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8 extremely effective ways of performance appraisal

Among the tens and hundreds of individuals you employ are those who are competent enough to take a managerial positions, those who would be a better fit in the other departments and low-performers who don't manage to fulfill their obligations quite well. In order to identify potential problems with your staff and reveal potential of their growth, numerous performance appraisal techniques are used.

A comprehensive analysis of how people know their job and their personal traits (interpersonal skils, leadership, initiative, etc.) makes a working base for further efficient managerial decisions to benefit both employee and the company. HR experts select these 8 performance appraisal methods as most effective in any organization.

1. Rating scales

This classic method evaluates the performance traits like attendance, results of work, initiative, dependability, etc. with the help of numerical scales rated from excellent to poor. Then, ratings are summarized and managers distinguish high-performers and low-performers.

+ simple, no training required, can be used everywhere

- biased opinion of raters may influence the result.


2. Checklist

A rater gets the list of objective statements related to job behavior and is asked to mark them YES  or NO; HR department does the further evaluation.

+ cheap, can embrace large number of employees

- biases; comparative ratings are not possible.

3. Forced choice

Supervisor or/and subordinate gets a list of statements framed in blocks and are expedted to point out which of them are true or false.

+ personal biases are eliminated as choice is limited

- accuracy of result depends on the right expression of statements

4. Critical incidents

This method assumes recording of outstanding or poor performance of employees. When noticing job behavior which is different from normal, supervisor maintains the record of such incidents for further evaluation.

+ behavior is evaluated and supported by description which makes a great base for improvement, promotion, etc.

- requires constant supervision; negative aspects may gain more attention


5. Behaviorally anchored rating scales

The rating tool consists of statements of job behaviors and each of them is worth a determined number of points; employee performance is matched to a description and thus performance rating of staff is calculated.

+ minimizes rating errors as it's performance-based

- requires expert knowledge to conduct

6. Performance observation

HR department or outsiders offer the staff to answer a set of questions or complete the other task to practically demonstrate their skills and knowledge

+ tests help discover the hidden potential of employees

- doesn't reflect actual job behavior; assessment and administration of results may be costly.

7. HR Accounting

This method is based on calculating and reporting the costs of human resources (including hiring, wages, training, etc). These figures are then compared to value added by an employee to the company profit

+ give accurate information on the biggest company assets

- monetary value added of a specific employee isn't always easy to calculate.


8. Assessment centers

Assessment center is located outside of the organization and has the traits of your employees evaluated by psychologists and HR professionals. What makes it more and more popular these days? It offers the staff a set of tests like role playing, simulations, work in groups to let them demonstrate their maximum capabilities as well as interpersonal skills. A thorough assessment helps your management ensure that in case of promotion the person is able to perform the tasks set before him.

+ can forecast future performance with high level of validity

- high traveling costs; rating highly depends on interpersonal skills.

Every manager can stay on one of the above methods  depending on their potentiality and human resource policy. Although some of the assessment methods require solid expenditures, basic evaluation of competencies and skills is easy to conduct to focus retention effort on your most perspective talent.