8 Modern Methods of Performance Appraisal in HRM

Post Views: 1,171

(Last Updated On: )

With the drastic change in corporate focus, as well as the changing trends of workforce needs, modern methods of performance appraisal are also coming to great attention. When you can pick the right person and assess them properly, organizational, as well as employee growth, comes to a consequence. Appropriately adopted modern methods of performance appraisal can be the best fit for the most desired outcome.

Modern methods of performance appraisal

Performance appraisal is an assessment of the performance of an employee’s performance against previously defined criteria for categories such as output, leadership, teamwork, versatility, oversight, etc. Let’s see some of the popular modern methods of performance appraisal:

1. Management by Objective (MBO)

In this approach, organizational goals are first defined then individual goals are defined for the employees. The performance of employees is reviewed against achieving individual goals. Management measures staff performance and compares it to the expected performance in order to evaluate employees.

This concept was given by Peter. Drucker, according to him, an employee’s performance can be evaluated based on the goals set by the management of a company.

If the employee is not able to achieve pre-established goals, management decides on a new strategy or policy that should be adopted to achieve the unattainable goals.

2. 1-to-4 Degree Response

This is a feedback mechanism where an employee’s performance details are collected from another stakeholder, such as superiors, co-workers, team members, and self. In this way, the employee is asked about himself, i.e. what he feels about his actions, and then he can understand his strengths and weaknesses.

Also, peers or team members are asked about the appraiser’s effectiveness by which the employee knows what others feel about him and, if anything, can overcome his mistrust. Thus, this method is used to evaluate the details of an employee from all points of view.

3. 720-Degree Response

This is another response mechanism, in which the evaluation is done not only by the organization’s stakeholders but also by groups outside the organization. These external groups that evaluate employee performance are customers, investors, suppliers, and other financial institutions.

This is one of the most important modern methods of performance evaluation because it is only the groups that determine the success of the entire organization.

4. Psychological Assessment

One of the most commonly used modern methods of performance evaluation is that the psychologist evaluates the employee’s potential for future performance rather than the past. Under this approach, the psychologist conducts in-depth interviews, psychological tests, discussions with the caregiver, and other evaluations.

This evaluation is performed to determine an employee’s intellectual, emotional, motivational, and other related characteristics that are necessary to predict his or her likelihood for future performance.

5. Assessment center

The Assessment Center is a place where various activities are conducted for employees to evaluate their work-related skills. These activities usually include social events, assignments, business games, and role-play.

This strategy focuses primarily on the assessment of interpersonal skills, intelligence and planning, and organizational skills. This approach is evaluated by an employee’s prospects for a new job, as well as his training and development needs.

The Assessment Center is the central location where managers come to practice. Here the evaluator is asked to participate in basketball practice, introduction or acting, discussion, computer simulation, etc. where they are evaluated for their inspiring skills, communication skills, confidence, sensitivity to the feelings of others, emotional awareness, administrative positions, etc.

This whole exercise is done under the instructor who monitors the employee’s behavior and then discusses it with the rater who eventually evaluates the employee’s effectiveness.

6. 360-Degree Performance Evaluation

This approach makes the evaluation more transparent and participatory. An employee’s performance is evaluated by the different people with whom he or she communicates on the job.

The feature of this approach is that in addition to the other parties, the employee evaluates their performance. People in any department who are in touch with the employee can be part of this approach.

The six teams that are involved in this approach are the top management, senior, peer group, subordinates, customers, and employees themselves.

The structured questionnaire is ready to collect feedback from various parties about the performance of the staff. The employee also evaluates himself by answering the questions. Based on this opinion, the employee is evaluated either positively or negatively.

7. Behaviorally Anchored Rating Scale

This approach emphasizes employees’ work-related behaviors. General behaviors that are not work-related are not considered. This approach breaks down the work into a variety of behaviorally anchored rating scales.

Then the behavior of the employee is compared with the behaviors rated according to the scale. For example, the positive behaviors of a customer care executive at an organization must receive the call within five seconds, greeting the customer in a courteous way.

Thus, employees who exhibit these behaviors will be anchored to a great number rating on the scale, and those who are not will be anchored to determine a weak number on the scale.

8. Human Resources Accounting Methods

This approach means finding an employee’s net contribution to the organization financially. An employee’s expense is calculated by adding costs such as compensation, hiring costs, training costs, and development.

After that, the financial contributions of the employees are found. The difference between employee contribution and expenditure indicates the effectiveness of the employee. If the contribution is high, the employee will be positively evaluated.

Take away

Nowadays, companies use modern methods of performance evaluation that provide a broader scope and more accurate and comprehensive evaluation of an individual than conventional methods. Learn how to stay calm during a performance appraisal.