Performance appraisal is a process to evaluate an employee whose performance and personality are evaluated by the management. It is a systematic process in which the assessment of the employee is done orally and with written elements such as performance appraisal forms.
Performance appraisal is essential for both the organization and employees. It helps out the organization to discover the abilities and skills of employees for future growth and development.
Methods of Performance Appraisal
There are two methods for carrying out the entire process. The traditional methods and modern methods. Each performance appraisal method has its own pros and cons, and therefore no single method is accepted by all the organizations. All organizations choose methods that are optimum for the management to carry out the process effectively.
Traditional Performance Appraisal Methods
1. Ranking method
This is the oldest and simplest method for the performance appraisal in which the employees are evaluated by comparing with other employees and ranking them in order from the best to the worst.
The ranking method is the easiest and simplest method to carry out the entire process but it may create problems and issues if conducted on a large scale. The ranking method is always criticized because it is less systematic and sometimes results look biased.
2. Paired Comparison
The paired comparison method is similar to the ranking method. When the alterations are made in the ranking method to make it effective when conducted on a large scale the paired comparison is used.
Generally, each employee is compared with each other with one on one basis. It is usually based on one character.
3. Forced Choice method
The forced-choice method was developed by J. P Guilford. In this method, the evaluator rates the employees based on the group or pairs of statements.
The evaluator is forced to choose from the statements which are readymade that why this approach is known as the forced-choice method.
In this method, both positive and negative statements are contained.
4. Checklist method
This is one more method to easily implement the process for appraising the employee. In this method, the checklist is made by the HR department to prepare the final scores of the employees. Later on, the checklist is forwarded to the evaluator.
The checklist mostly crafted with a list of questions regarding the behaviors and job performance of the employees. The evaluator just needs to answer the question in YES or NO form.
5. Critical incidents method
In this method, the evaluator analyzes the critical incident in which the employee participated and evaluate him or her on the basis of his behavior and performance during the incident.
This method is not only used for performance appraisal. This can be also used for job interviews. The interviewer can give examples of certain scenarios and ask the interviewee how he or she would handle such incidents.
6. Essay method
The Essay method is the simplest method among various available methods. In this method, the evaluator writes a descriptive essay on employees describing his strengths and weaknesses, nature, etc.
In this method is to employees have to rely on the observational skills and writing skills of the evaluator rather than his performance.
7. Confidential reports method
This is the traditional method used for appraising the appraisee. It is mainly used in government sectors. The evaluation is done by the immediate boss or supervisor to make promotion effective. Usually, the structured format is used in this method such as strength, weaknesses, character, attitude, attendance, etc.
Modern Performance appraisal methods
Management by objective(MBO)
This is the most interactive and fair method for the performance appraisal which is also cost-effective. In this method, the performance is evaluated by the goal set against the objectives by the management.
The Management by an objective method is used to set the goals and expected outcome for each appraisee which also helps to increase performance standards.
The assessment center is the central location where the evaluation of the executive and the supervisory potentials is done.
This method was first used back in 1930 in Germany by the armed forces to rank their officers. The method gradually spread to the UK and US by late 1940.
360 – Degree Appraisal
In this method, the feedback is taken about the employee from everyone who interacts with him during his working hours. They can be his juniors, seniors, supervisors team members, etc.
This method was first used and implemented in the General Electric Company (USA) back in 1992. And now it is widely used by many major organizations.
Cost Accounting Method
In this method, the employee performance is assessed on the monetary contribution of the employees to the organization. This is to establish the relationship between the cost involved in retaining the employee and the benefits that the organization derives from the employee.
Advantages of Performance Appraisal
The performance appraisal helps organizations and management to provide a record of performance over time.
It helps the managers to select the perfect candidate for any job based on his skills and performance.
Performance appraisal also helps the employees to identify their area of weakness in which they need improvements.
It will create a healthy competition between employees to perform better than their colleagues.
Disadvantages of Performance Appraisal
If the data and the factors used in appraisals are incorrect then the whole procedure will fail to provide accurate results.
Sometimes the evaluators are not equally qualified to evaluate the appraisees and their abilities. This may lead to cause the harm for the organization over a period of time.
Sometimes the essentials factors are left behind or not given equal weightage to those factors while performing the appraisal.
Process of Performance Appraisal
Setting up the Criteria.
The First step is to conduct an effective and successful performance appraisal to set the standards that are expected from the employees. The Evaluator should create the performance appraisal forms that have must have a relevant question and also should meet the criteria and goals set by the organization.
Communication with employees.
Setting up the criteria is just not enough to carry out this whole process. Communication with the employees is also the one big essentials part of this process to make this process unbiased and ethical.
Measuring the performance of employees.
This is the most important part of this whole process. If the standards and the criteria are well defined it will be easy to measure it for the evaluator. There are so many methods for it which we have already discussed.
Comparing the measurement with actual standards.
Once the measurement is done the next step is to compare it with the actual standards set for performance and evaluate the employee using those standards and criteria. There will certainly be some gaps between the standard set by the organization and the performance of the employee after comparing it, those gaps can be filled with providing feedback and training to the employee which also helps both the organization and employee for the development and growth.
Feedback to the employees
Once the evaluation and the comparisons are done the most crucial steps is to provide feedback to the employees so that the correctives actions can be done if there is any scope for improvement, also the positive feedback will motivate employees to perform even better for the future.
Sample performance appraisal forms
1) What this Template cover?
The document covers the key factors of appraisal form format like employee details, more than twenty evaluation criteria, detailed calculation of aggregate grade, side by side comparison of strengths and weaknesses, identification of training area, recommendations for the promotion and salary increment.
Suitable for industries: It is suitable to the industries where i) evaluation criteria are very broad & ii) regular training is given importance.
The document covers basic employee details, 3 major ability criteria of skill/knowledge, personality development, leadership. The maximum weightage of 60% is given to skill/knowledge and rest has 20% each weightage. The different flagging is assigned to based on the performance. This sample also includes a self-assessment form which again looks good factor of evaluating the performance.
It covers the basic information about the employee. This sample is a little mathematical and allowing to create the evaluation criteria. You can mention your own evaluation criteria, can set up the scorecard by assigning the weightage you want to define. Also, there is a summary section where you can summarize the performance review by appraiser, employee’s reaction to performance feedback and the planning for improvement and development.
Suitable for Industries: This sample is suitable where evaluation criteria is dynamic and multiple evaluation parameters are applied. The detailed appraiser review and feedback gathering from an employee is required regarding the performance evaluation.