Modern Methods of Performance Appraisal

Modern Methods of Performance Appraisal are Assessment center method, human resource accounting method, behaviorally anchored rating scale (BARS) method, management by objectives (MBO), psychological appraisal method, 360 degree, 720 degree appraisal method.

Performance appraisal is the evaluation of employees performance in which various factors are considered like the results of the project employees has worked, leadership, teamwork, supervision, etc.

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Modern Methods of Performance Appraisal

• Assessment Centre method
• Human Resource Accounting method
• Behaviorally Anchored Rating Scale (BARS)
• Management by Objectives
• Psychological Appraisal method
• 360 Degree Appraisal method
• 720 Degree Appraisal method

Management by Objectives

Peter Drucker was the first one to officially propose the goal setting approach which he stated as “Management by Objectives and Self Control”. Douglas McGregor further supported and improved on the concept of Peter Drucker.

McGregor felt that most traditional systems of appraisal involved rating of traits and personal qualities (subjective factors) which could not be measured accurately.

Browse more Topics under Human Resource Management

• Features of HRM
• Importance and Limitations of HRM
• Role of Personnel Manager
• Qualities of the HR Manager
• Managerial Functions of HR Manager
• Operative Functions of HR Manager
• Recruitment Process
• Selection Procedure
• Training and Development
• Methods of Training
• Performance Appraisal
• Traditional Methods of Appraisal
• HR Forecasting

Further, there were two problems with using the traditional system:

1. The managers felt uncomfortable using traditional approaches and did it resentfully.
2. Moreover, it had a detrimental effect on employees and their motivation to perform.

(source – wise step)

Under the ‘Management by Objectives’ method, employees are not evaluated based on their traits. Rather, they were judged by their performance against objectives set for the employees.

The main feature of this method was the mutual establishment of goals or targets by the managers and employees. It ensured that employees had an actual realistic target they could actually achieve.

Steps in Goal Setting

The goal setting approach of performance appraisal involves the constitutes of the following steps:

1. The employer and the employee discuss and mutually decide the role and key result areas for the employee.
2. The employee prepares a list of objectives for a period of six months to one year.
3. He discusses his plans with the manager and they decide on the final plan.
4. The manager periodically checks up on the progress of the employee.
5. At the end of the stipulated time period, to discuss the results and see whether targets have been met.
6. A further action plan is developed based on the outcome of the appraisal.

The goal setting method reduces the role of the manager’s involvement and ensures the employees are fairly evaluated solely based on their performance.

Employees feel highly satisfied and the coordination between the workers and managers improves. This approach is much better than the traditional approach as it gives concrete verifiable results.

Limitations of Goal Setting 

1. This type of approach is only applicable in jobs which give definite results. This cannot be very effective on blue collar workers.
2. This is a very time-consuming approach and requires patience and proper coordination between employers and employees. Any communication gap and this method are ineffective.
3. This approach more applicable to high-level executives who, in contract with low-level employees are more open to new ideas.
4. Operator workers don’t like taking initiative are not very interested in setting their own goals.

(source – businesstopia)

Behaviourally Anchored Rating Scales

Behaviourally anchored rating scale(BARS) is a method used to identify the most important areas of an employees performance and how much he needs to improve in what aspect of his achieve his objectives or goals.

There is a predetermined behaviour that has shown the most effective and efficient work performance. Thus, the employees’ behaviour is measured by comparing them to the predetermined behaviour and how much they deviate from this behaviour.

Such a system differentiates between behaviour, results, performance. This system helps employees understand how much they have to improve in which specific areas of their work.

Because the employees are the exact changes to be made, thus implementing these changes becomes very easy for them. Because of how specific and accurate this method is, BARS generally it is often considered the best method of performance appraisal.

Question on Modern Methods of Performance Appraisal

Mention at least involved in the application of goal setting approach to performance appraisal?

Answer – The steps involving the application of goal setting approach to performance are as follows –

1. The employer and the employee discuss and then mutually decide the role and key result areas for the employee.
2. The employee prepares a list of objectives for a period of six months to one year.
3. He discusses his plans with the manager and they decide on the final plan.
4. The manager periodically checks up on the progress of the employee, so as to ensure they are not falling behind.
5. After the end of the stipulated time period, to discuss the results and see whether targets have been met.
6. On the outcome of the appraisal, further actions are taken.