, and set the rating method.
• During assessment: Explain the purpose of each exercise before conducting them. Then, conduct the exercises and note each employee’s strength.
• Post-assessment: Collect feedback from your reviewers, evaluate them, and share them with your employees. If need be, provide further training to the employees who need it. You can use best online video editors to create training videos for your employees and share those with them to help them upskill.

This method is ideal for organizations in the service, manufacturing, and educational industries.

Here’s an example of an assessment situation for employees:

Performance appraisal methods: which one’s best for you?

Every business periodically assesses its employees' performance for various reasons. The struggle can be to identify which method gets the best results.

As discussed, each performance appraisal method has its distinct advantages and disadvantages. How you choose your ideal evaluation method will depend on your business and what you’re looking to get from your appraisal.

Whether you’re looking to improve employee retention , fill a role, or boost employee productivity, there’s a method for you. So, carefully consider your options and choose the right one.

Here are some frequently asked questions about performance appraisal methods.

Performance appraisal methods are systematic approaches organisations use to evaluate and assess the performance of their employees. These methods provide a structured framework for measuring employee productivity, skills, and achievements.

How should organizations choose the right performance appraisal method?

Selecting the appropriate performance appraisal method depends on various factors, such as organizational culture, job roles, and the desired outcomes. It is crucial to consider the specific needs of the organization and the nature of the work being performed when choosing an appraisal method.

How often should performance appraisals be conducted?

The frequency of performance appraisals varies among organizations. Some conduct annual appraisals, while others prefer more frequent evaluations, such as quarterly or biannual reviews. The frequency should allow for meaningful feedback and alignment with organizational goals.

How can performance appraisal methods contribute to employee development?

Performance appraisal methods allow managers to identify employee strengths and areas for improvement. Organizations can support employee growth, enhance skills, and foster continuous learning by providing constructive feedback and setting development goals.

How can organizations ensure fairness and objectivity in performance appraisals?

To ensure fairness and objectivity, organizations should establish clear evaluation criteria, provide training to managers on the appraisal process, encourage two-way communication, and maintain documentation of performance-related discussions. Regular calibration meetings can also help align evaluations across different managers and departments.

Can performance appraisal methods be customized to fit specific organizational needs?

Yes, performance appraisal methods can be tailored to align with an organization's unique needs and culture. Customization may involve modifying existing methods, combining different approaches, or creating new appraisal methods that reflect the organization's values and goals.

How can employees prepare for a performance appraisal?

Employees can prepare for performance appraisals by reviewing their job responsibilities, reflecting on their achievements and challenges, gathering relevant data or examples demonstrating their performance, and setting personal goals for future development.

How can organizations use performance appraisal data effectively?

Performance appraisal data can identify trends, track progress, identify training needs, and make informed decisions regarding promotions, rewards, and performance improvement plans. Analyzing and interpreting the data to derive meaningful insights and take appropriate actions is important.

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Performance Appraisal Essay

Introduction, meaning and definition, origin of the topic, importance of the topic to managers/ organizations, review of literature, works cited.

To attain high competitive advantage in an extremely dynamic environment, it is imperative for organizations to integrate effective management tools. One of the areas that organization management teams should focus on relates to improving their human capital.

In order to attain this, organizations should formulate strategies aimed at influencing the employee’s work lives and careers (Grote 15). Performance appraisal is one of the most effective management instruments that firms can integrate in their effort to influence the employees energy in order to achieve their strategic goals.

This arises from the fact that if well implemented, performance appraisal enables employees to be focused towards organizational values, mission and vision. In this paper, the concept of performance appraisal is comprehensively evaluated.

Performance appraisal refers to a formal management system that is used by organizations in the evaluation of individual employee performance. Performance appraisal can be defined as the systematic, impartial and periodic rating of the employees’ on the basis of their present and potential excellence in their job.

Alternatively performance appraisal can also be defined as the quantitative and qualitative aspect of evaluating the employees’ behavior (Chandramohan 124).

In most cases, it is the employees’ immediate supervisors who are charged with the responsibility of preparing the appraisal form used in evaluating the employees’ performance. The appraisal form usually contains a number of questions that assesses the employee performance on different dimensions.

