There are several performance appraisal methods. They include ranking, paired comparison, forced distribution, critical incident, checklist, essay evaluation management by objectives, and 360 performance. They can be explained as follows:
Ranking
The ranking is a traditional method of employee performance appraisal that is one of the oldest ever conceived. The employees are simplistically ranked from best to worst according to worth in ranking. The employee's worth in this method is determined by evaluating their performance against a set of predetermined parameters. These parameters include the employee's attitude, timeliness, attendance, and people skills. Their performances against these parameters are evaluated against those of other employees, which determines their worth.
Paired Comparison
In paired comparison, employees are compared directly with one another, usually in a one vs. one format, and on a singular trait. In this method, employees are grouped into pairs and compared directly with each other to determine whose performance was the better of the two. Sometimes, a third employee or manager is provided with a checklist containing the names and performances of two paired employees and has to choose who performed better. Their singular comparisons decide the final ranking for the employee against other employees through the number of successes against their paired opponents. In this method, each employee is compared to another group member on specific factors and ranked accordingly, which may often lead to competition.
Forced Distribution
Forced distribution can be defined as a performance appraisal method whereby groups of employees are categorized by similar performance and ranked in a descending hierarchy against other groups of similarly performing employees. When using the Forced Distribution method, a manager must rank his employees into groups defined by HR, with a preallotted percentage of the total in each group. For example, he might put his top 10% of staff in the 'outstanding' group, the next 10% in the 'excellent' group, all the way down to his lowest 10% in a 'fair' group.
Critical Incident
In the critical incident method of employee appraisal, events connected to an employee are observed and recorded for use in ranking them. A critical incident is a significant event that causes the rating of an employee to fluctuate or rise significantly. When using the Critical Incident method, managers document specific events for each employee and record them in a log. The critical incident method of employee appraisal allows experts and managers to gain useful data about individuals or experts and their interactions with the system. This information is then used to make useful alterations to the individuals' performances within the system.
Checklist
In the checklist method of performance appraisal, a manager is provided with a checklist containing positive and negative behaviors or traits of his employees or subordinates and then asked to respond to these statements using a yes or no response. This method is one of the simplest performance appraisal methods available due to its simplistic nature and the low-time requirements it bears.
Essay Evaluation
In the essay evaluation method of performance appraisal, the manager develops an essay that tackles questions about the employee. In essay evaluation, the manager may answer questions regarding an employee's traits or behaviors. The statements in the essay may be about the strengths or weaknesses of the employee. In essay evaluation, the manager's writing is of prime importance as it affects the reception of the employee's evaluation. Past performances of the employee may also be included in this format.
Management by Objectives
The management by objectives method of performance appraisal can be defined as a strategic approach to performance improvement whereby management sets goals and communicates them to the employees while allowing for some wriggle room with the employee. When using Management by Objectives, a number of objectives are agreed upon at the beginning of the rating period. In the end, the manager evaluates the employee based on their performance in achieving the defined goals. The method is marked by the open communication between manager and employee as they sit together during the goal formation and evaluation processes.
360 Performance
The 360-degree performance method can be described as an advanced appraisal method whereby an employee's evaluation is obtained from multiple sources anonymously. In the 360 Performance, employees anonymously rate their reports, co-workers, and managers, and this information is incorporated into that person's review.
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