Performance Appraisal

Performance Appraisal is the systematic evaluation of the performance of

employees and to understand the abilities of a person for further growth and
development. OR It is simply the evaluation of employee performance
and productivity against company goals and objectives.
Performance appraisal is generally done in systematic ways which are as
follows:

1. The supervisors measure the pay of employees and compare it with targets
and plans.
2. The supervisor analyses the factors behind work performances of
employees.
3. The employers are in position to guide the employees for a better
performance.
Objectives of Performance Appraisal
Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages, wage

structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men
on right job.
3. To maintain and assess the potential in a person for growth and
development.
4. To provide a feedback to employees regarding their performance and
related status.
5. It serves as a basis for influencing working habits of the employees.
6. To review and retain the promotional and other training programs.
Performance appraisal process
Step 1: In most organizations, the performance appraisal process means
evaluating an employee every 6 months or one year for the period an employee
has continually worked with the organization. In modern times, the Human
Resources department sends out an employee survey for them to fill out to collect
data related to their engagement and satisfaction levels.

Step 2: The employee’s immediate manager or supervisor will then evaluate the
quality of the employee’s performance based on the work done in the previous
year and then meet face-to-face to discuss the facts and figures.

Step 3: The feedback received from the survey can be kept anonymous. This
feedback can be analyzed real-time by using QuestionPro’s Workforce platform,
that measures, analyzes and activates data to get actionable insights.

For probationary employees, the probation period usually lasts between three to
six months. Their evaluation is based on whether they have come at pace with the
work and culture of the organization and if they are ready to take up more
responsibilities.

CRITICAL PURPOSES OF PERFORMANCE APPRAISAL IN HUMAN

RESOURCE MANAGEMENT
The purpose of performance appraisal feels obvious to some businesses: to
make sure that employees are meeting the standard set forth for the position
they were hired for. Are employees meeting their goals? Are they working well
with others? Is the quality of their work high enough to warrant a raise? And
yes, employee appraisals should seek to answer the questions, but overall, the
purpose of performance appraisals can be bigger than that, including making
sure that management is working well in managing employee expectations and
career paths, as well as their progress on projects and team fit.

While a performance appraisal is only one part of an employee performance

management system, it’s an important part with a distinct purpose. Here’s
what your employee performance appraisals should seek to accomplish.

Goals of your employee performance appraisal

1. Ensure employees feel valued

In order to be productive and really at the top of their performance, it’s

important to regularly check in with them to give feedback that both express
your appreciation for their work and helps them understand the impact of their
work on the business, which in turn makes them more likely to stay engaged
and continue performing well. While performance appraisals do give you the
opportunity to offer constructive criticism and address any shortcomings, it
also gives you a great opportunity to recognize the hard work of your
employees.

2. Establishing goals

Part of your performance appraisal objectives is to track progress against past

goals and give direction for the future. Setting new target goals for your
employees during a review helps to motivate your employees towards what’s
next, as well as help them align on the current strategic goals of the business,
particularly if those have changed since the last review.

3. Resolve problems

Whether an employee has a problem with their workload, a teammate, or a

project, a formal review gives you the opportunity to work on solving these
issues and retaining your team members. It’s also a key opportunity to share
any grievances you have with their performance or progress.

4. Maintain positive managerial relationships

The best teams are those with the best relationships with their coworkers and
managers. A relationship doesn’t necessarily mean friendship, but health
respect and open communication between parties can go a long way towards
enhancing productivity, creativity, and more.

5. Current project and day to day task check-in

Managers don’t always get the chance to have regular one-on-one meetings
with employees and have oversight on current projects or the problems and
successes that employees face along the way. A performance appraisal is the
minimum amount of time that a manager should be receiving employee
feedback and considering how to address complaints or work good employee
suggestions into a strategy.

6. Assess opportunities for promotion, advancement, and raises

A formal employee appraisal gives managers a dedicated space on their

calendar to consider a holistic list of employee contributions, strengths, and
weaknesses and assess opportunities for advancement is there’s a need in the
organization that needs filling. Promoting from within not only can save a
company on hiring costs but can also greatly increase overall employee morale.
It also gives businesses an opportunity to consider additional compensation for
a job well done and an incentive for continued performance.

7. Understand training needs

Conversely, employee performance appraisals should give you an

understanding of where employees can benefit from more formal feedback or
training. This helps you develop employees into stronger business assets rather
than dismiss them outright. Not only is hiring and retaining an employe e often
less cost-effective than investing in current staff, offering training to develop
skills can help boost the job performance of someone who’s already a good
team and culture fit. It’s much harder to train for soft skills and culture fit than
most other business skills.

