6 Most Effective Employee Performance Appraisal Methods That Companies Should Be Aware Of

performance appraisal

How does your company assess employee performance? Are you aware of the employee performance appraisal process and the various methods used in it? As a business owner, it is important to know the purpose of performance appraisal and effective techniques for appraising employees. Performance appraisal includes various methods that evaluate employee performance and identify training and development needs. The companies that use this process can recognize the benefits of using it. But they need to put some effort into finding effective methods for appraising their employees. Companies can even use automated tools for the performance appraisal process as it saves time. They need to find reliable and accurate HR and payroll management system software that makes the performance appraisal process easy. With such software, they can identify and set goals, track and manage performance.

Here are six modern employee performance appraisal methods which are considered to give effective results.

The performance appraisal process helps in improving employee relationships, boosts productivity, and motivates employees to do more. Companies that use traditional appraisal methods such as ranking, grading, annual performance reviews, essay method, checklist methods, and others, suffer from limitations and they don’t give effective results. These methods are time-consuming and don’t give the desired results after spending a lot of time on them. Modern performance appraisal methods are more objective type and concentrate on the personality traits of each employee. So, it is important to choose the right performance appraisal methods for your company based on your company’s strategy and culture. Each of these methods has some strengths that help organizations to improve employee performance, retention, and engagement.

Management By Objectives (MBO)

This performance appraisal method includes goal-setting activity, which is a collaborative effort between the supervisors and employees with specific responsibilities and expected outputs. After the goal setting, the supervisors track the progress of employees to identify performance gaps, course correction, and training requirements. The method helps to find out whether the desired goal is achieved in the stipulated time period or not. The focus is mostly on tangible career-oriented goals.

Assessment Center Method

This method involves testing employees in social-related conditions. The aim of this technique is to assess the personality and managerial potential of the employees by bringing them together to participate in games, role-playing and simulation exercises, etc. It allows accurate evaluation, reduces bias, and helps companies to identify the right candidate for transfer and promotion.

Psychological Appraisal Method

This method assesses the emotional balance, analytical skills, aptitude, and other attributes of the employees. Qualified psychologists and employees actively engage in the appraisal process through in-depth interviews, supervisor discussions, and psychological tests, thus facilitating a comprehensive assessment. The results of the method are highly dependent on the person who administers the process.

Behaviorally Anchored Rating Scale (BARS)

This method assesses the actions of employees to evaluate their specific behavior. The performance and behavior of an employee are analyzed to assess the overall performance. The company assigns employees different numerical ratings by comparing performance and behavior examples. The benefits of using this method include effective and accurate performance analysis, better feedback, and consistent assessment.

360 Degree appraisal

This method is a continuous process where feedback’s collected from managers, subordinates, suppliers, and customers. The performance of employees is evaluated by different people with whom the employees interact in the organization. The feedback’s mostly taken in questionnaire form to assess the behavior, competencies, and aptitude of an employee. This appraisal technique boosts the motivation of the employees. The feedback’s received from key members of the organization so the accuracy of the inputs is high.

Human Resource (cost) Accounting

This method analyzes the performance of employees on the basis of monetary benefits they have yielded for the company. The process involves comparing the cost of retaining an employee with the monetary benefits the company has derived from that specific employee. This technique primarily focuses on assessing the employee’s financial performance.

With all these modern appraisal methods HR professionals can easily garner the required information and can find the best-performing employees. Using technology can make the appraisal process even simpler. Businesses in India can look out for both HR & Payroll Solutions that provide various benefits. Such tools can integrate the performance management process with other aspects of HRM. Companies can access employee performance data, synchronize it with apps and exchange the process data effortlessly.

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