The concept of performance appraisal was first conceived in the United States in 1813 by General Lewis Cass. However, the performance appraisal was formally introduced by Taylor & Lord, a New York City department store in 914.

Prior to WWI, most organizations evaluated their employees’ on the basis of personality and traits rather than their accomplishments (Grote 2). However, after the First World War, businesses adopted divergent merit systems in an effort to evaluate their performance.

The past decades have been characterized by incorporation of diverse systems of evaluating the employee’s performance. During the 1950s, Peter Drucker introduced the concept of Management by Objective (MBO). Additionally, Douglas McGregor developed the concept of Theory X and Y.

As a result, most organizations shifted from trait assessment and formulated evaluation procedures that were based on goals. Over the years, the concept of performance appraisal has undergone significant development (Grote 3).

According to Grote (3), approximately 75% -90% of all organizations have formulated a formal performance appraisal procedure. Currently, it is generally accepted that the one of the most effective way of measuring the employees’ performance is by evaluating their results and behaviors.

Performance appraisal has increasingly been regarded as an indispensable management tool. This arises from the fact that there are numerous benefits associated with performance appraisal to both managers and organizations (Chandramohan 124).

Through performance appraisal, managers are able to make effective decisions with regard to different personnel aspects. According to Chandramohan (124), performance appraisal serves four main purposes. These relate to developmental purpose, organizational maintenance, administrative purposes and documentation purposes.

With regard to developmental purpose, performance appraisal enables organizations to focus on their employees’ development through integration of strategies such as competency development initiatives and training. The resultant effect is that organizations are able to enhance their employees’ future performance which contributes towards their career path.

Performance appraisal enables organizations to attain this through provision of performance feedback. According to Bhattacharyya (57), the feedback provided forms the basis upon which the employee improves his or her future performance.

Additionally, managers can assess the employees’ strengths and weaknesses thus becoming more aware of areas to focus when formulating the training and development program (Snell & Bohlander 347). The resultant effect is that they are able to improve the employees’ productivity.

By evaluating the employees’ performance, firms’ management teams can be able to develop an effective reward system. For example, organizations are able to make effective promotion decisions based on the employees’ capabilities.

Performance appraisal results into improvement of management/subordinate relationship. This arises from the fact that increases the rate of interaction between the employees and the management team.

Performance appraisal is one of the management tools that managers rely in the process of executing various human resource management roles such as staffing.

For example, some situations such as economic realities may force organizations to undertake downsizing. During this process, managers rely on performance appraisal to ensure that they only retrench marginal performance and retain the most talented employees (Grote 5).

According to Snell and Bohlander (347), the data obtained by conducting performance appraisal can be used to undertake human resource planning such as determining job worth. Additionally, the data can also be used to validate selection tests.

Organizations also use performance appraisal to document human resource management actions that can lead to legal actions. Different governments have formulated directives aimed at ensuring affirmative action and equal employment opportunities within organizations.

To protect themselves from possible legal actions for example on the basis of discrimination, it has become imperative for organizations to maintain accurate employee records. Through performance appraisal, organizations are able to attain this (Snell & Bohlander 347).

According to Sims (80), performance appraisal entails the process through which organizations assess their employees’ contribution towards the organization after a specific period. Different terms have been used to describe performance appraisal.

Some of these include performance review, performance evaluation, employee evaluation, annual review and employee appraisal. According to Harvard Business School (4), performance appraisal is a system that is used to support organizational employees in their on-the-job performance.

Traditionally, the threat of punishment and economic rewards in order to motivate the employees to achieve the formulated organizational goals formed the basis of performance appraisal. However, currently performance appraisal is undertaken for motivational and developmental processes.

Additionally, performance appraisal should be considered as a dynamic process which is aimed at improving the organization’s performance. As a result, the process of performance appraisal should be an considered as an ongoing process and not an annual process.

Grote (1) asserts that the process of performance appraisal should follow a 4-phase model which includes performance planning, performance execution, performance assessment and performance review. The chart below illustrates these four phases.

Source: (Grote 3)

Bhattacharyya (54) is of the opinion that performance appraisal is one of the most important elements of performance management. It is not possible to conduct performance management without integrating performance appraisal.

