Top 10 Methods of Performance Appraisal

This article throws light upon the top ten methods of performance appraisal of employees. The methods are: 1. Critical Incident Method 2. Weighted Checklist Method 3. Paired Comparison Analysis 4. Graphic Rating Scales 5. Essay Evaluation Method 6. Behaviourally anchored rating scales 7. Performance Ranking Method 8. Management By Objectives Method 9. Forced Ranking 10. Behavioural Observation Scales.

Performance Appraisal: Method # 1. Critical Incident Method:

Critical incident is an event that has a significant effect, either positive or negative, on task performance or user satisfaction, thus affecting usability. The critical incidents for performance appraisal is a method in which the manager writes down positive and negative performance behaviour of employees throughout the performance period. Critical incident is a method used for many sectors.

Critical incident method-Recording of events by appraiser. An incident is critical when it illustrates what the employers has done or failed to do. The critical incidents for performance appraisal are a method in which the manager writes down positive and negative performance behaviour of employees throughout the performance period.

Each employee will be evaluated as such and one’s performance appraisal will be based on the logs that are put in the evaluation form.

The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance. The critical incidents file of performance appraisal is a form of documentation that reflects all data about employee performances.

Disadvantages of Critical Incident:

This method suffers however from the following limitations:

I. Critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates.

II. Negative incidents may be more noticeable than positive incidents.

III. It results in very close supervision which may not be liked by the employee.

IV. The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it.

V. The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.

Performance Appraisal: Method # 2. Weighted Checklist Method:

This method describe a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behaviour on jobs. This method describe a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behaviour on jobs.

Process of Weighted Checklist:

I. HR department and Managers/Supervisors will set up checklist for each position.

II. If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank.

Sample of Weighted Checklist:

I. Does he give respect to his superiors? Yes/No

II. Does he follow instructions properly? Yes/No

III. Does he make mistakes frequently? Yes/No

The value of each question may be weighted equally or certain questions may be weighted more heavily than others.

Advantages and Disadvantages of Weighted Checklist:

I. This method help the manager in evaluation of the performance of the employee.

II. The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions.

III. This method also is expensive and time consuming.

IV. It becomes difficult for the manager to assemble, analyse and weigh a number of statements about the employee’s characteristics, contributions and behaviours.

Performance Appraisal: Method # 3. Paired Comparison Analysis:

Paired comparison analysis is a good way of weighing up the relative importance of options. A range of plausible options is listed. Each option is compared against each of the other options. The results are tallied and the option with the highest score is the preferred option. Paired comparison analysis is a good way of weighing up the relative importance of options.

Advantages and Disadvantages of Paired Comparison Analysis:

a. It is useful where priorities are not clear.

b. It is particularly useful where you do not have objective data to base this on.

c. It helps you to set priorities where there are conflicting demands on your resources.

d. This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage.

Steps to Conduct Paired Comparison Analysis:

a. List the options you will compare (elements as A, B, C, D, E for example).

b. Create a table 6 rows and 7 column.

c. Write down option to column and row; A to row second, cell first from left and A to row first, cell second from left; B to row third, cell first from left and B to row first, cell third from left etc; column seventh is total point.

d. Identify importance from 0 (no difference) to 3 (major difference).

e. Compare element “A” to B, C, D, E and place “point” at each cell.

f. Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score.

Performance Appraisal: Method # 4. Graphic Rating Scales:

The Rating Scale is a form on which the manager simply checks off the employee’s level of performance. This is the oldest and most widely method used for performance appraisal. The Rating Scale is a form on which the manager simply checks off the employee’s level of performance.

This is the oldest and most widely method used for performance appraisal. The scales may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the job).

Content of Appraisal:

a. Quantity of work. Volume of work under normal working conditions

b. Quality of work. Neatness, thoroughness and accuracy of work knowledge of job.

c. Dependability. Conscientious, thorough, reliable, accurate, with respect to attendance, relief, lunch breaks, etc.

d. Judgment

e. Attitude exhibits enthusiasm and cooperativeness on the job

f. Cooperation willingness and ability to work with others to produce desired goals.

g. Initiative.