One of the most important things to understand about performance appraisals

is that once a year reviews aren’t really satisfactory in helping you understand
the performance of your employees. Performance management systems are
meant to help you create more communication and feedback with your
employees to benefit both the employer and the individuals. Ultimately,
performance management is key in achieving the management responsibility of
guiding employees towards the success that adds to the success of the
business.

METHODS OF PERFORMANCE APPRAISAL

Traditional and modern methods of performance appraisal

 What’s the difference ?

Traditional methods tend to measure an employee’s past performance and

focus on assessing employee personality traits — such as initiative,
dependability, and leadership potential — while modern methods weigh job
achievements more heavily, regardless of the employee’s personality traits,
which is thought to be a less biased approach.

1. Traditional Methods of Performance Appraisal

Rating Scales Method

It is a well-known traditional method of performance appraisal. As the name

suggests, this performance appraisal method involves the use of a rating scale
that spans from 1 to 10. In this performance appraisal method, employees’
performance is measured against several factors including their attitude,
timeliness, efficiency, and interpersonal skills.

For example, If an employee gets a low rating then it means they have received
negative feedback, if the scale rating is high let’s say 9 or 10, then the
employee has done exceptionally well.

Useful For:

The rating scale is an effective appraisal method for assessing unique traits and
behaviors within your workforce.

Pros:

 Helps in assessing employee attributes and how they relate to their current
role.
 They are structured and standardized in nature.
 Useful for comparing employees against one another.
 Helps assess salary adjustments.
 Useful in considering candidates for promotion.

Cons:

 Responses are open to interpretation.

 The final rating can be deceiving.
 Average results can be difficult to interpret.
 Recent events can influence answers.

Tips To Implement:

 Attempt to be as objective as possible when posing your questions.

 Avoid asking subjective questions.
 Clearly establish criteria and expected outcomes.
 Limit your questions to those that are behavioural in nature.

Interesting Fact:

Rating scales were first introduced in the year 1910 and by 1920, the rating
scale method was introduced by the Scott Company.

Checklist Method

The Checklist method is one of the easiest traditional performance appraisal

methods. Under this traditional method of performance appraisal, HR prepares
a checklist and forwards it to the manager. The checklist may include a list of
questions (depicting behaviour and job performance of employees), and the
manager has to answer them in just ‘YES’ or ‘NO’ form.
 The manager analyzes the question and the employee and answers them
according to their evaluation of the employee. Questions in the checklist carry
a numerical value based on their importance to job performance. Therefore,
the appraisal score is calculated by adding up the scores of all these individual
factors.

For example, the checklist may contain a question- “Is the employee helpful to
other team members?” The question may carry a numerical value of 5, so if an
employee has been really helpful to their team, they may get a full score of 5 or
if the employee isn’t helpful according to the manager’s analysis, then they
might get 1 or Zero.

Useful For:

Making employee performance easy to evaluate as their supervisors have to

simply choose between yes/no.

Pros:

 Helps managers avoid discrimination.

 Ensures clarity of evaluation criteria.
 Helps the manager to be objective in their reviews.
 Provides an organized view of the performance.

Cons:

 Doesn’t allow elaborate explanations.

 Time-consuming process.
 Costly to prepare.
 Easy to overlook some important evaluation factors.
 Tips To Implement:

1. Focus on objective questions that can be answered in yes/no form.

2. Try to not put in a lot of questions as it can be very time consuming.
3. Make sure that you don’t include a lot of negative statements.

Interesting Fact:

According to Mosher and other experts, the checklist method was employed in
the first known collection evaluation at an American library, which
was reported in 1849.

Forced Distribution Method

This strategy is widely used in large corporations. It is predicted that employee

performance varies widely within an organization, with some individuals being
more productive than others. As a result, with this strategy, the management
must distribute employees based on their performance over the entire bell
curve. Some are exceptional, while others are average, and still, others are at
the bottom of the spectrum.

Useful For:

Creating an unmistakable separation between the performances of every

employee in the organization.

Pros:

 Helpful in eliminating the leniency of the appraiser.

 Highlights future front-line leaders.
 Relatively quick and easy model to understand and implement.

Cons:

 Does not work well for high performing employees who are introverts in
nature.
 Encourages discrimination among employees.
 Can have a negative impact on innovative employees due to limited categories
of evaluation.

