The various methods of performance appraisal include:
1. Straight ranking method:
This is the oldest and simple method of performance appraisal. The relative position of each employee is assessed. People are rated in order of merit and placed in a grouping, the systems obviously suffers from numerous drawbacks such as it is difficult to compare an individual with others having varying behavior traits.
2. Comparison Method:
This is a modification of the earlier method where each employee is compared on certain selected factors such as leadership, initiative etc. This method is also known as factor comparison method. When the number of employee is large it becomes difficult to compare and rank them on different attributes.
3. Grading Method:
This is a simple method where certain features are considered for grading such as analytical ability, job knowledge etc. Certain scales are then determined and the employee is graded on those features on the scale. This is a widely used method.
4. Graphic and linear rating method:
This is another most commonly used method considering two factors: employee characteristics and contribution. This method measures the personal qualities such as initiative, dependability, and decisiveness. As far as contribution is concerned both quality and quantity of work are considered. While measuring contribution, weights are assigned to both the quality and quantity. Rating is on a continuous scale. The drawback of the system is that the rating generally tends to be subjective. The system assumes each character to be equally important for all jobs.
5. Forced choice method:
This method forces the superior to make his choices. The underlying idea is to minimize the bias. Predetermined distribution scale rates the employee. Job performance and suitability for promotion are the factors normally considered. In the choice description method the superior is asked to select the statements which best describe the employee. The statements are predetermined sets of description of people.
6. Free from essay method:
In this method the appraiser designs a free form, open ended appraisal of the employee. The system thus gives absolute freedom to the superior to write about the job knowledge, employee’s attitudes, and development needs etc. The drawback of the system is that it could lead to a totally subjective evaluation and comparison between two employees is difficult. This type of appraisal system is generally used to appraise the top management.
7. Group appraisal method:
This is a method in which employees are rated by a group of appraisers consisting of the immediate supervisor and three or four others who have some knowledge of the performance of the employee. The advantage is that it is a thorough method with least bias as it involves multiple raters. However, it is a very time consuming process and may get reduced to just a ritual if the number of employees to be rated is high.
8. Assessment center method:
This is a modern method of assessment radically different from the traditional appraisal techniques. The method involves a number of assessors and different activities. A job related simulated situation assesses the behavior of the employee through their performance of different activities / exercises such as group discussion, business games, in basket exercise, committee meetings, psychometric etc.
9. Management by objective:
This method attempts to minimize external controls and emphasizes on the motivation levels of the employees. This is sought to be achieved through joint goal setting and the employee participation in the decisions which directly affect him. The objective of the MBO is to change the behavior and attitude in respect of getting the results. It is a result oriented system. The system emphasizes on goal achievement rather than method involved.
10. Human asset accounting method:
In this method money estimates are attached to the value of an organization’s personnel and its external goodwill. The principle behind this system is that like any other assets , human assets is leaves , the human assets value depreciates and if someone joins the organization bringing with him the skills and experience important to it, the human assets value increases. The current value of the human assets is appraised by undertaking periodic measurement of two variable called “key causal” and “intervening enterprise”. The first variable includes management policies strategies skills etc. the later includes loyalty attitudes and motivation level, effective interaction etc. Again this is not a method for individual performance measurement.
11. Behaviorally anchored rating scales (BARS):
This is a new appraisal technique. The jobs are described through illustrations or by giving critical incidents of effective and ineffective performance. Based on these incidents a rating scale is developed. A group of incidents are used as “behavior anchors” for the performance dimensions. While the system is objective, it is very time consuming.
The commonly used performance appraisal method in the service industry including banking is the one which is in three parts. The first part consists of self appraisal by the appraised. The second part is appraisal of the performance by the reporting authority of the employee. The third part is review by the superior of the reporting authority. This type of the system envisages employee participation in this important exercise. The self appraisal gives the employee an opportunity to assess his own performance- dispassionately.
12. Confidential Report:
There are still some organizations where the annual performance appraisal exercise is carried out as a confidential activity. In fact, the form in which the performance of the employee is evaluated and reported is called confidential report. This report is submitted to the Head Office. As the name suggests, the system is surround with lot of mystery and the employees tend to dislike it. There is no transparency at all. The superior assumes greater importance and wields power as he can make the career of the employee through this tool of confidential report. No feedback is given to the employee as to how is he performing his work. Thus there is no developmental consideration. This is a very old form of reporting on the employee. Its disadvantages outweigh any positive sides. Slowly the organizations are moving towards more open and transparent performance appraisal systems involving employees in goal setting, providing for self appraisal and regular feedback and taking corrective steps jointly with the employees, for further results.
Thus, above are the main methods of performance appraisal.