Rating Scales:

Rating scales can include 5 elements as follows:

a. Unsatisfactory

b. Fair

c. Satisfactory

d. Good

e. Outstanding

Advantages of the Rating Scales:

1.Graphic rating scales are less time consuming to develop.

2. They also allow for quantitative comparison.

Disadvantages of the Rating Scales:

i. Different supervisors will use the same graphic scales in slightly different ways.

ii. One way to get around the ambiguity inherent in graphic rating scales is to use behaviour based scales, in which specific work related behaviours are assessed.

iii. More validity comparing workers ratings from a single supervisor than comparing two workers who were rated by different supervisors.

Performance Appraisal: Method # 5. Essay Evaluation Method:

This method asked managers/supervisors to describe strengths and weaknesses of an employee’s behaviour. Essay evaluation is a non- quantitative technique. This method usually use with the graphic rating scale method.

This method asked managers/supervisors to describe strengths and weaknesses of an employee’s behaviour. Essay evaluation is a non-quantitative technique. This method usually use with the graphic rating scale method.

Input of Information Sources:

a. Job knowledge and potential of the employee;

b. Employee’s understanding of the company’s programs, policies, objectives, etc.;

c. The employee’s relations with co-workers and superiors;

d. The employee’s general planning, organizing and controlling ability;

e. The attitudes and perceptions of the employee, in general.

Disadvantages of Essay Evaluation:

i. Manager/supervisor may write a biased essay.

ii. A busy rater may write the essay hurriedly without properly assessing the actual performance of the worker.

iii. Apart from that, rater takes a long time, this becomes uneconomical from the view point of the firm, because the time of rater is costly.

iv. Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee.

Performance Appraisal: Method # 6. Behaviourally anchored rating scales:

This method used to describe a performance rating that focused on specific behaviours or sets as indicators of effective or ineffective performance. It is a combination of the rating scale and critical incident techniques of employee performance evaluation. This method used to describe a performance rating that focused on specific behaviours or sets as indicators of effective or ineffective performance.

It is a combination of the rating scale and critical incident techniques of employee performance evaluation. In psychology research on behaviourism, Behaviourally Anchored Rating Scales (BARS) are scales used to report performance.

BARS are normally presented vertically with scale points ranging from five to nine. It is an appraisal method that aims to combine the benefits of narratives, critical incident incidents, and quantified ratings by anchoring a quantified scale with specific narrative examples of good or poor performance.

BARS Behaviourally Anchored Rating Scales is a method that combines elements of the traditional rating scales and critical incidents methods.

In order to construct BARS seven steps are followed as mentioned below:

1. Examples of effective and ineffective behaviour related to job are collected from people with knowledge of job.

2. These behaviours are converted in to performance dimensions.

3. A group of participants will be asked to reclassify the incidents. At this stage the incidents for which there is not 75% agreement are discarded as being too subjective.

4. Then the above mentioned incidents are rated from one to nine on a scale.

5. Finally about six to seven incidents for each performance dimensions- all meeting retranslation and standard deviation criteria will be used as BARS.

Classification of Behaviourally Anchored Rating Scales:

a. Behavioural observation scales

b. Behavioural expectations scales

c. Numerically anchored rating scales

Rating Scales:

Each behaviour can rate at one of 7 scales as follows (you can set scales depend on your requirements):

a. Extremely poor (1 points)

b. Poor (2 points)

c. Below average (3 points)

d. Average (4 points)

e. Above average (5 points)

f. Good (6 points)

g. Extremely good (7 points).

Advantages and Disadvantages of Behaviourally Anchored Rating Scales:

a. This method are very useful and exactly.

b. It is very difficult to develop this method because you need to identify what is “good level” etc.

Performance Appraisal: Method # 7. Performance Ranking Method:

Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee, rather than comparing each one to a standard measurement.

Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee, rather than comparing each one to a standard measurement.

Rating Scale of Ranking:

a. Much better – 5 points

b. Slightly better – 4 points

c. Equal – 3 points

d. Slightly worst – 2 points

e. Much worst – 1 point

Process of Ranking:

a. The scaled comparison asks a rater or evaluator to compare the performance of two individuals.

b. Continue comparison to other two employees.

c. Total points to each employee.

d. Give point to employee, for example: A is Slightly better-4 points so that B is Slightly worst – 2 points.

