Performance appraisal is a crucial process in every organization as it helps in evaluating and improving employees’ performance. The appraisal process has evolved with time. Earlier, it was just a yearly ritual that was tied with compensation and had been a nightmare to both employees and employers. But today, the companies are too focused on enhancing the employee experience that they keep revamping their performance appraisal process to retain employees and develop them.   

Performance appraisal is often confused with performance management, whereas performance appraisal is just a part of performance management. Performance management has become a buzzword in recent days, especially after the strike of the pandemic. Businesses want to retain their high potential employees and high performers and so they look for the best performance management systems to keep their employees motivated, engaged, and productive.   

One size does not fit all. Even in normal conditions, the performance appraisal method should be chosen with sharp eyes to keep the business running smoothly while getting employees accustomed to the new system. In this forever disrupted world, the companies should be extra careful with choosing the appraisal method as that makes the employees believe in the management and give their best in everything they do.   

Here are a few appraisal methods you can consider before determining the right system for you.     

Management by Objectives (MBO)  

Management by Objectives is a management tool that helps in setting well-defined objectives for a year or a quarter. This method was introduced by Peter Drucker in the 1950s. The strategy focuses on improving the performance of employees as well as the organization and enabling frequent communication between the workforce and management. The goals are usually set only after both employees and managers agree to them.   

Management by Objectives increases the commitment of employees and ensures alignment of individual objectives to the overall business goal for the year. Based on the performance, whether the outcome has been achieved or not, the employees are evaluated. The only downside is that the method induces a lot of stress on the workforce especially when the objectives are stretch goals. The employees might work too hard as MBO is used for their appraisal process. Therefore, the way to overcome this disadvantage is by setting realistic goals that are attainable and time-bound.  

Behaviorally Anchored Rating Scale (BARS)  

BARS is a great leap from a traditional scale to a modern approach toward performance appraisal. The greatest advantage of BARS is its ability to personalize. The employees are evaluated based on their performance against specific behaviors on a numerical scale, and the behaviors on the scale vary with each role and the tasks performed by the employees. The critical incidents, narratives, and quantified ratings are all combined in the Behaviorally Anchored Rating Scale.   

BARS is a reliable method of performance appraisal and it has very well-defined performance criteria upon which an employee will be appraised. The workforce knows where they are supposed to improve and how-to from BARS.  

Human Resource Accounting Method  

The Human Resource accounting method keeps an account of the cost of retention, hiring, overhead cost, and other expenses of the workforce and is compared to the monetary benefits provided by the employees to the organization. This is one of the traditional methods but can still be useful in companies that have just started or in manufacturing sectors. Choosing the appraisal method that suits the organization is a skill that must be mastered by the company management.   

The evaluation based on this method provides greater benefits to the company but if combined with a few motivating steps like helping employees to upskill, compensating well when they do better can make this method super helpful to employees as well. The action taken on the evaluation decides the employee-employer relationship.  

General Performance Appraisal  

Performance appraisal, which once was an annual process, has now become a continuous one to engage and motivate the employees, especially the growing millennial workforce population. The general performance appraisal process begins with clearly set objectives which are monitored frequently to check the progress. The guidance and direction are provided along the way. The continuous performance management process mitigates the impact of the recency effect on the appraisal process.  

In this remote working age, only the companies that have adopted a continuous process can thrive. The employees are too isolated in this new work environment. Continuous performance management process helps to keep them engaged as the employees are involved in the goal-setting process and are encouraged to focus on their self-development through various training and learning programs.  

360 Degree Feedback Appraisal Method  

360 degree feedback appraisal method helps to promote collaboration and effective communication in this new normal. This method helps in assessing employee performance by getting feedback from peers, superiors, subordinates, and other internal and external stakeholders. Through this process, the employees will stay connected with one another and also with the company. Though 360 degree feedback process cannot eliminate the biased reviews, it helps in finding and nurturing the future leaders of the company. The appraisal process based on this feedback method cannot be leveraged for accurate appraisal but can be used as an additional source during the appraisal process. Self-appraisal is also a part of 360 degree feedback process. The employees are asked to evaluate themselves on their goals against competencies. This review form will be again reviewed by the manager and a discussion will be held to speak on the performance. 360 degree feedback enables two-way communication, upward and downward communication.  

Manager Performance Appraisal  

In this type, managers go through the appraisal process. It is the role of the manager that is very crucial in handling both the team and the client. The manager has to satisfy the clientele without disrupting the (team’s) employee morale. Most often, manager appraisal process involves feedback from the respective team members and sometimes from the client as well. The feedback forms from employees can also be anonymous.  

Thus, these are the appraisal methods that can help you in this new normal. Selecting the one that benefits you and your workforce is the key to the successful management and engagement of employees.