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5 Effective Performance Appraisal Methods

11 min read

Performance Management Is One Of The Rapidly Changing Part Of Talent Management System.

Performance appraisal is the process of evaluating the performance of employees in a certain time period to evaluate their productivity and identify how their performance can be improved. It is very significant as it not just defines if the employee will be entitled to promotion or raise in salary but also helps them discover their highs and lows at work.

Many companies claim that performance appraisal process takes a lots of time and also fails to engage their employees. The old and traditional methods are no longer giving effective results in this constantly changing work environment. Hence, it is high time that you revamp your performance appraisal process.

Here are some of the modern performance appraisal methods which you can implement right away.

5 Effective Performance Appraisal Methods

Management By Objective

It is a process in which a manager identifies the desired objectives to be achieved and gives each individual a major area of responsibility in terms of results expected from him/her and uses these measures as a guide to access the contribution of each individual employee. This method basically uses the SMART technique to ensure that the assigned goals are Specific, Measurable, Achievable, Realistic and Time-sensitive.

It is less time-consuming and cost-effective compared to the other performance appraisal methods. With this method you can easily find out whether the stated objective is achieved or not in a given time period. Also, the managers can easily determine whether the employee will be rewarded or needs to be trained further to improve the performance.

This technique mainly involves four significant steps: Goal Setting, Evaluation Standards, Analysis, and Periodic Review.

  • Goal Setting: Each employee is assigned certain goals based on the skills and the job role, that have to be attained for the next quarter or year.
  • Evaluation Standards: These are set based on the type of goals they have been assigned and the metrics that would help evaluate those goals.
  • Analysis: This is the stage where the goals will be analysed against the produced outcomes with the help of evaluation metrics.
  • Periodic Review: The manager now reviews the overall performance and decides if the employee needs to be trained or guided for efficiently attaining the set goals in the future.

As mentioned above, this technique is more inclined towards aiding better employee performance in the future.

Behaviourally Anchored Rating Scale (BARS)

This method has been developed recently and is claimed to be one of the effective methods among all the appraisal methods listed. It is a combination of traditional essay evaluation and rating scale. It is more expensive than other methods and guarantees precise results.

In this method the employee’s behaviour and performance are analyzed and used for evaluating overall performance of an employee. It consists of various scales that are volunteered by multiple BARS statements which further explain the employee traits. Based on the performance and behaviour of an employee, they are anchored as good, average, or poor.

The BARS method is the most preferred performance appraisal method as it enables managers to gauge better results, provide constant feedback and maintain consistency in evaluation.

Critical Incident Method

In this method the employer or manager evaluates an employee on the basis of “certain events” known as critical incidents where the employee did something really great or something not so great things at work.

This basically involves three steps:

  1. A list of all the noteworthy (positive or negative) things related to the on-the-job behaviour of employee will compiled in a list.
  2. A team of experts will be given the responsibility to entitle a weightage or score to each incident.
  3. Based on this list the employees will then be evaluated.

The evaluator should maintain a digital or physical journal to store the information of different incidents. This method is extremely useful for the growth of an employee since it gives detailed information unlike other performance appraisal methods.

360 Degree Feedback

This is somewhat time-consuming method since there are multiple scales involved in evaluating the performance, but it’s worth a try. In this method, the feedback of the employee is collected by the people who interact with him in the organization including his superiors, peers, subordinates, and also from customers. The feedback is usually taken by a questionnaire designed for this purpose. This method is very useful for startups. Take a look at this detailed info-graphic on the 360-degree performance appraisal process

This technique helps managers to get insights from a different perspective and conduct an unbiased performance review. The step-by-step process involving the following components:

  • Self-review
  • Peer Review
  • Managerial Review
  • Client Feedback

All these stages ensure that not just the managers but the employees as well are aware of how they are performing and guide each other while trying to improve individual performance.

Recommended Read:- 50+ Effective Self-Appraisal Comments with Examples

Forced Choice Method

In this method, evaluator rates an employee based on the group of statements. These statements are combination of both negative and positive statements. You need to identify the most descriptive statements of an employee and evaluate him. Such as:

  • Can be dependent to complete the project or task
  • Is reliable and trustworthy.

However, the weight assigned to each statement is not revealed to the reviewer. The HR personnel provide final rating considering all the sets of statements. Therefore, this is known to be an objective-based technique to conduct performance appraisals.

Choosing the best performance evaluation approach is more important than ever as it represents what you think of your employees and how much you feel about the productivity of your workforce. These are the 5 effective performance appraisal methods you can implement right away. Implementing these methods and a proper Performance Management Software helps in the growth of an employee and hence the growth of an organization.


Q1) What are the various types of modern performance appraisal methods?

There are various types of modern performance appraisal methods that an organization can put to use. They are Management by Objectives (MBO), Behaviorally Anchored Rating Scale (BARS), Assessment Centre, 360-degree feedback, psychological appraisal, and Human Resources Accounting Method.

Q2) What are the advantages of performance appraisal?

One of the main advantages of performance appraisal is that they allow the managers to define medium and long-term objectives for the employees. The employee performance report summarizes their performance over time. It offers an opportunity to discuss potential areas of development. It helps in improving the performance of employees and motivates them to do their best. Moreover, it provides a chance to offer constructive feedback and praise staff.

Q3) Which effective performance appraisal method takes less time and why?

The effective performance appraisal method that is less time-consuming is Management by Objective (MBO). To ensure that the assigned goals are Specific, Measurable, Achievable, Realistic and Time-sensitive, this method basically involves the SMART technique. This method can easily determine whether the stated objective has been attained or not in the given time frames. This method involves four significant steps. They are Goal Setting, Evaluation Standards, Analysis, and Periodic Review.

Q4) What is the need of performance appraisal in an organization?

There is more to performance appraisals than just assessing employees. In addition, it is also designed to get employee feedback, suggestions, and grievances. It helps in analyzing an organization at both the macro-level and micro-level. Employers and employees are able to collaborate more effectively. Through this process, they are able to identify the structural barriers to success. Performance appraisals will also result in a greater sense of self-worth, motivation, and job satisfaction.

Q5) What is the technique that is used by Management by Objective?

The concept of Management by Objectives (MBO) combines a philosophy of management, planning and controlling techniques, and an employee involvement program. It is a method where a manager and employee agree on particular performance goals and then create a strategy to achieve them. It is intended to improve employee engagement and commitment while bringing organizational goals into alignment. 

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    Meet the author

    Keka Editorial Team

    A bunch of inspired, creative and ambitious youngsters- that’s Keka’s editorial team for you. We have a thirst to learn new subjects and curate diverse pieces for our readers. Our deep understanding and knowledge of Human Resources has enabled us to answer almost every question pertaining to this department. If not seen finding ways to simplify the HR world, they can be found striking conversations with anyone and everyone , petting dogs, obsessing over gadgets, or baking cakes.


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