Courses for Kids
Free study material
Offline Centres
Store Icon

Modern Methods of Performance Appraisal

Last updated date: 20th May 2024
Total views: 397.5k
Views today: 10.97k
hightlight icon
highlight icon
highlight icon
share icon
copy icon

Performance Appraisal and Modern Methods of Performance Appraisal

Performance appraisal refers to the methodical assessment of the employees’ performances, with proper identification of their abilities and channelizing them towards better productivity and development. This review of the performances is done to bring out the strengths and weaknesses of employees to use them effectively in the future.
The modern methods of performance appraisal are stated below: 

  • Assessment Centre Method

  • Behaviorally Anchored Rating Scale (BARS) Method

  • Human Resource Accounting Method

  • Psychological Appraisal Method

  • Management by Objectives

  • 360 Degree Method

  • 720 Degree Method

A Detailed Analysis of the Modern Techniques of Performance Appraisal

Assessment Centre Method: 

As a part of the Assessment Centre Method, employees’ performances are evaluated to bring out their potentiality, further allowing a systematic placement in key departments. The interpersonal abilities, intellectuality, career setting goals, motivation and the ability to plan and organize are determined through this process.

Behaviorally Anchored Rating Scale (BARS) Method: 

BARS method helps in determining the key areas in the performance of an employee, suggesting areas of improvement to build the steps to achieve goals. As a part of the performance management, employees have a predefined behaviour recorded with the organization for effective performance. This method of appraisal analyzes the present behaviour of an employee in comparison with the predefined one. This makes the employees aware of their deviations and required improvements.

Human Resource Accounting Method: 

This method takes employees as assets evaluating their performance in monetary terms. Performance appraisal is analyzed based on the cost incurred and contributions provided by the employees, where contribution should remain higher than the expenditure incurred on the employees.

Psychological Appraisal Method: 

As a part of this method, psychological tests are conducted to determine the prospects of the employees instead of their past work analysis.

Management by Objectives: 

The MBO method originally proposed by Peter Drucker is implemented for setting goals for ultimate success. Setting smart enough goals can analyze the performances in line with the predetermined goals for better productivity. Douglas McGregor added to the concept defining the confined reach of the traditional methods setting goals examples for the organization as a whole.

360 Degree Method: 

In the 360 Degree Method, an employee’s performance evaluation surveys are conducted on colleagues, managers, subordinates and customers keeping their identities anonymous.

720 Degree Method: 

This system includes a synchronized method of appraisal where a 360-degree appraisal is combined with in-time feedback followed by further evaluation for setting goals smart and achieving them.

What is a SMART Goal? 

The characteristics of a SMART goal are:

S- Specific

M- Measurable

A- Achievable

R- Relevant

T- Time-Bound

In all modern methods of performance appraisal, setting goals is essentially done keeping SMART elements in mind. Why should this be limited to the professional field? Setting goals in life should also be done giving SMART elements the topmost priority. Only then, one can achieve them and learn from them effectively. 

Steps in Goal Setting

Setting goals is important. The following are the various steps in setting goals:

  • Mutual discussion and agreement between the management with the employees bringing out the best suitable roles for the employees. 

  • By setting goals smartly, employees define their objectives for the following year or a span of certain years.

  • The employee consults with the manager on devising the plans.

  • The manager at regular intervals evaluates the progress of performance of the employees.

  • Evaluating the outcomes after the predefined time period in accordance with the organizational goals.

  • The appraisal is followed by a new plan of action defining the steps to achieve goals.

Limitations of Goal Setting

Setting goals for employees examples require setting goals in life in line with their organizational goals. However, there are limitations of goal setting in organizations as discussed below:

  • Such steps to achieve goals can be applied only in organizations bringing out definite outcomes. This is not applicable in the case of blue-collar workers.

  • It is a time-consuming procedure requiring patience and effective coordination, without which hindrances might occur.

  • This is better applied only in the case of executives in the high levels who have established better communications with the low-level ones in devising new ideas and plans.

  • Setting goals is not a favourite for the operator workers who refrain from taking up initiatives.

FAQs on Modern Methods of Performance Appraisal

1. What is the Best Method of Performance Appraisal?

The Behaviorally Anchored Rating Scale (BARS) Method is often taken as the best method for appraisal of employees’ performances. This system provides an exact and accurate analysis of the performances bringing out the specifications of improvement required. With such determination of the changes to be made, implementing them becomes easier. This makes setting goals and achieving them easier for the organization.

2. Why is the Management by Objectives Method Important for Setting Goals and Achieving them?

A significant question on modern methods of performance appraisal comes with the importance of the Management by Objectives method in setting goals and achieving them. Under this system, the traits and qualities of the employees are not taken into consideration while evaluating the performance appraisal. They are rather assessed based on their performances in accordance with the set objectives assigned to them earlier. The importance of this method lies in its primary feature of combining the managers and the employees into a mutual agreement in setting goals.

3. What are the Problems of Using Traditional Appraisal Methods?

Douglas McGregor defined traditional appraisal systems as confined to the rating of skills and personal traits. The problems associated came with managers applying such methods with uncomfortably showing indignation. Such appraisal methods had negative impacts on the employees destroying their morale and motivation in the performance of jobs.