Performance Appraisal can be defined as the method of assessing the employees’ job performance as per the previously set benchmarks for several categories related to his/her work such as output, versatility, teamwork, supervision, leadership, etc.

Companies are using various methods of performance appraisal from decades to assess their employee’s performance. Each performance appraisal method has its own strengths and weaknesses which might work well for an organization but might not be good enough for other organization. Therefore, different organizations use different methods to evaluate their employee appraisal

Need of Modern Methods of Appraisal

With time and technology, workplaces have evolved drastically and needed better appraisal methods than the traditional methods of performance appraisal. It’s been observed that traditional methods lay more emphasis on rating individual’s personality traits, whereas the modern methods of performance appraisal lay more emphasis on the evaluation of job achievements, which is more objective and worthwhile.

One can simply understand the difference between traditional and modern methods of performance appraisal by the time of their development and how long they have been utilized by the organizations. The once which are used for several decades comes in the category of traditional methods such as Graphic Rating Scales, Paired Comparison, Ranking Method, Critical Incidents Methods, Essay Method and many more.

Whereas the recently developed appraisal methods with shorter usage history come in the category of modern methods of performance appraisal such as Assessment Centres, Management by Objectives (MBO) Behaviourally Anchored Rating Scales(BARS), 360 degree appraisal, Cost Accounting Method.

The main reason of developing these modern performance management techniques was to overcome the flaws in traditional methods. Most of the earlier performance management methods depend on the judgements of the raters, due to which sometimes the evaluation gets biased. Therefore companies now a day’s use modern methods of performance appraisal rather than the traditional ones

modern methods of performance appraisal

Different Modern Employee Performance Evaluation Methods

Assessment Centre Method

This method is used to test the individual in various social situations by using a number of procedures and assessors. The performance, as well as the potential of an employee, is evaluated by this method by assessing his performance on the job-related simulations. It includes all the characteristics which the concerned manager feel is important for a candidate to get success in his job. This method uses different techniques such as business games role play and in-basket exercises. It also includes a personal interview and projective tests to assess the career orientation, motivation and dependence on others of an employee. To assess the intellectual capacity of an employee, written tests are used. Experienced managers are the ones who evaluate this method and then prepare a summary report for the employees as well as the management. This performance appraisal technique is used to measure the planning ability, organizational skills, and interpersonal skills of an employee.

Human Resource Accounting Method

Organizations, who want to evaluate the net contribution of an employee to the company in terms of monetary aspects, use this performance evaluation method. It is used for assigning, budgeting and reporting the cost of the human capital in an organization which includes the salaries, wages and all other training expenses. Organizations, who consider their human capital as valuable assets, use this method to find out the relative worth of their assets in terms of money. The method assesses the cost of employees and their contribution to the company, ideally, the contribution part should be greater than the cost incurred on them. The difference then shows the performance of the employees.

Behaviorally Anchored Rating Scale(BARS)

This method combines the critical incident and graphic rating scale method. This appraisal technique gives emphasis on the job related behaviours of the employees. The method breakdowns the job into various behaviours which are listed on the rating scale. Then the actual behaviors of the employee are compared with the predetermined behaviors rated on the scale.

Management By Objectives(MBO)

This concept was introduced in 1954, by Peter Drucker, to overcome the flaws of traditional appraisal methods. In this method, the superior and the subordinates of an organisation together identify its common goals; firstly the organizational goals are defined based on which individual goals are defined by the employees. The performance of the employees is then reviewed on the basis of achievements of individual goals. The method consists of four steps: setting of goals, setting performance standards, comparing the achieved goals with the goals agreed on, and periodic review to take corrective steps for better performance.

performance appraisal techniques

Psychological Appraisal Method of Performance Appraisal

It is one of the new methods of performance appraisal which is widely used by the organizations to assess the employee’s potential for the future performance instead of the past performance, by a psychologist. The psychologist conducts various psychological tests, in-depth interviews, discussions with the supervisors and considers reviews of other evaluations. This appraisal technique is used to determine the emotional, intellectual, motivational and other concerned characteristics of an employee which are mandatory to predict his/her potential for the future performance.

360 Degree Appraisal

It is another staff appraisal method wherein the details of an employee’s performance are collected from other stakeholders which include the peers, superiors, colleagues and self. It is used to make the appraisal process more objective, participative, and transparent. It is called a 360 degree appraisal because it involves the persons above him, alongside him, below him as well as a self-appraisal to evaluate an employee’s performance.

720 Degree Appraisal

It is also one of the new methods of performance appraisal wherein the assessment is not only done by the stakeholders within the organization but also by the groups outside the organizations including the customers, suppliers, investors, etc. This is one of the methods which is used to determine the success of the organization as whole

All these modern methods of performance appraisal have a broader scope than any of the traditional method and provide a more comprehensive as well as accurate evaluation of a candidate. Amongst all these appraisal techniques, organizations can choose which one will be the best performance appraisal methods for them to identify the performance of their employees. 


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