Tips To Implement:

 All guidelines should be communicated to appraisers in a precise manner by

the HR department. Each manager should be aware of how reviews should be
interpreted and what each statement represents.
 According to the method’s core principle, teams that perform better should be
rewarded with various benefits.
 Appraisers are unable to appraise employees at their discretion; instead, they
must adhere to certain guidelines.
 In order to achieve internal equality, businesses should calibrate their
performance.

Interesting Fact:

Forced distribution method was first presented by General Electric in the

1980s.

Critical Incident Performance Appraisal Method

The critical incident technique is a performance review method that examines
an employee’s behaviour in specific circumstances, both in which he did
admirably and those in which he could have improved. A series of methods are
utilized to collect data and analyze it. The critical incident technique involves
observing critical human behaviours, abilities, and on-the-job situations.

Critical Incident
Performance Appraisal Method
 Useful For:

In comparison to other approaches, which may be highly objective and need

only rankings to assess employee performance, this method is quite subjective.

Pros:

 It aids in the detection of unusual events that might otherwise go unnoticed by

other means.
 This method is inexpensive and gives you a lot of information.
 The viewpoint of the respondent is taken into account.

Cons:

 Many instances may go undetected or be inaccurate since incident reporting is

based on the respondent’s perception.
 It’s possible that biases will emerge in response to recent events.
 The instances described may or may not be reflective of scenarios that occur on
the job on a regular basis.

Tips To Implement:

 Begin by identifying and reviewing occurrences that happened during the

course of the job.
 The process of fact-finding includes acquiring information about the incident
from members.
 Examine the facts and data gathered from the participants by the interviewer
and determine the concerns.
 Interesting Fact:

Sir Francis Galton’s research is credited with laying the groundwork for the
Critical Incident Method.

Essay Method

The management uses this strategy to produce a description of the employee’s

behavior and performance. In this method, the review description contains all
pertinent information, such as the employee’s mindset, job knowledge, present
performance, and potential for growth.

Useful For:

Giving managers the flexibility to focus on whatever they personally find

important about the individual’s performance.

Pros:

 The essay method is far less rigid and constraining.

 Allows the manager to emphasize practically any significant issue or
performance aspect.
 The method is fairly open-ended and adaptable.
 Subjective in nature.

Cons:

 It takes a long time and is tough to administer.

 A biased essay could be written by a manager or supervisor.
 It’s tough to draw conclusions about organizational demands.
 Tips To Implement:

 Make sure to keep the evaluation essay short and crisp in content.
 Try to highlight the weaknesses and strengths of the employee.
 Avoid the usage of any flowery language.

Interesting Fact:

The essay method is labeled as the “grandfather” of performance appraisal

methods.

Paired Comparison Method

Employees are evaluated using this method based on any single attribute. Each
employee is compared to others on a one-to-one basis, in pairs, based on a
particular quality/attribute, for example, creativity. The formula N (N-1)/2 is
used to calculate the number of potential pairs. While the letter N denotes the
number of employees to be appraised.

Useful For:

Companies that have a limited number of employees and funds.

Pros:

 It aids the manager in determining priorities when competing demands on a

company’s resources arise.
 In nature, it is cost-effective.
 It’s simple to pick the most significant problem to address or the solution that
will give you the most benefit.
 Cons:

 It’s beneficial when the priorities are unclear.

 This method is especially useful when you don’t have any objective data to
assess.

Tips To Implement:

 Make a list of the options you’ll compare (elements as A, B, C, D, E for

example).
 By applying the formula 5(5-1)/2, there will be a total of ten pairs to compare.
 Make a table with six rows and seven columns.
 Compare element “A” to elements “B,” “C,” “D,” and “E,” and set “point” in
each column.
 Finally, add up the totals of all the values for each of the variables to combine
the findings. You might choose to translate these numbers to a percentage of
your overall score.

Interesting Fact:

The origin of the paired comparison method can be traced back to it was first
use in the mid-1800s.

Field Review Method

This method is based on the supervisor’s assessment of the employee’s

performance, behaviour, and skills. The HR professional invites seniors to
respond to questions about the employee’s job and then evaluates the person
 based on the feedback obtained from managers. This is an evaluation
conducted by someone outside of the employee’s department.

Useful For:

Managerial level promotions or when a comparable analysis is needed.

Pros:

 Reduces the chances of biased performance reviews.

 Useful for managerial level performance evaluations.

