Methods of Performance Appraisal

 

Methods of Performance Appraisal

(A) Traditional Methods

a) Rating Scales Method: Rating Scales Method is generally used method for assessing the performance of the employees and very popular traditional method of Performance Appraisal of employees. Depending upon the job of worker under this method of appraisal traits like attitude, performance, regularity, accountability and sincerity etc. are rated with scale from 1 to 10. 1 demonstrates negative input and 10 demonstrates positive criticism.

 

b) Essay Appraisal Method: This traditional form of Performance Appraisal, also known as “Free Form method” includes a description of the performance of an employee by his superior. Under this method, the evaluator is asked to express the strengths and weaknesses of the employee's behaviour. This technique is typically used with a combination of the graphic rating scale because the assessor can present the scale in an elaborate manner in substantiating an explanation of their rating. Essay evaluation is a non-quantitative technique.

 

c) Ranking Method: This is a relatively easy method of Performance Appraisal. Under the ranking method, the manager compares an employee to other similar employees, rather than to a standard measurement. The relative position of each employee is expressed in terms of his numerical rank. Using this method, the evaluator is asked to rate employees from highest to lowest on some general criteria. Although it is relatively easier to rank the best and the worst employees, it is very difficult to rank the average employees. Generally, evaluators pick the top and bottom employees and then select the next highest and next lowest and move towards the average employees.

 

d) Paired Comparison Method: A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. Each worker is compared with all other employees in the group; for every trait, the worker is compared with all other employees.

 

e) Critical Incidents Methods: This technique of PerformanceAppraisal was developed by Flanagan and Burns. Under this method, the manager prepares statement lists of each effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees at work.

 

f) Confidential Report System: Confidential report system is well known method of Performance Appraisal system mostly being used by the Government organisations. It is a descriptive report prepared, generally at the end of each year, by the employee’s immediate superior. The report highlights the subordinate’s strengths and weaknesses. That report is not data based. The superior’s impressions about the subordinate are simply recorded there. It does not offer any feedback to the appraisee. The appraisee is not quite sure about why his ratings have dropped despite his best efforts, why others are rated high when compared to him, how to rectify his mistakes, etc. Since the report is generally not made public and therefore no feedback is available, the subjective analysis of the superior is likely to be highly controversial.

 

g) Checklist Method and Weighted Checklist Method: Another simple type of individual Performance Appraisal method is the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive statements about the employee and his behaviour. If the evaluator strongly believes that the employee possesses a particular listed characteristic, he checks the item; otherwise, leaves the item blank. A more recent variation of the checklist method is the weighted list. Under this, the value of each question can be weighted equally or certain questions can carry more weight than others.

 

h) Graphic Rating Scale: This is the very popular, traditional method of Performance Appraisal. Under this method, most popular traits of employee related to his job are  carefully defined like Attitude, Knowledge of Work, Managerial Skills, Team Work, Honesty, Regularity, Accountability, Interpersonal relationships, Creativity and Discipline etc. These attributes are allocated with numerical scale to organize the scores picked up by evaluator. Evaluator ticks rating of specific quality depending upon his contribution for a particular activity. This strategy is popularly known for the fact that it is simple and doesn't require any writing capacity. Comparison among employees is possible. This is important for the selection of pay structure, advancements, and so on.

 

(B) Modern Methods

a) Assessment Centres: This Performance Appraisal method was first applied in German Army in 1930. Later business and industrial houses began to use this method. This is not a technique of performance appraisal by itself. In fact it is a system or organisation, where the evaluation of various individuals is carried out by various experts using various techniques. These techniques include the methods discussed before in addition to in-basket, role playing, case studies, simulation exercises, structured insight, transactional analysis, etc. [This method of Performance Appraisal is being opted by the RBI (Reserve Bank of India) for assessment of its officers].

In this method, people from various departments are get together to spend two or three days working on individual or group assignments similar to what they would be handling when promoted. The observers rank the performance of each and every participant in order of merit. Since assessment centres are basically meant for evaluating the potential of candidates to be considered for promotion, training & development, they offer an excellent means of conducting evaluation processes objectively. All assesses have an equal opportunity to showcase their talents and capabilities and earn promotion based on merit.

 

b) Behaviorally Anchored Rating Scales: Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which mixes the Graphic Rating Scale and Critical Incident Method. The critical incidents serve as anchor statements on a scale and the rating from usually contains 6 to 8 specifically defined performance dimensions. It consists of predetermined critical areas of job performance or sets of behavioural statements describing important job performance qualities nearly as good or bad (for eg. the qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents.

A Behaviorally Anchored Rating Scales is an employee appraisal system where raters distinguish between successful and unsuccessful job performance by collecting and listing critical job factors. These critical behaviours are arranged and assigned a numerical worth which is used for appraising an employee. Because it is a job specific and identifies observable and measurable behaviour, it is a more reliable and valid method for performance appraisal.

 

c) Human Resource Accounting Method: HRA is a sophisticated way to measure the effectiveness of personnel management activities and the use of people in an organisation. It is the process of accounting for people as an organisational resource. It tries to value organisational human resources as assets and not as expenses. The HRA process shows the investment the organisation makes in its people and how the value of these people changes over time. The acquisition cost of employees is compared to the replacement cost from time to time. The value of employees increases with the investments made by the company to improve the quality of its human resources such as training & development and skills acquired by employees over a period of time through experience, etc. When qualified competent people leave an organisation, the value of human assets goes down. In this method, employee performance is evaluated in terms of costs and contributions of employees. Human Resource Costs include expenses incurred by the company in hiring, training, compensating and development of people. The contribution of human resources is the monetary value of labour productivity. Employee performance can be seen as positive when contribution is greater than the cost and performance can be viewed as negative if the cost is more than contribution.

 

d) Management by Objectives (MBO): MBO requires management to set specific, measurable goals with each employee and then periodically discuss the latter’s progress towards these goals. This technique emphasises participatively set goals (which are agreed by the superior and the employee) that are tangible, verifiable and measurable. MBO focuses attention on what needs to be accomplished rather than how it is to be accomplished. Therefore, it is a kind of evaluation and goal setting programme that consists of six steps:

i) Set the organisation’s goal

ii) Set departmental goals

iii) Discuss departmental goals

iv) Define expected results

v) Performance reviews

vi) Provide feedback

 

e) 360 Degree Feedback: A 360-degree feedback, system collects information on the performance of various parties, including subordinates, colleagues, supervisor and customers. Although, originally developed as a self-correcting and fact finding technique, the 360-degree feedback is also currently used to design promotions and rewards. A great advantage of this system is that the feedback comes from multiple sources. In actual practice, the 360-degree system can be a very sensitive issue. The system can fail to deliver results, if it is not designed and implemented properly.

 

Reference: Rao, V S P, (2010). “Human Resource Management Text and Cases”, 3^rd ed., Excel Books, New Delhi.