The chart below illustrates performance appraisal as an element of performance management. Performance appraisal enables organizations to understand their position with regard to performance relative to that of their competitors.

Considering the dynamic nature of environment within organizations operate, it has become imperative for organizations to incorporate the concept of performance appraisal in their effort to attain employee performances and management goals.

Through performance appraisal, organizations are able to develop and sustain their competitive advantage. Performance appraisal takes diverse forms such as formal or informal, open or confidential and oral or documented. In their operation, organizations adopt formal and documented systems of performance appraisals (Sims 80).

Bhattacharyya (55) is of the opinion that the process of performance appraisal contributes towards improvement in the level of performance both at the organizational and individual level. However, in order to attain these benefits, it is paramount for organizations to develop effective performance appraisal systems.

For example, a particular performance appraisal system that contributes to some of the employees being rewarded while the others are left out may increase the level of de-motivation.

In the process of designing a performance appraisal system, firms’ management teams should ensure that they take into consideration more than one objective. The appraisal system should focus on issues such as rewards, promotion, employee development and mentoring and development.

To effectively conduct performance appraisal, management teams should consider a number of steps. The first step entails establishing performance standards by writing down the job description. The second step entails communicating the standards to all the employees so as to ensure that they understand the basis of the performance appraisal.

The third step involves actual measurement of the employees’ performance. During this step, it is important for firms to undertake short term reviews rather than annual reviews. The fourth step involves comparing the employees’ performance with the established job standards.

The next step entails discussing the results of the appraisal process with the employees. Finally, the managers should rely on the findings to initiate the necessary collective actions (Bhattacharyya 55). The chart below illustrates the process of performance appraisal.

Source: (Bhattacharyya 59).

When conducting performance appraisal, effective techniques should be used. There are different appraisal techniques suggested by scholars. Some of these include peers, subordinates, supervisors, customers and self-appraisal. Organizations should select appraisal techniques that best fit their needs.

However, more than one appraisal methods should be incorporated in order to improve the validity and reliability of the results. An example of performance appraisal system that should be taken into account is the 360-degree. This system enables organizations to collect information about the employee from different sources such as from colleagues, direct reports, suppliers, customers and team members (Shaw 23).

Performance appraisal is one of the oldest concepts in management. Over the years, the concept of performance appraisal has undergone significant development. For example, it has shifted from being based on personality and traits to goals. Currently performance appraisal is also conducted on the basis of results.

From the above analysis, it is evident that performance appraisal is one of the most important management activity. If well implemented, performance appraisal can benefit both employees and the organization.

Through performance appraisal, organization management teams are able make effective decisions with regard to various personnel aspects. For example, they are able to formulate effective employee training and development programs, formulate reward systems, and undertake HR planning.

Through performance appraisal, organizations are able to formulate and implement effective employee motivation strategies thus increasing their productivity. The resultant effect is that the effectiveness with which the organizations attain their goals is increased.

On the other hand, performance appraisal enables employees to attain their personal and professional development goals. This is due to the fact that it enables employees to understand their strengths and weaknesses.

Additionally, the training programs implemented by organizations enhance their career paths. However, attainment of the above benefits is dependent on the effectiveness with which organizations have implemented the performance appraisal system.

As a result, the above steps should be taken into account when conducting performance appraisal. Additionally, the most appropriate performance appraisal technique should be used.

Bhattacharyya, Dipak. Performance management systems and strategies , Sydney: Pearson Education India, n.d. Print.

Grote, Richard. Performance appraisal question and answer book: A survival guide for managers , New York: American Management Association, 2002. Print.

Harvard Business School. Performance appraisal: Expert solutions to everyday challenges, London: Pocket Mentor Series, 2009. Print.

Shaw, Douglas. Performance measurement, management and appraisal sourcebook, Amherst, Mass.: Human Resource Development Press, 1995. Print.

Sims, Ronald. Managing organizational behavior , Westport, CT: Quorum Books, 2002. Print.

Snell, Scott and Bohlander, George. Managing human resources , New York: South-Western Publishers, 2012. Print.

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IvyPanda. (2020, January 13). Performance Appraisal. https://ivypanda.com/essays/performance-appraisal-4/

"Performance Appraisal." IvyPanda , 13 Jan. 2020, ivypanda.com/essays/performance-appraisal-4/.

