December 26, 2022

Types of Performance Appraisal Methods (Choose the Right One)

ssessing your employees' work performance is very important—no doubt about this.
You should know how your employees are doing, right? Do they need training? As a head, you are to identify whether your employees need improvement in any specific area. 
Performance appraisal will help you to identify those.
Not only that. 
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You can identify your high-performing employees. This will help you to identify who is eligible for promotions. And all these are possible through performance review.
So undoubtedly, it's crucial to know all the performance appraisal methods and choose the right one for your business.
Ohh, there is one important point. There are a couple of other names of "performance appraisal." For example, performance review, performance evaluation, or employee appraisal.
Let's first know the types of employee appraisal methods and their pros and cons, and then we will discuss which method will be suitable for your business.
There are lots of things to write, right? Please keep reading. Thank you.

Table of contents
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Performance Appraisal Methods


720-Degree feedback

Frankly speaking, it's one of my favorite methods. But yes, it is not without its criticisms. I'll talk about that later.

What is actually 720-degree feedback? This method (720-degree feedback) collects performance feedback from an employee's supervisor, subordinates, peers, and even customers or clients. 

How is the feedback gathered? 

The feedback is gathered through a structured questionnaire or interview process. Then it is used to help the employee identify areas of strength and areas that require development.


Now, what are the criticisms? Some argue that this type of appraisal is too time-consuming and expensive to implement. Nothing more than that.

Peer assessment

Peer assessment is a type of performance appraisal in which employees are evaluated by their peers. You may use this assessment method with other appraisal methods, such as self-assessment or 360-degree feedback.
There are several advantages to using peer assessment as part of your performance appraisal process.  
First, it provides a more objective perspective on an employee's performance. 
Second, it helps to identify areas where an employee may need improvement. 
Finally, it helps to build camaraderie and trust among employees.
There are also some disadvantages to using peer assessment. 
First, Peer assessment can sometimes be subjective and biased. 
Second, this type of appraisal can be time-consuming, as it requires employees to assess the work of their peers.
Finally, some employees may feel that they are being evaluated unfairly.


In order to get a well-rounded self-assessment, employees should rate themselves in a variety of categories. These categories include work behavior, attitude, job performance, and more. By rating themselves in these categories, employees can better understand their overall strengths and weaknesses. Additionally, this self-assessment helps employees identify areas where they need to improve.

Field review method

The Field Review Method is a type of performance appraisal in which the appraiser observes the employee in their work environment. This method has several advantages and disadvantages, which are outlined below.
  • Can provide more accurate and objective information than other methods
  • Observations can be made over an extended period of time
  • You can use this method in different job types
  • It may be challenging to arrange field visits for all employees
  • Appraisers may be influenced by their own personal biases
  • Field visits may be disruptive to the work environment

The management by objective (MBO)

  • MBO is a process where employees and managers work together to set specific, measurable, attainable, relevant, and time-bound goals. Once these goals are set, employees are evaluated on their progress.
  • MBO appraisals can be beneficial as they can:
  • Give employees clear goals to strive for
  • Provide feedback on employee performance
  • Help improve communication between managers and employees
  • However, MBO appraisals can also be difficult to implement correctly and can be time-consuming.

Project evaluation review

  • This method involves assessing an employee's performance on a specific project. It is a pretty simple appraisal method. Basically, you sit down with the employee and review their project performance. You can discuss their successes and their challenges, and you can give them feedback on their work.
There are a few advantages to this appraisal method.
First, it's pretty quick and easy to do. 
Second, it's a great way to get detailed, specific feedback on an employee's work. 

Rating scale

It is among the most widely used forms of performance evaluation techniques.
Rating scales are usually numeric, with a range of values representing different performance levels. For example, a standard scale is 1-5, with 1 being the lowest level of performance and 5 being the highest. 
There are both plus and downsides to this method. On the plus side, it's quick and easy to do. On the downside, it can be quite subjective, and some employees may feel like they're being unfairly judged.

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Which Performance Appraisal Method Will Be Suitable for Your Business?

Each business owner should set up a performance appraisal system that meets the specific needs of their business. 
We already know many performance appraisal methods are available, each with its advantages and disadvantages.
But which performance appraisal is suitable for your business? How do you understand that?
 I know it's a common problem.
You should first consider the nature of your business and your goals for the appraisal system.
Once you understand your business well and what you want to achieve with the appraisal system, you can begin to research the different performance appraisal methods. When you're doing your research, make sure to keep the following factors in mind:
  • The type of business you operate
  • The size of your business
  • The structure of your business
  • The goals you want to achieve with the appraisal system
With this information, you can narrow down your options and choose the suitable performance appraisal method.
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Frequently Asked Questions (FAQ)

Question: What is performance appraisal in HRM?

Answer: Performance appraisal is a process in HRM wherein employees are evaluated against predetermined performance standards. These standards are typically set by the organization or by the employee's immediate supervisor. The appraisal process usually takes place at regular intervals, such as annually or semi-annually. The aim of performance appraisal is to help identify areas where employees need improvement, as well as to recognize employees who are excelling in their roles. Additionally, performance appraisal can be used to make decisions about promotions, raises, and other types of recognition.
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Dear readers, we are near to finish. Thank you for being so patient in reading. By this time, we have known that there are multiple performance appraisal methods
The crucial part is choosing the right performance review method for the organization's needs. 
When choosing an employee appraisal method, consider factors such as the organization's size, structure, and culture. After selecting it, it is essential to train managers and employees on how to use it effectively. 
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