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Trending Performance Appraisal Methods for this Decade
Companies are moving from traditional performance appraisal methods like appraisal templates, ranking, checklists, critical incidents reports to a more goal-oriented approach. Most recently, appraisals focus on an individual's personality traits (creativity, integrity, goal-oriented approach, leadership qualities) and tend to be more objective.

With the right performance appraisal method, organisations can enhance employee performance and can make the whole experience effective and rewarding.

Here's a close look at 6 trending performance methods:

1. Management by Objectives:
This concept was introduced in 1954, by Peter Drucker, to overcome the flaws of traditional appraisal methods. Management by objectives (MBO) is the appraisal method where managers and employees together identify, plan, organise and communicate goals. After setting clear goals, managers and subordinates periodically discuss the progress made to control and debate on the feasibility. This process usually lays more stress on tangible work-oriented goals. So, intangible aspects like interpersonal skills, job commitment, etc. are often brushed under the rug. This method is slightly expensive and time-intensive.

2. 360-Degree Feedback:
Workers need ongoing communication with the management. A continuous process, like 360-degree feedback, can help employees stay motivated. This is one of the most widely used appraisal methods. In 360-degree feedback, every employee in an organisation appraises his/her managers, peers, customers, suppliers and also does a self-evaluation. This method ensures effective performance analysis. If not handled properly, this method can also suffer from the subjectivity of the appraiser.

3. Behaviorally Anchored Rating Scale (BARS):
Behaviorally anchored rating scales (BARS) bring out both the qualitative and quantitative benefits in a performance appraisal process. BARS compares employee performance with specific behavioral examples that are anchored to numerical ratings. This performance appraisal method is said to be better than the traditional methods. BARS provides clear standards, improved feedback, accurate performance analysis and consistent evaluation. However, when done manually it suffers from the usual distortions that are inherent in most review methodologies.

4. Human-Resource (Cost) Accounting Method:
Human resource (cost) accounting method analyses an employee's performance through the monetary benefits he/she yields to the company. It is obtained by comparing the cost of retaining an employee (cost to company) and the monetary benefits (contributions) an organisation has ascertained from that specific employee. When an employee's performance is evaluated based on cost accounting methods, factors like unit-wise average service value, quality, overhead cost, interpersonal relationships, and more are taken into account. Its high-dependency on the cost and benefit analysis and the memory power of the reviewer is the drawback of human resources accounting method.

5. Psychological Appraisals:
Psychological appraisals come in handy to determine the hidden potential of employees. This method focuses on analyzing an employee's future performance rather than their past work. Qualified psychologists conduct a variety of tests (in-depth interviews, psychological tests, discussions, and more) to identify an employee's emotional, intellectual, and other related traits. However, it is a rather slow and complex process and the quality of results is highly dependent on the psychologist who administers the procedure.

6. 720-Degree Appraisal:
It is also one of the new methods of performance appraisal wherein the assessment is not only done by the stakeholders within the organisation but also by the groups outside the organisations including the customers, suppliers, investors, etc. This is one of the methods which is used to determine the success of the organisation as whole

All these modern methods of performance appraisal have a broader scope than any of the traditional method and provide a more comprehensive as well as accurate evaluation of an employee. Amongst all these appraisal techniques, organisations can choose which one will be the best performance appraisal methods for them to identify the performance of their employees.

If you are not looking at changing your performance system drastically, you can make small changes to make the most of your current system:

7. Zero in on goals:
You should design your performance management method based on what organisational goals you want to achieve. Even the best performance appraisal methods fail when they aren't geared towards the core needs of a business. Similarly, the company goals and the rationale behind conducting performance appraisal shouldn't be a secret to employees. This way, they can clearly understand how their professional goals and contributions can be aligned well with the company objectives. They will also have a better sense of assessment that they go through and its impact on their long-term success.

8. Structure the information:
Formalise the topics that you plan to discuss during the performance assessment. A standard structure makes it easier to ensure fairness and give employees valuable information. A well-sketched performance assessment should include an overview of accomplishments, ways in which the employee could improve in the future, what type of skills they need to gain to better their performance, how progress is being made on specific goals, and what professional development opportunities may become available in the future.

9. Collect information in advance:
Getting feedback from team members and supervisors will make your performance appraisal method much more valuable. Use digital forms to document employee feedback and automate the process so that you don't have to revisit the step time and again. Instead, you can set the data to flow smoothly and route it through relevant stakeholders who are supposed to review the information.

Performance tracking in recent years has become intelligent in many ways. Automated HR software allows HR leaders to roll out a modern performance appraisal method in a few minutes. Furthermore, there are cloud based all-in-one HR tools that enable businesses to ensure global consistency in performance appraisals while offering room for local and role-specific variations. Whether you're going to give workers a score, detailed feedback, or specific tips on how to succeed at their jobs, you need to narrow down on one approach that can help you achieve all these goals.


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