Performance appraisal methods

Performance appraisal methods are used to document and judge the behavior and accomplishments of an employee. They can be used to derive training plans for employees, as well as whether someone should be promoted or demoted.

In this article, we give overviews of the more common methods, ranging from the numerically-focused rating scale system to the more documentary critical incidents approach, as well as other performance appraisal methods falling between these two extremes.

  • Rating scales. When rating the performance of an employee, one option is to assign a quantitative score to each element of performance. For example, a rating scale might be from one to five, which represents a continuum of performance from not meeting expectations to exceeding expectations. While this approach does yield a numeric level of performance that can be used to compare those in similar jobs, it suffers from the following problems: The evaluation of an employee’s performance is essentially subjective, where several supervisors might grant a different score to the same person. Also, the system does not assign a weighting to the various characteristics being evaluated. In reality, one item may be far more important than the others, but is not given additional weighting.
  • Essay reviews. The reverse of the rating scale system is the essay review. Under this mostly unstructured approach, a supervisor describes the performance of an employee. This concept works well when a supervisor wants to focus on a specific aspect of an employee’s performance, in either a positive or negative manner. Doing so places the appropriate amount of weight on specific areas of emphasis. However, it is difficult to compare essay-based evaluations, since there are no common performance criteria across multiple essays.
  • Self appraisal. It can be useful for employees to write appraisals of their own performance. Someone asked to do so is more likely to dredge up every possible positive action they have engaged in – some of which the supervisor may have forgotten. In addition, some employees tend to be more critical of their own activities than a supervisor would be, and so will come to a performance review meeting with a lengthy list of personal improvement suggestions. Both factors contribute to a healthy discussion in a review meeting. There is a downside to self-appraisals. Employees may write reviews that paint themselves as godlike creatures by taking credit for activities that were actually accomplished by others, while offloading the blame for failed initiatives on others. A result can be a severe difference of opinion between the supervisor’s and employee’s opinions of performance.
  • Behavioral expectations. A job can be designed with specific types of behavior categories. For each of these categories, there is a description of what constitutes performance that is below expectations, meets expectations, or exceeds expectations. The supervisor goes over this detailed description of behaviors with an employee serving in that position. As a result, the employee knows exactly what types of behavior must be demonstrated in order to be rated highly in that position. The advantage of using well-documented behavioral expectations is how well expectations can be communicated to employees. However, developing a complete set of these behaviors for a job can require a considerable amount of time.
  • Paired comparisons. When there are a number of employees working in the same role, supervisors can conduct a comparison, where they pair up each of the employees and rank them against each other, one at a time. By doing so, one can arrive at a specific top-to-bottom listing of the best-to-worst employees in that role. This concept is especially common when a “class” of employees is brought into a consulting or auditing firm and all given the same position. After one year, a paired comparison is conducted by all of the supervisors who dealt with these employees, to arrive at an employee ranking. The lowest-scoring employees are then counseled out of the firm, while everyone else is promoted.
  • Critical incidents analysis. The critical incidents approach focuses attention on those behaviors considered most essential to performing a job in a competent manner. All other behaviors are ignored, since they are not considered essential. A job analysis is conducted to determine key behaviors, which then form the basis for critical incidents analysis. The supervisor conducting an evaluation monitors employee performance, and documents on a critical incidents report specific situations where employees either did or did not engage in the targeted behaviors. The use of this analysis is helpful in several respects. First, it offers specific feedback on key behavioral areas. Also, incidents are recorded, so a record is built up over time of employee performance. Further, the system focuses employee attention on the most essential aspects of a job.
  • 360-degree reviews. A 360-degree review is (as the name implies) a review by one’s colleagues of an employee’s performance, typically using a detailed questionnaire. The employee being reviewed also fills out the same questionnaire; by doing so, one can point out the differences between an employee’s own perceptions of how he is performing and co-workers’ views. The intent is to give a comprehensive view of how someone’s performance can be improved. Given the large number of reviews given, it is likely that the biases of an individual reviewer will be minimized when the reviews are examined in aggregate. While the idea is fine, execution of the concept can cause problems. First, there is a greater tendency to give harsher feedback, some of which may not be justified. Also, if employees realize that reviews are used as the basis for pay increases, they may be excessively negative in the reviews they give other employees, in order to garner a larger share of the compensation budget for themselves.