There are many types of performance appraisals methods practised around the globe. It is crucial for organizations especially startups which are result orientated to choose the right kind of appraisal method according to their need.
Research published in the Arabian Journal of Business and Management in 2013 defines Performance Appraisal as the systematic evaluation of the employees according to their job and potential development.
The evaluation system tries to identify the gaps in performance and fills them by motivating employees. The research emphasizes that motivation is the driving force to direct a person towards a specific goal.
Another research conducted in 2015 states a direct relationship between Performance Appraisal and organizational effectiveness.
This makes Performance Appraisal a very constructive tool for any startup company. It obtains, analyzes, and records the information about the relative worth of an employee to the organization.
This blog brings to you 15 different types of Performance Appraisals for startups in 2022.
Goal of Performance Appraisal
Performance appraisal is a mutually beneficial process for both the organization and the employee, and it helps them understand each other and grow together.
Advantages for employees
- The employees effectively contributing to the organization are recognized. Their achievements are acknowledged.
- The need for support, training, or education can be identified and managed.
- Any specific skill of an employee can be recognized and brushed up for future projects.
- The outstanding performers may receive tips for their contributions.
Advantages for an organization
- The organization can assess its management techniques, training schedules, and working conditions to improve productivity.
- The feedback & support system can help employees identify their weak points and work on them.
- These events allow gaining insight into the work practices of team workers and individual performers.
- Communicating organizational goals to staff help improve loyalty. They can see their contribution affecting the success of the organization.
How to conduct performance appraisals
“The natural response to evaluation is to feel judged. We have to mature to a place where we respond to it with gratitude, and love feedback.”- Henry Cloud
Performance Appraisal is a continuous, systematic process. Generally, employees have a pretty negative perception of appraisals. This is mainly because they have to deal with criticism.
However, providing regular feedback makes them accustomed to the process. Further, highlighting their development also helps them to realize its importance.
Performance Appraisal is a cyclic process conducted in 4-steps. These are defined as follows:
- Setting Goals: Specific goals should be set for every employee, depending on their competence.
- Tracking Progress: The need for training or education is identified. Resources are provided accordingly.
- Feedback: The Management shares their feedback with the employee. This helps them recognize their weaknesses and strengths.
- Reward: Good performers should be identified and rewarded. These rewards can be pecuniary or others.
Check out our ebook on how to give constructive feedback to employees
Factors evaluated for Performance Appraisals
Several factors are monitored for performance appraisal. Although these factors vary as per your startup profile, some of them are equally important for every company.
The whatishumanresource.com has divided them into three types. Let us take a look:
- General Factors: These factors apply to every employee. They help assess the general attitude of a person towards work. These include adaptability, assertiveness, attendance, communication, etc.
- Team-based Factors: These are specially meant to be evaluated for employees working in a team. These analyze the ability of an employee to build and maintain healthy relationships inside the team. This includes factors such as cooperation, census building, teamwork, etc.
- Supervisory Factors: The employees working on or being considered for the supervisory positions are tested for these factors. These assess the ability of an employee to work in such crucial roles. These include cost-effectiveness, staff development, leadership skills, etc.
Types of Performance Appraisals
Numerous methods can be used in a startup for Performance Appraisal. The preference of method depends upon the type of work, number of employees, and the personal choice of the management.
However, as Meghan M. Biro has stated, “Employees engage with employers and brands when they are treated as humans worthy of respect”. Thus, the chosen Performance Appraisal method must consider the perspective of employees.
This section brings you the 15 types of Performance Appraisals best suited for your startup business in 2022.
The most general form of appraisal includes continuous, year-round interaction between management and employees. This makes regular checking of progress possible. However, the rewards and reviews are provided annually.
This requires a mediator during the entire evaluation process. Here, appreciation is shared before criticism. This kind of appraisal is beneficial at the time of disagreement.
3Management By Objective (MOB)
This is considered one of the best practices for Performance Appraisal. The management and employee work hand-in-hand. There are routine discussions on the progress. Incentives may be offered to the employees in return for their hard work.
4Assessment centre method
In this method, employees are made aware of other people’s perceptions of them. In this case, the review is divided into three stages: pre-assessment, during the assessment, and post-assessment.
To develop a better understanding, management may also make use of role-playing. This helps employees to get a closer look at their work practices.
