Many types of performance appraisals are commonly used to evaluate employees’ work. This can be interpreted to mean that managers and human resource professionals haven’t found one or even a few that they all can agree work well in all cases. In fact, the human resources field has been reinventing the performance appraisal since it came into widespread use in the 1950s, although some are iterations of others. The result is a wide range of methods that you as a manager or owner can learn about before deciding which will work best for you.
The earliest performance reviews didn’t have a method because none had been devised. So, the process consisted of a manager discussing the employee’s work over the previous year in an effort to decide if a raise or promotion was in order or not. In fact, rumor has it that those early reviews – which may have begun sporadically as early as the 1920s – could also result in a decrease in pay when an employee’s work was found to be lackluster.
By the 1960s and 1970s, however, it was apparent that performance reviews were highly subjective and depended almost entirely on the manager’s view of the employee overall. Human resource professionals looked for ways to remove the subjectivity as much as possible, which is how checklists and rating scales came into being.
Although each uses slightly different criteria, managers are given a list or rating scale to complete for each employee. For example:
Behavioral Checklist or Checklist Scale. As the names suggest, checklist methods focus on behaviors that have been determined to be important to doing the job well, such as “works well unsupervised” and “makes valuable contributions when working as part of a team." It also identifies ideal characteristics or traits to have for the job, which could include tenacity, flexibility and focus.
Checklists can be designed in slightly different ways, and one has not been found to be better than another. For example, some have “YES” and “NO” columns to check. Others have just one box that the manager checks if the employee exhibits that behavior and leaves it blank if he doesn’t.
Behaviorally Anchored Rating Scale (BARS). A more recently developed rating scale, BARS expands upon the checklist approach. Since some behaviors and characteristics are likely more critical to the job than others, they are weighted more or less than others according to their importance. BARS also gets the human resources department directly involved in the appraisal.
Managers complete the checklist because they work directly with the employees. But managers then submit the completed scale to the human resources department, which evaluates it and may conduct the actual performance appraisal with the employee. Sometimes the scores are anchored by the range they fall into, and are labeled “Good,” “Fair” or “Poor.”
Graphic Rating Scale. This is a rating scale in a graph format that gives more detail than a checklist. Instead of YES and NO columns, a graphic rating scale lists the ideal characteristics or behaviors in the left column, with four additional columns labeled POOR, AVERAGE, GOOD and OUTSTANDING. Managers rate each employee by checking one column for each trait or behavior.
This gives managers the ability to better describe the level of each behavior the employee usually exhibits. So instead of just saying YES, the manager can qualify answers by saying yes, but only in an average way.
Ranking Appraisal Scale. Although this method of performance review looks like a checklist, its methodology is different. Instead of rating how well each employee does a task, a ranking appraisal compares the employee to the other employees who perform the same job. For each behavior, managers rank the employees from best-performing to worst-performing.
When finished with all the behaviors, employees can be ranked overall from best to worst. This can be helpful when the budget contains a specific amount for total raises granted. The highest ranked employee would receive the largest raise, and the lowest ranked would receive the smallest raise.
Forced Choice Questionnaires. At first glance, these appear to be in checklist or rating scale format. The difference, though, is that managers are forced to choose the answer that best applies to the employee among a group of positive and negative statements. For example, choices might be:
- Pays great attention to detail.
- Sometimes misses deadlines by being too thorough.
- Focuses unequal amounts of time on different details.
- May overlook important details that affect a project's outcome.
The forced choice format is good for eliminating the "not applicable" and "no opinion" or other neutral responses because these are not options managers can choose. However, they may give skewed and inaccurate depictions of the employee by not allowing the opportunity to add comments or essays.
Psychological assessments. The early performance appraisals were often checklists that measured psychological traits rather than performance. For example, employees were judged on their intellectual abilities and emotional stability. This gave a sort of psychological profile, and might indicate which individuals would work well together versus those likely to clash, but they really didn’t measure performance – they instead sparked the need for other methods to be designed. Today, psychological assessments might be included as one part of a performance appraisal, but not as a standalone method.
By the 1980s, performance reviews and appraisals had been conducted regularly for several decades. There was enough data to draw some conclusions and make observations about types of appraisals and the process in general. And employers were not pleased with what they were seeing.
