Performance appraisals help employees understand their job duties, learn what they could do better and receive praise for work done well. In most organisations, the performance appraisal process happens once a year and is administered by superiors to subordinates.
Some organisations subscribe to the "360" performance appraisal system, wherein employees receive their annual appraisal from superiors, subordinates, peers and customers. Company leaders have several options for appraisal methods, all designed to aid in various aspects of performance management.
The graphic rating-scale method lists employee traits alongside a scale that indicates to what degree the employee possesses each trait.
Performance appraisers must rate the employee on his performance of each trait or his level of possession of each characteristic. Traits might include knowledge, initiative, work quality and speed.
This method offers precision and limits bias; however, employees will be left questioning why they received such ratings unless space for comments is provided. Appraisals are of little use unless they inform employees about improvement techniques.
The behaviorally anchored rating scale method uses a scale created by job designers to list the behaviours critical to the job in both positive and negative ways. These critical activities are called "behavioral anchors." For the appraisal, any employee behaviour that matches an anchor is listed on a vertical scale with higher perforce behaviours at the top, low performance behaviours at the bottom and average behaviours in the middle.
A BARS analysis gives a quick visual as to where an employee stands because it's easy to see clusters of behaviour points at the top for high performers and at the bottom for low performers. The drawback to BARS methods is that each one takes a considerable amount of time to develop. The system may be infeasible in organisations that have a higher number of different types of jobs.
Management by Objectives is an entire management philosophy created by Peter Drucker in 1954. Under this system, management sets goals -- related to quality, productivity, profits or other metrics -- and uses the performance appraisal to monitor employee progress toward the goals. This helps organisations with strong organizational cultures to instil those values in every employee. However, MBOs don't function well as an appraisal method separate from the management system. Organizations using MBO appraisals usually include MBO as part of their entire management process.