The employees here are requested to assess their performance. This helps them identify and accept their strengths and weaknesses. Usually, a self-appraisal practice involves filling up a detailed form. This can be a free or an essay-type Performance Appraisal form.
Employees are made to analyze their skills based on a checklist. Through this, they can recognize and work on their lagging area.
In addition, this form also provides space for suggestions & feedback for the management. This helps employees put forward their problems or requests.
This is also known as peer-to-peer review. The co-workers are requested to evaluate each other’s performances. This provides a well-round review for every employee. Moreover, it helps to keep the biases away.
The assessment is generally done by people working on similar profiles and close to each other.
As per Forbes, it is used by 85% of Fortune-500 companies for their leadership development process
This method helps reveal an employee’s “outside the organization personality”. The client in direct touch with the employee is requested to provide feedback.
This helps evaluate the value of an employee for the company.
Moreover, it also helps identify customer needs. Hence, it can help make the client’s experience better.
8Behaviorally Anchored Rating Scale (BARS)
It is a comparative kind of appraisal. Here, the performance and skills of an employee are evaluated using pre-determined standards.
The advantage of this method is that employees already know the parameters they will be judged on. The pre-set examples also make it easy to understand. Moreover, the scale can be customized as per different roles.
The drawbacks associated with this method are time incentives and regular updating.
9Straight ranking appraisal
This is one of the most complicated types of performance appraisal method. This requires ranking employees from best to worst. The implementation of this method necessitates a systematic approach.
The major drawback of this method is that it is subjective and assumes everyone to be equal. Moreover, it has the tendency to overlook certain strengths.
10Human Resource accounting method
This is a purely profit-based method. It evaluates the monetary gains brought by an employee for the company. In addition, it calculates the cost of continuing that employee in the company. It ignores service values and interpersonal relationships.
11Administrative Performance Appraisal
Under this method, an employee is evaluated for a specific skill. The targets achieved, based on that particular skills, are calculated. This method allows the management to allot the projects as per the skills of an employee.
12Project evaluation review
This method works by evaluating the performance of employees at the end of every project. As this provides a system of regular feedback, the skills of employees evolve with every challenge.
13Graphic rating scale
This is also known as grading appraisal, as it allows managers to level employees for any given skill. It utilizes a fixed scale of qualities for assessment. It helps divide the tiers of employees and quantify behaviour.
The major drawback of this method is varying temperament. The leniency or strictness depends only on the evaluator.
This method focuses on estimating the future performances of employees. It works by evaluating different components of an employee’s personality. This is based on the tests conducted by verified psychologists.
15Software for Appraisal Management
These are the technology-based methods for performance appraisal. This is purely factual and does not involve any bias. Many softwares are available for this purpose.
These can be customized as per the need of a startup. Moreover, they also allow you to set reminders for upcoming appraisals.
How to choose the best performance appraisal method for your startup
An effective Performance Appraisal is beneficial for the growth of both the employee and the organization.
However, the positive results can only be extracted if you choose the right kind of practice for your startup.
This section will give you seven tips to choose the best Performance Appraisal method for your startup.
1Refresh your training
The secret to success is to keep learning. Management must work on brushing up their appraisal skills by taking formal training.
This helps them learn new methods and revise their practices as per the requirement.
Dale Carnegie has said, “An hour of planning can save you ten hours of doing”. Therefore, everything should be planned.
Also, inform the employees in advance and give them time to prepare. If your startup policy involves self-appraisal, provide them with the form beforehand.
Management must welcome feedback from employees. This way appraisal does not feel like criticism. Moreover, you will be able to identify the areas for development and the need for additional support or training.
“Action speaks louder than words”. So, do not just listen to what your employees say, observe their body language. Keep a close eye on if they agree with your expectations.
An annual performance appraisal may look good on paper but does not resolve actual issues. Try to remain in touch with your employees. Provide them regular feedback and as for their opinion.
The Management must ensure that the objectives are specific, realistic, attainable, measurable, and time-restricted. This helps in motivating the employees to work towards their target.
7Document the discussion
Always keep a record of your feedback and employee responses. This helps in dealing with future issues.
Performance Appraisal provides an opportunity for the employer to evaluate employees’ contributions to the organization. Similarly, employees also get a chance to develop their roles.
The primary objective is to provide an equitable measurement of contribution. This requires choosing the correct method for evaluation and implementing it appropriately.