Performance reviews were dreaded by managers and employees alike. Managers found them cumbersome and time-consuming to prepare and awkward to conduct with the employee. Workers often didn't agree with their appraisals and felt unappreciated and demoralized. Furthermore, the whole process focused on looking back at problems instead of gearing up for the future.
Self-evaluations. The idea emerged that employees might be more receptive to the appraisal process if they had some input to it. Self-evaluations became a part of the review process for this reason. Self-evaluations never stand alone as the sole appraisal method, of course, because employees can’t be the sole judge of themselves. The question would no longer be, "Does she deserve a raise?" but, "How big a raise can she give herself?"
Self-evaluations can be done in conjunction with any other appraisal method. Employees could be asked to rate their performance using one of the rating scales, with room to give performance evaluation comments as to why they rated themselves the way they did. Or they could use an essay format to convey their opinions of their performance, backed up with examples.
Employees submit their self-evaluations to their managers, who take them into consideration when doing their evaluations of the employee. The manager now has another viewpoint to consider, with examples he may have overlooked or forgotten. He can see where he and the employee agree on performance, and where they don’t.
Neither managers nor employees go into the face-to-face review blindly, so they are no longer blindsided by the other’s opinions. Managers appreciate having additional input, and employees feel their opinions were heard and considered.
360-Degree Evaluations. In recent years, human resources professionals thought it would be beneficial to ask others to give their evaluations of employees they work with for a more holistic or well-rounded viewpoint. Picture an employee standing in the middle of a circle, surrounded by their peers, their managers and anyone the employee supervises. It’s a “full circle” view of the employee’s performance in a wide range of circumstances.
In companies that use this appraisal method, the employee who is in the middle of the circle will also be asked to review his own manager and peers. This type of performance appraisal requires explanation and examples, perhaps more than any other method. Everyone must be counseled to remain professional in their comments and provided with examples of what is and is not professional.
While an employee might be thinking, “He stinks as a manager! I never know what he wants me to do!” such a comment is not only unprofessional but it’s not helpful, either. A more constructive way to word that could be, “He needs to give more clear explanations when assigning tasks.” Another way to ensure that responses improve working relationships, rather than damage them, is to use a checklist method. One of the behaviors for managers could be, “Gives clear explanations when assigning tasks,” and employees could check YES or NO, or a point along the scale from POOR to EXCELLENT.
Work Standards Approach. This performance appraisal method outlines the standard work expected for each job category. Workers are evaluated based on how well they met the goal of each standard. It's an objective method because the standards are the same for everyone with that job title. However, that's also the negative side of the work standards approach. Since it's identical for a group of employees, it doesn't allow room for individuality.
Management by Objective (MBO). Unlike checklists that are standard for everyone in a certain job category, management by objective is unique for each individual. Managers work with each person to design goals to strive for, and employees are evaluated based on whether and how well they met each goal. It's easy for the individual to see where they are in relation to the goal at any point, and easy to assess whether the goal was met or not.
For example, all the sales reps in an organization shouldn't have the goal, "increase sales." Of course the goal is to do that, but each rep's goal should be specific to the stage he is currently in and where he needs to go from there. Some might be tasked to increase sales by 10 percent because that will bring them to a certain point. Other reps who consistently increase their sales anyway might find 10 percent ridiculously low and need a more challenging goal such as a $1 million goal or another milestone to be motivated.
Essay Methods. Although a more traditional method of appraisal where managers add notes to each question or segment, essay formats are valuable because they provide personal details. Essay doesn't mean the manager writes a long essay describing the employee; it just means space is provided for managers to comment or give examples for their answers to checklist-style questions. Essay methods can be combined with most other types of appraisals to make them more detailed and personal to the individual.
Essays of any form increase the time it takes to complete the assessment. Many managers found writing the employee evaluation comments to be too labor intensive, both for having to consider what to respond to each question and to decide how to write it.
Critical Incidents. Managers keep logs for each employee throughout the year or whatever time period the evaluation covers. In the logs, they record incidents where the employee did great work and incidents where the work was poor. Each entry is dated and described. At performance reviews, the manager has a list specific to each employee.
However, studies of this method show that there's a tendency to record more negative incidents than positive ones. It's human nature that when things are going well, people tend to keep going. When things take a downturn, though, people stop working to assess the damage done and how to improve it. That reminds the manager to log the incident.