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Sun Mar 03 2024

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What are the Methods of Performance Appraisal in HRM?

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Performance appraisal is an important process. It helps understand if employees are performing their job responsibilities well. This is done by evaluation. The appraisal process includes feedback on employees from the manager. It also includes a rating of their performance.

This process helps HR managers understand the employee's strengths and weaknesses. It helps them provide employees necessary feedback and support. It also allows them to reward performers that are doing well. Plans are made for improving employees.

Effective methods of performance appraisal in HRM retains employees and increases their engagement. It also gives them job satisfaction. Regular performance appraisals help managers too. It helps them align employee performance with their business goals. This leads to them performing for the organization better.

What are the Performance Management Methods in HRM?

Performing management is a process. Employees perform their best using performance management. It helps meet the organization's goals. There are many methods to conduct a review of an employee's performance.

Here are some of the methods:

  • Key Performance Indicators: These are special metrics. It helps in evaluating the progress of employees. This can be used to evaluate a team, individual or even an organization's performance.
  • Performance Appraisal: Managers give employees feedback to improve their performance. They also tell the employees their strengths. The appraisals are usually done once every year.
  • 360 Degree Feedback: Feedback is obtained from different sources like managers, subordinates and customers. The 360 degree method in hrm gives a more comprehensive evaluation of employee performance. It identifies employees' strengths and areas of improvement easily.
  • Performance Improvement Plans: These plans provide timelines. Employees can use these plans to improve themselves. Such plans are helpful when employees are not performing well.
  • Mentoring: Another one of the methods of performance appraisal in HRM is mentoring. Here the managers provide support and guidance. This helps improve the employee's performance. Coaching helps employees reach their full potential. It improves overall job performance.
  • Performance Recognition Reward: This method rewards employees. They are awarded based on their exceptional performance. Bonuses, promotions or other incentives are rewarded to hardworking employees.

What is Meant by 360 Degree Performance Appraisal?

360 degree performance appraisal in hrm is a useful evaluation process. Feedback is received on the employees. People who interact with the employees provide such feedback

The managers collect feedback on their employees. It helps them understand the employee's level of performance.

Such methods of performance appraisal in hrm allows managers to understand the employee's performance better. It helps them gain well-rounded feedback. This allows HR managers to create development plans suiting their employees.

However this method can be time-consuming and expensive. The feedback from customers cannot be relied on. However, many HR managers continue to use this tool.

What are the Modern Methods of Performance Appraisal?

Modern methods of performance appraisal in HRM helps employees perform more effectively. This in turn helps companies perform well.

Here are some of the modern methods:

  • Behavioral Checklist: A checklist of employee behaviors is made. This helps identify the strengths and drawbacks of an employee. It also helps to identify which areas employees can improve on. Employees can be given feedback after reviewing the checklist. This helps improve their performance.
  • Assessment Centres: Such centers evaluate employee's skills, abilities and competencies. Group discussions and role-playing are a part of such Centers. This is a standardized method. It identifies the employee's drawbacks
  • Continuous Performance Appraisal: It is a modern approach. Such methods of performance appraisal in HRM require regular feedback on employees. It helps provide clear performance objectives. There is an ongoing dialogue. This helps to address problems in employee performance as they arise.

What are Some Techniques of Performance Appraisal in HRM?

Performance appraisal helps evaluate and review an employee's job performance. Human Resource Management employs many useful techniques. for performance. This helps them understand the employee's performance and assess it.

Here are some of the techniques:

  • Management by Objectives: This technique sets specific goals for employees to follow. The manager and employee agree on the goals to be met . Employees create a plan for achieving these goals. This technique helps provide proper guidelines for the employee. It helps in aligning goals of the organization and employees.
  • Behaviorally Anchored Rating Scale: a rating scale is used to rate the performance of employees. It helps in evaluation of employees' performance. It ensures feedback on specific behaviours rather than subjective perceptions.
  • Forced Distribution Method: Such methods of performance appraisal in hrm rank employees. This is based on categories set by hiring managers . For example top performers, average performers, and low performers. This technique helps in removing biases. It encourages managers in judging employee's performance.
  • Critical Incident Technique: In this method incidents are recorded. The manager uses these incidents to judge the employee's performance. This method helps managers identify behavior that contributes to the success or failure of the employees.
  • Ranking Method: This method ranks employees in the organization. Employees are ranked from highest to lowest. This method helps in identifying the top performers in a company.

What are the Advantages of Performance Appraisal?

Performance appraisal is an essential process. The different methods of performance appraisal in hrm help organizations develop their systems appropriately. It provides a systematic approach. This is useful for identifying an employee's achievements.

Here are some of the advantages:

  • Performance appraisal motivates employees to perform better. Appreciations motivate employees to work better.
  • Methods of performance evaluation in hrm improve communication. It provides a platform for members of the organization. This helps them discuss goals and issues. It promotes open communication. This leads to healthy relationship patterns between them.
  • Performance appraisal identifies areas. These are the areas where employees need additional training. Then organizations arrange for the training of their employees. This leads to improved performance. It also increases productivity.
  • Methods of performance appraisal in HRM helps make better and informed decisions. This includes an employee's transfer, terminations and promotions. It prevents biased decisions. Decisions are based on merits.
  • Performance appraisal provides employees with feedback. It helps them review their performance. They can improve themselves and perform better. It helps them achieve the goals for their careers.
  • Performance appraisal helps employees to work towards the achievement of organizational goals. This helps in increased productivity. It also aids organizational performance.


Extensive research and analysis tell us that performance appraisal is crucial. It forms an important part of managing employees' performance in organizations. Performance appraisal is systematic in nature.

Methods of performance appraisal in hrm provide us with an objective way to assess performance. It is useful for understanding the progress of employees. It aids managers in evaluating employee contributions. It helps align the goals of employees with those of the organization.

Discussing performance-related issues with employees is vital. It helps managers identify their weaknesses. It promotes continuous learning. It influences an organization. This creates stronger relationships amongst the employees.

However, it is important to check for biases in performance appraisal. All aspects of employee performance need considerations. It can also be costly and time-consuming. Employees may feel a bias towards others. They can also feel as if their contributions are undervalued. Organizations need to consider these limitations.

Fair and valid methods of performance appraisal systems need adoption. Performance appraisal is a critical tool. It helps manage employee performance better. For organizations to flourish, they must practice effective and well-designed performance appraisal methods.