Performance Appraisal: Method # 8. Management By Objectives (MBO) Method:

Management by objectives or results was introduced by R Drucker in 1954. Drucker in The Practice of Management used this term and recognised the need of self-set goals. Since then it has become very popular as a method of planning, setting standards, motivating and appraising performance o/e employees.

The concept of MBO incorporates the better parts of the different theories of motivation. It recognises Maslow’s Self-fulfilment need. It is based on McGregor’s theory Y. It also honours Herzberg’s motivational factors of achievement, recognition, challenging work and responsibility. It also accepts the concept that people prefer to be assessed according to criteria or standards which they feel are realistic and reasonable.

Under modern democratic managerial style, employees, are themselves required to appraise or evaluate their performance, i.e., through self-appraisal studies and the manager or leader is merely a guide or his adviser enabling the employee to rate his merits. Hence, merit rating by the superior is now replaced by self-appraisal studies. MBO is the best device for employee appraisal.

MBO is a process in which managers/employees set objectives for the employee, periodically evaluate the performance, and reward according to the result. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods).

MBO is a process in which managers/employees set objectives for the employee, periodically evaluate the performance, and reward according to the result. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods).

Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.

The term “management by objectives” was first popularized by Peter Drucker in his 1954 book ‘The Practice of Management’.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

Features and Advantages:

The principle behind Management by Objectives (MBO) is basically for employees to have clarity of the roles and responsibilities expected of them. They then understand the objectives they must do and the overall achievement of the organization. They also help with the personal goals of each employee.

Some of the important features and advantages of MBO are:

1. Motivation:

Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.

2. Better Communication and Coordination:

Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.

3. Clarity of goals:

4. Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers.

5. Managers can ensure that objectives of the subordinates are linked to the organisation’s objectives.

Key Factors of MBO:

1. Superior-Subordinate Interaction:

The superior and the subordinate (the management pair) get together and jointly agree upon and prepare the list of duties and areas of responsibility of the individual’s job.

2. Superior and-Subordinate Mutually Set Goals:

The subordinate sets his own short-term goals or targets in consultation with his boss who guides him in the process of goal- setting. The goals set are realistic and reasonable and they satisfy also the needs of the organisation.

3. Superior and Subordinate Mutually Set Performance Criteria:

The superior and his subordinate ascertain the methods to be used in achieving the objectives as well as receiving any training needed. They agree upon standards or norms for measuring and evaluating performances.

4. Progress Evaluation:

From time to time, usually three or four times a year, they get together to evaluate progress toward the predetermined goals. At these face-to- face meetings new or modified goals are set for the next period.

5. Superior’s Supportive Role:

The superior plays a supportive role. He helps his subordinate constantly in achieving the pre-set objectives. He acts as a coach and offers valuable advice and guidance.

6. Focus of MBO:

The process of MBO emphasizes the result and not the means or personal traits. The superior does not act as a judge to pass his verdict on the performance of his subordinate. In fact, the superior helps through continuous guidance the subordinate to reach his goals.

It is concerned with assessing performance and not with evaluating or rating qualities and potentials of the subordinate staff. It is interested only in work-related and career-oriented goals. Primary emphasis is on self-supervision and self-regulation by the subordinates with frequent feedback of information for effective control and communication.

The modern human resource manager usually prefers MBO as it provides ample scope for employee participation in goal setting and in planning and organising the work through mutual interaction between the superior and his subordinates. MBO is a good solution to the problem of motivation.

It permits greater or lesser supervision as per needs of the subordinates. Greater freedom and challenge are possible over time’. This will depend on the employee’s performance, willingness to take more responsibility and the job’s potential for enlargement.

Limitations:

There are several limitations to the assumptive base underlying the impact of managing by objectives, including:

1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.

2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stakeholders.

As an example of the influence of management buy-in as a contextual influencer, in a 1991, comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity.

Companies with CEOs who showed low commitment only saw a 6% gain in productivity.

3. Companies evaluated their employees by comparing them with the “ideal” employee. Trait appraisal only looks at what employees should be, not at what they should do.