1. Straight ranking method:
This is the oldest and simple method of performance appraisal. The relative position of each employee is assessed. People are rated in order of merit and placed in a grouping, the systems obviously suffers from numerous drawbacks such as it is difficult to compare an individual with others having varying behavior traits.
2. Comparison Method:
This is a modification of the earlier method where each employee is compared on certain selected factors such as leadership, initiative etc. This method is also known as factor comparison method. When the number of employee is large it becomes difficult to compare and rank them on different attributes.
3. Grading Method:
This is a simple method where certain features are considered for grading such as analytical ability, job knowledge etc. Certain scales are then determined and the employee is graded on those features on the scale. This is a widely used method.
4. Graphic and linear rating method:
This is another most commonly used method considering two factors: employee characteristics and contribution. This method measures the personal qualities such as initiative, dependability, and decisiveness. As far as contribution is concerned both quality and quantity of work are considered. While measuring contribution, weights are assigned to both the quality and quantity. Rating is on a continuous scale. The drawback of the system is that the rating generally tends to be subjective. The system assumes each character to be equally important for all jobs.
5. Forced choice method:
This method forces the superior to make his choices. The underlying idea is to minimize the bias. Predetermined distribution scale rates the employee. Job performance and suitability for promotion are the factors normally considered. In the choice description method the superior is asked to select the statements which best describe the employee. The statements are predetermined sets of description of people.
6. Free from essay method:
In this method the appraiser designs a free form, open ended appraisal of the employee. The system thus gives absolute freedom to the superior to write about the job knowledge, employee’s attitudes, and development needs etc. The drawback of the system is that it could lead to a totally subjective evaluation and comparison between two employees is difficult. This type of appraisal system is generally used to appraise the top management.
7. Group appraisal method:
This is a method in which employees are rated by a group of appraisers consisting of the immediate supervisor and three or four others who have some knowledge of the performance of the employee. The advantage is that it is a thorough method with least bias as it involves multiple raters. However, it is a very time consuming process and may get reduced to just a ritual if the number of employees to be rated is high.
8. Assessment center method:
This is a modern method of assessment radically different from the traditional appraisal techniques. The method involves a number of assessors and different activities. A job related simulated situation assesses the behavior of the employee through their performance of different activities / exercises such as group discussion, business games, in basket exercise, committee meetings, psychometric etc.
9. Management by objective:
This method attempts to minimize external controls and emphasizes on the motivation levels of the employees. This is sought to be achieved through joint goal setting and the employee participation in the decisions which directly affect him. The objective of the MBO is to change the behavior and attitude in respect of getting the results. It is a result oriented system. The system emphasizes on goal achievement rather than method involved.
10. Human asset accounting method:
In this method money estimates are attached to the value of an organization’s personnel and its external goodwill. The principle behind this system is that like any other assets , human assets is leaves , the human assets value depreciates and if someone joins the organization bringing with him the skills and experience important to it, the human assets value increases. The current value of the human assets is appraised by undertaking periodic measurement of two variable called “key causal” and “intervening enterprise”. The first variable includes management policies strategies skills etc. the later includes loyalty attitudes and motivation level, effective interaction etc. Again this is not a method for individual performance measurement.
11. Behaviorally anchored rating scales (BARS):
This is a new appraisal technique. The jobs are described through illustrations or by giving critical incidents of effective and ineffective performance. Based on these incidents a rating scale is developed. A group of incidents are used as “behavior anchors” for the performance dimensions. While the system is objective, it is very time consuming.
The commonly used performance appraisal method in the service industry including banking is the one which is in three parts. The first part consists of self appraisal by the appraised. The second part is appraisal of the performance by the reporting authority of the employee. The third part is review by the superior of the reporting authority. This type of the system envisages employee participation in this important exercise. The self appraisal gives the employee an opportunity to assess his own performance- dispassionately.
12. Confidential Report:
There are still some organizations where the annual performance appraisal exercise is carried out as a confidential activity. In fact, the form in which the performance of the employee is evaluated and reported is called confidential report. This report is submitted to the Head Office. As the name suggests, the system is surround with lot of mystery and the employees tend to dislike it. There is no transparency at all. The superior assumes greater importance and wields power as he can make the career of the employee through this tool of confidential report. No feedback is given to the employee as to how is he performing his work. Thus there is no developmental consideration. This is a very old form of reporting on the employee. Its disadvantages outweigh any positive sides. Slowly the organizations are moving towards more open and transparent performance appraisal systems involving employees in goal setting, providing for self appraisal and regular feedback and taking corrective steps jointly with the employees, for further results.
Thus, above are the main methods of performance appraisal.
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