Which Performance Appraisal Method Works Best?

The simple fact is that there is no one performance appraisal method which should be applied across the board to all companies. There are nuances in the appraisal approaches used which make them more beneficial for specific types of companies and specific scenarios. In this post, I’ll show you three commonly used techniques and how they can be applied.

The first technique is management by objectives where employees and their manager sit down at start of year and set out what the goals are. Objectives are defined in a measurable way, should be achievable by the employee and have a set deadline assigned to them. Many sales organizations like this approach as its measurable and easily assessed whether or not the goal has been achieved at the end of the term. Any productivity improvements or performance training that is required can also be highlighted by any unsuccessful objectives.

Next, some larger companies still resort to using ratings scales to evaluate employees. The company establishes their own grading system in much the same way as schoolchildren would be assessed, though focuses on employee characteristics (e.g. performance, leadership, technical productivity, etc.). This is a very egalitarian way of assessing a number of different employees based on specific traits for the ideal workers. It is also beneficial for large companies when comparing several employees who are performing the same roles (e.g. to assess who should be promoted).

Finally, using 360° feedback is a popular performance appraisal method in smaller companies or consultancy firms. This involves managers interviewing individuals that came in contact with the employee being appraised (i.e. their peers, supervisors, consultancy clients, etc.). An overall view of the employee is established as result of these interviews based on a couple of key areas. The rating scale may even be used to assess key characteristics or traits. The real downside however is that there is a major overhead in performing all of these interviews, especially in larger companies.