When this approach is not properly set, agreed and managed by organizations, in self-centred thinking employees, it may trigger an unethical behavior of distorting the system of results and financial figures to falsely achieve targets that were set in a short-term, narrow, bottom-line fashion.

How corporate culture impacts unethical distortion of financial numbers: managing by Objectives and Results could be counterproductive and contribute to a climate that may lead to distortion of the system, manipulation of accounting figures, and, ultimately, unethical behaviour.

The use of MBO needs to be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the ’empowerment’ fad, it still has its place
in management today.

The key difference is that rather than ‘set’ objectives from a cascade process, objectives are discussed and agreed, based upon a more strategic picture being available to employees. Engagement of employees in the objective setting process is seen as a strategic advantage by many.

A saying around MBO “What gets measured gets done”, ‘Why measure performance’. Different purposes require different measures’, Public Administration Review, Italic text is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.

360 Degree Performance Appraisal:

360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them.

Who should conduct 360 degree performance appraisal?

a. Subordinates.

b. Peers.

c. Managers (i.e., superior).

d. Team members.

e. Customers.

f. Suppliers/vendors.

g. Anyone who comes into contact with the employee and can provide valuable insights and information.

What’s 360 degree measures?

a. 360 degree measures behaviours and competencies.

b. 360 degree addresses skills such as listening, planning, and goal-setting.

c. 360 degree focuses on subjective areas such as teamwork, character, and leadership effectiveness.

d. 360 degree provide feedback on how others perceive an employee.

360 degree appraisal has four components:

a. Self appraisal

b. Subordinate’s appraisal

c. Peer appraisal.

d. Superior’s appraisal

360 degree appraisal has four integral components:

1. Self appraisal

2. Superior’s appraisal

3. Subordinate’s appraisal

4. Peer appraisal.

Self appraisal gives a chance to the employee to look at his/her strength and weaknesses, his achievements, and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree performance appraisal where the employees’ responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team,-co-operation and sensitivity towards others.

Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a “360 degree review” of the employees’ performance and is considered to be one of the most credible performance appraisal methods.

360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees.

A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.

Performance Appraisal: Method # 9. Forced Ranking (Forced Distribution):

Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 per cent in the top category, 70 or 80 per cent in the middle, and 10 per cent in the bottom.

Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 per cent in the top category, 70 or 80 per cent in the middle, and 10 per cent in the bottom.

The to pranked employees are considered “high-potential” employees and are often targeted for a more rapid career and leadership development programs. In contrast, those ranked at the bottom are denied bonuses and pay increases. They may be given a probationary period to improve their performance.

Advantages and Disadvantages of Forced Ranking:

Advantages:

a. They force reluctant managers to make difficult decisions and identify the most and least talented members of the work group.

b. They create and sustain a high performance culture in which the workforce continuously improves.

Disadvantages:

a. They increase unhealthy cutthroat competitiveness;

b. They discourage collaboration and teamwork;

c. They harm morale;

d. They are legally suspect giving rise to age discrimination cases.

Performance Appraisal: Method # 10. Behavioural Observation Scales:

Behavioural Observation Scales is frequency rating of critical incidents that worker has performed. Behavioural Observation Scales is frequency rating of critical incidents that worker has performed. The BOS was developed by Latham & Wexley (1977) who believed that both graphic rating scales and BARS require supervisors to make vague judgments.

The BOS is a list of critical incidents behaviours which the supervisor has to rate in terms of frequency.:

The use of the Behaviour Observation Scale will assist with the assessment and rating of pain. Behavioural observations for the non-verbal are used for the resident with a severe cognitive impairment.

Non-communicative residents who are unable to understand the rating scale and/or express the presence of pain need to be assessed for pain and treated accordingly. Make the following observations, indicating if the behaviours are “N” normal or “U” unusual for that resident.

Describe how it is unusual. Assign one point for each unusual behaviour. Total the points and determine the pain level using the scale below. Observe the resident for 3 to 5 minutes for behaviors seen. Total unusual behaviours observed.

Rating scales: 5 scales is used as follows to identify frequency of behaviour:

a. Never

b. Seldom

c. Sometimes

d. Generally

e. Always.