Selection of appraisal methods depends on the role being appraised and whether it is possible to observe work behaviour or work outputs alone. The method of appraisal in a workplace can vary from very informal, to a highly structured and formal procedure.
Formal and Informal Appraisals
The type of appraisal system that best suits an organisation will depend on:
- the size and type of organisation
- which employees and job types are being appraised
- training and development policies, procedures and resources
- the access and availability of appraisal expertise to provide input into the desired system
- the management capability and time available to make a formal system work
- whether existing informal systems work adequately
Informal Appraisals
An informal appraisal approach relies on impromptu meetings and discussions, consultation, coaching, discipline and feedback. These all occur in a formal system as well, but an informal approach does not define specific ways, times or methods for appraisals to take place. The key to successful informal approaches is to create a healthy culture of open communication. A good example of a time when an informal approach is needed might be where a supervisor has identified minor performance gaps and wishes to address the issue promptly without going through formal channels (ie the underperformance does not warrant a formal disciplinary procedure). This can also be helpful if a performance gap has been identified and waiting to discuss the issue until a formal process is undertaken could be to the detriment of the individual and their team.
Which Approach?
The approach taken will depend on the organisation’s circumstances. For example, in a smaller organisation or where there are few opportunities for promotion or career development within the organisation, a formal system may be unnecessary. On the other hand, a large organisation with several branches and several people making people management decisions will need a formal system to help with planning, consistency and employee development. Regardless of whether a formal or informal appraisal process is used (or both), individual performance needs to be appraised.
Formal systems provide transparency, standardisation, trail of evidence for dismissal/disciplinary situations, clear links to organisational outcomes etc. Informal approaches are usually less time consuming but may result in richer performance conversations.
Many organisations that adopt a formal appraisal system also strive to create a workplace culture that encourages open communication and constructive feedback through informal channels as well.
Below is a list of common appraisal techniques.
Comparative Approaches
RANKING
Method
The process of comparing employees’ performance against others and listing employees in order from highest achievers to lowest achievers. This can be a general ranking within the group or one which is separated out into different skill areas, or competencies required to perform the job.
Advantages
Generally simple to use and easy to implement.
Disadvantages
Highly subjective and can be inaccurate, particularly when the employees being compared are not performing similar tasks or where the manager does not have in-depth knowledge of the job requirements. There is no way of telling whether performance is objectively good or bad, it merely ranks employees against each-other, so they could all be high-achievers or low-achievers. High potential for bias and separating mid-ranked employees can also be challenging.
For example; staff are ranked against desired qualities (where 1 = poor and 4 = excellent)
GRADING
Method
The process of rating an employees’ performance in terms of set categories, such as poor, satisfactory, or highly satisfactory by matching performance with the definitions of each category.
Advantages
Addresses each employee’s performance against objective criteria without comparing to other employees.
Disadvantages
Focusses on individual performance alone and does not provide a good idea of where the employees’ performance sits in relation to others. This can also be too simplistic and subjective.
FORCED DISTRIBUTION
Method
A variation of grading whereby a set proportion of employees must fall within set categories, similar to that of a normal curve/bell-shaped curve.
Advantages
Avoids managers rating all employees as satisfactory, unsatisfactory or exceptional due to the fixed percentages required in each grade. High performers and under-performers are easier to spot.
Disadvantages
Employees can feel this method is harsh, may damage trust and potentially create harmful rivalry between staff.
Attribute Approaches
GRAPHIC SCALES / RATING
Method
The process of attributing an employees’ performance (including personal characteristics and/or work behaviours) to a representative numeric scale from 1 to 5. Unsatisfactory performance is usually denoted by “1”, and performance which exceeds expectations is usually rated at 5.
Advantages
Easy to use.
Disadvantages
This is a particularly unreliable method of assessing performance. Assessable criteria may not be suited to all jobs, criteria often overlaps and it can be hard to justify low ratings. There can also be variation between assessors in how they interpret the difference between each of numbers on the scale.
CRITICAL INCIDENTS
Method
The process whereby a supervisor keeps a journal of times when an employee has performed particularly well or poorly on the job over a period of time. The supervisor draws upon these critical incidents to assess the employee’s overall performance level.
Advantages
If the journal is kept over a long period of time, it can be an accurate and objective way of assessing actual work behaviour and outputs and provides transparency.
Disadvantages
Success will depend on the manager taking accurate, objective and timely notes, but largely focusses on past behavior and examples of high performance or low performance and when the manager chooses to record incidents.
Behavioural Approaches
BEHAVIOURALLY ANCHORED RATING SCALES (BARS)
Method
An extension of the critical incidents approach, the BARS technique involves creating a list of job-specific behaviors (from highly desirable through to unsatisfactory) based on different elements of job performance, e.g. job knowledge, attendance, productivity etc.
Advantages
Job-specific and provides clear performance standards in a number of areas, is objective and more transparent by avoiding general number scales.
Disadvantages
Can be difficult to create, takes a lot of time to prepare and needs to be created individually for each job to be assessed.
BEHAVIOURAL OBSERVATION SCALES
Method
The process of creating a list of preferred behavior required to execute a job gathered by the critical incidents method. Employees are assessed on how regularly they display these behaviors on a scale ranging from 1 to 5. “Almost never” equates to “1” and “almost always” equates to “5”.
Advantages
This technique is useful when used in addition to other methods of appraisal to provide context and help qualify ratings.
Disadvantages
Is very subjective and impacted by managers writing skills and their ability to convey their opinion effectively. This can also be very time consuming and is difficult to find common trends in manager essays for performance comparison purposes.
MANAGEMENT BY OBJECTIVES
Method
A collaborative approach whereby a manager and employee agree on set objectives and responsibility areas and meet to review results at regular intervals. Performance will be evaluated depending on the achievement of goals.
Advantages
Job specific, is very clear and can be highly motivating. Ensures achievement of short-term goals and continued improvement.
Disadvantages
Can result in a lack of freedom to be innovative and a lack of ownership of decisions and commitment. It is hard to compare performance, measure improvement and can lead to the setting of “easy to achieve” or short-term goals.
FORCED CHOICE
Method
Selection of a number of explanations which reflect the employees work performance most accurately. Outcomes are graded by using a hidden formula.
Advantages
Manager prejudice is diminished due to the undisclosed formula used to assess employees.
Disadvantages
Requires implementation by experts so can be difficult, expensive and take a long time.
FIELD REVIEW
Method
A technique whereby appraisers and human resources specialists come together to discuss appraisee results.
Advantages
Effective in reducing Manager prejudice and analysing performance accurately and objectively.
Disadvantages
Can be very costly, time intensive and may be met by resistance from managers.
ASSESSMENT CENTRE
Method
A technique whereby groups of employees are assessed using a variety of methods, simulations and exercises. May also be valuable to identify performance potential.
Advantages
An impartial technique which can also be a training exercise to improve performance and identify talent.
Disadvantages
Can be very costly, time intensive and unsuited to small organisations given the use of simulations.
SELF-ASSESSMENT
Method
Where an individual employee appraises their own performance to be followed up with their supervisor to discuss results and compare appraisals.
Advantages
A collaborative approach with makes sure employees are involved in the process and can help in setting goals for future performance and improve commitment.
Disadvantages
Cannot be relied upon as the only source of evaluation, there needs to be a follow up with a manager. Employee ratings often don’t match supervisor ratings and can be a source of tension.
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Updated February 2022