Performance appraisal is an integral part of performance management. Usually, it is done once in a year. Apart from improving the employee performance up to its maximum potential, it serves many other purposes.
It helps the employers to recognize the competency levels of the employees. Thus it is a useful tool in deciding on the allocation of rewards like salary hike or promotion, to the employees according to their performance.
On the other hand, the employees comes to know about their roles and responsibilities in the company and the expectations of their employers. You can say it is a kind of feedback given to the employees by the employer. Here are the various types of performance appraisal methods that are used by different companies.
Based on Ranking
In this method, performance of an employee is compared with others who are doing the same kind of job and not to any definite standard measurement. The performances are represented graphically where the employees are ranked in the range of best to worst as per their performances.
Usually, maximum number of employees are found in the middle of the curve, as it represents employees with an average performance while the best and the worst performers are at the either ends of the curve. This method is very helpful for choosing the best performer among the best of the performances.
Its biggest drawback is that it can trigger rivalry among its employees, which may adversely affect the entire working environment. Moreover, a negative performer is labeled as a loser which may dent the motivation of that employee.
Based on Rating
Here, evaluation of the performance is based upon certain traits of the employees like employee motivation, attitude, flexibility, quality of work, quantity of work, cooperativeness, participation in team work and so on. Every employee is graded on each of these traits. Usually, it is done objectively by yes/no or satisfactory/unsatisfactory check boxes.
The disadvantage of this performance appraisal process is that there is no specific definition for any given trait. Evaluation of a particular trait often varies from one person to the other. This may create confusion among the employees and gives rise to tension between the employee and the employer.
Based on Behavior
Also known as behaviorally anchored rating scales (BARS), the performance here is rated from best to worst according to the behavior pattern required for a given job. All the dimensions of job behaviors that are relevant for a particular job have to be included in the scale and thus, a clear standard is developed.
For this kind of analysis, thorough knowledge of the job behavior, required for a specific job is a must. However, traits and personality factors are not taken into account. This is a slightly complicated as well as time-consuming process because for each type of job, a suitable scale has to be prepared.
Performance Appraisal Based on Objective
This method is referred to as Management by Objectives (MBO). Certain goals and objectives are set by the employer after discussing them with the employees. The performance of the employees are evaluated periodically after they submit their status report from time to time.
When there is a specific set of goals, the employee feels motivated and puts in the best possible efforts to achieve the goals. This method often helps in obtaining higher levels of performances from the employees.
The disadvantage of this process is that in a way, every employee starts to outperform the other which may result in an non cooperative atmosphere in the work place and in turn affecting the productivity. There is one more narrative based performance appraisal which is often used along with other performance appraisal methods.
For this, the HR manager as well as the employee give written statements on the performance of a particular employee. It can be done in two different ways. Either they can write whatever they wish to or there could be a set of questions which needs to be answered by both the parties.
One cannot say which of the mentioned methods is the best. A method which is suitable for a particular company may not be right for others. It largely depends on the system prevailing within the company. Sometimes, companies use more than one of these methods for better analysis of their employees.