Performance appraisals are used to evaluate employees’ work and productivity, recognize their accomplishments, identify training opportunities and help the worker develop new skills and set performance goals for the coming year.

Appraisals take many forms, depending on the nature of the business and its organizational culture. The critical incident appraisal method is based on objective, observable employee performance, rather than subjective ratings or rankings used in other appraisal methods.

Critical Incident Definition

Critical incident is a misleading term. It suggests something bad happening, such as a serious workplace accident. But in performance appraisals, critical incidents can be both good and bad. What makes them critical is that they are significant in some way, to the employee, manager, work group or the customer.

It can be a difficult project or assignment that was successfully completed; a situation that challenges a worker’s understanding and attitudes; or an incident that involved conflict, anger, or criticism.

Appraisal Method of Performance Appraisal

The manager describes, in writing, an employee’s behavior in critical incidents that occur throughout the evaluation period. He documents what happened, who was involved and what the employee did or failed to do. Managers document incidents as they occur, and they may be positive and negative events. The documented critical incidents are used in preparing the performance evaluation to identify employee strengths and opportunities for improvement.

Because the nature and severity of critical incidents may vary, managers often assign a score to each incident. For example, offending an important client would be a negative critical incident with potentially serious consequences that would outweigh many positive critical incidents.

Advantages of the Critical Incident Method

The critical incident method has the advantage of being task-focused. It focuses on the essential duties of an employee’s job and how well she performs those duties. It is based on direct observation by the manager and not second-hand accounts.

In this approach, managers gather information over time. They keep a log of positive and negative incidents, recorded at the time they occurred. So, the annual performance appraisal is not overly influenced by an employee’s most recent accomplishments or problems.

It is an effective relationship building tool because the manager must spend more time in the work area observing and interacting with employees, rather than in her office. This gives her the opportunity to get to know each worker, to provide coaching and guidance; and to get feedback on what is working well and what is not.

In addition, the critical incident log provides the required performance or behavior documentation necessary for a manager to take disciplinary action with an employee.

Process Improvement Tool

Health care, power plants, aviation and other high risk industries use critical incidents as the starting point for improving processes and reducing risks. Critical incident documentation can identify areas where workers routinely have problems; where the work flow backs up; or where safety or security issues occur. The manager can interview those involved to collect information to supplement his own observations of the incident to help clarify the problem and identify solutions.