9 Best Performance Appraisal Methods

Tristan Ovington
By Tristan Ovington
Updated April 30, 2024

Staff need to progress and feel seen, right? However, the challenge as an HR leader is balancing this against targets and offering the appropriate response or support to meet their expectations to ensure a great employee experience

When leaders use it correctly, performance appraisal archives a balance of the needs of employees and their organization to enhance communication and relationships instead of simply measuring performance.

66% of US employees feel their organization appreciates them. This figure may sound high, but it shows that over a third of US staff feel their organization does not value their efforts. 

66% of US employees feel their organization appreciates them (1)

One of the main reasons staff feel undervalued may be the simplistic way HR departments conduct the appraisals, with 55% of HR teams still ignoring formal appraisal methods and resorting to spreadsheets

Confining them to boxes is unlikely to capture the needs and desires of employees. It is more likely to damage communication, relationships, and organizational perception, often negatively impacting employee retention

Reading through these helpful methods will allow you to build strong relationships with your staff as they begin to feel their organization cares about them, giving them an incentive to be productive and make their organization successful. 

9 Performance appraisal methods

9 Best Performance Appraisal Methods (1)

There are nine main appraisal types, and understanding each is essential to help ensure you are conducting the right appraisal meeting for the proper purpose. Understanding these methods is crucial, as you need a suitable method for the situation. 

Just 30% of employees agree that their managers involve them in goal setting, which is a missed opportunity as employees involved in goal setting are 3.6 times more likely to engage in their organization. Performance appraisal tailored to employee needs can help keep them satisfied and reach goals for their organization. 

Choosing the right method for the right employee and situation is crucial. For example, the forced choice method would be perfect for assessing the performance of a sizeable new staff intake. The 360-degree method is more appropriate for evaluating managers’ performance based on their team members’ perceptions of them. 

1. Assessment center method

Organizations conduct this method in a designated assessment center, including various exercises such as computer simulations, discussions, role-playing, and other evaluative activities. 

How do you implement it?

An assessment center entails standardized behavior evaluations using various inputs over a two- or three-day period conducted off-site. 

Trained observers assess managers’ exercise the following responses:

  • In-basket tasks.
  • Role-playing.
  • Case analyses.
  • Interviews.
  • Psychological tests.

Who’s it for?

Manufacturing firms, service-oriented businesses, educational establishments, and consulting agencies utilize the assessment center method to pinpoint prospective organizational leaders and managers.

2. Behaviorally Anchored Assessment Scale (BAAS)

This structured appraisal method evaluates employee performance against predefined behavioral examples, each meticulously calibrated with assigned ratings to ensure accurate data collection and comprehensive assessment of individual competencies and behaviors.

How do you implement it?

BAAS includes five steps:

  1. Collecting critical incidents.
  2. Identifying performance dimensions.
  3. Reclassifying the incidents.
  4. Assigning scale values to each incident. 
  5. Developing a final instrument. 

Who’s it for?

The Behaviorally Anchored Assessment Scale is suited to situations where managers require precise evaluation of employee performance using behavior-based criteria.

3. Checklist approach

The checklist approach utilizes a simple yet effective checklist of questions with binary responses to evaluate various employee attributes systematically. The checklist approach provides a streamlined framework for assessing performance across multiple criteria and facilitating objective decision-making in performance appraisal processes.

How do you implement it?

Using a checklist scale involves posing questions to which the manager responds with either yes or no, incorporating behavioral and trait methods. Another version includes checking criteria the employee meets and leaving blanks for unmet areas.

Who’s it for?

The checklist method is perfect for managers who need binary responses from employees to assess their performance. One example is assessing performance related to new technologies based on employee satisfaction with a new software tool.

4. Critical incidents approach

Drawing from specific positive and negative incidents, supervisors employ this approach to assess employee behavior, leveraging notable events to gain insights into strengths, areas for improvement, and overall performance trends, fostering targeted development and growth strategies.

How do you implement it?

  1. Planning: The researcher outlines study objectives, scopes, and contexts for analyzing critical incidents.
  2. Data collection: Various methods like interviews, surveys, or observations gather specific data relevant to critical incidents.
  3. Data analysis: Using a coding system, the researcher identifies themes and patterns within the collected data.
  4. Interpretation and reporting: Findings are interpreted and reported clearly, often supported by critical incident quotes or examples.

Who’s it for?

CIT is helpful for managers who must collect in-depth data on an event, behavior, or experience within a particular context and is adaptable to individual or group environments.

5. Client/customer feedback

Tailored for frontline employees interfacing with clients or customers, this feedback method harnesses external perspectives to gauge employee effectiveness and service quality. It offers invaluable insights into customer perceptions, satisfaction levels, and opportunities for enhancing the customer experience and organizational reputation.

How do you implement it?

There are four steps to cover when implementing the client/customer feedback method.

