6 Performance Appraisal Methods & 1 HRMS For Employee Management

Performance Appraisal

Employee performance appraisal is a common scenario in every organization. It is not all about increasing the salary amount of an employee; it’s more than that. It is also a very crucial process for every organization as it improves employee productivity and improves their outcomes. We can say that performance appraisal is a systematic evaluation of an individual concerning performance on his/her job along with the potential for development. 

In a simpler tone, we can say that it is an annual process where an organization evaluates each employee’s performance as well as productivity against a set of objectives. 

It is a truly important process not because only it mostly results in an employee’s wage rise and promotion but also it helps in evaluating each employee’s strengths, skills, and shortcomings properly. But being an employer have you ever felt that performance appraisal is adding no value to your organization? If yes, you are doing it in the wrong way. 

This blog by Vyrazu Labs is meant for those employers and HR professionals who find employee performance appraisal nothing effective to their organization. If you are facing the same thing, we must say you need to revamp your existing appraisal process and try implementing one of the six performance appraisal methods we are going to discuss below. 

Six performance appraisal methods modern organizations should try 

If you are following the right performance appraisal method, you are going to improve the performance of each employee and enjoy increased productivity. It can work as a good performance review method and your entire experience will be effective as well as rewarding. 

  1. MBO- Management by Objectives
  2. 360-degree feedback
  3. Assessment Centre Method
  4. BARS- Behaviorally Anchored Rating Scale 
  5. Psychological Appraisals 
  6. Human-Resource Accounting Method 

MBO- Management by Objectives

Management by Objectives is a popular employee appraisal method. Here, managers and other employees together plan, identify, organize, communicate, and focus on identified objectives during a specific appraisal year or period. When goals are defined properly, managers and other employees again discuss the progress that they have made to control to achieve the defined goals or objectives. 

This appraisal method is effective when you need to measure the qualitative and quantitive output of senior position holders of an organization such as managers, directors, business development executives, and so on. 

Reasons for the failure of this appraisal method 

  • Improper MBO program 
  • Lack of proper top management involvement 
  • Inadequate corporate objectives   

A real-time example of this method- Walmart, the retail giant uses this method for the performance management of its top, middle, and first-line managers. 

360-Degree Feedback 

This method is another popular one and it is also known as the multidimensional performance appraisal method. Via this method, an organization can evaluate each of its employees using feedback collected directly from that employee’s circle of influence such as customers, peers, managers, and direct reports. This method is truly effective in eliminating bias in performance reviews. It will also help in getting a clear understanding of each employee’s competence skill. 

This appraisal method mainly includes five important components such as self-appraisals, managerial reviews, peer reviews, client reviews, and subordinate appraising managers. You can take the help of this method as it will help you in initiating coaching, counseling, and planning career development activities for all your employees. Apart from this, this method is also helpful in integrating performance feedback with the work culture and promote employee engagement. 

Reasons for the failure of 360-degree feedback appraisal method 

  • Cultural differences 
  • Competitiveness 
  • Improper and ineffective planning
  • Misguided feedback
  • Leniency in review 

A real-time example of this method- some private organizations such as G4s, RBS, Sainsbury’s, and so on are using this 360-degree appraisal method to successfully measure employee performance. 

Assessment Centre Method

The assessment Centre Method is in practice since 1930 and it was invented by the German Army. Today, in many organizations, we can see its polished and tailored version so that it can satisfy modern requirements. Via this method, employees get a clear picture of how other responsible individuals observe them and its impact on employees’ performances. If you want to know how an employee is going to perform in the recent future days, this appraisal method is going to help you at the best level. A lot of employers prefer to enable this method when it comes to evaluating the present as well as the future performance level of an employee and deciding appraisal, promotion, and other rewards. 

We have seen that Assessment Centre Method is effective on service-based companies, manufacturing organizations, educational institutes, consulting firms, and so on. In this way, they can easily decide the future leaders and managers of the organization. 

A real-time example of this method- Philips, Microsoft, and other popular organizations prefer to enable this method to find their future managers as well as leaders in their workforce. 

Behaviorally Anchored Rating Scale (BARS)

This method is designed to bring out both qualitative and quantitive benefits of an employee performance appraisal process. Via this method, you will be able to compare employee performance with specific behavioral examples. The result will be shown in form of ratings. Each employee of an organization needs to go through various BARS statements and it will describe some common behaviors that each employee exhibits regularly. All sized business organizations can enable this method to evaluate the performance of their entire workforce. 

Psychological Appraisals

This appraisal method seems helpful when it comes to determining the hidden potential of your employees. Via this method, you have to focus on the future work of an employee instead of his/her past works. This method will help you in determining 7 important components of each of your employees’ performance. Those components are cognitive abilities, interpersonal skills, leadership skills, intellectual traits, personality traits, emotional quotient, and related any other skills based on the job role. 

Such employee performance appraisal method is the cup of tea of large enterprises such as Exxon Mobil, Ford motors, etc. They use this method for the development of team building, leadership pipeline, conflict resolutions, and so on. 

The human resource accounting method 

The human resource accounting method is all about analyzing each employee’s performance via the monetary benefit that he/she adds to the organization. In this way, you will compare the cost of having an employee with the monetary benefit he/she is adding to the company. Such a performance appraisal method is effective for small businesses and startups as here the performance of each employee matters a lot. 

What should you do: 

If your existing appraisal method is not adding any value to your organization, you can try one of these performance appraisal methods and explore the changes. You can do better employee performance management if you enable Human resource management software like HRMWARE. From tracking employees to sending feedback- you do everything regarding effective employee performance management. HRMWARE, the best HRMS is now free for organizations that are running with up to 10 employees.