IvyPanda . (2020) 'Performance Appraisal'. 13 January.

IvyPanda . 2020. "Performance Appraisal." January 13, 2020. https://ivypanda.com/essays/performance-appraisal-4/.

1. IvyPanda . "Performance Appraisal." January 13, 2020. https://ivypanda.com/essays/performance-appraisal-4/.

Bibliography

IvyPanda . "Performance Appraisal." January 13, 2020. https://ivypanda.com/essays/performance-appraisal-4/.

• Importance of Performance Appraisal
• Performance Appraisal System
• Evaluation of the Employee Performance Appraisal
• Performance Appraisal in Improving Employees’ Performance
• The Various Types of Performance Appraisals
• Use of Performance Appraisals as a Reward System
• Ways to Improve Performance Appraisals
• Performance Management and Appraisal
• Type of Performance Appraisals
• Optimal Performance and Appraisals
• Implications of Employee Engagement
• Leadership and Its Theoretical Perspectives
• Organization the business in Kenya
• Human Resource Issues Facing Companies
• Doing business in UAE

Traditional Methods And Techniques Of Performance Appraisal

A performance appraisal is a standard feature at most workplaces. It’s conducted at regular intervals to evaluate employee performance and…

A performance appraisal is a standard feature at most workplaces. It’s conducted at regular intervals to evaluate employee performance and assign goals for the next year. It also helps to develop a clear understanding of where your employees are succeeding and what areas need improvement in order for them to reach their full potential.

There are many ways of conducting a performance appraisal. The factors that affect the chosen method include the organization’s size, management style and preference. Here, we’ll discuss traditional methods of performance appraisal and how they can help employees achieve their goals.

With traditional appraisal methods, organizations usually conduct them at least once a year. But others might opt for a twice-yearly schedule. This helps them stay connected to their employees’ progress.

What Are Traditional Methods Of Performance Appraisal?

Traditional vs. modern.

Traditional techniques of performance appraisals give employees feedback on how they’re doing and also give them a chance to voice any concerns. The performance appraisal helps the employer and employee understand each other. The primary goal of the performance appraisal is to maintain a good work environment by evaluating each employee’s work, providing feedback and guiding them to achieve their goals. The traditional method of a performance appraisal includes:

Interviewing Employees

A one-on-one interview with employees is a great way to discuss any concerns the employee may have. By doing this, you can find out what they think of their own performance and how they’re performing compared to their own expectations. This is one of the most popular traditional methods of performance appraisal.

Comparative Methods

Employee performance can be compared to that of their peers in one of two ways: the ranking method or a paired comparison. In the ranking method, the performance of each team member is assigned a value compared to their peers. In the paired ranking, each employee is compared against a selection of others.

Rating System

Employees can also be rated on a list of skills that are needed for their position or business goals. This will provide a clear understanding of what skills each worker has and where improvements can be made. It also seeks employee input on how they’re performing and gives them a chance to voice concerns. Employees will answer questions related to their goals—how close they are to reaching them. Organizations use this method mainly at the beginning when an employee takes on a new position or when there are changes in productivity or employee performance.

Time Sampling

A time sampling is a traditional method of appraisal in which an employee’s productivity is measured over a specified period. This method is best for high-volume operations where quality control and accurate production times are needed. For example, if you run a manufacturing plant that makes multiple products, you can use this method for each product line in order to evaluate work quality.

Essay Appraisal

The essay appraisal method is used to rate an employee’s performance at different levels. The manager writes an essay describing the employee’s performance such as organization, analysis, detail, application, judgment and completion. This method, one of several traditional techniques of performance appraisals, is good when you don’t have a lot of relevant data available for comparison as it’s more qualitative.

The traditional method of a performance appraisal includes these and some other techniques, often used alone or with one another.

Traditional methods of performance appraisal were built on standard parameters such as production, attendance and other related variables. However, with changing times, the notion of performance appraisals has been modernized and adapted to suit the needs of organizations. Nowadays, performance appraisals have transformed into a tool that offers valuable data about the strengths and improvement areas of each employee.