  1. Begin by collecting data and metrics regarding customer service performance.
  2. Examine past performance evaluations and feedback to pinpoint strengths and areas for enhancement.
  3. Establish expectations and objectives for the upcoming review, ensuring alignment with company goals.
  4. Incorporate positive and constructive remarks to foster growth and progress when crafting feedback.

Who’s it for?

The client feedback method is better suited to private sector organizations than public sector organizations as peer reviews at public sector organizations are more lenient and, therefore, less helpful for action points for improvement.

6. 360-Degree review method

The 360-degree feedback method is unusual as it uses many other methods to build a picture of employee performance. It assesses performance using input from managers, peers, customers, and direct reports, reducing bias and enhancing comprehension of competence.

How do you implement it?

  1. Self-appraisals: Self-assessments allow employees to reflect on their performance, acknowledging strengths and weaknesses. Yet, without structured forms, they risk bias.
  2. Managerial reviews: Supervisor assessments form the foundation of traditional appraisals, encompassing individual and team evaluations by senior managers.
  3. Peer reviews: Colleagues offer valuable insights into teamwork, initiative, and reliability, but personal relationships may skew evaluations.
  4. Subordinates Appraising manager (SAM): Upward feedback from reporters provides a unique managerial perspective, although fears of reprisal can influence results.
  5. Customer or client reviews: External feedback provides a clearer view of employee performance but may overlook the impact of internal processes and policies.

Who’s it for?

Organizational managers and leaders utilize 360-degree evaluations to gain insight into others’ perceptions of their strengths and weaknesses.

7. Expanded feedback method

The innovative expanded feedback method rises above traditional 360-degree feedback. It integrates perspectives from internal stakeholders and external entities, including customers, investors, suppliers, and financial partners, enriching the evaluation process with diverse insights and perspectives.

How do you implement it?

The expanded feedback method involves three simple steps:

  1. Soliciting feedback from various sources. 
  2. Utilizing multiple channels for communication
  3. Providing constructive criticism and recognition.

Who’s it for?

The expanded feedback method is for employees, managers, and organizations seeking comprehensive performance evaluation and improvement.

8. Forced choice technique

Characterized by a predetermined set of True/False questions, this method minimizes response bias and subjectivity, providing a standardized framework for evaluating employee competencies and behaviors, thus facilitating fair and impartial performance assessments based on objective criteria.

How do you implement it?

Implement the forced-choice performance appraisal technique by designing statements where raters must choose the most and least descriptive of the employee’s behavior, ensuring objective evaluation and minimizing biases inherent in traditional rating scales.

Who’s it for?

Managers often select the forced choice technique when assessing large numbers of staff in a group. This technique is perfect for appraising large new intakes of staff quickly and can help indicate the direction of employee flow from an early stage.

9. Management By Objectives (MBO)

Through collaborative goal-setting and regular performance reviews, this results-oriented approach empowers employees to take ownership of their professional development and contribute meaningfully to company success, fostering alignment, accountability, and motivation toward achieving mutually agreed-upon objectives.

How do you implement it?

There are five steps to implementing management by objectives. These steps include:

  1. Establish or refine organizational goals, drawing from the company mission and vision.
  2. Communicate the organizational goals to employees. In 1981, George T. Doran introduced the SMART acronym (specific, measurable, achievable, relevant, time-bound) to articulate this idea.
  3. Encourage staff to define personal objectives aligned with company goals, boosting motivation and empowerment after sharing organizational objectives.
  4. Monitor employee progress. As outlined in step two, a crucial aspect of objectives is their measurability, enabling employees and managers to gauge their achievement.
  5. Assess and recognize employee advancement. This stage entails providing candid feedback on each employee’s accomplishments and areas for improvement.

Who’s it for?

Senior executives such as managers, directors, and executives in businesses of any scale when assessing number and experience-based employee performance data.

Consider all these methods to ensure you use the best one for the right situation and get the best results for employees and your organization. 

It is best to try as many as possible to gain performance appraisal experience and add a wide range of tools to measure performance to ensure you don’t negatively impact staff well-being while you measure employee productivity.

Use performance appraisal to enhance communication and relationships

It would be easy to skew performance appraisal toward organizational benefits like ensuring workers are productive and follow legal compliance procedures. 

This approach has short-term benefits, like protecting your company’s reputation. Still, people are not numbers and will resent their organization in the long term if they don’t feel their leaders care about their needs.

Use performance appraisal to enhance communication between team members and managers, build relationships, and help develop individuals into higher positions internally via employee inboarding, not reinforce disciplinary procedures and productivity goals. 

Using performance appraisal in this way creates a workforce that seeks to innovate their organization and feel the incentive to be productive and make their company successful.

Tristan Ovington
By Tristan Ovington
Tristan Ovington, an accomplished senior writer and journalist, typically contributes his expertise to the Enterprisers Project. Renowned for his valuable perspectives on digital adoption, digital transformation, change management, and Cloud applications.