Cons:

 Outsiders are generally not familiar with employees’ performance; hence, the
review might be inaccurate.
 Observation of actual employee behaviours is not possible.
 Highly time-consuming process.
 The process is not very employee-friendly.

Tips To Implement:

1. Prepare a set of predetermined questions to assess the talents and abilities of

an employee.
2. Interview the employee and ask questions.
3. Record the responses of the employee.
4. Based on the interview, assign a rating to the employee.
5. Take the manager’s review into account before calculating the final rating.

Interesting Fact:
The field review method is considered to be one of the oldest methods of
performance appraisals.

Drawbacks of Traditional Performance Appraisal Methods

These methods are highly subjective. The performance appraisal is dependent

on the appraiser’s judgement, which is subject to favouritism and bias. Because
the reviewer has not gotten enough job training, he is unable to effectively
assess the performance of others.

These performance appraisal techniques have several flaws, which include the
following:

Drawbacks Of Traditional Performance Appraisal Methods

Halo Effect:

This is one of the major drawbacks of traditional performance appraisal

methods. When appraisers allow one significant attribute to affect their
performance evaluation process, the phenomenon is known as the halo effect.
Regardless of the employee’s performance, the appraiser assigns the same
scores to all factors.

Leniency and Strictness:

The appraisers have different tendencies when it comes to rating. Some are
more liberal, while others are more rigorous. The evaluator’s habits mirror
their rating of employees. You may have noticed that a lenient evaluator gives
the employees good scores, whereas the stricter one gives them low scores for
their performance.

Central Tendency:

When the evaluator lacks appropriate knowledge about the employee and his
performance and the time to devote to the performance appraisal process, he
may play it safe and rate all employees’ performance as average. This
propensity is a major flaw in the performance evaluation system.

Personal Bias & Favouritism:

The evaluator’s bias towards employees based on sex, religion, caste, color, or
status is fairly widespread. This makes objective appraisal difficult. The
evaluator can be swayed by the member’s seniority and give him a high rating.
Some supervisors want to purposely rate their subordinates low so that they
can outperform them

5 modern methods of performance appraisal

1. Management by objectives (MBO)

The management by objectives method is an approach that focuses on
improving an organization’s performance across the board by articulating
clear objectives for the business. The entire team, both management and
employees, sets those objectives.

In this approach, an employee and manager work together to identify and

plan goals for the employee to reach, usually within a specific time frame.
The manager and employee then meet regularly to discuss the employee’s
progress and make any adjustments necessary toward the goals and
objectives.

2. 360 degree feedback

The 360 degree feedback method is designed to get feedback from all the key
players an employee impacts in their day-to-day activities — managers and
supervisors, peers, subordinates, and even clients and customers. The
employee also completes a self-evaluation.

This method is highly regarded because multiple people are involved in

evaluating the employee’s performance.

Organizations typically collect this feedback via an online questionnaire or

form. Jotform’s free employee performance review form makes it fast and
easy to gather feedback, and it simplifies the evaluation process, whether
you use a 360 degree feedback approach or another method.

3. Behaviorally anchored rating scale (BARS)

According to HR software company TalentLyft , BARS is “a measuring system
which rates employees or trainees according to their performance and
specific behavioral patterns.”

This is considered one of the most effective modern methods of performance

appraisal because it relies on both quantitative and qualitative forms of
measurement. In this approach, the employer compares each employee’s
performance with specific behavioral examples that are anchored to
numerical ratings.

4. Psychological appraisal

This approach to performance appraisal attempts to evaluate how an

employee might perform in the future rather than assessing how they have
performed in the past.

A qualified psychologist conducts in-depth interviews, psychological tests,

and private conversations to assess an employee. The psychologist analyzes
components such as interpersonal skills, cognitive abilities, intellectual traits,
leadership skills, personality traits, emotional quotient, and other factors.

5. Assessment center

In the assessment center method, an organization tests its employees on

both job capabilities and social interaction skills. Written tests help evaluate
ability, while situational exercises and role-playing scenarios assist with
determining an employee’s likelihood of success in carrying out
responsibilities that are part of their day-to-day role.
Performance appraisals are critical to the success of any organization. The
performance appraisal method you choose will depend on your goals and the
structure of your business; the right one can help you improve performance
and provide growth opportunities across your organization.

One way to simplify the process is to use Jotform’s evaluation forms . Simply
start with one of our ready-made forms and customize it with the Jotform
Form Builder to create the perfect evaluation for your performance appraisal
needs.