A distinction can be made between input and output based criteria.
Input based criteria relateses to the personal traits, competences and skills that an employee brings to a company or a job.
Output based criteria are co-owned with individual performance objectives or the goals to be met by the employee.
In a performance management system, departmental level objectives are derived from business strategy objectives. The departmental objectives are then translated into team and individual objectives.
Companies often use the acronym SMART to help set effective objectives.
There are difficulties in setting objectives for certain types of jobs such as doctors, teachers etc.
Performance Appraisal Methods
- Management by Objectives (MBO)
Also referred to as goal-setting approach, the management by objectives (MBO) approach is more commonly used with professional and managerial employees.
The MBO process typically consists of the following steps:-
- Establishing clear and precisely defined statements of objectives for the work to be done by an employee.
- Developing an action plan indicating how these objectives are to be achieved.
- Allowing employees time to implement the action plan.
- Measuring objective achievement.
- Taking corrective action if necessary.
- Establishing new objectives for the future.
For an MBO system to be successful, several requirements must be met:-
- Objectives should be quantifiable and measurable.
- Objectives should be challenging yet achievable.
- They should be expressed in writing and in clear and concise language.
- Employees should be allowed to participate in objective setting process. Active participation by the employees is likely to get employees committed.
- The objectives and action plan must serve as a basis for regular discussions between the manager and the employee concerning the employee performance. These regular discussions provide an opportunity for the manager and employee to discuss progress and modify objectives when necessary.
- The 360-degree feedback/Appraisal
With 360-degree appraisal, a person’s job performance is evaluated by his/her immediate supervisor as well as the other individuals who have entire direct or indirect contact with the persons work. The person also conducts a self-assessment of his/her performance. Co-workers also evaluate the person. Additionally, subordinates, customers, clients (internal and external) and anyone else who has contact with the person also makes an evaluation.
Full circle (360-degree) evaluation is therefore made by those people above, below, inside, outside and anywhere in between.
The evaluations are typically made by having all of the involved individuals completing a lengthy and anonymous questionnaire.
- Behaviourally Anchored Rating Scale (BARS)
This method is designed to assess behaviours required to successfully complete a job. The focus of BARS is not as performance outcomes but as functional behaviours demonstrated on the job. The assumption is that these functional behaviours will result in effective job performance.
Most BARS use the term job dimension to mean those broad categories of duties and responsibilities that make up a job. Each job is likely to have several job dimensions and separate scales must be developed for each.
- Essay Appraisal
This method requires that the evaluation describe an employee’s performance in written narrative form. Instructions are often provided as to the topics to be covered. A typical essay appraisal question might be ‘describe in your own words this employee’s performance, including quantity and quality of work, job knowledge and ability to get along with other employees’ What are the employee’s strengths and weaknesses. The main problem with essay appraisals is that their length and content can vary considerably depending on the rator e.g. one venture may write a lengthy statement describing an employee’s potential and little about past performance. Another rater may concentrate on an employee’s past performance. The writing skill of the appraiser can also affect the appraisal.
- Graphic Rating Scales
With the graphic rating scale method, the appraise assesses an employee on factors such as quantity of work, dependability, job knowledge, attendance, accuracy of work and cooperativeness. One potential weakness of this method is that evaluators are unlikely to interpret written descriptions in the same manner due to differences in background, experience and personality. It is also possible to choose categories that have little relationship to job performance or omit categories that have a significant influence on job performance.
This is an appraisal method where the appraise answers with a yes or a no to a series of questions about the behaviour of the employee.
The scoring key for the checklist method is normally kept by the human resource department. The evaluator does not usually know the marks given for each question.
The drawbacks of the checklist method include:-
- It is time consuming to assembling the question for each job category.
- The checklist questions can have different meanings for different raters.
- It is possible to introduce bias with the method.
- Ranking Method
This is a method of performance appraisal in which the performance of an employee is ranked in comparison to the performance of others.
Two of the used ranking methods are paired comparison and forced distribution.
The alternation ranking method lists the names of the employees to be rated on the left side of a sheet of paper. The rater chooses the most valuable employee on the list, crosses the name on the left hand lists and puts it at the top of the column on the right hand side of the paper. The appraise then selects and crosses off the name of the least valuable employee from the left hand column and moves it to the bottom of the right hand column. The rater repeats the process for all the remaining names on the left hand side of the paper. The resulting list of names in the right hand column gives a ranking of the employees from the most to the least valuable.
In paired comparison, a rater assesses the performance of individuals until each employee has been judged in comparison to other employees. A ranking is then provided form the number of times from which each individual was rated or batter.
In forced distribution, individual’s performances are allocated to categories of performance levels according to distribution. The method mainly uses percentages e.g. 50% of employees meet expectations, 20% exceed expectation, 20% do not meet expectations.