What is Employee Performance Appraisal?
Performance appraisal is the process of documenting, evaluating, measuring, driving, and developing employees’ performance in a systematic manner. In other words, it can be termed as an employee appraisal system, performance review, or performance management system.
Benefits of performance appraisal
Performance appraisal has three major benefits for both the employer and the employee.
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1. Selection Process validation:
Performance appraisal helps the managers to validate the selection process and it also helps to recommend changes and improvements to be made in the existing process. A periodic review of the selected employee’s performancehelps to know the strengths and weaknesses of the performance appraisal methods.
2. Compensation
The employee appraisal system helps to identify the best performers and to compute their compensation package based on the merit system. It boosts the employee’s contribution to the company. On the other hand, the employees who lag behind in performance are identified and training policies and programs are framed accordingly.
3. Employee’s self-development
Self-development is one of the best benefits for an employee through positive feedback, promotions, rewards, and transfers. The performance appraisal methods help in identifying his areas for improvement. Along with the manager, an employee can devise training programs to enhance his skills.
10 New Performance Appraisal Methods
When it comes to an Organisation’s success, predominantly it relies on the employee’s performance. There is a boundless number of performance appraisal methods available to evaluate, review, measure, and develop an employee’s performance. Let’s take a look at the 10 recent performance appraisal methods and how they benefit both the manager and the employee.
1. Management by Objectives (MBO)
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Management by Objectives is the process of setting objectives by the organization, that leads the employees to set goals with proper alignment with the management. This process drives them to know their roles and responsibilities and work towards the future course of action.
2. 360-Degree Feedback
360-degree feedback, also known as multi-source feedback, is the process of gathering feedback from supervisors, co-workers, peers, direct reporters, and also self-assessment. It helps to review the behavior and skills of each employee and explicitly the strengths and weaknesses of the person.
3. Behaviorally Anchored Rating Scales (BARS)
Behaviorally Anchored Rating sales, termed BARS evaluate the employee’s performance dimensions by comparing certain behavior statements usually on 5 point or 9 points scale. They guide the employee’s entire life cycle by providing a complete profile for each one of them.
4. Critical Incident Appraisal Method
A critical incident appraisal is a method of collecting incidents from the managers or domain experts pertaining to the KPIs of the employee. It involves continuous monitoring of both positive and negative behavior and how it is exhibited. This method is more descriptive and has limitations in comparing the employee’s performance based on the decisions made in particular incidents.
5. Human Resource (cost) Accounting Method
The human resource/Cost Accounting method analyses the employee’s performance with the financial gain they bring into the company vs.. their cost. It is effective in organizations where they have a perfect estimate of the employee and his contribution cost. Also, it is most useful in companies where performances are driven by the P & L statements.
6. Psychological Appraisal
The psychological appraisal approach attempts to evaluate employees based on predicting their future performance rather than focusing on their past performance. It is a unique method, where qualified Psychologists look for the personality traits, interpersonal skills, intellectual abilities, and leadership skills that play a vital role in future performance.
7. Narrative appraisal method
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A narrative appraisal is basically a written analysis in the form of an easy analysis of an employee’s performance. These reports are more open-ended and stand out from the pre-defined questions. This appraisal is more individualized and qualitative in nature. Comparison between employees’ and managers’ expressive skills are major challenge in this method.
8. Check-Ins
Performance Check-Ins appear similar to other performance appraisal techniques, but they are not. Performance check-ins occur more informally, where managers tend to build rapport with their subordinates and they align each other to work towards the organization’s goals. Check-ins happen in stipulated intervals (weekly, monthly, bi-monthly, or quarterly) and it is important to access the progress of the employee since the last Check-In.
9. Competency Assessment
Competency Assessment is the measurement of someone’s capabilities against the job requirements. The assessment is carried out on the identified tasks and skills that are considered to be critical to performing the role successfully.
10. Checklist Appraisal
Checklist Appraisal consists of a list of statements, that can be evaluated with answers “yes” or “No”. The assessment statements are both positive and negative about the workplace habits, employee’s job skills, etc., Unlike the descriptive or narrative method, the Checklist appraisal technique is the easiest and the quickest form of assessment.
Closing Thoughts
Performance appraisal software plays a vital role in understanding the employees and keeping them motivated through proper recognition and awards. These tools also help managers and leaders to align with employees to set development objectives and gather regular feedback from them.
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