Does this mean traditional methods of performance appraisals in HRM are ineffective in the modern workplace? Measuring performance on multiple dimensions helps managers define what employees can achieve and identify areas of potential growth. So, an understanding of these traditional methods is still useful to this day. Many are still in use, either exclusively or along with more modern appraisal methods that are less one-sided and more collaborative.

Master the traditional method of appraisal alongside the modern with Harappa’s First Time Managers Program ! It’ll teach managers new to the field how to navigate these complex workplace needs and more. Setting goals and monitoring them, leadership, persuasion and growing trust are just some of the skills packed into the program that’s perfect for early-career employees getting set to take on more advanced managerial roles. Help a new generation of managers achieve their best today with Harappa!

Explore Harappa Diaries to learn more about topics such as  Performance Appraisal , the  Techniques Of Performance Appraisals , Ways To  Coach Employees  at Work and Ways To  Improve Employee Experience  at work that will help organizations tap into employee potential.

Performance Evaluation Essay

Have you ever wondered how to evaluate someone to see if they are still up to their worth? For students and employees, a performance evaluation may sound terrifying but it is actually far from it. A performance evaluation is used to see and to target out the person’s difficulty and to make it all the better. In this article, we have 3+ performance evaluation essay examples in PDF. Some samples you may download to use. Check it out now.

3+ Performance Evaluation Essay Examples

1. performance evaluation essay template.

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2. Business Performance Evaluation Essay

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3. Work-Based Performance Evaluation Essay

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4. Performance Evaluation Narrative Essay

Definition of Performance

To execute something . To be able to act out what is being given as a form of a task. The promise of doing an action.

Definition of Evaluation

Evaluation as defined is to determine whether the individual’s worth and significance is still followed by a certain criteria. The use of an evaluation is to understand and correct an individual shortcomings and prevent any other issues that may undermine the individuals’ significance.

Definition of Evaluation Essay

An evaluation essay is also called a report essay or a critical essay. This essay is the type that may lead to an argument between the writer and their audience. This is also the essay that needs critical and analytical thinking. The writer must also provide evidence and extensive research to support the case or the topic they choose to write about. These evidences are based on facts.

Definition of Performance Evaluation Essay

The process of evaluating students or employees. To show them their weaknesses and address them in a polite and professional manner. To target the issues and resolve them to get a better outcome.

Tips for Writing Evaluation Essays

Here are some useful tips to help you write an evaluation essay.

• Choose your Topic: Like in any other essay writing, choose the topic you wish to discuss. Once you have done that, do your research and give out some evidence to support your topic.
• Write the Statement: The most important part of your essay is always your statement. This is where the narrative comes in. Write about your topic, discuss in your narrative about your chosen topic, as well as the key points. 
• Search for Supporting Evidence: When writing this type of essay, evidence is key. Do your research, look for information that supports your evaluation. 
• Make a Copy: Make a copy of your essay. Whether it is a draft or your final paper. This way, you can compare and find some loopholes in your document and change that.
• Review, Rewrite, Revise: Review your work. Look for some grammatical errors that you may have forgotten and rewrite them. Check your spelling and correct punctuation marks. Revise the parts that need revising.

What makes a good performance evaluation essay?

A performance essay must have the following information. The narrative, the methods and the objectives. It must also follow a format and a rubrics for it to be considered a performance essay.

Is there an easier way to conduct a performance evaluation?

You may use an essay type to conduct your evaluation or you may use a table type to conduct. All these would still depend on the rubrics that you made to evaluate your employees’ performances .

Is rubrics necessary to evaluate my employees’ performance?

A rubrics is simply there as a guide to evaluate but if you choose to use another, that is fine as well.

A performance evaluation essay should start and end with the target topic of what the author intends to write about. The extensive research and evidence should also be present as this is the type of essay where hard facts are based on. Assumptions of any sort should be avoided.  As this is seen as something to evaluate students or employees welfare, it should be used as such. The rubrics for the essay is merely a guide and should not be used as a means of judging a person’s actions nor a person’s shortcomings. With that being said, following the tips and the examples as guides for your evaluation essay writing should be easy.

Performance Evaluation Essay Generator

Text prompt

• Instructive
• Professional

Analyze your academic performance over the past semester in a Performance Evaluation Essay.

Discuss the outcomes of a recent project or assignment in your Performance Evaluation Essay.