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The Modern Methods of Performance Appraisal in the Organization

Home Articles The Modern Methods of Performance Appraisal in the Organization

Every organization has to assess the performance of its employees, and that is called the performance management system. Performance appraisal is one of the methods used for managing the performance of the workers by different standards of output which is set by the organization or the industry. There are various categories by which the managers usually evaluate the performance, such as decision-making skills, the outcome of the processes which the employees are handling, teamwork, behavioural attributes, skills and competencies and much more.

The organizations do the performance appraisal with the help of two sets of methods in which the one is the is the traditional methods and the second is modern methods. This article will discuss the modern techniques, but you need to know the traditional methods of appraisal are and you can gain insight about them in the different article  “Traditional Methods of Performance Appraisal Used in The Companies”. The major drawback of the traditional methods of performance appraisal is that there is a high probability of the biasedness of the appraiser. To combat this problem, the organizations now use the modern techniques of performance appraisal, and this article is dedicated to these methods.


  • BARS or behavioural anchored rating scales method

There are different performance dimensions which need to be addressed while assessing the performance. The BARS method is the technique where the managers evaluate the behavioural attributes of a person according to the role he or she has been assigned. It describes different degrees of behaviours with a particular performance dimension in question. There are five steps involved in the BARS method, and that is:

  1. The first stage is to generate the critical incidents for evaluating particular traits of the behaviours
  2. Development of the performance dimensions according to the role of the employee
  3. Reallocation of the critical incidents for the job in question
  4. Providing the rating to the incidents by using scaling technique
  5. Finally, in the fifth step, the BARS instrument is developed
  • MBO or management by objectives

The MBO technique was proposed by Peter Drucker in 1954 in his popular book called “ The Practice of Management.” In this method, Drucker has described that the common goals are identified by the joint efforts of the employee by him, and his/her boss and the subordinates. Here the results of a prove or duty are defined beforehand so that they can assess the person. These goals or objectives gives the employees a platform on which they can design their strategy to achieve them with the given resources and time.

The managers must define the goals of the employees of his/her department and then discuss their progress about them through periodical meetings. This is the method where the employees work in close tandem with each other for planning, organizing and communicating their objectives.

The MBO program usually comprises of four main steps, and that is, setting the goals, in the beginning, setting the performance standards on which the employee will be evaluated, the comparisons with the other employees, and the periodic review by the person who has been designated for reviewing the performance.

  • The assessment centres

When the organizations have to evaluate the performance of the executives or higher officials of management, then they use the method of the assessment centre. Here the managers have to come together as a group, and they have to participate in a simulated exercise which is designed particularly for the evaluation purpose. The evaluation is usually done by the superiors of the managers and HR specialist who has the understanding of the behavioural aspects needed at their position. There are different techniques which are used in assessment centres such as in-basket exercise, role-playing, simulations, etc. The assessment centres are also used by organizations for the training and development purpose. This method gives a very accurate assessment, and the biasedness also limits to a minimum. The companies mainly use this technique if they want to select the right employee for a higher level of the job.

  • 360-degree performance appraisal

In this technique, the employee is assessed and rated by all people who are directly or indirectly linked to his role. The employee is appraised by his/her boss, peers, subordinates, suppliers, distributors, and even the customer if the employee is a frontline worker. All the stakeholders are involved in this method with whom the employee has to interact while performing the duties of his job.

  • The cost accounting method

These days the companies are also assessing the performance of the employees by monetary benefits which are yielded by the performance of the employee. The necessary procedure of evaluating the performance through this method is that the managers have to ascertain a relationship between the benefits the organisation is getting from the work of an employee and the cost it has to bear to retain him/her.

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